Appraised by Race: How Rocket Mortgage’s Process Let a Racist Appraisal Kill a Black Woman’s Refinance
TL;DR
- In January 2021, Francesca Cheroutes, a Black woman in Denver, sought to refinance her duplex at 749-751 Ash Street through Rocket Mortgage. Less than eight months earlier, the same property had been appraised at $860,000 by Rocket’s own process.
- Rocket hired appraisal management company Solidifi, which assigned appraiser Maksym Mykhailyna (CEO of Maverick Appraisal Group). Mykhailyna met Cheroutes in person, saw she was Black, ignored her list of recent improvements, and valued the home at $640,000. That is a $220,000 drop with no market or property justification.
- Mykhailyna ignored every nearby comparable duplex that pointed to a higher value. He deliberately pulled comparables from distant neighborhoods with far higher concentrations of Black residents, while refusing to use properties from the adjacent, predominantly White Congress Park neighborhood. He had used those exact Congress Park properties as comparables just one month earlier when appraising a White owner’s home nearby.
- Mykhailyna excluded the basement bedrooms from Cheroutes’s units while counting them for the comparables he chose. At his own stated rate of $160,000 per bedroom, excluding those two bedrooms alone suppressed the value by $320,000.
- When Cheroutes told Rocket the appraisal was discriminatory, Rocket’s representative told her that because she raised discrimination, he could no longer help her, then canceled her loan that same day. Rocket never contacted the appraiser, Solidifi, or Cheroutes’s legal team about her complaint.
- Solidifi reviewed the appraisal, found it violated its own stated standards in multiple measurable ways, and forwarded it to Rocket anyway without requesting a single correction.
- The U.S. Department of Justice filed this federal lawsuit on October 21, 2024, on behalf of Cheroutes, citing violations of the Fair Housing Act by all four defendants: Rocket Mortgage, Solidifi, Mykhailyna, and Maverick Appraisal Group.
The internal Rocket employee notes from January 25, 2021, revealing exactly how the loan was “killed” the same day Cheroutes reported discrimination are documented in Legal Receipts.
The Non-Financial Ledger: What the Dollar Figures Cannot Measure
Francesca Cheroutes bought her duplex in 2011 for $270,000. She took out a loan to cover the purchase and immediately poured roughly $200,000 into renovations. She has lived in one unit and rented out the other ever since. For ten years she maintained the property with care and money, replacing gutters, installing granite countertops, painting, updating bathrooms, staining the fence. She knew what her home was worth because she had watched Denver’s real estate market surge around her, and she had the appraisals to prove it. By May 2020 her home was valued at $860,000. She had turned a $270,000 purchase into more than three times that, the hard way.
When Mykhailyna knocked on her door in January 2021, Cheroutes did what any homeowner would do. She tried to help. She told him about the new gutters, the new back doors, the fresh paint, the updated kitchen and bathrooms. He looked at her and said nothing. His facial expressions, as she described them later, made clear he had no interest in what she was saying. He did not take notes. He did not ask a single question. He did not introduce the person he had brought with him. He had already walked through her backyard without announcing himself, past the Black Lives Matter sign in her front yard, which his companion commented on.
She already knew something was wrong. She told her daughter as much before the results even came back.
When the appraisal arrived at $640,000, she was not confused. She was certain. She contacted Rocket and explained, with specifics, why she believed her race had driven the number down. Her loan officer, Brandon Swales, privately agreed that a 25 percent drop from eight months ago made no sense. He passed her along. She spoke to Matthew Watson, a Solution Consultant. Watson’s response was not to investigate. His response was to tell her that because she had raised discrimination, he could no longer help her, and that if she did not accept the $640,000 appraisal, her loan would be canceled. She told him directly: if Rocket cancels this loan because I reported discrimination, Rocket becomes part of the discrimination. Watson wrote a note in Rocket’s internal system that same day: he had “[n]otified client this loan has been cancelled.”
She was then transferred to Client Relations, where Abril CanoBaca told her there was nothing she could do except refer her to the legal team. CanoBaca also told her she could submit her own comparable sales, then let Mykhailyna, the same appraiser she had just reported for discrimination, evaluate them. Rocket’s legal team never called her. Not once.
The financial harm is documentable. She was denied a fixed 2.75 percent interest rate, a shorter loan term, and lower monthly payments. Unable to face another in-person appraisal after what had happened, she applied instead for a variable-rate home equity line of credit, a financial product that carried more risk and less favorable terms, specifically because it required only a drive-by appraisal. She made a worse financial decision for herself to avoid being seen again.
She also feared for her son, who was trying to buy a home at the time. She had watched what the system did to her. She did not know what it would do to him.
Cheroutes purchased her home in a neighborhood the federal complaint describes as 77 percent White and 5 percent Black. She maintained it. She improved it. She documented it. None of that mattered to the man Rocket and Solidifi sent to assess its worth, or to the company that reviewed his work and passed it through anyway, or to the lender that used it as the reason to close her file.
Legal Receipts: What the Court Documents Actually Say
Every quote below is drawn verbatim from the federal complaint filed October 21, 2024, in the U.S. District Court for the District of Colorado, Case No. 24-cv-02915.
“Mr. Mykhailyna appraised the property at $640,000, which was $220,000 lower than the earlier appraisal. Mr. Mykhailyna’s appraisal was also lower than the sales prices of all six comparable duplexes within a mile of the property, which Mr. Mykhailyna’s agreement with Solidifi directed him to consider in the appraisal.” Complaint, ¶5
- This directly proves that Mykhailyna’s own contractual obligation required him to look within one mile first. He found six comparables. Every single one of them would have produced a higher valuation than $640,000. He ignored five of the six and went looking farther away.
- The $640,000 figure was not the product of a market. It was the product of a specific decision to discard every nearby data point that contradicted the number he produced.
“Mr. Mykhailyna’s refusal to look west of Colorado Boulevard for comps was also inconsistent with his approach in an appraisal he had completed just prior for the White owners of a fourplex property located 0.7 miles to the east, in the same neighborhood as the Subject Property. In that appraisal, Mr. Mykhailyna chose four comps to the west of the property, including two on the other side of Colorado Boulevard, in Congress Park.” Complaint, ¶85
- Mykhailyna’s stated reason for excluding Congress Park comparables from Cheroutes’s appraisal was that Colorado Boulevard was a “hard” neighborhood border. That explanation collapses when you look at what he actually did one month before: he crossed that exact same boulevard to source comparables for a White homeowner’s property that was farther from Congress Park than Cheroutes’s home.
- The rule he invented to depress Cheroutes’s value was a rule he did not apply to his White clients. The complaint documents this directly.
“In generating the Subject Appraisal, Mr. Mykhailyna made numerous adjustments that deviated from appraisal standards and other appraisals of the Subject Property and that unjustifiably reduced the Subject Property’s value… In the sixteen appraisals of two- to four-unit properties that Mr. Mykhailyna had completed in Denver between 2020 and 2022, he had never used anywhere near such a large multiplier. In fact, in twelve of those appraisals, his lot size adjustments applied a multiplier no greater than $5 per square foot.” Complaint, ¶¶95, 97
- For Cheroutes’s home, Mykhailyna used a $40 per square foot lot-size adjustment multiplier. His standard across twelve of his sixteen comparable appraisals was no greater than $5 per square foot. This produced downward adjustments of $96,800 and $93,600 on two comparables, artificially dragging down the final valuation.
- He provided no justification for the deviation. The complaint notes his only written explanation was a vague reference to conducting a “matched pair analysis” with no elaboration. Solidifi’s own standards required a detailed explanation for adjustments exceeding 10 percent. He exceeded that threshold and wrote nothing.
“In his appraisal report, he excluded the third bedroom in the basement of each unit of the Subject Property. In contrast, for three of the sales comps he selected, he included basement bedrooms… In the appraisal report, he wrote that the value per bedroom of the comps was $160,000. By that metric, if he had included the two basement bedrooms, the value of the Subject Property would have been $320,000 higher.” Complaint, ¶¶101–102
- Mykhailyna counted basement bedrooms when they existed in the comparables he chose to suppress Cheroutes’s value, but refused to count them for Cheroutes’s actual property. Using his own stated valuation metric, this single asymmetry alone accounts for $320,000 of the discrepancy.
- The comparables were inflated by including features. The subject property was deflated by excluding the same category of features. That is not an error. That is a systematic choice applied in one direction.
“Mr. Watson did not take any action to investigate her report of discrimination or dispute it. Rather, he told Ms. Cheroutes that because she had raised the issue of discrimination, he could not talk to her or help her… Mr. Watson also told Ms. Cheroutes that if she did not agree to proceed with a loan based on the $640,000 appraisal, he would cancel the loan.” Complaint, ¶¶118–119
- Rocket’s position, delivered by a named employee, was that reporting racial discrimination in a housing transaction disqualifies the borrower from receiving further assistance. This is the opposite of what federal law requires. The Fair Housing Act explicitly prohibits coercing or interfering with someone exercising their fair housing rights.
- The complaint alleges a separate violation under 42 U.S.C. § 3617 specifically because of this conduct: Rocket used the threat of loan cancellation to pressure Cheroutes into dropping her discrimination complaint.
“On January 25, 2021, the same day he spoke to Ms. Cheroutes, Mr. Watson wrote an internal note in Rocket’s system that he ‘[n]otified client this loan has been cancelled.’ On January 26, 2021, Rocket generated a letter from Mr. Swales to Ms. Cheroutes stating, ‘we are unable to offer you financing at this time’ due to the ‘Low appraised value’ of the property. Emails between Rocket employees in the subsequent days stated that the appraisal ’caused the loan to no [sic] make sense’ and that the loan was ‘killed’ due to ‘a low appraised value.'” Complaint, ¶¶122–123
- The internal language is unambiguous. The loan was “killed.” The internal notation was made the same day as the discrimination report. The official letter cited “Low appraised value” as the reason, with no reference to her discrimination complaint and no indication that any investigation was underway.
- Rocket then confirmed to Cheroutes that its legal team “might not contact her” and that the representative had “no knowledge about the actions of the legal team.” The legal team never contacted her, Solidifi, or Mykhailyna. The complaint confirms this.
“Although the Subject Appraisal did not comply with Solidifi’s standards and requirements for its appraisers, Solidifi did not request any changes or take any corrective action based on its review.” Complaint, ¶111
- Solidifi’s own documented standards required clear explanations when net adjustments exceeded 15 percent and gross adjustments exceeded 25 percent. The Subject Appraisal hit 28.4 percent on both metrics for one comparable, with no explanation provided. Solidifi reviewed the appraisal, identified it had failed its own requirements, and forwarded it to Rocket anyway.
- Solidifi had the authority under its own contract to require changes. It chose not to use that authority. The complaint names Solidifi as a defendant under a theory of vicarious liability because Mykhailyna and Maverick operated as Solidifi’s agents, and Solidifi controlled their work, owned the resulting appraisal, and approved it for submission.
— Complaint, ¶130
Societal Impact Mapping: This Is Bigger Than One House
The Cheroutes case is not an isolated incident. It lands inside a documented national pattern of racially discriminatory property appraisals that strip generational wealth from Black families and concentrate that loss in communities already bearing the weight of decades of state-sanctioned housing discrimination.
Public Health
Housing instability and financial trauma produce measurable health consequences. The connection between discriminatory housing practices and physical and psychological harm is documented across medical and social science literature.
- Cheroutes experienced documented emotional distress and humiliation as a direct result of Defendants’ conduct, as stated in the complaint. The humiliation of being told your home is worth $220,000 less than it was eight months ago, with no market or property justification, is a recognized form of dignity harm.
- Cheroutes feared for her son, who was seeking to buy a home at the time of the appraisal. That fear is a transmission of housing-based racial trauma across generations, a documented psychological phenomenon in families that have navigated discrimination in the housing system.
- Because of what happened during the in-person appraisal, Cheroutes made a deliberate financial decision to choose a product, a variable-rate HELOC, that required no interior inspection. Avoidance of home appraisal inspections due to fear of discrimination is a documented behavioral response that limits Black homeowners’ access to favorable financial products and compounds wealth gaps over time.
- The complaint documents that Rocket’s own loan officer agreed a 25 percent valuation drop without cause made no sense, yet the institutional machinery proceeded anyway. The experience of being dismissed by every tier of a financial institution after raising a clear civil rights violation is associated with elevated chronic stress and psychological harm in affected populations.
Economic Inequality
The complaint situates this case within a documented national history of race-based property devaluation. The mechanisms that drove that history did not disappear; they migrated into the appraisal process itself.
- According to data cited in the complaint, home equity represents 63 percent of total wealth for the average Black household, compared to 41 percent for the average White household. When an appraisal strips $220,000 from a Black homeowner’s property value without cause, it is stripping a disproportionately large share of that family’s total net worth.
- The median net worth of U.S. households in 2021 was $166,900 including home equity, but only $57,900 without it, per Pew Research Center data cited in the complaint. A $220,000 undervaluation in a single appraisal is larger than three times the median non-equity net worth of an American household.
- Freddie Mac research cited in the complaint found that appraisals for home purchases are more likely to fall below the contract price when the borrower is Black than when the borrower is White. This case documents the mechanism that produces that statistical disparity: individual appraisers making racially motivated comparable selections, with AMCs and lenders failing at every review stage to catch or correct it.
- Cheroutes purchased her home in 2011 for $270,000, invested $200,000 in renovations, and maintained it for a decade. Her home was on track to represent a substantial, multigenerational asset in a rising market. The discriminatory appraisal blocked her access to a 2.75 percent fixed refinance rate. Over the lifetime of a mortgage, the difference between a 2.75 percent fixed rate and a variable-rate HELOC is tens of thousands of dollars. That gap compounds.
- A higher percentage of White residents in a neighborhood correlates with higher appraised values, even controlling for house quality, neighborhood socioeconomic status, and area amenities, per research cited in the complaint. Mykhailyna’s method of sourcing comparables from Black-majority neighborhoods to appraise a property in a 77 percent White neighborhood is a direct application of this historical devaluation logic to a living, working Black homeowner’s asset.
- Between 2011 and 2021, the average home sale price in the Denver metro area increased from roughly $256,000 to $612,000. Cheroutes participated in that market with discipline and investment. The Subject Appraisal was designed, through its methodology, to detach her from the gains that market had produced and to reassign her home’s value to a different, lower-wealth geography based on race.
The “Cost of a Life” Metric
The specific financial damage documented in this case can be translated into concrete terms.
The amount Mykhailyna’s appraisal stripped from Cheroutes’s documented property value in a single report, compared to an appraisal conducted less than eight months earlier on the same home by the same lender’s process.
This figure exceeds the median net worth of an American household when home equity is excluded, which was $57,900 in 2021 per Pew Research Center.
The additional suppression caused by Mykhailyna’s selective exclusion of Cheroutes’s basement bedrooms. Using his own stated valuation of $160,000 per bedroom and the fact that he counted basement bedrooms in the comparables but not in the subject property, this single asymmetric choice alone accounts for more than the entire $220,000 gap.
He excluded her bedrooms. He counted the same category of bedrooms in the comparables he chose to pull her value down.
The lot-size adjustment multiplier Mykhailyna used for Cheroutes’s property ($40 per sq ft) versus the standard he applied in twelve of his sixteen comparable Denver appraisals ($5 per sq ft or less). At the standard rate, the lot-size adjustment on two comparables would have been roughly $12,000 instead of roughly $95,000 each — a difference of over $83,000 per comparable, applied twice.
He used no justification for the 8x deviation from his own practice. Solidifi’s standards required one. Neither Solidifi nor Rocket asked for it.
What Now: Who to Pressure and How to Fight Back
The federal government sued. That matters. But the system that produced this outcome is still operating. The named defendants continue to do business. Appraisal management companies still control who appraises your home. Here is who holds power and what you can do with that information.
Who Runs These Companies
- Rocket Mortgage, LLC: Incorporated in Michigan, principal place of business in Detroit, Michigan. Brandon Swales (loan officer, named in complaint), Matthew Watson (Solution Consultant, named in complaint), Nikki Cogburn (representative, named in complaint), Abril CanoBaca (Client Relations, named in complaint), Randall Griebel (Client Relations, named in complaint).
- Solidifi U.S. Inc.: Incorporated in Delaware, principal place of business in Buffalo, New York. Named in complaint as the appraisal management company that contracted with Maverick, owned the appraisal output, reviewed the non-compliant appraisal, and forwarded it without correction.
- Maksym Mykhailyna: Licensed appraiser and CEO of Maverick Appraisal Group Inc. Named in complaint as the individual who conducted the discriminatory appraisal, met Cheroutes in person, and made the specific methodological choices documented above.
- Maverick Appraisal Group Inc.: Incorporated in Colorado, principal place of business in Denver, Colorado. Mykhailyna’s company; named as vicariously liable for his conduct as agent of Solidifi.
Regulatory Watchlist
- U.S. Department of Housing and Urban Development (HUD): The agency that investigated, found reasonable cause, and issued the Charge of Discrimination that led to this lawsuit. HUD accepts Fair Housing Act complaints at hud.gov/program_offices/fair_housing_equal_opp. If you have experienced appraisal discrimination, file here first.
- U.S. Department of Justice, Civil Rights Division, Housing and Civil Enforcement Section: The DOJ team, based at 150 M Street NE, Washington DC 20530, filed this lawsuit. Contact: nathan.shulock@usdoj.gov or the main Civil Rights Division housing line.
- Consumer Financial Protection Bureau (CFPB): The CFPB oversees mortgage lenders and appraisal management companies under the Truth in Lending Act and related regulations. Mortgage servicing complaints can be filed at consumerfinance.gov/complaint.
- The Appraisal Subcommittee (ASC) and The Appraisal Foundation: The ASC oversees state appraiser licensing boards. Mykhailyna is a licensed appraiser in Colorado. The Colorado Board of Real Estate Appraiser Examiners has jurisdiction over his license. Complaints about licensed appraisers go to the state board in the jurisdiction where the appraisal was conducted.
- Federal Housing Finance Agency (FHFA): Oversees Fannie Mae and Freddie Mac, who set the appraisal form standards used in this case. The FHFA has been investigating racial bias in appraisals as a systemic issue. Public comment and complaint mechanisms exist at fhfa.gov.
- Colorado Civil Rights Division (CCRD): The state-level agency that originally received Cheroutes’s complaint before it was transferred to HUD. State-level civil rights agencies can run parallel investigations and provide additional remedies under state law.
Grassroots Resistance and Mutual Aid
- Document your appraisal in real time. If you are Black or a person of color and you are scheduled for a home appraisal, document every improvement to your property before the appraiser arrives. Record the inspection if legal in your state. Note which direction the appraiser looks for comparables. Ask for the comparable addresses in writing. If the appraisal comes in below market expectations, request the full comparable list and check each address’s demographics using public census data. This documentation is exactly what the DOJ used in this case.
- Request a reconsideration of value (ROV). Under regulations at 15 U.S.C. § 1639e and 12 C.F.R. § 1026.42, you have rights to request corrections to an appraisal. Your lender is required to provide the appraisal to you. You can submit alternative comparables. Do not let the lender tell you those comparables will be evaluated only by the appraiser you already reported for discrimination, as Rocket tried to do to Cheroutes.
- Connect with local fair housing organizations. Fair housing nonprofits in your metro area often conduct testing (sending Black and White homeowners to the same lenders and appraisers to document differential treatment) and can provide legal referrals. National Fair Housing Alliance member organizations operate in most major cities.
- Share this case with Black homeowners you know. The most effective form of organizing in the immediate term is making sure people who are about to refinance or purchase know what happened to Cheroutes and know their rights before they sit down with an appraiser.
- Pressure Rocket Mortgage publicly. Rocket Mortgage advertises heavily to consumers. It markets itself as a simple, technology-forward mortgage experience. The public record now shows that when a Black woman told Rocket’s representative that an appraisal was discriminatory, he told her he could no longer help her and canceled her loan that afternoon. Consumers choosing mortgage lenders should have that information.
The source document for this investigation is attached below.
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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