The U.S. Department of Justice (DOJ) has taken action against a group of companies, including Rocket Companies Inc., alleging racial discrimination in mortgage refinancing applications. The lawsuit, filed on Monday, accuses Rocket Companies, Solidifi US, Maverick Appraisal Group, and its CEO Maksym Mykhailyna of discriminating against a Black homeowner by undervaluing her Denver home based on her race.
The DOJ contends that the homeowner, who applied for a mortgage refinancing loan from Rocket Mortgage in early 2021, was unfairly targeted. Rocket Mortgage contracted with Solidifi for the appraisal, and Solidifi retained Maverick Appraisal Group for the task.
The complaint alleges that Mykhailyna used sales data from neighborhoods with larger Black populations, located further away from the homeowner’s property, to undervalue her home. He also allegedly used homes in the same neighborhood to support an appraisal for a white homeowner in the same neighborhood just a few months prior. This, according to the DOJ, indicates racial bias and discriminatory practices.
The DOJ also alleges that Rocket Mortgage, after the homeowner reported the discrimination, interfered with her rights by canceling her refinance application. This action, according to the lawsuit, further highlights the company’s discriminatory practices.
Rocket Mortgage, in response to the allegations, stated that under federal law, mortgage lenders are required to work independently during the appraisal process. The company claims the DOJ’s actions are an attempt to score headlines based on Rocket Mortgage’s prominent position in the industry.
The homeowner, after reporting the discrimination to Rocket Mortgage, filed a complaint with the Department of Housing and Urban Development (HUD). HUD conducted an investigation and referred the matter to the DOJ.
This lawsuit highlights the ongoing struggle for fair housing practices in the United States. It underscores the need for greater transparency and accountability in the mortgage refinancing process, particularly in light of the historical and ongoing racial disparities in housing access.
Rocket Companies’ shares closed down 9.33% at $16.33 on Monday, reflecting the impact of the lawsuit on investor sentiment.
