Rocket Mortgage alleges Texas broker faked docs on $368K loan
How the deal worked
The relationship between Rocket Mortgage and 205 Exclusive Group was governed by a broker agreement dated August 26, 2021, according to the complaint. Under that deal, the brokerage was responsible for collecting borrower information, pre-qualifying applicants, and submitting loan applications to Rocket Mortgage for funding.
The agreement specifically barred the broker from submitting applications containing “false or misrepresented information,” according to the filing. It also made the broker responsible for any misrepresentations in a loan package – whether those came from the broker itself, the borrower, or a third party working with either of them.
The filing also alleges the brokerage misrepresented its own practices when it first applied to join Rocket Mortgage’s wholesale program. The complaint states the brokerage attested that it followed “the recommended quality control guidelines for responsible lending of either Fannie Mae or Freddie Mac” and that it had “an Anti-Money Laundering Program in place.” Rocket Mortgage alleges those attestations were false.
Where it gets personal
The lawsuit does not stop at the company level. Rocket Mortgage alleges the brokerage’s two co-owners – each holding a 50% stake in 205 Exclusive Group – “personally and actively participated” in what the complaint calls a “fraud scheme.” The filing alleges this was carried out with “specific and malicious intent to defraud” Rocket Mortgage into funding the loan, or in the alternative, that the co-owners acted “recklessly” or “negligently.”
What Rocket Mortgage is chasing
Rocket Mortgage is pressing four counts. The first two go after the brokerage: breach of contract for allegedly violating its promises about loan quality, and breach of a separate agreement in the contract that required the broker to cover Rocket Mortgage’s losses if those promises turned out to be broken.
