Black homeowners face discrimination in appraisals
Abena and Alex Horton wanted to take advantage of low home-refinance rates brought on by the coronavirus crisis. So in June, they took the first step in that process, welcoming a home appraiser into their fourbedroom, four-bath ranchstyle house in Jacksonville, Fla.
The Hortons live just minutes from the Ortega River, in a predominantly white neighborhood of 1950s homes that tend to sell for $350,000 to $550,000.
They had expected their home to appraise for around $450,000, but the appraiser felt differently, assigning a value of $330,000. Abena Horton, who’s Black, immediately suspected discrimination.
The couple’s bank agreed that the value was off and ordered a second appraisal.
But before the new appraiser could arrive, Horton, a lawyer, began an experiment: She took all family photos off the mantle. Instead, she hung up a series of oil paintings of Alex Horton, who is white, and his grandparents that had been in storage. Books by Zora Neale Hurston and Toni Morrison were taken off the shelves, and holiday photo cards sent by friends were edited so that only those showing white families were left on display.
On the day of the appraisal, Abena Horton took the couple’s 6-year-old son on a shopping trip to Target, and left Alex Horton alone at home to answer the door.
The new appraiser gave their home a value of $465,000 — a more than 40 percent increase from the first appraisal.
Race and housing policy long have been intertwined in the United States. Black Americans consistently struggle more than their white counterparts to be approved for home loans, and the specter of redlining — a practice that denied mortgages to people of color in certain neighborhoods — continues to drive down home values in Black neighborhoods.
Even in mixed-race and predominantly white neighborhoods, Black homeowners say, their homes consistently are appraised for less than those of their neighbors, stymying their path toward building equity and further perpetuating income equality in the United States.
Home appraisers are bound by the Fair Housing Act of 1968 to not discriminate based on race, religion, national origin or gender. Appraisers can lose their license or even face prison time if they are found to produce discriminatory appraisals.
Title XI of the Financial Institutions Reform, Recovery and Enforcement Act, enacted in 1989, also binds appraisers to a standard of unbiased ethics and performance.
“My heart kind of broke,” Abena Horton said. “I know what the issue was. And I knew what we needed to do to fix it, because in the
Black community, it’s just common knowledge that you take your pictures down when you’re selling the house. But I didn’t think I had to worry about that with an appraisal.”
Appraisals, by nature, are subjective. And discrimination, particularly the subconscious biases and microaggressions that have risen to the fore in white America this summer following the death of George Floyd, is notoriously difficult to pinpoint.
Horton shared her experiment in a widely circulated Facebook post, earning 25,000 shares and more than 2,000 comments, many of which came from Black homeowners and carried the same message: This also happened to me.
In each comment, a repeated theme: Home appraisers, who work under codes of ethics but with little regulation and oversight, often are all that stands between the accumulation of home equity and the destruction of it for Black Americans.
In response to the pandemic, a federal ruling issued in March allowed appraisals for homes that were being sold to be done remotely in certain circumstances, temporarily pausing the need for interior home inspections. Those looking to refinance, however, still must complete an in-person appraisal.
In Hughley’s case, the appraiser was fired. Horton has filed a complaint with the Department of Housing and Urban Development.
When contacted about her case, HUD said it had been assigned to the Jacksonville Human Rights Commission. The agency added that it receives a handful of similar complaints each year.
In 2018, researchers from Gallup and the Brookings Institution published a report on the widespread devaluation of Black-owned property in the United States, which they discussed in a 2019 hearing before the House Financial Services Subcommittee.
The report found a home in a majority Black neighborhood is likely to be valued for 23 percent less than a near-identical home in a majority-white neighborhood; it also determined this devaluation costs Black homeowners $156 billion in cumulative losses.
Many appraisers, both during the hearing and in the weeks after, defended their practice, noting it’s their job to report on local market conditions, not set them.
“Is there a problem with poor and underserved communities in the United States? Yes. Is it the appraisal profession’s fault? No,” wrote Maureen Sweeney, a Chicago-based appraiser in a letter to the House subcommittee. “It’s like blaming the canary for the bad air in the coal mine, or blaming the mirror for your bad hair day. Appraisers reflect the market; we do not create it.”