DOJ and Rocket Mortgage Seek Pause in Fair Housing Case Amid Settlement Talks

The Department of Justice (DOJ), alongside mortgage giant Rocket Mortgage and other named defendants, has jointly petitioned the U.S. District Court for the District of Colorado to temporarily suspend discovery and pretrial deadlines in a significant Fair Housing Act case filed in October 2024. This joint motion, filed on July 31, underscores the parties' shared belief in a "reasonable prospect of settlement" for at least a portion of the contentious litigation. To that end, they have also jointly requested a settlement conference, to be presided over by Magistrate Judge Timothy P. O’Hara, a magistrate judge known for facilitating dispute resolution. The parties explicitly stated in their filing that they "believe that settlement conference/mediation with Magistrate Judge O’Hara is likely to facilitate partial or complete resolution of this case," indicating a strategic move towards resolving the matter outside of a protracted trial.

The core of the lawsuit revolves around allegations of racial discrimination in property valuation during a mortgage refinance application. The complaint, initially brought by the DOJ, names Rocket Mortgage, Solidifi U.S. (a mortgage services company), Maverick Appraisal Group (an appraisal management company), and appraiser Maksym Mykhailyna as defendants. The central claim is that these entities engaged in discriminatory practices against a Black homeowner in Denver, specifically by undervaluing her property. The DOJ alleges that appraiser Maksym Mykhailyna deliberately used comparable sales data from more distant neighborhoods with higher Black populations, while simultaneously disregarding closer sales from predominantly white neighborhoods. This alleged selective use of data resulted in a stark discrepancy: the home was appraised at over $200,000 less than a previous appraisal conducted less than a year prior.

Following this significantly lower appraisal, which the homeowner challenged as discriminatory, Rocket Mortgage allegedly proceeded to cancel her refinance application. This action prompted the homeowner to file a formal complaint with the Department of Housing and Urban Development (HUD). HUD conducted an investigation and subsequently found "reasonable cause to conclude that the defendants had violated the Fair Housing Act." This finding led HUD to refer the matter to the DOJ for further legal action. The DOJ’s subsequent complaint formalizes these allegations, asserting discrimination based on race and color in connection with the refinance application. The homeowner has also intervened in the case, filing her own complaint that further alleges violations of the Fair Housing Act and Section 1981 of the Civil Rights Act of 1866, which prohibits racial discrimination in contracting. The case is currently in the discovery phase, a critical stage where parties exchange evidence. To date, they have exchanged documents, completed written discovery, and conducted ten fact depositions, gathering substantial information before this potential settlement initiative.