No, Appraisers Didn’t Cause America’s Racial Wealth Gap
After years of feckless payouts by insurance companies and corporations, the era of using the courts to harass appraisers for their value opinions has ended.
Last week, a U.S. District Court judge in Maryland threw out a discrimination lawsuit on summary judgment. It was brought against an appraiser by a militant professor at Johns Hopkins University and his wife, who passed away since the filing of the suit. She, too, was a professor at Hopkins.
The Maryland appraiser, Shane Lanham, relied partly on crowdfunding to stitch together a successful defense against the spurious allegations. He received an assist by a key ruling in April in which a U.S. District Court judge in Ohio dismissed a similar meritless discrimination lawsuit against an appraiser. Both lawsuits were based on hunches and disparate-impact quackery. The lawsuits were so flawed as to be shocking.
The two dismissals were a blow to the deep-pocketed housing lobby – the Realtors, homebuilders and lenders – and their captured patrons in government. The housing lobby has sought to delegitimize and sideline third-party appraisers for decades. Cheerleading these lawsuits seemed like a new low, even for this bunch. It was a scorched-earth campaign that inflicted severe harm on random individuals for simply doing their jobs. For a subset of academics and agitators, the lawsuits were about providing justification for radical mortgage-lending policies grounded in the tenets of DEI and critical-race theory.
While the housing lobby may have lost the battle in federal courtrooms, it’s still winning the wider war to subvert long-accepted mortgage underwriting safeguards, like FICO scoring, title insurance, mortgage insurance, downpayments and appraisals.
The campaign began in earnest during Covid under the first Trump administration, was combined with critical-race theory under the Biden administration and has continued, minus the racial-grievance storyline, during the second Trump term. The removal of time-tested mortgage-lending guardrails passes enormous risk onto the U.S. taxpayer while allowing the privatization of profits by large corporations. A largely unexamined byproduct of this has been today’s massive housing inflation.
Lanham, a state-licensed real property appraiser based in Parkville, Maryland, had the misfortune of being assigned to appraise the Hopkins professors’ home on behalf of nonbank lender loanDepot. The lender was also named as a defendant in the professors’ lawsuit, but LoanDepot quietly extricated itself from the lawsuit by paying off the plaintiff what one attorney familiar with the case believes was approximately $400,000. Lanham’s success in getting the case dismissed in summary judgment casts a spotlight on the cowardice of LoanDepot’s settlement with the plaintiff. It left Lanham to defend himself alone. Along the way, Lanham countersued for defamation. His countersuit was dismissed when the judge tossed the main case.
When the Maryland case, known as Connolly and Mott v. Lanham et al, was filed, the Hopkins professors, who were black, alleged Lanham, who was white, had undervalued their home in 2021 due to racial animus when the appraiser’s opinion of value failed to reach the roughly $550,000 necessary to make a refinance work. Both professors had built their academic career around racism, historical grievance and class struggle. Nathan Connolly’s 33-page resumé can be viewed here.
Court filings showed billings by a Washington, D.C., civil rights law firm to be more than $3 million for work done on behalf of the Hopkins professors. Records examined earlier in the year show that over a two-and-a-half-year period, the Beltway law firm Relman Colfax billed 5,411 hours to the case at an average hourly rate of $583 with total expenditures reaching $3.15 million. The source of the funding is rife with speculation.
The Ohio case was known as Daviola-Turner v. Henley Appraisals LLC. The federal judge in that case noted the lack of any factual basis whatsoever for discrimination in claims against the appraiser; the judge dismissed all the plaintiffs’ causes of action as a result. Grasping at all straws, one allegation by the plaintiffs and their crack legal team was that the appraiser had discriminated against one of the plaintiffs because she was a Canadian.
In the Maryland case, it was a surprise to no one that the plaintiffs were affiliated with Hopkins, a hotbed of divisive racial theory over the past few years. Last year, its medical school’s Office of Diversity, Inclusion, and Health Equity issued a “privilege” hit list that consisted of sweeping and offensive generalities and stereotyping of people based only on their skin color. It caused a mutiny among faculty physicians that was only partially quelled by a published apology by the school’s dean. The tension still simmers under the surface.
Wrote Judge Walter Rice of the U.S. District Court for the Southern District of Ohio in the Henley case: “The court is not required to blindly ignore the obvious alternative theory [to the assertions of discrimination]: that Henley honestly thought the property was worth the amount that he appraised it for. Merely stating that Henley discriminated against the Turners is insufficient as a matter of law.”
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I hope Senator John Kennedy is aware of this situation.
It is astonishing that the normal course for complaints was not followed. It is telling, in any case similar to these, when the Plaintiff’s immediately take legal action. Bias has no place in Real Estate Appraisals, Real Estate, or life for that matter. Laws need to be put in place to protect appraisers from false claims of bias. Mr. Lanham’s case never should have made it as far, or as long, as it did. Mr. Lanham also should be able to recover some or all of his financial loss (legal fees and lost revenue), as it was none of his own doing. That is not justice. We all need to get these two legal outcomes out to the media, and ensure it gains the same national attention as the initial suits obtained.