The U.S. government has dismissed a lawsuit it filed two months ago alleging that a company affiliated with Rocket Mortgage engaged in a kickback scheme to steer homebuyers toward the lender.
It’s unclear why the Consumer Financial Protection Bureau ended the suit, which was filed less than a month before the end of the Biden administration. But the agency’s notice of dismissal came a few days after the affiliate, Rocket Homes, told the Eastern Michigan federal court that the government didn’t have a good case. Both Rocket affiliates are subsidiaries of Rocket Cos.
Rocket Homes’ role is to match people looking to buy homes with real estate brokers. The bureau said in its December suit that the company required brokers it worked with to steer homebuyers to its sister firm, Rocket Mortgage. In exchange, Rocket Homes provided the brokers with referrals of new customers. The bureau said this type of arrangement is illegal under federal law because it encourages brokers to exploit consumers who rely on them.
But Rocket Homes responded that it hadn’t penalized brokers if they told customers about other lenders. The company also rebutted allegations that homebuyers paid more for their mortgages because they were discouraged from considering other lenders.
“This case was a misrepresentation of the facts,” Rocket Homes said in a statement after the case was dismissed Thursday. “It was an empty claim brought forth by former CFPB director [Rohit] Chopra for the sole purpose of seeing his name in headlines during the final days in public office.”
The bureau did not respond to a request to comment. The agency is in turmoil after its acting director suspended most of its operations in early February. Jonathan McKernan, President Trump’s choice to be the agency’s new permanent director, was scheduled for a nomination hearing before a U.S. Senate housing committee on Thursday.
The lawsuit also accused Phoenix-based brokerage The Jason Mitchell Group and numerous affiliates of collaborating with Rocket in the alleged scheme. The government alleged that the brokerage encouraged agents to use “coercive tactics” to steer customers to Rocket Mortgage. Mitchell could not be immediately reached for comment about the suit’s dismissal.
In Rocket Homes’ Feb. 21 filing asking the court to end the case, the company said federal law allows it to have referral arrangements like those it had with certain brokers. The company also said it didn’t make sense to suggest consumers were steered toward Rocket Mortgage, because those homebuyers had already decided on their own that they wanted to work with the lender.
“Their real estate broker should be willing to support that choice and be prepared to work with that lender – not steer the consumer to another lender to start the process over,” Rocket Homes said in the court document.
Jason Mitchell made its own request earlier this month for the court to drop the case, saying in a court filing that the law allows brokerages and agents to send referrals to one another, even in exchange for a fee.