In This Story
Rocket Companies (RKT+8.95%) stock dropped 7.6% after it unveiled an agreement to acquire Mr. Cooper (COOP+5.83%) for $9.4 billion in shares, boosting its mortgage servicing portfolio to $2.1 trillion in unpaid balances, or about one in every six U.S. home loans.
The shares of Mr. Cooper, a mortgage originator and servicer, jumped about 17% on the news. The firm will pay a $2 per share dividend on completion of the deal. Its shareholders will own about 25% of the combined company, with Rocket’s investors holding 75%.
“Ultimately, this combination drives higher loan volume and long-term client relationships — while providing greater recurring revenue and lowering client acquisition costs,” the companies said in a joint statement. The deal is scheduled for completion in the fourth quarter.
Earlier this month, Rocket announced the purchase of real estate brokerage Redfin (RDFN+8.16%) for $1.75 billion in stock, seeking to drive its mortgage business through integration with the target company’s agent network.
Rocket Mortgage was the No. 3 mortgage lender in the U.S. by volume last year, closing $101 billion worth of loans, translating to just under a 6% market share, according to the Detroit Free Press (GCI+6.37%). The leading originators were United Wholesale Mortgage (UWMC+8.24%), at $139 billion, and PennyMac Financial (PFSI+4.17%) at $115 billion, the newspaper reported.
U.S. existing home sales increased 4.2% in February, but fell 1.2% from a year earlier. Housing inventories jumped 5.1% from January and by 17% from last year. The median existing home price was $398,400, up 3.8% from last year, with all four U.S. regions reporting price increases. Sales of new homes gained 1.8% to an annualized rate of 676,000 units.
Home sales are tied to interest rates, and with inflation remaining sticky the Federal Reserve may be constrained from cutting borrowing costs to buoy the economy.