Rocket Mortgage, the third largest U.S. mortgage lender, has entered into a conciliation agreement with the U.S. Department of Housing and Urban Development (HUD) to resolve allegations of discriminatory housing practices, the parties announced on Monday.
The complaint filed by a couple alleges that the company and a mortgage banker denied a mortgage loan application based on race for a single-family home located within the boundaries of the Flathead Indian Reservation in Saint Ignatius, Montana. Consequently, the borrowers got a mortgage from another lender on less favorable terms and higher interest rates.
Rocket and the banker settled the matter without admitting any fault or liability concerning the claims.
“No one seeking to purchase a home should be subjected to unlawful discrimination when applying for a home mortgage,” Demetria L. McCain, HUD’s principal deputy secretary for fair housing and equal opportunity, said in a statement.
According to the settlement agreement, Rocket will pay the couple $65,000 and invest at least $30,000 in programs related to homeownership for Native Americans.
Rocket will also provide fair lending training to its employees and improve outreach regarding the financing options available for properties within the boundaries of Native American reservations.
Rocket Companies, the lender’s parent company, had 14,700 employees based in the United States and Canada as of December 31, 2023. In the first quarter of 2024, it delivered a GAAP net income of $291 million, mainly due to cost reductions and investments in artificial intelligence. Rocket originated $20.2 billion in mortgages in Q1 2024.
The agreement with HUD shall govern the company’s conduct for three years from its effective date or until it has satisfactorily complied with all the terms, whichever is later.HUD’s commitment to increasing homeownership among Native Americans is evident in its recent initiatives. In mid-April, it announced a new rule aimed at encouraging lender participation in the department’s Section 184 Indian Housing Loan Guarantee program. The effective date for the new rule is June 18.
