A class action lawsuit alleging a “nationwide conspiracy” designed to “artificially inflate residential mortgage rates and fees” has been filed against one of the largest mortgage service providers in the U.S., Optimal Blue, and 26 of the largest U.S. mortgage lenders.
Filed on Oct. 3 in the U.S. District Court for the Middle District of Tennessee, the lawsuit claims these entities have operated a “data-sharing network” since at least 2019 that enables them “to orchestrate a price-fixing scheme.” Optimal Blue offers pricing software embedded in loan origination systems (LOSs) used by lenders to price home mortgages.
The plaintiffs — Angel D. Mendez, Seth Ogilvie, Nancy Donacki-Thompson and Ori Wasserburg — purchased residential mortgages and claim their costs were impacted by the alleged conspiracy. The plaintiffs seek undisclosed damages and permanent injunctive relief to dismantle the alleged price-fixing scheme, claiming “due to the nature of the residential mortgage market, there are likely millions” of people impacted.
In September 2023, Toronto-based Constellation Software Inc. purchased Optimal Blue from Black Knight, a major mortgage technology firm, to clear regulatory hurdles ahead of the acquisition of Black Knight by Intercontinental Exchange Inc. (ICE), another major mortgage technology firm, which also owns the New York Stock Exchange.
As part of an agreement with the Federal Trade Commission, Black Knight also sold Empower, its proprietary LOS, to Constellation Software. ICE owns and operates the most widely used mortgage LOS, Encompass. Optimal Blue’s pricing software remains integrated within the Encompass suite of loan origination software, despite the divestiture, as well as Constellation Software’s Empower.
Optimal Blue, Black Knight and Constellation Software are each named as defendants, though ICE, the parent company of Black Knight, is not. Neither Constellation Software nor ICE immediately responded to Scotsman Guide’s request for comment.
“Each Loan Originator Defendant agreed to surrender its most sensitive competitive data to Optimal Blue and competitors as the price of admission to this cartel,” the lawsuit reads, citing such “non-public, competitively sensitive, granular, real-time data” as lender profit margins, loan-level pricing adjustments, concessions, servicing release premiums, loan officer compensation and borrower credit characteristics.
“This intelligence would never be available in real-time to competitors in a functioning market,” the plaintiffs claim. According to the lawsuit, Optimal Blue advertised it serves roughly 3,500 lenders in 2025. The impact of the alleged anti-competitive practices is “uniformly inflated mortgage prices for American families,” the plaintiffs maintain.
To support these claims, the plaintiffs cite statistics showing the difference in rate spreads — the difference between a loan’s annual percentage rate and yields on newly issued mortgage-backed securities — between users and non-users of Optimal Blue’s software.
Since January 2020, they claim that rate spreads for mortgages issued by Optimal Blue users were roughly 2.68 basis points (49.2%) higher than mortgages from non-users. Optimal Blue users’ rate spreads after 2019 were 9.6 basis points higher than their pre-2020 baseline, “representing a massive windfall extracted from American homebuyers,” the class action complaint alleges.
The 26 lenders named as defendants are here listed in the order they appear in the complaint: Rocket Mortgage; United Wholesale Mortgage; Wells Fargo Bank N.A.; JPMorgan Chase Bank N.A.; Loandepot.com; Bank of America N.A.; Fairway Independent Mortgage Corp.; U.S. Bank National Association; Freedom Mortgage Corp.; Guaranteed Rate; NewRez; CrossCountry Mortgage; PennyMac Loan Services; Guild Mortgage Co.; Citibank N.A.; Flagstar Bank N.A.; Nationstar Mortgage; New American Funding; CMG Mortgage; AmeriSave Mortgage Corp.; Better Mortgage Corp.; FirstBank; Churchill Mortgage Corp.; First Community Mortgage; Movement Mortgage; and Beeline Loans.
