Rocket Mortgage’s parent company reported a surge in loan originations amid mortgage rates’ downward slide.
Origination volume surged 28 percent year-over-year for Detroit-based Rocket Companies, National Mortgage Professional reported. The revelation of the big increase was disclosed in the company’s third-quarter earnings, a decidedly mixed bag for Rocket Mortgage’s parent company.
Rocket generated $28.5 billion in closed loan origination volume in the third quarter. In the previous quarter, that metric was $24.6 billion, according to HousingWire, as the firm rode a dip in mortgage rates.
But Rocket suffered a $481 million GAAP net loss in the third quarter — a massive reversal from the second quarter when the company managed to generate a $178 million profit. The big loss was driven in part by an $878 million loss in the fair value of the company’s mortgage servicing rights.
Total revenue in the third quarter was $647 million, roughly half the revenue from the prior quarter, while expenses grew to $1.14 billion.
“Over the past few months, the market has thrown our industry almost every curve ball imaginable,” Rocket Companies CEO Varun Krishna said on a Tuesday earnings call.
Rocket is embracing portfolio acquisitions and subservice agreements to boost its bottom line. Last month, the company announced a subservice agreement with Annaly Capital Management, which will soon see Rocket manage servicing and recapture activities for some of the real estate investment trust’s mortgage servicing rights.
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As of the end of September, Rocket had $8.3 billion in total liquidity, including $1.2 billion of cash on the balance sheet. The company projects its adjusted revenue in the fourth quarter to land between $1.05 billion and $1.2 billion, based around a typical seasonal lull and stubbornly high mortgage rates.
Rocket shares fell 11.3 percent in aftermarket trading following the earnings call, dropping to $13.78 per share.