The U.S. Department of Justice (DOJ) announced Monday afternoon that it’s going after a group of companies for alleged racial discrimination in mortgage refinancing applications.
What To Know: The DOJ filed a lawsuit against Rocket Companies Inc.’s RKT Rocket Mortgage; as well as Solidifi US; Maverick Appraisal Group and Maverick CEO Maksym Mykhailyna, alleging that the parties discriminated against a Black homeowner by “undervaluing her home based on her race” in an appraisal that takes place when a homeowner files to refinance their mortgage.
The DOJ also alleged Rocket Mortgage further interfered with the homeowner’s rights by canceling her mortgage refinance application after she reported the discrimination.
Benzinga reached out to Rocket Companies, Solidifi US and Mykhailyna’s company Maverick Appraisal Group for comment on the allegations.
Rocket Mortgage issued the following statement to Benzinga in response to the DOJ’s lawsuit:
"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 said.
“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 homeowner applied for a mortgage refinancing loan from Rocket Mortgage in early 2021. Rocket Mortgage contracted Solidifi to appraise the home and Solidifi retained Mykhailyna and his company for the appraisal.
The home was located in a predominantly white neighborhood in Denver, but the complaint alleged Mykhailyna used sales data from neighborhoods that were further away and had larger Black populations. Mykhailyna also allegedly used homes in the same neighborhood to support an appraisal for a white homeowner in the same neighborhood a few months earlier.
“The complaint alleges that these and other errors demonstrate Mykhailyna undervalued the property because of race and color,” the press release states.
Mykhailyna sent his appraisal to Solidifi, which reviewed the appraisal and forwarded it to Rocket Mortgage. When Rocket Mortgage presented it to the homeowner, she contacted the company and explained why she believed there was racial discrimination involved. The DOJ claimed Rocket Mortgage canceled her refinance application in response.
The homeowner then filed a complaint with the Department of Housing and Urban Development (HUD), which conducted an investigation before referring the matter to the DOJ.
"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 Shelley of HUD's Office of Fair Housing and Equal Opportunity.
"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 shares closed Monday down 9.33% at $16.33, according to pricing data from Benzinga Pro.
Photo: Shutterstock.
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