(The Center Square) – The nation’s largest mortgage lender filed a lawsuit against the federal government seeking to address what Rocket Mortgage sees as the misuse of the Fair Housing Act.
Rocket Mortgage says the U.S. Department of Housing and Urban Development wants it to both leave appraisers alone and make sure appraisers don’t engage in discriminatory practices. That puts the company “between the proverbial ‘rock and a hard place,'” attorneys wrote in a complaint filed Wednesday.
“It is unreasonable that the DOJ chose to sue Rocket Mortgage for the conduct of an independent appraiser. We will not stand idly by while the courts are used as venues to leverage our company’s name to publicize the case instead of pursuing justice against those who may have committed wrongdoing,” said Bill Emerson, president of Rocket Companies. “Today’s filings highlight the conflict between HUD’s regulations and the DOJ’s enforcement positions.”
In the complaint, Rocket attorneys said “this reality of the government’s inconsistent and conflicting approach requires judicial intervention.”
In October, the U.S. Department of Justice sued Rocket Mortgage over the alleged conduct of an independent appraiser. The Justice Department claimed the Michigan lender discriminated against a Black homeowner who got an allegedly low appraisal when seeking to refinance her loan.
The Justice Department alleged that Rocket Mortgage LLC; Solidifi US Inc.; Maverick Appraisal Group Inc.; and appraiser Maksym Mykhailyna discriminated against a Black homeowner, Francesa Cheroutes, by undervaluing her home based on her race in an appraisal required as part of a home mortgage refinance application. The feds also alleged that Rocket Mortgage retaliated against the homeowner and interfered with her rights by cancelling her mortgage refinance application when she reported alleged discrimination.
Rocket Mortgage asked a judge to dismiss that suit on Wednesday.
“There are no allegations that Rocket Mortgage hired Mykhailyna or ever met him – it did neither. Nor are there any allegations that Rocket Mortgage directed or participated in any of Mykhailyna’s conduct,” attorneys for the company wrote. “Again, it did neither. And there are no allegations that Rocket Mortgage itself took any action with respect to Cheroutes on account of her race. This is because it did not.”
Justice Department officials said it filed the October lawsuit as part of ongoing efforts to “end to appraisal bias which prevent Black communities and other consumers of color from accessing credit and benefitting from homeownership.”
“Appraisal bias exacerbates the racial wealth gap, and runs contrary to the principles of fairness, transparency and equity that we need in our housing market today,” Assistant Attorney General Kristen Clarke said in October.
Rocket Mortgage called it a smear campaign.
The company noted that it originated three home loans for the borrower named in the lawsuit. The company also said the borrower’s loan is being serviced by Rocket Mortgage, and also was being serviced by Rocket Mortgage at the time of the appraisal in question. When the applicant raised concerns with the home’s valuation during this refinance, Rocket Mortgage offered a path to challenge the appraisal through a value reconsideration process. The borrower declined to engage in that process on two separate occasions, according to the complaint.
“It is notable that, in a case about the alleged actions of an independent appraiser that was contracted through an unaffiliated third party, Rocket Mortgage is listed first in the DOJ’s filing and is the only company mentioned by name in the headline of the government’s press release announcing the DOJ’s lawsuit,” Emerson said. “We have always been guided by the fundamental principle that all homebuyers and homeowners should be treated fairly and should have every opportunity to achieve their dream of owning their own home or using their equity to improve their lives.”
HUD declined to comment on the lawsuit, citing department policy.
