Optimal
Blue
was
previously
owned
by

Black
Knight
before
being

sold
to

Constellation
Software
as
part
of

Intercontinental
Exchange’s
(ICE)
acquisition
of
Black
Knight.
Both
the
current
and
former
owners
are
named
as
defendants,
alongside
26
U.S.
mortgage
lenders
that
originated
more
than
7
million
loans
between
2019
and
2024.

In
a
statement,
Optimal
Blue
stated,
“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.”

The
crux
of
the
lawsuit

The
lawsuit
centers
on
two
Optimal
Blue
tools
launched
in
2019,
Competitive
Analytics
and
Competitive
Data
License,
which
require
lenders
to
share
“an
unprecedented
quantity
and
quality
of
non-public,
competitively
sensitive,
granular,
real-time
data
covering
every
component
of
their
residential
Mortgage
Pricing
and
profit
margins.”

Plaintiffs
allege
this
data-sharing
arrangement
–
the
“price
of
admission
to
this
cartel”
–
allowed
lenders
to
coordinate
pricing
rather
than
compete,
effectively
inflating
rates
and
margins.
The
platform
provides
real-time
visibility
into
competitors’
pricing,
including
loan
margins,
pricing
adjustments,
concessions
and

loan
officer
compensation,
which
would
not
exist
in
a
truly
competitive
market,
they
claim. 

“When
Loan
Originators
discover
they
are
pricing
below
rivals,
they
raise
margins
without
risking
market
share
loss,”
the
complaint
continues.”
Because
lenders
monitor
competitors’
prices
in
near
real-time,
downward
pricing
pressure
evaporates.”

According
to
the
lawsuit,
rate
spreads
—
the
difference
between
the
annual
percentage
rate
and
the

Consumer
Financial
Protection
Bureau’s
prime
rate
—
for
mortgages
issued
by
Optimal
Blue
clients
were
2.68
basis
points
(49.2%)
higher
than
for
non-users.
Compared
with
their
own
rates
prior
to
joining
the
platform,
lenders’
spreads
were
9.6
bps
higher,
even
after
controlling
for
pandemic
effects
and
other
factors. 

The
plaintiffs
claim
the
alleged
“cartel”
has
distorted
mortgage
pricing
in
Nashville
and
across
Tennessee,
where
monthly
payments
have
surged.
The
lawsuit
notes
that
average
monthly
payments
rose
to
$1,657
in
2024,
up
$628
from
2022.

Optimal
Blue
allegedly
dominates
the
pricing
engine
market,
powering
68%
of
the
top
500
mortgage
lenders
in
the
U.S.
and
pricing
about
40%
of
all
residential
mortgages
annually.
The
platform
reportedly
serves
around
3,500
lenders. 

Plaintiffs
seek
damages
and
permanent
injunctive
relief.