Rocket Mortgage (formerly Quicken Loans) earned a hard-fought win in court this week following the Fourth Circuit Court of Appeals’ dismissal of the majority of a $10.6 million judgment against the mortgage lender and its affiliate, Amrock LLC (formerly Title Source, soon to be Rocket Close) stemming from a 2012 class-action lawsuit (Phillip Alig vs. Rocket Mortgage LLC) alleging undue influence over appraisals.
Plaintiffs alleged that Rocket Mortgage and Amrock compromised the independence of appraisals by sharing borrowers’ home-value estimates from mortgage refinance applications with appraisers — as was customary prior to post-Great Financial Crisis mortgage reforms — rendering the “independent” appraisals that the plaintiffs had paid for “worthless.”
A district court ruled in favor of the plaintiffs, awarding over $10 million in damages, including statutory damages for “unconscionable inducement” and refunds of appraisal fees. The decision encompassed a class of 2,769 West Virginia borrowers who had refinanced their mortgages with Rocket under similar conditions, and thus were assumed to have experienced similar harm.
On appeal, the Fourth Circuit initially upheld the class certification and damages. However, the Supreme Court’s 2021 decision in TransUnion LLC v. Ramirez, which clarified that each class member in a class-action lawsuit must demonstrate concrete harm to have standing, the Fourth Circuit’s ruling was vacated and remanded for the district court for reconsideration.
Language from TransUnion LLC v. Ramirez, cited by the Fourth Circuit in dismissing its earlier judgment, captured the high court’s belief that “an injury in law is not an injury in fact,” observing that “standing is not dispensed in gross.” Therefore, the Fourth Circuit ruled, “mere exposure to the borrowers’ estimates could only establish potential influence, i.e., a risk of influence, and such a risk cannot be the basis for standing to recover damages under TransUnion.”
Plaintiffs seeking class-wide relief argued that paying for “independent” appraisals they did not receive constituted harm, but the Fourth Circuit found that the plaintiffs failed to prove that all class members suffered concrete harm due to the appraisal practices, and the court found no evidence that appraisers were influenced or that the appraisals were factually inaccurate as a result of Rocket’s practices.
The Fourth Circuit affirmed, however, the portion of the district court’s earlier judgment, including damages, on the named plaintiffs’ statutory and conspiracy claims, while vacating the portion of the district court’s judgment on the merits of the named plaintiffs’ breach of contract claim.
One judge dissented in the Fourth Circuit's decision, writing, "I believe the plaintiffs in this case — named and unnamed class members alike — have made the required showing because they paid for appraisals that the record shows were deficient as a matter of West Virginia law. Accordingly, I would hold the unnamed class members in this case possess Article III standing."
Rocket currently seeks dismissal of an appraisal bias lawsuit filed against the company by the Department of Justice (DOJ) in October 2024. In early December 2024, Rocket filed a lawsuit against the U.S. Department of Housing and Urban Development (HUD) seeking clarification on appraisal enforcement and regulatory discrepancies.
