mortgage bankers association (MBA) filed an amicus brief on Friday consumer financial protection bureau (CFPB) and Department of JusticeInterest in setting a liability standard that would apply to lenders in cases of alleged bias by third-party appraisers.
Thank you for reading this post, don't forget to subscribe!The mortgage trade group said it was concerned that the CFPB and DOJ would hold lenders liable for the actions of an appraiser who is neither an employee nor an agent of the lender, a reference to a case in US District Court in Maryland in which an appraiser , Shane Lanham, as well as the lender being sued, loandepotRelating to alleged racial bias.
Due to regulations put in place after the Great Financial Crisis, lenders subcontract appraisals to third-party appraisal companies, which are independent and provide an appraisal that often determines whether a loan is funded.
“Our members have a substantial interest in this matter because there is no existing legal right to hold the lender liable for the acts of a third-party appraiser. In fact, the liability that exists would unreasonably interfere with the independent judgment of the appraiser.” have to do,” said Bob Brockschmidt, MA’s president and CEO. “We disagree with the CFPB and DOJ’s statement that seeks to increase liability to lenders for bias resulting from the use of independent appraisers.”
The amicus brief filed with the court does not address the allegations made by Nathan Connolly and Shani Mott, a black couple called Homeland in North Baltimore, who received an appraisal of $472,000 from Lanham’s company, 20/20 Appraisal, But then months later received a $750,000 appraisal from a different appraiser when the house was “white-washed” and a white friend posed as the homeowner.
In March 2021, Connolly, a history professor at Johns Hopkins University who specializes in the legacy of redlining and housing discrimination, and Mott were approved to refinance with LonDepot at a rate of 2.25% and were told that His home is likely to be worth over $550,000. After the appraisal from Lanham came in at $472,000, LoanDepo said it would not fund the loan.
The complaint alleges that Lanham “cherry-picked low-priced homes” as a comparison, while ignoring sales in nearby majority-white areas that had higher prices.
One in three computers with values ranging from $435,000 to $545,000 was located outside Homeland in a majority-black census block. According to the suit, a fourth comparable, which sold for $650,000, was not used in calculating the home’s value.
seven months later, rocket hostage The refinance was approved after the home received an appraisal of $750,000 without any meaningful changes.
In January 2023, Lanham filed a counterclaim against the couple.
“Laboring someone as ‘racist’ and falsely accusing someone of racism is one of the most harmful, hurtful and destructive attacks in today’s society,” he wrote in the lawsuit.
Lanham said the label had a “devastating effect” on his reputation, business, livelihood and well-being.
Lanham listed technical arguments for providing the $475,000 appraisal. Among them, Lanham said a property in the neighborhood was listed for sale for $500,000 and was reduced to $475,000 just 10 days after completing its appraisal. The house sold two months later for $465,000. Lanham also stated that the second appraisal was done seven months later, did not include the home next door as a comp, and depended on the sale of the home that had not yet occurred.
Although the MBA acknowledged that the evaluation bias is “unacceptable,” the trade group said the DOJ and CFPB statements of interest in the Lanham case “negotiate with third parties to impose requirements on lenders beyond the existing federal legal framework.” Let’s try- Party Appraiser.
