The United States Department of Justice (DOJ) has announced a new lawsuit against Rocket Mortgage and an appraisal firm, alleging that the two companies discriminated against a Black Denver homeowner by undervaluing her home based on race.

According to the complaint, the homeowner applied for a refinance from Rocket in January 2021, with the lending giant contracting with Solidifi U.S. Inc. to complete the accompanying appraisal. Solidifi then retained Maksim Mykhailyna and his company, Maverick Appraisal Group, to appraise the property.

The DOJ alleges that while the home in question was located in a predominantly white neighborhood, Mykhailyna instead used sales data from homes in farther neighborhoods with larger Black populations to determine his valuation. Moreover, while Mykhailyna used sales of homes in an adjoining neighborhood less than a mile away when he appraised a white homeowner’s property just a few months earlier, he did not do so in the complainant’s appraisal, the complaint said.

Mykhailyna’s appraisal valued the property at more than $200,000 lower than an appraisal on the same home less than one year prior — a decrease of more than 25% at a time when home values in Denver were solidly growing.

Mykhailyna sent his appraisal to Solidifi, which in turn reviewed it and passed it along to both Rocket and the homeowner. The homeowner then contacted Rocket in attempt to explain why she believed the appraisal to be discriminatory; Rocket, according to the complaint, canceled her refinance application in response.

That led to her reaching out to the Department of Housing and Urban Development (HUD), which conducted an investigation determined that there was reasonable cause to believe the defendants had violated the Fair Housing Act. HUD then referred the matter to DOJ.

“HUD applauds today’s action and remains committed to working with DOJ to ensure appraisal companies and mortgage providers are held accountable when they violate our nation’s fair housing laws.” said Diane M. Shelley, principal deputy assistant secretary of HUD’s Office of Fair Housing and Equal Opportunity. “It has been over 56 years since the passage of the Fair Housing Act, and it is unconscionable that Black and Brown families still face discrimination during housing transactions.”