The lender will pay the Chicago homeowner $50k and provide mandatory training to its employees on fair lending and appraisals.
JPMorgan Chase Bank will pay an African-American woman $50,000 to resolve her claim that the lender valued her home for less than it was worth because of her race, the U.S. Department of Housing and Urban Development (HUD) announced this week.
HUD approved a conciliation agreement between the two parties after the woman filed a complaint on Oct. 14, 2020 alleging racial discrimination in the appraisal of her home in the 60653 ZIP code of Chicago, where about 9 in 10 residents are Black.
In recent months, news stories about racial discrimination in appraisals have proliferated, as Black homeowners have shared their experiences of obtaining higher second appraisals after removing any indication that the owners were Black from the home — including a case where a San Francisco Bay Area couple’s home was appraised for $500,000 more after they replaced family photos with those of the family of a white friend, who also posed as the homeowner.
While the name of the complainant is redacted in the Chase agreement, the details of the complaint match an experience shared by Black homeowner Christina Jordan in a Chicago Sun-Times article a week before the HUD complaint was filed.
In the article, Jordan said that when she was in the process of refinancing her three-bedroom condo in the Oakland neighborhood of Chicago, she was surprised to receive an appraisal from Chase that valued her home at $278,000 — $1,000 less than she had paid for the home six years earlier.
She got a second appraisal from Wintrust Bank, this time without disclosing her race on any forms. The appraisal came in $62,000 higher.
Asked whether Jordan was the complainant and if so how Chase explains the $62,000 difference between the two appraisals, a Chase Home Lending spokesperson told Inman, “We did extensive research into the matter and take these complaints very seriously. Appraisals are conducted by independent contractors who are specialists in the specific regions and use market based comparisons to come up with a value. Our internal review of the appraisal assessment, as well as a market analysis, found no substantive issues and supported the appraisers value.”
Chase declined to comment on how many complaints alleging race discrimination in appraisals Chase had received in the last five years.
Asked whether the complainant was Jordan, HUD said, “We don’t identify our complainants to protect their privacy.” Jordan did not respond to a request for comment sent via LinkedIn. HUD declined to comment on whether the agency had received other complaints regarding race discrimination in appraisals and how often it facilitates conciliation agreements that pertain to race discrimination in appraisals.
“The race of a homeowner and the racial composition of their neighborhood must not influence the valuation of a home,” said Jeanine Worden, HUD’s Acting Assistant Secretary for Fair Housing and Equal Opportunity, in a statement.
“The Fair Housing Act prohibits the consideration of race as a factor in the appraisal of a home and in the provision of other real estate-related services. Discrimination in home buying, mortgage lending, and property appraisal deprive qualified individuals of an equal opportunity to pursue homeownership as a path to family stability and financial security. HUD is committed to ensuring that all housing, whether for rent or for sale, is free from discrimination.”
According to the settlement, Chase will also provide its home lending advisors and client care specialists with mandatory training on the Reconsideration of Value process and fair lending issues related to appraisals, including specifics regarding how to handle complaints of discrimination in the appraisal process and the process for customers to submit a ROV request, including the requirement to provide three alternative comparable sales.
In the agreement, Chase denied violating the Fair Housing Act or engaging in racial discrimination.
“Respondents aver that they are firmly committed to the principles of home ownership, fair housing, and equal opportunity,” the agreement reads. “Respondents enter into this Conciliation Agreement solely for the purpose of obtaining expeditious administrative closure of this matter. By settling this matter, Respondents are not admitting to any fault, guilt or liability with respect to the claims.”
HUD invited anyone who believes they experienced discrimination to file a complaint by contacting HUD’s Office of Fair Housing and Equal Opportunity at hud.gov/fairhousing or (800) 669-9777 (voice) or (800) 877-8339 (Relay).