The Department of Justice (DOJ) filed a lawsuit against Rocket Mortgage, appraiser Maksym Mykhailyna, Maverick Appraisal Group, and Solidifi U.S. Inc., yesterday, alleging racial discrimination in a January 2021 Colorado incident where a Black homeowner's home was undervalued based on her race.
Rocket Mortgage called the case "a massive overreach." A release from the Detroit-based company states, "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. 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."
Rocket added, "It is clear the government isn’t interested in their own rules, or facts, and are simply including us in this case to score headlines based on our strong brand and prominent position in the industry. We look forward to exposing the government’s massive overreach in this matter.”
The Justice Department's complaint states that a homeowner applied for a refinance with Rocket Mortgage in January 2021. Rocket Mortgage hired Solidifi US Inc., which chose Mykhailyna from Maverick Appraisal Group to assess the property in a predominantly white Denver neighborhood.
The complaint alleges Mykhailyna used sales from distant, majority-Black areas, ignoring closer sales, and undervalued the property by over $200,000 compared to an appraisal less than a year earlier, despite rising home values.
After the homeowner raised concerns of discrimination, Rocket Mortgage canceled the refinance. The homeowner filed a complaint with Department of Housing and Urban Development (HUD), which found that there was probable cause of Fair Housing Act violations and referred the case to the DOJ.
“The complaint alleges racially discriminatory practices by a lender and an appraiser that harmed a homeowner. These discriminatory practices have gone on for too long in Denver,” said Acting U.S. Attorney Matt Kirsch for the District of Colorado. “The U.S. Attorney’s Office is committed to addressing persistent inequities in housing through vigorous enforcement of federal laws prohibiting discrimination in housing and lending.”
Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, said that the lawsuit is part of an ongoing effort to combat appraisal bias, which prevents communities and consumers of color from accessing credit and benefitting from homeownership.
"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," said Assistant Attorney Clarke. "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.”
