Details About Alleged Racial Bias Case in Allendale, Oakland, California from Civil Rights Department by Mary Cummins Real Estate Appraiser

allendale, oakland, california, mary cummins, real estate appraiser,bias, discrimination, real estate, appraiser, appraisal, real estate appraiser, fair housing,redlining, 

This morning I received the results of a California State Information Act Request I made regarding an alleged case of racial bias in Allendale, Oakland, California which was settled May 2024. I requested any and all documents in the case involving the appraiser because I didn't have the complainant's name or property address. I only had the appraiser's name which I won't post in text. 

Complainant stated appraiser told them they should remove security bars from windows. Complainant stated this is evidence of "racist discrimination" based on "racism/includes hairstyle and hair texture." Security bars on bedroom windows which don't release from the inside are against code in California since about 1995. All appraisers, lenders tell everyone to remove the bars because it's the law and prevents people especially children from burning to death in a fire.

Response to State Information Act Request. They redacted name and address.

https://drive.google.com/file/d/1muiicnMhbJfi7F5L2vcltoYvdw8HbIXq/view?usp=sharing

Summary of response. They redacted name and address.

https://drive.google.com/file/d/15KPOXRBORCfL9LknvGr5TiWwObqoHvRJ/view?usp=sharing

Press release from Fair Housing Advocates of Northern California about the case.

https://www.fairhousingnorcal.org/press-releases-and-statements/discrimination-complaint-alleging-race-discrimination-in-home-appraisal-process-settled-with-appraiser

I was hoping for an address or name so I could check the values by doing historical valuations. No such luck but I did get other vital information from the complaint, see below. This information shows the first appraisal probably wasn't biased but the second higher one probably was. I will say that census tract 4070, Allendale, Oakland, California is an area going through revitalization and rapid home appreciation. ( FHANC are the ones who stated the tract. Appraisers don't look at tract information. I'm looking at it now because FHANC mentioned it in their complaint. Allendale is almost exact same area as the tract) If you look at the census map linked directly above, the MacArthur Fwy 580 goes through the tract. Generally freeways are initially built through areas which had lower values because it's cheaper for the city, county, state to purchase the land. Allendale is across the bay from much higher priced San Francisco. People priced out of SanFran have been pushed over into Allendale, Oakland for years now. This is why prices in Allendale and the surrounding area have been increasing rapidly especially for fully renovated properties. Properties near freeways vary more in value based on proximity, view of the freeway. This is a map of Allendale on Google. Here is Zillow (I know, I know) chart of home appreciation in Allendale over time. Zillow is okay for trends but not for specific home values.

We do know that the subject property needed repairs. An older property in an area going through revitalization is a more complex appraisal. It will be worth less than similar properties which have been fully renovated. The cost to renovate an older home in this area can easily run $250,000. Most of these homes, duplexes were built 1900-1930. 

FHANC states Allendale is a "black neighborhood" which is a racist statement. Census docs state the inhabitants are mainly Latino, Asian, White, Black in that order of percentages. "Black" is actually the smallest percentage of the population in that area. This shows a false statement and bias by FHANC. Census docs state median value of owner occupied homes in area today May 2024 is $702,200 ±$68,592. 78% of homes worth $500-$1M. Only 8% worth over $1M. The home was worth less at the time of appraisal 2021. Median prices for the area were lower then.

The owner stated she had two recent previous and one subsequent appraisal on the property. That's a red flag right there. Why did she make so many recent loan applications? Clearly the previous loans were probably denied or she wouldn't be seeking yet another loan. This would also cause more credit inquiries which make it more difficult and expensive to get a loan. A good loan agent would have explained all of these things to her before doing a credit check or appraisal. Sometimes you need to work on credit or the property before doing a credit inquiry or appraisal or you'll just get rejected and have to wait six months minimum to reapply.

The owner stated the property needed work. "Ms. Trent applied to a mortgage company to refinance her home loan and to use some of the equity to finance  needed repairs and renovations." "I was relying on being approved for the loan to in order to make improvements to my heating and bathroom going into the winter." Many banks will not give a conventional loan on a property if it needs major repairs or is in less than average or fair condition. The appraisal value is not the only reason why a loan could be denied. Sometimes lenders just state that when it's not true to deflect blame, complaints and lawsuits. Even if the loan to value ratio were higher than the borrower desired, the borrower could get a higher LTV ratio loan if they had good credit and/or paid a higher rate. 

One interesting note is that the complainant states she was discriminated against based on her "Race (includes hairstyle and hair texture)." She claims she was "Denied equal terms and conditions; Denied loan/home owners insurance." She claims the appraiser made racist, racially charged statements which were "critical of her and her home specifically that her security bars should be removed." Unreleasable security bars must be removed from bedroom windows because people can die in a fire. They can be replaced with bars which release from the inside so people can escape a fire. That's not racist but California Health and Safety, Building Code and the law since 1995-1998! Here is the Oakland security bar law. I've said that to everyone with security bars even when I don't see or know what the owner looks like.

She claims the appraiser adjusted sold comps down $150,000 to $200,000 based on their superior condition. She stated her home needed work. We're supposed to adjust for condition. She stated appraiser only used two comps in area with more "white people" unlike her area. She wanted "white" comps just like the last case in Oakland. Again, it's the race income home value correlation and not race home value. Whites make more money than Latinos, blacks. People who make more money have more money and buy/own more expensive homes in more expensive areas. The correlation is not race/color = home value. 

She goes on to mention "redlining" maps from 1935-1968. Here's an article I wrote about redlining. The maps were made by the government's Home Owners Loan Corporation to determine property risk factors so the government could give people cheaper loans to help the economy. It included many factors which we still use today. Some maps included race, nationality of inhabitants, not owners of the properties getting the loans. Race, nationality were omitted in 1968. Race, nationality were a mere correlation to value, risk because of income. They were not a direct factor which caused the property owner to be considered high risk and be denied a loan. There were red zones which had no black people. It wasn't black=redzone=loan denied. It was high risk=redzone=loan could be denied.

She said her property was in a yellow zone almost 100 years ago. ( HOLC aka "redline" Map of Oakland 1936-39) Makes sense as it was closer to new then and there was no 580 freeway. She said appraiser cut off comp properties at the 580 freeway. 580 built 1960 after home was built. That makes total sense as that is the edge of Allendale. She wanted the appraiser to choose only certain higher comps in a circle around her. We shouldn't always choose a perfect circle around the subject because neighborhoods aren't laid out that way. She said appraiser only chose comps from specific areas. That's what we're supposed to do. She said appraiser chose comps based on 100 year old redlining map. I doubt the appraiser has even seen the redlining maps from 100 years ago. Research has also shown that redlining affected the white property owners mainly. Research has shown that redlining does not affect properties today in a negative manner. Those areas have actually appreciated the most through revitalization which some incorrectly call "gentrification."

She states appraiser lives in the Bay Area. She also I assume Googled the appraiser after the appraisal. There is allegedly a photo of the appraiser in San Francisco in front of the Gadsden flag with a caption that states "Don't tread on me! A warrior of light never accepts the unacceptable." She states that's racist. The phrase is the opposite of racist. The first part "don't tread on me" is a message to the British not to trample on the rights of Americans. The second part is from "Excerpt from Warrior of the Light: A Manual by Paulo Coelho." The phrase is against antisemitism and Hitler and other ills of the human race. The Gadsden flag flies in the Civic Center of San Francisco. "The Gadsden Flag is a historical American flag with a yellow field depicting a timber rattlesnake coiled and ready to strike, beneath which are the words “DON’T TREAD ON ME.” Its creator, Christopher Gadsden, designed it in 1775 during the American Revolution as a warning to Great Britain not to violate the liberties of its American subjects." She is clearly racist. She sees racism in everything. I realize people who have been discriminated against in the past will assume everything they don't like is racism but it's not.

First appraisal December 8, 2021 at $785,000. Second was a month or so later at $1,125,000. This sounds exactly like the other Oakland case of alleged bias. It's also directly related to an article I just wrote on why appraisal values can vary. That is a huge difference. It appears the second appraiser used properties in a more expensive neighborhood/area farther from the 580 freeway and subject which were in superior C2-C3 renovated condition. I believe the second appraiser was incompetent and trying to avoid a complaint. Higher value means happy borrower and no complaint even if the appraisal is riddled with mistakes and is bank fraud. It takes a good experienced ethical appraiser to come in at market value in these situations knowing there could be a nightmare frivolous meritless complaint like in this case.

Sadly we don't have enough information to know if there was any discrimination in the valuation process beyond what I just stated. Based on the complaint there was no discriminatory behavior. I think the differences in values were due to the second appraiser selecting comps in a different area and not properly adjusting down for inferior subject condition. They may have done that because they knew they were the second appraiser and didn't want a complaint or lawsuit. Maybe the owner told them about the first lower appraiser and said she's filing a complaint. The second appraiser should have been reported to BREA and sued for bank fraud.

Based on my experience researching these cases discrimination is not the issue. The borrower just wanted a higher value. She probably got real estate agent, Zillow postcards in the mail saying "a "similar" home just sold for $1,500,000." "Find out what your home is worth today!" She assumed her home in fair condition would be worth the same when it's not. Agents do this to drum up business. If anyone has more information on this case, please, let me know.

Below is the main three page complaint from owner/borrower. The one from FHANC is almost identical. This is also in the pdf above.

Appraiser John Dorie sent me this information about fire code.

"The International Residential Code, IRC, Section R310 dictates the MINIMUM specifications for

a Sleeping Room. The International Fire Code, IFC, Section 1031 also specifies the minimum

regulations for Emergency Escape and Resue from Sleeping Rooms. Both Codes work in concert

without disagreement.

IRC Section R310.1 and IFC Section 1031.3 require all, “Basements, habitable attics, and every

sleeping room shall have not less than one operable emergency and rescue opening.”

IRC Section 310.2.1 and IFC Section 1031.3.1 and .2 require a minimum of 5.7 sf (net clear

height min 24", net clear width min 20") for the emergency and rescue opening.

IFC Section 1031.6 focuses on “bars, grills, covers and screens” covering possible escape and

rescue windows and doors and is specific stating, “Such devices shall be releasable or

removable from the inside without the use of a key, tool or force greater than that which is

required for normal operation of the emergency escape and rescue opening.”

Below is a sample State Information Act Request, Freedom of Information Act Request. Most Government Departments have forms you can fill out and submit online. You generally request the documents from the Public Records Act contact. I've been doing this with the cases I've covered in my blog.

"Dear Custodian of Record,

Pursuant to my rights under the California Public Records Act Government Code Section 6250 et seq., (or Freedom of Information Act if federal department) I ask to obtain a copy of the following, which I understand to be held by your agency:

(List specific and general items such as all communications, documents, data, files written and otherwise concerning person, address, complaint, lawsuit....)

I ask for a determination on this request within 10 days of your receipt of it, and an even prompter reply if you can make that determination without having to review the records in question.

If you determine that any or all or the information qualifies for an exemption from disclosure, I ask you to note whether, as is normally the case under the Act, the exemption is discretionary, and if so whether it is necessary in this case to exercise your discretion to withhold the information.

If you determine that some but not all of the information is exempt from disclosure and that you intend to withhold it, I ask that you redact it for the time being and make the rest available as requested.

In any event, please provide a signed notification citing the legal authorities on which you rely if you determine that any or all of the information is exempt and will not be disclosed.

If I can provide any clarification that will help expedite your attention to my request, please contact me. I ask that you notify me of any duplication costs exceeding $50 before you duplicate the records so that I may decide which records I want copied. I would prefer to receive the records including audio by email at ***.

Thank you for your time and attention to this matter."

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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Redlining in home loan financing - Mary Cummins, Real Estate Appraiser, Los Angeles, California

UPDATE: 08/12/2023 AEI just posted an op-ed about redlining. It stated only 20% of people living in redlined areas at the time were black owners. I previously stated most who owned property in redlined areas were white. Now we know it was 80% which proves my point with research. Whites were primarily negatively affected by redlining because whites owned the property. This proves that blacks were not the target or "victim" of redlining.

This also shows that blacks and others were pushed into these areas because they were cheaper to rent. That is why they were drawn to those areas. No one corralled them into these areas. Poor whites, Latinos, newer immigrants were also in these same areas for the same reasons. Redlining did not cause the areas to deteriorate.

“Our results suggest that racial bias in the construction of the HOLC maps can explain at most 4 to 20 percent of the observed concentration of Black households in the lowest-rated zones. Instead, our results suggest that the majority of Black households were located in such zones because decades of disadvantage and discrimination had already pushed them into the core of economically distressed neighborhoods prior to the federal government’s involvement in mortgage markets.”

Redlining did not keep black people from owning homes. "However, there was a robust growth of black home ownership during the postwar era; continuously increasing from 21% in 1940 to 54% by 1980."

Another point is the condition of the homes in primarily black owned areas. They previously were middle class white areas which experienced deterioration and decline which is a natural real estate cycle. This made the properties cheaper and blacks and others were more easily able to afford to rent them. Some even owned them. Redlining didn't cause this. It's just a real estate cycle which happens all over the world. Blacks, Latinos ended up reaping the benefit of buying the depreciated homes when the areas went through the revitalization stage and greatly increased in value. They sold the properties at a large profit.

"Unlike the Oliver-Shapiro assertion that “their homes and communities deteriorated and lost value,” many of these black neighborhoods were previously upper-middle class ones. This filtering down housing process provided a financial foundation for many black families. And when the professional classes chose to repopulate some of these neighborhoods, black homeowners, including Washington DC’s Shaw district, reaped the gains from further housing appreciation."

Another interesting point is the wealth gap between whites and blacks. It's not caused by the median or average family wealth differences. It's mainly caused by the upper class wealth. I would bet that most of the overall wealth gap is driven by the 5% most wealthy people who are white. If you removed people worth over $5,000,000, the wealth gap would shrink immensely. It's probably the billionaires driving most of the wealth gap.

"The left-wing blogger Matt Bruenig found that if black households in the lower half of their distribution had their wealth raised to be exactly the same as white households in their lower half, the overall racial wealth gap would be reduced by just 3 percent. As a result, he concluded, “What this shows is that 97 percent of the overall racial wealth gap is driven by households above the median of each racial group.” Indeed, over two-thirds of racial gap reflects the differences in assets held by the top ten percent of households in each group. Class, not race is the major driver of wealth inequality. "

Another reason for the wealth gap is the difference in family structure. Couples have more money than single people.

"To be sure, racial disparities in home ownership rates persist. But a significant share can be explained by family structure. In 2022, overall black homeownership was 44 percent; but for married couples it was 64 percent, virtually the same as the overall white homeownership rate. "

https://www.aei.org/op-eds/the-racial-wealth-gap-myths-and-realities/

ORIGINAL: Redlining - Definition: To refuse (a loan or insurance) to someone because they live in an area deemed to be a poor financial risk.

The National Housing Act of 1934 created the Federal Housing Administration FHA to help revive the US economy after the Great Depression. The purpose of the FHA was to provide affordable loans so people could buy homes. Private lenders would make the loans and the federal government would insure them for losses. The new loans would have lower down payments, smaller monthly payments and were more affordable.

President Roosevelt's New Deal created the Home Owners Loan Corporation to help process the home loans. "To facilitate private investment through the FHA, the HOLC, and the Federal Home Loan Board Bank (FHLBB), the federal government crafted a national set of standards for assessing mortgage risk. Through its 1935 City Survey Program, the HOLC gathered data about neighborhoods from approximately 239 cities and compiled the results into a rating system ranging from A to D. Communities with A ratings represented the best investments for homeowners and banks alike; B, neighborhoods that were still desirable, C, those in decline, and D, areas considered hazardous. "A" communities generally had access to better amenities such as better schools, parks, shopping, transportation and were therefore more desirable. "D" communities generally were located near less desirable features such as industrial properties and they had fewer and lower quality amenities." To visually capture these rankings, the HOLC then turned these ratings into color-coded maps, using green for A, blue for B, yellow for C, and red for D – the origin of the term “redlining.”

Many researchers have stated the HOLC maps were more a consequence of existing ordinary and discriminatory lending practices as opposed to being a cause for them. Still, the spatial isolation could make it a self-fulfilling prophecy over time. Many have stated the ratings were just a description of the current state of the real estate cycle for each neighborhood. A "D" area could be revitalized, redeveloped into a "B" area. If that area improved with the addition of more public transportation, parks, schools, shopping, it could become an "A" area. This is what has happened in downtown Los Angeles and other areas such as Boyle Heights which some refer to as gentrification. Areas which were in a then D zone are now a B zone. The reverse has also happened. Some areas which were B are now D. Real estate risk constantly changes.

Others have shown how the HOLC grades were more a function of factors such as housing condition, residential density, and housing type, as opposed to solely ethnic and racial composition. If the ethnic and racial compositions were not included in the maps, it would not have affected their accuracy in determining loan risk. Over time some of these ratings became more associated with race and immigration status than unbiased risk. The term "red zone" ended up having a connotation of POC, immigrants living in poor areas. Generally poorer people, people of color and immigrants lived in the C, D areas because it was less expensive. Over time the redlining caused less investment in C, D areas and more in A, B areas causing a greater divide between the areas. As people were pushed out of more expensive A, B areas and into C, D areas, those areas became A, B areas.

It must be noted that the actual HOLC maps never stated "D is a black area" or "D is an immigrant area." There were worksheets prepared by individuals which were used to determine the risk of each specific area. Those worksheets included many factors and descriptions including the following from top to bottom (see worksheet for an area of Los Angeles below), population, class and occupation, nationalities, income, sometimes "negro" %, building type, size, age, condition, owner/tenant % occupancy, home price bracket, sales demand, predicted price trend, sales demand, new construction, rate of sale of new construction, overhang of HOLC properties, description and characteristic of area. It's important to note that the maps only covered 239 cities. We have 108,000 cities in the US. The entire US was never mapped. Only .2% of cities were mapped, 1/5th of 1%. It's clearly impossible for the mapping of only .2% to affect all cities today.

Today in real estate appraisal and analysis we use all of the above factors except race and nationality. It's a violation of the Fair Housing Act to consider or mention race or nationality because it would be discrimination. All of the other factors are good indicators of value and trends. Now the US Census does include race and whether or not someone is "foreign born." The census has nothing to do with real estate sales or loans. It's a population study.

That said the areas ended up correlating with higher populations of POC, immigrants and poor people based on affordability. There is a direct correlation between income and POC. Whites make more than Latinos and Blacks. People with more money buy more expensive homes in more expensive areas. If the government wants to correct the wealth gap, they need to fix the income gap. Appraisers can't do it. If one were to note today property in the four distinct phases or life cycles of real estate, one would probably find a higher percentage of POC, immigrants and poor people in those same areas because hazardous, run down, less desirable areas have lower rent and less expensive homes to buy. In some areas, it's all poor white people. The correlation is income and wealth. People buy or rent what they can afford based on their income. Wealth is tied to income. Race correlates with income. The correlation is NOT race = home valuation. The causation is income.

The Fair Housing Act of 1968 made redlining due to race illegal. It became "unlawful to discriminate in the terms, conditions, or privileges of sale of a dwelling because of race or national origin." A bank could no longer refuse to make loans in certain areas based on those specific factors. Banks can only refuse loans based on the credit, credit history, income, assets, debts, expenses of the buyer, borrower. Those were the only factors that ever mattered in relation to risk anyway.

I am using this example below because it specifically mentions race, nationalities. Not all of the worksheets noted it. It was up to the individual filling in the form. The race, nationality had no effect on the rating. It was just reporting. They could have omitted it and ratings would have been the same. We know that race, immigrant status, being poor correlated with the lower C and D ratings because they correlated with lower income, lower net financial worth, lower credit ratings which affects affordability. This is not to say one caused the other. This is just to aid in the explanation of what "redlining" was.

Another important thing to consider is most people in the "redlined" areas were renters. Generally these areas are 80% tenants. The people who owned the property were mainly white. White property owners were the ones being denied loans or charged more for the loans. POC property owners were in the minority but they were also denied loans or charged more. And again this is only for government backed loans. People still got loans on the properties from sub prime lenders. We still have sub prime lenders today who do riskier loans. Those riskier loans are for riskier borrows or properties. A risky borrower has little cash, poor credit, lots of debt, shorter confirmed work history, undocumented work history, little income showing on tax returns, income only from retirement funds or investment property... A risky property is located in a wildfire area, higher risk flood zone, lava zone, tornado zone, next to river/ocean/lake, landslide area, on an earthquake fault, condo development with a major lawsuit, condo development with insufficient repair funds, older property, property not in average condition, property that needs seismic word, property with tenants that refuse to move, property that is behind on property taxes... Notice all these risk factors have nothing to do with race or color. These are just loan risk factors. Any safe bank would consider all of these risk factors especially if they are offering and reselling government backed loans.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.

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