In December 2021, in the thick of the COVID-19 pandemic when home mortgage loan rates were at historic lows, the East Oakland homeowner applied to refinance her mortgage to take out money from the equity in her home to pay for home repairs.
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The details of the allegations were shared by the Fair Housing Advocates of Northern California (FHANC) in a release to ABC7 News announcing the settlement agreement.
The name of the mortgage company was not publicized as a part of the terms agreed to in the settlement. The homeowner asked ABC7 News not to share her identity.
RELATED: Our America: Lowballed | Watch the full episode
Our America: Lowballed | Watch the full episode
The appraiser hired by the lender appraised the homeowner's property at $785,000--a value much lower than the homeowner expected.
"First thing I thought was he doesn't like me because of my race," the homeowner told ABC7 News. "I wasn't happy with the amount of what he valued my home at. And then I looked at the (comparable homes) in my area, and I knew something was wrong."
The homeowner asked the lender to reconsider the value in a process known as reconsideration of value (ROV).
The company sent the report back to the same appraiser who did not raise the value of the home.
"I was very hurt and disappointed and got upset and cried a little bit," the homeowner said. "He was discriminating against me because of who I was. I was single, a senior. But he felt that I, my property, wasn't of value."
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One month later, the homeowner applied for another loan with a different lender. The subsequent appraisal came in at $1,125,000 -- a $340,000 difference.
After receiving the higher appraisal, the homeowner reached out to the Fair Housing Advocates of Northern California, thanks to her son who saw one of ABC7's many segments on appraisal bias.
"The important thing to do is to take action as soon as possible because these are short statute of limitations," said Julia Howard-Gibbon, FHANC supervising attorney.
The group helped the homeowner file a civil rights complaint with the state and eventually negotiated a settlement agreement on the homeowner's behalf with both the initial appraiser behind that low appraisal and the lender.
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The lender and the appraiser both deny wrongdoing, but agreed to make sweeping changes to their business practices, according to the release from FHANC.
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The appraiser agreed to pay an undisclosed amount of money to the homeowner, not to discriminate again, and to watch the ABC7 documentary "Our America: Lowballed" that chronicles the systemic nature of appraisal bias.
The appraiser did not return ABC7's multiple requests for comment.
The lender is also changing practices.
"What we've got the lender, in this case, to do is to change the policy. So that if a homeowner says, 'I believe this appraisal came in low because of my race, or the demographics of my neighborhood,' then that has to be reviewed by a different appraiser. Not just the appraiser who did their initial report," said Howard-Gibbon.
The settlement announcement comes days after the Department of Housing and Urban Development released new guidance on mortgages insured by the Federal Housing Authority.
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The changes now standardize how lenders handle appraisal bias cases after years of reporting on the issue and a task force created by President Joe Biden.
"This new policy helps equip them with the tools to make sure that consumers are better engaged, that lenders are more prepared. And on the backend, there's a lot of tracking," said Sarah Edelman, Department of Housing and Urban Development deputy assistant secretary.
The updated policies handed down by HUD now apply to two-thirds of the mortgage market between FHA, Fannie Mae and Freddie Mac.
According to an analysis of nationwide appraisal data, the FHFA reports there has been a decline in the rates of Black and Latino homeowners receiving so-called lowball appraisals -- an issue ABC7 News has led the charge reporting on.
From 2013 to 2021 Black and Latino homeowners were twice as likely compared to White homeowners to receive appraisals that came in below the contract price.
MORE: North Bay housing report finds discrimination against Latino renters in 3 counties
The lower appraisals often cause a home mortgage loan or mortgage refinance application to fall through, delaying the dream of homeownership or causing homeowners to pay higher interest rates.
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Data from 2022 and 2023 show Black and Latino homeowners are one-and-a-half times more likely to receive low appraisals -- a noteworthy decrease.
In California, Black homeowners, once twice as likely to receive low appraisals compared to White homeowners, now receive low appraisals at roughly the same rate. This marks a drastic difference.
Still, HUD continues to receive complaints of discriminatory appraisals.
"If there's an inaccurate appraisal, then state regulators should be involved. Where there's an appraisal that has some indication that it's discrimination, those complaints should be filed with HUD or with our state fair housing assistance agencies to conduct investigations," said Melody Taylor, executive director of the Property Appraisal Valuation Equity (PAVE) Task Force.
The PAVE Task Force was created in 2021 by President Joe Biden after several now-viral reports of appraisal discrimination reported by ABC7 News. Many of those stories were featured in "Our America: Lowballed."
TAKE ACTION: Local resources to help with housing discrimination issues
"I think the 'Lowballed' documentary really helped move the conversation away from 'Is this happening?' to 'This is happening. What should we do about it?'", said Jillian White, Appraisal Insights CEO.
"Now we're moving into the phase of it's prevalent, there are lawsuits and settlements, and now also definitive action steps that need to be taken by the lenders to really ensure that they're putting up guardrails to prevent this from happening from moving forward," she said.
White recently launched Appraisal Insights, and its appraisal bias certification program. The first of its kind program allows appraisal management companies and lenders to undergo continuing education to make sure that their processes regarding the reconsideration of value process are completely outlined.
The East Oakland homeowner at the heart of this most recent settlement is now glad she can move forward with her home repairs and her life, several years after the alleged act of discrimination.
She encourages others to file complaints with state and federal agencies.
"It has to be us standing up for ourselves and letting them know we're not satisfied. We're not going to take it anymore," she said.