QUESTION
How does Rocket Mortgage finance its loans?
ANSWER
Rocket Mortgage, which is a part of Rocket Companies, finances its loans primarily through the sale of mortgages on the secondary market. After originating and funding a mortgage loan, Rocket Mortgage often sells these loans to government-sponsored entities like Fannie Mae or Freddie Mac, or to other financial institutions. The process of selling these loans replenishes Rocket Mortgage’s liquidity, allowing the company to finance additional mortgages. This practice is typical in the mortgage industry and enables lenders to access more capital to serve a larger number of customers without retaining the long-term risk associated with the loans they originate. Revenue comes from origination fees, loan servicing, and the difference between the interest rate at which they lend and the rate obtained when they sell the loan.
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