HUD complaints allege racial bias in Indianapolis home appraisals

The Fair Housing Center of Central Indiana and Indianapolis resident Carlette Duffy have filed fair housing complaints with the U.S. Department of Housing & Urban Development, alleging Duffy’s home was appraised at a lower value because she is African American.

During 2020, Duffy had her home appraised by two different mortgage companies and appraisers. Both times, the appraised value was significantly below the $187,000 that a market analysis had calculated as the possible list price. However, after she contacted a third lender and did not reveal either her race or gender, her home was valued at $259,000.

The complaints were filed against CityWide Mortgage and appraiser Jeffrey Pierce of Pierce Appraisal, Inc., in Plainfield, and against Freedom Mortgage, SingleSource, and appraiser Tim Boston of Appraisal Network in Indianapolis. Duffy and FHCCI allege the lenders and appraisers violated fair housing laws by discriminating in the appraisal and undervaluing her home.

HUD will now investigate to determine if the lenders or appraisers violated the law, according to FHCCI.

“In the past year, we have heard stories across our country of African Americans questioning the appraisal process and the values assigned to their homes,” Noe Rojas, director of systemic investigations at FHCCI said in a press release.

He pointed to a 2018 study by the Metropolitan Policy Program at Brookings, which found in the average U.S. metropolitan area, homes in neighborhoods where half the residents are Black are valued at roughly half the price of homes in neighborhoods with no Black residents.

“This shows how systemic racism continues to haunt neighborhoods of color,” Rojas said.

Freedom Mortgage, CityWide Mortgage and SingleSource did not respond to a request for comment. Pierce said he was unaware of the complaint and could not provide a statement.

Tim Boston was also unaware of the complaint but maintained the allegation was an “absolute bold-faced lie.”

He said he bases his appraisals on the data and comparable pricing in the neighborhood. The appraisal values he calculates are not influenced by race or sexual orientation or any other characteristic.

“Anybody that knows me and has done business with me knows that’s a fact,” Boston said.

Duffy believed her newly renovated home had increased in value. She wanted to refinance her mortgage to take advantage of the low interest rates and escalating home sale prices throughout Indianapolis.

According to the complaint filed against CityWide and Pierce Appraisal, Pierce visited Duffy’s home in March 2020 and appraised the property at $125,000. In April, the other complaint states, Duffy then contacted Freedom Mortgage and the following month Boston visited her home and conducted the appraisal. He appraised the property at $110,000 with a cash-out value of $96,000.

Duffy’s home is in a historically African American neighborhood in Indiana. According to the two complaints, she believes the appraisers were “purposefully pulling comps for the (appraisals) that were not fair and were racially motivated.”

She began the refinancing process for a third time in October, the complaints state. However, this time she did not indicate her race and interacted with the appraiser only through email. Before the unnamed appraiser visited, Duffy removed all the pictures of her family along with artwork and books that showed her African American heritage.

On the day of the appraisal, she left the home and had a white friend posing as her brother greet the appraiser. The appraisal valued the home at $259,000.

“Ms. Duffy did not give up,” Amy Nelson, FHCCI executive director, said in a press release. “Instead, she did what fair housing organizations across the country have been doing to root out fair housing violations — she conducted a fair housing test.”

For more information on appraisals and to review the complaints, visit the FHCCI Appraisals Education Page.