The Consumer Financial Protection Bureau (CFPB) today said it has sued Rocket Homes, Jason Mitchell, and The Mitchell Group of real estate brokerages over alleged violations of the Real Estate Settlement Procedures Act (RESPA), to include illegal kickbacks and the steering of mortgage borrowers to Rocket Mortgage.
CFPB alleges Rocket Homes “pressured” real estate agents and brokers “not to share valuable information with their clients concerning products not offered by Rocket Mortgage.” Rocket Mortgage is one of the top mortgage lenders in the country.
In a press release issued today announcing the lawsuit, CFPB Director Rohit Chopra stated that "Rocket engaged in a kickback scheme that discouraged homebuyers from comparison shopping and getting the best deal." CFPB notes it is seeking “to bring defendants into compliance with the law, consumer redress, and the imposition of civil money penalties” over the alleged scheme.
Rocket Homes emailed the following statement to NMP, flatly denying the CFPB's allegations and calling the lawsuit a "desperate" attempt at a headline grab.
“The CFPB’s allegations are false and a distortion of reality,” Rocket's statement reads. “The accusation that homebuyers paid more when working with Rocket Homes is a lie. Additionally, the notion that Rocket Homes penalized real estate brokers or agents for helping clients compare rates and choose the best lender for them is also a lie."
In exchange for getting borrowers to go with Rocket Mortgage, Rocket Homes would give brokers and agents "homebuyer referrals and priority for future homebuyer referrals from [its] network," the CFPB states.
Real estate agents who made the most referrals to The Mitchell Group’s "favored" partners – which included Rocket Mortgage and title, closing, and escrow services provider Amrock, both subsidiaries of Rocket Companies – allegedly received $250 gift cards.
This alleged scheme has been happening since 2019, when the CFPB first opened an investigation into Rocket Homes for RESPA violations.
In a Form S-1 filed with the Securities and Exchange Commission (SEC) in July 2020 prior to the company’s initial public offering (IPO), Rocket acknowledged outstanding investigations into Rocket Homes by the CFPB “to determine if Rocket Homes conducted any activities in a manner that violated RESPA [the Real Estate Settlement Procedures Act] and to determine if further CFPB action is necessary.”
“We intend to cooperate fully with the CFPB in this investigation and are confident in the compliance processes that Rocket Homes has in place,” the Form S-1 reads.
‘False and a Distortion of Reality’
Rocket's emailed statement to NMP suggests how the company plans to defend itself in court.
“The facts are clear – data shows one third of consumers with a loan application already in progress with Rocket Mortgage, before contacting Rocket Homes, chose to close with a different lender," the statement reads. "This proves Rocket Homes is committed to empowering homebuyers to make the best decisions for their unique needs. Rocket Homes’ has always focused on connecting buyers with top-performing agents based on measurable success metrics.
“[CFPB] Director [Rohit] Chopra’s transparent ploy to bolster his political agenda before the changing of administrations is a reckless and shocking misuse of public resources. This flimsy lawsuit is just the latest in a tidal wave of legal actions by a desperate Chopra hungry for headlines."
In early December, Rocket Mortgage sued the Department of Housing and Urban Development (HUD) to clarify regulatory and enforcement discrepancies after being sued by the Department of Justice (DOJ) in October for alleged appraisal bias.
“The laws and regulations are clear on appraisal independence,” president of Rocket Mortgage, Bill Emerson, told NMP at the time. “We have no authority. HUD is choosing through enforcement or litigation to alter the playing field. We’re going back and saying, ‘Now you have to provide clarity to not only us, but the industry on how we’re supposed to handle this.’” Rocket also filed a motion to dismiss the claim brought forward by the DOJ.
Now, it seems the CFPB would like clarity on how Rocket Homes brings business to Rocket Mortgage. Rocket, however, remains defiant.
"Rocket Homes will not rest until these baseless allegations are fully dismissed, and the CFPB redirects its focus to real issues that genuinely impact consumers," read the company's statement to NMP.
