Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
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Showing posts with label black. Show all posts
Showing posts with label black. Show all posts

Friday, August 25, 2023

Important Alleged Discrimination Case Against Wells Fargo, Comment by Mary Cummins

wells fargo, racial discrimination, lawsuit, cv 00990, mortgage discrimination, mary cummins, real estate appraiser, real estate appraisal, credit, black, latino, white,complaint
wells fargo, racial discrimination, lawsuit, cv 00990, mortgage discrimination, mary cummins, real estate appraiser, real estate appraisal, credit, black, latino, white,complaint

Peter Christensen just wrote an article about this very important legal case. Wells Fargo is being sued for racial discrimination for rejecting mortgages of some black, Latino applicants. The lawsuit is based on appraisals and credit. They cite Andre Perry's false and misleading paper as evidence. This looks like a shakedown lawsuit to get WF to cough up a few bucks "without admitting guilt." This is what the false narrative of the alleged racist appraiser and real estate industry has given us. The government promoting the false narrative for their political agenda has caused this frivolous lawsuit. We all know based on AEI's research that blacks, Latinos are more likely to be rejected for loans based on socioeconomic factors and appraisal value. Blacks, Latinos have less income, less wealth, lower credit scores which is why they buy less expensive homes in less expensive areas. 

"In March 2022, Bloomberg News published an article entitled “Wells Fargo Rejected Half Its Black Applicants in Mortgage Refinancing Boom” (registration required). Bloomberg’s researchers had combed through the data for 8 million conventional loan refinance applications in 2020 reported by lenders under the Home Mortgage Disclosure Act. The researchers saw stark differences in Wells Fargo’s approval rates for White, Black and Hispanic refinance applicants. They found that Wells Fargo approved 72% of applications from White applicants but only 47% from Black applicants. In contrast, Rocket Mortgage approved 86% of White applicants and 79% of Black applicants. For Hispanic borrowers, Wells Fargo’s approval rate was 53% versus a 79% industry average for Hispanics. Some might jump to an explanation here like “Black and Hispanic borrowers may not have the same average financial means as Whites.” Bloomberg’s research, however, showed that Wells Fargo’s approval rate was lower for Blacks in high income brackets than for Whites in low brackets.

After publication of the article, a half-dozen class actions were filed swiftly against Wells Fargo by Black and Hispanic borrowers who had been denied loans. The Federal District Court in Northern California consolidated these cases earlier this year under the new title In re Wells Fargo Mortgage Discrimination Litigation, U.S. District Court, N.D. Cal., Case No. 3:22-cv-00990.

The primary legal claims in the consolidated case are brought under the federal Fair Housing Act and Equal Credit Opportunity Act. And, the alleged damages could be substantial – borrowers denied loan refinances in 2020-2021 may have lost out on saving tens of thousands of dollars on their mortgages by being unable to lock in historically low interest rates. The operative complaint in the case principally alleges a story about disparate treatment and impact in Wells Fargo’s mortgage determinations, including the bank’s use of flawed “centralized, universal, race-infected lending algorithms” or “digital redlining.” But part of the plaintiffs’ theory is also based on alleged bias in the appraisals relied on by the bank.

Here’s a key allegation pertaining to appraisals:

Wells Fargo knowingly incorporates, without adjustment, appraisals that have been shaped by years of race-based valuation standards or appraisals affected by race-based criteria. Homes in majority Black neighborhoods are worth an average of 23% less than homes in neighborhoods with “very few or no Black residents” and of similar home quality. (Citing Dr. Andre Perry’s research at Brookings “The Devaluation of Assets in Black Neighborhoods.”).

As a result, the plaintiffs allege that “Wells Fargo’s discrimination . . . has forced those who received below-market appraisals from Wells Fargo to abandon the process with Wells Fargo and turn elsewhere.”

"Plaintiffs Aaron Braxton, Paul Martin, Gia Gray, Bryan Brown, Elretha Perkins, Christopher Williams, Ifeoma Ebo and Terah Kuykendall-Montoya, individually and as representatives of a nationwide class of similarly situated applicants for original purchase mortgage, refinance and other home mortgage loans (collectively, “Plaintiffs” or the “Class”), 

Go to the below link for the rest of this important article and lawsuit.

https://www.valuationlegal.com/2023/08/the-most-significant-appraisal-discrimination-case-doesnt-name-an-appraiser-as-a-defendant/

Copy of lawsuit from same site.

https://www.valuationlegal.com/wp-content/uploads/2023/08/In-re-Wells-Fargo-Discrimination-Amended-and-Consolidated-Complaint-Fair-Housing-ECOA-3-24-23.pdf


Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

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Friday, August 11, 2023

AEI Report Shows Andre Perry's Paper is Fraudulent. Same Difference in Home Values in White Areas.

This is from an email from Jeremy Bagott, MAI. AEI used Andre's Perry own dataset and methodology to study race and home values.  February 2023 the report was updated. Andre Perry previously stated the main difference in home values between white and black is race alone. Perry blamed that on home valuations. AEI's research has proven the main difference is caused almost entirely by socioeconomic factors and not race. I've been yelling this from the mountain tops since Perry's paper first came out but AEI has nailed it down with facts and independent research. People who make more money have more money and buy more expensive homes in more expensive areas, period. 

Maybe lower income white people should be yelling about home value differences compared to higher income white and black people. Maybe they should be demanding money, free homes, cheap loans, debt relief like Andre Perry and his following have been doing. "Rich white people have stolen $46,000 from every poorer white person's home value in the US!" Maybe all poor people need their own type of reparations for being trapped by low wages and poverty for generations. It won't solve the problem because the income gap is the main cause for everyone but the story will probably sell online media ads. We need to reduce the income/wealth gap among everyone. AEI stated this in their summary but the government will not listen to facts for some reason on this issue.

https://mailchi.mp/0b513ed845f9/report-finding-of-bias-in-home-valuations-fails-by-own-measure-8037698

"REPORT: FINDING OF BIAS IN HOME VALUATIONS FAILS BY OWN MEASURE

VENTURA, Calif. (August 11, 2023) – In an updated refutation of the findings of Brookings Institution researcher Andre Perry, Edward Pinto and Tobias Peter of the AEI Housing Center demonstrated just how broken the Brookings research was.

Perry’s 2018 research, titled “The Devaluation of Assets in Black Neighborhoods,” pinned the nation’s racial wealth gap on 80,000 state-licensed real property appraisers.

Unfortunately, these now-discredited findings have been levered by housing-industry lobbyists, partisan policymakers, agitators and grievance groups to malign the nation’s 80,000 real property appraisers and hollow out America’s mortgage underwriting safeguards.

A dataset provided to Pinto and Peter earlier in the year by Perry allowed the AEI Housing Center to fully refute the latter’s conclusions.

While their original refutation was still largely correct, Pinto and Peter have now updated their key findings and takeaways using the new dataset. To the surprise of no one, their redacted study found that what Perry et al. had characterized as race-based differences in home valuations were almost entirely due to socio-economic status, not racial bias by real estate appraisers.

Using the dataset and Perry’s own methodology, Pinto and Peter created a simple case study of so-called “entirely white” tracts (tracts demographers rate as 97.5% white or greater). In those tracts, racial animus, by definition, is ruled out as a factor. The duo then compared high and low socio-economic status in these so-called all-white neighborhoods and found differences as large as – or even larger than – the ones Perry et al. incorrectly attributed to racial bias.

But much damage has been done by Perry’s now-discredited findings. Perry’s 2018 report took the nation’s real property appraisers from the table and onto the menu. The flawed findings have most recently served as a pretext to justify the current administration’s whole-of-government effort to insert race into every corner of the mortgage underwriting process, including collateral valuation.

Pinto and Peter determined:

• That while lower socio-economic status may leave blacks at a large income (and wealth) disadvantage relative to most whites, this is not due to any statistically relevant bias in home appraisals

• The primary remedy would be policies that work to address the income and wealth gap, not those that scapegoat appraisers.

• The focus should be on increasing financial security, creating generational wealth, and shrinking the socio-economic gap through sustainable home ownership. This is largely a buying power issue, not a valuation one. To do otherwise risks repeating the mistakes of the past."


Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

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Thursday, August 3, 2023

AEI Response to PAVE Task Force AVM. Appraisers Are Not Racists and Don't Lowball Blacks, Latinos, comments by Mary Cummins

UPDATE 11/03/2023AEI proves once again that HUD, US Government lied about appraisers allegedly low-balling people of color. This is exactly what appraisers have been saying all along. "We find that seemingly large differences in the share of under-valuations–appraisals where the appraised value is below the contract price– received by people of color are almost entirely or entirely due to differences in geographies where people, regardless of race or ethnicity, reside. When comparing appraisals for people of color to those for non-Hispanic white people within the same census tract, we find that there are no or minimal differences.

This analysis suggests that commonalities in people’s experiences in buying a home (e.g. first-time home buyer status) or local market conditions (e.g. the presence of a market frenzy or seller concessions) are far more important than differences in people’s race or ethnicity when it comes to determining who receives an under-valuation and who does not. This suggests that studies by FHFA, Brookings, or Freddie Mac with their singular focus on appraiser racial bias have misdiagnosed the issue." #AEI #americanenterpriseinstitute #marycummins #realestateappraiser #realestateappraisal #HUD https://www.aei.org/research-products/report/confirming-alternative-explanations-for-appraisal-under-valuations-new-evidence-from-appraisal-level-data/

ORIGINAL: American Enterprise Institute (AEI) made some important independently researched statements in their comment letter about the PAVE Task Force, AVMs and real estate appraisers. It shows with verified facts the flaws in the research cited by PAVE. The research cited by PAVE was poorly done by the Urban Institute, Andre Perry then twisted to meet the agenda of UI, Perry. I have no issues with promoting the interests of black people. I'm Latino and promote the interests of Latinos, Blacks, Asians, women, lower income, homeless... I do have a problem with people falsifying research to promote an agenda with racist lies which hurt innocent people. Below are a few important issues raised in AEI's comment letter to the PAVE Task Force.

1. AEI stated First Time Buyers (FTBs) tend to overpay for properties. There are also more seller concessions. This would explain appraisals being at market value which is lower than contract price. I see this all the time because I appraise in these areas. It's not the result of biased, racist appraisers.

Urban Institute, HUD, PAVE stated that "racist old white male" appraisers were intentionally low balling blacks and Latinos. Their "proof" was a difference in contract price and appraisal values in census tract areas with more Blacks, Latinos. I'd commented at the time it was probably because there is a correlation between race and income. Whites make more money than blacks, Latinos. People who make more money have more money and buy more expensive homes in more expensive areas. Areas which are predominantly black, Latino are lower income areas with many first time buyers. 

"The presence of first-time homebuyers (FTBs) or the use of seller concessions could affect the sale price relative to the AVM. Our analysis in “Exploring Alternative Explanations for Appraisal UnderValuation” shows a significantly higher share of FTBs in tracts with lower levels of non-Hispanic White residents. This is significant because the literature shows that FTBs tend to overbid for a home by approximately $3,000, or about 1% of the contract price for the average home compared to repeat buyers and that they use a higher share of seller concessions, which can amount to 2.01-3% of the property price."

2. The letter noted that homes in lower priced areas that are more likely to be predominantly black, Latino are generally in lower rated condition which would be C4, C5 rating as opposed to C3 and above. I see this every day in my inspections of these areas. Again, it has to do with money. The more money you have, the more you will spend to properly maintain and upgrade your home.

"Even though the paper controls for home quality as measured by an exterior condition rating, we found in other work that exterior condition ratings can be quite different from interior condition ones. We also found that home interior quality can be a significant factor in the difference between an AVM and a home’s sale price and that for a small number of properties with extreme conditions that difference was significant."

3. The letter also again stated that AEI found no effect of race on appraisal value

"We have pointed out serious flaws in numerous studies that purport to show widespread appraiser bias or systemic devaluations of neighborhoods." https://www.aei.org/research-products/report/exploring-alternative-explanations-for-appraisal-under-valuation/

They suggest "To better measure and document appraiser racial bias, we once again propose reviewing every appraiser for racial bias and deliberate inaccuracies based on a comprehensive review of their past refinance appraisals. To that end, we have demonstrated a working methodology in “A Blueprint for Mass Screening Appraisers for Racial Bias and Inaccuracy Based on an Atlanta, GA Study” that could be implemented today by either FHFA, Fannie Mae, or Freddie Mac.Ultimately, the goal of public policy should be to identify biased and inaccurate appraisers and to prosecute the former and to educate and retrain the latter."

I fully support this. Please, fairly audit everyone's appraisals. I'd be the first to take racist appraisers out behind the woodshed. Take away their license, charge them with actual crimes and send them to prison. Stop blaming every appraiser for racism and bias. What really irks me is that these people are claiming racism and bias when they are doing exactly that to real estate appraisers. If you're against racism, bias, you should be against ALL racism or bias against everyone or else you're a hypocrite.

https://www.aei.org/research-products/report/a-response-to-the-recommendations-of-the-pave-working-group/

https://www.aei.org/wp-content/uploads/2023/08/A-Response-to-the-Recommendations-of-the-PAVE-Working-Group-FINAL-1.pdf?x91208


Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

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Wednesday, July 19, 2023

Fed Michael Barr: AI could 'perpetuate or even amplify' racial bias in mortgages, by Mary Cummins

Michael Barr of the Federal Reserve stated artificial intelligence AI could perpetuate or even amplify racial bias in mortgages, mary cummins, real estate appraiser, real estate appraisal, los angeles, california, michael barr, racial bias,federal reserve, fed, loan origination, race, black, white, bias
Michael Barr of the Federal Reserve stated artificial intelligence AI could perpetuate or even amplify racial bias in mortgages, mary cummins, real estate appraiser, real estate appraisal, los angeles, california, michael barr, racial bias,federal reserve, fed, loan origination, race, black, white, bias

Artificial Intelligence (AI) is now being accused of racial bias. They're basically stating math, statistics, numbers themselves are racially biased. Again, the correlation between race and home value is caused by the income gap. If you have less money, you buy a less expensive home. Same with credit scores. The less money you have, the lower your credit score. POC make less money than whites. I'm just glad they're not still falsely accusing appraisers of AI's bias like they did previously with Andre Perry's fraudulent paper. No appraiser was involved in his data only robot Automated Valuation Methods (AVMs) which were basically accurate.

https://www.americanbanker.com/news/feds-barr-ai-could-perpetuate-or-even-amplify-bias-in-mortgages

"Fed's Barr: AI could 'perpetuate or even amplify' bias in mortgages

By  Kyle Campbell

Michael Barr, vice chair for supervision at the Federal Reserve, said in a speech Tuesday that artificial intelligence in mortgage underwriting could exacerbate racial bias if left unchecked.Bloomberg News

The Federal Reserve's top regulator is wary of the use of artificial intelligence in mortgage underwriting. 

Speaking at the National Fair Housing Alliance's national conference Tuesday morning, Fed Vice Chair for Supervision Michael Barr said advancements in mortgage origination technology could lead to discriminatory lending practices."

Just did some Googling on racial bias in loan origination. 98-99% of the difference in loan origination between blacks, whites explained by credit scores and leverage. Did they consider LTV on the home or all debts? There's more to credit than credit score and LTV ratios. They include savings, how long at current job, debts, monthly financial responsibilities, single vs married, children... AEI research considered those factors.

"How much does racial bias affect mortgage lending? We assess racial discrimination in mortgage approvals using new data on mortgage applications. Minority applicants tend to have significantly lower credit scores, higher leverage, and are less likely than white applicants to receive algorithmic approval from race-blind government automated underwriting systems (AUS). Observable applicant- risk factors explain most of the racial disparities in lender denials. Further, we exploit the AUS data to show there are risk factors we do not directly observe, and our analysis indicates that these factors explain at least some of the residual 1-2 percentage point denial gaps. Overall, we find that differential treatment has played a limited role in generating denial disparities in recent years."

https://www.federalreserve.gov/econres/feds/how-much-does-racial-bias-affect-mortgage-lending.htm

I'm thinking this is just showboating for political reasons. The banks, credit unions don't want to give up credit scores. They correlate highly with ability to repay loans. 

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

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Thursday, June 29, 2023

Real Estate Appraisers Mentioned in False Light in California Reparations Report by Mary Cummins

mary cummins, california reparations task force, california reparations report,real estate appraiser, real estate appraisal, california, los angeles, black, latino, reparations, slavery
mary cummins, california reparations task force, california reparations report,real estate appraiser, real estate appraisal, california, los angeles, black, latino, reparations, slavery


The final California Reparations Report came out today. I just started reading it but thought I'd search for the words "appraiser" and "appraisal." Sure enough they're in there because Paul Austin and Tenisha Tate-Austin told their false story about alleged racial discrimination to the Task Force. 

"Consider Paul Austin and Tenisha Tate-Austin, who bought a home in Marin City in 2016. Three years later, a white appraiser valued their home for $500,000 less than it was worth, calling it a “distinct, marketable area.”27 “I took that as code word as: it’s a Black area,” said Paul Austin, who testifed before the Task Force that he felt physically sick when he read the appraisal report."

The statement above is totally false. I sent in a correction. It was not valued for $500,000 less than what it was worth. The appraisals were never made public. I wrote an in depth fully research article about the Austin v Miller case here. https://mary--cummins.blogspot.com/2021/02/alleged-discrimination-home-appraisal.html 

They were not discriminated against or low balled by the first appraiser. Marin City is a distinct area just like Pacoima, Beverly Hills, La Habra are distinct areas. The second appraiser came in way too high. My article above goes into the values in great depth. The second appraiser is the one who should be investigated by the California Attorney General, Bureau of Real Estate Appraisers, lose their license and be charged with bank fraud. The harm this case caused to the first appraiser is beyond comprehension.

I haven't gotten far in the report but did notice a few important things. The report mentions the racial and other bias against Mexicans, Native Americans, Asians, Jews, Catholics, immigrants, women, poor... All of these other groups were also affected by racial, color, gender and other biases. The report isn't about slavery per se as California was never a slave state. The report is about racial harm against black people living in California before 1900. Mexicans, Native Americans, Asians, Italians were lynched. Native Americans, Mexicans lost their lands and property. Mexicans, Native Americans, Immigrants were used as near slave labor. Women, men, the poor were raped by slave owners, employers, government sanctioned church... Mexicans, Native Americans, Asians weren't allowed to attend public school with whites. All this happened in California. Every state, nation, people has done truly horrible things to others throughout all of human history. 

The Governor and others already said there will be no monetary reparations. California has a budget deficit. The report was done to educate the nation and for positive PR for California and it's politicians. The state would also have to consider the harm caused to everyone else before they ever cut a check. It would be discrimination to give money to only one group based on race. There was already a case here in Oregon over Covid funds. (The Oregon CARES Act Discrimination Lawsuit is Great Northern Resources Inc., et al. v. Katy Coba, et al., Case No. 3:20-cv-01866-IM (L), in the U.S. District Court for the District of Oregon, Portland Division.) They wanted to give some Covid funds to blacks only because they were more affected than whites but the state was sued due for discrimination. Latinos who were equally negatively impacted by Covid sued for discrimination so the funds had to be given to everyone who applied. Any reparations would be the same.

If we were to do a California Reparations Report for all races, colors, religions, genders... everyone in California would end up owing everyone else money. It'd cancel itself out. You'd also have to offset benefits of living in the state minus harm caused by past actions in the state by the state. I'm Mexican, Indigenous, African and Euro. Half of my ancestral family was harmed by the other half. The reports would just cost the state a lot of money and I'd probably get half a cent. I'll pass on that waste of funds. I personally am just very happy to live here in California. I'm lucky I was born in this state and in this country. 

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

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Sunday, June 11, 2023

Reparations and Return of Lost Land by Mary Cummins real estate appraiser and genealogist


When Janice Hahn first made the motion to return Bruce's Beach to one of the original owners for $20,000,000 I knew it would start a real estate gold rush for "lost land" and it has. Blacks, Latinos, Indigenous, whites and everyone else will all be asking for payment for lands once maybe owned by their ancestors. 

While the return of Bruce's Beach was big news it did not set a legal precedent because it was a gift. There was no recent lawsuit. The county of Los Angeles did not have to give the land back to the Bruces. The Bruces ultimately agreed to sell the property for much, much more than market value back in the day after an eminent domain lawsuit which they lost. It wasn't "stolen" from them. Had they invested that money back into real estate they would have much more than $20,000,000 today but they didn't. They sold the real estate and spent the money. They recently said they will sell the property again. In essence the family sold the property twice both times for more than market value. Some are upset they aren't keeping it in the family to build generational wealth for black families. It's their property to do with as they please. The real cause of the wealth gap among whites, blacks, Latinos is the income gap.

Because of the Bruces' big payday many people are thinking about asking for compensation for land once owned by their ancestors or maybe they just rented it or lived there. Sometimes that land was sold fair and square. Other times it was taken through legal eminent domain, failure to pay taxes, legal abandonment, questionable transactions, outright theft or war. 

While genealogical documents, old newspapers, old real estate deeds can show some ownership interests and transactions, that might not tell the whole story. How will we figure out who actually owned the rights to the property and whether or not they actually sold or transferred it fairly and legally? How will we figure out which descendants should be compensated, for how much and in what order? 

In 1923 20-150 black people were murdered in the Rosewood Massacre. It was sanctioned by the local government. The people who survived fled in fear abandoning their real and personal property. By the 1990's some considered a lawsuit but evidence and statute of limitations issues ended those plans. Years later a politician filed a bill to compensate the children of some victims for the losses. The few that were left got about $150,000 each. I watched the film in 1997 and did most of the genealogical research for the Rosewood Cemetery. I personally feel they deserved much more compensation but, Florida.

UPDATE:03/2024 A bill was filed to seek reparations for families displaced in Chavez Ravine. ORIGINAL: In the 1950's Chavez Ravine properties were taken, bought by eminent domain. The owners were compensated for the land. Some sold outright. Some filed lawsuits. Dodgers Stadium ultimately ended up being built on the land. During the eminent domain proceedings there were holdouts who sued. They lost the lawsuits but did get over market value for the land at the time. The descendants of some are now talking about suing to get Bruces Beach type of money. Some didn't even own the land but were just renters or lived there with others for free. Some renters were given relocation fees. In fact most living in Chavez Ravine at the time were renters. Do their children who never lived there have a right to new compensation? The stories of eminent domain actions for Los Angeles freeways, government buildings, schools are all very similar. Poor people living in poor areas were displaced for government projects. The government chose the sites based on logistics, economic feasibility and property values. Gov had to choose a site that was cheaper to preserve gov funds per law. Race was not a consideration. Many times the people displaced were just poor whites.

There are already sufficient laws to protect real estate rights in our country. Anyone can file a lawsuit to try to reclaim land they feel rightly belongs to them. They just need to provide proper documentation. There's currently a system for clearing heir property with clouded title. Some of these cases go back a few generations over 100 years. But what about people who owned the land before the US existed? In my state of California the land was previously owned by Mexicans, Spaniards and Indigenous people in that reverse order. Who has the legal right to the land and compensation? 

In a recent article on this issue "A New Front in Reparations: Seeking the Return of Lost Family Land" Thomas W. Mitchell, a law professor and director of the Initiative on Land, Housing & Property Rights at Boston College Law School, stated  “We are talking about the loss of heritage and history and culture.” “You are talking about a fundamental hit in terms of economic mobility and generational wealth.” But whose heritage, history, culture and wealth are we talking about? Should claims by Native Americans take precedence based on chronological order? They definitely lost their "heritage, history, culture and generational wealth" besides their lives. Did they legally sell or give their land to US states and nations? No, it was stolen, taken by the Spaniards, French, Russians, US states, USA and private individuals through brute force. Is brute force, war a legal means of seizing property?

What about the Spaniards. Did they legally give all Spain owned land grants to Mexico after the Mexican revolution? Did the state of California legally acquire land from Mexico after the war? At least the California, Mexican, Spanish land grant documentation still exists but there were no grants from Native Americans. Generally possession over a period of time shows rights to the land. Perhaps because the Indians didn't have a paper deed written in English filed at the local county assessor's office showing they owned the land they never really owned it. If a tree falls in the forest and no one hears it...?

Bruce's Beach was originally owned by the Tongva Indians. There was no sign that said "Free land. Take whatever you want, kill us and send the rest of us on a death march to a small desolate area of the country." Should the Bruce family give the $20,000,000 to the Tongva Indians just like LA County gave it to them? Maybe the Tongva tribe should sue the Bruces? The Tongva weren't even allowed an eminent domain hearing. They were killed and forced off the land. Is that considered a legal real estate transaction? It's a legitimate question.

Another recent article talked about reparations and real estate in California. California was never a slave state yet a state commission was convened to study black slave reparations for residents. The commission considered papers and research on blacks, wealth, income and property. No reparations will be paid for many reasons. First and foremost the state doesn't have the funds. Second and more importantly one would need to consider reparations for all before you start handing out state money otherwise it's discrimination. There was already a black only Covid subsidy case which set legal precedent and reversed the subsidy. There are a lot of poor Latinos, Native Americans, Asians and even whites who are affected by some of the same negative influences in the Reparations Report. You don't have to be descended from slaves owned in another state to be poor in California. It was actually a good thing for those slaves and their descendants that their owners came to free state California because they were freed. They would have continued to be slaves in other states for much longer.

Latinos, Chinese, Japanese, everyone except the rich were taken advantage of for labor, real property, personal property through government actions all throughout California's history. Some Chinese were murdered in government sanctioned massacres and their property stolen. Others US citizens were expatriated to Mexico during the depression losing their land, jobs, income and all possessions. The Japanese were sent to internment camps but some have been compensated for some lost property. And don't forget about the Native Americans. Some were given rations and land but it was never equal to the land value of the US. Who gets reparations, land, how much and in what order? 

In the article "Can Reparations Bring Black Residents back to San Francisco" linked above a woman talks about the old family home in Fillmore sold through eminent domain from her black grandfather. Her grandfather was paid market value for the property. Had he reinvested in real estate his family would have more money than the current value of their old home today. But they didn't. She still wants reparations for the value of the property. She also feels she personally should get the home back. What about the people who owned it before her? What about the Native Americans who owned the entire area and the Americas?

Descendants of black slaves weren't the only people living in blighted areas sold under eminent domain in California. Latinos, Asians, Italians, Irish, immigrants, Jews... poor people of every race and color including whites lived in those areas. Do they also get reparations? I realize it was the California Reparations Task Force which was formed to mainly look at reparations for the descendants of black slaves owned in other states and free black people who were in California by the 19th century. The purpose was to calculate racist and other harm done to black people. Still, the task force considered the economic effect of things which affected more than just descendants of black people. Other people experienced racism, colorism, sexism, genderism, religious persecution, people taking advantage of the poor... Will we revisit and re-litigate every act of eminent domain? Every land transfer? Every instance of a laborer being paid less than what they feel they were worth or due? Every murder and assault? Every slight ever made to another in California? Everyone would end up owing everyone else money and California would go broke. 

Another woman in the article wants the tossed about figure of $5,000,000 per black Californian reparations so she can move back to expensive San Francisco. She states it's her home because she lived there when it was a less expensive blighted place. What about all the other poor people who also lived there and had to move? Blacks weren't the only people living there. What about the Indians who used to own it? It was their home for over 10,000 years. Currently they're trying to reclaim some of their land. They tried to reclaim Alcatraz but failed. They were given back some land in the form of reparations in the East Bay. Now they want to reclaim "Turtle Island" which is their name for all of North America

So far we have no set answers but a Pandora's box full of question. We do at least have centuries of established real estate laws. Most of our real estate laws came from the British and are older their our own country. You sometimes see them cited in Supreme Court rulings. People have always been able to sue for these causes. We'll soon see if the courts will be flooded with lawsuits to unwind eminent domain actions and other real estate transactions. Title companies may be busy. 

As I'm both a licensed real estate appraiser and genealogist perhaps this may be my new calling. I was able to figure out market value for Bruce's Beach property in 1920. I could appraise even older claims if I could find enough documentation. This may be the beginning of an interesting new era in genealogical real estate studies. Or we could just give Turtle Island back to Native Americans, go back to our ancestral countries and be done with it. 

References:

AB 3121 Reparations Task Force Report https://oag.ca.gov/ab3121/reports

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


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Wednesday, April 12, 2023

Andre Perry falsely states grocery stores are racist. More bad "research," by Mary Cummins


Andre Perry just released more false and misleading "research." Andre Perry believes that premium grocery stores are racist against black people. He "proves" his point by showing there aren't many premium grocery stores in predominantly black areas. Again, his "research" is bad science and misinterpreted results. People on the internet are using his "data" to attack grocery stores and rile up black people against whites. This is not peer reviewed or published research. Below is his linked article. 

https://www.brookings.edu/research/what-the-lack-of-premium-grocery-stores-says-about-disinvestment-in-black-neighborhoods/

Andre Perry states there are few premium grocery stores in mainly black areas. This is correlation and not causation. There are also few Louis Vuitton stores and Rolls Royce dealerships in predominantly black areas for the same reason. The reason is financial. There is research which proves whites make more money than blacks and Latinos in general. If a store chooses its location based on higher income, that area will more likely be more white than black, Latino. It's correlation and the income gap, stupid.

Premium grocery stores are in the business of making money. They want to make as much net profits as possible. They do this by locating their stores in an area which has the highest concentration of their most likely customers with the least amount of risk. They don't consider race. Below is an article about how Whole Foods chooses store locations to prove this. https://www.washingtonian.com/2015/07/14/how-whole-foods-decides-if-your-neighborhood-is-worthy/#:~:text=Whole%20Foods%20doesn't%20divulge,estate%2C%20population%20density%2C%20education%2C

From the article, "Whole Foods doesn’t divulge specifics about its real-estate decision-making, which it considers “proprietary.” Mid-Atlantic regional president Scott Allshouse at least offers this via e-mail:“We take a variety of factors into consideration, including availability and cost of real estate, population density, education, demographics, and the community’s interest in natural and organic foods. No one factor is most important.” Later in the article it states main factor is "education then commuter patterns, checking out competing grocery stores, and calculating their likely earnings."

Here's info on Trader Joe's locations. They tend to choose locations "located in cheaper parts of expensive areas." "The company is selective about new markets, taking a gander at median household income, education, population density, distribution efficiencies and labor force." " Stern and David Livingston, an expert in supermarket location research, said Trader Joe’s typically looks for median household income in excess of $100,000. The perfect storm, Livingston said, is high incomes and expensive homes within the first 2 miles of the potential site, with maybe a major university or large medical complex sprinkled on top." “They are not going to open a store based on a petition because everyone wants a Trader Joe’s,” Livingston said. “But only people who are educated and have high disposable incomes will actually support one.”

Grocery stores are not a government service or a nonprofit. They don't have to invest in poorer areas. They are a business. They don't care about race. They do care about safely making net profits. If an area has lots of potential clients but has high crime, theft, vandalism, they probably wouldn't choose it because net profits would be reduced by crime. Some shoppers might not even want to shop in a high crime area because they don't want to get mugged, robbed, car broken into, raped or killed. A good example of this is Whole Foods markets closing in a prime area of San Francisco. https://kesq.com/money/cnn-business-consumer/2023/04/11/whole-foods-closes-san-francisco-flagship-store-after-one-year-citing-crime-2/#:~:text=An%20enormous%20Whole%20Foods%20in,over%20the%20past%20six%20years. 

Instead of calling Whole Foods a racist piece of shit the County Supervisor said this about the closure. "San Francisco Board of Supervisors member Matt Dorsey said on Twitter that he was “incredibly disappointed” by the closure. “Our neighborhood waited a long time for this supermarket, but we’re also well aware of problems they’ve experienced with drug-related retail theft, adjacent drug markets, and the many safety issues related to them,” Dorsey wrote. Appearing on “CNN This Morning” Wednesday, Dorsey said he’s “seen a lot of issues of people acting out and shoplifting” at the store. “Fingers crossed we can turn things around here and I do have some optimism, but hopefully we can get this supermarket back open,” he said." Reducing crime in the area is the solution here not calling people racists. If you call Whole Foods racists, they may never want to open a store in that market area.

Per research there is a correlation between income, age, class, gender, race and increased street crime, see link below. Lower income, 15-24 age group, lower class, males, black then Latino commit most street crime per research. Lower income areas tend to have more 15-24 year olds, lower class, males, blacks and Latinos which commit more crime. More correlation. Increased crime levels is another reason why Trader Joe's would not want a store in a lower income area. Crime reduces sales, adds costs and eats into profits. https://open.lib.umn.edu/socialproblems/chapter/8-3-who-commits-crime/

Andre Perry's article looks at premium markets. Premium markets like Trader Joe's sell specialty items, organic food and higher priced items. It makes sense to be located in an area where people make more money. If you don't have a lot of money and went to Trader Joe's, you wouldn't be able to afford to buy as much food. You'd rather shop at the 99 cent store where I shop or Dollar General. There is plenty of good, healthy, affordable food at the 99 cent store. I buy beans, rice, fresh fruits, fresh vegetables at the 99 cent store at a better price than Ralphs, Trader Joe's and Whole Foods. I'd be pissed if I didn't have a 99 cent store not a Trader Joe's. Only uppity people like Andre Perry would demand a Trader Joe's. If you want to shop at Trader Joe's to buy $11 lavender flavored organic nuts, just go to one. If you can't travel, the 99 cent store is fine to buy regular nuts. People don't need specialty grocery stores. They just need to buy good affordable food. Next Perry will be whining that there's no Gucci store in low income areas.

I'm Latino and live in a predominantly Latino area because it's a poorer area in Los Angeles. We have a 99 cent store and a Ralphs. I eat good, healthy, cheap food and am happy. I don't want or need an expensive Whole Foods or Trader Joe's store. Maybe I should be like Andre Perry and yell that markets are racist against Latinos because I personally don't get what I want. Perry seems to always forget that his predominantly black areas (10% or more black) also have 90% poor Latinos, whites and others. He only cares about black people because he has a personal agenda. I read most of his book "Know your price" and he basically admits that he's racist against white people. He blames every problem on white people.

Maybe I should lie and state that all companies that don't cater to poor Latino me are racists against Latinos. I'd probably get a good following of poor angry Latinos who think all their problems are caused by others. I bet I could write a book about Latino hate and make money writing hate books, giving hate speeches and spewing racist lies to further divide our country just like Andre Perry. I would never do that because that would be dishonest and racist. Andre Perry is doing it because of his racism and he likes the money and false accolades. He needs to make more money so he can shop at more expensive Trader Joe's.

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


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Monday, February 20, 2023

Rebuttal to Marcia Fudge's Misleading 2022 CNN Interview by Mary Cummins Real Estate Appraiser

Marica Fudge, HUD, Laura Coates, CNN, interview,Mary Cummins real estate appraiser, bias, discrimination, racism,white, black, Latino, home value, 


Marcia Fudge of the Housing and Urban Development Department (HUD) was on CNN August 22, 2022 with Laura Coates discussing alleged appraisal bias. "Housing and Urban Development Sec. Marcia Fudge says her department is examining the process in which home appraisers collect data, which she says is systemically biased against people of color." "HUD Secretary On Battle Against Racism In Real Estate."

Here is a link to the show:   https://www.cnn.com/videos/business/2022/08/22/hud-sec-fudge-racism-in-home-appraisal-process-coates-intv-ctn-vpx.cnn

Here is a link to the transcript: https://transcripts.cnn.com/show/se/date/2022-08-22/segment/01

Marcia Fudge continues to promote the false narrative of the alleged "racist appraiser" "devaluing black owned homes." Marcia Fudge has the facts and independent research yet actively intentionally promotes the false narrative to promote her own agenda. Fudge's agenda is to get media attention for herself and more money for her department. Fudge and politicians have created this problem so they can state they alone can fix it. In fact based on what Fudge said in the interview the problem has already been fixed just by doing the same thing they've done for years.

The real issue is the income gap. White owned homes are valued more than black, Latino owned homes because of the income gap. Whites make more money than blacks, Latinos. The more money you make, the more money you have. The more money you have, the more expensive home you can buy and own. The more expensive home you have, the more generational wealth is created.  If you want to fix the home value gap, fix the income gap. Fudge won't admit to that because then the problem is not in the jurisdiction of her department HUD and she won't get more money.

Below are some very misleading quotes by Marcia Fudge.

"Because what we know is that it used to be that these things happen only in redlined
communities. But now it is pervasive, it is happening everywhere. And we determined that part of the problem was how appraisers are trained, who was in the appraisal industry, and how they are governed. And so, what we did, in March, was to present a report that showed how deeply, this whole bias situation, is across this country. It is systemic, and it is intentional to some degree."

Marcia Fudge doesn't understand redlining. Here's an article I wrote about it. Those risk maps were made by her own government agency HUD FHA and no longer exist. Government made risk maps were a way to determine loan risk. They included many factors. We still use all of these factors except we don't use race or country of origin. If you took race and country of origin out of the old maps, they were 100% as effective in determining risk. Obviously race and nation of origin have nothing to do with loan risk. Correlation is not causation. Not all maps even included those factors. 

"That's part of the problem, Laura, it's the data. So, they collect data, and the data is not what it should be. They then use the data, in a way that it should not be used. And so, they come up with these biased appraisals. But as well, when you look at an industry, that is more than 95 percent White, you find that people of color, are treated differently, because there is an inherent bias with a lot of them. And because they collect the data, the data is not good data."

Appraisers don't collect data. The data is home sale prices. It's just data. HUD collects this data. Zillow has and uses the same data. MLS, Title collect data. Appraisers use the public data according to the law and well established, accepted economic theory. HUD is one of the government agencies which told appraisers what data to use and how to use it. Appraisers are doing what HUD told us to do.

95% of all appraisers aren't white. I've gone over the misleading statistics in previous articles. Almost the same amount of appraisers are white as real estate agents. If most agents are white, does that mean they are also all racists? Most people in the US are white. Does that mean every white person is racist? Of course not. 

"If those homes are appraised the way that they should be Laura, then we look at being able to pass down, significantly, more resources, and more wealth, to generations that follow." "And if we are
constantly being discriminated against - and that is really what this is. We can call it bias, if you want. But it is systemic racism, and it is built within most federal agencies, and those agencies that we oversee." 

This is the result of the income gap and not appraisers. Here is AEI's response to the PAVE Task Force. Fudge knows this. She has the facts, data and research. If she truly believes this, she should be fired because she's incompetent. Fudge is just lying to the public. 

"So, we're tackling it. We are now advising first-time homebuyers, on their rights, if they get low appraisals. We are doing it to people, who sell properties. We are going to train all of the appraisers through fair housing and lending laws. We're going to make sure that the data is collected properly. And we're going to make sure that the right people have the data."

Fudge's solution is to do what we've already been doing for years. Fudge created a "horrible" problem then instantly fixed it by doing nothing. All these things have already been done years before she was the head of HUD. This proves she knows the problem doesn't really exist. She hasn't made any real changes and now it's "fixed."

Marcia Fudge stated that her own home is worth less than white owned homes down the street because she is black. This is of course false. I did a valuation of her much older home on a busy highway. It's worth less than the homes up the street because they are new luxury homes off of the highway. If Fudge doesn't understand this, she doesn't understand the basics of home appraisal and should resign as head of HUD. She states this falsehood for effect every time she speaks. 

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 40 years of experience.


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Tuesday, February 14, 2023

Real Reasons Appraisers Come in Below Contract Price by AEI. It's not Racism, by Mary Cummins



AEI just released a report about appraisers coming in below contract price in areas with lower income buyers, lower priced homes and more blacks and Latinos. This is exactly what I've been talking about. Again, AEI proves it with science and facts. Just FYI AEI is considered a "conservative" source. 

"Our critique points out some significant shortcomings of these studies. Notably, they focus on entire
neighborhoods, when they should study the actions of individual appraisers. They use the greater share
of under-valuations as evidence of racial bias, when they should consider explanations unrelated to bias
that might account for under-valuations, including for example the greater share of first-time
homebuyers, who tend to overbid, or the greater presence of seller concessions, which will reduce the
appraisal amount when they are properly accounted for. They also fail to note the size of these undervaluations. Using the Aggregate Statistics Data File and Dashboards, our analysis indicates they are relatively small, averaging about $1,100 to $1,900.5 These levels are too high if they are in fact due to racial bias. However, our analysis finds multiple other plausible explanations for under valuations of this magnitude such as the greater presence of first-time homebuyers or seller concessions. We also note
that under valuations of this magnitude of are unlikely to depress entire neighborhoods and, they may
in fact provide a disproportionate consumer benefit to minority homebuyers.

We conclude with a renewed call on Fannie Mae, Freddie Mac, and regulators such as the FHFA to mass screen individual appraisers for racial bias and inaccuracies. We have already laid the groundwork for this research with a published working methodology." 

The most important issue which I've stated previously is they focus on appraisal value and contract price for purchases and no refinances. When doing an appraisal for purchase the appraiser NEVER sees, meets the borrower, buyer. We may see the seller or the seller's agent but never the borrower. The government study also doesn't know the race or color of the borrower, buyer AND appraiser. What if it's only black appraisers coming in low with black borrowers? A recent horrible unreliable "study" showed that the appraiser who came in the lowest for black people was themselves black. 

More important observations from AEI's study. Contract price does not equal market value. First time home buyers which are more likely in these lower priced areas are more likely to over bid. They don't always know they can negotiate. These same areas tend to have homes in lower condition. The appraiser adds more comps to appraisals which are below contract price. I do this to fully back up my work so everyone can understand the value. An appraisal that comes in below the contract price would not endear you to the AMC or lender. Appraisers HATE coming in below contract price but we do it because it's the right legal fair thing to do. The appraisal is to secure the loan not help a buyer or seller.

Some good snippets though you should read the entire report.

Fist time buyers offer over market value. "Shui and Murthy (2019) conclude that first-time homebuyers using Fannie Mae or Freddie Mac financing overbid for a home by approximately $3,000, or about 1% of the contract price for the average home compared to repeat buyers. They also find that FTBs with higher LTVs tend to overpay by more compared those with lower LTVs. FHA borrowers, who are disproportionally concentrated in minority census tracts and largely FTBs, typically have higher LTVs and lower credit scores and may thus be more likely to overpay than other buyers."

There are more seller concessions in these first time buyers, buyers using gov funding and these areas. If a home sells for $100,000 and has a $3,000 seller concession, appraisers subtract $3,000 from $100,000 in the adjustments. The net price is $97,000 which is under contract price now by 3%. There are more concessions to help buyers buy the property and because of condition.

There are more buyers for lower priced homes. This causes buyers to over bid for homes based on supply and demand. We saw this during the recent Covid runup. Buyers bid and paid over list price. They had to make up the difference in loan amount with a larger down payment. 

First time buyers aren't just competing against other buyers but also against their rent. Many only compare what they are paying in rent to what their mortgage will be. Quick story. Friend of mine was buying a cheap mobile home. She wanted to buy a cheap home because the mortgage is less than her rent. She was buying it to save monthly expenses. Appraisal came in $20,000 below contract price of $85,000. She asked me for help. I told her appraisal value looked correct. I told her to ask seller to reduce price. She said "but it's actually worth $85,000! It's almost the cheapest house on the market! I will lose the home to someone else! I have to buy this home because the monthly payments are cheaper than my cheap rent!" She didn't care about the price but the monthly payment being less than rent. She only wanted to find a way to get $20,000 more cash for the down payment. Thankfully seller reduced the price. The appraisal gap prevented her from over paying for her first home. Many first time buyers in less expensive areas feel the same way. 

Buyers using government funding tend to overbid. They're buying the home with someone else's money because of lower down payment requirements.They just want the home at any price believing it will instantly go up in value and they will have thousands in equity to take eventually. The government told them this is the American dream.

The actual appraisal gap is small. There is almost no gap in Latino areas and 1% in black areas. The government made this huge stink about appraisal gap and there barely is one! "In our prior critique of Freddie Mac’s research note, we find that “there appears to be no gap [in home purchase appraisals] relative to White tracts for Latino tracts and a relatively small gap [in home purchase appraisals] of 1-2% for Black tracts.” They mean predominantly white, Latino or black census tracts. None are 100% white, black or brown. That means whites are having the same issues in those areas as blacks and Latinos. The gap is not a color issue because the same things happens to whites in the same area. 

AEI again debunks Andre Perry's "paper." Perry stated appraisers devalue black owned property by $48,000 per home. That's much more than the difference in contract price and appraised value of 1%. AEI pointed out that homes owned by poor whites are also valued less than homes owned by wealthier whites. It's not because of skin color but income, wealth and location.

Appraisals coming in below contract price can help lower income Latino, black buyers. They can renegotiate with the seller. The government didn't say the buyers never closed on the properties and the deals died. They're prevented from overpaying and ending up upside down. AEI state that the government is part of the problem. They help and allow buyers to over pay for  homes at the top of the market only to lose those homes later when the market tanks or they have a financial emergency. And you know who the government falsely blames for that? Appraisers!

This kind of reminds me of the destroyed apartment buildings in the Turkey earthquake. Their President bragged that he reduced earthquake requirements to allow the construction of 300,000+ homes for lower income people. That is one of the major causes of the high fatalities in the earthquake. The President basically killed people. FHA and the government like to brag that they helped low income people buy homes. Then they lose their homes because they over paid at the peak of the market and couldn't easily pay the mortgage. Also reminds me of our student loan problems. Latinos, blacks are the ones stuck with huge student loans while the government brags they helped them get an education. Most didn't even finish their education and get the degree or certificate. Most of the ones that did didn't even get the better paying promised job. Governments just want to brag that they "helped" people not caring that they actually destroyed them financially. If the government helped them find a way to earn more money, they could buy a home on their own and afford to stay in it. 

AEI suggest mass screening of appraisers to check for racial bias. I support this. If any appraiser knew of a racist appraiser who came in low on a black, Latino owned home because of their racial bias, they would love to take that appraiser back behind the wood shed. All appraisers are being attacked, vilified, defamed based on this false narrative of the "racist old white male appraiser." While racism sure as hell exists, not all appraisers are racists who lowball Latinos and blacks. If there are appraisers doing this, other appraisers would be the first to hold them accountable and strip them of their license. 

FTR Dan Wiley of Freddie Mac stated this about their appraisal gap research. "We have not reached any conclusion for cause of the gaps or correlation. Our research showed that further studies are warranted." Danny Wiley and Freddie Mac are doing further research into the possible causes of the appraisal gap. They are looking at all the new data and reviewing all appraisals involved in the appraisal gap research. Of course that hasn't stopped Marcia Fudge, HUD, media... from running with Freddie Mac and other's inconclusive data about appraisal gap from stating it's allegedly caused by racial discrimination by appraisers. 

https://www.aei.org/research-products/report/exploring-alternative-explanations-for-appraisal-under-valuation/?utm_source=newsletter&utm_medium=email&utm_campaign=exploring_alternative_explanations_for_appraisal_under_valuation&utm_term=2023-02-14


Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


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