Judge finds plausible race discrimination in Black couple’s lawsuit over lowball appraisal
The appraisal suddenly shot up to $1.4 million when a white stand-in posed as the owner.
SAN FRANCISCO (CN) — A Black couple claiming their home was drastically undervalued by a white appraiser can move forward with a claim for race discrimination, a federal judge ruled in a case that has drawn the Justice Department’s attention.
Tenisha Tate-Austin and her husband Paul spent years renovating the Marin City home with views of the San Francisco Bay which they bought in 2016. They added 270 square feet of living space to the ground level and adding a deck and a gas fireplace to the upstairs. They also built an in-law unit on the property, equipped with a kitchen and bathroom. After refinancing their home several times to finance the revamp, they decided to refinance one more time in 2020 to take advantage of low interest rates and pay for the additional unit.
Appraiser Janette Miller with Miller and Perotti Real Estate Appraisers was hired by appraisal services company AMC Links to do the inspection in January 2020.
The Austins’ lawsuit, filed this past December, claims Miller valued their home at $995,500 — an amount their complaint calls “erroneously low” considering their home appraised for $1.4 million in 2019.
The couple’s lawsuit quotes from Miller’s report, which appears to attribute her lowball appraisal to declining home values in Marin City following the Great Recession and foreclosure crisis of 2007-2008.
But the Austins note Marin City experienced higher foreclosure rates than other predominately white areas, which is “directly linked to the history of redlining, segregation, discrimination, and lack of access to credit in such communities.” Though more than 10 years have passed since then and home values have rebounded completely, they say Miller insisted on using outdated market trends to disproportionately devalue Marin City homes.
The couple enlisted a white friend to stand in for them during a second appraisal, “white-washing” their home to remove family photos and African art from the walls. The friend replaced the photos with those of her own family. Lo and behold, the home appraised for $1,482,500.
Their lawsuit, in which they claim violations of the federal Fair Housing Act and California Fair Employment and Housing Act, drew a response from the U.S. Department of Justice, which filed a statement of interest in the case urging U.S. District Judge Maxine Chesney to hold that the FHA applies to discriminatory appraisals and that individual appraisers should be held liable for discrimination under the law.
Ruling Wednesday on a motion to dismiss by Miller and her firm, Chesney found the Austins made plausible claims of disparate treatment, and that race may have been a “motivating factor” in Miller’s appraisal.
She dismissed the Austins’ claim for discriminatory housing practice under Section 3604(a) and (c) of the Fair Housing Act, which makes it illegal to refuse to sell or rent to someone based on their race, or to advertise a dwelling indicating a racial preference. Chesney sided with the Miller firm on that claim since the Austins already own their home.
However, she found the appraiser could be held liable for a discriminatory real estate transaction since Paul Austin was at his home and the Austins’ family photos were on display while Miller performed the inspection.
Attorneys for the appraiser did not respond to emails seeking comment late Wednesday.
Liza Cristol-Deman, an attorney representing the Austins and their co-plaintiff, the nonprofit Fair Housing Advocates of Northern California said they are still reviewing Chesney’s ruling, but are happy that the judge found that anti-discrimination laws apply to home appraisals.
“We are pleased with Judge Chesney’s order recognizing that the Fair Housing Act and other civil rights laws prohibit discrimination based on race in the home appraisal process,” Cristol-Deman said in an email. “We look forward to pursuing the case with the ultimate goal of finding justice for the Austin family and Fair Housing Advocates of Northern California.”
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