Rocket Accused Of Using ‘Kickback Scheme’ To Attract More Borrowers
The Consumer Financial Protection Bureau claims Rocket gave real estate agents incentives to steer consumers away from other companies. Rocket calls the allegations a “lie” and political ploy.
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A new lawsuit from the Consumer Financial Protection Bureau accuses Rocket Homes of using an illegal kickback scheme to get agents to steer their clients to the company — an allegation Rocket described as “a lie.”
The Consumer Financial Protection Bureau (CFPB) filed the suit Monday. In an accompanying statement, the agency said the goal of the suit is to stop Rocket Homes from providing incentives to agents and brokers “in exchange for steering homebuyers to Rocket Mortgage, LLC for loans.” CFPB Director Rohit Chopra added in the statement that the scheme “discouraged homebuyers from comparison shopping and getting the best deal.”
Rohit Chopra
“At a time when homeownership feels out of reach for so many, companies should not illegally block competition in ways that drive up the cost of housing,” Chopra added.
In a statement to Inman, Rocket pushed back, saying that the CFPB’s “allegations are false and a distortion of reality.”
“The accusation that homebuyers paid more when working with Rocket Homes is a lie,” the company added in its statement. “Additionally, the notion that Rocket Homes penalized real estate brokers or agents for helping clients compare rates and choose the best lender for them is also a lie.”
The company further pointed to data that it said shows “a third of consumers with a loan application already in progress with Rocket Mortgage, before contacting Rocket Homes, chose to close with a different lender.” According to Rocket, this shows that the company empowers homebuyers “to make the best decisions for their unique needs.”
Rocket also vowed to fight the allegations, and suggested the lawsuit was a political play on Chopra’s part.
“Director Chopra’s transparent ploy to bolster his political agenda before the changing of administrations is a reckless and shocking misuse of public resources,” Rocket said in its statement. “This flimsy lawsuit is just the latest in a tidal wave of legal actions by a desperate Chopra hungry for headlines.”
Which side prevails in court remains to be seen. But in the meantime, the CFPB’s statement argues that the alleged kickbacks included homebuyer referrals and priority for future referrals. The arrangement also required real estate professionals who got Rocket referrals to steer clients away from other lenders and prevented “brokers and agents from sharing valuable information with their clients concerning products not offered by Rocket Mortgage,” the statement adds.
The CFPB argues in the statement that Rocket’s actions violate the Real Estate Settlement Procedures Act, a 1975 law that among other things prevents kickbacks.
News that the CFPB was investigating Rocket first surfaced via a regulatory filing in 2020, on the eve of the company’s initial public offering. The investigation aimed to determine if Rocket engaged in illegal practices in order to drum up business.
In addition to Rocket, the lawsuit also includes broker Jason Mitchell and his companies. Mitchell is based in Arizona, but his companies operate in 41 states and Washington, D.C.
On LinkedIn, the Jason Mitchell Group bills itself as the “largest B2B real estate brokerage in America.” According to the statement, the Mitchell Group “referred thousands of clients to Rocket Mortgage” and a Rocket affiliate called Amrock. Agents who made the most referrals to the Mitchell Group’s preferred partners, including Rocket, received gift cards, according to the statement.
Inman has reached out to Mitchell’s company for comment and will update this story with any response it sends.
The statement concludes by noting that the lawsuit “seeks a stop to alleged unlawful conduct, redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.” The complaint does not specify how much money the CFPB is seeking.
Read the CFPB’s complaint here (if the document doesn’t load, refresh the page):
