Judge Allows Refi Lawsuit Vs. Rocket Mortgage To Move Ahead – NMP Skip to main content

Judge Allows Refi Lawsuit Vs. Rocket Mortgage To Move Ahead

Apr 17, 2023
Cash and gavel

2 couples who own property in N.C. claim Rocket denied a refi application in order to impose a higher rate.

A federal judge in Pennsylvania last week dismissed five claims in a lawsuit filed against Rocket Mortgage, but allowed two others to stand.

The lawsuit was filed in October 2022 by two couples who own a property in North Carolina. They claim Rocket fraudulently rejected their application to refinance a mortgage on the property in order to avoid approving a much lower mortgage rate.

According to the lawsuit, the two couples — John J. Speicher and his wife, Patricia C. Giles, both of Wyomissing, Pa., and Jeremy G. and Courtney Speicher of Concord, N.C. — filed their refinance application in March 2022 and were told their rate would be locked in at 3.99% for six weeks. 

Mortgage rates at the time began rising, however, and on on April 20 last year, the two couples learned their application had been terminated. Rocket offered to restart the application, but said the rate new would be 5.5%. 

Their lawsuit against Rocket Mortgage claimed three different counts of breach of contract, as well as negligence, fraud, and violations of the federal Truth In Lending Act and the Pennsylvania Unfair Trade Practices Act.

Rocket Mortgage filed a motion to dismiss the lawsuit, and Judge Joseph F. Leeson Jr. of U.S. District Court for the Eastern District of Pennsylvania issued a ruling on April 11. 

Leeson ruled that the termination is not a breach of contract. The couples had argued that disclosure forms are a binding contract. He also dismissed claims of negligence because lenders do not owe a duty of care to borrowers, he said. 

The judge ruled, however, that the couples did provided “sufficient facts” for their fraud and unfair trade practice claims, “because they allege that Rocket Mortgage knowingly misrepresented that plaintiffs would receive a 3.99% interest rate, plaintiffs relied on that representation, and their reliance on that representation resulted in a financial loss.”

Based on the judge’s order, of the five of the claims he dismissed, three were dismissed with prejudice — which means they cannot be amended and refiled — while the other two were dismissed without prejudice. As a result, the claims of negligence and of violations of the Truth In Lending Act could be amended and refiled within seven days of the order, or April 18.

About the author
David Krechevsky was an editor at NMP.
Published
Apr 17, 2023
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