At Federal Agency, The Mayhem Is the Message

Ken Mullinix Has Become a Figure From a Kafka Novel

Mullinix has become a student of the “Title VIII Complaint Intake, Investigation, and Conciliation Handbook (8024.1).” The handbook is designed to protect citizens from overzealous federal workers. He found section after section had been violated in his own investigation by the HUD contractor. 

Czech-German author Franz Kafka wrote “The Trial” in 1915. The novel is a reflection on bureaucracy, power and absurdity. Its protagonist, Josef, is arrested and prosecuted by a mysterious and inaccessible authority for a crime that is never revealed to him or the reader. It’s a man’s journey through an incomprehensible and dehumanizing landscape.

Ken Mullinix has become a figure from a Kafka novel. He’s collateral damage in a campaign by a ponderous U.S. Department of Housing and Urban Development that pits the might of a nearly 10,000-employee federal agency wielding $214 billion in budgetary resources against a private citizen for rendering an unpopular opinion.

In the yearslong process, Mullinix, who has been a real property appraiser in Southern California for 35 years, has learned that the agency may be violating its own policies in the way it is carrying out its investigation of him. He believes about 300 appraisers are ensnared in similar HUD probes based on frivolous complaints by questionable complainants using nonprofits as surrogates and contract investigators not subject to Title 5 conflict-of-interest constraints. These constraints otherwise apply to all federal employees.

The contractors have HUD email addresses and are indistinguishable from federal employees, said Mullinix.

He believes these investigations are simply designed to intimidate independent state-licensed appraisers, who, he contends, are caught in a supercharged political atmosphere and being blamed for simply doing their jobs, which occasionally involves delivering an opinion of value that costs a broker his commission or upsets a borrower. He believes delegitimizing and marginalizing appraisers is the point. As with title insurance, the Biden administration wants to nationalize these activities.

HUD has been signaling to commissioned real estate salespeople, employees at nonbank lenders, disgruntled borrowers and HUD-affiliated groups to bring them appraisers for dubious discrimination cases. Last year, HUD posted notice in the Federal Register it wished to allow convicted felons – white-collar criminals and perjurers – to become “discrimination testers.” You can read the rulemaking here.

Many of the complaints against appraisers, Mullinix said, seem to come in cases where value opinions don’t rise to levels that make transactions work. There are also complaints, like the one against him, that appear to be stage-managed by outside actors.

Mullinix has become a student of the “Title VIII Complaint Intake, Investigation, and Conciliation Handbook (8024.1).” The handbook is designed to protect citizens from overzealous federal workers. He found section after section had been violated in his own investigation by the HUD contractor.

“For example, the handbook requires the HUD investigator to explain the entire procedure to the respondent at the outset of any investigation,” he said. “This never occurred in my case.”

There’s a pathway, he has learned, to file a counter-complaint. There’s the HUD Office of Inspector General, there is his member of Congress representing California’s 47th District, there are public-interest pro bono law firms such as the Pacific Legal Foundation, the Institute for Justice and the New Civil Liberties Alliance.

He takes inspiration from Shane Lanham, the Maryland appraiser who is taking the fight to a pair of ethnic-studies professors at Johns Hopkins University who, along with their lawyer, have caused his name to be tarnished on a national scale for alleged discrimination – only because his opinion of value did not rise to the professors’ expectation of what their home was worth. Lanham is both defending himself from these baseless allegations and prosecuting a defamation case against the professors. You can contribute to his GoFundMe page here.

But back to Mullinix. He has become a full-time defendant in a system in which the process itself is the punishment. It’s a scorched-earth campaign. The full might of a federal agency turned on a mom-and-pop appraiser who is paid to render opinions of value.

“I take great pride in my work and adhere strictly to the highest standards of professionalism and ethics,” he said. For three years, he has been working full time to clear his name. He’s a professional defendant with the full might of a federal agency arrayed against him.

Jeremy Bagott
Jeremy Bagott

Jeremy Bagott

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

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7 Responses

  1. Avatar Pat Turner says:

    As always, damn good job!
    Is there a way to employ this to correct these overzealous prosecutions of appraisers?

  2. Avatar Honest Appraiser says:

    The King Cobra strikes again !! Thanks for your wok Jeremy – and others. Maybe one of these days somebody in a position of power will realize how badly the Independent Fee Appriaser has been kicked under the bus while AMC’s are pocketing $Millions without disclosure. Truth in Lending ?? I think not.

    • Baggins Baggins says:

      Yeah. Several theories on this point. I’ll post a short essay after a while after others have had a fair chance to comment. Mr Bagotts articles are a real game changer. Top notch journalism. Thank you.

  3. Avatar Eric Kennedy says:

    Updates on the Lanham case – from Mr. Lanham gofundme page ” Hello everyone. If you haven’t heard, or read, my co-defendant, LoanDepot, has decided to settle their case out of court. I want everyone to know that this does not affect my position as I still intend to take my cases, both defense of the accusations against me and prosecution of the defamation suit, to trial. The wife of the couple suing me has passed away from cancer and this will extend the timeline of the discovery portion and depositions as the prosecution/defense have asked for an extension on these matters. This means the case will likely carry on into 2025, though I will keep my fingers crossed that it doesn’t. When I have something new & noteworthy to update on, I will let you know.” Pretty good turnout here

  4. I have some familiarity with Ken’s case. He has or has had an E&O attorney representing and advising him. I dont typically comment on members cases, but bringing this into the public eye was his decision.

    AGA cannot get between a Member, and their attorney. We did not do so in this instance. WE are not attorneys and do not offer legal advice. We have the ability to read though.

    Most HUD Bias complaints used to ‘clear’ within six months to a year.

    HUD has made numerous improper demands of Ken regarding submission of other, unrelated work. Being the law abiding, sincerely concientious appraiser that he is, Ken complied with all the HUD requests (initially) because HUDs initial letter hints or suggests that federal law obligates him to comply with document and records production.

    I do not understand why any attorney would recommend that their client voluntarily provide HUD with copies of all their work performed over a six-month (or longer ) period of time.

    Its clearly a fishing expedition. One that any halfway competent attorney should see through.

    The specific law HUD cites in their initial complaint notification letter does NOT obligate the appraiser to provide ANY information. Not even for the case involved.

    Read the law for yourself if you receive such a letter. The LAW being cited merely authorizes HUD to seek VOLUNTARY cooperation. It does not in any way mandate compliance.

    HUD has the ability to subpoena records. PROVIDED that they can convince a judge that the records being sought have reasonable relevance, AND that they are entitled to receive them for some lawful purpose beyond intimidation.

    I carefully reviewed the specific appraisal in question. Ken did absolutely nothing wrong that would hint at, let alone support an accusation of appraisal bias. Nothing!

    In my opinion, most of his peers would concur it’s a pretty good appraisal report beyond NOT being biased.

    IF HUD’s non-appraiser ‘investigator’ pretends to have found any indication of bias, then it is only found in the investigator’s imagination.

    On the contrary, it is HUD’S former Secretary Marcia Fudge who has used specifically racist/biased language in her published Official HUD Strategic Plan where she brags that certain new programs and efforts will be beneficial, …”especially for People of Color.”

    Perhaps that and other racially biased actions are why she has resigned.

    A side NOTE to all appraisers. Keep in mind that E&O attorneys NEVER plan or prepare to fight agaisnt accusations in court. Their entire philosophy and that of their employers (E&O insurers) is to ‘settle’ cases. Like the California case in Mill Valley.

    They also operate on a limited ceiling fee-meter. There is only so much money E&O insurers will spend on a case. When that point is reached, the settlement-oriented attorneys want to get paid.

    Its not likely they are looking to PROVE an appraiser’s innocence or to insist the other side PROVE guilt or culpability.

  5. This appraiser has been dealing with this for THREE years? Thats pathetic and HUD should be ashamed of themselves, as should the federal government! And where is the support of the regulators and all those appraisal organizations that claim they do something for appraisers.

    This is just sickening!!!


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At Federal Agency, The Mayhem Is the Message

by Jeremy Bagott time to read: 3 min