Tenisha Tate-Austin and her husband became suspicious when the Northern California home they spent years renovating was valued by an appraiser far lower than they expected.
So when they asked for a second opinion last year, a White friend pretended to own their home and they removed all artwork and photos that could show that it actually belonged to a Black family.
The new appraisal for their home in Marin County was more than $1.4 million and nearly half a million dollars higher than the previous estimate, they said.
“What that appraisal did is what we were actually asking the appraisers to do, to not consider race, to not consider neighborhoods and or the lines that have been drawn and perpetuated by redlining,” Tate-Austin told CNN.
Racist language is still woven into home deeds across America. Erasing it isn't easy, and some don't want to
Last week, the couple filed a lawsuit in federal court in San Francisco, arguing that racial discrimination played a role in the low valuation of their home.
In their lawsuit, the Austins say, the first appraiser, Janette Miller, who is a White woman, violated the Fair Housing Act when she took into account the family’s race and the racial demographics of the house’s location for her appraisal.
“We shouldn’t have to go through this, we shouldn’t have to have our White friend standing in,” Paul Austin said.
CNN has reached out to Miller and her company, Miller & Perotti Real Estate Appraisals, which has also been named as defendant in the suit, multiple times for comment.
The Austins are seeking financial damages and asked the court to “permanently” ensure that the defendants won’t engage in discriminatory housing practices directly or through others, the lawsuit says.
Homes in largely Black areas valued less
The Austins had spent three years renovating their home. Since 2016, they added a deck, a gas fireplace, renovated the bathrooms, and even increased the total square feet of the home, the couple said.
“We put a lot of time and effort into the house, and that didn’t happen overnight,” Tate-Austin said.
When Miller appraised their home last year, the Austins say she compared their home to those in areas with a significant Black population, according to the lawsuit.
The population in Marin County, where they live, is more than 85% White, according to the US Census Bureau.
When a Black homeowner concealed her race, her home's appraisal value doubled
Research has shown that homes in largely Black neighborhoods are valued less than homes in mainly White areas, even when housing type and income of the areas are the same. In the average US neighborhoods where the share of the population is 50% Black, homes are valued at roughly half the price of homes in neighborhoods with no Black residents, according to recent research from the Brookings Institute.
Homes in majority Black neighborhoods in the US have been undervalued by an average of $46,000 over nearly a decade, according to an analysis by Redfin. The firm looked at more than 73 million single-family homes listed and sold between January 2013 and February 2021 and found a major gap between houses sold in Black and White neighborhoods.
Other homeowners are hiding their race
Like the Austins, there have been others families of color who recently have concealed their race or identity when getting their home appraised.
In Indianapolis, a Black woman previously told CNN she did not reveal her race or gender on an application when arranging for an appraisal. She kept communication to email and told the appraiser that she would be out of town and her brother would be at her home during the appraisal. Then a White friend posed as her brother and met the appraiser instead of her.
The appraised value more than doubled – it had been her third appraisal – and it led her to file a Fair Housing complaint against the lenders and appraisers she had worked with alleging racial discrimination.
The Austins said they took a chance at “white washing” their home because they knew of the discrepancy in home appraisals and they how they are not the first family who have received a lower home estimate.
The couple and their attorneys continue litigating their case but said they wanted to speak up to encourage other families of color to fight if they think their property is worth more.
“Hopefully, at the highest level we can start seeing systemic change and people being held accountable for devaluing Black and Brown lives, because that’s essentially what they did to us,” Paul Austin said.
1/19/2022 in News & Media, NFHA News, Press Releases
Groundbreaking Report Identifies Bias and Systemic Barriers in Real Estate Appraisals
FOR IMMEDIATE RELEASE
January 19, 2022
Media Contact: Izzy Woodruff | 202-898-1661 | IWoodruff@nationalfairhousing.org
Groundbreaking Report Identifies Bias and Systemic Barriers in Real Estate Appraisals
The federally-funded report produced by the National Fair Housing Alliance and its partners raises serious concerns about the standards and criteria related to the appraisal of residential real estate, which often represents a family’s largest asset.
Washington, D.C. — Racial discrimination in home appraisals continues to affect Black and Latino homeowners throughout our country, and a new federally-commissioned report from the National Fair Housing Alliance (NFHA) identifies recommendations to address this crisis. Documented instances of appraisal discrimination along racial lines in California, Florida, Colorado, Indiana, and other areas are reflective of practices that restrict housing and lending access for families of color nationwide. Conducted by NFHA, Dane Law LLC, and the Christensen Law Firm (the “NFHA Consortium”), the “Appraisal Standards and Appraiser Criteria report” is the most comprehensive review of bias in the appraisal industry to date, and it presents a roadmap for Congress, regulators, advocates, and the industry to address the nation’s long legacy of bias in the valuation of real estate and build a future in which a family’s most valuable asset is treated fairly.
The comprehensive and independent review by the NFHA Consortium was commissioned by the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council and managed by the Council on Licensure, Enforcement and Regulation. The goals of the report included an assessment of whether the Uniform Standards of Professional Appraisal Practices (“Appraisal Standards”) and Appraiser Qualifications Criteria (“Appraiser Criteria”) encourage or systemize bias and that both consistently support or promote fairness, equity, objectivity and diversity in both appraisals and the training and credentialing of appraisers.
“Our report details a comprehensive analysis of structural challenges in Appraisal Standards and Appraiser Criteria that impacts every homeowner in the U.S.,” said Lisa Rice, President and CEO of NFHA. “It also highlights the deep inequities and systemic issues of bias in the appraisal industry that restricts homeownership and important lending opportunities for people of color. While we’ve done the work of identifying the obstacles and outlining a number of fixes, we call on federal regulators, Congress, the industry, and fellow advocates to work together to enact the meaningful changes called for in our report. Any entity with a role in the appraisal process has a responsibility to help address these inequalities.”
The report’s recommendations are outlined below:
Governance of the Appraisal Industry
Due to the important role appraisals play in the residential housing market and consumers’ financial situations, the Appraisal Foundation’s legal authority should be considered for further review.
The Appraisal Foundation should take steps to enhance inclusiveness and ensure the voices of civil rights and consumer advocates are included in a meaningful way on their board of trustees and in their rulemaking procedures.
Gaps in Fair Housing Requirements and Training
The Appraisal Standards Board should revise the Uniform Standards of Professional Appraisal Practice (“Appraisal Standards”) to clearly state that discrimination in appraisals is prohibited.
Fair housing training ought to be required for every appraiser to obtain, and maintain, their credentials.
The Appraisal Foundation should work with civil rights experts to develop comprehensive fair housing training in required initial and continuing education courses. The fair housing training module in the current 2022-2023 USPAP Standards continuing education course should be revised immediately to ensure the training is comprehensive and accurate.
The Appraisal Foundation should work closely with the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, the Federal Housing Finance Agency, and other regulators and enforcement agencies to develop, improve, and implement fair housing training.
Barriers to Entry to the Appraisal Profession
The Appraiser Qualifications Board should work with civil rights experts and other stakeholders to analyze barriers to entry to the appraisal profession and identify disparate impacts on potential appraisers of color.
Given the deep racial and gender disparities in the industry, consideration should be given to amending the appraiser qualification requirements, including the Supervisory Appraiser criteria, to ensure women and people of color can gain the training and practical experience needed to become certified and/or licensed appraisers.
The Appraisal Foundation should continue and expand outreach to women and individuals of color, ensure the demographics of those entering the profession are transparent, and provide new professionals with the tools they need to be prepared for the future with respect to the use of new technologies in the field.
Compliance and Enforcement
The report identified a need for additional data to help reform the appraisal industry. Government entities, Fannie Mae and Freddie Mac, along with others in the industry should work collaboratively to release appraisal data sets to help reduce bias and develop better compliance and monitoring systems.
Government Sponsored Enterprises (GSEs), lenders, appraisers, civil rights, and consumer advocates should use data science tools to develop more robust compliance management systems to prevent and remedy fair housing violations in appraisals.
The Appraisal Standards Board should consider amending USPAP Standards to require appraisers to identify mortgage borrowers as “intended users” of appraisals.
The Appraisal Foundation, government entities, GSEs, and lenders should develop standards and guidance for appraisers regarding the Reconsideration of Value process to provide for fairness, transparency, and accountability.
Click here to read ASC’s statement on the report.
Click here to read the full report.
Click here to read the Appraisal Study Overview.
For years, NFHA has led the fight against racism and other forms of discrimination in home appraisals. In February 2021, NFHA called on the Federal Housing Finance Agency to address the specific issues in appraisal policy that cause race-based discrimination.
The National Fair Housing Alliance (NFHA) is the country’s only national civil rights organization dedicated solely to eliminating all forms of housing and lending discrimination and ensuring equal opportunities for all people. As the trade association for over 170 fair housing and justice-centered organizations throughout the U.S. and its territories, NFHA works to dismantle longstanding barriers to equity and build diverse, inclusive, well-resourced communities.
The full report can be found here: https://nationalfairhousing.org/wp-content/uploads/2022/01/2022-01-18-NFHA-et-al_Analysis-of-Appraisal-Standards-and-Appraiser-Criteria_FINAL.pdf
A Systemic Problem
● While the many individual stories have captured national headlines, the analyses of systemic
bias are even more stunning and disturbing. Recent studies contain the following findings:
○ Researchers at Freddie Mac analyzed millions of appraisals submitted for purchase
transactions and found racial disparities in the percentage of properties that received an
appraisal value lower than the contract price the (“appraisal gap”), despite controlling
for other factors. Specifically, the research showed that an appraisal gap is more likely
to occur in Black or Latino census tracts than White census tracts.
○ For example, Freddie Mac’s researchers reported that 12.5% of the properties in Black
census tracts received an appraisal value lower than the contract price, as compared to
7.4% of the properties in White census tracts– meaning there was a nationwide racial
“appraisal gap” of 5.2%.
○ Homes in majority Black neighborhoods were valued 23% less than properties in mostly
White neighborhoods, even after controlling for home features and neighborhood
amenities, as found by a 2018 Brookings Institution study of homeowner estimates and
○ Neighborhood racial composition was an even stronger determinant of a home’s value
in 2015 than it was in 1980, according to a 2020 academic study of homeowners’
estimates from 1980 to 2015.
○ The Federal Housing Finance Agency recently found that thousands of appraisal reports
contained race-related and other inappropriate information including identifying the
racial composition of neighborhoods and areas that serve “Jewish Households” as well
as describing areas as having an “Asian influence.”
○ The appraisal profession does not reflect the racial composition of the U.S. According to
the U.S. Bureau of Labor Statistics, about 96.5% of property appraisers are White and
about 70% are men.