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Mortgage giant Rocket Companies bounced back from a third quarter net loss in a big way Thursday, posting a $649 million profit in the final three months of 2024 that pushed the company into the black in what will be rememered as a difficult year for real estate.
Last year was the worst year for existing-home sales since 1995, but Rocket Mortgage grew 2024 closed loan volume by 29 percent, to $101.2 billion.
Higher profit margins on those loans helped boost 2024 net revenue by 34 percent, to $5.1 billion, prompting Rocket CEO Varun Krishna to call 2024 a “foundational year” for the company.
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“We have momentum heading into 2025 with the launch of our unified Rocket brand and Rocket.com platform,” Krishna said in a statement. “We’re well-positioned to help even more Americans find their path to homeownership.”
Although the company doesn’t break out its purchase mortgage and refinancing originations, Rocket claims its purchase market share grew by 8 percent from 2023, fueled by “strategic optimizations across processes, teams, marketing, and technology.”
Home equity loan volume more than doubled, bolstering Rocket Mortgage’s claim to be the largest originator of closed-end second mortgages.
In addition to originating loans, Rocket is also a major mortgage loan servicer, collecting monthly payments from millions of borrowers on behalf of investors.
At the end of the year, Rocket was collecting payments on 2.8 million mortgages totalling $593 billion, a business that earned it $1.46 billion in fee income — and strengthening ties to homeowners who might eventually be in the market for another loan.
“Our ecosystem is the foundation of what makes Rocket unique, and its heart is our origination and servicing flywheel,” Krishna said on a call with investment analysts. “The scale of both sides feed into and amplifies the other, allowing us to grow in non linear ways.”
Varun Krishna
When Rocket originates a mortgage, “it’s just the beginning of our relationship,” he said. “Every client interaction — whether answering a buyer’s chat inquiry about affordability or providing immediate assistance after a natural disaster — is a chance to strengthen that relationship. So we don’t view our servicing portfolio as just a recurring cash flow asset.”
In addition to Rocket Mortgage, Rocket Companies’ stable of brands includes the personal finance app, Rocket Money; real estate brokerage and search site, Rocket Homes; and title and settlement services provider Amrock.
Those offerings — coupled with Rocket’s sizable presence in mortgage loan servicing — make the company a “fintech” (financial technology) platform, providing a range of tools to help people manage their finances.
The Rocket Money app boasted 4.1 million premium members at the end of the year, an increase of more than 1 million from a year ago. In January Rocket launched a new website at a recently acquired domain, Rocket.com, positioning it as a one-stop destination for home search and mortgage financing.
Rocket’s loan servicing business provides a steady source of income when lending slows down, but can also make ups and downs in mortgage rates more tricky to navigate — at least on paper.
Rocket’s $481 million Q3 loss was driven by nearly $900 million in paper writedowns in the fair value of its growing mortgage servicing rights (MSR) portfolio.
When mortgage rates fall, loan servicers must write down the estimated value of their MSRs. Lower rates mean servicing clients are more likely to refinance their home and end up with another loan servicer.
Rising mortgage rates during the final three months of 2024 provided a boost to Rocket’s Q4 bottom line, allowing for a $356 million writeup of the fair value of its MSRs.
The $649 million in Q4 net income pushed Rocket into the red for the year, with 2024 net income of $646 million.
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