11-14-2024
Francesca Cheroutes, a Black homeowner in Denver, made improvements to her six-bedroom Denver duplex in 2021. Interest rates were falling, and her neighborhood's home values were going up. She decided to refinance. Less than a year before, she had received an appraisal of $860,000. The new appraisal with the improvements came in at $640,000. Cheroutes was shocked and believed the appraisal was 25% less because of her race.
The Justice Department has filed a race discrimination lawsuit based on this appraisal against Rocket Mortgage, her lender; Solidifi U.S. Inc., an appraisal management company; Maverick Appraisal Group; and the individual appraiser, Maksym Mykhailyna (who is white and Maverick's CEO). In the complaint, the Justice Department points to many issues in the appraisal, including omitting the improvements, using the wrong elementary school and replacing it with a school with more black students, and marking the fenced property as unfenced. Moreover, the appraiser used a different neighborhood (with a higher concentration of Black residents) as the baseline for price comparison.
Mykhailyna denied the allegations when asked for comment by the New York Times, claiming Cheroutes was “using the race card.” Rocket Mortgage plans to seek a dismissal of the claims against it because it “played no role in [Mykhailyna’s] valuation.” Solidifi hired Maverick to conduct the appraisal, according to Rocket Mortage. The NYT points out that about 95% of home appraisers are white. Solidifi’s agreement with Maverick required it to use houses within a mile for a baseline. The home selected by Maverick was 2.5 miles away and in a neighborhood with lower home values. Mykhailyna says there were no comparable homes nearby and denied any knowledge of the neighborhood he selected. The lawsuit states that there were six properties within a one-mile radius. Cheroutes went to Rocket Mortage about her concerns, but the company said it could not investigate. Rocket canceled her application when she refused to accept a loan based on that appraisal.