Rocket Companies Inc (NYSE:RKT) has filed suit against the United States Department of Housing and Urban Development (HUD) related to regulations involving independent licensed appraisers.

What Happened: Rocket Companies’ Rocket Mortgage is suing HUD in an effort to correct conflicts between the government’s regulations requiring appraiser independence and its enforcement actions seeking to hold lenders liable for the conduct of independent licensed appraisers.

Rocket Mortgage said it also filed a motion to dismiss the claim the U.S. Department of Justice brought against the company in October based on “the same regulatory conflicts and misapplication of applicable law.”

“It is unreasonable that the DOJ chose to sue Rocket Mortgage for the conduct of an independent appraiser. We will not stand idly by while the courts are used as venues to leverage our company’s name to publicize the case instead of pursuing justice against those who may have committed wrongdoing,” said Bill Emerson, president of Rocket Companies.

Benzinga reached out to the Department of Justice for comment on Rocket Companies' lawsuit, but a department spokesperson declined to comment.

The DOJ filed a lawsuit against Rocket Mortgage, Solidifi US and Maverick Appraisal Group in October, alleging discrimination against a Black homeowner.

The homeowner applied for a mortgage refinancing loan from Rocket Mortgage in early 2021. Rocket Mortgage contracted Solidifi to appraise the home and Solidifi retained Maverick Appraisal Group for the appraisal.

The DOJ claimed that Maverick “undervalued the property because of race and color.” The DOJ further alleged that Rocket Mortgage interfered with the homeowner's rights by canceling her mortgage refinance application after she reported the discrimination. The homeowner filed a complaint with HUD after Rocket Mortgage canceled her application. After conducting an investigation, HUD referred the matter to the DOJ.

Rocket Mortgage immediately responded to the claims in October, suggesting the government wasn’t following its own rules. The company said in a statement to Benzinga that it looked forward to “exposing the government’s massive overreach” related to the matter.

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On Thursday, Rocket Mortgage called the DOJ’s complaint “baseless” and said the only explanation for the company’s inclusion in this case is the “DOJ’s apparent motive to bring headlines to their claim.”

“It is notable that, in a case about the alleged actions of an independent appraiser that was contracted through an unaffiliated third party, Rocket Mortgage is listed first in the DOJ’s filing and is the only company mentioned by name in the headline of the government’s press release announcing the DOJ’s lawsuit,” Emerson said.

“We have always been guided by the fundamental principle that all homebuyers and homeowners should be treated fairly and should have every opportunity to achieve their dream of owning their own home or using their equity to improve their lives. Our long, exemplary track record of fair housing lending speaks for itself.”

The DOJ claims in its lawsuit that Rocket Mortgage “had the authority to correct” the alleged discriminatory appraisal but failed to do so. Rocket Mortgage argues that this is “100% false” because the law does not give the company “authority to correct” the appraisal process.

Rocket Mortgage believes all claims against the company should be immediately dismissed. The company is asking the court to declare that the Fair Housing Act prohibits Rocket Mortgage from influencing or attempting to influence an independent judgement of an appraiser and affirm that Rocket Mortgage has no control or responsibility related to the actions of an independent appraiser.

The company is also asking the court to state that Rocket Mortgage is not liable for relying on an appraisal from an independent third party and issue an order vacating any policies that hold mortgage lenders responsible for failing to correct perceived or alleged bias or discrimination in an appraisal.

RKT Price Action: Rocket Companies shares were down 1.05% at $13.61 at the time of publication Thursday, according to Benzinga Pro.

Photo: Shutterstock.