We recently outlined the Justice Department’s October lawsuit against Rocket Mortgage, the biggest home lender in the U.S.  The DOJ wants to make Rocket responsible for alleged discrimination committed by an independent appraiser, who was contracted by a third-party appraisal management company, to assist with a black homeowner’s refinancing application with Rocket.

Last week, Rocket fired back, filing its own lawsuit against the Department of Housing and Urban Development, calling on the courts to clarify the contradictions between federal law and recent legal action by the Justice Department, on behalf of HUD, against them.

The DOJ suit is puzzling because Rocket had no direct relationship with the independent appraiser.  In fact, the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in the wake of the 2008 housing-driven financial crisis, established appraiser independence, legally blocking lenders from exerting any kind of influence over appraisers.

Rocket asserts that the DOJ made them a defendant to grab clickbait headlines about their anti-discrimination efforts.  While the DOJ suit names multiple parties, Rocket Mortgage is the only company mentioned in the DOJ’s press release announcing the lawsuit.

“How is a lender supposed to know what they’re supposed to do? When can they intervene? When should they not intervene? How do they know if there’s discrimination or not? You’re not the one that hired the appraiser. You’re not involved in that process,” Rocket President Bill Emerson said on CNBC.  “What we want is clarity for us and clarity for the industry. We don’t know any other way to get it, and we simply can’t sit by and have our reputation destroyed.”

Emerson did acknowledge the need to combat discrimination when it does occur.  “If there is discrimination there, I want the client to get justice, but that justice should come at the right place–from the appraiser, not the lender, who has absolutely no ability to affect the outcome here,” Emerson said.

The point of keeping lenders from influencing appraisers was to prevent one of the dynamics that led to the 2008 financial crisis.  HUD and the DOJ’s efforts risk throwing the mortgage-lending industry into disarray by undermining the law.  Rocket calling on the courts to clarify what lenders are supposed to do seems entirely appropriate.

Clarity in the industry is imperative to protect aspiring and current homeowners alike.  The next administration should end the confusion and protect homeowners from appraisal discrimination while keeping appraisers and lenders separate.