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New leadership at the Consumer Financial Protection Bureau has dropped three lawsuits brought during the final weeks of the Biden administration — including a controversial RESPA complaint that accused Rocket Homes of favoring real estate agents who steered clients to Rocket Mortgage.
The case against Rocket Homes was brought under the leadership of former CFPB Director Rohit Chopra, who was accused by Rocket of engaging in a “transparent ploy to bolster his political agenda before the changing of administrations.”
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Thursday’s notice of dismissal of the case against Rocket Homes was submitted “with prejudice” — meaning it can’t be reinstated, and provided no reason for the 180-degree about-face.
Trump fired Chopra as CFPB director on Feb. 1, and the notice of dismissal of the case against Rocket Homes was submitted by several officials including recent Trump appointees to the CFPB, Chief Legal Officer Mark Paoletta and Deputy Chief Legal Officer Daniel Shapiro.
The CFPB on Thursday also dismissed cases filed in January that were pending against lender Capital One and Vanderbilt Mortgage & Finance. It also dropped a May 31, 2024, complaint against a student loan servicer, the Pennsylvania Higher Education Assistance Agency.
Democrats on the Senate Banking Committee released a report Tuesday claiming that since Trump began his second term as president, 38 CFPB enforcement actions have been frozen and the agency is processing 80 percent fewer complaints.
In its Dec. 23 complaint against Rocket Homes, the CFPB alleged that the company violated anti-kickback provisions of the Real Estate Settlement Procedures Act (RESPA), by requiring real estate agents and brokers who received its referrals “to steer consumers to its affiliate company, Rocket Mortgage, and away from potential competitors.”
Rocket Homes allegedly required agents “to refrain from mentioning the value of comparison shopping for mortgage loans or discussing various programs or options not offered by Rocket Mortgage,” the CFPB alleged. The complaint also accused a B2B real estate brokerage, Jason Mitchell Group, of providing gift cards to agents who “referred thousands of clients to Rocket Mortgage.”
In a Feb. 21 motion to dismiss the case, attorneys for Rocket Homes argued that RESPA provides “a categorical safe harbor … for payments made pursuant to ‘cooperative brokerage and referral arrangements’ like those between Rocket Homes and its real estate brokerage partners.”
Licensed as a real estate brokerage, Rocket Homes operates a property search site that attracts homebuyers who are often unrepresented by an agent. Rocket Homes earns referral fees by sending those homebuyers to partner agents and brokers. The fees that brokerages pay to Rocket Homes when a referral resulted in a sale — typically 35 percent of the brokerage’s commission — are a standard practice between brokerages permitted by RESPA, Rocket maintained.
But the CFPB argued that the “ability to receive future referrals from the Rocket Homes network and being given priority for additional referrals of potential homebuyers” in exchange for sending clients to Rocket Mortgage were also “things of value” that amounted to kickbacks prohibited by RESPA
In a statement to Inman, Rocket Homes characterized the case as “an empty claim brought forth by former CFPB director Chopra for the sole purpose of seeing his name in headlines during the final days in public office.”
Rocket Homes “has always connected buyers with top-performing agents based only on objective criteria like how well they helped homebuyers achieve their dream of homeownership,” the company said. “We are proud to put this matter behind us and remain focused on our mission to help everyone home.”
During Trump’s first term, the CFPB ended an investigation into whether Zillow’s co-marketing program for agents and lenders violated RESPA without taking action. The CFPB had begun its investigation into the co-marketing program — which allows Zillow Premier Agents to invite lenders to share advertising costs and appear alongside them as “Premier Lenders” — under the leadership of Richard Cordray, an Obama appointee.
The CFPB has had a series of acting directors during Trump’s second term, including Treasury Secretary Scott Bessent and Office of Management and Budget Director Russell Vought. Trump’s nominee to be the CFPB’s permanent director, Jonathan McKernan, had a confirmation hearing before the Senate Banking Committee on Thursday.
Editor’s note: This story was updated to correct that the CFPB’s notice of dismissal of the case against Rocket Homes was submitted “with prejudice,” meaning it can’t be reinstated.
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