The Department of Justice (DOJ) filed a lawsuit against Rocket Mortgage, appraiser Maksym Mykhailyna, Maverick Appraisal Group, and Solidifi U.S. Inc. on Wednesday, accusing them of racial discrimination related to an appraisal incident in January 2021. The case involves a Black homeowner in Colorado whose property was allegedly undervalued based on her race
Rocket Mortgage swiftly responded, labeling the lawsuit as a "massive overreach." In a statement, the Detroit-based company explained, "Federal law mandates that mortgage lenders maintain an arm's length relationship during the appraisal process. This means lenders work with independent appraisal management companies, who then assign the task to state-licensed appraisers to ensure that property valuations are unbiased and objective."
The company further stated, "It seems the government is ignoring its own regulations and is targeting us in this case merely for the purpose of attracting media attention due to our prominent role in the industry. We are eager to challenge the government's overreach in this situation."
According to the DOJ’s complaint, the homeowner had applied for a refinance with Rocket Mortgage in January 2021. Rocket Mortgage hired Solidifi U.S. Inc., which in turn selected Mykhailyna from Maverick Appraisal Group to evaluate the home located in a predominantly white Denver neighborhood.
The lawsuit claims that Mykhailyna used property sales data from distant, majority-Black areas instead of closer, more relevant sales, ultimately undervaluing the property by over $200,000 compared to an appraisal conducted less than a year earlier, even though home values had been rising.
After the homeowner raised concerns about potential discrimination, Rocket Mortgage decided to cancel the refinance. The homeowner subsequently filed a complaint with the Department of Housing and Urban Development (HUD), which determined there was probable cause to believe that the Fair Housing Act had been violated and referred the case to the DOJ.
“The complaint alleges discriminatory actions by both a lender and an appraiser that negatively impacted a homeowner,” said Matt Kirsch, Acting U.S. Attorney for the District of Colorado. “These discriminatory practices have persisted for too long in Denver, and we are committed to addressing these inequities by enforcing federal housing laws that prohibit discrimination in both lending and housing.”
Kristen Clarke, Assistant Attorney General of the DOJ’s Civil Rights Division, remarked that the lawsuit is part of an ongoing effort to combat appraisal bias, which disproportionately affects communities of color and limits their access to homeownership and credit.
"Appraisal bias perpetuates the racial wealth gap and goes against the principles of fairness, equity, and transparency that are crucial for today’s housing market," Clarke said. "The DOJ will continue to hold accountable those who discriminate against loan applicants, including appraisers, lenders, and others. No one should face the financial harm and personal indignity caused by appraisal bias."
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