A lawsuit alleging hundreds of thousands of homebuyers overpaid because Detroit-based Rocket Companies' mortgage unit colluded with real estate agents highlights decades-old affordable housing issues and the role of federal watchdogs under President Donald Trump.

Plaintiffs' attorneys in a January lawsuit describe the alleged deal between Rocket and real estate agents as "a perpetual loop of illegal referrals and kickbacks" at the expense of homebuyers.

"Buying a home is most likely the largest purchase any individual will make in their lifetime, and housing is a basic need,” plaintiffs' attorney Steve Berman said in a statement. “That Rocket sought to capitalize on this by pressuring homebuyers into bad loans is not only illegal, but immoral.”

The lawsuit comes as private lawyers increasingly take on such industry giants as Rocket and Pontiac-based United Wholesale Mortgage, while at the same time the federal Consumer Financial Protection Bureau eases enforcement under Trump. Critics say the agency, created in the wake of the Great Recession, overstepped during past administrations. But consumer-protection advocates say the bureau no longer serves its founding purpose: ensuring a multitrillion-dollar industry follows laws meant to safeguard consumers.

Filed in the U.S. District Court for the Eastern District of Michigan, the lawsuit seeks class-action status for homeowners who financed through Rocket since 2019. The plaintiffs — none of whom were made available by their attorneys for an interview — are three homebuyers from Georgia, North Carolina and Pennsylvania who financed their homes through Rocket Mortgage after being "pushed" by their real estate agents.

The lawsuit alleges that Rocket gave leads on prospective buyers to real estate agents. In exchange, agents were expected to push those buyers to use Rocket financing "even though Rocket Mortgage’s terms are disadvantageous to the clients," the suit claims.

'Vast referral network'

Agents who referred the most clients to Rocket were rewarded with more leads, attorneys at the Seattle-based real estate law firm of Hagens Berman wrote in the lawsuit: "Until its acquisition of Redfin in July 2025, Rocket Homes operated a vast referral network through its website, which connected prospective home buyers with third-party real estate agents.

"Agents were required to pay a 35% 'referral fee' to Rocket Homes if they closed on deals as the buyers’ agents. In exchange for these leads, agents were required to steer clients to Rocket Mortgage LLC (Rocket’s mortgage company) and away from other mortgage providers — all in violation of a real estate agent’s fiduciary duties to her clients. This practice has helped catapult Rocket Mortgage into the second-largest mortgage originator in the United States."

Hagens Berman lawyers were not made available for an interview with The Detroit News.

In a statement, Rocket described the case as "an empty lawsuit filed by a typical, predatory plaintiff law firm," adding: "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."

The company, founded by billionaire businessman Dan Gilbert, last week reported a net loss of $234 million in 2025, compared with a $636 million profit in 2024. But the lender grew its purchase market share to 5.5% in the final months of 2025, up from 3.8% the previous year.

'Easier targets'

This is not the first time Rocket has been accused of using agents to steer would-be clients. The Consumer Financial Protection Bureau first sued Rocket in December 2024 following a years-long investigation. But the case was dropped less than two months after President Donald Trump took office. A request for comment on the case was not immediately returned by the agency.

Ohio-based real estate attorney Chuck Cain said class-action suits alleging kickback schemes have been ticking up in the past several years. He said plaintiff attorneys tend to sue major real estate brokerages or lenders like Rocket because those companies have the money to dole out large settlements.

"Especially when you’re talking about large lenders, they’re the easier targets, so to speak, for a class-action attorney because yes, if we are able to get a verdict, I know we’re all going to get a check," said Cain, also president of Alliance Solutions LLC. He said lenders have a track record of fighting such lawsuits successfully.

"Usually, the lenders will defend them all the way through because they feel that they’ve done nothing wrong, rather than writing a big check to someone," Cain said.

If the case against Rocket is successful, "it will really send a message that this kind of thing shouldn't be tolerated," said Andrew Pizor, senior attorney with the National Consumer Law Center. Repercussions against unfair practices by a major company would also help "give smaller players more of a level playing field for business," he said. "It'll promote competition, which usually lowers prices for consumers."

On the flip side, "it's not going to put Rocket or Zillow out of business or anything like that," Pizor said. "They've got such a broad market share and such big name recognition, I really think this is going to be a small dent in their business, which is another reason why I think it's despicable."

Lawsuit called 'a sham'

United Wholesale Mortgage is also fighting a consumer class-action racketeering lawsuit in federal court. Filed in 2024, the suit accuses the wholesale-exclusive lender of conspiring with agents to steer homebuyers into costly mortgages. As a result, the lawsuit alleges, borrowers paid billions of dollars in excessive fees.

UWM has called the lawsuit "a sham."

Allegations of undisclosed referral fees and kickbacks in the homebuying industry date back decades. Congress outlawed the practice in 1974.

"Buying a home is such an important and complex financial transaction, and within it there exists significant opportunities for abuse, for someone to be steered, (and) for someone to make money off you," National Community Reinvestment Coalition President and CEO Jesse Van Tol said. "And so that is why we regulate these things."

Cain said the core of the law bans offering "a thing of value in exchange for the referral of a real-estate transaction."

The practice is now "entrenched" in the industry despite being illegal, Pizor said: "They're so intent on doing this that companies keep trying to find ways around the rule. They keep claiming things don't violate it when they do. It's a very straightforward rule. It's just that the real estate industry doesn't like it."

The plaintiffs have "a very good shot" at succeeding in the case, he added: "Fortunately, there seems to be enough information out there available that a private law firm has been able to pick up the mantle and try to pursue the case. It's unfortunate because the government has a role in enforcing the law, and they also have special tools that are not as available to private litigants."

Rocket has until March 30 to file a legal response to the complaint.

©2026 www.detroitnews.com. Visit at detroitnews.com. Distributed by Tribune Content Agency, LLC.