On Monday July 15th, 2024, the U.S. Department of Housing and Urban Development (HUD) announced that they have charged multiple organizations, including Rocket Mortgage and Maverick Group, with housing discrimination because of a biased appraisal in Denver, Colorado in a press release.
The HUD alleges that Maverick Appraisal Group and lender Rocket Mortgage have discriminated against a female Black homeowner by undervaluing her property.
According to the statement, “When the homeowner complained to Rocket Mortgage, Rocket Mortgage would only proceed with her refinance loan application based on the appraised value that she alleged was discriminatory.”
The Fair Housing Act forbids individuals and organizations from discriminating in real estate transactions because of race, and prohibits retaliation towards individuals who report violations.
“Homeownership is crucial to build both generational wealth and housing stability for Black and Brown families. HUD will continue to vigorously enforce the Fair Housing Act against those who seek to limit the financial returns associated with homeownership because of race or any other protected characteristic,” said Diane M. Shelley, HUD’s Principal Deputy Assistant Secretary for Fair Housing and Equal Opportunity.
Housing Discrimination Contributing Factors
The Colorado woman who filed the complaint resided in a predominantly white area of Denver, Colorado. According to court documents, an earlier propoerty appraisal was 25% less than an appraisal that had been done just 8 months earlier, despite the fact that the owner had made updates and renovations between the appraisals.
The court docket also notes that at at the time of the second appraisal, the owner had photos of her and her Black family throughout the house, and Black Lives Matter signs in their yard. Part of the appraisal process is to benchmark the property’s against similar properties in the area.
The appraiser inexplicable skipped over similar complexes and subdivisions that were in closer proximity to the evaluated property to use as a comparison, using property values from further, predominately Black neighborhoods. The same appraiser had evaluated neighboring properties more favorably when the owners were White.
Less than 5% of the total population in Colorado is Black, which is a little over 200,000 individuals according to the U.S. Census Bureau. The Census also provided that 40% of the Black population in Colorado are homeowners.
When the woman approached Rocket Mortgage with her claims of discrimination, she was told she could only use the loan application she was appraised for, which was declined shortly after.
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The Case Moves Forward
The case is now appearing in court in front of a United States Administrative Law Judge. If the judge finds HUD’s claims to be true, the woman may win compensation to cover discrimination-related losses.
“The Fair Housing Act protects all of us from discrimination throughout the process of buying a home or securing a home loan,” said Damon Y. Smith, HUD General Counsel. “As this charge demonstrates, HUD is committed to ensuring that no one is denied a home or a mortgage because of a discriminatory appraisal.”
