Oct 21, 2024 Story by: Editor
The U.S. Department of Justice (DOJ) announced on Monday that it is pursuing legal action against several companies over allegations of racial discrimination in mortgage refinancing applications.
Key Information:
The DOJ has filed a lawsuit against Rocket Companies Inc., specifically Rocket Mortgage, along with Solidifi US, Maverick Appraisal Group, and its CEO Maksym Mykhailyna. The lawsuit claims these parties discriminated against a Black homeowner by “undervaluing her home based on her race” during an appraisal process connected to a mortgage refinancing application.
Additionally, the DOJ alleges that Rocket Mortgage violated the homeowner’s rights by canceling her mortgage refinancing application after she reported the racial discrimination.
Benzinga contacted Rocket Companies, Solidifi US, and Maverick Appraisal Group for comments regarding the lawsuit.
In response, Rocket Mortgage provided Benzinga with a statement:
“Under federal law, mortgage lenders are required to work at arm’s length during the appraisal process, partnering with independent appraisal management companies who assign the work to state-licensed professional appraisers. The law’s intent is to determine the home’s value without any input or bias from the lender or any other party with interest in the transaction,”
the company explained.
“It is clear the government isn’t interested in their own rules, or facts, and are simply including us in this case to score headlines based on our strong brand and prominent position in the industry. We look forward to exposing the government’s massive overreach in this matter.”
According to the DOJ, the Black homeowner applied for a mortgage refinancing loan from Rocket Mortgage in early 2021. Rocket Mortgage contracted Solidifi to carry out the home appraisal, which then hired Mykhailyna and his company for the task.
The lawsuit alleges that while the home was situated in a predominantly white neighborhood in Denver, Mykhailyna used sales data from areas further away with larger Black populations for the appraisal. In contrast, for a white homeowner in the same neighborhood, he allegedly used local homes to support their appraisal a few months prior.
“The complaint alleges that these and other errors demonstrate Mykhailyna undervalued the property because of race and color,” the DOJ stated.
After receiving the appraisal, the homeowner contacted Rocket Mortgage, pointing out what she believed to be racial discrimination. The DOJ claims Rocket Mortgage canceled her refinance application following her complaint.
Subsequently, the homeowner filed a complaint with the Department of Housing and Urban Development (HUD), which conducted an investigation and referred the matter to the DOJ.
Principal Deputy Assistant Secretary Diane Shelley of HUD’s Office of Fair Housing and Equal Opportunity praised the DOJ’s actions, stating:
“HUD applauds today’s action and remains committed to working with the DOJ to ensure appraisal companies and mortgage providers are held accountable when they violate our nation’s fair housing laws.”
“It has been over 56 years since the passage of the Fair Housing Act, and it is unconscionable that Black and Brown families still face discrimination during housing transactions.”
Rocket Companies’ stock closed on Monday, dropping 9.33% to $16.33, according to Benzinga Pro’s pricing data. Source: Benzinga
