The U.S. Department of Housing and Urban Development (HUD) announced on Monday that it has charged multiple entities with housing discrimination. HUD cited that the entities issued a biased appraisal and then denied a refinance loan application in Denver.
HUD’s charge against the appraiser, Maksym Mykhailyna; appraisal company, Maverick Appraisal Group; appraisal management company, Solidifi U.S. Inc.; and lender, Rocket Mortgage, LLC, alleges that the appraiser issued a discriminatory appraisal that undervalued a Black homeowner’s property based on her race.
HUD's charge alleges that, when the homeowner complained to Rocket Mortgage, Rocket Mortgage would only proceed with her refinance loan application based on the appraised value that she alleged was discriminatory.
A spokesperson from Rocket offered a statement on the matter. "Under federal law, mortgage lenders are required to work at arm’s length during the appraisal process, partnering with independent appraisal management companies who assign the work to state-licensed professional appraisers. The law's intent is to determine the home's value without any input or bias from the lender or any other party with interest in the transaction."
“Homeownership is crucial to build both generational wealth and housing stability for Black and Brown families,” said HUD’s Principal Deputy Assistant Secretary for Fair Housing and Equal Opportunity, Diane M. Shelley. “HUD will continue to vigorously enforce the Fair Housing Act against those who seek to limit the financial returns associated with homeownership because of race or any other protected characteristic.”
HUD’s Charge of Discrimination alleges that Maksym Mykhailyna and his appraisal company, Maverick Appraisal Group, issued an insupportably low appraisal of a duplex owned by a Black woman in a predominantly white area of Denver.
At the time of publication, Maksym Mykhailyna nor Maverick Appraisal Group offered a comment.
Despite recent appraisals showing steady value increases and the Denver market's growth, this appraisal dramatically dropped the property's value, using flawed methods and comparisons to predominantly Black neighborhoods while excluding more appropriate white neighborhoods, and even deviated from the appraiser's own previous methods.
Both Solidifi and Rocket Mortgage reviewed the appraisal report but failed to correct it despite several red flags, HUD's release stated. When the homeowner complained to Rocket Mortgage, she was told she could only proceed with her loan application based on the appraisal that she alleged was discriminatory; ultimately, her application was denied.
“The Fair Housing Act protects all of us from discrimination throughout the process of buying a home or securing a home loan,” said Damon Y. Smith, HUD general counsel. “As this charge demonstrates, HUD is committed to ensuring that no one is denied a home or a mortgage because of a discriminatory appraisal.”
The release also stated that an Administrative Law Judge will hear HUD’s Charge unless a party opts for federal court. If discrimination is found, the judge may award damages, order relief to prevent further discrimination, and impose penalties. In federal court, punitive damages may also be awarded.
Rocket's spokesperson argued, "For that reason (and more), our company is clearly a misplaced target used simply to score headlines because of its brand and position in the industry. We look forward to bringing the facts of this case to court to set the record straight. Until then, we will continue offering affordable options and championing other equitable initiatives to make the dream of homeownership accessible to all."
