The U.S. Consumer Financial Protection Bureau (CFPB) has initiated legal action against Rocket Homes Real Estate, LLC, a subsidiary of Rocket Companies, Inc., and the Jason Mitchell Group real estate brokerages. The allegation revolves around their involvement in an illegal kickback scheme designed to direct borrowers towards Rocket Mortgage LLC.
The lawsuit aims to put a halt to these practices by Rocket Homes, the Mitchell Group, and Jason Mitchell himself. It seeks not only to cease the kickback scheme but also to secure compensation for affected consumers and impose a civil penalty, which is expected to be allocated to the CFPB's victims relief fund.
According to allegations, Rocket Homes, based in Michigan, engaged in providing kickbacks to real estate brokers and agents as an incentive for directing prospective borrowers to Rocket Mortgage. The CFPB further contends that Rocket Homes applied pressure on brokers and agents to withhold important information from clients, specifically details about certain mortgage products not offered by Rocket Mortgage, including down payment assistance programs—potential financial strategies that could save homebuyers significant amounts.
The U.S. watchdog claims that Rocket Homes breached the Real Estate Settlement Procedures Act.
Rocket Homes, through the lawsuit, is thus compelled to discontinue any incentive practices that encourage real estate brokers and agents to steer homebuyers toward Rocket Mortgage for securing loans.
Additionally, the CFPB has brought charges against Jason Mitchell, his real estate business, JMG Holding Partners LLC, operating as the Jason Mitchell Group, and other associated brokerage entities in the 41 states and the District of Columbia where it operates. These charges pertain to their involvement in the illegal scheme.
The investigation revealed that The Mitchell Group referred thousands of clients to Rocket Mortgage and Amrock. Jason Mitchell had instituted 'Dog Bone' awards, providing $250 gift cards to Mitchell Group agents who made the highest number of referrals to the group’s preferred partners, such as Rocket Mortgage and Amrock.
CFPB Director Rohit Chopra remarked, "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."
On the New York Stock Exchange, Rocket Companies' shares closed Monday at $11.35, marking a 3.98% decrease. However, in pre-market activities, the shares saw a 2.1% increase, trading at $11.59.
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