CFPB dismisses Rocket, Vanderbilt Mortgage lawsuits

The Consumer Financial Protection Bureau has dropped lawsuits against Rocket Homes and brokerage The Mitchell Group, and Vanderbilt Mortgage & Finance. 

The notices were filed Thursday while prospective bureau head Jonathan McKernan was answering lawmakers' questions in a confirmation hearing before Congress. Bureau Acting Director Russell Vought earlier this month ordered the regulator to halt most of its activities, including enforcement actions. 

The December complaint against Rocket Homes, the real estate arm of Rocket Cos., and the Mitchell Group, accused the companies of a kickback scheme to boost origination business. The parties previously denied the allegations and on Thursday lauded the CFPB's move. The case, like the suit against Vanderbilt, was denied with prejudice, meaning it can't be refiled.

In a statement Thursday, Rocket Homes said the case was a misrepresentation of facts. 

"It was an empty claim brought forth by former CFPB director Chopra for the sole purpose of seeing his name in headlines during the final days in public office," the statement said, referring to the Biden-appointed bureau head. 

Thomas Burke of Philadelphia-based Ballard Spahr, an attorney for The Mitchell Group, said the dismissal was a vindication of The Mitchell Group's position that the case should have never been filed.  

"Our position has always been that the Mitchell group provides exemplary service to its consumer clients, and that that view would ultimately win out," he told National Mortgage News.

The attorney also said he believed the dismissal to be case-specific, rather than a broader dismissal of similar litigation. In simultaneous moves Thursday, the bureau dismissed at least two other pending lawsuits against financial institutions. 

Neither the CFPB nor an enforcement attorney in the Rocket case responded immediately to requests for comment Thursday. 

The bureau's lawsuit against Vanderbilt, a unit of Berkshire Hathaway subsidiary Clayton Homes, accused the Tennessee-based firm of risky lending practices that left some borrowers bankrupt. The manufactured home originator was accused of ignoring red flags in underwriting and fabricating unrealistic expense estimates for homeowners. 

Thursday's dismissal, like the Rocket notice, did not include reasons for the move. Filed two weeks before the Trump Administration entered office, the lawsuit didn't specify the number of borrowers allegedly impacted nor the potential damages or restitution for victims. 

Vanderbilt in a January denial slammed the lawsuit as "politically motivated, regulatory overreach" and defended its underwriting practices. A spokesperson for the company said Thursday afternoon the company was reviewing the filing. 

An enforcement attorney for the CFPB in that case declined to comment Thursday. 

The bureau has come under heavy fire from Vought, President Trump and Department of Government Efficiency leader Elon Musk, who have all called for stripping the CFPB of its powers, if not "deleting it" altogether. 

The Department of Justice this week insisted the bureau would not be dismantled, but rather would continue to exist with a reduced budget and headcount. McKernan bore the brunt of lawmakers' inquiries Thursday on the future of the bureau, but emphasized he would follow his statutory duties. 

Sen. Tina Smith, D-Minn., mentioned the dropped lawsuits and asked how McKernan would respond if Musk, Vought or whoever "in charge" asked to drop litigation. 

McKernan responded: "Senator, if I'm confirmed, I'm the director."