Connolly and Mott v. Lanham, 20/20 Valuations, and loanDepot.com, U.S. District Court, Maryland. This is one of the appraisal discrimination cases that has received significant attention – among appraisers, the media and government agencies. A Black couple in Baltimore – Dr. Connolly and Dr. Mott, both university professors – filed suit in August 2022 alleging racial discrimination against loanDepot.com and the appraiser it engaged to appraise their home for a refinance. They alleged that the appraiser had taken in account their race in his valuation of their home in violation of the federal Fair Housing Act and other laws prohibiting discrimination. The defendant appraiser valued their home at $472,000; a second appraiser later valued it at $750,000 after the couple “whitewashed” the residence and had a white friend stand-in for them.
Significant developments have occurred in the case.
Dr. Shani Mott’s passing. As the New York Times reported today, Dr. Shani Mott passed away on March 12, four days before her 48th birthday after a battle with cancer. The Times reported that Dr. Mott had entered Hospice care in January, and that just two weeks before passing away, she had given an eight-hour deposition in the case, while sitting in a wheelchair and breathing from an oxygen tank. Whatever observers may think about the claims or appraisals in the case, that Dr. Mott would participate in a deposition as she neared death, I think, speaks to a strong, genuine personal belief by the couple in the merit of their claims.
The person conviction she showed in her claims is something I’ve observed as a defense attorney in other appraisal discrimination cases – as a general matter, people who bring appraisal discrimination claims sincerely believe they’ve been discriminated against and harmed. Even though appraisers largely believe that such discrimination does not exist to the extent portrayed by federal regulators (the PAVE Tax Force) and though I personally believe the individual appraisers I’ve represented have not engaged in intentional discrimination, there is still real work to done – to win over of the confidence of both borrowers and regulators.
Settlement with loanDepot.com. The second development in the case is that on March 22, 2024, the attorneys for Drs. Connolly and Mott and for loanDepot.com filed a settlement with the court. There is a monetary component – which is confidential. More significantly, loanDepot.com agreed to an extensive revamping of: (a) its reconsideration of value practices; (b) fair housing/non-discrimination training requirements; (c) statistical tracking of appraisal outcomes; and (d) training and contractual requirements for AMCs and appraisers.
There are key takeaways for other lenders and AMCs to learn from the settlement agreement. I’ll discuss those takeaways in a future post. For now, you’ll find a full copy of the settlement agreement here: Connolly-Mott-loanDepot.com Settlement Agreement. It’s a good map for some of the policies, practices and actions that I’ve been helping lenders and AMCs with in regard to fair housing and appraisal bias issues.
The settlement does not include the defendant appraiser. That part of the case will proceed for now, with a trial scheduled later this year.
Thank you, Peter Christensen
