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After losing its title as the nation’s biggest mortgage lender to rival United Wholesale Mortgage last year, Rocket Mortgage announced Monday it will court homebuyers this spring by offering them a closing credit of up to $10,000 — if they work with a real estate agent that’s partnered with sister company Rocket Homes.
Rocket’s new “BUY+” program provides homebuyers working with a Rocket Homes Partner Agent a closing cost credit equal to 1.5 percent of their loan amount — about $5,000 for a homebuyer putting down 5 percent to purchase a $350,000 home. To claim the full $10,000 closing credit, a homebuyer would have to borrow close to $667,000.
Sellers who work with a Rocket Homes Partner Agent can qualify for a “SELL+” rebate equal to 1 percent of their home’s sale price — and are also eligible to participate in BUY+ if they also buy with Rocket Homes and Rocket Mortgage.
“One of the benefits of sister companies Rocket Homes and Rocket Mortgage is that each are uniquely designed to help homebuyers during specific moments in the real estate process,” Rocket Homes CEO Doug Seabolt said in a statement. “Clients could already do many things with one Rocket Account login, like connect with a trusted real estate agent and search for a home with Rocket Homes — then use that same account to get approved for financing with Rocket Mortgage. Now, we are adding onto that elevated experience with game-changing savings.”
Clients who buy a home with their own agent can also qualify to receive a smaller closing credit, equal to 0.25 percent of their loan amount. That’s one-sixth of the credit provided to homebuyers working with Rocket Homes Partner Agents, or about $830 for a client making a 5 percent down payment on a $350,000 home.
Those borrowers are eligible to receive an additional 0.5 percent lender paid credit if they upgrade to services offered by Rocket Mortgage including a verified approval or RateShield letter.
While providing home loans through Rocket Mortgage is Rocket’s biggest business, it also helps consumers line up real estate services, personal loans, used cars and rooftop solar systems through subsidiaries Rocket Homes, Rocket Loans, Rocket Auto and Rocket Solar.
Last week Rocket rolled out a new VISA rewards card that incentivizes first-time homebuyers to choose Rocket Mortgage when financing their home. It was the latest move in Rocket’s strategy to grow its business by repositioning itself as a fintech platform capable of unlocking the “lifetime value of the client” by cross-marketing products and services.
Rocket Homes is licensed as a real estate brokerage in all 50 states, enabling it to populate a property search site, Rockethomes.com, with for-sale listings from multiple listing services. Rocket Homes then collects referral fees from a network of more than 20,000 vetted agents that it sends buyers and sellers to. Rocket Mortgage also generates leads for agents when unrepresented homebuyers qualify for loans.
According to the company’s most recent annual report to investors, last year Rockethomes.com attracted an average of 2.05 million unique visitors a month, and Rocket Homes Partner Real Estate Agents were involved in 32,700 transactions, helping Rocket Homes generate $52.8 million in gross revenue.
In 2021, Rocket Homes announced it would also employ on-staff agents working from downtown Detroit to provide services to sellers at a discounted commission rate of 1.5 percent. Those remote agents were to provide advice on listing price, facilitate photos, place homes in the local multiple listing service, negotiate offers and handle paperwork.
A Rocket spokesperson declined to comment on how many in-house agents Rocket Homes employs, what markets Rocket Homes in-house agents serve or what fees it charges.
According to Zillow.com, Rocket Homes agents including Beth Kirton and Danny Ribble have listed and sold hundreds of homes, primarily in midwestern states like Michigan, Ohio and Pennsylvania but also in North Carolina and South Carolina.
In its most recent annual report to investors, parent company Rocket Companies Inc. noted that Rocket Homes “competes with traditional real estate brokerages while also facing expanded risks not faced by traditional brokerages.”
To encourage consumers to shop for mortgages and settlement services, the Real Estate Settlement Procedures Act (RESPA) prohibits the payment of unearned kickbacks or referral fees in exchange for business. But REPSA, which is enforced by the Consumer Financial Protection Bureau, allows payments under cooperative brokerage and referral arrangements, or agreements between real estate agents and brokers.
Other things of value, such as marketing services, that are provided in exchange for business can also be considered problematic under RESPA or similar state laws, depending on how they’re provided. The CFPB in 2018 concluded an investigation into whether Zillow violated RESPA by letting agents and lenders combine marketing efforts without taking any action against the company.
In its 2020 annual report to investors, Rocket disclosed that in May of that year, “the CFPB issued a civil investigative demand to our subsidiary, Rocket Homes, the stated purpose of which is to determine if Rocket Homes conducted any activities in a manner that violated RESPA and to determine if further CFPB action is necessary. We are cooperating fully with the CFPB in this investigation and are confident in the compliance processes that Rocket Homes has in place.”
In addition to paying Rocket Homes for referrals, real estate agents can refer clients to Rocket Mortgage, but aren’t paid for doing so.
In October 2020, Rocket Mortgage launched Rocket Pro Insight (RPI), a website and mobile app for real estate agents the company promised would provide “unprecedented” real-time updates on the status of their clients’ mortgages. In reporting second quarter 2022 results in August, Rocket said approximately 90,000 real estate agents had signed up for Rocket Pro Insight as of June 30, 2022.
Rocket has not reported on Rocket Pro Insight agent adoption since, and the app’s website, RocketProInsight.com, now redirects to an agent landing page at Rocket Mortgage.
A Rocket spokesperson declined to comment on the status of the CFPB’s 2020 RESPA investigation, or how Rocket is addressing the RESPA risks that might be created by its relationships with agents who send and receive business from the company.
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