Marin appraiser sued for alleged race discrimination

Click here to read the article in the Marin Independent Journal.

By RICHARD HALSTEAD | [email protected] | Marin Independent Journal
PUBLISHED: December 6, 2021 at 6:17 p.m. | UPDATED: December 8, 2021 at 7:28 a.m.

Fair Housing Advocates of Northern California and a Marin City couple have sued a San Rafael appraiser in federal court for alleged race discrimination.

Paul Austin and his wife, Tenisha Tate-Austin, both of whom are Black, were surprised when the appraisal of their home in February 2020 came back $455,000 lower than an appraisal done in March 2019.

The Austins sought the appraisal because they wanted to take advantage of lower interest rates and obtain additional funding to complete home improvements.

Janette Miller of Miller and Perotti Real Estate Appraisers conducted the second audit and is named as a defendant in the suit along with AMC Links LLC, which hired her to do the job at the request of the Austins’ mortgage broker.

“We believe that Ms. Miller valued our house at a lower rate because of our race and because of the current and historical racial demographics of where our house is located,” Austin said. “The sales comps that the appraiser chose to use were unsuitable and were guaranteed to lower the value of our house.”

To test their suspicion of discrimination, the Austins sought another appraisal. This time they took steps to ensure that the appraiser would not know that they are Black.

They packed away their family photos and removed any art that was African or African American. They also had a White friend greet the appraiser as if she was the homeowner when the appraiser visited the house.

“The fact that there was nearly a half a million dollar bump in value after they erased themselves from their home is very strong evidence, we believe, of race discrimination,” said Julia Howard-Gibbon, a lawyer for Fair Housing Advocates of Northern California.

Neither Miller nor AMC Links responded to requests for comment Monday.

The suit makes clear that there were important differences between the way the two appraisers, both hired by AMC Links, arrived at their valuations.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, mortgage lenders and brokers are no longer allowed to employ or contract with an appraiser directly. They must instead contract with management companies such as AMC Links that hire independent appraisers.

“We also believe that the (first) appraiser took race into account when she valued the home by comparing it to sales primarily in Marin City,” Howard-Gibbon said, “rather than a larger radius around the home.”

The suit asserts that appraising a house in Marin City using comparisons of other property sales located exclusively or primarily in Marin City results in a skewed and race-based valuation of the property.

“Marin City has a long history of undervaluation based on stereotypes, redlining, discriminatory appraisal standards, and actual or perceived racial demographics,” the suit states. “Choosing to use comps located in Marin City means that the valuation is dictated by these past sale prices, which were the direct product of racial discrimination.”

When doing her sales comparisons, Miller used three properties in Marin City, two in Mill Valley and one in Sausalito. The second appraiser used two properties in Marin City and six in Sausalito.
“Pulling comps within the neighborhood of the home and near the home isn’t in and of itself problematic, if there are recent comparable sales,” Howard-Gibbon said.

The suit asserts this was not the case. It quotes Miller as writing in her appraisal that she based her valuation on five years of Marin City homes sales, where no one year had more than four sales. As a result, the suit says, Miller’s opinion is fundamentally flawed because of the small number of home sales per year.

The suit also identifies other problems with the approach that Miller took. It says Miller’s market analysis was dated, looking at no sales more recent than 2008. It faults Miller for lowering the valuation per square foot on the houses located outside of Marin City that she used for comparison purposes.

“Miller opined that she looked at several years of data and determined that houses in Marin City were worth ‘conservatively’ 25% less per square foot than those in ‘surrounding areas,'” the suit alleges.
The suit asserts that two of the three Marin City homes used in the sales comparisons were unlike the Austins’ home.

A Brookings Institution study released in 2018 reported that houses in majority Black neighborhoods in U.S. metropolitan areas were appraised for 23% less than properties in mostly White neighborhoods, despite having similar quality and amenities.

The response from appraisers at the time was that their job is to assess local market conditions, not to create the conditions.

The plaintiffs in the Marin City suit are seeking an unspecified amount in compensatory damages, statutory damages and punitive damages, in addition to attorneys’ fees and expenses.

According to the suit, the Austins have suffered “emotional distress with attendant physical injuries, and violation of their civil rights.” The plaintiffs have requested a jury trial.
​
The case has been assigned to U.S. District Court Judge Joseph Spero in San Francisco. The defendants have not filed responses and have no attorneys listed in the court docket.
An initial case management conference is scheduled for March 4.