On October 21, DOJ filed a complaint in the U.S. District Court for the District of Colorado alleging that the defendants engaged in discriminatory housing practices in violation of the Fair Housing Act (FHA). The complaint alleged the defendants — a mortgage lender, an appraisal management company, and individual appraisers — significantly undervalued the property of a Black homeowner due to her race when the homeowner sought to refinance her home “during a time of falling interest rates and rising home values in the Denver area.”

The defendants’ appraisal was over $200,000 lower than a previous appraisal of the same property less than a year prior, and DOJ alleged the defendants appraised the property “based on a series of intentional choices and suspect errors” that were affected by the owner’s race. When the homeowner complained to the mortgage lender that the valuation was low and racially motivated, the lender refused to change the appraisal and ultimately canceled the refinancing application.

DOJ’s complaint detailed how the defendants’ actions violated the FHA, finding, among other things, the appraiser’s selection of sales comps and adjustments was based on race, “selecting less valuable properties from distant neighborhoods with larger Black populations instead of similar properties from nearby neighborhoods” and “making unsupported adjustments and errors that deviated” from the appraiser’s past practices. The complaint alleged the defendants’ discriminatory conduct was intentional and in reckless disregard of the individual’s rights. DOJ also claimed the mortgage lender retaliated against the individual by canceling her loan application after she reported the discrimination.

DOJ now seeks several forms of relief, including a declaration that the defendants violated the FHA, an injunction preventing further discriminatory practices, and monetary damages for the individual homeowner. The complaint also requested that the defendants take affirmative steps to restore the homeowner to the position she would have been in without the discriminatory conduct and to prevent this conduct in the future.