A systematic study exploring racial and other biases in appraisals would help clear the air. Read more.
But are these biases also common in Canada? Given the lack of methodical research probing biases in appraisals and mortgage underwriting, there may not be a definitive answer here, yet there’s plenty of evidence of it down south.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc.
when his house was appraised for much lower than expected. His family bought the house for US$450,000 in 2017 and spent additional funds renovating the place. An appraisal company in 2021 valued the house at just US$472,000, even though housing prices had significantly increased since he bought the house.Article content
Connolly then removed his family photographs and had a white professor from John Hopkins pose as the owner. The second appraisal put the value at US$750,000. Connolly and his wife, Shani Mott, also a lecturer at John Hopkins, believe the 59-per-cent difference in valuations was motivated by racial biases and have sued the appraiser and the loan company that arranged the first appraisal.
Federal Home Loan Mortgage Corp., known as Freddie Mac, studied more than 12 million appraisals and found that homes in predominantly Black or Latino neighbourhoods were “. Therefore, the racial differences between the appraisers and the appraised could have contributed to the lower valuation of minority-owned properties.Article content
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