A signed broker agreement, a funded loan, and documents allegedly fabricated start to finish
Rocket Mortgage alleges a Texas wholesale broker fed it fabricated documents to fund a $368,600 mortgage.
The lawsuit, filed on October 26, 2026, in the US District Court for the Eastern District of Michigan, targets 205 Exclusive Group, a Texas-based mortgage brokerage, along with the firm's two co-owners. According to the filing, the broker submitted a loan application that misrepresented the borrower's intent to live in the property as a primary residence - and backed that application with documents the complaint describes as "misleading, untrue, fabricated, altered and otherwise fraudulent."
The loan closed on September 24, 2022, for $368,600. Rocket Mortgage alleges it discovered after closing - along with the loan's investors - that the borrower did not actually intend to occupy the mortgaged property as a primary residence. For anyone in the wholesale channel, that is about as fundamental as underwriting inputs get. Occupancy status drives pricing, risk grading, and whether a loan qualifies for sale to investors. When it is wrong, the fallout does not stop at the origination desk.
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.
The filing alleges Rocket Mortgage gave written notice demanding the broker buy back the loan and make it whole. According to the complaint, the broker "willfully failed and/or refused to honor the terms of the Agreement."
The third count alleges the brokerage lied about its compliance practices from the start - before a single loan was submitted - to get into Rocket Mortgage's wholesale program.
The fourth count targets the two co-owners personally, seeking what is known as joint and several liability, meaning Rocket Mortgage could collect the full judgment from either one of them.
What Rocket Mortgage says it lost
The damages described in the filing include being forced to buy the loan back after the loan's investor demanded it, losses on reselling the loan in the secondary market, broker fees paid on a loan that the complaint says should never have been funded, interference with Rocket Mortgage's investor relationships, and reputational harm. The lawsuit seeks judgment exceeding $75,000 on each of the four counts, plus interest, exemplary damages, and attorney fees.
For wholesale lenders and brokers, the case is a sharp reminder that occupancy misrepresentation remains one of the fastest routes from a funded loan to a federal courtroom - and that broker agreements are written to make sure it is the originator, not the lender, left holding the bag.
None of the allegations in this lawsuit have been proven or tested, and no court has made any finding on the merits of any claim.
