There are several ways to find out how much your house is worth. One of the most popular methods is to take a picture of the exterior and upload it to an appraisal website. A black family recently discovered the cold truth about how lending companies can undervalue their home based on race.
A couple in Baltimore recently discovered they were being discriminated against because of their ethnicity. They simply wanted to refinance their mortgage like everyone else.
The black couple felt that their offer was way too low so they decided to “whitewash” the home and were shocked when they received a higher appraisal increased by $278,000.
So what exactly is “whitewashing”? The family was told one rate from the appraiser that was very low. So they decided to remove all of their beautiful black family photos and add white family photos instead. When they were given an estimate the second time around at $278,000 MORE than their previous appraisal, they knew it was time to come out into the public and tell their truth.
They proceeded to file a suit in the District Court of Maryland. The lender accused in the case, LOANDEPOT, declined to speak to officials about the allegations. But in a statement,
LoanDepot said that they strongly opposed bias. LoanDepot said that the appraisers are independent and that they work to eradicate bias.
The company, 20/20 Valuations ( the independent appraisers), could not be reached for comment. Neither the company nor the individual appraiser named in the suit could be reached for comment.
The couple purchased their four-bedroom home for $450,000 in 2017. The family had invested in a tankless water heater, recessed lighting, and other improvements.
The increase in prices in the area and across the country between 2017 and 2021 is greater than the rise experienced in the previous 5 years.
The appraiser from 20/20 valuations said that the home was only worth $472,000. However, the family knew they spent at least $35,000 on remodeling just one room in the house on top of the other improvements mentioned above.
The suit claims that the appraiser was motivated by racial animus. The appraiser allegedly included low-valued homes in areas with more Black residents and excluded similar homes in majority-white areas.
Later on, the couple learned the government gave their home an assessment of $622,000. And this is when they decided to “whitewash” the home. It was a simple experiment that turned into a lawsuit! They contacted white friends and asked them to borrow a vintage print which featured “ a white pin up model” and some photos.
After they completed their experiment
The home was appraised at $750,000, or 59% more than its last appraisal.
The U.S. housing industry has a long history of racial discrimination. Racism is still a factor that has a direct impact on the wealth gap today.
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