An appeals court reversed a previous decision that found Rocket Mortgage guilty of interfering with the appraisal process more than a decade ago. The prior determination had resulted in awarding class members over $10.5 million.
The Fourth Circuit reversed a West Virginia district court's class certification, finding insufficient evidence of concrete harm caused to each class member. It also reversed previously granted damages.
The case has been kicked back to a lower court for further consideration.
The original suit, filed in 2012, argued that Rocket Mortgage and its title insurance company Amrock put pressure on appraisers to inflate home values in order to obtain higher loan values. Over 2,700 loans were part of the class action.
Rocket was accused of influencing appraisers by providing suggested home values on appraisal request forms before the appraisers submitted their reports.
Plaintiffs claim they were not informed of this practice, which was "compromising the appraisal process" and rendered appraisals as "unreliable and worthless." Pre-2009 it was common for lenders to share how homeowners valued their properties with appraisers, the appeals court wrote. This practice has since changed.
For years the suit has been ping-ponging back and forth between the federal court and the appeals court. This was partly due to the Supreme Court's decision in TransUnion LLC v. Ramirez, which established that class members must prove they suffered concrete harm.
The Supreme Court ruling influenced the Fourth Circuit's recent decision to decertify the suit and reverse the damages award.
"Based on TransUnion, we conclude that the plaintiffs have not established that the class members, as borrowers, suffered a concrete harm as a result of the defendants' transmission to appraisers of their home-value estimates, and therefore we reverse the district court's judgment to the extent that it certified the class and awarded its members damages," the Fourth Circuit court wrote in its ruling Jan. 24.
A senior circuit court judge disagreed with the decision to decertify the class action, writing in a dissent that "the unnamed class members have demonstrated they suffered concrete injury from Quicken's appraisal process and thus have standing."
Rocket Mortgage is currently involved in other
The lender is disputing the Department of Housing and Urban Development's and the Department of Justice's claims that it should be held responsible for the conduct of third-party appraisers that it works with.
The megalender filed a suit against HUD in a federal court in Colorado in December and is asking for allegations brought against it by the
