A new class-action lawsuit from homebuyers has been entered into the docket—this one targeting mortgage lenders. The case, known as Mendez v. Optimal Blue, has been filed in Tennessee and is seeking monetary restitution, as reported by Reuters.
The claim of the lawsuit is that the defendants, including mortgage software provider Optimal Blue, and more than two dozen banks and lenders including Rocket, Wells Fargo, Guaranteed Rate, CrossCountry Mortgage and JPMorgan Chase, engaged in a price-fixing scheme. Specifically, lenders allegedly used Optimal Blue software to share private information among themselves and collaborate in raising prices.
The filing elaborates that the alleged conspiracy was carried out via Optimal Blue’s business analytics tools. These tools, Competitive Analytics and Competitive Data
License, process data such as mortgage market trends to assist with loan pricing and other lender business decisions.
Lenders pay to access these tools and the tools “require loan originator defendants to surrender an unprecedented quantity and quality of nonpublic, competitively sensitive, granular, real-time data covering every component of their residential mortgage pricing and profit margins,” the complaint reads. The allegation continues that the lenders have used these software tools to adjust their pricing in response to competitors.
“In any legitimate competitive market, loan originators would guard this data jealously. Instead, defendants freely share this intelligence as the price of cartel membership, ensuring uniformly inflated mortgage prices for American families,” the lawsuit reads.
The plaintiff class of the case includes homebuyers from Tennessee, Delaware, Minnesota and Rhode Island. The proposed class, if approved, would include homebuyers nationwide who obtained a mortgage priced by Optimal Blue from October 2021 onward.
The complaint described this alleged conspiracy as a “cartel,” which has worsened the housing affordability crisis. To firm up its claims, the complaint cited data that mortgages issued by Optimal Blue users have, since January 2020, had rate spreads (the difference between a loan’s annual percentage rate and the average prime offer rate for a mortgage as calculated by the Consumer Financial Protection Bureau) that were 2.68 basis points higher than mortgages from non-users. The complaint subsequently cited that Optimal Blue’s own rate spreads climbed by 9.6 basis points following the 2019 implementation of the business analytics tools.
In a statement provided to RISMedia, an Optimal Blue spokesperson said: “We are aware of the lawsuit filed against Optimal Blue and many of the top lenders in the industry. We do not agree with the assertions made by the plaintiffs in this case, and we are confident that we can demonstrate how Optimal Blue’s products actually foster competition in the mortgage industry. Until we work through the legal process to disposition this appropriately, we can provide no further comment.”
At press time, defendants Rocket Mortgage and United Wholesale Mortgage (UWM) did not respond to requests for comment.
