Corporate Misconduct Accountability Project
Rocket Mortgage · Federal Civil Rights Lawsuit
Rocket Mortgage Sued for Racial Discrimination in Home Appraisal
A Black homeowner in Denver lost $220,000 in home value overnight when an appraiser and lender allegedly conspired to devalue her property based on race, then retaliated when she complained.
CRITICAL SEVERITY
TL;DR
In January 2021, Francesca Cheroutes, a Black homeowner in Denver, applied to refinance her duplex with Rocket Mortgage. An appraiser valued her home at $640,000, down $220,000 from an appraisal just eight months earlier, despite a booming market and property improvements. The Department of Justice alleges the appraiser manipulated the appraisal by redefining her neighborhood to include areas with higher Black populations, ignoring comparable sales, and miscounting bedrooms. When Cheroutes complained of discrimination, Rocket Mortgage allegedly refused to help her and ultimately cancelled her loan application.
This case reveals how discrimination in home appraisals systematically transfers wealth away from Black families.
$220,000
Amount of home value erased by allegedly discriminatory appraisal
13x
Size of unjustified lot size adjustments compared to appraiser’s typical practice
2
Bedrooms the appraiser failed to count, potentially suppressing value by $320,000
4-5x
Higher Black population in areas appraiser used to redefine her neighborhood
The Allegations: A Breakdown
Core Allegations
What they did · 8 points
| 01 | Appraiser Maksym Mykhailyna valued Francesca Cheroutes’s Denver duplex at $640,000 in January 2021, down $220,000 from the $860,000 valuation Rocket Mortgage obtained just eight months earlier, despite a booming real estate market and property improvements. | high |
| 02 | Mykhailyna saw a Black Lives Matter sign in the front yard and met Cheroutes and her daughter, both Black, before conducting the appraisal. He was dismissive and ignored her detailed list of recent improvements including new doors, gutters, and updated kitchens and bathrooms. | high |
| 03 | The appraiser redefined Cheroutes’s neighborhood boundary to exclude her actual neighborhood (Hale, predominantly white) and instead used areas with Black populations four to five times higher than her actual location. | high |
| 04 | Mykhailyna ignored six valid duplex sales within one mile of her property and instead used inferior comparable properties, including two adjacent to East Colfax Avenue, a street known for activities that depress housing values. | high |
| 05 | The appraiser claimed Colorado Boulevard was a hard neighborhood border preventing him from using comparables from the more valuable Congress Park neighborhood. Yet one month earlier, when appraising a property for a white family, he crossed that same border to select comparables from Congress Park. | high |
| 06 | Mykhailyna made downward lot size adjustments thirteen times larger than his typical practice and failed to count two bedrooms (one in each unit of the duplex) that he had counted in comparable properties. This omission alone could have suppressed value by up to $320,000. | high |
| 07 | When Cheroutes contacted Rocket Mortgage to report the errors and state her belief the appraisal was racially discriminatory, a Rocket representative told her that because she raised the issue of discrimination, he could not talk to her or help her. | high |
| 08 | Rocket Mortgage issued an ultimatum: accept a new loan with less favorable terms based on the $640,000 discriminatory valuation, or they would cancel her application. When she continued to protest and request a fair appraisal, Rocket cancelled her loan. | high |
Regulatory Failures
How the system enabled this · 4 points
| 01 | The Appraisal Standards Board attempted to eliminate a clear summary of federal anti-discrimination laws from its standards, according to a February 2023 letter from the DOJ, CFPB, HUD, and other federal agencies. | high |
| 02 | The ASB proposed replacing clear anti-discrimination language with a new, undefined distinction between unethical discrimination and unlawful discrimination, which federal agencies warned would imply the existence of ethical discrimination. | high |
| 03 | Federal agencies warned the proposed changes would create confusion in the appraisal industry and be nearly impossible for regulators to enforce, giving appraisers cover to claim that using race or other protected characteristics was somehow essential to credible assignment results. | high |
| 04 | The appraiser, the appraisal management company Solidifi that hired him, and Rocket Mortgage that used the discriminatory result all failed to stop the discriminatory act. It required a federal lawsuit to force accountability. | medium |
Wealth Disparity
The transfer of wealth from Black families · 4 points
| 01 | The $220,000 that disappeared from Cheroutes’s balance sheet represents lost capital for retirement, her children’s future, or weathering a financial crisis. For most American families, especially Black families, home equity is the primary source of wealth. | high |
| 02 | Blocked from a favorable refinance at historic low mortgage rates, Cheroutes was forced to take out a less stable, variable-rate home equity line of credit, exposing her to greater financial risk. | medium |
| 03 | A March 2022 appraisal valued Cheroutes’s home at $885,000, confirming the property had increased in value over time and proving the January 2021 appraisal of $640,000 was artificially suppressed. | high |
| 04 | Cheroutes suffered emotional distress and humiliation from being told her home was worth less simply because a Black family lived in it. She was left to fear that her own son would face the same discrimination while trying to buy his own home. | medium |
Corporate Accountability Failures
How Rocket Mortgage evaded responsibility · 4 points
| 01 | Rocket Mortgage had a choice to correct a clear injustice after Cheroutes reported the discriminatory appraisal, but instead chose to validate it and retaliate against her for exercising her civil rights. | high |
| 02 | Rather than investigate Cheroutes’s discrimination complaint, Rocket told her they could not help her because she had raised the issue, effectively punishing the victim for reporting misconduct. | high |
| 03 | Rocket Mortgage presented Cheroutes with a false choice: accept loan terms based on a discriminatory valuation or lose the refinance opportunity entirely, leveraging her financial need against her civil rights complaint. | high |
| 04 | The company cancelled Cheroutes’s loan application when she persisted in requesting a fair appraisal, demonstrating a pattern of retaliation against customers who assert their rights under fair lending laws. | high |
Community Impact
The broader pattern of discrimination · 4 points
| 01 | Cheroutes lived in Denver’s Hale neighborhood, a thriving, predominantly white area. The appraiser deliberately redrew her neighborhood boundaries to exclude this reality and include areas with significantly higher Black populations. | high |
| 02 | The appraiser’s methodology treated Colorado Boulevard as an impermeable barrier only when it prevented him from using higher-value comparables for a Black homeowner, but crossed it freely when appraising for white families. | high |
| 03 | By selecting comparables near East Colfax Avenue, known for activities that depress housing values, the appraiser imported stigma from a different area to justify a lower valuation of Cheroutes’s property in a desirable neighborhood. | medium |
| 04 | Cheroutes’s experience is not isolated but represents a systemic pattern where the real estate industry weakens rules designed to prevent discrimination, producing devastating on-the-ground results for Black families. | high |
The Bottom Line
What this case reveals · 4 points
| 01 | The Department of Justice filed a federal lawsuit against Rocket Mortgage, Solidifi, and appraiser Maksym Mykhailyna, seeking to hold all parties accountable for their roles in the discriminatory appraisal and retaliation. | high |
| 02 | This case demonstrates how systemic racism operates through seemingly technical processes like home appraisals, where subjective judgments about neighborhoods and comparables can be weaponized to transfer wealth away from Black families. | high |
| 03 | The battle over obscure language in regulatory handbooks in Washington has direct, devastating impacts on families like the Cheroutes, showing how industry efforts to weaken anti-discrimination standards enable real-world harm. | medium |
| 04 | True reform requires codifying the strongest possible anti-discrimination language into every corner of the financial world, with proactive testing for bias and severe personal penalties for executives who enable or ignore discrimination. | medium |
Timeline of Events
December 2018
Cheroutes’s duplex appraised at $755,000
May 2020
Rocket Mortgage obtains appraisal valuing property at $860,000
January 2021
Cheroutes applies to refinance with Rocket Mortgage at historic low rates
January 20, 2021
Appraiser Maksym Mykhailyna sees Black Lives Matter sign, meets Cheroutes and her daughter, and values property at $640,000
January 2021
Cheroutes contacts Rocket Mortgage to report errors and racial discrimination in appraisal
January 2021
Rocket representative tells Cheroutes he cannot help her because she raised discrimination issue
January 2021
Rocket Mortgage cancels Cheroutes’s loan application after she continues to protest
March 13, 2022
New appraisal values Cheroutes’s property at $885,000, proving the discriminatory appraisal was artificially low
February 14, 2023
DOJ, CFPB, HUD, and other federal agencies send letter to Appraisal Standards Board opposing weakening of anti-discrimination language
October 2024
Department of Justice files lawsuit against Rocket Mortgage, Solidifi, and Maksym Mykhailyna
Direct Quotes from the Legal Record
QUOTE 1
The appraiser saw her race
allegations
“When he met Ms. Cheroutes and her daughter, he saw they were a Black family. He was dismissive, ignoring her detailed list of recent improvements—new doors, new gutters, updated kitchens and baths.”
💡 This establishes the appraiser knew the race of the homeowner before conducting the discriminatory valuation
QUOTE 2
The manufactured devaluation
allegations
“In a booming market, after significant upgrades, Ms. Cheroutes’s home had somehow lost $220,000 in value. The only thing that had changed was the appraiser who saw her face.”
💡 This summarizes the impossibility of the valuation drop absent discrimination
QUOTE 3
Rocket’s refusal to help
accountability
“A Rocket representative told her that because she had raised the issue of discrimination, he could not talk to her or help her.”
💡 This demonstrates Rocket Mortgage retaliated against a customer for asserting civil rights
QUOTE 4
The ultimatum
accountability
“Rocket then issued an ultimatum: either accept a new loan with less favorable terms based on the discriminatory $640,000 valuation, or they would cancel her application.”
💡 This shows Rocket Mortgage forced the victim to choose between accepting discrimination or losing the refinance
QUOTE 5
Rocket cancelled the loan
accountability
“When she continued to protest and ask for a new, fair appraisal, Rocket Mortgage cancelled her loan.”
💡 This proves Rocket Mortgage followed through on retaliation when Cheroutes asserted her rights
QUOTE 6
Double standard on neighborhood boundaries
allegations
“Mykhailyna claimed that Colorado Boulevard, a major street west of her home, was a hard neighborhood border, justifying his refusal to use comps from the more valuable, adjoining Congress Park neighborhood. Yet, just one month prior, when appraising a property for a white family, he had crossed that same hard border to select comps from that very neighborhood.”
💡 This reveals the appraiser applied racially discriminatory standards in defining neighborhood boundaries
QUOTE 7
Massive unjustified adjustments
allegations
“He made massive, unjustified downward adjustments for lot size that were thirteen times larger than his typical practice.”
💡 This shows the appraiser departed drastically from his own standards to manufacture a lower value
QUOTE 8
Missing bedrooms
allegations
“He also simply did not count the third bedroom in the basement of each of her duplex’s units—two entire bedrooms that he had counted in the comparable properties. By his own report’s math, this omission alone could have suppressed the home’s value by as much as $320,000.”
💡 This demonstrates the appraiser used objectively false information to justify a lower valuation
QUOTE 9
Redrawing the neighborhood
allegations
“He defined Ms. Cheroutes’s subject neighborhood not by the popular, valuable, and predominantly white area where she lived, but by cherry-picking properties from distant neighborhoods with Black populations four to five times higher.”
💡 This shows the appraiser deliberately redefined her neighborhood to include areas with higher Black populations
QUOTE 10
Regulatory loophole creation
regulatory
“The agencies warned this move was dangerous because it implies the existence of ethical discrimination—a concept that would create confusion in the appraisal industry and be nearly impossible for regulators to enforce.”
💡 This reveals how industry groups try to weaken anti-discrimination standards through bureaucratic language changes
QUOTE 11
The theft of generational wealth
wealth
“For most American families, and especially for Black families, home equity is the primary source of wealth. The $220,000 that disappeared from Ms. Cheroutes’s balance sheet represents lost capital for retirement, for her children’s future, or for weathering a financial crisis.”
💡 This explains why discriminatory appraisals are not just technical errors but transfers of generational wealth
QUOTE 12
The emotional harm
wealth
“But the deeper harm was the emotional distress and humiliation of being told her home was worth less simply because a Black family lived in it. She was left to fear that her own son would face the same discrimination while trying to buy his own home.”
💡 This captures the psychological and intergenerational impact of housing discrimination beyond financial loss
QUOTE 13
System designed for this outcome
conclusion
“It is a system where profit and industry convenience are prioritized over justice and civil rights, leaving individuals to fight a lonely battle against interconnected corporate actors.”
💡 This summarizes how corporate structure and regulatory capture enable systematic discrimination
Frequently Asked Questions
What exactly did Rocket Mortgage do wrong?
Rocket Mortgage received a discriminatory appraisal that valued a Black homeowner’s property at $640,000, down $220,000 from just eight months earlier despite market growth and improvements. When the homeowner complained about racial discrimination, Rocket told her they could not help because she raised that issue, then gave her an ultimatum to accept unfavorable terms or lose the refinance. When she continued protesting, Rocket cancelled her loan application entirely.
How did the appraiser manipulate the valuation?
Appraiser Maksym Mykhailyna redefined the homeowner’s neighborhood to exclude her actual area and include neighborhoods with Black populations four to five times higher. He ignored six valid comparable sales within one mile and used inferior properties near a street known for depressing values. He made lot size adjustments thirteen times larger than his typical practice and failed to count two bedrooms that he counted in comparable properties, potentially suppressing value by $320,000.
How much value did the discriminatory appraisal erase?
The discriminatory appraisal valued Francesca Cheroutes’s duplex at $640,000 in January 2021, down from $860,000 just eight months earlier, a loss of $220,000. A March 2022 appraisal valued the same property at $885,000, proving the discriminatory appraisal was artificially suppressed and the property had actually increased in value over time.
Why does the appraiser’s treatment of Colorado Boulevard matter?
The appraiser claimed Colorado Boulevard was a hard neighborhood border that prevented him from using comparable sales from the more valuable Congress Park neighborhood for Cheroutes’s home. But just one month earlier, when appraising a property for a white family, he crossed that exact same border to select comparables from Congress Park. This double standard reveals racially discriminatory application of appraisal standards.
What is the connection to the Appraisal Standards Board?
In February 2023, the DOJ, CFPB, HUD, and other federal agencies wrote to the Appraisal Standards Board opposing its attempt to eliminate clear anti-discrimination language from national appraisal standards. The ASB wanted to replace it with a distinction between unethical and unlawful discrimination, which agencies warned would imply the existence of ethical discrimination and make enforcement nearly impossible. This shows how industry groups try to weaken protections that could have prevented what happened to Cheroutes.
What happened to Francesca Cheroutes after Rocket cancelled her loan?
Blocked from refinancing at historic low mortgage rates, Cheroutes was forced to take out a less stable, variable-rate home equity line of credit. She suffered financial harm from lost refinancing opportunity and emotional distress from being told her home was worth less because a Black family lived in it. She feared her own son would face the same discrimination when trying to buy a home.
Who is being sued in this case?
The Department of Justice filed a federal lawsuit against three parties: Rocket Mortgage (the lender), Solidifi (the appraisal management company that hired the appraiser), and Maksym Mykhailyna (the individual appraiser who conducted the discriminatory valuation).
Is this an isolated incident?
No. The article and federal agency letter make clear this is part of a systemic pattern where the real estate and appraisal industry attempts to weaken anti-discrimination protections while discriminatory appraisals continue to transfer wealth away from Black families. The regulatory battle over standards language shows this is an industry-wide issue, not one bad actor.
What can readers do about appraisal discrimination?
If you suspect appraisal discrimination, document everything including the appraiser’s behavior, file a complaint with your lender in writing mentioning fair housing laws, request a reconsideration of value with supporting comparable sales data, file complaints with HUD and the Consumer Financial Protection Bureau, and consult a fair housing attorney. Federal law prohibits retaliation for asserting your rights.
Why is home equity especially important for Black families?
For most American families, and especially Black families, home equity is the primary source of wealth due to historical and ongoing barriers to other forms of wealth accumulation. The $220,000 erased from Cheroutes’s home value represents lost capital for retirement, children’s education, starting businesses, or weathering financial emergencies. Discriminatory appraisals systematically transfer generational wealth away from Black families.
Disclaimer: All factual claims in this article related to the Rocket Mortgage case and the Appraisal Standards Board are derived from the public complaint filed by the U.S. Department of Justice (Case No. 1:24-cv-02915) and a public comment letter filed by federal agencies on February 14, 2023.
saucerino:
https://www.justice.gov/d9/2024-10/complaint_-_united_states_v_rocket_mortgage.pdf
https://www.nytimes.com/2024/11/01/realestate/home-appraisal-discrimination-rocket-mortgage.html
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