Relman Colfax has reached a landmark settlement with loanDepot.com, LLC, one of the ten largest residential mortgage lenders in the country, resolving a federal appraisal discrimination lawsuit brought against the lender. The Firm filed the case on behalf of homeowners Drs. Nathan Connolly and Shani Mott, a Black couple living in the mostly white historic neighborhood of Homeland in Baltimore, Maryland. The couple applied to loanDepot to refinance their mortgage and loanDepot had the home appraised by Shane Lanham of 20/20 Valuations, LLC. Drs. Connolly and Mott alleged that the appraisal was discriminatory on the basis of race, and that loanDepot discriminated and retaliated against them by failing to overturn the appraisal and/or have a new one conducted. The discrimination claims against Defendants Lanham and 20/20 Valuations remain pending.
Recognizing that fair and accurate appraisals are critically important to protecting the fair housing and fair lending rights of people of color, loanDepot commits in the settlement to maintain or implement a comprehensive set of industry-leading policies and practices for the “reconsideration of value” (ROV) process in mortgage lending. loanDepot will make clear to applicants that they can ask loanDepot to reconsider an appraisal if they believe it is flawed. loanDepot will explain how to make an ROV request, maintain a clear and thorough internal process for timely addressing them, escalate any that allege discrimination, and explain any denials in writing. Second appraisals will be ordered if loanDepot identifies any indicia of discrimination. Applicants will not be charged to utilize the ROV process.
loanDepot will require its employees to attend training on appraisal discrimination and appraisers to certify that they have not been found to have discriminated. The company will not utilize appraisers who cannot meet this certification requirement or if bias is identified. It will also conduct statistical analyses of appraisals and ROVs to identify any possible discrimination, maintain records, and report its findings. The settlement also provides for a payment to Drs. Connolly and Mott. The Settlement Agreement, which sets forth the required ROV best practices in greater detail, is available here.
Dr. Connolly stated that he is “pleased that loanDepot has agreed to these important best practices for ROVs and hopes that other lenders will follow loanDepot’s lead and commit to comparable policies and procedures.” While loanDepot denies the allegations in the litigation, it engaged constructively throughout the settlement process, demonstrating a commitment to combat bias in lending.
The Relman Colfax litigation team includes John Relman, Reed Colfax, Jennifer Klar, Glenn Schlactus, Soohyun Choi, Gabriel Diaz, and David DePriest, with paralegal assistance from Don Scales, Max Niles, and Jazmin Trenco.