CFPB Files Lawsuit To Stop Illegal Kickback Scheme To Steer Borrowers To Rocket Mortgage

The Consumer Financial Protection Bureau (CFPB) sued Rocket Homes  to stop them from providing incentives to real estate brokers and agents in exchange for steering homebuyers to Rocket Mortgage, LLC for loans. The CFPB also sued Jason Mitchell, his real estate brokerage firm, JMG Holding Partners LLC, which does business as The Jason Mitchell Group, and the individual real estate brokerage companies in the 41 states and the District of Columbia where it does business (The Mitchell Group), for their role in the unlawful scheme. Rocket Homes pressured real estate brokers and agents not to share valuable information with their clients concerning products not offered by Rocket Mortgage, such as the availability of down payment assistance programs, which often save homebuyers thousands of dollars. The CFPB is suing Rocket Homes, The Mitchell Group, and Jason Mitchell to stop the kickback scheme, provide consumer redress, and obtain a civil penalty which will be deposited into the CFPB’s victims relief fund.

“Rocket engaged in a kickback scheme that discouraged homebuyers from comparison shopping and getting the best deal,” said CFPB Director Rohit Chopra. “At a time when homeownership feels out of reach for so many, companies should not illegally block competition in ways that drive up the cost of housing.”

Rocket Homes Real Estate, LLC is incorporated in Michigan and is an affiliate of Rocket Companies, Inc. (NYSE: RKT), which also operates Rocket Mortgage, one of the largest mortgage lenders in America. Rocket Homes’ main office and principal place of business is located in Detroit, Michigan. Rocket Homes operates a referral network throughout the United States that matches consumers with real estate brokerages.

The Jason Mitchell Group is primarily located in Scottsdale, Arizona and has 45 affiliated real estate brokerages in 41 states and the District of Columbia.

The CFPB’s investigation found that Rocket Homes gave referrals and other incentives to real estate brokerages under an agreement or understanding that the real estate brokers and agents would refer real estate settlement business to Rocket Mortgage and a separate Rocket affiliate called Amrock, which handles title, closing, and escrow services.

The CFPB’s investigation further found that The Mitchell Group referred thousands of clients to Rocket Mortgage and Amrock. Jason Mitchell offered “Dog Bone” awards of $250 gift cards to Mitchell Group agents who made the most referrals to The Mitchell Group’s favored partners, including Rocket Mortgage and Amrock.

Specifically, the CFPB alleges that Rocket Homes violated the Real Estate Settlement Procedures Act by:

• Providing kickbacks in exchange for referrals: Rocket Homes gave incentives, such as home-buyer referrals and priority for future homebuyer referrals from the network, in exchange for brokers’ and agents’ mortgage lending and settlement service referrals.
• Requiring brokers and agents to steer consumers toward Rocket Mortgage: Rocket Homes required that the brokers and agents receiving its referrals “preserve and protect” the relationship between the consumer and Rocket Mortgage by steering clients away from other competing lenders and preventing brokers and agents from sharing valuable information with their clients concerning products not offered by Rocket Mortgage, including the availability of programs that provide assistance for a borrower’s down payment.

The CFPB further alleges that The Mitchell Group and Jason Mitchell also violated the Real Estate Settlement Procedures Act through its participation in Rocket’s kickback and steering scheme. The Mitchell Group encouraged its network of real estate brokers and agents to engage in coercive tactics to get consumers to use Rocket Mortgage for their home loans. Agents were trained to suggest that house settlements could fall through if the homebuyer wanted to comparison shop with Rocket Mortgage’s competitors.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws. The CFPB also has the authority to enforce the Real Estate Settlement Procedures Act.

The CFPB’s lawsuit against Rocket Homes, The Mitchell Group, and Jason Mitchell seeks a stop to alleged unlawful conduct, redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.