Rocket Moves To Dismiss Respa Suit, Citing Safe Harbor And Lack Of Injury

Detroit-based Rocket Companies this week moved to dismiss a lawsuit alleging violations of the Real Estate Settlement Procedures Act (RESPA), arguing that plaintiffs failed to demonstrate injury, relied on claims beyond the one-year statute of limitations and did not sufficiently plead unjust enrichment.

The class-action suit, filed in late January, alleges that homebuyers who began their search through subsidiary Rocket Homes were referred to third-party agents who paid referral fees of about 35% upon closing.

It further claims agents were incentivized to steer borrowers to Rocket Mortgage — even when loan terms were less favorable — or face higher referral fees. Borrowers who were preapproved by Rocket Mortgage were also allegedly funneled to Rocket Homes and matched with agents who paid fees for services the complaint says were not actually provided.

In a March 30 court filing, Rocket argued that RESPA’s Section 8(c) “categorically exempts cooperative brokerage and referral arrangements” such as those described in the complaint. The company said the plaintiffs failed to plausibly allege key elements of a claim, including a qualifying referral, a concrete “thing of valuem” and the existence of an agreement or understanding tied to referrals.

The suit, filed in the U.S. District Court for the Eastern District of Michigan, names plaintiffs Barbara Waller, Elizabeth Johnson and Randel Clark, who allege they were steered to Rocket Mortgage or Amrock, the company’s title affiliate. They are represented by Hagens Berman, a consumer protection law firm that was also involved in similar litigation against Zillow and the National Association of Realtors. 

“There is nothing in the motion we didn’t anticipate, and we have strong answers to all of the points raised,” Steve Berman, managing partner for Hagens Berman, told HousingWire via email.

Rocket defended itself in a statement provided by a spokesperson.

“This is an empty lawsuit filed by a typical, predatory plaintiff law firm. It was designed solely to line the firm’s pockets, using the worn out and beat playbook of filing meritless claims paired with a media campaign to try to extort settlements from job-creating American businesses. Ultimately, the American consumer is the one who pays the price for these dubious acts that drive up costs throughout the economy,” the statement read.

“Even more egregious is the firm that filed this senseless case had to go plaintiff fishing on Facebook to find a name they could slap on their revenue generation scheme. They miscalculated. We have a long and successful history of defeating these nonsensical claims brought on by unscrupulous parties posing as righteous defenders of hard-working Americans. This amoral and costly scheme has gone on for way too long in the court system. We hope that our strategy to fight off these self-serving aggressors inspires other victims to join us in exposing and deterring these bad actors from continuing their abusive practices.”

The motion to dismiss outlines the evolution of Rocket Homes’s business model. Prior to about 2019, it primarily worked with consumers who already had a relationship with Rocket Mortgage, but it has since expanded.

Rocket Homes operates a co-brokerage model in which local agents provide on-the-ground support while the company oversees the transaction. It also enforces a “preserve and protect” policy intended to honor a client’s chosen lender and avoid steering – regardless of who is the lender.

“The ‘preserve and protect’ allegations do not plausibly allege that a ‘referral’ was made to Rocket Mortgage or that Rocket Homes gave partner brokerages a ‘thing of value’ in return; and the ‘reciprocal referral’ allegations do not identify a counterparty or plausibly allege the existence of an agreement or understanding,” the motion states. 

The company further states that the complaint relies on “generalized allegations” and fails to establish actual injury, pointing in part to what it describes as unproven claims previously raised in a case that was dismissed by the Consumer Financial Protection Bureau (CFPB). That suit was filed late in the Biden administration and abandoned under the second Trump administration.

Rocket argued that its arrangements fall within RESPA’s exemption for cooperative brokerage relationships, aka, the “safe harbor.” It requires the parties to be real estate brokerages, and for the payments to be made pursuant to cooperative brokerage and referral arrangements or agreements between agents and brokers. “Both elements are satisfied here,” the filing states.

The motion also argues that plaintiffs fail to plausibly allege either a qualifying “referral” or a “thing of value.” The complaint identifies the potential for future referrals as the alleged benefit to brokerages, but Rocket contends that such possibilities are too speculative to meet RESPA’s definition.

It further argues that merely encouraging the use of affiliated services does not constitute a mutual agreement or understanding required to establish liability.

Rocket is seeking dismissal of all claims with prejudice. If the case proceeds, it asks for the dismissal of Rocket Companies, Amrock and Redfin as defendants.

Editor’s note: This story has been updated with comments from Rocket.