Rocket buys Mr. Cooper – The Daily Tearsheet

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Rocket has agreed to buy Mr. Cooper in a $9.4 billion stock deal. This deal is about recapturing the refi on Mr. Cooper’s servicing portfolio. “Servicing is a critical pillar of homeownership – alongside home search and mortgage origination,” said Varun Krishna, Rocket CEO. “With the right data and AI infrastructure we will deliver the right products at the right time. That’s how we build lifelong relationships, by proactively unlocking benefits and meeting needs before they arise. We look forward to welcoming Mr. Cooper’s nearly 7 million clients.”

Rocket claims it has an 83% recapture rate, which is 3x the industry average. On the investor conference call, Rocket was asked about what they were planning on doing with Mr. Cooper’s correspondent channel and they said they were keeping it. The combined companies expect to see around $500MM in synergies, of which $400 are cost synergies and $100MM are revenue synergies. Since UWM sold a lot of servicing to Mr. Cooper, that is probably the revenue synergies they imagine they will see.

They claimed on the call that the believe the regulators, GSEs and Ginnie Mae will look favorably on the transaction. The deal is expected to close in Q4, so they are signaling the regulatory path might be somewhat difficult. Between the Redfin and Mr. Cooper deals, Rocket is looking to touch every part of the value chain in a real estate transaction. How will UWM respond?

The Chicago PMI improved in March, rising to 47.6. This is the third consecutive monthly gain, and is the highest level since November of 2023. That said, the index remains in contractionary territory. Production, employment, and new orders advanced.

Are you a mortgage originator with a bookkeeper, but no financial analyst? Are you doing without an annual budget because you don’t have the time / resources to develop one? Are you considering an acquisition, and want an in-depth analysis of the potential synergies and impact on the bottom line? Perhaps you have some projects that need to be done, but you can’t justify a full-time hire.

I am a consultant who has extensive experience in capital markets, secondary marketing, FP&A, budgeting, and servicing. If you think you might have a need, let’s set up a discovery call. 

Please reach out to brent@thedailytearsheet.com