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Last year was a big one for lawsuits across the mortgage industry, with accusations of redlining, talent poaching, kickbacks and more at organizations like Rocket Homes, a division of Rocket Companies, and PNC Bank. Here are some of the notable cases from the last three months that lenders should follow.
Rocket Companies has weathered numerous legal storms throughout last year, starting with settlements over fair lending complaints with the Department of Housing and Urban Development and a $3.5 million agreement to quash allegations of overtime payment failures. The company denied any wrongdoing in both cases.
Allegations of bias in lending have also plagued the company. Francesca Cheroutes, a Black homeowner in Detroit, claimed that Rocket Mortgage and two other parties undervalued her home based on her race and shut down her refinance application after she flagged the issue to Rocket — prompting a lawsuit from the Department of Justice.
“Under federal law, mortgage lenders are required to work at arm’s length during the appraisal process, partnering with independent appraisal management companies who assign the work to state-licensed professional appraisers,” the company said in a statement.
Now, Rocket faces a suit from the Consumer Financial Protection Bureau over claims the company worked with The Mitchell Group to boost originations through a kickback scheme.
Read more: 9 explosive mortgage suits 2024: poaching, fraud and more
A case between Florida-based lender The Mortgage Firm and the DOJ has also made headlines. The Mortgage Firm is gearing up to spend roughly $1.75 million to build out a loan subsidy program for affordable home purchase, refinance and home improvement loans in predominantly Black and Hispanic neighborhoods to address redlining claims.
But with CFPB Director Rohit Chopra‘s tenure at the agency very likely at its end, and a spate of regulatory rollbacks on the horizon, experts are wondering how the CPFB’s appetite for lawsuits will change in 2025.
“The exact tone [of the agency] will depend on the new director and the immediate actions taken initially,” John Culhane, a partner at Ballard Spahr, said on webinar discussing the Trump administration’s regulatory and enforcement outlook. “All advisory guidance will be rescinded, some rulemakings will be paused and those that have been finalized will be reopened.”
Read more: 2025 banking forecasts: Taming the CFPB and Trump’s return
Learn more about the top legal battles in the mortgage industry over the last three months and what the broader implications are for consumers and lenders alike.
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The Mortgage Firm’s $1.75M settlement over redlining allegations
As part of settlement negotiations for ongoing litigation between Florida-based lender The Mortgage Firm and the Department of Justice, executives are preparing to spend $1.75 million to deal with redlining allegations.
The mortgage lender faces allegations of not offering mortgage services in predominantly Black and Hispanic neighborhoods across the Miami metropolitan area, in direct violation of the Fair Housing Act and the Equal Credit Opportunity Act, according to a Jan. 7 complaint.
In addition to broadening how the firm conducts its marketing and outreach into minority communities, executives will allocate the $1.75 million in funding towards developing a loan subsidy program for affordable home purchase, refinance, and home improvement loans in predominantly Black and Hispanic neighborhoods in the Miami-Fort Lauderdale-West Palm Beach, Florida, area.
Read more: Florida lender to invest $1.75M to settle DOJ redlining claims
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Couple files lawsuit against Newrez for $500,000 HELOC wire transfer
Stephen and Cynthia Skertich have filed charges against Shellpoint Mortgage Servicing, a division of Newrez, in Pennsylvania federal court for allowing an “obviously counterfeit” home equity line of credit wire transfer to go through.
According to the complaint, the couple charge that Shellpoint let a roughly $500,000 transaction go through after receiving a request form with what the Skertichs later claimed are forged signatures. Further allegations by the couple claim Shellpoint is holding them liable for the full amount transferred and has already begun foreclosure proceedings.
“Shellpoint takes the issue of fraud very seriously and works closely with our customers to validate fraudulent activity and remove unauthorized transactions from our customers’ accounts, as well as with law enforcement to support their investigations,” a company spokesperson said to National Mortgage News.
Read more: Couple sues Newrez for OK’ing fraudulent HELOC wire transfer
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Two lenders lock horns over retail poaching allegations
The Minneapolis-based Luminate Home Loans is petitioning a California judge to halt the New York-based Better Home & Finance from building out its retail operations in a poaching and trade secrets scheme.
The suit alleges that three ex-leaders of Luminate’s former Neo Home Loans division, including former president Daniel Horanyi, were meeting with Better executives to discuss the prospect of leaving the firm and also disclosing proprietary information to shift Neo into Better’s operations, according to court documents.
“The theft of Luminate’s proprietary information and the systematic targeting of Luminate’s team members to unfairly replicate its successes is not competition — it is corporate robbery,” Lucas Markowitz, a partner at Mitchell Sandler representing Luminate, said in a statement in November.
Read more: Luminate Home Loans sues Better for poaching retail business
Stefani Reynolds/Bloomberg
Former PNC Bank loan officer sues for alleged wage violations
Alla Gurevich, who worked for the Pittsburgh-based PNC Bank as a loan officer from 2018 to 2020, is suing the bank for alleged owed overtime wages and damages in excess of $5 million.
Gurevich filed the case in New Jersey federal court in December, wherein she accused PNC of breaking state wage laws and sought to determine a similar class of roughly 50 loan officers who underwent similar situations to start.
She earned $3,000 per month as a fixed amount, plus commissions for loans, but like others “regularly did not record all hours worked because of a common policy and practice by defendant of discouraging the recording of all hours worked,” the lawsuit said.
Read more: LO’s class action seeks unpaid OT wages from PNC Bank
Andrew Martinez/National Mortgage News
CFPB wages lawsuit against Rocket Homes, brokerage for kickbacks
The Consumer Financial Protection Bureau is going after Rocket Homes, the real estate division of Rocket Companies, and The Mitchell Group for allegedly orchestrating a kickback scheme to drive up origination volume.
Last month, regulators with the CFPB alleged in a complaint that Rocket Homes provided real estate brokers and agents with incentives such as such as homebuyer referrals and priority for future homebuyer referrals from the network for diverting business towards Rocket Mortgage and Amrock, which is the firm’s title, closing and escrow company.
“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,” Rohit Chopra, director of the CFPB, said in a press release.
Read more: CFPB sues Rocket Homes, brokerage over kickback scheme
