LoanDepot to Revise Appraisal Complaint Policies Following Settlement with Baltimore Couple

LoanDepot, a mortgage lender, has reached a settlement with Dr. Nathan Connolly and the late Dr. Shani Mott’s estate, resolving allegations of racial discrimination in the appraisal process of their Baltimore home. The settlement, filed in Maryland’s U.S. District Court, includes undisclosed financial compensation for the couple and pledges from loanDepot to modify how it addresses complaints of racially biased appraisals, though it does not admit any wrongdoing or liability.

The dispute began when Connolly and Mott, both Johns Hopkins University professors, were denied a mortgage refinance by loanDepot based on an appraisal they deemed racially biased. The appraisal, conducted by Shane Lanham of 20/20 Valuations, valued their home at $472,000—significantly less than the anticipated value. The couple alleged the low appraisal reflected racial discrimination, given their home’s location in a predominantly Black area adjacent to a wealthier, mainly white neighborhood.

After being denied the refinance based on this appraisal, Connolly and Mott obtained a higher valuation by "whitewashing" their home for a subsequent appraisal by another lender, successfully refinancing their mortgage but at a less favorable interest rate.

The settlement with loanDepot includes policy enhancements such as better notifications for customers about their right to reconsider valuations, standards for free second appraisals, improved training for employees to recognize discrimination, and a commitment to avoid using appraisers previously found guilty of discriminatory practices.

Despite loanDepot’s commitment to these changes, the independent appraiser, Lanham, has denied any wrongdoing and countersued Connolly and Mott for defamation, maintaining his appraisal was not influenced by racial bias. This ongoing legal battle highlights the complexities of addressing alleged racial discrimination in the housing market and the importance of transparent and fair appraisal practices.