Rocket Mortgage Counters Appraisal Bias Claim With HUD Suit

Rocket Mortgage responded to being sued by the Justice Department in a case of alleged appraisal bias with a lawsuit against the Department of Housing and Urban Development.

The nation’s top lender filed a lawsuit against the housing agency on Wednesday, the New York Times reported. Rocket claims it should not have been included in a lawsuit the DOJ filed in October, which stemmed from a case of alleged appraisal bias involving a Colorado homeowner.

The Justice Department sued Rocket, appraisal management company Solidifi U.S., Maverick Appraisal Group and its chief executive officer. That lawsuit came about after homeowner Francesca Cheroutes filed a complaint about local home appraiser Maksym Mykhailyna, who leads Maverick.

Cheroutes claimed Mykhailyna, who is white, undervalued her home, which notably had a “Black Lives Matter” sign in the front yard. Despite a recent appraisal for $860,000, Cheroutes alleged she received a new appraisal of $640,000.

Cheroutes claims to have raised concerns about the appraisal with Rocket Mortgage, which said it could not investigate the matter. Rocket canceled Cheroutes’ refinancing application after the homeowner refused to accept a loan based on an appraisal value she believed was errant.

Rocket, which also filed for the dismissal of the case brought against the company by the DOJ, claims in its latest suit that its inclusion in the original action was wrong because government regulations prevent Rocket from exerting control in the appraisal process.

The president of Rocket Companies made a point to support an investigation into the appraisal, but not his company’s position in the original lawsuit, which the company said is demonstrative of conflicting demands placed on lenders regarding appraisal concerns.

“If the appraiser did something he shouldn’t have done, she should have justice,” Bill Emerson said. “But we have to follow the rules and the law, and that’s what we did here.”

— Holden Walter-Warner