Racial Targeting Under the Heading of Diversity, Equity & Inclusion

Abstract

Valuation Jiu-Jitsu Will Lead to Future Addie Polks Addie Polk was a 91-year-old African-American widow who shot herself in the chest in 2008 during a Fannie Mae-initiated eviction in Akron, Ohio. In Polk's case, a fraudulent mortgage was originated in the widow's name through an affinity scam in which commissioned salespeople for the now-defunct Countrywide Home Loans infiltrated her largely African-American Baptist church. Polk became the national face of predatory lending as she lay dying of self-inflicted gunshot wounds in the Akron General Medical Center. Polk's case came to symbolize the way in which lenders, particularly the nonbank lenders - egged on by Fannie and Freddie - targeted African-Americans for subprime loans. In their book "Predatory Lending and the Destruction of the African-American Dream," wrote law professors Janis Pearl Sarra and Cheryl Wade: "Millions of middle-class and high-income African-Americans who qualified for regular fixed-rate, long-term mortgages were steered to subprime mortgages. For the most part, white American borrowers who had credit histories identical to the credit histories of African-American borrowers were not targeted for subprime mortgages." Fast-forward to 2022. National appraiser organizations that once pioneered analytical techniques like discounted cash-flow models and regression analysis have been recently flogging webinars by an organization called ACTION, which calls for "Restorative appraisals" in which appraisers are taught to use comparable sales from so-called "White neighborhoods" when appraising homes in what are identified as "Black neighborhoods." Using comparables from distant neighborhoods is how a dishonest Ohio appraiser, working with Countrywide, was able to appraise Polk's home for reportedly twice the home's market value. With the implicit full faith and credit of the U.S. government, Fannie Mae then guaranteed Polk's loan based on the inflated appraisal.