The Consumer Financial Protection Bureau (“CFPB”) filed an action on December 23, 2024, against Rocket Home Real Estate LLC (“Rocket Homes”), a real estate brokerage and affiliates (“Defendant Brokerage”) and an individual owner of the real estate brokerage, asserting violations of the Real Estate Settlement Procedures Act (“RESPA”). If sustained, the asserted violation of RESPA could significantly alter the landscape of real estate customer referral networks and future RESPA claims.
What You Need to Know:
- The CFPB clearly intends for its active enforcement of RESPA to continue during the Trump administration.
- The CFPB is intent on further framing out what constitutes “a thing of value” for referrals and that “future referrals” may not be paid for.
- The CFPB will continue to use enforcement actions against large industry players to serve in the place of formal rule making.
Rocket Homes is affiliated with Rocket Companies, Inc. (“Rocket Companies”) which also operates Rocket Mortgage, LLC (“Rocket Mortgage”). Rocket Homes is a real estate brokerage that operates exclusively as a residential property seller and buyer referral network, connecting consumers with real estate brokerages and agents who have the local expertise and experience that the consumer is seeking. The CFPB, which regulates consumer financial products and services under federal laws, including but not limited to RESPA, alleges that Rocket Homes and the Defendant Brokerage engaged in an unlawful “kickback scheme” that resulted in the steering of consumer borrowers to Rocket Mortgage by offering incentives to the brokerage and its agents for the referral. The purported “things of value”[1] were future priority referrals of buyers from Rocket Homes’s network to the Defendants, allegedly conditioned on referring consumers to Rocket Mortgage for lending and settlement services. In short, the CFPB alleges that the Defendant Brokerage would only receive additional referrals from Rocket Homes if the Defendant Brokerage referred its customers to Rocket Mortgage and its affiliated title company, Amrock LLC.
The CFPB also alleges that Rocket Homes required the Defendant Brokerage and its agents, in order to maintain their receipt of priority buyer referrals, to steer consumers away from Rocket Mortgage’s competitors by “preventing” brokers and agents from advising consumers of certain products not offered by Rocket Mortgage, such as down-payment assistance programs, USDA loans and loans on manufactured houses, all of which the CFPB contends can save consumers substantial money. The CFPB argues that by doing so, the brokerage and its agents were effectively “preserving and protecting” the relationship between consumers and Rocket Mortgage, instead of acting in the best interests of their clients. As alleged, the Defendant Brokerage and its agents, at the direction of the individual defendant, would discourage consumers from comparing Rocket Mortgage services to its competitors by, among other things, suggesting that the deal would fall through if the consumer were to compare shop, arguably stripping consumers of the best deals.
Additionally, the CFPB alleges that the foregoing buyer referrals were provided with the understanding that the Defendants and agents would refer their customers to utilize other affiliates of Rocket Companies, such as its affiliated title agency to handle title, closing and escrow services. The CFPB also asserts that the Defendant Brokerage and the individual defendant, through its agents, referred thousands of consumers to the Rocket Companies by providing other “Dog Bone” awards (i.e. $250 gift cards) to its agents with the most referrals to the Rocket Companies. It further alleges that Rocket Mortgage charged higher rates and fees to consumers that came through Rocket Homes’s referral network compared to those that did not. Though, it is unclear whether CFPB’s theory of systematically overcharging consumers in the referral network takes into account other variables, such as credit profiles, market timing and loan types.
Lenders, brokerages, agents and consumers should all be aware of the implications of CFPB’s action and its impacts on business. Therefore, our office will continue to monitor this action as it develops.
[1] RESPA’s implementing regulation defines “things of value” broadly as “monies, things, discounts, salaries, fees [and] . . . the opportunity to participate in a money-making program.” 12 C.F.R. § 1024.14(d). This definition is more expansive than the one contained within the actual statute, which defines “thing of value” to include “any payment, advance, funds, loan, service, or other consideration.” 12 U.S.C. § 2602(2).
