The race gap in home appraisals is personal for Bobby Rush
Citing his own personal experience, a Chicago congressman is calling for a federal probe into what he sees as rampant racial prejudice in the home appraisal business.
In a letter to the Government Accountability Office, Congress’ internal investigative unit, Rep. Bobby Rush says that discrimination in home appraisals “have resulted in a systemic robbery of wealth from Black families and Black communities, as insidious as redlining and Jim Crow.”
Rush cited extensive national and local research, including a recent WBEZ report that found that the gap in Chicago home values in predominantly white compared to predominantly Black and Latino neighborhoods increased from $50,000 in 1980 to a whopping $324,000 by 2015.
But the story behind the story is what happened to Rush – personally.
In a phone call, the congressman said he decided to take advantage of declining interest rates and refinance the century old home he owns and has extensively renovated in the Bronzeville neighborhood on the mid-South Side.
Rush applied to his mortgage company in the spring and “things went well.” But then the appraisal firm used by the mortgage company sent out someone to examine the property.
Like many companies, the appraiser his bank uses doesn’t have very many African-Americans on staff, Rush said. So the person who arrived at his home was “an elderly white gentleman who came from a suburban community.” And even though Bronzeville has undergone a significant revival in recent years, “He seemed uncomfortable and awkward” at having to be in the area, said Rush.
Bottomline, the congressman says appraised value of the home came in at $250,000 less than it should have. The home was valued less than comparable homes in the neighborhood, including a new one with less space and only a single-car garage, he said.
Rush said the mortgage company replied that it was legally required to accept the appraisal.
The congressman in the end got his refinancing. But he says he had to pay a percentage and a half, 150 basis points, more than if the home had been properly valued.
“To truly achieve racial equity in the housing market, we must examine every possible way to eliminate the discriminatory vestiges of its foundation,” Rush concluded in his letter to GAO. “It is imperative that GAO promptly undertake a comprehensive study detailing why such extreme racial disparities exist within home appraisals and how to rectify them.”
No response yet from GAO.