The Department of Justice lodged a suit against Rocket Mortgage and two other parties for alleged racial bias three years prior.
According to the litigation, a Black homeowner had her Denver home undervalued because of her race and Rocket Mortgage "retaliated against the homeowner" by canceling her refinance application once she reported this alleged discrimination to the company.
Shortly after, Francesca Cheroutes, the homeowner, reported the situation to the
The parties accused are Rocket Mortgage, Solidifi US Inc, Maverick Appraisal Group and Maksym Mykhailyna, the appraiser that valued the property.
Rocket Mortgage in a statement distanced itself from the AMC and appraiser, noting it was included in the case "to score headlines based on our strong brand and prominent position in the industry."
"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," Rocket said in an email Tuesday. "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."
"We look forward to exposing the government's massive overreach in this matter," the lender added.
Solidifi in a statement pointed out this filing is not a new complaint and is "simply the next procedural step in the existing matter."
"Our position has not changed. While we cannot comment on ongoing investigatory, administrative, or litigation proceedings, Solidifi intends to vigorously defend any allegations regarding failure to detect or correct any alleged bias in an appraisal," the AMC wrote in a statement.
The appraiser could not immediately be reached Tuesday.
The homeowner that flagged her refinance application being unfairly denied claimed the appraiser, Mykhailyna, issued an insupportably low appraisal of her duplex in a predominantly white area of Denver.
Specifically, the borrower claimed the appraiser used improper metrics to discern the cost of her house, such as sales from properties in further-away Denver neighborhoods with large Black populations instead of closer neighborhoods that are predominantly white. Because of this, the property was valued 25% less — or $200,000 lower — than an appraisal on the same property completed a year prior, the
The suit says the appraisal was then sent to Solidifi, which reviewed it and forwarded it to Rocket and Cheroutes. Once Cheroutes saw the appraisal she flagged it as discriminatory, and she says Rocket then canceled her refi application.
The homeowner reported this to the Department of Housing and Urban Development. The department, after conducting an investigation, determined that there was reasonable cause to conclude the defendants violated the Fair Housing Act and forwarded the case to the DOJ.
The DOJ signaled that it will continue to hold the appraisal industry accountable for instances of bias in a statement Monday.
"This lawsuit is part of our ongoing efforts to bring an end to appraisal bias which prevent Black communities and other consumers of color from accessing credit and benefitting from homeownership," said Assistant Attorney General Kristen Clarke of the Justice Department's Civil Rights Division. "Appraisal bias exacerbates the racial wealth gap, and runs contrary to the principles of fairness, transparency and equity that we need in our housing market today"
Meanwhile, HUD issued a statement underlining its commitment to work with the law enforcement agency to uphold
"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," said Principal Deputy Assistant Secretary Diane M. Shelley of HUD's Office of Fair Housing and Equal Opportunity.
Per the suit, the DOJ is seeking undisclosed monetary damages for Cheroutes.
