DOJ sues Rocket, appraisal companies for alleged discrimination
Another supervisor has filed a lawsuit Rocket mortgage for allegedly discriminating against a black homeowner by undervaluing her home during an appraisal in Colorado three years ago. And the Detroit-based lender believes it’s a “massive overshoot.”
Monday has the US Department of Justice-after a move by the U.S. Department of Housing and Urban Development (HUD) filed a lawsuit in July against the lender, appraiser Maksym Mykhailyna and his company, Maverick Review Groupand the appraisal management company Solidifi US Inc..
The document alleges that the plaintiffs undervalued a homeowner’s property based on her race in an appraisal conducted in Denver in 2021. Additionally, Rocket is accused of retaliating against the homeowner by canceling her refinance application when she reported the discrimination.
“Under federal law, mortgage lenders are required to work remotely during the appraisal process, working with independent appraisal management companies that assign the work to state-licensed professional appraisers,” a Rocket spokesperson told HousingWire. “The intent of the law is to determine the value of the home without any input or bias from the lender or any other party with an interest in the transaction.”
The spokesperson continued: “It is clear that the government is not interested in their own rules or facts, and is simply involving us in this case to make headlines based on our strong brand and prominent position in the industry. We look forward to exposing the government’s enormous reach in this area.”
The DOJ lawsuit was filed in the U.S. District Court for the District of Colorado.
“This lawsuit is part of our ongoing efforts to end the appraisal bias that prevents Black communities and other consumers of color from accessing credit and benefiting from homeownership,” said Assistant Attorney General Kristen Clarke of the DOJ’s Civil Rights Division in a statement. .
The homeowner applied for a mortgage refinance with Rocket in January 2021.
According to the complaint, Mykhailyna used sales of properties in more distant neighborhoods with large black populations and sales of homes less than a mile from the homeowner’s property during the appraisal process.
It resulted in an appraisal that was more than $200,000 lower than that of the same property less than a year earlier, despite the fact that home prices in Denver rose 25% during the same period. After she filed a complaint with Rocket Mortgage, the company canceled her refinance application.
The homeowner filed a complaint with HUD, which concluded that the defendants had violated the Fair Housing Act and referred the case to the DOJ.
This is the second case of rating bias involving a top-10 lender and a powerful regulator. LoanDepot settled a civil case in March in which a Black Maryland couple claimed they had been rated low by the local appraiser and subsequently discriminated against by the lender. The DOJ and CFPB filed a statement of interest in the case.
LoanDepot ultimately admitted no guilt and the settlement included a review of its appraisal policies and procedures.
The changes include communicating to applicants that they have the right to request a reconsideration of value (ROV); explain why an ROV is refused or the valuation remains unchanged; and training its credit, rating and customer service staff on this topic. The document states that LendingDepot “must not use appraisers who have previously been found to have discriminated in a valuation by a court regulatory body.”
