Rocket Mortgage Sues United States Department of Housing and Urban Development

PRNewswire 5-Dec-2024 8:16 AM

• The company also filed a motion to dismiss the claim the Department of Justice brought against the company
  
  
• DOJ's recent claim against Rocket Mortgage misplaced blame on the Company for work done by an independent appraiser hired by an independent appraisal management company

DETROIT, Dec. 5, 2024 /PRNewswire/ -- Rocket Mortgage, the nation's largest mortgage lender and a part of Rocket Companies (NYSE:RKT), filed suit in Federal District Court against the United States Department of Housing and Urban Development (HUD) to correct conflicts between the government's regulations requiring appraiser independence and its enforcement actions seeking to hold lenders liable for the conduct of independent licensed appraisers. Rocket Mortgage also filed a motion to dismiss the claim the DOJ brought against the company based on the same regulatory conflicts and misapplication of applicable law.

"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 the 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. We are looking forward to laying out all the facts of this case in court. Rocket Mortgage has thousands of passionate team members who focus every day on doing the right thing. It would be an offense to our workforce if we let the DOJ's and HUD's wrongful actions go unchecked."

On October 21, 2024, the Department of Justice (DOJ) filed a baseless complaint against Rocket Mortgage in the United States District Court for the District of Colorado (United States of America v. Rocket Mortgage, Solidifi, Maksym Mykhailyna and Maverick Appraisal Group). Rocket Mortgage followed all applicable laws and the only explanation for the company's inclusion in this case about the alleged conduct of an independent appraiser is the DOJ's apparent motive to bring headlines to their claim.

"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 added. "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. Our long, exemplary track record of fair housing lending speaks for itself."

The accusation of discrimination is against the independent appraiser who performed the appraisal, not Rocket Mortgage. Despite this, the DOJ surprisingly dragged Rocket Mortgage into a lawsuit based on the assertion that the company "had the authority to correct the [allegedly] discriminatory appraisal, or cause it to be corrected, but failed to do so." This is 100% false. Rocket Mortgage had no "authority to correct" the appraisal as a matter of law and the claims against the company should be immediately dismissed.

It's important to note that Rocket Mortgage originated three home loans for the borrower named in the lawsuit, with which there were no issues. The borrower's loan is currently being serviced by Rocket Mortgage, and also was being serviced by Rocket Mortgage at the time of the appraisal in question. When the applicant expressed concern with the home's valuation during this refinance, Rocket Mortgage offered a path to challenge the appraisal through a value reconsideration process which complies with the law. The borrower declined to engage in that process on two separate occasions.

The government's own requirements under the Dodd Frank Act and the changes to the Truth in Lending Act (TILA), that was enacted in 2010 in response to the Great Recession, mandate that a lender must obtain an appraisal from an independent state-licensed third-party appraiser to prevent conflicts of interest and undue influence on the appraisal process. The government's requirements also prohibit lenders from taking any action to influence the appraisal value "to be based on a factor other than the independent judgment of th[at] appraiser." The government cannot require Rocket Mortgage to rely only on an independent appraiser's opinion of value and – at the same time – find the company liable for not influencing or correcting the valuation.

Rocket Mortgage filed its complaint against HUD to seek judicial resolution of the conflicts HUD has created between the government-created mandates of appraiser oversight and appraiser independence. This resolution is necessary because HUD has failed to provide notice or an opportunity to comment on its policy change requiring lenders to oversee and "correct" the appraisals of independent, third-party appraisers.

Rocket Mortgage is asking the court to:

• Declare that the Fair Housing Act prohibits Rocket Mortgage pursuant to TILA's appraiser independence requirements from influencing or attempting to influence the independent judgment of an appraiser to "correct" or "remediate" a home appraisal.
  
  
• Affirm that Rocket Mortgage does not have control over, or any other legal responsibility for, the actions of an independent appraiser.
  
  
• State that, under the Fair Housing Act, Rocket Mortgage is not liable for relying on an appraisal provided by an independent, third-party appraiser
  
  
• Issue an order vacating any policies of holding mortgage lenders responsible for failing to correct or remediate perceived or alleged appraiser bias or discrimination in an appraisal.

Any assertion that Rocket Mortgage is biased is false. Rocket Mortgage remains committed to homeownership for everyone who can sustainably afford it. In fact, the company has introduced several programs in an effort to bridge the racial homeownership gap.

Rocket Mortgage is America's largest mortgage lender, having helped more Americans than any other lender according to Home Mortgage Disclosure Act (HMDA) data from 2023, the most recent time period available. The company has also been top-ranked in J.D. Power's client service studies for mortgage origination and mortgage servicing a total of 22 times over the past several years, more than any other lender.  

The case is Rocket Mortgage, LLC vs United States Department of Housing and Urban Development filed in the United States District Court for District of Colorado. Rocket Mortgage also filed a motion to dismiss the government's claims against the company. Rocket Mortgage is represented by Michigan-based Morganroth & Morganroth and Goodwin Procter of Washington, DC.

ABOUT ROCKET MORTGAGE

Detroit-based Rocket Mortgage is the largest mortgage lender and is a part of Rocket Companies (NYSE:RKT).

The lender enables the American Dream of homeownership and financial freedom through its obsession with an industry-leading, digital-driven client experience. In late 2015, it introduced the first fully digital, completely online mortgage experience. Since its founding in 1985, Rocket Mortgage has closed more than $1.8 trillion of mortgage volume across all 50 states.

J.D. Power has ranked Rocket Mortgage #1 in client satisfaction for both primary mortgage origination and servicing 22 times – the most of any mortgage lender. Rocket Companies, Rocket Mortgage's parent company, has placed in the top third of Fortune's list of the "100 Best Companies to Work For" the list for 21 consecutive years.

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SOURCE Rocket Mortgage