The U.S. Department of Housing and Urban Development (HUD) announced on Monday that it has charged lender Rocket Mortgage, two appraisal companies and one appraiser with allegedly issuing a biased valuation and denying a refinance loan to a Black homeowner in Denver.
The HUD accused appraiser Maksym Mykhailyna and his company, Maverick Appraisal Group, appraisal management company Solidifi U.S. Inc., and Rocket of discrimination under the Fair Housing Act.
Spokespeople for the appraisal companies and Mykhailyna didn’t immediately replied to HousingWire‘s requests for comment.
In a statement, a spokesperson for Rocket said that federal law requires lenders 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 goal is to value a home without any input or bias from the lender.
“For that reason (and more), our company is clearly a misplaced target used simply to score headlines because of its brand and position in the industry. We look forward to bringing the facts of this case to court to set the record straight. Until then, we will continue offering affordable options and championing other equitable initiatives to make the dream of homeownership accessible to all.”
The HUD claimed that in January 2021, a Black woman received an “insupportably” low appraisal for her home in a majority-white area of Denver.
That’s despite home value appreciation in the Colorado market and other recent appraisals of the same property indicating steady increases in value, HUD stated. Her duplex was valued at $640,000, which was about 25% lower than its value eight months prior.
According to HUD, the valuation had “inaccuracies and unsupportable methodological choices,” including “inexplicably large adjustments” for site size and “incorrect measure of interior square footage.” These assumptions reduced the home’s value.
In addition, the appraiser relied on comparable properties in majority-Black neighborhoods while discarding comparable homes in neighborhoods with larger white populations. That was not the practice for appraisals with white owners, HUD stated.
Per the charge, Solidifi and Rocket ignored “red flags” in the valuation, with the latter requiring the appraisal during the application process and ultimately denying the applicant a refinance loan.
“Homeownership is crucial to build both generational wealth and housing stability for Black and Brown families,” Diane M. Shelley, HUD’s principal deputy assistant secretary for fair housing and equal opportunity, said in a statement. “HUD will continue to vigorously enforce the Fair Housing Act against those who seek to limit the financial returns associated with homeownership because of race or any other protected characteristic.”
The case will proceed to review by an administrative law judge unless any of the parties elects to have the case heard in federal court.
Editor’s note: This story has been updated with a statement from Rocket Mortgage.
