On Monday, the U.S. Department of Justice announced it had filed suit against Rocket Mortgage and a number of appraisers for racial discrimination in mortgage refinancing applications.
According to the DOJ, Rocket Mortgage LLC, Solidifi US Inc., Maverick Appraisal Group Inc., and Maksym Mykhailyna discriminated against a black homeowner by undervaluing her home in an appraisal as part of the homeowner’s refinance application. The DOJ claims that not only did the companies undervalue the home based on the homeowners race, but that Rocket Mortgage retaliated against the homeowner and interfered with her rights by cancelling her mortgage application when she reported the discrimination.
“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,” Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said. “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. The Justice Department will continue to hold appraisers, lenders and others who discriminate against loan applicants accountable for their actions. No one should have to suffer the indignity and financial harm associated with appraisal bias.”
According to the suit, the homeowner applied for a mortgage refinance loan from Rocket Mortgage in January 2021. Rocket Mortgage contracted with Solidifi US to complete the appraisal. Solidifi then contracted with Mykhailyna and his company, Maverick Appraisal Group to handle the appraisal. While the homeowner lived in a predominantly white neighborhood, the DOJ said in the complaint that Mykhailyna used property sales from neighborhoods further away that were predominantly black. Additionally, the DOJ said, the appraiser failed to consider data from sales of homes less than a mile from the homeowner’s property, even though a few months earlier the appraiser had used sales of homes in that same neighborhood to support his appraisal of a home with a white owner. The appraisal was more than $200,000 lower than the appraised value of the same property a year prior.
Mykhailyna forwarded his appraisal to Solidifi which reviewed it and forwarded it to Rocket Mortgage. When the homeowner received the appraisal, she contact Rocket Mortgage and explained why she believed it was discriminatory. In response, Rocket Mortgage canceled her refinance application. The homeowner then filed a complaint with the U.S. Department of Housing and Urban Development, which later conducted an investigation and determined there was reasonable cause to conclude the companies had violated the Fair Housing Act. The complaint was then forwarded on 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.” Principal Deputy Assistant Secretary Diane M. Shelley of HUD’s Office of Fair Housing and Equal Opportunity said. “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.”