The Department of Housing and Urban Development accused Rocket Mortgage, a real estate appraiser and property appraisal management company, of discriminating against black homeowners.
The housing authority said Rocket chose to rely solely on biased appraisals when it rejected a borrower's refinancing application in Denver three years ago.
According to HUD, appraiser Maksim Mikhailina, who owns Maverick Appraisal Group, allegedly gave an “unbearably low appraisal” to a two-family home owned by a black woman in a predominantly white neighborhood of Denver.
According to the Housing Department, AMCs Rocket and Solidifi chose to rely on the appraisers' assertions even though borrowers challenged the validity of the reports.
HUD is accusing appraiser Rocket and appraisal management company Solidifi of discriminatory practices.
“Homeownership is critical for building generational wealth and housing stability for Black and brown families,” HUD Principal Deputy Assistant Secretary Diane Shelley said Monday. “HUD will continue to vigorously enforce the Fair Housing Act against those who seek to limit the financial benefits that come with homeownership because of race or other protected characteristics.”
A Rocket Mortgage spokesman said the company was “clearly mistargeted by an attacker simply trying to gain attention by leveraging its brand and position in the industry.”
“We look forward to taking the facts of this case to court and uncovering the truth,” a Rocket spokesperson added. “Until then, we will continue to provide affordable options and promote equitable efforts to make the dream of homeownership a reality for all.”
The appraiser and AMC did not immediately respond to requests for comment Tuesday.
According to the complaint filed Monday, Mikhailina submitted an appraisal report to AMC Solidifi on Jan. 21, 2021, which listed the property's value at $640,000 – a significantly lower amount than the $860,000 the property was appraised for eight months earlier.
HUD said Mikhaylina relied on inaccurate measurements in writing his appraisal report, which contained “numerous inaccuracies and improper comparisons.”
The borrower, who was not named, questioned an appraisal that said his property's value had fallen by 25 percent and argued to Rocket that home prices in his area had increased over the past year.
But the HUD report said Rocket offered borrowers the option of proceeding with their loan applications using the appraised value or canceling or denying the loan applications.
Ultimately, the application was denied and Rocket sent letters to borrowers stating that it was “unable to provide loans at this time,” HUD alleged.
The complaint is one of a handful accusing mortgage lenders and appraisal firms of discriminatory practices.
Recently, LoanDepot settled a lawsuit with a Maryland couple who claimed the lender rejected their refinance application because their home was discriminatory and undervalued.
As part of the settlement, plaintiffs Nathan Connolly and the estate of Shani Mott, who died in mid-March, will receive an undisclosed amount from the lender to reimburse them for damages and legal fees.