Rocket Mortgage accused of racial discrimination against Black Colorado homeowner
(CBS DETROIT) - The Justice Department has filed a lawsuit against Detroit-based Rocket Mortgage, alleging that the company canceled a Black homeowner's refinance application after she reported that her home was undervalued due to racial bias.
The federal lawsuit was filed on Monday in the U.S. District Court for the District of Colorado against the company and two appraisers, Solidifi U.S. Inc. and Maverick Appraisal Group Inc., and Maverick's CEO, Maksym Mykhailyna.
The woman lives in Denver, Colorado, where the home was previously appraised at $860,000, according to the complaint.
According to the lawsuit, the woman contacted Rocket Mortgage to refinance her home. The mortgage company contracted with Solidifi Inc. to conduct an appraisal, and Solidifi retained Mykhailyna to complete the appraisal. The Justice Department claims Mykhailyna appraised the home at $640,000, about $220,000 lower than the home's previous valuation.
The lawsuit alleges that Mykhailyna used sales from properties that were farther away and in neighborhoods that were predominately Black instead of the homeowner's neighborhood that was predominately white.
The woman informed Rocket Mortgage that Mykhailyna's appraisal was lower than the previous appraisal, and she believed it was racial discrimination, the complaint says. The homeowner requested that the appraisal be redone; however, Rocket Mortgage refused and said she either "proceed with the refinancing using the discriminatory appraisal, or her refinancing application would be canceled," according to the lawsuit.
The company then canceled the woman's refinance application after she continued to claim racial discrimination, according to the complaint.
The lawsuit says the woman filed a complaint with the U.S. Department of Housing and Urban Development, which determined in an investigation that the companies "engaged in one or more discriminatory housing practices against Ms. Cheroutes in violation of the Fair Housing Act."
"HUD applauds today's action and remains committed to working with DOJ to ensure appraisal companies and mortgage providers are held accountable when they violate our nation's fair housing laws," said Principal Deputy Assistant Secretary Diane M. Shelley of HUD's Office of Fair Housing and Equal Opportunity in a statement. "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 Mortgage responded to the lawsuit in 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. 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."
You can view a full copy of the lawsuit below.
Justice Department sues Rocket Mortgage by CBS Detroit on Scribd