Judgment against Rocket Mortgage vacated by Supreme Court

The U.S. Supreme Court vacated a ruling against Rocket Mortgage and its affiliated title and valuation company Amrock, overturning a $9.7 million judgment in favor of 2,769 West Virginia mortgage borrowers.

"Petition granted. Judgment vacated and case remanded for further consideration in light of TransUnion LLC v. Ramirez," the case page on the Court's website reads. The ruling was issued on Jan. 10.

The court's statement refers to a case it decided in June 2021, in which TransUnion was alleged to have violated the Fair Credit Reporting Act. Lower courts had granted the consumers involved class action status and damages.

That case's 5-4 majority decision, written by Justice Brett Kavanaugh, turned on whether the class was "concretely harmed" by TransUnion's actions and because they were not, they had no legal standing to sue.

Just prior to the issuing of the TransUnion decision, in March 2021, the U.S Fourth Circuit Court of Appeals came out with a 2-to-1 decision that mostly upheld a federal judge in West Virginia granting class action status and summary judgment in this case, Alig v. Quicken. A group of refinancing borrowers alleged the mortgage company, then known as Quicken Loans, and its appraisal unit, which at the time called Title Source, inflated property values for loans originated between 2004 and 2009.

In the District Court's summary judgment, it penalized Rocket $3,500 for each of the alleged violations for a total of nearly $9.7 million. The Fourth Circuit, however, rejected and remanded for further hearing an additional $969,000 breach of contract award.

Rocket asked the Supreme Court to vacate the Fourth Circuit ruling in September, citing the TransUnion case in regards to legal standing.

However, in their response, the attorneys for Phillip Alig and the rest of the class said standing was not the issue; violations of West Virginia law was the only thing to be considered.

"The district court and the Fourth Circuit had to predict whether Rocket's practice of using biased appraisals to inflate mortgages — a practice that has since been universally prohibited — amounted to 'unconscionable inducement' under West Virginia's Consumer Credit and Protection Act," the response brief said. "West Virginia's courts have already concluded that Rocket's practice violates the WVCCPA."

That made this case different from TransUnion v. Ramirez, the filing from counsel of record Deepak Gupta said. "The plaintiffs' claims have always been based on that concrete pocketbook injury — not on the uncertain future risks that followed," the brief continued. "TransUnion — a case in which the plaintiffs never paid the defendant anything — does nothing to undermine that settled basis for…standing."

But the Supreme Court disagreed and remanded the case.

"As the dissenting judge in the now-vacated Fourth Circuit opinion correctly recognized, '[t]o impose liability on Quicken Loans for what was an industry-wide practice to provide relevant information to appraisers and that harmed [plaintiffs and class members] not one iota, is fundamentally unjust,'" a statement from Rocket Mortgage said.

"The facts of this case are clear, and demonstrate that our practices were compliant and that the refinance loans we provided benefited our West Virginia clients. We remain confident that we will ultimately prevail," the statement continued.

National Mortgage News reached out to Gupta for comment, but has not yet received a response.