At deadline, it is uncertain what the terms of the settlement were between the couple, Yvette Bailey and Kenneth Romer, and Santander Bank. The bank did not respond to a request for further information. 

This case is among a handful of legal actions filed after the refinance boom, which are accusing financial services companies of relying on biased appraisals that resulted in borrowers being denied loans.

The current legal action filed in a Connecticut federal court alleges the bank, which exited U.S. residential mortgage lending in 2022, discriminated against Bailey and Romer by relying on a biased appraisal done by Cavanaugh Appraisals, LLC. The plaintiffs said the appraisal "dramatically undervalued" the house and Santander ultimately denied the couple a refinance loan. The suit was first reported by Law360.

The house was expected to appraise between $1.2 and $1.7 million, but had a valuation of $780,000. According to documents, the appraiser, Mary Jane Cavanaugh, spent a mere 10 minutes in the property and quickly left. During that time, the couple's mixed race children were at the property, which the suit implies may have had an impact on the valuation.

Most of the comparable properties Cavanaugh allegedly selected were further from the property than necessary, the worth of the land was also "drastically low for Avon, and realistically drastically low for much of Hartford Country; she also ignored that Plaintiffs have a second approved building lot on their land," the lawsuit said.

After being denied the loan, the couple went to another lender and made the decision to "whitewash" their property before an appraisal "removing family photos and any artwork that would be associated with black culture." The couple "felt embarrassment, humiliation, and anger that they had to carry out this experiment," the suit said. 

The home appraised for $1.2 million, $420,000 more than Cavanaugh's appraisal less than four months prior. 

"Plaintiffs made no significant improvements in their home in the interim, and although median home prices in Avon had meaningfully changed since Defendant Cavanaugh's appraisal, [the new appraiser James] Boothroyd actually concluded that the market for luxury homes such as the Plaintiffs' had declined by 5.5% in that area," the suit said. "Mr. Boothroyd's appraisal confirms that Defendant Cavanaugh's appraisal was grossly inconsistent with appraisal guidelines and principles and that her excuses for devaluing the Plaintiffs' home were invalid and pretextual."  

Per documents, the couple accuse both the appraisal company and Santander of violating the Fair Housing Act, the Equal Credit Opportunity Act, the Civil Rights Act of 1866 and the Connecticut Discriminatory Practices Act.

The prevalence of appraisal bias cases in the housing industry has spurred the federal government to take action. In 2021, the White House formed the PAVE task force to take action on evidence of appraisal gaps from studies by the government-sponsored entities last year.

Meanwhile, housing agencies such as the Department of Housing and Urban Development and the Department of Veterans Affairs have proposed policy changes to address potential bias.