DOJ sues Rocket, rating companies for discrimination
sued for discriminating against a black homeowner during an appraisal in Colorado three years ago. And the Detroit-based lender believes it's a “massive overreach.”
Monday, US Department of Justicefollowing an action by (HUD) filed a lawsuit in July against the lender, appraiser Maksym Mykhailyna and his company. Maverick Assessment Groupand appraisal management company .
The filing alleges that the plaintiffs undervalued the homeowner's property based on his race in a 2021 appraisal in Denver. In addition, Rocket is accused of retaliating against the landlord by canceling the refinance application when he reported the discrimination.
“Under federal law, mortgage lenders are required to work remotely during the appraisal process, partnering with independent appraisal management companies that outsource the work to state-licensed professional appraisers,” a Rocket spokesperson told HousingWire. “The purpose of the statute is to determine the value of the home without any input or bias from the creditor or any other party with an interest in the transaction.”
The spokesperson continued: “It is clear that the government does not care about its own rules or facts and is simply bringing us into this to grab headlines based on our strong brand and prominent position in the industry. We look forward to the government going overboard on this issue.”
The DOJ lawsuit was filed in the US District Court for the District of Colorado.
“This lawsuit is part of our ongoing efforts to end appraisal bias that prevents Black communities and other consumers of color from accessing credit and benefiting from homeownership,” said Kristen Clarke, assistant attorney general for DOJ's civil rights division. .
The homeowner applied for a mortgage refinance at Rocket in January 2021.
According to the complaint, during the appraisal process, Mykhailyna used sales of properties in more distant black neighborhoods and discarded sales of homes less than a mile from the homeowner's property.
This resulted in a price more than $200,000 lower than what the same property did less than a year ago, despite a 25% increase in Denver home prices over the same period. After she complained to Rocket Mortgage, the company canceled her refinance application.
The homeowner filed a complaint with HUD, which defendants .
This is the second valuation bias case involving a top 10 lender and a powerful regulator. In March, loanDepot alleged that a Black Maryland couple was downgraded in an appraisal by a local appraiser and subsequently discriminated against by the lender. DOJ and CFPB at work.
loanDepot ultimately admitted no fault, and the settlement underwent a major overhaul of its appraisal policies and procedures.
The changes include notifying applicants that they have the right to request a review of value (ROV); Explain why the ROV was rejected or the assessment was unchanged; and training credit, appraisal and customer service staff on the subject. The document states that loanDepot “shall not use appraisers who have previously been subject to appraisal discrimination by a judicial regulator.”
