The Verdict Is In on Connolly v. Lanham, and Appraisers Should Be Paying Attention

Reading through the court's summary judgment in Connolly v. Lanham, there was a moment where I just sat back and said, "That's it? That's how this ends?" No trial. No real accountability. Just a judge saying, there's not enough here to go forward on either side. And that might sound neutral on paper, but if you're an appraiser? That outcome hits differently.

Let me back up.

Nathan Connolly and the late Shani Mott, both professors at Johns Hopkins, refinanced their home in Baltimore. They had it appraised by Shane Lanham. He came in at $472,000. They didn't like that number. A few weeks later, they conducted what's now widely known as the "whitewashing" test: they removed all family photos, swapped out personal decor, had a white colleague pose as the owner, and ordered a new appraisal. That one came in at $750,000. And just like that, the story exploded. The New York Times, ABC, and WUSA9, national headlines about discrimination in a home appraisal.

They filed a lawsuit. Lanham countersued for defamation. And now, a couple of years later, it's all been dismissed. The judge said there was no evidence the first appraisal was discriminatory, and also said the couple's public comments were protected by the fair reporting privilege. So technically, no one won. But in the real world? Lanham lost a lot more than they did.

He lost business, reputation, and probably sleep. He had to go on defense just to clear his name. Lanham ended up spending over $64,000 of his own money on legal fees after his insurance coverage was capped, even after supporters raised money through GoFundMe. On top of that, he estimates he lost about 75 percent of his clients because of the accusation. And here's where it gets tricky: even though the court said the plaintiffs genuinely believed their claims, that belief, backed by insufficient actual evidence, led to all of this fallout.

That should worry anyone in this profession.

Let's talk about that second appraisal for a second. The one that appeared to demonstrate the first was discriminatory. The appraiser, Daniel Dodd, later admitted to five errors in his report, including locational, adjustment, and mathematical mistakes. These were labeled as material errors, meaning they discredited his report in the eyes of the court and demonstrated that different appraisers can arrive at significantly different conclusions based on their individual judgment and execution. If we're going to talk about bias and professionalism, then we should also be asking serious questions about competency.

What bugs me is that the entire case turned into a media circus before anything was actually investigated. While the second appraisal contained errors that the court found material, the initial valuation gap of $278,000 raised legitimate questions about consistency in the appraisal process. Meanwhile, Lanham followed accepted methodology. He supported his opinion using standard practices, and the court said as much. But that didn't undo the damage.

And the media? They ran with it. The Connollys gave interviews left and right. Again, all protected by fair reporting privilege because they were just talking about their own lawsuit. But here's the thing: that legal protection doesn't stop public destruction. Once it's out there, the story, the implication, the soundbite, you can't unring the bell.

The core problem here isn't just about discrimination. It's about what happens when someone makes a serious accusation based on belief rather than evidence. That includes claims of discrimination, including racial discrimination, which carry serious weight and social implications. When those claims are made publicly without corroborating evidence and still gain traction, the consequences can be massive, including reputational damage, financial harm, and long-term professional fallout, even if the person genuinely believes what they're saying. The plaintiffs didn't bring in a qualified expert. They didn't statistically prove bias. The court said their assumptions didn't hold up, and that there was no violation of appraisal standards.

There's also a question of how bias can go the other direction. Connolly and Mott were experts in racial and social history, and that perspective likely shaped how they interpreted what happened. That doesn't mean their experiences should be discounted, but it raises the question of whether they were predisposed to believe discrimination occurred, even without clear evidence. The court noted they assumed discrimination almost immediately, even before reviewing the appraisal. Some might call that lived experience. Others might call it jumping to conclusions. But when you take that belief and broadcast it to the country, that becomes something else entirely.

And speaking of letting someone take the fall, let's talk about LoanDepot. The lender quietly settled with Connolly for over $400,000. No admission of guilt, of course. But they agreed to fair housing training, statistical monitoring, and policy changes. They settled, made PR-friendly changes, and went back to business as usual. Meanwhile, they left Lanham completely exposed. No backing. No public defense. Just silence. If lenders won't even stand by appraisers when there's no finding of wrongdoing, what message does that send?

Appraisers are out here doing high-liability work for low pay, constantly under pressure from AMCs, lenders, and regulators. And now we have to worry about being dragged through the media and court system because someone didn't like our number? With no built-in protections unless we hire legal defense teams and hope for the best?

Where does that leave us?

Right now, it feels like appraisers are the only ones in the real estate chain without any real protection. We can lose clients over one complaint. We can be publicly accused with no way to respond. And if you think your E&O is going to protect your reputation in the press? Good luck.

This case should be a wake-up call. Not because we should be scared to do our jobs. But we need to start demanding real protections. Contracts that require lenders to support us if we're pulled into legal fights. Legal funds from our professional organizations. And serious conversations about what accountability looks like when public accusations go unproven.

Let's be honest: some studies and news stories claim there's bias in the system, and that certain neighborhoods or racial groups get worse valuations. But there's a problem with this research. The American Enterprise Institute conducted a detailed critique of the Brookings study, pointing out fundamental methodological problems. AEI found that these studies focus on comparing entire neighborhoods rather than examining individual appraiser behavior. More importantly, they assume racial bias is the explanation for under-valuations without considering other factors like first-time homebuyer behavior (who tend to overbid) or seller concessions that legitimately reduce appraised values.

When AEI analyzed the actual data, they found the under-valuations averaged only $1,100 to $1,900 - amounts too small to systematically depress neighborhood values and explainable by normal market factors rather than discrimination. The Brookings study compared majority-Black neighborhoods and majority-white ones without properly accounting for factors like location, amenities, demand, or economic conditions. When you're comparing properties with different characteristics in different markets, attributing price differences to discrimination ignores basic market fundamentals.

There's also no court case, at least so far, where an appraiser has been found liable for racial discrimination. Not one. In fact, Lanham's case is the first where an appraiser fought the claim to the end instead of settling, and he won. Another similar case in Ohio (Daviola‑Turner v. Henley Appraisals) was also dismissed. HUD complaints and media headlines are one thing. Proving wrongdoing is another.

Research on algorithmic bias in AVMs (automated valuation models) shows mixed results, with some studies finding disparities and others not. If both automated systems and human appraisers reach different values because of location, property condition, or upgrades, that's not necessarily bias. That's variance. That's market reality.

This doesn't mean discrimination isn't real or that people's experiences aren't valid. But if we're going to address fairness in appraisals, we need to start with accuracy, transparency, and evidence, not gut feelings or headlines based on methodologically flawed studies.

Because here's the truth: the court said the Connollys believed what they were saying. But they didn't prove it, and it started with a gut reaction before they even read the report. And yet they walked away with a $400K settlement, media coverage, and policy changes. Lanham got tossed aside. Reading the judgment and knowing what he went through, it's hard not to come back to that same reaction I had at the beginning: That's it?

We can't afford to let this happen again.

If you think this case doesn't affect you, you're not paying attention. You could do everything right, follow standards, document everything, explain your process, and still lose your career because someone decided to go public with a story that isn't backed by facts.

And if that's the bar now, every one of us is vulnerable.