2020 07 30 Clyburn To Rocket Loans Re Contracting 64b77e3e4b35

Date: 2020-07-30

Full text

July 30, 2020

Mr. Jay Farner
Chief Executive Officer
Quicken Loans
1050 Woodward Avenue
Detroit, MI 48226-1906

Dear Mr. Farner:

Our Committees are examining the $500 million contract issued by the Small Business
Administration (SBA) to process Emergency Injury Disaster Loan (EIDL) applications during
the coronavirus crisis. We are concerned by reports that millions of small businesses seeking
emergency loans have faced long delays, poor service, and processing errors. As the
Committees of jurisdiction, it is our duty to ensure that taxpayer money is being spent efficiently,
effectively, and equitably.

At the onset of the coronavirus crisis, SBA faced an unprecedented number of EIDL
applications from small businesses impacted by the pandemic. SBA reportedly “attempted to
solve the problem by outsourcing much of its loan evaluation work to Rocket Loans” through a
pre-existing contract with another company, RER Solutions.1 On March 29, 2020, SBA’s Office
of Disaster Assistance issued an emergency $50 million contract to RER Solutions for “data
analysis and loan recommendation services for Covid-19.”2 Since then, SBA has expanded the
award amount to half a billion dollars.3

RER Solutions is a minority-owned and women-owned business that participates in
SBA’s 8(a) program for businesses owned by economically and socially disadvantaged
individuals. According to Dun & Bradstreet, RER Solutions has 40 employees.4 The $500
million contract awarded by SBA is more than 10 times the value of all federal contracts the
company was awarded in Fiscal Year 2019. RER Solutions appears to have engaged Rocket
Loans as a subcontractor on the contract. Rocket Loans is a subsidiary of Rock Holdings Inc.,

1
Here’s Where the Small Business Administration’s Coronavirus Disaster Loans Are Going, Washington
Post (June 9, 2020) (online at www.washingtonpost.com/business/2020/06/09/sba-disaster-loans/).
2
USA Spending, Contract Summary (online at
www.usaspending.gov/#/award/CONT_AWD_73351020F0071_7300_73351019D0001_7300) (accessed July 9,
2020).
3
Id.
4
Dun & Bradstreet, Company Profile: RER Solutions Inc. (online at www.dnb.com/business-
directory/company-profiles.rer_solutions_inc.c3794f63228e308a0255da27b92f865e.html) (accessed July 9, 2020).
Mr. Jay Farner
Page 2

the parent company for Quicken Loans, one of the nation’s largest mortgage lenders with nearly
$900 million in income last year.5

Recent reports about the EIDL program raise questions about whether RER Solutions and
Rocket Loans have provided adequate services to SBA and the millions of small businesses
seeking EIDL funds. The EIDL program has reportedly been “hobbled by delays and confusion”
that have left many applicants waiting for months for funds.6 SBA has reportedly “struggled to
keep up with a flood of more than 9 million applications, nearly 100 times what it had received
in previous years.”7 The program has been plagued by average wait times of 41 days to process
loans, technical glitches that delayed disbursements to many small businesses, a lack of
communication with applicants, and widespread reports that businesses have not received funds
SBA claimed were disbursed.8

We are seeking to ensure that taxpayer dollars are being spent in the best interest of the
American people and not diverted to fraud, waste, or abuse. To assist with this investigation,
please produce by August 13, 2020, the following documents and information from January 1,
2020, to the present:

1. All documents relating to the solicitation, award, modification, or performance of
the contract awarded by SBA to RER Solutions in March 2020 related to EIDL
loans, including but not limited to:

a. all offer information, including proposals, quotes, unsolicited proposals,
submitted by Rocket Loans to RER Solutions and/or SBA;
b. any documents regarding Rocket Loans’ participation in the SBA contract;
c. any documents regarding the ability of Rocket Loans to perform its
contract with RER Solutions and advance the performance of the SBA
contract; and
d. the contract between RER Solutions and Rocket Loans, in addition to all
documents between any of the three parties leading to the contractual
relationship, including but not limited to the solicitation and offer between
RER Solutions and Rocket Loans; and

5
Securities and Exchange Commission, Form S-1, Rocket Companies, Inc. (July 7, 2020) (online at
www.sec.gov/Archives/edgar/data/1805284/000104746920004008/a2241988zs-1.htm).
6
Thousands of Small Business Owners Have Not Gotten Disaster Loans the Government Promised Them,
ProPublica (July 16, 2020) (online at www.propublica.org/article/thousands-of-small-business-owners-have-not-
gotten-disaster-loans-the-government-promised-them); Here’s Where the Small Business Administration’s
Coronavirus Disaster Loans Are Going, Washington Post (June 9, 2020) (online at
www.washingtonpost.com/business/2020/06/09/sba-disaster-loans/).
7
SBA Grant Program Attracting the Wrong Kind of Attention, Washington Post (July 15, 2020) (online at
www.washingtonpost.com/business/2020/07/15/sba-eidl-loan-program-coronavirus/).
8
Thousands of Small Business Owners Have Not Gotten Disaster Loans the Government Promised Them,
ProPublica (July 16, 2020) (online at www.propublica.org/article/thousands-of-small-business-owners-have-not-
gotten-disaster-loans-the-government-promised-them).
Mr. Jay Farner
Page 3

2. All communications regarding the SBA contract and its performance, including
internal communications and communications with SBA, RER Solutions,
Quicken Loans, Rock Holdings, Inc. or any affiliated company, the White House,
other federal agencies, or third parties; and

3. A list and description of all other federal loan processing contracts on which
Rocket Loans has performed either as a prime contractor or subcontractor.

In addition, please provide written responses to the following questions by August 13,
2020:

1. Describe the contractual relationship between RER Solutions and Rocket Loans,
the amount of work Rocket Loans will perform, and the revenue and profit Rocket
Loans will receive from RER Solutions.

2. Has Rocket Loans partnered with any other companies, subsidiaries and/or
affiliates to perform its contractual obligations to RER Solutions? If so, which
companies, affiliates and/or subsidiaries; in what capacity; what is the scope of
work they are supposed to perform; and how much money will each entity receive
for their work?

3. How did Rocket Loans become aware of the opportunity to partner with RER
Solutions and serve as a subcontractor in the SBA EIDL contract?

We also request a staff briefing on these issues by August 13, 2020.

An attachment to this letter provides additional instructions for responding to this request.
If you have any questions regarding this request, please contact staff for the Select Subcommittee
on the Coronavirus Crisis at (202) 225-4400.

Sincerely,

__________________________ __________________________
James E. Clyburn Nydia M. Velázquez
Chairman Chairwoman
Select Subcommittee on the Committee on Small Business
Coronavirus Crisis
Mr. Jay Farner
Page 4

Enclosure

cc: The Honorable Steve Scalise, Ranking Member
Select Subcommittee on the Coronavirus Crisis

The Honorable Steve Chabot, Ranking Member
Committee on Small Business
Responding to Oversight Committee Document Requests

1. In complying with this request, produce all responsive documents that are in your
possession, custody, or control, whether held by you or your past or present agents,
employees, and representatives acting on your behalf. Produce all documents that you
have a legal right to obtain, that you have a right to copy, or to which you have access, as
well as documents that you have placed in the temporary possession, custody, or control
of any third party.

2. Requested documents, and all documents reasonably related to the requested documents,
should not be destroyed, altered, removed, transferred, or otherwise made inaccessible to
the Committee.

3. In the event that any entity, organization, or individual denoted in this request is or has
been known by any name other than that herein denoted, the request shall be read also to
include that alternative identification.

4. The Committee’s preference is to receive documents in electronic form (i.e., CD,
memory stick, thumb drive, or secure file transfer) in lieu of paper productions.

5. Documents produced in electronic format should be organized, identified, and indexed
electronically.

6. Electronic document productions should be prepared according to the following
standards:

a. The production should consist of single page Tagged Image File (“TIF”), files
accompanied by a Concordance-format load file, an Opticon reference file, and a
file defining the fields and character lengths of the load file.

b. Document numbers in the load file should match document Bates numbers and
TIF file names.

c. If the production is completed through a series of multiple partial productions,
field names and file order in all load files should match.

d. All electronic documents produced to the Committee should include the following
fields of metadata specific to each document, and no modifications should be
made to the original metadata:

BEGDOC, ENDDOC, TEXT, BEGATTACH, ENDATTACH, PAGECOUNT,
CUSTODIAN, RECORDTYPE, DATE, TIME, SENTDATE, SENTTIME,
BEGINDATE, BEGINTIME, ENDDATE, ENDTIME, AUTHOR, FROM, CC,
TO, BCC, SUBJECT, TITLE, FILENAME, FILEEXT, FILESIZE,
DATECREATED, TIMECREATED, DATELASTMOD, TIMELASTMOD,
INTMSGID, INTMSGHEADER, NATIVELINK, INTFILPATH, EXCEPTION,
BEGATTACH.

7. Documents produced to the Committee should include an index describing the contents
of the production. To the extent more than one CD, hard drive, memory stick, thumb
drive, zip file, box, or folder is produced, each should contain an index describing its
contents.

8. Documents produced in response to this request shall be produced together with copies of
file labels, dividers, or identifying markers with which they were associated when the
request was served.

9. When you produce documents, you should identify the paragraph(s) or request(s) in the
Committee’s letter to which the documents respond.

10. The fact that any other person or entity also possesses non-identical or identical copies of
the same documents shall not be a basis to withhold any information.

11. The pendency of or potential for litigation shall not be a basis to withhold any
information.

12. In accordance with 5 U.S.C.§ 552(d), the Freedom of Information Act (FOIA) and any
statutory exemptions to FOIA shall not be a basis for withholding any information.

13. Pursuant to 5 U.S.C. § 552a(b)(9), the Privacy Act shall not be a basis for withholding
information.

14. If compliance with the request cannot be made in full by the specified return date,
compliance shall be made to the extent possible by that date. An explanation of why full
compliance is not possible shall be provided along with any partial production.

15. In the event that a document is withheld on the basis of privilege, provide a privilege log
containing the following information concerning any such document: (a) every privilege
asserted; (b) the type of document; (c) the general subject matter; (d) the date, author,
addressee, and any other recipient(s); (e) the relationship of the author and addressee to
each other; and (f) the basis for the privilege(s) asserted.

16. If any document responsive to this request was, but no longer is, in your possession,
custody, or control, identify the document (by date, author, subject, and recipients), and
explain the circumstances under which the document ceased to be in your possession,
custody, or control.

17. If a date or other descriptive detail set forth in this request referring to a document is
inaccurate, but the actual date or other descriptive detail is known to you or is otherwise
apparent from the context of the request, produce all documents that would be responsive
as if the date or other descriptive detail were correct.

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18. This request is continuing in nature and applies to any newly-discovered information.
Any record, document, compilation of data, or information not produced because it has
not been located or discovered by the return date shall be produced immediately upon
subsequent location or discovery.

19. All documents shall be Bates-stamped sequentially and produced sequentially.

20. Two sets of each production shall be delivered, one set to the Majority Staff and one set
to the Minority Staff. When documents are produced to the Committee, production sets
shall be delivered to the Majority Staff in Room 2157 of the Rayburn House Office
Building and the Minority Staff in Room 2105 of the Rayburn House Office Building.

21. Upon completion of the production, submit a written certification, signed by you or your
counsel, stating that: (1) a diligent search has been completed of all documents in your
possession, custody, or control that reasonably could contain responsive documents; and
(2) all documents located during the search that are responsive have been produced to the
Committee.

Definitions

1. The term “document” means any written, recorded, or graphic matter of any nature
whatsoever, regardless of how recorded, and whether original or copy, including, but not
limited to, the following: memoranda, reports, expense reports, books, manuals,
instructions, financial reports, data, working papers, records, notes, letters, notices,
confirmations, telegrams, receipts, appraisals, pamphlets, magazines, newspapers,
prospectuses, communications, electronic mail (email), contracts, cables, notations of any
type of conversation, telephone call, meeting or other inter-office or intra-office
communication, bulletins, printed matter, computer printouts, teletypes, invoices,
transcripts, diaries, analyses, returns, summaries, minutes, bills, accounts, estimates,
projections, comparisons, messages, correspondence, press releases, circulars, financial
statements, reviews, opinions, offers, studies and investigations, questionnaires and
surveys, and work sheets (and all drafts, preliminary versions, alterations, modifications,
revisions, changes, and amendments of any of the foregoing, as well as any attachments
or appendices thereto), and graphic or oral records or representations of any kind
(including without limitation, photographs, charts, graphs, microfiche, microfilm,
videotape, recordings and motion pictures), and electronic, mechanical, and electric
records or representations of any kind (including, without limitation, tapes, cassettes,
disks, and recordings) and other written, printed, typed, or other graphic or recorded
matter of any kind or nature, however produced or reproduced, and whether preserved in
writing, film, tape, disk, videotape, or otherwise. A document bearing any notation not a
part of the original text is to be considered a separate document. A draft or non-identical
copy is a separate document within the meaning of this term.

2. The term “communication” means each manner or means of disclosure or exchange of
information, regardless of means utilized, whether oral, electronic, by document or
otherwise, and whether in a meeting, by telephone, facsimile, mail, releases, electronic

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message including email (desktop or mobile device), text message, instant message,
MMS or SMS message, message application, or otherwise.

3. The terms “and” and “or” shall be construed broadly and either conjunctively or
disjunctively to bring within the scope of this request any information that might
otherwise be construed to be outside its scope. The singular includes plural number, and
vice versa. The masculine includes the feminine and neutral genders.

4. The term “including” shall be construed broadly to mean “including, but not limited to.”

5. The term “Company” means the named legal entity as well as any units, firms,
partnerships, associations, corporations, limited liability companies, trusts, subsidiaries,
affiliates, divisions, departments, branches, joint ventures, proprietorships, syndicates, or
other legal, business or government entities over which the named legal entity exercises
control or in which the named entity has any ownership whatsoever.

6. The term “identify,” when used in a question about individuals, means to provide the
following information: (a) the individual’s complete name and title; (b) the
individual’s business or personal address and phone number; and (c) any and all
known aliases.

7. The term “related to” or “referring or relating to,” with respect to any given subject,
means anything that constitutes, contains, embodies, reflects, identifies, states, refers to,
deals with, or is pertinent to that subject in any manner whatsoever.

8. The term “employee” means any past or present agent, borrowed employee, casual
employee, consultant, contractor, de facto employee, detailee, fellow, independent
contractor, intern, joint adventurer, loaned employee, officer, part-time employee,
permanent employee, provisional employee, special government employee,
subcontractor, or any other type of service provider.

9. The term “individual” means all natural persons and all persons or entities acting on
their behalf.

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