The CFPB Has Accused Rocket Companies (RKT) of an Illegal Kickback Scheme

The Consumer Financial Protection Bureau (CFPB) accused Rocket Homes, a unit of Rocket Companies (RKT), and The Jason Mitchell Group of running an illegal kickback scheme to steer mortgage applications to Rocket affiliates. The CFPB claims that Rocket Homes provided real estate brokerages with incentives, such as referrals and awards, to push real estate settlement business toward Rocket Mortgage.

Part of the alleged scheme included $250 “dog bone” gift card awards, given by The Jason Mitchell Group to agents who sent the most referrals to Rocket’s affiliates. CFPB Director Rohit Chopra criticized the practice by saying that it discouraged competition and potentially drove up costs for homebuyers during a time when affordability is already a major challenge.

Unsurprisingly, Rocket Homes has strongly denied the claims and called the CFPB’s lawsuit “flimsy.” In fact, it argued that data shows many customers choose other lenders, which proves that Rocket isn’t blocking consumer choice. This lawsuit follows a string of actions by the CFPB, which recently sued Walmart and major banks like JPMorgan Chase and Bank of America over their handling of peer-to-peer payment fraud.

Is RKT a Good Stock to Buy?

Turning to Wall Street, analysts have a Moderate Sell consensus rating on RKT stock based on six Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 24% decline in its share price over the past year, the average RKT price target of $14.40 per share implies 26.9% upside potential.

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