Here’s one that seems to have slipped by almost unnoticed in the electoral frenzy of the past few weeks. A story in the New York Times tells us of the travails of one Francesca Cheroutes, the owner of a six-bedroom duplex in Denver. It seems back in 2020 she made some substantial improvements to her property, which she had appraised the year prior at $860,000. Then, hoping to take advantage of extant rising property values and the low interest rates at the time, Ms. Cheroutes concluded the time was right to refinance. Accordingly, she went ahead and had the house appraised in January of 2021. That appraisal came in at $640,000. That’s 25% below what it was a year before.

It is pertinent to the story to point out Ms. Cheroutes is black. She also happens to be an attorney who specializes in labor law discrimination. The appraiser, one Maksym Mykhailyna, is white. You can see where this is going.

The Department of Justice took up the case, and subsequently filed a discrimination suit against — well, everyone; the appraiser, the appraisal management company, Solidifi, even the mortgage lender.

Now, I’m not an appraiser, and wouldn’t know where to start in appraising someone’s dwelling. But if even half the allegations against Mr. Mykhailyna are valid — and there is no reason to suspect they are not — then it would seem he at least made some egregious and cosmically thoughtless errors in his appraisal. This includes not taking note of the property’s improvements, listing the wrong local elementary school, overlooking the fact the property was fenced and using comparative values of homes several miles away rather than ones in the immediate neighborhood. Whether or not these errors were racially motivated is perhaps up to God and a judge to decide; in any case, that is what we have anti-discrimination laws and a tort system for.

Where the lawsuit encounters difficulties is in the DOJ’s insistence on looping in extraneous third parties, most notably the mortgage lender.

Not much good came out of the Dodd-Frank banking regulation law. It was patched together after the 2008 housing crisis by lawmakers with no clear understanding of how the whole mess happened, and who grasped instead at explanations that tied it up in a nice tight ideological package. But any bill that expansive and encumbered is bound to have something decent in it, even if via accident or simple chance.

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One little beneficent piece of Dodd-Frank is a provision that forbids mortgage lenders from having influence over appraisers. The problem was rather more complicated than Senator Dodd and Congressman Frank would let on, but there is little question the cozy relationships between lenders, appraisers and real estate agents contributed a great deal to the artificial inflation of home valuations. Significant pressure was being exerted on appraisers at the time to conjure up a figure sufficiently exorbitant to satisfy insouciant greed. Everybody loved inflated appraisals in those days. Until the weight of all those inflated figures became too much for the market to bear and the whole edifice came crashing down.

So Dodd-Frank inserted a firewall between the appraiser and the lender, legally prohibiting the sort of collusion between the two that could produce those sorts of market-distorting ersatz valuations.

In other words, the mortgage lender in Ms. Cheroutes’ case, Rocket Mortgage, was prohibited by law from having anything to do with the appraisal. In order to ensure compliance with the law they also engaged the services of a third-party appraisal management company, in this case Solidifi, to select the appraiser and supervise their work. The corollary: how can Rocket Mortgage then be found liable for alleged discrimination on the part of an appraiser with whom they have nothing to do?

And yet the DOJ lawsuit specifically demands Rocket be ordered to violate this principle of appraisal — and therefore, the — by mandating they intercede with the appraiser, commanding a new appraisal. Yes, very much like they did in the bad old days of pre-2008.

It’s not especially surprising the Biden Justice Department managed to find one of the only constructive bits of Dodd-Frank to try and blow up. But the consequences of doing so could be dire, and counter-productive to the DOJ’s nobler aims. President-elect Donald Trump was elected largely on the auspices of his promise of economic revitalization. An easy first step he could take would be to reverse the Biden Justice Department’s interventionist dismantling of appraiser independence. A free society’s legal structures can and should single out the malevolent actor and mete out due punishment, without harming others or disfiguring the functions of the marketplace; and in that manner, award Ms. Cheroutes the appraisal she deserves.

Kelly Sloan is a political and public affairs consultant and a recovering journalist based in Denver.