A new class-action lawsuit claims that it’s not just high interest rates that have made mortgages more expensive.
Homeowners in Tennessee, Minnesota, Delaware and Rhode Island claimed that mortgage software provider Optimal Blue enabled nearly 30 major lenders, including Rocket Mortgage, CrossCountry Mortgage and United Wholesale Mortgage, to inflate residential mortgage fees and rates.
Plano, Texas-based Optimal Blue provides market intelligence and pricing software to mortgage lenders. In 2019, it launched its pricing software, which gives lenders access to real-time pricing data provided by other lenders. As of this year, Optimal Blue counted 3,500 clients for its pricing analytics services, according to the complaint.
The complaint claims that in a 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 echoes the suits filed against rent-pricing software RealPage, which have argued that its real-time rent pricing software allows landlords to collude to reduce competition and artificially inflate rents. Earlier this week, a host of landlords agreed to a settlement in their class-action case that would result in a payout of $141 million.
The proposed class includes borrowers who received residential mortgages priced using Optimal Blue starting in October 2021. The complaint claims that Optimal Blue and the named lenders violated antitrust laws, and are seeking unspecified damages.
Reuters first reported the lawsuit.
The complaint comes during a period in which borrowers have been hemmed in by persistently high mortgage rates. The 30-year fixed-rate mortgage hasn’t fallen below 6 percent since Sept. 2022, according to the Federal Reserve Bank of St. Louis.
Tennessee homebuyers have seen their monthly mortgage payments increased to over $1,600 from $1,029 since 2022, according to the complaint. The lawsuit also claims that the average prime offer rate for mortgages issued by Optimal Blue was almost 50 percent higher from mortgages issued by non-Optimal Blue users.
“Defendants’ price-fixing scheme has transformed the American dream of homeownership into a financial nightmare for countless Nashville and Tennessee families,” the complaint claims.
Optimal Blue has had several owners in the past few years, all of whom are also named as defendants. Real estate data and analytics firm Black Knight purchased Optimal Blue from private equity firm GTCR in 2020.
In 2023, software conglomerate Constellation purchased Optimal Blue through its Perseus operating for $700 million.
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