Rocket Mortgage was one of four parties charged today by the U.S. Department of Housing and Urban Development (HUD) relating to the issuance of an allegedly biased appraisal and the ensuing denial of a refinance loan.
Along with Rocket, an appraisal management company, Solidifi U.S. Inc.; an appraisal company, Maverick Appraisal Group; and an appraiser, Maksym Mykhailyna, were named in HUD’s charge. Mykhailyna is the owner and founder of Maverick Appraisal Group.
According to a statement from HUD, the appraiser issued a discriminatory appraisal undervaluing a Black homeowner’s property in violation of the Fair Housing Act. The property, a duplex in a predominantly white area of Denver, had seen consistent increases in value in other recent appraisals. Mykhailyna’s appraisal, however, assigned what HUD called a “dramatic drop” in the home’s value.
The charge alleges that the appraisal was peppered with inaccuracies and “unsupportable” choices that deviated from Mykhailyna’s own methodology for similar properties nearby with white owners. Those choices included a reliance on comparable properties in areas with larger Black populations and the exclusion of comparable properties in neighborhoods with larger white populations.
The appraisal report was then reviewed by both Solidifi and Rocket, but neither company made moves to correct it. Rocket, per HUD, then violated the Act by terminating her refi application after insisting it could only proceed based on the appraised value that she alleged was discriminatory.
“The Fair Housing Act protects all of us from discrimination throughout the process of buying a home or securing a home loan,” said Damon Y. Smith, HUD general counsel. “As this charge demonstrates, HUD is committed to ensuring that no one is denied a home or a mortgage because of a discriminatory appraisal.”
“Homeownership is crucial to build both generational wealth and housing stability for Black and brown families,” said Diane M. Shelley, HUD’s principal deputy assistant secretary for fair housing and equal opportunity. “HUD will continue to vigorously enforce the Fair Housing Act against those who seek to limit the financial returns associated with homeownership because of race or any other protected characteristic.”
HUD’s charge will be heard by a U.S. administrative law judge, unless any party to the charge elects to have the case heard instead in federal district court. If the judge finds that discrimination has indeed occurred, damages may be awarded to the homeowner for her losses resulting from the discrimination and may also impose civil penalties.