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December 6, 2021, 5:22 pm By Matthew Blake
A San Rafael, California real estate appraiser is being sued for allegedly undervaluing a home by almost 50% because the homeowners are Black.
Sausalito, California homeowners Tenisha Tate-Austin and Paul Austin, along with Fair Housing Advocates of Northern California, filed a lawsuit in federal court Thursday alleging race discrimination against Janette C. Miller of Miller & Perotti Real Estate Appraisal and AMC Links LLC, an appraisal management company headquartered in Lehi, Utah.
Messages left with Miller and AMC Links on Monday were not returned.
The lawsuit is the latest instance of Black homeowners stating that an appraiser has, because of conscious or subconscious racism, thought less of their home’s value, and that no one intervened to overrule the appraiser’s prejudice. By many appraisers own admission, their profession is old and white, and faced with a growing number of race discrimination complaints, though the extent of these complaints is unclear.
According to the lawsuit, Tate-Austin, and her husband Austin bought a house in Marin County for $550,000 in 2016. Over the next four years, the couple completely remodeled the home, and later added an accessory dwelling unit. They refinanced their mortgage in 2018 and 2019, and sought to do so again in 2020.
It was in this third iteration of mortgage refinancing where the alleged appraisal bias occurred.
Miller who, according to her LinkedIn, has operated Miller & Perotti appraisal services since 1992, valued the home at $992,000.
The Austins claim Miller was lowballing them because of their race. In response, the Austins brought in a new appraiser, who the complaint does not identify, and “white-washed” their house prior to the appraisal.
“They packed away their family photos, which depicted the house’s occupants as an African American family,” the complaint reads. “They also removed and stored any art that was African or African American themed and stored it where it would not be visible.”
Moreover, the Austin’s had a white friend pose as the property’s owner. This friend, “placed some of her own family photos, depicting her white family” around the house “prior to the inspection.”
The new appraiser valued the home at $1.482 million – 49% more than Miller’s valuation.
Besides the evidence drawn from the second appraisal, the Austins claim that Miller was biased because of the sales comparisons she used in valuing the home. Miller’s comparisons included homes in nearby Marin City, the complaint states, that were not like the Austins’ home but may have been selected because Marin City has a higher Black population relative to the rest of Marin County.
The complaint does not delve into why AMC Links is also being sued besides a sentence stating that the firm failed to review Miller’s valuation to ensure that it met the Appraisal Foundation’s published standards and was not influenced by race.
Appraisal management companies such as AMC Links typically play matchmaker between mortgage lender and appraiser. Federal regulators have envisioned appraisal management companies as a firewall between appraiser and lender.
Fair Housing of Northern California also names itself as a plaintiff, contending that their investigation into the Austin appraisal, “diverted resources, including staff time and financial resources, from other investigations and activities.”
In July, Fair Housing of Northern California filed a complaint with the U.S. Department of Housing and Urban Development on behalf of Cora Robinson, who alleged racial bias against Class Valuation, an appraisal management company, and Thomas Kearney, an individual appraiser.
In addition to officially filed complaints, the Washington Post, New York Times and other widely read publications have anecdotally reported on racial bias in appraisals. However, it is unclear how rampant bias complaints are.
For one, the Department of Housing and Urban Development has repeatedly declined to disclose to HousingWire the number of appraiser bias complaints it has received. In a November interview, Melody Taylor, executive director of HUD’s Property Appraisal and Valuation Equity task force, stated that, “Due to confidentiality filings, HUD does not disclose the complaints we receive.”
HUD has also told HousingWire it does not disclose investigations that are still pending.
In addition to HUD and a few private lawsuits, the Consumer Finance Protection Bureau also receives complaints about appraisers. That federal agency has received 14 such complaints since 2019, though CFPB does not categorize such alleged misconduct as specifically regarding race discrimination.