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More Black Americans Call Out Housing Appraisal Process As Discriminatory

RACHEL MARTIN, HOST:

After getting two low appraisals for a home she was trying to refinance, an Indianapolis homeowner is fighting back. She wondered if the appraisals were based on her race. So she designed a way to test for discrimination in the housing appraisal process. From member station WFYI, Jill Sheridan reports.

JILL SHERIDAN, BYLINE: Carlette Duffy's tidy, three-bedroom home close to downtown Indianapolis is in a historic Black neighborhood. It's been completely renovated and sits across the street from a park in lush green space. She bought it four years ago for $100,000.

CARLETTE DUFFY: My house is my forever home. I love my neighborhood. I love my home.

SHERIDAN: With a hot housing market and low interest rates, Duffy wanted to refinance her mortgage to help fix up another home for her daughter. The first appraisal came back at $125,000. And she was shocked. A recent independent market analysis had estimated her home at $187,000. So she tried again.

DUFFY: And then to get the second one and it's $15,000 lower just a few months later. I just could not fathom - you know, there was this nagging voice in my head that was saying that there is something wrong.

SHERIDAN: Duffy had a theory and wanted to put it to the test. When she applied for refinancing with a new lender, she left her race and gender off the application. One of her friend's husbands, who is white, agreed to stand in during the third appraisal. Before he did, she took out everything that might indicate her race and left her home. She got another shock when she got that appraisal back.

DUFFY: I scrolled so fast. And I was just, like, holding my breath, scrolling and getting to the bottom of it to see the number. I'm just like, I don't even want to read it just yet. I just want to see the number.

SHERIDAN: The number - 259,000 more than double the original appraisal.

DUFFY: And then it just sinks in. It just set in that what was devaluing my home was me.

SHERIDAN: Carlette Duffy filed a complaint against two of the lenders with HUD. Neither would comment for this story. But the appraiser with the lowest estimate, Tim Boston, stands by his report.

TIM BOSTON: Any time I put a report out, I prepare with the intention of having to defend that report before a group of my peers. It's all data driven. So it's inherent in the data. And I wouldn't know how to change that.

SHERIDAN: A number of studies have found that Black-owned homes are undervalued when compared to those of white homeowners. This is especially true in historically Black neighborhoods. A study by the Brookings Institution finds that adds up to 156 billion in cumulative losses for Black homeowners. Amy Nelson heads the Fair Housing Center of Central Indiana and says local and federal policies that perpetuated racial segregation in the early 20th century play into the continued disparity.

AMY NELSON: It was the appraisal industry at the time that supported the very redlining maps that redlined Carlette's neighborhood and so many Black neighborhoods in our city.

SHERIDAN: Nelson says while it's hard to determine how prevalent the problem is, examples of racial bias and discrimination in the appraisal process have been discussed for years.

NELSON: Just a growing number of Blacks and African Americans saying something's wrong here.

SHERIDAN: There also may be a growing desire to address this issue. HUD recently decided in favor of a complainant in a similar appraisal discrimination case. In a written statement, the American Society of Appraisers says it supports a focus on why Black homes are devalued. It adds that more education for appraisers and a more diverse workforce could be part of the solution. For NPR News, I'm Jill Sheridan.

(SOUNDBITE OF FEVERKIN AND YONDERLING'S "SUNROOM") Transcript provided by NPR, Copyright NPR.