Carlos Turner, a Black man, and his wife, Diana Davoli-Turner, a Canadian permanent resident, say the whitewashed appraisal was 39% greater than the bank-appointed review. The couple's federal lawsuit, initially filed in December, echoes a complaint filed in 2022 against Loandepot and follows greater attention from feds on the issue of racial bias in the valuation process.

The couple claims their Springboro, Ohio home was appraised by an in-state company at $520,000 in March 2022. It was a review done with a different lender as the homeowners mulled a refinance amid lower interest rates. Davoli-Turner later applied for a home equity line of credit with U.S. Bank, and a review by a different appraiser, Kevin Henley of Henley Appraisals one month later determined a $470,000 home value. 

Henley's appraisal was filled with errors and the bank did not perform any additional review, according to the complaint. The couple, considering rising rates, a few months later agreed to a $34,363 HELOC with U.S. Bank for a 30-year term with an interest rate over 10%.

"The Henley defendants' undervaluation of the Turner plaintiffs' home reflected their belief that, because plaintiff Turner is Black, and plaintiff Davoli-Turner is not a U.S. citizen, they did not belong in Springboro, a predominantly white city," the suit states.

The Turners contacted the Miami Valley Fair Housing Center, a Dayton-based nonprofit, to investigate their ordeal, and the organization arranged a "whitewashed" appraisal in May 2023. The walkthrough involved removing photographs and other markers of the family's ethnicity, and the plaintiffs weren't present. That review determined that the home's value was $655,000, a figure far outpacing the increase in local property values year-over-year, an attorney for the couple said.  

U.S. bank declined to comment on the lawsuit, while attorneys for both parties and Henley didn't respond to requests for comment Thursday.

Henley's appraisal allegedly used the incorrect square footage of the couple's home and used an unreliable sales comparison to help determine its value. The appraiser also allegedly asked the couple why they sent their children to a private school for athletics rather than the local high school, which the plaintiffs construed as racially motivated. 

The bank, in a response earlier this month to the initial complaint, said the school comment raises no inference of discrimination due to the couple's national origin or race. Carlos Turner should be dismissed from the lawsuit, the bank argues, because he did not apply for the loan nor was listed on the appraisals. 

Davoli-Turner's earlier loan applications were denied for "major" credit report delinquencies, U.S. Bank said, while plaintiffs said the applicant was "unaware" of such delinquencies. Lawyers for U.S. Bank also rejected Davoli-Turner's allegation that the bank's request to confirm her permanent residency status was discriminatory. They point to rules by federal regulators which permit such inquiries, to allow lenders to confirm if consumers can continue to repay. 

"No facts suggest that any loan was denied due to her Canadian national origin — the refinance and home equity loans were denied because she did not qualify," wrote attorneys for the bank. 

The Miami Valley Fair Housing Center is also a plaintiff in the case. Henley has not yet retained an attorney per court records in the U.S. District Court for the Southern District of Ohio's Western Division. The plaintiffs, in addition to seeking damages in excess of $25,000, want employees of the defendants to receive fair housing law training.

Financial regulators in recent years have focused more on appraisal bias, making suggestions in the past year for housing stakeholders to monitor for instances of discrimination. The White House two years ago also introduced a task force to combat inequities in the valuations. 

The similar suit against Loandepot and an appraiser from a Black couple in Maryland remains pending.