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Oakland homeowner alleges appraiser bias

Complaint filed with HUD says appraiser, appraisal management company and two lenders flouted the Fair Housing Act

An Oakland homeowner says the home valuation process failed her due to the color of her skin, according to a complaint filed with U.S. Department of Housing and Urban Development. Cora Robinson, who is Black, claims that appraiser Thomas Kearney violated the Fair Housing Act by undervaluing her home by over $400,000. Kearney’s valuation, the complaint claims, is based on comparing Robinson’s abode to far-flung Black-owned homes in Oakland instead of white-owned domiciles in the surrounding neighborhood.

Robinson also names as a defendant Class Valuation, an appraisal management company. Two mortgage originators – Kind Lending and Home Point Financial Corporation, a holding company for wholesale lender Homepoint – are additionally accused of violating federal anti-discrimination law.

The complaint was filed last week, and Robinson’s legal counsel at Fair Housing Advocates of Northern California provided a copy. The document provides a rare look into an appraisal gone wrong due to alleged racial bias; a charge that has been anecdotally floated in a raft of news articles over the past year.

Robinson’s situation also provides a glimpse into Oakland’s stunning cost of living growth. Oakland home prices climbed 113% in the last decade, according to PropertyShark.

Hoping to take advantage of these skyrocketing property values plus low interest rates, Robinson engaged with a mortgage broker on a refinancing application for her property, a duplex that her family has owned for decades. The mortgage broker, who was unnamed in the complaint, applied with Homepoint to refinance the mortgage.

Per the complaint, Kearney, an appraiser at Kearney & Associates in Clayton, California, met Robinson at her home last August, and wrote an appraisal report that, “Undervalued the home at a value of $800,000, which is $439,000 less than the amount another appraiser valued the property at six months later.”

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Like most appraisers, Kearney relied largely on the appraised value of comparable homes to reach his figure. Here, Robinson claims that the comps were all “South of the subject property, which is an area that has a higher percentage of Black residents and has been historically undervalued.”

Robinson requested a second opinion, but Home Point “Ignored the issues with the appraisal and denied Ms. Robinson’s refinance loan application,” the complaint said.

A Homepoint spokesperson responded with an email: “We are aware of the matter, and while we are unable to comment on specifics, we take all consumer complaints and our fair housing obligations seriously. Homepoint is diligently working toward an appropriate resolution.”

In October, Robinson went to another lender, California-based Kind Lending, who organized a new appraisal with Class Valuation, a Troy, Michigan-based company that serves as a matchmaker and administrative middleman between lender and appraiser. Class Valuation allegedly assigned none other than Kearney “to appraise the subject property for a second time, three months after his first appraisal, despite that Ms. Robinson requested a review of valuation following his first appraisal.”

The complaint alleges that Kearney didn’t visit the property for his second go-around, though he did tack on $25,000 extra to the valuation, penciling it out at $825,000.

Robinson, who at this point had selected a new mortgage broker, complained about Kearney to Kind Lending, according to the legal filing. But the mortgage financier allegedly, “Ignored the issues of the appraisal and denied the refinance loan due to the low appraisal value.”

Numerous messages left with Kearney were not returned. A spokesperson for Kind told HousingWire that its company policy “is not to comment on regulatory complaints.”

Class Valuation responded with a statement that the company, “Has been unnecessarily named and we are confident our request to be dismissed from the complaint would be granted.”

Robinson did eventually get her home refinanced this February with an undisclosed lender after a $1.239 million valuation from an undisclosed appraiser.

How long Robinson may pursue her claims against the multiple defendants is unclear. Also unclear is how vigorously the Joe Biden administration may investigate Robinson’s allegations.

A spokesperson at HUD confirmed receipt of the complaint but did not provide any documentation filed with the federal agency or provide an update on HUD’s investigation.

In May a HUD spokesperson told HousingWire, “There are a number of cases before HUD related to bias in appraisals. We do not disclose the complaint and responses provided by the respondent while an investigative matter is still pending at HUD.”

The federal agency is scheduled to address the appraisal bias issue Thursday afternoon with a virtual event, “Advancing Equity in the Home Valuation Process.” HUD Secretary Marcia Fudge is slated to provide opening remarks.

“Bias in the home valuation process,” reads the agency’s website, “Including human bias, algorithmic bias, and lender redlining hinders wealth creation and contributes to the racial wealth disparities in the United States.”

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