DOJ, Rocket ready to talk settlement in appraisal bias case

Rocket Mortgage, federal prosecutors and other parties in a complaint say they're ready to discuss potentially wrapping up a Biden-era appraisal bias lawsuit. 

The sides filed a joint motion for a settlement conference last week, seeking to discuss a possible resolution to the case in front of a Colorado federal judge. They also filed a joint motion to stay discovery, although neither party implied there's a readymade deal. 

"The parties are in agreement that there is a reasonable prospect of settlement for all or part of this case, and they believe a settlement conference with Magistrate Judge O'Hara would be productive in facilitating that potential resolution," attorneys for all parties wrote last week, referring to one of the judges overseeing the case. 

The court has not addressed the motions, and the filings did not suggest a specific hearing date.

The lawsuit arose in 2024, when the Department of Housing and Urban Development accused Rocket, an appraiser and an appraisal management company of discriminating against a Black homeowner. The Department of Justice sued, accusing the defendant firms of violating the Fair Housing Act in allegedly issuing a low appraisal and denying the homeowner's refinance application.

Rocket then sued HUD, seeking clarity over its appraisal rules after the Trump administration in early 2025 rescinded Biden-era policies regarding appraisal discrimination. A federal judge dismissed that case in March, finding the challenge moot in light of HUD's regulatory pullback.

The pending case is a rare, lingering appraisal bias lawsuit after other complaints earlier this decade have been resolved. Loandepot settled appraisal bias claims last August, while a 2023 case against U.S. Bank was dismissed late last year. 

Neither attorneys for all of the parties, nor a spokesperson for Rocket responded to requests for comment on the latest filings. 

The Rocket case

The allegations stem from a 2021 transaction, in which Rocket denied Francesca Cheroutes' refi application for her Denver home. Appraiser Maksym Mykhailyna, owner of Maverick Appraisal Group, issued an "insupportably low" appraisal of her duplex in a predominately white neighborhood, a HUD probe alleged.

AMC Solidifi submitted the appraisal to Rocket, which relied on it despite Cheroutes' protests, the lawsuit claims. The lender has denied discriminating against Cheroutes, and previously argued that it had no statutory authority to correct the appraisal. 

In last week's filings, attorneys said by the time of the hearing they'd be ready to exchange demands and responses regarding potential monetary and non-monetary settlement terms. The sides have been cooperative in discovery proceedings, they wrote, and have deposed ten fact witnesses. 

A resolution to the case would mark the closing of another chapter of Biden-era enforcement actions. The DOJ in the past two years has moved to terminate redlining consent orders against lenders, with mixed success. The Consumer Financial Protection Bureau has also rolled back numerous industry enforcement actions, as the Trump administration has softened its activities.