DENVER (KDVR) — The U.S. Justice Department is suing Rocket Mortgage for race discrimination after a Denver woman claimed that she was treated unfairly during the home appraisal process.
The lawsuit also alleges Rocket Mortgage retaliated against the Black homeowner by canceling her application when she complained about the appraiser.
Franchesca Cheroutes told FOX31 she believes an appraisal conducted in January 2021 as part of her refinance application didn’t reflect the true value of her home, which had been recently upgraded. Her property is in the Hale neighborhood, and interest rates were falling.
“It showed that my house, according to him, had fallen in value 25% from the last, which was before all those improvements,” she said.
The Justice Department released a statement estimating that amount to be more than $200,000 lower than an appraisal on the property less than a year before, all during Denver’s boom in home prices.
Cheroutes alleges the appraiser compiled a comparable home price report using fewer adjacent areas that tended to retain lower home values. She was dismayed by the response from Rocket Mortgage when she complained about the appraisal.
“That's where things derailed quickly,” she said.
Cheroutes said the problem was not addressed by the company.
“I would have to decide whether to proceed with the appraisal as is or cancel it by the end of the phone call,” she said.
The lawsuit alleges that the appraiser disregarded comparable properties and instead relied on sale prices of properties in neighborhoods with greater concentrations of Black residents, rather than the predominantly white neighborhood where the property was being appraised.
Cheroutes is represented by noted civil rights attorney Mari Newman, of the Newman McNulty law firm, who said Rocket Mortgage and the appraisal company had a responsibility to provide fair treatment of their client.
Newman said that all parties involved should be held accountable.
“All of them engaged in racist, willful racist discrimination and Rocket retaliated when it insisted that Ms. Cheroutes had to either quit talking about discrimination or give up her right to have a fair and accurate appraisal like anybody else in this country,” said Newman.
FOX31 asked Rocket Mortgage about the claim and received the following response.
“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 law's intent is to determine the home's value without any input or bias from the lender or any other party with interest in the transaction.
It is clear the government isn’t interested in their own rules, or facts, and are simply including us in this case to score headlines based on our strong brand and prominent position in the industry. We look forward to exposing the government’s massive overreach in this matter.”
FOX31 reached out to the appraisal company and is still waiting for a response.
The DOJ statement said its staff received the case after an investigation conducted by the Department of Housing and Urban Development found a violation of the Fair Housing Act.
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