In one other follow cited within the go well with, debtors who obtained a preapproval letter from Rocket Mortgage had been allegedly directed to Rocket Houses and matched with a real estate agent. If the borrower in the end bought a house utilizing that agent, the brokerage paid Rocket Houses a referral charge — usually round 35% — for companies the lawsuit claims Rocket Houses didn’t really present.
“The coercion of the brokers is what makes this case distinctive; they’re arguing that Rocket’s technique was primarily pay-to-play,” stated James Brody, managing companion at Brody Gapp LLP. “Essentially the most damaging facet of this criticism is the erosion of the fiduciary wall — a homebuyer trusts that their agent is an impartial adviser, and if that adviser is incentivized to prioritize one lender’s mortgage quantity over the borrower’s monetary pursuits, that relationship is arguably compromised.”
Plaintiffs Barbara Waller, Elizabeth Johnson and Randel Clark purchased houses between 2021 and 2023 by means of actual property brokers whom they declare didn’t provide choices — or pushed them to make use of Rocket Mortgage or Amrock, the group’s title firm.
They’re represented by Hagens Berman, a shopper safety legislation agency that was additionally concerned in related litigation in opposition to Zillow and the National Association of Realtors. Attorneys for Hagens Berman declined to touch upon this story.
A Rocket spokesperson responded to questions from HousingWire by stating: “You’ll discover our responses to these questions in our dispositive motions which we’ll file on the proper time.”
Potential sticking factors
Within the movement to dismiss that’s anticipated from Rocket, the choose will think about solely the sufficiency of the allegations. However authorized specialists see extra challenges to the case shifting ahead, together with whether or not it may be licensed as a class action.
“It’s the place lots of the battle would happen, at the very least initially,” stated Troy Garris, co-managing companion at Garris Horn LLP. “The plaintiffs must present that it makes extra sense to litigate as a category reasonably than individually. To try this, they have to show that the alleged accidents and conduct are sufficiently related. Right here, any proof of hurt seems extremely individualized, involving completely different brokers and completely different states.”
Colgate Selden, a shareholder at Baker, Donelson, Bearman, Caldwell & Berkowitz PC, famous that the criticism doesn’t tackle one other RESPA Part 8 exception associated to compensation splits underneath cooperative brokerage and referral preparations between actual property brokers and brokers. (Disclosure: Rocket is a consumer of the legislation agency, however Selden — who joined the agency this week — doesn’t signify the lender.)
“They concentrate on fiduciary obligations, however that’s a state-by-state evaluation,” Selden stated. “There are waivers of fiduciary duties for a lot of actions in commonplace company types relying on the precise consumer relationship, so class certification based mostly on this criticism could be robust.”
One other problem, Selden added, is the one-year statute of limitations in Part 8 for personal actions. The criticism argues that every alleged kickback constitutes a separate violation, thereby resetting the statute-of-limitations clock.
Rocket’s preliminary response to the lawsuit was that “the claims on this case are an entire retread of the case that the Shopper Finance Safety Bureau filed and was rapidly dismissed.”
The corporate was referring to a CFPB criticism, filed in December 2024, that raised related allegations. It was dismissed in February 2025. The plaintiffs within the present case argue that the dismissal of the prior criticism was tied to the Trump administration’s efforts to weaken the CFPB, reasonably than the deserves of the case.
“Successfully, a regulatory dismissal may be political or resource-driven, whereas a category motion jury trial in search of treble damages is a wholly completely different ballgame,” stated Brody. “The plaintiffs are betting they will show what regulators could not have had the time — or political will — to pursue.”
Historical past behind the allegations
The lawsuit alleges {that a} 2019 settlement between Rocket Houses and its companion brokers required them to “protect and shield” shoppers’ relationships with their chosen lender, Quicken Loans (now Rocket Mortgage).
Brokers had been additionally allegedly instructed to advertise the advantages of utilizing Quicken and different Rocket-affiliated corporations, with warnings that intentionally steering shoppers away may end in termination of the connection.
In line with the criticism, agent efficiency — together with Quicken mortgage conversion charges, which had been anticipated to achieve 80% of shoppers — was a key think about figuring out referral eligibility. Rocket Houses allegedly used these metrics to resolve which brokers obtained referrals and what number of.
A 2022 model of the settlement reportedly required brokers to inform Rocket Houses when shoppers had been contemplating various lenders. Whereas these provisions had been in place for 5 years, the criticism argues that their “spirit” continued past that interval.
In line with the CFPB’s investigation, an estimated 50% of all penalties assessed by Rocket Houses in opposition to brokers stemmed from violations of the “protect and shield” requirement.
“Plaintiffs appear to rely closely on the concept the corporate pressured brokers to refer enterprise internally,” Garris stated. “However pressuring an agent just isn’t essentially the identical as pressuring a borrower, or requiring a borrower to make use of a selected lender. The satan, after all, is within the particulars.”
Whereas RESPA prohibits quid professional quo funds, known as kickbacks, it permits a variety of different compensatory preparations, leaving room for interpretation.
Funds for lead generation or desk leases, for instance, are usually permissible — however provided that they replicate cheap market worth and correspond to precise companies supplied. Regulators may additionally require detailed proof of those companies, in any other case, such funds may very well be deemed as illegal referral charges, attorneys stated.
“The allegations counsel that Rocket Houses established completely different market charges for leads relying on whether or not brokers despatched loans to Rocket Mortgage,” stated Ron Gapp, founding companion of Brody Gapp LLP. “That differential therapy is the place potential RESPA points may come up.”
Buying Redfin to cowl their tracks?
Following the dismissal of the CFPB case, Rocket acquired actual property brokerage Redfin for $1.75 billion — a transfer the lawsuit characterizes as a “maneuver” to deliver the alleged steering practices in-house.
The plaintiffs allege, on data and perception, that Rocket knew its conduct was “unlawful.” The acquisition added greater than 2,200 brokers to Rocket’s community.
In line with the lawsuit, “Rocket gives Redfin brokers with elevated referrals, a factor of worth, in change for brokers referring shoppers to Rocket Mortgage, a factor of worth. Requiring brokers to offer referrals to Rocket Mortgage to obtain leads is proof of an unlawful steering scheme and unjust enrichment.”
Attorneys stated RESPA has typically been interpreted to allow affiliated enterprise association referrals, supplied that sure situations are met. For example, the referring occasion should give correct affiliated enterprise disclosures, can not require the borrower to make use of the affiliated entity, and should obtain nothing of worth past a return on possession curiosity.
The plaintiffs allege violations of RESPA and unjust enrichment. they’re in search of treble damages, single damages, disgorgement and injunctive aid to halt Rocket’s alleged steering practices.
Sarah Wolak contributed reporting to this story.
