By Alexis Weisend | The Seattle Times
Rocket Cos., which acquired Seattle-based Redfin last year, allegedly pressured agents to steer buyers toward its loans — even if the loan terms were unfavorable for their clients, a lawsuit claims.
In the lawsuit filed Monday in the U.S. District Court for the Eastern District of Michigan, three homeowners from Georgia, North Carolina and Pennsylvania accuse the Detroit-based homeownership services company of scheming to funnel homebuyers into its mortgage lending company, Rocket Mortgage.
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The plaintiffs claim their real estate agents pressured them into using Rocket Mortgage or told them it was their only option when buying their homes between 2021 and 2023.
Up until its acquisition of Redfin last July, Rocket Cos. had its own real estate listing website that routed potential buyers to independent real estate agents and brokerages. If a referral led to a home sale, Rocket Cos. received 35% of the agent’s commission, according to the lawsuit.
The lawsuit claims Rocket rewarded agents who steered clients to Rocket Mortgage and away from other lenders and threatened punishment for those who didn’t.
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The lawsuit claims this practice violates the Real Estate Settlement Procedures Act, which prohibits accepting a “thing of value” in exchange for referrals of settlement services involving a federally related mortgage loan.
In a statement, a Rocket spokesperson said the company “categorically disagrees” with the claims and disputes the allegations that Rocket, Redfin or any of the named defendants are doing anything illegal.
“Rocket is proud to help homebuyers navigate complex real estate partnerships. We are confident that we will be vindicated once facts are presented,” the spokesperson said.
The lawsuit requests unspecified financial compensation and seeks a class action status for United States residents who have purchased a home using Rocket Mortgage, or its former name — Quicken Loans, since 2019.
“We believe at least hundreds of thousands of consumers have been duped by Rocket’s tricks, and judging by its year-over-year revenue, its scheme has worked,” said the homeowners’ attorney Steve Berman in a statement.
Berman is the managing partner and co-founder of Hagens Berman — a Seattle law firm specializing in large class-action litigation.
A four-year investigation by the Consumer Financial Protection Bureau backs up the lawsuit’s claims, Berman said.
The bureau filed a lawsuit against Rocket Companies in 2024 also accusing the company of violating the Real Estate Settlement Procedures Act with its alleged mortgage-steering practice.
Among other claims, the agency accused Rocket Mortgage of charging higher rates and fees to consumers who went through the Rocket referral network compared with consumers who didn’t go through the network.
But the bureau dropped the case, along with several others, in February after President Donald Trump fired the agency’s former director.
The Rocket spokesperson said the claims in the homeowners’ lawsuit are a “complete retread” of the CFPB’s now-dismissed case.
How the alleged scheme worked
Rocket Cos. “exploited the vulnerability of home buyers for profit” with the help of its vast agent referral network, Berman claims.
In addition to rewarding agents who funneled clients to Rocket Mortgage with leads, its 2019 terms and conditions for partnered agents contained a warning that purposefully steering a client away from Rocket Mortgage to another lender was prohibited and could terminate any relationship with the company, the lawsuit claims.
Additionally, the lawsuit claims Rocket Cos. compelled agents to steer clients to Amrock, a Rocket subsidiary, for titles, escrow and closing services — which Berman claims also violates the Real Estate Settlement Procedures Act.
Agents and brokers who pushed their clients into Rocket Mortgage loans were rewarded with more referrals, the lawsuit claims, and those who did not faced a higher referral fee.
The lawsuit alleges Rocket Cos. pressured agents to reach a goal of four out of every five clients using Rocket Mortgage.
This practice encouraged real estate agents to go against their clients’ best interest, the lawsuit claims, by leading some buyers into higher-cost loans or causing them to miss out on first-time homebuyer assistance programs Rocket didn’t offer.
“Agents steering clients exclusively to Rocket Mortgage, as opposed to recommending multiple lenders and shopping around, had a negative financial impact on clients,” Berman wrote.
Redfin brought in
The steering practice allegedly continued with Redfin agents after Rocket Cos. acquired the real estate listing company for $1.75 billion in July. A month later, Rocket shuttered its listing website and merged its agent network into Redfin, which brought on 2,200 agents.
The acquisition announcement came a few weeks after the CFPB dropped the case against Rocket.
In the lawsuit, Berman referenced media reports that the agency’s case dismissal was the result of the Trump administration’s effort to gut the agency. The dismissal was not due to the merits of the bureau’s claims, he wrote.
“Rocket knew and recognized that it was engaged in illegal steering, and — after it was caught by the CFPB — decided to acquire Redfin to bring the steering practice in-house,” Berman wrote.
A Redfin spokesperson declined to comment and referred to Rocket Cos.’ statement.
Rocket isn’t the only company Hagens Berman is accusing of an illegal mortgage steering scheme.
The Seattle law firm is representing a homeowner in a lawsuit filed against Zillow in November. The homeowner claims her Zillow-affiliated agent pressured her to take out a home loan through Zillow, after leading her to believe it was her only lending option.
Zillow has denied any wrongdoing.
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