Legal action has been taken against Rocket Mortgage for allegedly discriminating against a Black homeowner by undervaluing her property during an appraisal in Colorado three years ago. Rocket Mortgage, based in Detroit, believes that the lawsuit is an exaggerated claim.
The U.S. Department of Justice, following a similar action by the U.S. Department of Housing and Urban Development in July, filed a lawsuit against Rocket Mortgage, appraiser Maksym Mykhailyna and his company Maverick Appraisal Group, as well as the appraisal management company Solidifi U.S. Inc.
The lawsuit alleges that the plaintiffs undervalued the homeowner’s property based on her race in a 2021 appraisal in Denver. Rocket Mortgage is also accused of retaliating against the homeowner by canceling her refinance application after she reported the discrimination.
In response, a spokesperson for Rocket Mortgage stated that mortgage lenders are required to maintain independence during the appraisal process to ensure an unbiased valuation of the property. The spokesperson criticized the government for including Rocket Mortgage in the case for publicity purposes.
The lawsuit by the DOJ was filed in the U.S. District Court for the District of Colorado as part of efforts to address appraisal bias and promote equal access to credit and homeownership for Black communities and consumers of color.
The homeowner had applied for a mortgage refinance with Rocket Mortgage in January 2021. During the appraisal process, Mykhailyna allegedly used sales data from distant neighborhoods with large Black populations, resulting in a significantly lower valuation compared to a previous appraisal despite rising home prices in Denver.
After the homeowner complained, Rocket Mortgage canceled her refinance application. The homeowner’s complaint to HUD led to a conclusion that the defendants violated the Fair Housing Act, prompting the referral to the DOJ.
This case is reminiscent of a previous incident involving loanDepot, where a Black Maryland couple alleged discrimination in an appraisal and subsequent mistreatment by the lender. loanDepot settled the case with no admission of fault and implemented changes to its appraisal policies and procedures.