HUD accuses Rocket, appraisal companies of discrimination

The U.S. Department of Housing and Urban Development (HUD) announced Monday that it has charged lenders Rocket mortgagetwo appraisal companies and one appraiser who allegedly provided a biased appraisal and denied a refinancing loan to a black homeowner in Denver.

The HUD accused appraiser Maksym Mykhailyna and his company, Maverick Review Groupappraisal management company Solidifi US Inc.and a tremendous amount of discrimination under the Fair Housing Act.

Spokespeople for the companies did not immediately respond HousingWire‘s requests for comment.

HUD alleged that a Black woman received an “unbearably” low appraisal for her home in a predominantly white area of ​​Denver in January 2021.

That’s despite the appreciation of homes in the Colorado market and other recent appraisals of the same property indicating steady appreciation, HUD said. Her duplex was valued at $640,000, which was about 25% lower than its value eight months earlier.

According to HUD, the appraisal contained “inaccuracies and unsupportable methodological choices,” including “inexplicably large adjustments” for site size and “incorrect measure of interior square footage.” These assumptions reduced the value of the house.

Additionally, the appraiser relied on comparable properties in predominantly black neighborhoods, while discarding comparable homes in neighborhoods with larger white populations. That was not the practice in appraisals with white owners, HUD said.

According to the complaint, Solidifi and Rocket ignored “red flags” in the appraisal, with the latter requiring the appraisal during the application process and ultimately denying the applicant a refinancing loan.

“Homeownership is critical to building both generational wealth and housing stability for Black and Brown families,” said Diane M. Shelley, HUD Assistant Secretary for Fair Housing and Equal Opportunity, in a statement. “HUD will continue to vigorously enforce the Fair Housing Act against those who attempt to limit financial returns associated with homeownership because of race or any other protected characteristic.”

The case will be adjudicated by an administrative law judge unless either party chooses to have the case heard in federal court.