CFPB Takes Action: Rocket and Jason Mitchell Group Hit with RESPA Lawsuit!
In a stunning turn of events, the Consumer Financial Protection Bureau (CFPB) has dropped a bombshell lawsuit against Rocket Homes, accusing the real estate giant of running a kickback scheme designed to funnel business to its sister companies, Rocket Mortgage and Amrock. Joining them in the spotlight is the Jason Mitchell Group, which is also under scrutiny for potential violations of the Real Estate Settlement Procedures Act (RESPA).
According to the CFPB’s allegations, from 2019 to 2024, Rocket Homes purportedly dangled incentives in front of brokers and agents—encouraging them to steer clients towards Rocket Mortgage and Amrock in exchange for lucrative referrals and future business. This controversial practice raises eyebrows, given that all these companies are part of the Detroit-based Rocket Companies.
The claims are serious. The Jason Mitchell Group and its founder, Jason Mitchell, are accused of referring thousands of clients to Rocket’s services. The lawsuit even highlights some eyebrow-raising tactics, like offering $250 “Dog Bone” gift cards to agents who funneled the most clients to Mitchell’s preferred partners, which notably included Rocket Mortgage.
But it doesn’t stop there. Allegations reveal that Rocket Homes allegedly hampered brokers and agents from sharing information about competing lenders, including valuable down-payment assistance programs. Agents at The Jason Mitchell Group were reportedly trained to suggest that transactions could fall flat if clients dared to shop around for mortgage options.
Rocket Homes has vigorously defended itself against these claims, stating, “The CFPB’s allegations are utterly false and a gross distortion of reality. The idea that homebuyers paid more when working with Rocket Homes is a blatant lie. Moreover, the suggestion that we penalized agents for helping clients compare rates is equally unfounded.”
They insist that the data speaks volumes—showing that one-third of consumers who applied for loans with Rocket Mortgage ultimately chose to close with another lender. This, they argue, underscores Rocket Homes’ commitment to helping buyers make informed decisions tailored to their specific needs. “Rocket Homes has always focused on connecting buyers with top-performing agents based on measurable success metrics,” they added.
In a bold move, Jason Mitchell has rejected a $200,000 settlement offer from the CFPB, opting instead to fight the allegations head-on. “I could have taken the easy route,” he stated, “but that would mean admitting to things that simply aren’t true. I choose to stand up for what’s right.” His determination to clear his name is palpable, as he believes the Jason Mitchell Group is being used as a pawn in a larger game.
The lawsuit, filed in the U.S. District Court for the Eastern District of Michigan, names Rocket Homes, Jason Mitchell, and JMG Holding Partners LLC (doing business as The Jason Mitchell Group), along with affiliated brokerages in 41 states and the District of Columbia, as defendants.
CFPB Director Rohit Chopra didn’t hold back, stating, “Rocket engaged in a kickback scheme that discouraged homebuyers from comparison shopping and getting the best deal. At a time when homeownership feels like a distant dream for many, companies must not illegally stifle competition in ways that drive up housing costs.”
Details from the lawsuit paint a troubling picture where Rocket Homes allegedly operates a vast referral network, matching potential homebuyers with brokerage firms that pay Rocket a hefty referral fee—typically calculated at 35% of the brokerage’s commission.
The CFPB claims that real estate firms and agents steered clients away from competitors, ultimately pushing them towards Rocket Mortgage, where they faced higher rates and fees compared to those who didn’t go through the Rocket Homes network. Furthermore, the lawsuit alleges that Rocket threatened, suspended, and even expelled agents for not adequately steering clients away from other mortgage lenders.
According to the lawsuit, Rocket Homes pressured brokerages to achieve a staggering capture rate of 80%, meaning they wanted at least 80% of clients referred to a brokerage to secure their mortgages through Rocket Mortgage.
It’s worth noting that this isn’t the first time the CFPB has acted against kickback schemes; they recently took enforcement actions against other companies in August 2023, marking their first significant enforcement action in years.
As this legal battle unfolds, the ramifications for Rocket Homes, Jason Mitchell, and the entire industry could be profound. Stay tuned as we continue to follow this story and its implications for homebuyers across the nation.
