Rocket Faces RESPA Class-Action Lawsuit

A class-action lawsuit has been filed against Rocket Mortgage, alleging violations of the Real Estate Settlement Procedures Act (RESPA). The lawsuit stems from claims that real estate agents were compelled to steer clients towards Rocket’s lending services, which is similar to recent allegations against Zillow.

Details of the Class-Action Lawsuit

The lawsuit was initiated on January 26 in the U.S. District Court for the Eastern District of Michigan. Three homebuyers — Barbara Waller, Elizabeth Johnson, and Randel Clark — are the plaintiffs in this case. They assert that agents working with Rocket’s referral program pressured them to select Rocket Mortgage as their only mortgage option.

Allegations Against Rocket Mortgage

• The plaintiffs argue that Rocket’s practices exploit the vulnerabilities of homebuyers.
• Agents affiliated with Rocket’s referral system were mandated to direct clients towards Rocket Mortgage. This is a clear violation of agents’ fiduciary duties.
• In the complaint, Rocket is accused of imposing a 35% referral fee on agents who connected buyers with Rocket Mortgage.

Background of Legal Scrutiny

In December 2024, the Consumer Financial Protection Bureau (CFPB) launched an investigation into Rocket Mortgage, leading to allegations of steering clients towards less favorable loan options. The CFPB lawsuit highlighted the potential harm to consumers, who were charged higher rates when they used Rocket’s services compared to those who did not.

Continued Practices After Acquisition

Even after Rocket’s acquisition of Redfin, allegations suggest that the company has maintained these steering practices. The complaint claims that Rocket still refers clients to third-party agents while charging higher fees for those who do not steer clients towards Rocket Mortgage.

Rocket’s Response

In response to the lawsuit, a spokesperson for Rocket Mortgage expressed strong disagreement with the allegations. The company contends that the claims are effectively a reiteration of the CFPB case that was dismissed. Rocket maintains its commitment to helping homebuyers navigate the complexities of real estate.

Potential Impact on Consumers

The plaintiffs’ legal representation, Hagens Berman, suggests that potentially “hundreds of thousands” of consumers could be affected by Rocket’s alleged deceptive practices. Managing partner Steve Berman emphasized the importance of fairness and transparency within the real estate market.

Similar Issues with Zillow

This lawsuit is part of a growing trend wherein real estate companies face scrutiny for alleged steering practices. Similar claims have been made against Zillow, which has also been accused of encouraging agents to direct clients towards its mortgage division.

As this case unfolds, it will shed light on the ongoing concerns surrounding consumer protection in the real estate lending space.