By Aarthi Swaminathan
Rocket Companies is accused of violating a 1974 law which prohibits kickbacks
A class-action lawsuit accuses Rocket Companies of illegally pushing home buyers toward Rocket's mortgages. Rocket denies the charges.
Three home buyers have filed a class-action suit against mortgage-lending giant Rocket Companies (RKT), alleging that it illegally steered the buyers into using Rocket's lending services.
The buyers accused the company of exploiting them and pushing them to use Rocket's mortgage company, even though the loan packages offered by Rocket were &#34;disadvantageous&#34; to the buyers, according to the lawsuit.
The case was filed by the law firm Hagens Berman, which also represented home sellers in a lawsuit against the National Association of Realtors that alleged real-estate brokers were conspiring to inflate real-estate commissions. That case was settled in 2024 for $418 million.
&#34;We categorically disagree and will dispute the allegations that Rocket, Redfin or any of the named defendants are doing anything illegal,&#34; a Rocket spokesperson told MarketWatch.
Rocket acquired real-estate brokerage Redfin in 2025 with the aim of becoming a one-stop shop where the home-buying process would be faster and less complicated.
The named defendants in the lawsuit are Rocket Companies, Rocket Mortgage, Amrock Holdings - which is now known as Rocket Close - and Rocket Homes Real Estate.
&#34;The claims in this case are a complete retread of the case that the [Consumer Financial Protection Bureau] filed and was quickly dismissed,&#34; the Rocket spokesperson added, referring to a 2024 lawsuit filed by the government consumer watchdog, which also accused Rocket of illegally steering borrowers toward its own mortgage division.
&#34;Rocket is proud to help homebuyers navigate complex real estate partnerships. We are confident that we will be vindicated once facts are presented,&#34; the Rocket spokesperson said.
The lawsuit against one of America's biggest mortgage lenders highlights how vulnerable consumers can be as they go through the complex process of buying a home.
A home purchase is one of the largest investments most Americans will ever make, but &#34;the burden of this process is compounded by the opaque and byzantine rules on buying and financing the purchase of a home,&#34; the lawsuit stated.
Many buyers &#34;do not have a full understanding of the home buying and lending process,&#34; lawyers wrote in their complaint. &#34;[A] s a result, they usually have no choice but to rely on real estate agents, who have a fiduciary duty to represent them and serve their best interests.&#34;
The plaintiffs' lawyers say that Rocket Mortgage pressured buyers into thinking they had no other option than to use Rocket as their mortgage provider.
The lawsuit also alleges that real-estate agents were referred to potential buyers through Rocket, and in exchange for the leads, had to steer clients towards Rocket Mortgage, &#34;all in violation of a real estate agent's fiduciary duties to her clients.&#34;
Don't follow your broker's advice blindly
To be clear, home buyers don't necessarily need to go with the mortgage lender that their agent suggests.
Research has shown that shopping around with different lenders and comparing the interest rates and fees they offer can save buyers substantial sums of money.
Buyers could save an average of $80,000 over the life of their 30-year fixed-rate loan by shopping around, according to one analysis by LendingTree (TREE). In high-cost states like California, the potential lifetime savings from shopping around goes up to nearly $120,000.
With home prices near record highs, mortgage rates play a key role in a borrower's ability to afford a house.
A separate analysis by Realtor.com in October found that if buyers raised their credit scores from &#34;good&#34; to &#34;very good&#34; - meaning from the 660 to 720 range to the 720 to 760 range -  they could qualify for a rate that is 11 basis points lower, and save over $8,500 over the life of a loan.
(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)
&#34;Even in a challenging homebuying market with sustained high mortgage rates, there's room for strategy,&#34; Jake Krimmel, a senior economist at Realtor.com, said in the report.
&#34;Focusing on what you can control - improving credit, saving more, and comparing offers - can make a measurable difference in affordability,&#34; he added.
What the home buyers accused Rocket of doing
The three home buyers allege in the lawsuit that they were compelled into taking out loans with Rocket.
In Douglasville, Ga., a buyer who bought a home in April 2022 said that her real-estate agent pushed her to use Rocket Mortgage, and did not present her with other mortgage options.
The buyer &#34;did not know, and could not have reasonably known, that Rocket Mortgage's arrangement with real estate agents compelled them to steer clients to Rocket Mortgage in violation of federal law,&#34; the lawsuit stated.
The lawsuit alleges that Rocket had an arrangement with real-estate agents that compelled them to pressure buyers to use Rocket's mortgage company when taking out a mortgage, in exchange for referrals to future clients who were buyers or sellers.
Under a 1975 federal law called the Real Estate Settlement Procedures Act, steering consumers into certain mortgages in exchange for a fee or a kickback is illegal.
In Kenly, N.C., another buyer who bought their home in December 2023 said they were pushed by their real-estate agent into using Rocket to finance their home purchase, and pressured into using another Rocket-owned company for title and appraisal services.
In Pittsfield, Pa., a third buyer who bought a home in June 2021 said &#34;he felt that he had no other choice,&#34; when it came to choosing mortgage lenders, the lawsuit stated.
This alleged steering ultimately cost the plaintiffs' money, according to the lawsuit, because Rocket Mortgage offered &#34;substandard loan packages that charged higher interest rates and offered fewer cost-saving opportunities for home buyers.&#34;
The fact that as these buyers were getting ready to buy a house, &#34;Rocket sought to capitalize on this by pressuring homebuyers into bad loans is not only illegal, but immoral,&#34; Steve W. Berman, managing partner and co-founder of Hagens Berman, said in a statement.
Related: Rocket-Redfin deal could make home buying more convenient - and more expensive
If the allegations in the lawsuit are true and Rocket was giving real-estate agents referrals to buyers in exchange for steering them towards Rocket Mortgage, that amounts to &#34;corporate bribery,&#34; Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, told MarketWatch.
The case was filed on Jan. 26 in the U.S. District Court for the Eastern District of Michigan Southern Division.
The class-action suit builds on a previous investigation by the Consumer Financial Protection Bureau in 2024, which also accused Rocket Homes of steering prospective borrowers to the company. For example, the CFPB alleged in a lawsuit that a real-estate broker offered awards of $250 gift cards to agents who made the most referrals to his company's favored partners, including Rocket Mortgage.
The lawsuit was dismissed by the Trump administration in February 2025.
Why steering is illegal under federal law
The kickbacks prohibited by RESPA &#34;used to be cash in envelopes passed in secret, but now they have become normalized by tech companies that have built bribery into their platforms,&#34; Shearer, at the Vanderbilt Policy Accelerator, said.
Shearer was at the CFPB between 2021 and 2024 as a senior advisor to the director of the agency. RESPA was first enforced by the U.S. Department of Housing and Urban Development; the CFPB took over enforcement when it was created in 2011.
&#34;Regardless of whether it's digital or analog, these kickbacks drive up prices by adding costs and steering customers to more expensive options,&#34; he added.
The Trump administration has since gutted the CFPB, and the agency has pared back enforcement significantly in the last few months.
&#34;In the middle of an affordability crisis, and in particular when mortgage rates are already high, this is a perfect example of why we should not defund the corporate enforcers like the CFPB,&#34; Shearer said.
Shares of Rocket Companies traded about 1% lower as of 3:40 p.m. on Tuesday.
-Aarthi Swaminathan
This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
01-27-26 1731ET

<p>A class-action lawsuit has been filed against Rocket Companies, accusing the mortgage lender of illegally steering home buyers towards its own mortgage services, which the plaintiffs claim were disadvantageous. The lawsuit highlights the vulnerability of consumers in the complex home-buying process and alleges that real estate agents were pressured to direct clients to Rocket Mortgage, violating their fiduciary duties. Rocket denies the allegations, asserting that they will contest the claims and maintain their commitment to helping homebuyers navigate real estate transactions.</p>

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These home buyers are suing one of the biggest mortgage lenders in America. Why you should pay attention.