Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 07, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-39432 | |
Entity Registrant Name | Rocket Companies, Inc. | |
Entity Central Index Key | 0001805284 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-4946470 | |
Entity Address, Address Line One | 1050 Woodward Avenue | |
Entity Address, City or Town | Detroit | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48226 | |
City Area Code | 313 | |
Local Phone Number | 373-7990 | |
Title of 12(b) Security | Class A common stock, par value $0.00001 per share | |
Trading Symbol | RKT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Class A common stock | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 136,473,972 | |
Class D common stock | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 1,848,879,483 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and cash equivalents | $ 2,864,906 | $ 1,971,085 |
Restricted cash | 75,647 | 83,018 |
Mortgage loans held for sale, at fair value | 18,825,444 | 22,865,106 |
Mortgage servicing rights (“MSRs”), at fair value | 4,304,762 | 2,862,685 |
MSRs collateral for financing liability, at fair value | 233,687 | 205,033 |
Notes receivable and due from affiliates | 11,901 | 22,172 |
Property and equipment, net of accumulated depreciation and amortization of $511,934 and $497,812, respectively | 232,155 | 211,161 |
Deferred tax asset, net | 608,351 | 519,933 |
Lease right of use assets | 227,078 | 238,546 |
Loans subject to repurchase right from Ginnie Mae | 4,970,601 | 5,696,608 |
Other assets | 703,377 | 941,477 |
Total assets | 34,732,277 | 37,534,602 |
Liabilities | ||
Funding facilities | 14,452,672 | 17,742,573 |
Lines of credit | 375,000 | 375,000 |
Senior Notes, net | 2,974,177 | 2,973,046 |
Early buy out facility | 635,712 | 330,266 |
MSRs financing liability, at fair value | 223,756 | 187,794 |
Accounts payable | 297,459 | 251,960 |
Lease liabilities | 261,774 | 272,274 |
Forward commitments, at fair value | 54,412 | 506,071 |
Investor reserves | 93,937 | 87,191 |
Notes payable and due to affiliates | 73,769 | 73,896 |
Tax receivable agreement liability | 669,738 | 550,282 |
Loans subject to repurchase right from Ginnie Mae | 4,970,601 | 5,696,608 |
Other liabilities | 1,343,441 | 605,485 |
Total liabilities | 26,426,448 | 29,652,446 |
Equity | ||
Additional paid-in capital | 370,210 | 282,743 |
Retained earnings | 184,939 | 207,422 |
Accumulated other comprehensive income | 365 | 317 |
Non-controlling interest | 7,750,295 | 7,391,654 |
Total equity | 8,305,829 | 7,882,156 |
Total liabilities and equity | 34,732,277 | 37,534,602 |
Class A common stock | ||
Equity | ||
Common stock | 1 | 1 |
Class B common stock | ||
Equity | ||
Common stock | 0 | 0 |
Class C common stock | ||
Equity | ||
Common stock | 0 | 0 |
Class D common stock | ||
Equity | ||
Common stock | 19 | 19 |
IRLCs | ||
Assets | ||
Derivatives, at fair value | 765,215 | 1,897,194 |
Forward commitments | ||
Assets | ||
Derivatives, at fair value | 909,153 | 20,584 |
Liabilities | ||
Forward commitments, at fair value | $ 54,412 | $ 506,071 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Property and equipment, accumulated depreciation and amortization | $ 511,934 | $ 497,812 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock authorized (shares) | 10,000,000,000 | 10,000,000,000 |
Common stock issued (shares) | 135,574,865 | 115,372,565 |
Common stock outstanding (shares) | 135,574,865 | 115,372,565 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock authorized (shares) | 6,000,000,000 | 6,000,000,000 |
Common stock issued (shares) | 0 | 0 |
Common stock outstanding (shares) | 0 | 0 |
Class C common stock | ||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock authorized (shares) | 6,000,000,000 | 6,000,000,000 |
Common stock issued (shares) | 0 | 0 |
Common stock outstanding (shares) | 0 | 0 |
Class D common stock | ||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock authorized (shares) | 6,000,000,000 | 6,000,000,000 |
Common stock issued (shares) | 1,848,879,483 | 1,869,079,483 |
Common stock outstanding (shares) | 1,848,879,483 | 1,869,079,483 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Gain on sale of loans | ||
Gain on sale of loans excluding fair value of MSRs, net | $ 2,379,278 | $ 1,286,690 |
Fair value of originated MSRs | 1,173,164 | 535,419 |
Gain on sale of loans, net | 3,552,442 | 1,822,109 |
Loan servicing income (loss) | ||
Servicing fee income | 292,361 | 257,093 |
Change in fair value of MSRs | 245,921 | (991,252) |
Loan servicing income (loss), net | 538,282 | (734,159) |
Interest income | ||
Interest income | 95,245 | 74,042 |
Interest expense on funding facilities | (67,844) | (39,459) |
Interest income, net | 27,401 | 34,583 |
Other income | 466,112 | 243,776 |
Total revenue, net | 4,584,237 | 1,366,309 |
Expenses | ||
Salaries, commissions and team member benefits | 842,199 | 683,606 |
General and administrative expenses | 291,419 | 194,074 |
Marketing and advertising expenses | 320,843 | 217,993 |
Depreciation and amortization | 15,304 | 16,115 |
Interest and amortization expense on non-funding debt | 35,571 | 33,107 |
Other expenses | 235,731 | 121,135 |
Total expenses | 1,741,067 | 1,266,030 |
Income before income taxes | 2,843,170 | 100,279 |
Provision for income taxes | (65,832) | (1,232) |
Net income | 2,777,338 | 99,047 |
Net income attributable to non-controlling interest | (2,653,636) | (99,047) |
Net income attributable to Rocket Companies | $ 123,702 | 0 |
Earnings per share of Class A common stock | ||
Basic (in dollars per share) | $ 1.07 | |
Diluted (in dollars per share) | $ 1.07 | |
Weighted average shares outstanding | ||
Basic (shares) | 115,673,524 | |
Diluted (shares) | 122,011,916 | |
Comprehensive income | ||
Net income | $ 2,777,338 | 99,047 |
Cumulative translation adjustment | 307 | (1,760) |
Unrealized loss on investment securities | (364) | 0 |
Comprehensive income | 2,777,281 | 97,287 |
Comprehensive income attributable to non-controlling interest | (2,653,586) | (97,287) |
Comprehensive income attributable to Rocket Companies | $ 123,695 | $ 0 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Common StockClass A common stock | Common StockClass D common stock | Additional Paid-in Capital | Retained Earnings | Net Parent Investment | Accumulated Other Comprehensive Income (Loss) | Total Non-controlling Interest |
Beginning Balance at Dec. 31, 2019 | $ 3,515,555 | $ 0 | $ 0 | $ 0 | $ 0 | $ 3,510,698 | $ (151) | $ 5,008 |
Beginning Balance (shares) at Dec. 31, 2019 | 0 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 99,047 | 99,487 | (440) | |||||
Other comprehensive income (loss) | (1,760) | (1,439) | (321) | |||||
Net transfers to Parent | 21,919 | 21,919 | ||||||
Share-based compensation, net | 29,058 | 29,049 | 9 | |||||
Unrealized loss on investment securities | 0 | |||||||
Ending Balance at Mar. 31, 2020 | 3,663,819 | $ 0 | $ 0 | 0 | 0 | 3,661,153 | (1,590) | 4,256 |
Ending Balance (shares) at Mar. 31, 2020 | 0 | 0 | ||||||
Beginning Balance at Dec. 31, 2020 | 7,882,156 | $ 1 | $ 19 | 282,743 | 207,422 | 0 | 317 | 7,391,654 |
Beginning Balance (shares) at Dec. 31, 2020 | 115,372,565 | 1,869,079,483 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 2,777,338 | 123,702 | 2,653,636 | |||||
Other comprehensive income (loss) | 307 | 14 | 293 | |||||
Share-based compensation, net | 39,149 | 2,116 | 37,033 | |||||
Share-based compensation, net (shares) | 2,300 | |||||||
Unrealized loss on investment securities | (364) | (21) | (343) | |||||
Distributions for state taxes on behalf of unit holders (members), net | (4,840) | (281) | (4,559) | |||||
Distributions to unit holders (members) from subsidiary investment | (2,242,999) | (2,242,999) | ||||||
Special Dividend to Class A Shareholders | (145,903) | (145,903) | ||||||
Increase in controlling interest of investment, net of income taxes and Tax receivable agreement liability | 985 | 85,351 | (1) | 55 | (84,420) | |||
Increase in controlling interest of investment, net of income taxes and Tax receivable agreement liability (shares) | 20,200,000 | (20,200,000) | ||||||
Ending Balance at Mar. 31, 2021 | $ 8,305,829 | $ 1 | $ 19 | $ 370,210 | $ 184,939 | $ 0 | $ 365 | $ 7,750,295 |
Ending Balance (shares) at Mar. 31, 2021 | 135,574,865 | 1,848,879,483 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Operating activities | ||
Net income | $ 2,777,338 | $ 99,047 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 15,304 | 16,115 |
Provision for deferred income taxes | 38,457 | 0 |
Origination of mortgage servicing rights | (1,173,164) | (535,419) |
Change in fair value of MSRs | (245,921) | 991,252 |
Gain on sale of loans excluding fair value of MSRs, net | (2,379,278) | (1,286,690) |
Disbursements of mortgage loans held for sale | (104,103,499) | (50,418,371) |
Proceeds from sale of loans held for sale | 110,280,681 | 52,261,240 |
Share-based compensation expense | 42,072 | 29,058 |
Change in assets and liabilities | ||
Due from affiliates | 10,272 | 7,051 |
Other assets | 132,324 | (820,657) |
Accounts payable | 45,499 | 77,282 |
Due to affiliates | (302) | 15,298 |
Premium recapture and indemnification losses paid | 1,399 | (297) |
Other liabilities | 832,332 | (53,317) |
Total adjustments | 3,496,176 | 282,545 |
Net cash provided by operating activities | 6,273,514 | 381,592 |
Investing activities | ||
Proceeds from sale of MSRs | 10,204 | 167,662 |
Net decrease in notes receivable from affiliates | 0 | 59,632 |
(Increase) decrease in mortgage loans held for investment | (12,462) | |
(Increase) decrease in mortgage loans held for investment | 2,130 | |
Purchase and other additions of property and equipment, net of disposals | (36,633) | (18,782) |
Net cash (used in) provided by investing activities | (38,891) | 210,642 |
Financing activities | ||
Net payments on funding facilities | (3,289,901) | (618,754) |
Net borrowings on lines of credit | 0 | 810,000 |
Net borrowings on early buy out facility | 305,446 | 90,875 |
Net borrowings notes payable from unconsolidated affiliates | 175 | 1,212 |
Proceeds from MSRs financing liability | 11,704 | 9,513 |
Distributions to other unit holders (members) of Holdings | (2,375,904) | 0 |
Net transfer to parent | 0 | 21,919 |
Net cash (used in) provided by financing activities | (5,348,480) | 314,765 |
Effects of exchange rate changes on cash and cash equivalents | 307 | (1,760) |
Net increase in cash and cash equivalents and restricted cash | 886,450 | 905,239 |
Cash and cash equivalents and restricted cash, beginning of period | 2,054,103 | 1,455,725 |
Cash and cash equivalents and restricted cash, end of period | 2,940,553 | 2,360,964 |
Non-cash activities | ||
Loans transferred to other real estate owned | 578 | 383 |
Supplemental disclosures | ||
Cash paid for interest on related party borrowings | $ 1,460 | $ 1,059 |
Business, Basis of Presentation
Business, Basis of Presentation and Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business, Basis of Presentation and Accounting Policies | Business, Basis of Presentation and Accounting Policies Rocket Companies, Inc. (the "Company", and together with its consolidated subsidiaries, "Rocket Companies", "we", "us", "our") was incorporated in Delaware on February 26, 2020 as a wholly owned subsidiary of Rock Holdings Inc. ("RHI") for the purpose of facilitating an initial public offering ("IPO") of its Class A common stock, $0.00001 par value (the “Class A common stock”) and other related transactions in order to carry on the business of RKT Holdings, LLC ("Holdings") and its wholly owned subsidiaries. We are a Detroit-based holding company consisting of tech-driven real estate, mortgage and eCommerce businesses. We are committed to providing an industry-leading client experience powered by our platform. In addition to Rocket Mortgage, the nation’s largest mortgage lender, we have expanded into complementary industries, such as real estate services, personal lending, and auto sales where we seek to deliver innovative client solutions leveraging our Rocket platform. Our business operations are organized into the following two segments: (1) Direct to Consumer and (2) Partner Network, refer to Note 12, Segments. Rocket Companies, Inc. is a holding company. Its primary material asset is the equity interest in Holdings which, through its direct and indirect subsidiaries, conducts all of the Company's operations. Holdings is a Michigan limited liability company and wholly owns the following entities, with each entity's subsidiaries identified in parentheses: Quicken Loans, LLC, Amrock Holdco, LLC (“Amrock”, "Amrock Title Insurance Company" and "Nexsys Technologies LLC"), LMB HoldCo LLC (“Core Digital Media”), RCRA Holdings LLC (“Rock Connections” and “Rocket Auto”), Rocket Homes Real Estate LLC (“Rocket Homes”), RockLoans Holdings LLC (“Rocket Loans”), Rock Central LLC, EFB Holdings Inc. (“Edison Financial”), Lendesk Canada Holdings Inc., RockTech Canada Inc., and Woodward Capital Management LLC. As used herein, “Rocket Mortgage” refers to either the Rocket Mortgage brand or platform, or the Quicken Loans business, as the context allows. In April 2021, Amrock Holdco, LLC changed its name to Amrock Holdings, LLC. Initial Public Offering On August 10, 2020 we completed the IPO of our common stock pursuant to a Registration Statement on Form S-1 (File No. 333-239726), which closed on August 10, 2020. In the IPO, we sold an aggregate of 115,000,000 shares of Class A common stock, including 15,000,000 shares purchased by the underwriters on September 9, 2020. Rocket Companies, Inc. received net proceeds from the IPO of approximately $2,023,000 after deducting underwriting discounts and commissions, all of which was used to purchase 115,000,000 non-voting membership units of Holdings (the “Holdings Units”) and shares of Class D common stock from RHI. Holdings is treated as a partnership for U.S. federal income tax purposes and, as such, is itself generally not subject to U.S. federal income tax under current U.S. tax laws. Each member of Holdings will be required to take into account for U.S. federal income tax purposes its distributive share of the items of income, gain, loss and deduction of Holdings. As indicated in Note 8, Income Taxes, the Company is party to a Tax Receivable Agreement. Basis of Presentation and Consolidation Prior to the completion of the initial public offering, RHI, Holdings and its subsidiaries consummated an internal reorganization in which Rocket Companies, Inc. became the sole managing member of Holdings. Prior to the reorganization, Rocket Companies, Inc. had no operations. As the sole managing member of Holdings, the Company operates and controls all of the business affairs of Holdings, and through Holdings and its subsidiaries, conducts its business. Holdings is considered a variable interest entity (“VIE”) and we consolidate the financial results of Holdings under the guidance of ASC 810, Consolidation. A portion of our net income is allocated to the non-controlling interest holders. For further details, refer to Note 13 , Variable Interest Entities and Note 14 , Non-controlling Interests. Income from Holdings and its subsidiaries prior to the reorganization and IPO has been accounted for as a non-controlling interest in our Condensed Consolidated Statements of Income and Comprehensive Income. Accumulated net income prior to the reorganization and IPO is presented in net parent investment in our Condensed Consolidated Statements of Changes in Equity as the financial statements prior to the reorganization and IPO reflect combined subsidiaries operating as part of RHI. We have accounted for the reorganization as one of entities under common control and the net parent investment was allocated between non-controlling interest and additional paid-in capital based on the ownership of Holdings. Our condensed consolidated financial statements for periods prior to the reorganization and IPO reflect the combined subsidiaries that historically operated as part of RHI. We have further adjusted the prior period results to retrospectively reflect the acquisition of Amrock Title Insurance Company (“ATI”) which qualified as a common control transaction as discussed further below in the Acquisition Agreement section. All significant intercompany transactions and accounts between the businesses comprising the Company have been eliminated in the accompanying condensed consolidated financial statements. All transactions and accounts between RHI and other related parties with the Company have a history of settlement or will be settled for cash and are reflected as related party transactions. For further details of the Company’s related party transactions refer to Note 6, Transactions with Related Parties . Our condensed consolidated financial statements are unaudited and presented in U.S. dollars. They have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC. In our opinion, these condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair statement of our results of operations, financial position and cash flows for the periods presented. However, our results of operations for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period. Acquisition Agreement On August 5, 2020, Rocket Companies, Inc. entered into an acquisition agreement with RHI and its direct subsidiary Amrock Holdings Inc. pursuant to which we acquired ATI, a title insurance underwriting business, for total aggregate consideration of $14,400 that consisted of 800,000 Holdings Units and shares of Rocket Companies, Inc. Class D common stock valued at the initial public offering price of $18.00 per share (the number of shares issued equals the purchase price divided by the price to the public in our initial public offering), the acquisition closed on August 14, 2020 subsequent to the IPO date on August 10, 2020. ATI's net income for the year ended December 31, 2019 was $4,700. Because the Acquisition was a transaction between commonly controlled entities, U.S. GAAP requires the retrospective combination of the entities for all periods presented as if the combination had been in effect since the inception of common control. Accordingly, the Company’s condensed consolidated financial statements included in this Form 10-Q, including for the three months ended March 31, 2020, reflect the retrospective combination of the entities as if the combination had been in effect since inception of common control. Management Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although management is not currently aware of any factors that would significantly change its estimates and assumptions, actual results may differ from these estimates. Subsequent Events In preparing these condensed consolidated financial statements, the Company evaluated events and transactions for potential recognition or disclosure through the date these condensed consolidated financial statements were issued. Refer to Note 5, Borrowings for disclosures on changes to the Company’s debt agreements and Note 8, Income Taxes for tax distributions made that occurred subsequent to March 31, 2021. Special Dividend On February 25, 2021, our board of directors authorized and declared a cash dividend (the "Special Dividend") of $1.11 per share to the holders of our Class A common stock. The Special Dividend was paid on March 23, 2021 to holders of the Class A common stock of record as of the close of business on March 9, 2021. The Company funded the Special Dividend from cash distributions of approximately $2.2 billion by RKT Holdings, LLC to all of its members, including the Company. Revenue Recognition Gain on sale of loans, net—Gain on sale of loans, net includes all components related to the origination and sale of mortgage loans, including (1) net gain on sale of loans, which represents the premium we receive in excess of the loan principal amount and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees (credits), points and certain costs, (3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks and loans held for sale, (5) the gain or loss on forward commitments hedging loans held for sale and interest rate lock commitments (IRLCs), and (6) the fair value of originated MSRs. An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of a pull-through factor. Subsequent changes in the fair value of IRLCs and mortgage loans held for sale are recognized in current period earnings. When the mortgage loan is sold into the secondary market, any difference between the proceeds received and the current fair value of the loan is recognized in current period earnings in Gain on sale of loans, net. Included in Gain on sale of loans, net is the fair value of originated MSRs, which represents the estimated fair value of MSRs related to loans which we have sold and retained the right to service. Refer to Note 3, Mortgage Servicing Rights for information related to the gain/(loss) on changes in the fair value of MSRs. Loan servicing income (loss), net—Loan servicing income (loss), net includes income from servicing, sub-servicing and ancillary fees, and is recorded to income as earned, which is upon collection of payments from borrowers. This amount also includes the Change in fair value of MSRs, which is the adjustment for the fair value measurement of the MSRs asset as of the respective balance sheet date. Interest income, net—Interest income includes interest earned on mortgage loans held for sale and mortgage loans held for investment net of the interest expense paid on our loan funding facilities. Interest income is recorded as earned and interest expense is recorded as incurred. Other income—Other income is derived primarily from lead generation revenue, professional service fees, real estate network referral fees, contact center revenue, personal loans business, closing fees, net appraisal revenue, and net title insurance fees. The following revenue streams fall within the scope of ASC Topic 606—Revenue from Contracts with Customers and are disaggregated hereunder: Core Digital Media lead generation revenue —The Company recognizes online consumer acquisition revenue based on successful delivery of marketing leads to a client at a fixed fee per lead. This service is satisfied at the time the lead is delivered, at which time revenue for the service is recognized. Online consumer acquisition revenue, net of intercompany eliminations, were $6,680 and $7,560 for the three months ended March 31, 2021 and 2020, respectively. Professional service fees —The Company recognizes professional service fee revenue based on the delivery of services (e.g., human resources, technology, training) over the term of a contract. Consideration for the promised services is received through a combination of a fixed fee for the period and incremental fees paid for optional services that are available at an incremental rate determined at the time such services are requested. The Company recognizes the annual fee ratably over the life of the contract, as the performance obligation is satisfied equally over the term of the contract. For the optional services, revenue is only recognized at the time the services are requested and delivered and pricing is agreed upon. Professional service fee revenues were $3,549 and $1,835 for the three months ended March 31, 2021 and 2020, respectively, and were rendered entirely to related parties. Rocket Homes real estate network referral fees —The Company recognizes real estate network referral fee revenue based on arrangements with partner agencies contingent on the closing of a transaction. As this revenue stream is variable, and is contingent on the successful transaction close, the revenue is constrained until the occurrence of the transaction. At this point, the constraint on recognizing revenue is deemed to have been lifted and revenue is recognized for the consideration expected to be received. Real estate network referral fees, net of intercompany eliminations, were $9,578 and $7,988 for the three months ended March 31, 2021 and 2020, respectively. Rock Connections and Rocket Auto contact center revenue —The Company recognizes contact center revenue for communication services including client support and sales. Consideration received includes a fixed base fee and/or a variable contingent fee. The fixed base fee is recognized ratably over the period of performance, as the performance obligation is considered to be satisfied equally throughout the service period. The variable contingent fee related to car sales is constrained until the sale of the car is completed. Contact center revenues, net of intercompany eliminations, were $11,632 and $7,341 for the three months ended March 31, 2021 and 2020, respectively. Amrock closing fees —The Company recognizes closing fees for non-recurring services provided in connection with the origination of the loan. These fees are recognized at the time of loan closing for purchase transactions or at the end of a client's three-day rescission period for refinance transactions, which represents the point in time the loan closing services performance obligation is satisfied. The consideration received for closing services is a fixed fee per loan that varies by state and loan type. Closing fees were $157,167 and $73,486 for the three months ended March 31, 2021 and 2020, respectively. Amrock appraisal revenue, net —The Company recognizes appraisal revenue when the appraisal service is completed. The Company may choose to deliver appraisal services directly to its client or subcontract such services to a third-party licensed and/or certified appraiser. In instances where the Company performs the appraisal, revenue is recognized as the gross amount of consideration received at a fixed price per appraisal. The Company is an agent in instances where a third-party appraiser is involved in the delivery of appraisal services and revenue is recognized net of third-party appraisal expenses. Appraisal revenue, net was $22,491 and $17,619 for the three months ended March 31, 2021 and 2020, respectively. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. We maintain our bank accounts with a relatively small number of high-quality financial institutions. Restricted cash as of March 31, 2021 and 2020 consisted of cash on deposit for a repurchase facility and client application deposits, title premiums collected from the insured that are due to the underwritten insurance company and a $25,000 bond. March 31, 2021 2020 Cash and cash equivalents $ 2,864,906 $ 2,295,988 Restricted cash 75,647 64,976 Total cash, cash equivalents, and restricted cash in the statement of cash flows $ 2,940,553 $ 2,360,964 Loans subject to repurchase right from Ginnie Mae For certain loans sold to Ginnie Mae, the Company as the servicer has the unilateral right to repurchase any individual loan in a Ginnie Mae securitization pool if that loan meets defined criteria, including being delinquent more than 90 days. Once the Company has the unilateral right to repurchase the delinquent loan, the Company has effectively regained control over the loan and must re-recognize the loan on the Condensed Consolidated Balance Sheets and establish a corresponding finance liability regardless of the Company's intention to repurchase the loan. The asset and corresponding liability are recorded at the unpaid principal balance of the loan, which approximates its fair value. Accounting Standards Issued but Not Yet Adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope to clarify that Topic 848 is applicable to many derivative instruments and hedging relationships. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received if an asset were sold or the price that would be paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. Required disclosures include classification of fair value measurements within a three-level hierarchy (Level 1, Level 2, and Level 3). Classification of a fair value measurement within the hierarchy is dependent on the classification and significance of the inputs used to determine the fair value measurement. Observable inputs are those that are observed, implied from, or corroborated with externally available market information. Unobservable inputs represent the Company’s estimates of market participants’ assumptions. Fair value measurements are classified in the following manner: Level 1 —Valuation is based on quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 —Valuation is based on either observable prices for identical assets or liabilities in inactive markets, observable prices for similar assets or liabilities, or other inputs that are derived directly from, or through correlation to, observable market data at the measurement date. Level 3 —Valuation is based on the Company’s internal models using assumptions at the measurement date that a market participant would use. In determining fair value measurement, the Company uses observable inputs whenever possible. The level of a fair value measurement within the hierarchy is dependent on the lowest level of input that has a significant impact on the measurement as a whole. If quoted market prices are available at the measurement date or are available for similar instruments, such prices are used in the measurements. If observable market data is not available at the measurement date, judgment is required to measure fair value. The following is a description of measurement techniques for items recorded at fair value on a recurring basis. There were no material items recorded at fair value on a nonrecurring basis as of March 31, 2021 or December 31, 2020. Mortgage loans held for sale: Loans held for sale that trade in active secondary markets are valued using Level 2 measurements derived from observable market data, including market prices of securities backed by similar mortgage loans adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk. Loans held for sale for which there is little to no observable trading activity of similar instruments are valued using Level 3 measurements based upon dealer price quotes. IRLCs: The fair value of IRLCs is based on current market prices of securities backed by similar mortgage loans (as determined above under mortgage loans held for sale), net of costs to close the loans, subject to the estimated loan funding probability, or “pull-through factor”. Given the significant and unobservable nature of the pull-through factor, IRLCs are classified as Level 3. MSRs: The fair value of MSRs (including MSRs collateral for financing liability and MSRs financing liability) is determined using a valuation model that calculates the present value of estimated net future cash flows. The model includes estimates of prepayment speeds, discount rate, cost to service, float earnings, contractual servicing fee income, and ancillary income among others. These fair value measurements are classified as Level 3. Forward commitments: The Company’s forward commitments are valued based on quoted prices for similar assets in an active market with inputs that are observable and are classified within Level 2 of the valuation hierarchy. Assets and Liabilities Measured at Fair Value on a Recurring Basis The table below shows a summary of financial statement items that are measured at estimated fair value on a recurring basis, including assets measured under the fair value option. There were no material transfers of assets or liabilities recorded at fair value on a recurring basis between Levels 1, 2 or 3 during the three months ended March 31, 2021 or the year ended December 31, 2020. Level 1 Level 2 Level 3 Total Balance at March 31, 2021 Assets: Mortgage loans held for sale $ — $ 17,834,610 $ 990,834 $ 18,825,444 IRLCs — — 765,215 765,215 MSRs — — 4,304,762 4,304,762 MSRs collateral for financing liability (1) — — 233,687 233,687 Forward commitments — 909,153 — 909,153 Total assets $ — $ 18,743,763 $ 6,294,498 $ 25,038,261 Liabilities: Forward commitments $ — $ 54,412 $ — $ 54,412 MSRs financing liability (1) — — 223,756 223,756 Total liabilities $ — $ 54,412 $ 223,756 $ 278,168 Balance at December 31, 2020 Assets: Mortgage loans held for sale $ — $ 22,285,440 $ 579,666 $ 22,865,106 IRLCs — — 1,897,194 1,897,194 MSRs — — 2,862,685 2,862,685 MSRs collateral for financing liability (1) — — 205,033 205,033 Forward commitments — 20,584 — 20,584 Total assets $ — $ 22,306,024 $ 5,544,578 $ 27,850,602 Liabilities: Forward commitments $ — $ 506,071 $ — $ 506,071 MSRs financing liability (1) — — 187,794 187,794 Total liabilities $ — $ 506,071 $ 187,794 $ 693,865 (1) Refer to Note 3, Mortgage Servicing Rights for further information regarding both the MSRs collateral for financing liability and MSRs financing liability. The following tables present the quantitative information about recurring Level 3 fair value financial instruments and the fair value measurements as of: March 31, 2021 December 31, 2020 Unobservable Input Range Weighted Average Range Weighted Average Mortgage loans held for sale Dealer pricing 87% - 103% 100 % 89% - 105% 99 % IRLCs Loan funding probability 0% - 100% 77 % 0% - 100% 74 % MSRs, MSRs collateral for financing liability, and MSRs financing liability Discount rate 9.5% - 12.0% 9.9 % 9.5% - 12.0% 9.9 % Conditional prepayment rate 6.9% - 57.5% 10.9 % 6.6% - 52.1% 15.8 % The table below presents a reconciliation of Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2021 and 2020. Mortgage servicing rights (including MSRs collateral for financing liability and MSRs financing liability) are also classified as a Level 3 asset measured at fair value on a recurring basis and its reconciliation is found in Note 3, Mortgage Servicing Rights. Loans Held for Sale IRLCs Balance at December 31, 2020 $ 579,666 $ 1,897,194 Transfers in (1) 718,158 — Transfers out/principal reductions (1) (307,462) — Net transfers and revaluation losses — (1,131,979) Total gains included in net income 472 — Balance at March 31, 2021 $ 990,834 $ 765,215 Balance at December 31, 2019 $ 308,793 $ 508,135 Transfers in (1) 540,859 — Transfers out/principal reductions (1) (425,369) — Net transfers and revaluation gains — 706,730 Total losses included in net income (6,193) — Balance at March 31, 2020 $ 418,090 $ 1,214,865 (1) Transfers in represent loans repurchased from investors or loans originated for which an active market currently does not exist. Transfers out primarily represent loans sold to third parties and loans paid in full. Fair Value Option The following is the estimated fair value and unpaid principal balance (“UPB”) of mortgage loans held for sale that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected for mortgage loans held for sale as the Company believes fair value best reflects their expected future economic performance: Fair Value Principal Amount Due Upon Maturity Difference (1) Balance at March 31, 2021 $ 18,825,444 $ 18,534,892 $ 290,552 Balance at December 31, 2020 $ 22,865,106 $ 21,834,817 $ 1,030,289 (1) Represents the amount of gains included in Gain on sale of loans, net due to changes in fair value of items accounted for using the fair value option. Disclosures of the fair value of certain financial instruments are required when it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. The following table presents the carrying amounts and estimated fair value of financial liabilities that are not recorded at fair value on a recurring or nonrecurring basis. This table excludes cash and cash equivalents, restricted cash, warehouse borrowings, and line of credit borrowing facilities as these financial instruments are highly liquid or short-term in nature and as a result, their carrying amounts approximate fair value: March 31, 2021 December 31, 2020 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Senior Notes, due 1/15/2028 $ 995,528 $ 1,064,793 $ 994,986 $ 1,079,629 Senior Notes, due 3/1/2029 $ 742,197 $ 725,648 $ 741,946 $ 766,365 Senior Notes, due 3/1/2031 $ 1,236,452 $ 1,204,888 $ 1,236,114 $ 1,298,175 The fair value of Senior Notes was calculated using the observable bond price at March 31, 2021 and December 31, 2020, respectively. The Senior Notes are classified as Level 2 in the fair value hierarchy. |
Mortgage Servicing Rights
Mortgage Servicing Rights | 3 Months Ended |
Mar. 31, 2021 | |
Transfers and Servicing [Abstract] | |
Mortgage Servicing Rights | Mortgage Servicing Rights Mortgage servicing rights are recognized as assets on the Condensed Consolidated Balance Sheets when loans are sold, and the associated servicing rights are retained. The Company maintains one class of MSRs asset and has elected the fair value option. These MSRs are recorded at fair value, which is determined using a valuation model that calculates the present value of estimated future net servicing fee income. The model includes estimates of prepayment speeds, discount rate, cost to service, float earnings, contractual servicing fee income, and ancillary income and late fees, among others. These estimates are supported by market and economic data collected from various outside sources. The following table summarizes changes to the MSRs assets for the three months ended: Three Months Ended March 31, 2021 2020 Fair value, beginning of period $ 2,862,685 $ 2,874,972 MSRs originated 1,173,164 535,419 MSRs sales (15,865) (186,292) Changes in fair value: Due to changes in valuation model inputs or assumptions (1) 583,307 (805,536) Due to collection/realization of cash flows (298,529) (247,925) Total changes in fair value 284,778 (1,053,461) Fair value, end of period $ 4,304,762 $ 2,170,638 (1) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates. Does not include the change in fair value of derivatives that economically hedge MSRs identified for sale. The total UPB of mortgage loans serviced, excluding subserviced loans, at March 31, 2021 and December 31, 2020 was $431,497,603 and $371,494,905, respectively. The portfolio primarily consists of high-quality performing agency and government (FHA and VA) loans. As of March 31, 2021, delinquent loans (defined as 60-plus days past-due) were 3.21% of our total portfolio. Excluding clients in forbearance plans, our delinquent loans (defined as 60-plus days past-due) were 0.72% as of March 31, 2021. During the first quarter of 2021 and fourth quarter of 2020, the Company sold MSRs with a fair value of $4,885 and $193,739, respectively, relating to certain single-family mortgage loans. Based on the contract terms, the sale of those MSRs did not immediately qualify for sale accounting treatment under U.S. GAAP. As a result, the Company was required to retain the MSRs asset (i.e., MSRs collateral for financing liability, at fair value) and the MSRs liability (i.e., MSRs financing liability, at fair value) on the balance sheet until certain contractual provisions lapse after June for the fourth quarter of 2020 sales and July 2021 for the first quarter of 2021 sales. These MSRs were reported on the balance sheet at fair value using a valuation methodology consistent with the Company’s method for valuing MSRs until those contractual provisions lapse. Furthermore, the net change in fair market value (“FMV”) of the MSRs asset and liability from these sales are captured within Loan servicing income (loss), net in the Condensed Consolidated Statements of Income and Comprehensive Income. The unrealized gain of $31,077 relating to the MSRs liability and the offsetting unrealized loss of $31,077 relating to the MSRs asset were recorded in current operations for the three months ended March 31, 2021. Additionally, the terms of the agreement require quarterly adjustments to the sales price for changes in prepayment rates at the time of sale for a period of six months. Furthermore, in the three months ended March 31, 2021, the Company also sold MSRs with a fair value of $10,982 relating to certain mortgage loans, which qualified for sale accounting treatment under U.S. GAAP. During the third quarter of 2019, the Company sold MSRs with a fair value of $340,303 relating to certain single-family mortgage loans. Based on the contract terms, the sale of those MSRs did not immediately qualify for sale accounting treatment under U.S. GAAP. As a result, the Company was required to retain the MSRs asset and the MSRs liability on the balance sheet until certain contractual provisions lapsed after June 2020. These MSRs were reported on the balance sheet at fair value using a valuation methodology consistent with the Company’s method for valuing MSRs until those contractual provisions lapsed. Furthermore, change in FMV of the MSRs asset and liability from this sale is captured within Loan servicing income (loss), net in the Condensed Consolidated Statements of Income and Comprehensive Income. The unrealized gain of $116,150 relating to the MSRs liability and the offsetting unrealized loss of $116,150 relating to the MSRs asset were recorded in current operations for the three months ended March 31, 2020. Furthermore, in the three months ended March 31, 2020, the Company sold MSRs with a fair value of $186,292 relating to certain mortgage loans, all of which qualified for sale accounting treatment under U.S. GAAP. The following is a summary of the weighted average discount rate and prepayment speed assumptions used to determine the fair value of MSRs as well as the expected life of the loans in the servicing portfolio: March 31, 2021 December 31, 2020 Discount rate 9.9 % 9.9 % Prepayment speeds 10.9 % 15.8 % Life (in years) 6.54 5.05 The key assumptions used to estimate the fair value of MSRs are prepayment speeds and the discount rate. Increases in prepayment speeds generally have an adverse effect on the value of MSRs as the underlying loans prepay faster. In a declining interest rate environment, the fair value of MSRs generally decreases as prepayments increase and therefore, the estimated life of the MSRs and related cash flows decrease. Decreases in prepayment speeds generally have a positive effect on the value of MSRs as the underlying loans prepay less frequently. In a rising interest rate environment, the fair value of MSRs generally increases as prepayments decrease and therefore, the estimated life of the MSRs and related cash flows increase. Increases in the discount rate result in a lower MSRs value and decreases in the discount rate result in a higher MSRs value. MSRs uncertainties are hypothetical and do not always have a direct correlation with each assumption. Changes in one assumption may result in changes to another assumption, which might magnify or counteract the uncertainties. The following table stresses the discount rate and prepayment speeds at two different data points: Discount Rate Prepayment Speeds 100 BPS Adverse Change 200 BPS Adverse Change 10% Adverse Change 20% Adverse Change March 31, 2021 Mortgage servicing rights $ (181,137) $ (337,856) $ (166,962) $ (315,934) December 31, 2020 Mortgage servicing rights $ (115,130) $ (212,119) $ (147,420) $ (279,691) |
Mortgage Loans Held for Sale
Mortgage Loans Held for Sale | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Mortgage Loans Held for Sale | Mortgage Loans Held for Sale The Company sells substantially all of its originated mortgage loans into the secondary market. The Company may retain the right to service some of these loans upon sale through ownership of servicing rights. A reconciliation of the changes in mortgage loans held for sale to the amounts presented on the Condensed Consolidated Statements of Cash Flows is below: Three Months Ended March 31, 2021 2020 Balance at the beginning of period $ 22,865,106 $ 13,275,735 Disbursements of mortgage loans held for sale 104,103,499 50,418,371 Proceeds from sales of mortgage loans held for sale (1) (110,276,266) (52,257,635) Gain on sale of mortgage loans excluding fair value of other financial instruments, net (2) 2,133,105 1,406,913 Balance at the end of period $ 18,825,444 $ 12,843,384 (1) The proceeds from sales of loans held for sale on the Condensed Consolidated Statements of Cash Flows includes amounts related to the sale of consumer loans. (2) The Gain on sale of loans excluding fair value of MSRs, net on the Condensed Consolidated Statements of Cash Flows includes amounts related to the sale of consumer loans, interest rate lock commitments, forward commitments, and provisions for investor reserves. Credit Risk The Company is subject to credit risk associated with mortgage loans that it purchases and originates during the period of time prior to the sale of these loans. The Company considers credit risk and losses associated with these loans to be insignificant as it holds the loans for a short period of time, which for the three months ended March 31, 2021 is, on average, approximately 18 days from the date of borrowing, and the market for these loans continues to be highly liquid. The Company is also subject to credit risk associated with mortgage loans it has repurchased as a result of breaches of representations and warranties during the period of time between repurchase and resale. |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The Company maintains various funding facilities and other non-funding debt as shown in the tables below. Interest rates typically have two main components – a base rate (most commonly LIBOR or SOFR, some have a floor) plus a spread. The commitment fee charged by lenders for each of the facilities is an annual fee and is calculated based on the committed line amount multiplied by a negotiated rate. The fee rate ranges from 0% to 0.50% among the facilities except for the Senior Notes, which have no commitment fee. The Company is required to maintain certain covenants, including minimum tangible net worth, minimum liquidity, maximum total debt or liabilities to net worth ratio, pretax net income requirements, and other customary debt covenants, as defined in the agreements. The Company was in compliance with all covenants as of March 31, 2021. The amount owed and outstanding on the Company’s loan funding facilities fluctuates greatly based on its origination volume, the amount of time it takes the Company to sell the loans it originates, and the Company’s ability to use the cash to self-fund loans. In addition to self-funding, the Company may from time to time use surplus cash to “buy-down” the effective interest rate of certain loan funding facilities or to self-fund a portion of our loan originations. As of March 31, 2021, $3,146,623 of the Company’s cash was used to buy-down our funding facilities and self-fund, $475,000 of which are buy-down funds that are included in Cash and cash equivalents on the Condensed Consolidated Balance Sheets and an estimated $2,671,623 of which is discretionary self-funding that reduces Cash and cash equivalents on the Condensed Consolidated Balance Sheets. The Company has the right to withdraw the $475,000 at any time, unless a margin call has been made or a default has occurred under the relevant facilities. The Company has an estimated $2,671,623 of discretionary self-funded loans, of which a portion can be transferred to a warehouse line or the early buy out line, provided that such loans meet the eligibility criteria to be placed on such lines. The remaining portion will be funded in normal course over a short period of time, generally less than one month. A large unanticipated margin call could also have a material adverse effect on the Company’s liquidity. Furthermore, refer to Note 3, Mortgage Servicing Rights for additional information regarding the MSRs financing liability with the MSRs sold during the fourth quarter of 2020. The terms of the Senior Notes restrict our ability and the ability of our subsidiary guarantors among other things to: (1) incur additional debt or issue preferred stock; (2) pay dividends or make distributions in respect of capital stock; (3) purchase or redeem capital stock; (4) make investments or other restricted payments; (5) sell assets; (6) enter into transactions with affiliates; (7) effect a consolidation or merger, taken as a whole; (8) designate our subsidiaries as unrestricted subsidiaries, unless certain conditions are met, as defined in the agreements; (9) merge, consolidate or sell, transfer or lease assets, and; (10) create liens on assets. Items (1) through (9) apply to the 2028 Senior Notes. Items (9) and (10) apply to the 2029 and 2031 Senior Notes, which have investment grade covenants. Funding Facilities Facility Type Collateral Maturity Line Amount Committed Line Amount Outstanding Balance March 31, 2021 Outstanding Balance December 31, 2020 MRA funding: 1) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 10/22/2021 $ 2,000,000 $ 100,000 $ 998,397 $ 999,752 2) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 12/2/2021 1,500,000 500,000 1,128,746 1,320,484 3) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 4/22/2022 2,750,000 1,000,000 904,931 2,407,156 4) Master Repurchase Agreement (1)(7) Mortgage loans held for sale (6) 1/26/2022 2,000,000 1,700,000 1,672,731 1,953,949 5) Master Repurchase Agreement (2)(7) Mortgage loans held for sale (6) 4/22/2021 3,000,000 500,000 2,466,830 2,004,707 6) Master Repurchase Agreement (3)(7) Mortgage loans held for sale (6) 9/5/2022 2,000,000 1,000,000 449,622 1,780,902 7) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 9/16/2021 1,750,000 1,137,500 1,108,254 1,343,130 8) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 6/12/2021 400,000 — 150,166 219,786 9) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 9/24/2021 1,500,000 750,000 790,446 983,126 10) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 10/9/2021 500,000 — 155,601 480,544 11) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 12/17/2021 1,000,000 500,000 438,412 765,432 18,400,000 7,187,500 10,264,136 14,258,968 Early Funding: 12) Early Funding Facility (4)(7) Mortgage loans held for sale (6) (4) 4,000,000 — 3,032,857 2,514,193 13) Early Funding Facility (5)(7) Mortgage loans held for sale (6) (5) 3,000,000 — 1,155,679 969,412 7,000,000 — 4,188,536 3,483,605 Total $ 25,400,000 $ 7,187,500 $ 14,452,672 $ 17,742,573 (1) This facility has a 12-month initial term, which can be extended for 3-months at each subsequent 3-month anniversary from the initial start date. Subsequent to March 31, 2021, this facility was amended to decrease the total facility size to $1,600,000 with $1,500,000 committed and was extended to April 26, 2022. (2) Subsequent to March 31, 2021, this facility was renewed which extended the expiration date to April 20, 2023. (3) Subsequent to March 31, 2021, this facility decreased its commitment amount to $500,000. (4) This facility is an evergreen agreement with no stated termination or expiration date. This agreement can be terminated by either party upon written notice. (5) This facility will have an overall line size of $3,000,000, which will be reviewed every 90 days. This facility is an evergreen agreement with no stated termination or expiration date. This agreement can be terminated by either party upon written notice. (6) The Company has multiple borrowing facilities in the form of asset sales under agreements to repurchase. These borrowing facilities are secured by mortgage loans held for sale at fair value as the first priority security interest. (7) The interest rates charged by lenders of the funding facilities ranged from 1.00% to 2.25%, plus the applicable base rate, for the three months ending March 31, 2021 and from 0.40% to 2.30%, plus the applicable base rate for the year ending December 31, 2020. Other Financing Facilities Facility Type Collateral Maturity Line Amount Committed Line Amount Outstanding Balance March 31, 2021 Outstanding Balance December 31, 2020 Line of Credit Financing Facilities 1) Unsecured line of credit (1) — 7/27/2025 $ 2,000,000 $ — $ — $ — 2) Unsecured line of credit (1) — 7/31/2025 100,000 — — — 3) Revolving credit facility (3) — 8/10/2023 1,000,000 1,000,000 300,000 300,000 4) MSRs line of credit (3) MSRs 10/22/2021 200,000 — — — 5) MSRs line of credit (2)(3) MSRs (2) 200,000 200,000 75,000 75,000 $ 3,500,000 $ 1,200,000 $ 375,000 $ 375,000 Early Buy out Financing Facility 6) Early buy out facility (3)(4) Loans/ Advances 3/13/2023 $ 2,600,000 $ — $ 635,712 $ 330,266 (1) Refer to Note 6, Transactions with Related Parties for additional details regarding this unsecured line of credit (2) This MSRs facility can be drawn upon for corporate purposes and is collateralized by GSE MSRs within our servicing portfolio. This facility has a 5-year total commitment comprised of a 3-year revolving period that expires on April 30, 2022 followed by a 2-year amortization period that expires on April 30, 2024. (3) The interest rates charged by lenders of the other funding facilities ranged from 1.25% to 4.00%, plus the applicable base rate, for the three months ending March 31, 2021 and for the year ending December 31, 2020. (4) Subsequent to March 31, 2021, utilization of the early buy out facility has increased to approximately $2,000,000 due to greater eligible collateral. Unsecured Senior Notes Facility Type Maturity Interest Rate Outstanding Balance March 31, 2021 Outstanding Balance December 31, 2020 Unsecured Senior Notes (1) 1/15/2028 5.250 % 1,010,000 1,010,000 Unsecured Senior Notes (2) 3/1/2029 3.625 % 750,000 750,000 Unsecured Senior Notes (3) 3/1/2031 3.875 % 1,250,000 1,250,000 Total Senior Notes $ 3,010,000 $ 3,010,000 Weighted Average Interest Rate 4.27 % 4.27 % (1) The 2028 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing. Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $1,010,000 carrying amount on the Condensed Consolidated Balance Sheets by $7,901 and $6,572 as of March 31, 2021, respectively and $8,197 and $6,817 as of December 31, 2020, respectively. (2) The 2029 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing. Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $750,000 carrying amount on the Condensed Consolidated Balance Sheets by $7,803 and $8,053 as of March 31, 2021 and December 31, 2020, respectively. (3) The 2031 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing. Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $1,250,000 carrying amount on the Condensed Consolidated Balance Sheets by $13,548 and $13,887 as of March 31, 2021 and December 31, 2020, respectively. Refer to Note 2, Fair Value Measurements for information pertaining to the fair value of the Company’s debt as of March 31, 2021 and December 31, 2020. |
Transactions with Related Parti
Transactions with Related Parties | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties The Company has entered into various transactions and agreements with RHI, its subsidiaries, certain other affiliates and related parties (collectively, “Related Parties”). These transactions include providing financing and services as well as obtaining financing and services from these Related Parties. Financing Arrangements On June 9, 2017, Rocket Mortgage and RHI entered into a $300,000 uncommitted and unsecured line of credit (“RHI Line of Credit”). On December 24, 2019 the Company amended the RHI Line of Credit and increased the borrowing capacity to $1,000,000, due on November 1, 2024. On July 24, 2020, the Company amended the RHI Line of Credit and increased the borrowing capacity to $2,000,000, due on July 27, 2025. Borrowings under the line of credit bear interest at a rate per annum of one month LIBOR plus 1.25%. The line of credit is uncommitted and RHI has sole discretion over advances. The RHI Line of Credit also contains negative covenants which restrict the ability of the Company to incur debt and create liens on certain assets. It also requires Rocket Mortgage to maintain a quarterly consolidated net income before taxes if adjusted tangible net worth meets certain requirements. As of March 31, 2021 and December 31, 2020, there were no outstanding amounts due to RHI pursuant to the RHI Line of Credit. RHI and ATI are parties to a surplus debenture, effective as of December 28, 2015, and as further amended and restated on December 31, 2019 (the “RHI/ATI Debenture”), pursuant to which ATI is indebted to RHI for an aggregate principal amount of $21,500. The RHI/ATI Debenture matures on December 31, 2030. Interest under the RHI/ATI Debenture accrues at an annual rate of 8%. Principal and interest under the RHI/ATI Debenture are due and payable quarterly, in each case subject to ATI achieving a certain amount of surplus and payments of all interest before principal payments begin. Any unpaid amounts of principal and interest shall be due and payable upon the maturity of the RHI/ATI Debenture. On July 31, 2020, Holdings and RHI entered into an agreement for an uncommitted, unsecured revolving line of credit ("RHI 2nd Line of Credit’’), which will provide for financing from RHI to the Company of up to $100,000. The line of credit will mature on July 31, 2025. Borrowings under the line of credit will bear interest at a rate per annum of one month LIBOR plus 1.25%. The negative covenants of the line of credit restrict the ability of the Company to incur debt and create liens on certain assets. The line of credit also contains customary events of default. As of March 31, 2021 and December 31, 2020 there were no amounts outstanding pursuant to the RHI 2nd line of credit. The amounts receivable from and payable to Related Parties consisted of the following as of: March 31, 2021 December 31, 2020 Principal Interest Rate Principal Interest Rate Included in Notes receivable and due from affiliates on the Condensed Consolidated Balance Sheets Affiliated receivables and other notes $ 11,901 — % $ 22,172 — % Included in Notes payable and due to affiliates on the Condensed Consolidated Balance Sheets RHI/ATI Debenture $ 21,500 8.00 % $ 21,500 8.00 % Affiliated payables 52,269 — % 52,396 — % Notes payable and due to affiliates $ 73,769 $ 73,896 Services, Products and Other Transactions We have entered into transactions and agreements to provide certain services to RHI, its subsidiaries and certain other affiliates of our majority shareholder. We recognized revenue of $3,729 and $3,100 for the three months ended March 31, 2021 and 2020 respectively, for the performance of these services, which was included in Other income. Related Party receivables were $11,901 and $22,172 as of March 31, 2021 and December 31, 2020, respectively. We have also entered into transactions and agreements to purchase certain services, products and other transactions from certain subsidiaries of RHI and affiliates of our majority shareholder. We incurred expenses of $16,257 and $10,872 for the three months ended March 31, 2021 and 2020 respectively, for these products, services and other transactions, which are included in General and administrative expenses. We also incurred expenses of $5,672 and $5,011 for the three months ended March 31, 2021 and 2020, respectively, for parking spaces we rent from related parties, or an agent of the related party, which are included in General and administrative expenses. Related party payables, which is recorded in Notes payable and due to affiliates, were $52,269 and $52,396 as of March 31, 2021 and December 31, 2020, respectively. The Company has also entered into a Tax Receivable Agreement with RHI and Dan Gilbert, our founder and Chairman (our "Chairman") as described further in Note 8, Income Taxes. Cleveland Cavaliers Naming Rights Contract The Company incurred marketing and advertising costs related to the naming rights for Rocket Mortgage Field House and other promotional sponsorships, which are related parties. For the three months ended March 31, 2021 and 2020, the Company incurred expenses of $2,335 and $2,323, respectively, related to these arrangements. Lease Transactions with Related Parties The Company is a party to lease agreements for certain offices, including our headquarters in Detroit, with various affiliates of Bedrock Management Services LLC (“Bedrock”), a related party, and other related parties of the Company. For the three months ended March 31, 2021 and 2020 we incurred expenses totaling $17,629 and $16,397, respectively, for these properties. |
Other Assets
Other Assets | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Other assets consist of the following: March 31, 2021 December 31, 2020 Mortgage production related receivables $ 303,246 $ 307,282 Disbursement funds advances 128,468 80,877 Prepaid expenses 86,614 98,529 Goodwill and other intangible assets 46,498 47,230 Non-production-related receivables 38,259 76,595 Ginnie Mae buyouts 32,124 40,681 Other real estate owned 1,184 1,131 Margin call receivable from counterparty — 247,604 Other 66,984 41,548 Total Other assets $ 703,377 $ 941,477 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company has income tax expense of $65,832 on income before income taxes and non-controlling interest of $2,843,170 for the three months ended March 31, 2021. The Company has income tax expense of $1,232 on income before income taxes and non-controlling interest of $100,279 for the three months ended March 31, 2020. The Company’s income tax expense varies from the expense that would be expected based on statutory rates due principally to its organizational structure. Prior to the IPO in 2020, the Company was owned by RHI which has elected S corporation status. When owned by RHI, Quicken Loans, Amrock and several other wholly owned corporations had elected to be treated as qualified subchapter S subsidiaries. The shareholders of RHI, as shareholders of an S corporation, are responsible for the federal income tax liabilities. A provision for state income taxes is required for certain jurisdictions that tax S corporations and their qualified Subchapter S subsidiaries and for states where the Company is taxed as a C Corporation. During 2020, in a series of transactions occurring along with the IPO, subsidiaries of the Company were contributed to Holdings by RHI. Several of these subsidiaries, such as Quicken Loans, Amrock and other subsidiaries, are no longer qualified Subchapter S corporations and are single member LLC entities owned by Holdings. As single member LLCs of Holdings, all taxable income or loss generated by these subsidiaries will pass through and be included in the income or loss of Holdings. Other contributed subsidiaries of Holdings, such as Amrock Title Insurance Co., LMB Mortgage Services and others, are treated as C Corporations and will separately file and pay taxes apart from Holdings in various jurisdictions including U.S. federal, state, local and Canada. As part of the IPO, Rocket Companies acquired a portion of the units of Holdings, which is treated as a partnership for U.S. federal tax purposes and in most applicable jurisdictions for state and local income tax purposes. The remaining portion of Holdings is owned by RHI and our Chairman ("LLC Members"). As a partnership, Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Holdings after Rocket Companies acquisition of its portion of Holdings is passed through and included in the taxable income or loss of its members, including Rocket Companies, in accordance with the terms of the operating agreement of Holdings (the "Holdings Operating Agreement"). Rocket Companies is a C Corporation and is subject to U.S. federal, state, and local income taxes with respect to its allocable share of any taxable income of Holdings. Tax Receivable Agreement The Company expects to obtain an increase in its share of the tax basis in the net assets of Holdings when Holdings Units are redeemed from or exchanged by the LLC Members. The Company intends to treat any redemptions and exchanges of Holdings Units as direct purchases of Holdings Units for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that the Company would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. In connection with the IPO, the Company entered into the Tax Receivable Agreement with the LLC Members. The Tax Receivable Agreement provides for the payment by Rocket Companies of 90% of the amount of any cash tax benefits that Rocket Companies actually realizes, or in some cases is deemed to realize, as a result of (i) certain increases in Rocket Companies allocable share of the tax basis in Holdings’ assets resulting from (a) the purchases of Holdings Units (along with the corresponding shares of our Class D common stock or Class C common stock) from the LLC Members (or their transferees of Holdings Units or other assignees) using the net proceeds from our initial public offering or in any future offering, (b) exchanges by the LLC Members (or their transferees of Holdings Units or other assignees) of Holdings Units (along with the corresponding shares of our Class D common stock or Class C common stock) for cash or shares of our Class B common stock or Class A common stock, as applicable, or (c) payments under the Tax Receivable Agreement; (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the Tax Receivable Agreement and (iii) disproportionate allocations (if any) of tax benefits to Holdings as a result of section 704(c) of the Code that relate to the reorganization transactions. The Company expects to benefit from the remaining 10% of any cash savings, if any, that it realizes. Effective on March 31, 2021, the Company and RHI exchanged 20,200,000 shares of Class A common stock for the equivalent number of Paired Interests (in this instance, Holdings Units together with a corresponding number of shares of Class D common stock) which resulted in an increase in the tax basis of assets of Holdings and would be subject to the provisions of the Tax Receivable Agreement. The Company recorded an increase in its deferred tax asset on investment in partnership of $123,587, an increase in the valuation allowance of $3,146, and an increase in the Tax receivable agreement liability of $119,456 with the net offsetting amount of $985 recorded to Additional Paid-in Capital in the Increase in controlling interest of investment, net of income taxes and Tax receivable agreement liability in the Condensed Consolidated Statements of Changes in Equity. During the year ended December 31, 2020, the Company acquired an aggregate of 115,000,000 Holdings Units valued at $2,070,000 in connection with the exchange of those Holdings Units by the LLC Members, which resulted in an increase in the tax basis of the assets of Holdings and would be subject to the provisions of the Tax Receivable Agreement. The amounts payable under the Tax Receivable Agreement will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of Rocket Companies in the future. Any such changes in these factors or changes in the Company’s determination of the need for a valuation allowance related to the tax benefits acquired under the Tax Receivable Agreement could adjust the Tax receivable agreement liability recognized and recorded within earnings in future periods. Tax Distributions The holders of Holdings’ Units, including Rocket Companies Inc., incur U.S. federal, state and local income taxes on their share of any taxable income of Holdings. The Holdings Operating Agreement provides for pro rata cash distributions (“tax distributions”) to the holders of the Holdings Units in an amount generally calculated to provide each holder of Holdings Units with sufficient cash to cover its tax liability in respect of the Holdings Units. In general, these tax distributions are computed based on Holdings’ estimated taxable income, multiplied by an assumed tax rate as set forth in the Holdings Operating Agreement. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial InstrumentsThe Company enters into interest rate lock commitments ("IRLCs"), forward commitments to sell mortgage loans and forward commitments to purchase loans, which are considered derivative financial instruments. These items are accounted for as free-standing derivatives and are included in the Condensed Consolidated Balance Sheets at fair value. The Company treats all of its derivative instruments as economic hedges; therefore, none of its derivative instruments qualify for designation as accounting hedges. Changes in the fair value of the IRLCs and forward commitments to sell mortgage loans are recorded in current period earnings and are included in gain on sale of loans, net in the Condensed Consolidated Statements of Income and Comprehensive Income. Forward commitments to purchase mortgage loans are recognized in current period earnings and are included in gain on sale of loans, net in the Condensed Consolidated Statements of Income and Comprehensive Income. The Company enters into IRLCs to fund residential mortgage loans with its potential borrowers. These commitments are binding agreements to lend funds to these potential borrowers at specified interest rates within specified periods of time. The fair value of IRLCs is derived from the fair value of similar mortgage loans or bonds, which is based on observable market data. Changes to the fair value of IRLCs are recognized based on changes in interest rates, changes in the probability that the commitment will be exercised, and the passage of time. The expected net future cash flows related to the associated servicing of the loan are included in the fair value measurement of rate locks. IRLCs and uncommitted mortgage loans held for sale expose the Company to the risk that the value of the mortgage loans held and mortgage loans underlying the commitments may decline due to increases in mortgage interest rates during the life of the commitments. To protect against this risk, the Company uses forward loan sale commitments to economically hedge the risk of potential changes in the value of the loans. These derivative instruments are recorded at fair value. The Company expects that the changes in fair value of these derivative financial instruments will either fully or partially offset the changes in fair value of the IRLCs and uncommitted mortgage loans held for sale. The changes in the fair value of these derivatives are recorded in gain on sale of loans, net. MSRs assets (including the MSRs value associated with outstanding IRLCs) that the Company plans to sell expose the Company to the risk that the value of the MSRs asset may decline due to decreases in mortgage interest rates prior to the sale of these assets. To protect against this risk, the Company uses forward loan purchase commitments to economically hedge the risk of potential changes in the value of MSRs assets that have been identified for sale. These derivative instruments are recorded at fair value. The Company expects that the changes in fair value of these derivative financial instruments will either fully or partially offset the changes in fair value of the MSRs assets the Company intends to sell. The changes in fair value of these derivatives are recorded in the change in fair value of MSRs, net. Forward commitments include To-Be-Announced ("TBA") mortgage-backed securities that have been aggregated at the counterparty level for presentation and disclosure purposes. Counterparty agreements contain a legal right to offset amounts due to and from the same counterparty under legally enforceable master netting agreements to settle with the same counterparty, on a net basis, as well as the right to obtain cash collateral. Forward commitments also include commitments to sell loans to counterparties and to purchase loans from counterparties at determined prices. The Company uses forward commitments in hedging the interest rate risk exposure on its fixed and adjustable rate commitments. Utilization of forward commitments involves some degree of basis risk. Basis risk is defined as the risk that the hedged instrument’s price does not move in parallel with the increase or decrease in the market price of the hedged financial instrument. The Company calculates an expected hedge ratio to mitigate a portion of this risk. The Company’s derivative instruments are not designated as accounting hedging instruments, and therefore, changes in fair value are recorded in current period earnings. Hedging gains and losses are included in Gain on sale of loans, net in the Condensed Consolidated Statements of Income and Comprehensive Income. Net hedging gains and losses were as follows: Three Months Ended March 31, 2021 2020 Hedging gains (losses) (1) $ 1,642,280 $ (996,984) (1) Includes the change in fair value related to derivatives economically hedging MSRs identified for sale. Refer to Note 2, Fair Value Measurements, for additional information on the fair value of derivative financial instruments. Notional and Fair Value The notional and fair values of derivative financial instruments not designated as hedging instruments were as follows: Notional Value Derivative Asset Derivative Liability Balance at March 31, 2021: IRLCs, net of loan funding probability (1) $ 31,909,968 $ 765,215 $ — Forward commitments (2) $ 42,203,886 $ 909,153 $ 54,412 Balance at December 31, 2020: IRLCs, net of loan funding probability (1) $ 40,560,544 $ 1,897,194 $ — Forward commitments (2) $ 59,041,900 $ 20,584 $ 506,071 (1) IRLCs are also discussed in Note 10, Commitments, Contingencies, and Guarantees. (2) Includes the fair value and net notional value related to derivatives economically hedging MSRs identified for sale. Counterparty agreements for forward commitments contain master netting agreements. The table below presents the gross amounts of recognized assets and liabilities subject to master netting agreements. The Company had zero and $247,604 of cash pledged to counterparties related to these forward commitments at March 31, 2021 and December 31, 2020, respectively, classified in Other assets in the Condensed Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, the Company had $659,339 and zero, respectively, of cash pledged from counterparties related to these forward commitments. Margins received by the Company are classified in Other liabilities in the Condensed Consolidated Balance Sheets. Gross Amount of Recognized Assets or Liabilities Gross Amounts Offset in the Condensed Consolidated Balance Sheets Net Amounts Presented in the Condensed Consolidated Balance Sheets Offsetting of Derivative Assets Balance at March 31, 2021: Forward commitments $ 1,359,887 $ (450,734) $ 909,153 Balance at December 31, 2020: Forward commitments $ 35,746 $ (15,162) $ 20,584 Offsetting of Derivative Liabilities Balance at March 31, 2021: Forward commitments $ (81,311) $ 26,899 $ (54,412) Balance at December 31, 2020: Forward commitments $ (715,671) $ 209,600 $ (506,071) Counterparty Credit Risk Credit risk is defined as the possibility that a loss may occur from the failure of another party to perform in accordance with the terms of the contract, which exceeds the value of existing collateral, if any. The Company attempts to limit its credit risk by dealing with creditworthy counterparties and obtaining collateral where appropriate. The Company is exposed to credit loss in the event of contractual nonperformance by its trading counterparties and counterparties to its various over-the-counter derivative financial instruments noted in the above Notional and Fair Value discussion. The Company manages this credit risk by selecting only counterparties that it believes to be financially strong, spreading the credit risk among many such counterparties, placing contractual limits on the amount of unsecured credit extended to any single counterparty, and entering into netting agreements with the counterparties as appropriate. |
Commitments, Contingencies, and
Commitments, Contingencies, and Guarantees | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies, and Guarantees | Commitments, Contingencies, and Guarantees Interest Rate Lock Commitments IRLCs are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each client’s creditworthiness on a case-by-case basis. The number of days from the date of the IRLC to expiration of fixed and variable rate lock commitments outstanding at March 31, 2021 and December 31, 2020 was approximately 43 days on average. The UPB of IRLCs was as follows: March 31, 2021 December 31, 2020 Fixed Rate Variable Rate Fixed Rate Variable Rate IRLCs $ 39,337,177 $ 2,306,869 $ 53,736,717 $ 1,065,936 Commitments to Sell Mortgage Loans In the ordinary course of business, the Company enters into contracts to sell existing mortgage loans held for sale into the secondary market at specified future dates. The amount of commitments to sell existing loans at March 31, 2021 and December 31, 2020 was $6,286,655 and $3,139,816, respectively. Commitments to Sell Loans with Servicing Released In the ordinary course of business, the Company enters into contracts to sell the MSRs of certain newly originated loans on a servicing released basis. In the event that a forward commitment is not filled and there has been an unfavorable market shift from the date of commitment to the date of settlement, the Company is contractually obligated to pay a pair-off fee on the undelivered balance. There were $819,380 and $280,502 of loans committed to be sold servicing released at March 31, 2021 and December 31, 2020, respectively. Investor Reserves The following presents the activity in the investor reserves: Three Months Ended March 31, 2021 2020 Balance at beginning of period $ 87,191 $ 54,387 Provision for investor reserves 5,347 1,577 Premium recapture and indemnification losses paid 1,399 (297) Balance at end of period $ 93,937 $ 55,667 The maximum exposure under the Company’s representations and warranties would be the outstanding principal balance and any premium received on all loans ever sold by the Company, less (i) loans that have already been paid in full by the mortgagee, (ii) loans that have defaulted without a breach of representations and warranties, (iii) loans that have been indemnified via settlement or make-whole, or (iv) loans that have been repurchased. Additionally, the Company may receive relief of certain representation and warranty obligations on loans sold to Fannie Mae or Freddie Mac on or after January 1, 2013 if Fannie Mae or Freddie Mac satisfactorily concludes a quality control loan file review or if the borrower meets certain acceptable payment history requirements within 12 or 36 months after the loan is sold to Fannie Mae or Freddie Mac. Property Taxes, Insurance, and Principal and Interest Payable As a service to its clients, the Company administers escrow deposits representing undisbursed amounts received for payment of property taxes, insurance and principal, and interest on mortgage loans held for sale. Cash held by the Company for property taxes and insurance was $4,097,902 and $3,551,400, and for principal and interest was $11,791,564 and $13,065,549 at March 31, 2021 and December 31, 2020, respectively. These amounts are not considered assets of the Company and, therefore, are excluded from the Condensed Consolidated Balance Sheets. The Company remains contingently liable for the disposition of these deposits. Guarantees As of March 31, 2021 and December 31, 2020, the Company guaranteed the debt of a related party totaling $15,000, consisting of three separate guarantees of $5,000 each. As of March 31, 2021 and December 31, 2020, the Company did not record a liability on the Condensed Consolidated Balance Sheets for these guarantees because it was not probable that the Company would be required to make payments under these guarantees. Trademark License The Company has a perpetual trademark license agreement with a third-party entity. This agreement requires annual payments by the Company based upon the income from the sale of loans generated under the Quicken Loans brand. Total licensing fees incurred and paid were $625 and $1,875 for the three months ended March 31, 2021 and 2020, respectively, which is classified in other expenses in the Condensed Consolidated Statements of Income and Comprehensive Income. The Company has entered into an agreement with Intuit that, among other things, gives the Company full ownership of the “Quicken Loans” brand in 2022 in exchange for certain agreements, subject to the satisfaction of certain conditions. We have fulfilled our payment obligations pertaining to the licensing agreement with Intuit in 2021 and no further expenses are expected. Tax Receivable Agreement As indicated in Note 8, Income Taxes, the Company is party to a Tax Receivable Agreement. Legal Rocket Companies, among other things, engages in mortgage lending, title and settlement services, and other financial technology services. Rocket Companies and its subsidiaries operate in highly regulated industries and are routinely subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of business, including inquiries, complaints, subpoenas, audits, examinations, investigations and potential enforcement actions from regulatory agencies and state attorney generals; state and federal lawsuits and putative class actions; and other litigation. Periodically, we assess our potential liabilities and contingencies in connection with outstanding legal and administrative proceedings utilizing the latest information available. While it is not possible to predict the outcome of any of these matters, based on our assessment of the facts and circumstances, we do not believe any of these matters, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows. However, actual outcomes may differ from those expected and could have a material effect on our financial position, results of operations, or cash flows in a future period. Rocket Companies accrues for losses when they are probable to occur and such losses are reasonably estimable. Legal costs are expensed as they are incurred. As of March 31, 2021 and December 31, 2020, we recorded reserves related to potential damages in connection with any legal proceedings of $15,000 and zero, respectively. The ultimate outcome of these or other actions or proceedings, including any monetary awards against us, is uncertain and there can be no assurance as to the amount of any such potential awards. Rocket Companies will incur defense costs and other expenses in connection with the lawsuits. Plus, if a judgment for money that exceeds specified thresholds is rendered against us and we fail to timely pay, discharge, bond or obtain a stay of execution of such judgment, it is possible that we could be deemed in default of loan funding facilities and other agreements governing indebtedness. If the final resolution of any such litigation is unfavorable in one or more of these actions, it could have a material adverse effect on our business, liquidity, financial condition, cash flows and results of operations. |
Minimum Net Worth Requirements
Minimum Net Worth Requirements | 3 Months Ended |
Mar. 31, 2021 | |
Mortgage Banking [Abstract] | |
Minimum Net Worth Requirements | Minimum Net Worth Requirements Certain secondary market investors and state regulators require the Company to maintain minimum net worth and capital requirements. To the extent that these requirements are not met, secondary market investors and/or the state regulators may utilize a range of remedies including sanctions, and/or suspension or termination of selling and servicing agreements, which may prohibit the Company from originating, securitizing or servicing these specific types of mortgage loans. Rocket Mortgage is subject to the following minimum net worth, minimum capital ratio and minimum liquidity requirements established by the Federal Housing Finance Agency (“FHFA”) for Fannie Mae and Freddie Mac Seller/Servicers, and Ginnie Mae for single family issuers. Furthermore, refer to Note 5, Borrowings for additional information regarding compliance with all covenant requirements. Minimum Net Worth The minimum net worth requirement for Fannie Mae and Freddie Mac is defined as follows: • Base of $2,500 plus 25 basis points of outstanding UPB for total loans serviced. • Adjusted/Tangible Net Worth is defined as total equity less goodwill, intangible assets, affiliate receivables and certain pledged assets. The minimum net worth requirement for Ginnie Mae is defined as follows: • Base of $2,500 plus 35 basis points of the Ginnie Mae total single-family effective outstanding obligations. • Adjusted/Tangible Net Worth is defined as total equity less goodwill, intangible assets, affiliate receivables and certain pledged assets. Effective for fiscal year 2020, under the Ginnie Mae MBS Guide, the issuers will no longer be permitted to include deferred tax assets when computing the minimum net worth requirements. Minimum Capital Ratio • For Fannie Mae, Freddie Mac and Ginnie Mae, the Company is also required to hold a ratio of Adjusted/Tangible Net Worth to Total Assets greater than 6%. Minimum Liquidity The minimum liquidity requirement for Fannie Mae and Freddie Mac is defined as follows: • 3.5 basis points of total Agency servicing. • Incremental 200 basis points of total nonperforming Agency, measured as 90+ delinquencies, servicing in excess of 6% of the total Agency servicing UPB. • Allowable assets for liquidity may include cash and cash equivalents (unrestricted) and available for sale or held for trading investment grade securities (e.g., Agency MBS, Obligations of GSEs, US Treasury Obligations). The minimum liquidity requirement for Ginnie Mae is defined as follows: • Maintain liquid assets equal to the greater of $1,000 or 10 basis points of our outstanding single-family MBS. The most restrictive of the minimum net worth and capital requirements require the Company to maintain a minimum adjusted net worth balance of $2,005,065 and $2,175,968 as of March 31, 2021 and December 31, 2020, respectively. As of March 31, 2021 and December 31, 2020, the Company was in compliance with this requirement. |
Segments
Segments | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Segments | Segments The Company’s Chief Executive Officer, who has been identified as its Chief Operating Decision Maker (“CODM”), has evaluated how the Company views and measures its performance. ASC 280, Segment Reporting establishes the standards for reporting information about segments in financial statements. In applying the criteria set forth in that guidance, the Company has determined that it has two reportable segments—Direct to Consumer and Partner Network. The key factors used to identify these reportable segments are the organization and alignment of the Company’s internal operations and the nature of its marketing channels, which drive client acquisition into the mortgage platform. This determination reflects how its CODM monitors performance, allocates capital and makes strategic and operational decisions. The Company’s segments are described as follows: Direct to Consumer In the Direct to Consumer segment, clients have the ability to interact with Rocket Mortgage online and/or with the Company’s mortgage bankers. The Company markets to potential clients in this segment through various brand campaigns and performance marketing channels. The Direct to Consumer segment derives revenue from originating, closing, selling and servicing predominantly agency-conforming loans, which are pooled and sold to the secondary market. The segment also includes title insurance, appraisals and settlement services complementing the Company’s end-to-end mortgage origination experience. Servicing activities are fully allocated to the Direct to Consumer segment and are viewed as an extension of the client experience. Servicing enables Rocket Mortgage to establish and maintain long term relationships with our clients, through multiple touchpoints at regular engagement intervals. Revenues in the Direct to Consumer segment are generated primarily from the gain on sale of loans, which includes loan origination fees, revenues from sales of loans into the secondary market, as well as the fair value of originated MSRs and hedging gains and losses. Loan servicing income consists of the contractual fees earned for servicing loans and other ancillary servicing fees, as well as changes in the fair value of MSRs due to changes in valuation assumptions and realization of cash flows. Partner Network The Rocket Professional platform supports our Partner Network segment, where we leverage our superior client service and widely recognized brand to grow marketing and influencer relationships, and our mortgage broker partnerships through Rocket Pro TPO. Our marketing partnerships consist of well-known consumer-focused companies that find value in our award-winning client experience and want to offer their clients mortgage solutions with our trusted, widely recognized brand. These organizations connect their clients directly to us through marketing channels and a referral process. Our influencer partnerships are typically with companies that employ licensed mortgage professionals that find value in our client experience, technology and efficient mortgage process, where mortgages may not be their primary offering. We also enable clients to start the mortgage process through the Rocket platform in the way that works best for them, including through a local mortgage broker. Revenues in the Partner Network segment are generated primarily from the gain on sale of loans, which includes loan origination fees, revenues from sales of loans into the secondary market, as well as the fair value of originated MSRs and hedging gains and losses. Additionally, there are no performance marketing costs associated with this segment. Other Information About Our Segments The Company measures the performance of the segments primarily on a contribution margin basis. The accounting policies applied by our segments are the same as those described in Note 1, Business, Basis of Presentation and Accounting Policies and the decrease in MSRs due to valuation assumptions is consistent with the changes described in Note 3, Mortgage Servicing Rights . Directly attributable expenses include Salaries, commissions and team member benefits, General and administrative expenses and Other expenses, such as servicing costs and origination costs. The Company does not allocate assets to its reportable segments as they are not included in the review performed by the CODM for purposes of assessing segment performance and allocating resources. The balance sheet is managed on a consolidated basis and is not used in the context of segment reporting. The Company also reports an “all other” category that includes operations from Rocket Homes, Rock Connections, Core Digital Media, Rocket Loans, and includes professional service fee revenues from related parties. These operations are neither significant individually nor in aggregate and therefore do not constitute a reportable segment. Key operating data for our business segments for the three months ended: Three Months Ended Direct to Consumer Partner Network Segments Total All Other Total Revenues Gain on sale $ 2,863,600 $ 684,428 $ 3,548,028 $ 4,414 $ 3,552,442 Interest income 58,668 36,061 94,729 516 95,245 Interest expense on funding facilities (42,006) (25,818) (67,824) (20) (67,844) Servicing fee income 291,652 — 291,652 709 292,361 Changes in fair value of MSRs 245,921 — 245,921 — 245,921 Other income 304,912 27,778 332,690 133,422 466,112 Total U.S. GAAP Revenue, net 3,722,747 722,449 4,445,196 139,041 4,584,237 Less: Increase in MSRs due to valuation assumptions (544,450) — (544,450) — (544,450) Adjusted revenue 3,178,297 722,449 3,900,746 139,041 4,039,787 Directly attributable expenses 1,018,495 179,777 1,198,272 65,067 1,263,339 Contribution margin $ 2,159,802 $ 542,672 $ 2,702,474 $ 73,974 $ 2,776,448 Three Months Ended Direct to Consumer Partner Network Segments Total All Other Total Revenues Gain on sale $ 1,610,832 $ 203,447 $ 1,814,279 $ 7,830 $ 1,822,109 Interest income 47,311 25,571 72,882 1,160 74,042 Interest expense on funding facilities (25,385) (13,720) (39,105) (354) (39,459) Servicing fee income 255,990 — 255,990 1,103 257,093 Changes in fair value of MSRs (991,252) — (991,252) — (991,252) Other income 145,023 19,609 164,632 79,144 243,776 Total U.S. GAAP Revenue, net 1,042,519 234,907 1,277,426 88,883 1,366,309 Plus: Decrease in MSRs due to valuation assumptions 743,327 — 743,327 — 743,327 Adjusted revenue 1,785,846 234,907 2,020,753 88,883 2,109,636 Directly attributable expenses 780,620 91,944 872,564 45,499 918,063 Contribution margin $ 1,005,226 $ 142,963 $ 1,148,189 $ 43,384 $ 1,191,573 The following table represents a reconciliation of segment contribution margin to consolidated U.S. GAAP income before taxes for the three months ended: Three Months Ended March 31, 2021 2020 Contribution margin, excluding change in MSRs due to valuation assumptions $ 2,776,448 $ 1,191,573 (Decrease) increase in MSRs due to valuation assumptions 544,450 (743,327) Contribution margin, including change in MSRs due to valuation assumptions 3,320,898 448,246 Less expenses not allocated to segments : Salaries, commissions and team member benefits 230,094 198,850 General and administrative expenses 194,494 94,597 Depreciation and amortization 15,304 16,115 Interest and amortization expense on non-funding debt 35,571 33,107 Other expenses 2,265 5,298 Income before income taxes $ 2,843,170 $ 100,279 |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities Rocket Companies, Inc. is the sole managing member of Holdings with 100% of the management and voting power in Holdings. In its capacity as managing member, Rocket Companies, Inc. has the sole authority to make decisions on behalf of Holdings and bind Holdings to signed agreements. Further, Holdings maintains separate capital accounts for its investors as a mechanism for tracking earnings and subsequent distribution rights. Accordingly, management concluded that Holdings is a limited partnership or similar legal entity as contemplated in ASC 810, Consolidation . Furthermore, management concluded that Rocket Companies, Inc. is Holdings’ primary beneficiary. As the primary beneficiary, Rocket Companies, Inc. consolidates the results and operations of Holdings for financial reporting purposes under the variable interest consolidation model guidance in ASC 810. Rocket Companies, Inc.'s relationship with Holdings results in no recourse to the general credit of Rocket Companies, Inc. Holdings and its consolidated subsidiaries represents Rocket Companies, Inc.'s sole investment. Rocket Companies, Inc. shares in the income and losses of Holdings in direct proportion to Rocket Companies, Inc.'s ownership percentage. Further, Rocket Companies, Inc. has no contractual requirement to provide financial support to Holdings. Rocket Companies, Inc.’s financial position, performance and cash flows effectively represent those of Holdings and its subsidiaries as of and for the period ended March 31, 2021. Prior to the reorganization and IPO, Rocket Companies, Inc. was not impacted by Holdings. |
Non-controlling Interests
Non-controlling Interests | 3 Months Ended |
Mar. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests The non-controlling interest balance represents the economic interest in Holdings held by our Chairman and RHI. The following table summarizes the ownership of Holdings Units in Holdings as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Holdings Units Ownership Percentage Holdings Units Ownership Percentage Rocket Companies, Inc.'s ownership of Holdings Units 135,574,865 6.83 % 115,372,565 5.81 % Holdings Units held by our Chairman 1,101,822 0.06 % 1,101,822 0.06 % Holdings Units held by RHI 1,847,777,661 93.11 % 1,867,977,661 94.13 % Balance at end of period 1,984,454,348 100.00 % 1,984,452,048 100.00 % The non-controlling interest holders have the right to exchange Holdings Units, together with a corresponding number of shares of our Class D common stock or Class C common stock (together referred to as “Paired Interests”), for, at our option, (i) shares of our Class B common stock or Class A common stock or (ii) cash from a substantially concurrent public offering or private sale (based on the price of our Class A common stock). As such, future exchanges of Paired Interests by non-controlling interest holders will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in-capital when Holdings has positive or negative net assets, respectively. As of March 31, 2021, our Chairman has not exchanged any Paired Interests. As of December 31, 2020, neither our Chairman or RHI had exchanged any Paired Interests. Effective on March 31, 2021, the Company and RHI exchanged 20,200,000 shares of Class A common stock for the equivalent number of Paired Interests (in this instance, Holdings Units together with a corresponding number of shares of Class D common stock). This transaction resulted in an increase of Rocket Companies' controlling interest and a corresponding decrease of non-controlling interest of approximately 1%. |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Compensation | Share-based Compensation The Company grants various types of share-based awards, both equity and cash awards, to various team members and directors of the Company and its affiliates. Included in share-based compensation expense for the Company are RKT and RHI denominated awards. Share-based compensation expense is included in Salaries, commissions and team member benefits on the Condensed Consolidated Statements of Income and Comprehensive Income . In connection with the IPO, equity-based awards were issued under the Rocket Companies, Inc. 2020 Omnibus Incentive Plan including restricted stock units and stock options to purchase shares of our Class A common stock at an exercise price equal to the price to the public in the initial public offering. Share-based compensation expense is recognized on a straight-line basis over the requisite service period based on the fair value of the award on the date of grant. Team Member Stock Purchase Plan The Team Member Stock Purchase Plan ("TMSPP") was initiated in December 2020, with the first offering period beginning in January 2021. Under the TMSPP, the Company is authorized to issue up to 10,526,316 shares of its common stock to qualifying team members. Eligible team members may direct the Company, during each three-month option period, to withhold up to 15% of their gross pay, the proceeds from which are used to purchase shares of common stock at a price equal to 85% of the closing market price on the exercise date. Under ASC 718, the TMSPP is a liability classified compensatory plan and the Company recognizes compensation expense over the offering period based on the fair value of the purchase discount. There were no shares purchased for the three months ended March 31, 2021 under the TMSPP. Share-based Compensation Expense A summary of share-based compensation expense recognized during the three months ended March 31, 2021 and March 31, 2020 related to RKT-denominated awards is as follows: Three Months Ended March 31, 2021 2020 RKT restricted stock units $ 27,601 $ — RKT stock options 10,035 — RKT Team Member Stock Purchase Plan 2,923 — RKT denominated share-based compensation expense $ 40,559 $ — A summary of share-based compensation expense recognized during the three months ended March 31, 2021 and March 31, 2020 related to RHI-denominated awards is as follows: Three Months Ended March 31, 2021 2020 RHI restricted stock units $ 1,372 $ 28,978 RHI stock options — 32 RHI cash settled awards — 12,678 RHI denominated share-based compensation expense $ 1,372 $ 41,688 Including subsidiary share-based compensation plans, total share-based compensation expense for the three months ended March 31, 2021 and 2020, was $41,983 and $41,737, respectively. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company applies the two-class method for calculating and presenting earnings per share by separately presenting earnings per share for Class A common stock and Class B common stock. In applying the two-class method, the Company allocates undistributed earnings equally on a per share basis between Class A and Class B common stock. According to the Company’s certificate of incorporation, the holders of the Class A and Class B common stock are entitled to participate in earnings equally on a per-share basis, as if all shares of common stock were of a single class, and in such dividends as may be declared by the board of directors. Holders of the Class A and Class B common stock also have equal priority in liquidation. Shares of Class C and Class D common stock do not participate in earnings of Rocket Companies, Inc. As a result, the shares of Class C and Class D common stock are not considered participating securities and are not included in the weighted-average shares outstanding for purposes of earnings per share. Restricted stock units awarded as part of the Company’s compensation program are included in the weighted-average Class A shares outstanding in the calculation of basic EPS once the units are fully vested. Basic earnings per share of Class A common stock is computed by dividing Net income attributable to Rocket Companies by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing Net income attributable to Rocket Companies by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. There was no Class B common stock outstanding as of March 31, 2021. See Note 14, Non-controlling Interests for a description of Paired Interests. Prior to the IPO, Holdings membership structure included equity interests held by RHI. The Company analyzed the calculation of earnings per unit for periods prior to the IPO and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. Therefore, earnings per share information has not been presented for the three months ended March 31, 2020. The following table sets for the calculation of the basic and diluted earnings per share for the period: Three Months Ended March 31, 2021 Net income $ 2,777,338 Net income attributable to non-controlling interest (2,653,636) Net income attributable to Rocket Companies 123,702 Add: Reallocation of Net income attributable to vested, undelivered stock awards 80 Net income attributable to common shareholders $ 123,782 Numerator: Net income attributable to Class A common shareholders - basic $ 123,782 Add: Reallocation of net income attributable to dilutive impact of share-based compensation awards (1) 6,349 Net income attributable to Class A common shareholders - diluted $ 130,131 Denominator: Weighted average shares of Class A common stock outstanding - basic 115,673,524 Add: Dilutive impact of share-based compensation awards (2) 6,338,392 Weighted average shares of Class A common stock outstanding - diluted 122,011,916 Earnings per share of Class A common stock outstanding - basic $ 1.07 Earnings per share of Class A common stock outstanding - diluted $ 1.07 (1) Reallocation of net income attributable to dilutive impact of share-based compensation awards comprised of $5,889 related to restricted stock units, $422 related to stock options and $38 related to TMSPP. (2) Dilutive impact of share-based compensation awards comprised of 5,879,491 related to restricted stock units, 421,267 related to stock options and 37,634 related to TMSPP. For the period from January 1, 2021 to March 31, 2021, 1,868,855,039 Holdings Units, each weighted for the portion of the period for which they were outstanding, together with a corresponding number of shares of our Class D common stock, were exchangeable, at our option, for shares of our Class A common stock. After evaluating the potential dilutive effect under the if-converted method, the outstanding Holdings Units for the assumed exchange of non-controlling interests were determined to be anti-dilutive and thus were excluded from the computation of diluted earnings per share. |
Business, Basis of Presentati_2
Business, Basis of Presentation and Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation | Prior to the completion of the initial public offering, RHI, Holdings and its subsidiaries consummated an internal reorganization in which Rocket Companies, Inc. became the sole managing member of Holdings. Prior to the reorganization, Rocket Companies, Inc. had no operations. As the sole managing member of Holdings, the Company operates and controls all of the business affairs of Holdings, and through Holdings and its subsidiaries, conducts its business. Holdings is considered a variable interest entity (“VIE”) and we consolidate the financial results of Holdings under the guidance of ASC 810, Consolidation. A portion of our net income is allocated to the non-controlling interest holders. For further details, refer to Note 13 , Variable Interest Entities and Note 14 , Non-controlling Interests. Income from Holdings and its subsidiaries prior to the reorganization and IPO has been accounted for as a non-controlling interest in our Condensed Consolidated Statements of Income and Comprehensive Income. Accumulated net income prior to the reorganization and IPO is presented in net parent investment in our Condensed Consolidated Statements of Changes in Equity as the financial statements prior to the reorganization and IPO reflect combined subsidiaries operating as part of RHI. We have accounted for the reorganization as one of entities under common control and the net parent investment was allocated between non-controlling interest and additional paid-in capital based on the ownership of Holdings. Our condensed consolidated financial statements for periods prior to the reorganization and IPO reflect the combined subsidiaries that historically operated as part of RHI. We have further adjusted the prior period results to retrospectively reflect the acquisition of Amrock Title Insurance Company (“ATI”) which qualified as a common control transaction as discussed further below in the Acquisition Agreement section. All significant intercompany transactions and accounts between the businesses comprising the Company have been eliminated in the accompanying condensed consolidated financial statements. All transactions and accounts between RHI and other related parties with the Company have a history of settlement or will be settled for cash and are reflected as related party transactions. For further details of the Company’s related party transactions refer to Note 6, Transactions with Related Parties |
Basis of Presentation | Our condensed consolidated financial statements are unaudited and presented in U.S. dollars. They have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC. In our opinion, these condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair statement of our results of operations, financial position and cash flows for the periods presented. However, our results of operations for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period. |
Management Estimates | Management Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although management is not currently aware of any factors that would significantly change its estimates and assumptions, actual results may differ from these estimates. |
Revenue Recognition | Revenue Recognition Gain on sale of loans, net—Gain on sale of loans, net includes all components related to the origination and sale of mortgage loans, including (1) net gain on sale of loans, which represents the premium we receive in excess of the loan principal amount and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees (credits), points and certain costs, (3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks and loans held for sale, (5) the gain or loss on forward commitments hedging loans held for sale and interest rate lock commitments (IRLCs), and (6) the fair value of originated MSRs. An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of a pull-through factor. Subsequent changes in the fair value of IRLCs and mortgage loans held for sale are recognized in current period earnings. When the mortgage loan is sold into the secondary market, any difference between the proceeds received and the current fair value of the loan is recognized in current period earnings in Gain on sale of loans, net. Included in Gain on sale of loans, net is the fair value of originated MSRs, which represents the estimated fair value of MSRs related to loans which we have sold and retained the right to service. Refer to Note 3, Mortgage Servicing Rights for information related to the gain/(loss) on changes in the fair value of MSRs. Loan servicing income (loss), net—Loan servicing income (loss), net includes income from servicing, sub-servicing and ancillary fees, and is recorded to income as earned, which is upon collection of payments from borrowers. This amount also includes the Change in fair value of MSRs, which is the adjustment for the fair value measurement of the MSRs asset as of the respective balance sheet date. Interest income, net—Interest income includes interest earned on mortgage loans held for sale and mortgage loans held for investment net of the interest expense paid on our loan funding facilities. Interest income is recorded as earned and interest expense is recorded as incurred. Other income—Other income is derived primarily from lead generation revenue, professional service fees, real estate network referral fees, contact center revenue, personal loans business, closing fees, net appraisal revenue, and net title insurance fees. The following revenue streams fall within the scope of ASC Topic 606—Revenue from Contracts with Customers and are disaggregated hereunder: Core Digital Media lead generation revenue —The Company recognizes online consumer acquisition revenue based on successful delivery of marketing leads to a client at a fixed fee per lead. This service is satisfied at the time the lead is delivered, at which time revenue for the service is recognized. Online consumer acquisition revenue, net of intercompany eliminations, were $6,680 and $7,560 for the three months ended March 31, 2021 and 2020, respectively. Professional service fees —The Company recognizes professional service fee revenue based on the delivery of services (e.g., human resources, technology, training) over the term of a contract. Consideration for the promised services is received through a combination of a fixed fee for the period and incremental fees paid for optional services that are available at an incremental rate determined at the time such services are requested. The Company recognizes the annual fee ratably over the life of the contract, as the performance obligation is satisfied equally over the term of the contract. For the optional services, revenue is only recognized at the time the services are requested and delivered and pricing is agreed upon. Professional service fee revenues were $3,549 and $1,835 for the three months ended March 31, 2021 and 2020, respectively, and were rendered entirely to related parties. Rocket Homes real estate network referral fees —The Company recognizes real estate network referral fee revenue based on arrangements with partner agencies contingent on the closing of a transaction. As this revenue stream is variable, and is contingent on the successful transaction close, the revenue is constrained until the occurrence of the transaction. At this point, the constraint on recognizing revenue is deemed to have been lifted and revenue is recognized for the consideration expected to be received. Real estate network referral fees, net of intercompany eliminations, were $9,578 and $7,988 for the three months ended March 31, 2021 and 2020, respectively. Rock Connections and Rocket Auto contact center revenue —The Company recognizes contact center revenue for communication services including client support and sales. Consideration received includes a fixed base fee and/or a variable contingent fee. The fixed base fee is recognized ratably over the period of performance, as the performance obligation is considered to be satisfied equally throughout the service period. The variable contingent fee related to car sales is constrained until the sale of the car is completed. Contact center revenues, net of intercompany eliminations, were $11,632 and $7,341 for the three months ended March 31, 2021 and 2020, respectively. Amrock closing fees —The Company recognizes closing fees for non-recurring services provided in connection with the origination of the loan. These fees are recognized at the time of loan closing for purchase transactions or at the end of a client's three-day rescission period for refinance transactions, which represents the point in time the loan closing services performance obligation is satisfied. The consideration received for closing services is a fixed fee per loan that varies by state and loan type. Closing fees were $157,167 and $73,486 for the three months ended March 31, 2021 and 2020, respectively. Amrock appraisal revenue, net —The Company recognizes appraisal revenue when the appraisal service is completed. The Company may choose to deliver appraisal services directly to its client or subcontract such services to a third-party licensed and/or certified appraiser. In instances where the Company performs the appraisal, revenue is recognized as the gross amount of consideration received at a fixed price per appraisal. The Company is an agent in instances where a third-party appraiser is involved in the delivery of appraisal services and revenue is recognized net of third-party appraisal expenses. Appraisal revenue, net was $22,491 and $17,619 for the three months ended March 31, 2021 and 2020, respectively. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. We maintain our bank accounts with a relatively small number of high-quality financial institutions. Restricted cash as of March 31, 2021 and 2020 consisted of cash on deposit for a repurchase facility and client application deposits, title premiums collected from the insured that are due to the underwritten insurance company and a $25,000 bond. |
Loans subject to repurchase right from Ginnie Mae | Loans subject to repurchase right from Ginnie Mae For certain loans sold to Ginnie Mae, the Company as the servicer has the unilateral right to repurchase any individual loan in a Ginnie Mae securitization pool if that loan meets defined criteria, including being delinquent more than 90 days. Once the Company has the unilateral right to repurchase the delinquent loan, the Company has effectively regained control over the loan and must re-recognize the loan on the Condensed Consolidated Balance Sheets and establish a corresponding finance liability regardless of the Company's intention to repurchase the loan. The asset and corresponding liability are recorded at the unpaid principal balance of the loan, which approximates its fair value. |
Accounting Standards Issued but Not Yet Adopted | Accounting Standards Issued but Not Yet Adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope to clarify that Topic 848 is applicable to many derivative instruments and hedging relationships. |
Fair Value Measurements | Fair value is the price that would be received if an asset were sold or the price that would be paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. Required disclosures include classification of fair value measurements within a three-level hierarchy (Level 1, Level 2, and Level 3). Classification of a fair value measurement within the hierarchy is dependent on the classification and significance of the inputs used to determine the fair value measurement. Observable inputs are those that are observed, implied from, or corroborated with externally available market information. Unobservable inputs represent the Company’s estimates of market participants’ assumptions. Fair value measurements are classified in the following manner: Level 1 —Valuation is based on quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 —Valuation is based on either observable prices for identical assets or liabilities in inactive markets, observable prices for similar assets or liabilities, or other inputs that are derived directly from, or through correlation to, observable market data at the measurement date. Level 3 —Valuation is based on the Company’s internal models using assumptions at the measurement date that a market participant would use. In determining fair value measurement, the Company uses observable inputs whenever possible. The level of a fair value measurement within the hierarchy is dependent on the lowest level of input that has a significant impact on the measurement as a whole. If quoted market prices are available at the measurement date or are available for similar instruments, such prices are used in the measurements. If observable market data is not available at the measurement date, judgment is required to measure fair value. The following is a description of measurement techniques for items recorded at fair value on a recurring basis. There were no material items recorded at fair value on a nonrecurring basis as of March 31, 2021 or December 31, 2020. Mortgage loans held for sale: Loans held for sale that trade in active secondary markets are valued using Level 2 measurements derived from observable market data, including market prices of securities backed by similar mortgage loans adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk. Loans held for sale for which there is little to no observable trading activity of similar instruments are valued using Level 3 measurements based upon dealer price quotes. IRLCs: The fair value of IRLCs is based on current market prices of securities backed by similar mortgage loans (as determined above under mortgage loans held for sale), net of costs to close the loans, subject to the estimated loan funding probability, or “pull-through factor”. Given the significant and unobservable nature of the pull-through factor, IRLCs are classified as Level 3. MSRs: The fair value of MSRs (including MSRs collateral for financing liability and MSRs financing liability) is determined using a valuation model that calculates the present value of estimated net future cash flows. The model includes estimates of prepayment speeds, discount rate, cost to service, float earnings, contractual servicing fee income, and ancillary income among others. These fair value measurements are classified as Level 3. Forward commitments: The Company’s forward commitments are valued based on quoted prices for similar assets in an active market with inputs that are observable and are classified within Level 2 of the valuation hierarchy. |
Mortgage Servicing Rights | Mortgage servicing rights are recognized as assets on the Condensed Consolidated Balance Sheets when loans are sold, and the associated servicing rights are retained. The Company maintains one class of MSRs asset and has elected the fair value option. These MSRs are recorded at fair value, which is determined using a valuation model that calculates the present value of estimated future net servicing fee income. The model includes estimates of prepayment speeds, discount rate, cost to service, float earnings, contractual servicing fee income, and ancillary income and late fees, among others. These estimates are supported by market and economic data collected from various outside sources. |
Income Taxes | The Company’s income tax expense varies from the expense that would be expected based on statutory rates due principally to its organizational structure. Prior to the IPO in 2020, the Company was owned by RHI which has elected S corporation status. When owned by RHI, Quicken Loans, Amrock and several other wholly owned corporations had elected to be treated as qualified subchapter S subsidiaries. The shareholders of RHI, as shareholders of an S corporation, are responsible for the federal income tax liabilities. A provision for state income taxes is required for certain jurisdictions that tax S corporations and their qualified Subchapter S subsidiaries and for states where the Company is taxed as a C Corporation. During 2020, in a series of transactions occurring along with the IPO, subsidiaries of the Company were contributed to Holdings by RHI. Several of these subsidiaries, such as Quicken Loans, Amrock and other subsidiaries, are no longer qualified Subchapter S corporations and are single member LLC entities owned by Holdings. As single member LLCs of Holdings, all taxable income or loss generated by these subsidiaries will pass through and be included in the income or loss of Holdings. Other contributed subsidiaries of Holdings, such as Amrock Title Insurance Co., LMB Mortgage Services and others, are treated as C Corporations and will separately file and pay taxes apart from Holdings in various jurisdictions including U.S. federal, state, local and Canada. |
Derivative Financial Instruments | The Company enters into interest rate lock commitments ("IRLCs"), forward commitments to sell mortgage loans and forward commitments to purchase loans, which are considered derivative financial instruments. These items are accounted for as free-standing derivatives and are included in the Condensed Consolidated Balance Sheets at fair value. The Company treats all of its derivative instruments as economic hedges; therefore, none of its derivative instruments qualify for designation as accounting hedges. Changes in the fair value of the IRLCs and forward commitments to sell mortgage loans are recorded in current period earnings and are included in gain on sale of loans, net in the Condensed Consolidated Statements of Income and Comprehensive Income. Forward commitments to purchase mortgage loans are recognized in current period earnings and are included in gain on sale of loans, net in the Condensed Consolidated Statements of Income and Comprehensive Income. The Company enters into IRLCs to fund residential mortgage loans with its potential borrowers. These commitments are binding agreements to lend funds to these potential borrowers at specified interest rates within specified periods of time. The fair value of IRLCs is derived from the fair value of similar mortgage loans or bonds, which is based on observable market data. Changes to the fair value of IRLCs are recognized based on changes in interest rates, changes in the probability that the commitment will be exercised, and the passage of time. The expected net future cash flows related to the associated servicing of the loan are included in the fair value measurement of rate locks. IRLCs and uncommitted mortgage loans held for sale expose the Company to the risk that the value of the mortgage loans held and mortgage loans underlying the commitments may decline due to increases in mortgage interest rates during the life of the commitments. To protect against this risk, the Company uses forward loan sale commitments to economically hedge the risk of potential changes in the value of the loans. These derivative instruments are recorded at fair value. The Company expects that the changes in fair value of these derivative financial instruments will either fully or partially offset the changes in fair value of the IRLCs and uncommitted mortgage loans held for sale. The changes in the fair value of these derivatives are recorded in gain on sale of loans, net. MSRs assets (including the MSRs value associated with outstanding IRLCs) that the Company plans to sell expose the Company to the risk that the value of the MSRs asset may decline due to decreases in mortgage interest rates prior to the sale of these assets. To protect against this risk, the Company uses forward loan purchase commitments to economically hedge the risk of potential changes in the value of MSRs assets that have been identified for sale. These derivative instruments are recorded at fair value. The Company expects that the changes in fair value of these derivative financial instruments will either fully or partially offset the changes in fair value of the MSRs assets the Company intends to sell. The changes in fair value of these derivatives are recorded in the change in fair value of MSRs, net. Forward commitments include To-Be-Announced ("TBA") mortgage-backed securities that have been aggregated at the counterparty level for presentation and disclosure purposes. Counterparty agreements contain a legal right to offset amounts due to and from the same counterparty under legally enforceable master netting agreements to settle with the same counterparty, on a net basis, as well as the right to obtain cash collateral. Forward commitments also include commitments to sell loans to counterparties and to purchase loans from counterparties at determined prices. The Company uses forward commitments in hedging the interest rate risk exposure on its fixed and adjustable rate commitments. Utilization of forward commitments involves some degree of basis risk. Basis risk is defined as the risk that the hedged instrument’s price does not move in parallel with the increase or decrease in the market price of the hedged financial instrument. The Company calculates an expected hedge ratio to mitigate a portion of this risk. The Company’s derivative instruments are not designated as accounting hedging instruments, and therefore, changes in fair value are recorded in current period earnings. Hedging gains and losses are included in Gain on sale of loans, net in the Condensed Consolidated Statements of Income and Comprehensive Income. |
Earnings Per Share | The Company applies the two-class method for calculating and presenting earnings per share by separately presenting earnings per share for Class A common stock and Class B common stock. In applying the two-class method, the Company allocates undistributed earnings equally on a per share basis between Class A and Class B common stock. According to the Company’s certificate of incorporation, the holders of the Class A and Class B common stock are entitled to participate in earnings equally on a per-share basis, as if all shares of common stock were of a single class, and in such dividends as may be declared by the board of directors. Holders of the Class A and Class B common stock also have equal priority in liquidation. Shares of Class C and Class D common stock do not participate in earnings of Rocket Companies, Inc. As a result, the shares of Class C and Class D common stock are not considered participating securities and are not included in the weighted-average shares outstanding for purposes of earnings per share. Restricted stock units awarded as part of the Company’s compensation program are included in the weighted-average Class A shares outstanding in the calculation of basic EPS once the units are fully vested. Basic earnings per share of Class A common stock is computed by dividing Net income attributable to Rocket Companies by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing Net income attributable to Rocket Companies by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. There was no Class B common stock outstanding as of March 31, 2021. See Note 14, Non-controlling Interests for a description of Paired Interests. Prior to the IPO, Holdings membership structure included equity interests held by RHI. The Company analyzed the calculation of earnings per unit for periods prior to the IPO and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. Therefore, earnings per share information has not been presented for the three months ended March 31, 2020. |
Business, Basis of Presentati_3
Business, Basis of Presentation and Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash, Cash Equivalents and Restricted Cash | The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. We maintain our bank accounts with a relatively small number of high-quality financial institutions. Restricted cash as of March 31, 2021 and 2020 consisted of cash on deposit for a repurchase facility and client application deposits, title premiums collected from the insured that are due to the underwritten insurance company and a $25,000 bond. March 31, 2021 2020 Cash and cash equivalents $ 2,864,906 $ 2,295,988 Restricted cash 75,647 64,976 Total cash, cash equivalents, and restricted cash in the statement of cash flows $ 2,940,553 $ 2,360,964 |
Schedule of Cash, Cash Equivalents and Restricted Cash | The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. We maintain our bank accounts with a relatively small number of high-quality financial institutions. Restricted cash as of March 31, 2021 and 2020 consisted of cash on deposit for a repurchase facility and client application deposits, title premiums collected from the insured that are due to the underwritten insurance company and a $25,000 bond. March 31, 2021 2020 Cash and cash equivalents $ 2,864,906 $ 2,295,988 Restricted cash 75,647 64,976 Total cash, cash equivalents, and restricted cash in the statement of cash flows $ 2,940,553 $ 2,360,964 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Statement Items Measured at Estimated Fair Value on a Recurring Basis | The table below shows a summary of financial statement items that are measured at estimated fair value on a recurring basis, including assets measured under the fair value option. There were no material transfers of assets or liabilities recorded at fair value on a recurring basis between Levels 1, 2 or 3 during the three months ended March 31, 2021 or the year ended December 31, 2020. Level 1 Level 2 Level 3 Total Balance at March 31, 2021 Assets: Mortgage loans held for sale $ — $ 17,834,610 $ 990,834 $ 18,825,444 IRLCs — — 765,215 765,215 MSRs — — 4,304,762 4,304,762 MSRs collateral for financing liability (1) — — 233,687 233,687 Forward commitments — 909,153 — 909,153 Total assets $ — $ 18,743,763 $ 6,294,498 $ 25,038,261 Liabilities: Forward commitments $ — $ 54,412 $ — $ 54,412 MSRs financing liability (1) — — 223,756 223,756 Total liabilities $ — $ 54,412 $ 223,756 $ 278,168 Balance at December 31, 2020 Assets: Mortgage loans held for sale $ — $ 22,285,440 $ 579,666 $ 22,865,106 IRLCs — — 1,897,194 1,897,194 MSRs — — 2,862,685 2,862,685 MSRs collateral for financing liability (1) — — 205,033 205,033 Forward commitments — 20,584 — 20,584 Total assets $ — $ 22,306,024 $ 5,544,578 $ 27,850,602 Liabilities: Forward commitments $ — $ 506,071 $ — $ 506,071 MSRs financing liability (1) — — 187,794 187,794 Total liabilities $ — $ 506,071 $ 187,794 $ 693,865 (1) Refer to Note 3, Mortgage Servicing Rights for further information regarding both the MSRs collateral for financing liability and MSRs financing liability. |
Schedule of Quantitative Information About Fair Value Measurements of Level 3 Financial Instruments | The following tables present the quantitative information about recurring Level 3 fair value financial instruments and the fair value measurements as of: March 31, 2021 December 31, 2020 Unobservable Input Range Weighted Average Range Weighted Average Mortgage loans held for sale Dealer pricing 87% - 103% 100 % 89% - 105% 99 % IRLCs Loan funding probability 0% - 100% 77 % 0% - 100% 74 % MSRs, MSRs collateral for financing liability, and MSRs financing liability Discount rate 9.5% - 12.0% 9.9 % 9.5% - 12.0% 9.9 % Conditional prepayment rate 6.9% - 57.5% 10.9 % 6.6% - 52.1% 15.8 % |
Schedule of Reconciliation of Level 3 Assets | The table below presents a reconciliation of Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2021 and 2020. Mortgage servicing rights (including MSRs collateral for financing liability and MSRs financing liability) are also classified as a Level 3 asset measured at fair value on a recurring basis and its reconciliation is found in Note 3, Mortgage Servicing Rights. Loans Held for Sale IRLCs Balance at December 31, 2020 $ 579,666 $ 1,897,194 Transfers in (1) 718,158 — Transfers out/principal reductions (1) (307,462) — Net transfers and revaluation losses — (1,131,979) Total gains included in net income 472 — Balance at March 31, 2021 $ 990,834 $ 765,215 Balance at December 31, 2019 $ 308,793 $ 508,135 Transfers in (1) 540,859 — Transfers out/principal reductions (1) (425,369) — Net transfers and revaluation gains — 706,730 Total losses included in net income (6,193) — Balance at March 31, 2020 $ 418,090 $ 1,214,865 (1) Transfers in represent loans repurchased from investors or loans originated for which an active market currently does not exist. Transfers out primarily represent loans sold to third parties and loans paid in full. |
Schedule of Fair Value Option for Mortgage Loans Held For Sale | The following is the estimated fair value and unpaid principal balance (“UPB”) of mortgage loans held for sale that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected for mortgage loans held for sale as the Company believes fair value best reflects their expected future economic performance: Fair Value Principal Amount Due Upon Maturity Difference (1) Balance at March 31, 2021 $ 18,825,444 $ 18,534,892 $ 290,552 Balance at December 31, 2020 $ 22,865,106 $ 21,834,817 $ 1,030,289 (1) Represents the amount of gains included in Gain on sale of loans, net due to changes in fair value of items accounted for using the fair value option. |
Schedule of Liabilities not Recorded at Fair Value on a Recurring or Nonrecurring Basis | The following table presents the carrying amounts and estimated fair value of financial liabilities that are not recorded at fair value on a recurring or nonrecurring basis. This table excludes cash and cash equivalents, restricted cash, warehouse borrowings, and line of credit borrowing facilities as these financial instruments are highly liquid or short-term in nature and as a result, their carrying amounts approximate fair value: March 31, 2021 December 31, 2020 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Senior Notes, due 1/15/2028 $ 995,528 $ 1,064,793 $ 994,986 $ 1,079,629 Senior Notes, due 3/1/2029 $ 742,197 $ 725,648 $ 741,946 $ 766,365 Senior Notes, due 3/1/2031 $ 1,236,452 $ 1,204,888 $ 1,236,114 $ 1,298,175 |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Transfers and Servicing [Abstract] | |
Summary of Changes to MSR Assets | The following table summarizes changes to the MSRs assets for the three months ended: Three Months Ended March 31, 2021 2020 Fair value, beginning of period $ 2,862,685 $ 2,874,972 MSRs originated 1,173,164 535,419 MSRs sales (15,865) (186,292) Changes in fair value: Due to changes in valuation model inputs or assumptions (1) 583,307 (805,536) Due to collection/realization of cash flows (298,529) (247,925) Total changes in fair value 284,778 (1,053,461) Fair value, end of period $ 4,304,762 $ 2,170,638 (1) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates. Does not include the change in fair value of derivatives that economically hedge MSRs identified for sale. |
Schedule of Assumptions Used to Determine Fair Value of MSRs | The following is a summary of the weighted average discount rate and prepayment speed assumptions used to determine the fair value of MSRs as well as the expected life of the loans in the servicing portfolio: March 31, 2021 December 31, 2020 Discount rate 9.9 % 9.9 % Prepayment speeds 10.9 % 15.8 % Life (in years) 6.54 5.05 |
Summary of Discount Rate and Prepayment Speeds at Two Different Data Points | The following table stresses the discount rate and prepayment speeds at two different data points: Discount Rate Prepayment Speeds 100 BPS Adverse Change 200 BPS Adverse Change 10% Adverse Change 20% Adverse Change March 31, 2021 Mortgage servicing rights $ (181,137) $ (337,856) $ (166,962) $ (315,934) December 31, 2020 Mortgage servicing rights $ (115,130) $ (212,119) $ (147,420) $ (279,691) |
Mortgage Loans Held for Sale (T
Mortgage Loans Held for Sale (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Reconciliation of Changes in Mortgage Loans Held for Sale | A reconciliation of the changes in mortgage loans held for sale to the amounts presented on the Condensed Consolidated Statements of Cash Flows is below: Three Months Ended March 31, 2021 2020 Balance at the beginning of period $ 22,865,106 $ 13,275,735 Disbursements of mortgage loans held for sale 104,103,499 50,418,371 Proceeds from sales of mortgage loans held for sale (1) (110,276,266) (52,257,635) Gain on sale of mortgage loans excluding fair value of other financial instruments, net (2) 2,133,105 1,406,913 Balance at the end of period $ 18,825,444 $ 12,843,384 (1) The proceeds from sales of loans held for sale on the Condensed Consolidated Statements of Cash Flows includes amounts related to the sale of consumer loans. (2) The Gain on sale of loans excluding fair value of MSRs, net on the Condensed Consolidated Statements of Cash Flows includes amounts related to the sale of consumer loans, interest rate lock commitments, forward commitments, and provisions for investor reserves. |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Funding Facilities | Funding Facilities Facility Type Collateral Maturity Line Amount Committed Line Amount Outstanding Balance March 31, 2021 Outstanding Balance December 31, 2020 MRA funding: 1) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 10/22/2021 $ 2,000,000 $ 100,000 $ 998,397 $ 999,752 2) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 12/2/2021 1,500,000 500,000 1,128,746 1,320,484 3) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 4/22/2022 2,750,000 1,000,000 904,931 2,407,156 4) Master Repurchase Agreement (1)(7) Mortgage loans held for sale (6) 1/26/2022 2,000,000 1,700,000 1,672,731 1,953,949 5) Master Repurchase Agreement (2)(7) Mortgage loans held for sale (6) 4/22/2021 3,000,000 500,000 2,466,830 2,004,707 6) Master Repurchase Agreement (3)(7) Mortgage loans held for sale (6) 9/5/2022 2,000,000 1,000,000 449,622 1,780,902 7) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 9/16/2021 1,750,000 1,137,500 1,108,254 1,343,130 8) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 6/12/2021 400,000 — 150,166 219,786 9) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 9/24/2021 1,500,000 750,000 790,446 983,126 10) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 10/9/2021 500,000 — 155,601 480,544 11) Master Repurchase Agreement (7) Mortgage loans held for sale (6) 12/17/2021 1,000,000 500,000 438,412 765,432 18,400,000 7,187,500 10,264,136 14,258,968 Early Funding: 12) Early Funding Facility (4)(7) Mortgage loans held for sale (6) (4) 4,000,000 — 3,032,857 2,514,193 13) Early Funding Facility (5)(7) Mortgage loans held for sale (6) (5) 3,000,000 — 1,155,679 969,412 7,000,000 — 4,188,536 3,483,605 Total $ 25,400,000 $ 7,187,500 $ 14,452,672 $ 17,742,573 (1) This facility has a 12-month initial term, which can be extended for 3-months at each subsequent 3-month anniversary from the initial start date. Subsequent to March 31, 2021, this facility was amended to decrease the total facility size to $1,600,000 with $1,500,000 committed and was extended to April 26, 2022. (2) Subsequent to March 31, 2021, this facility was renewed which extended the expiration date to April 20, 2023. (3) Subsequent to March 31, 2021, this facility decreased its commitment amount to $500,000. (4) This facility is an evergreen agreement with no stated termination or expiration date. This agreement can be terminated by either party upon written notice. (5) This facility will have an overall line size of $3,000,000, which will be reviewed every 90 days. This facility is an evergreen agreement with no stated termination or expiration date. This agreement can be terminated by either party upon written notice. (6) The Company has multiple borrowing facilities in the form of asset sales under agreements to repurchase. These borrowing facilities are secured by mortgage loans held for sale at fair value as the first priority security interest. (7) The interest rates charged by lenders of the funding facilities ranged from 1.00% to 2.25%, plus the applicable base rate, for the three months ending March 31, 2021 and from 0.40% to 2.30%, plus the applicable base rate for the year ending December 31, 2020. |
Schedule of Other Financing Facilities | Other Financing Facilities Facility Type Collateral Maturity Line Amount Committed Line Amount Outstanding Balance March 31, 2021 Outstanding Balance December 31, 2020 Line of Credit Financing Facilities 1) Unsecured line of credit (1) — 7/27/2025 $ 2,000,000 $ — $ — $ — 2) Unsecured line of credit (1) — 7/31/2025 100,000 — — — 3) Revolving credit facility (3) — 8/10/2023 1,000,000 1,000,000 300,000 300,000 4) MSRs line of credit (3) MSRs 10/22/2021 200,000 — — — 5) MSRs line of credit (2)(3) MSRs (2) 200,000 200,000 75,000 75,000 $ 3,500,000 $ 1,200,000 $ 375,000 $ 375,000 Early Buy out Financing Facility 6) Early buy out facility (3)(4) Loans/ Advances 3/13/2023 $ 2,600,000 $ — $ 635,712 $ 330,266 (1) Refer to Note 6, Transactions with Related Parties for additional details regarding this unsecured line of credit (2) This MSRs facility can be drawn upon for corporate purposes and is collateralized by GSE MSRs within our servicing portfolio. This facility has a 5-year total commitment comprised of a 3-year revolving period that expires on April 30, 2022 followed by a 2-year amortization period that expires on April 30, 2024. (3) The interest rates charged by lenders of the other funding facilities ranged from 1.25% to 4.00%, plus the applicable base rate, for the three months ending March 31, 2021 and for the year ending December 31, 2020. (4) Subsequent to March 31, 2021, utilization of the early buy out facility has increased to approximately $2,000,000 due to greater eligible collateral. |
Schedule of Unsecured Senior Notes | Unsecured Senior Notes Facility Type Maturity Interest Rate Outstanding Balance March 31, 2021 Outstanding Balance December 31, 2020 Unsecured Senior Notes (1) 1/15/2028 5.250 % 1,010,000 1,010,000 Unsecured Senior Notes (2) 3/1/2029 3.625 % 750,000 750,000 Unsecured Senior Notes (3) 3/1/2031 3.875 % 1,250,000 1,250,000 Total Senior Notes $ 3,010,000 $ 3,010,000 Weighted Average Interest Rate 4.27 % 4.27 % (1) The 2028 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing. Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $1,010,000 carrying amount on the Condensed Consolidated Balance Sheets by $7,901 and $6,572 as of March 31, 2021, respectively and $8,197 and $6,817 as of December 31, 2020, respectively. (2) The 2029 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing. Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $750,000 carrying amount on the Condensed Consolidated Balance Sheets by $7,803 and $8,053 as of March 31, 2021 and December 31, 2020, respectively. (3) The 2031 Senior Notes are unsecured obligation notes with no asset required to pledge for this borrowing. Unamortized debt issuance costs and discounts are presented net against the Senior Notes reducing the $1,250,000 carrying amount on the Condensed Consolidated Balance Sheets by $13,548 and $13,887 as of March 31, 2021 and December 31, 2020, respectively. |
Transactions with Related Par_2
Transactions with Related Parties (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Receivables from and Payables to Related Parties | The amounts receivable from and payable to Related Parties consisted of the following as of: March 31, 2021 December 31, 2020 Principal Interest Rate Principal Interest Rate Included in Notes receivable and due from affiliates on the Condensed Consolidated Balance Sheets Affiliated receivables and other notes $ 11,901 — % $ 22,172 — % Included in Notes payable and due to affiliates on the Condensed Consolidated Balance Sheets RHI/ATI Debenture $ 21,500 8.00 % $ 21,500 8.00 % Affiliated payables 52,269 — % 52,396 — % Notes payable and due to affiliates $ 73,769 $ 73,896 |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | Other assets consist of the following: March 31, 2021 December 31, 2020 Mortgage production related receivables $ 303,246 $ 307,282 Disbursement funds advances 128,468 80,877 Prepaid expenses 86,614 98,529 Goodwill and other intangible assets 46,498 47,230 Non-production-related receivables 38,259 76,595 Ginnie Mae buyouts 32,124 40,681 Other real estate owned 1,184 1,131 Margin call receivable from counterparty — 247,604 Other 66,984 41,548 Total Other assets $ 703,377 $ 941,477 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Net Hedging Losses and Gains | Net hedging gains and losses were as follows: Three Months Ended March 31, 2021 2020 Hedging gains (losses) (1) $ 1,642,280 $ (996,984) (1) Includes the change in fair value related to derivatives economically hedging MSRs identified for sale. |
Schedule of Notional and Fair Values of Derivative Financial Instruments | The notional and fair values of derivative financial instruments not designated as hedging instruments were as follows: Notional Value Derivative Asset Derivative Liability Balance at March 31, 2021: IRLCs, net of loan funding probability (1) $ 31,909,968 $ 765,215 $ — Forward commitments (2) $ 42,203,886 $ 909,153 $ 54,412 Balance at December 31, 2020: IRLCs, net of loan funding probability (1) $ 40,560,544 $ 1,897,194 $ — Forward commitments (2) $ 59,041,900 $ 20,584 $ 506,071 (1) IRLCs are also discussed in Note 10, Commitments, Contingencies, and Guarantees. (2) Includes the fair value and net notional value related to derivatives economically hedging MSRs identified for sale. |
Schedule of Gross Amounts of Recognized Assets Subject to Master Netting Agreements | The table below presents the gross amounts of recognized assets and liabilities subject to master netting agreements. The Company had zero and $247,604 of cash pledged to counterparties related to these forward commitments at March 31, 2021 and December 31, 2020, respectively, classified in Other assets in the Condensed Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, the Company had $659,339 and zero, respectively, of cash pledged from counterparties related to these forward commitments. Margins received by the Company are classified in Other liabilities in the Condensed Consolidated Balance Sheets. Gross Amount of Recognized Assets or Liabilities Gross Amounts Offset in the Condensed Consolidated Balance Sheets Net Amounts Presented in the Condensed Consolidated Balance Sheets Offsetting of Derivative Assets Balance at March 31, 2021: Forward commitments $ 1,359,887 $ (450,734) $ 909,153 Balance at December 31, 2020: Forward commitments $ 35,746 $ (15,162) $ 20,584 Offsetting of Derivative Liabilities Balance at March 31, 2021: Forward commitments $ (81,311) $ 26,899 $ (54,412) Balance at December 31, 2020: Forward commitments $ (715,671) $ 209,600 $ (506,071) |
Schedule of Gross Amounts of Recognized Liabilities Subject to Master Netting Agreements | The table below presents the gross amounts of recognized assets and liabilities subject to master netting agreements. The Company had zero and $247,604 of cash pledged to counterparties related to these forward commitments at March 31, 2021 and December 31, 2020, respectively, classified in Other assets in the Condensed Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, the Company had $659,339 and zero, respectively, of cash pledged from counterparties related to these forward commitments. Margins received by the Company are classified in Other liabilities in the Condensed Consolidated Balance Sheets. Gross Amount of Recognized Assets or Liabilities Gross Amounts Offset in the Condensed Consolidated Balance Sheets Net Amounts Presented in the Condensed Consolidated Balance Sheets Offsetting of Derivative Assets Balance at March 31, 2021: Forward commitments $ 1,359,887 $ (450,734) $ 909,153 Balance at December 31, 2020: Forward commitments $ 35,746 $ (15,162) $ 20,584 Offsetting of Derivative Liabilities Balance at March 31, 2021: Forward commitments $ (81,311) $ 26,899 $ (54,412) Balance at December 31, 2020: Forward commitments $ (715,671) $ 209,600 $ (506,071) |
Commitments, Contingencies, a_2
Commitments, Contingencies, and Guarantees (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of IRLC Unpaid Principal Balance | The UPB of IRLCs was as follows: March 31, 2021 December 31, 2020 Fixed Rate Variable Rate Fixed Rate Variable Rate IRLCs $ 39,337,177 $ 2,306,869 $ 53,736,717 $ 1,065,936 |
Schedule of Investor Reserves Activity | The following presents the activity in the investor reserves: Three Months Ended March 31, 2021 2020 Balance at beginning of period $ 87,191 $ 54,387 Provision for investor reserves 5,347 1,577 Premium recapture and indemnification losses paid 1,399 (297) Balance at end of period $ 93,937 $ 55,667 |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Key Operating Data for Business Segments | Key operating data for our business segments for the three months ended: Three Months Ended Direct to Consumer Partner Network Segments Total All Other Total Revenues Gain on sale $ 2,863,600 $ 684,428 $ 3,548,028 $ 4,414 $ 3,552,442 Interest income 58,668 36,061 94,729 516 95,245 Interest expense on funding facilities (42,006) (25,818) (67,824) (20) (67,844) Servicing fee income 291,652 — 291,652 709 292,361 Changes in fair value of MSRs 245,921 — 245,921 — 245,921 Other income 304,912 27,778 332,690 133,422 466,112 Total U.S. GAAP Revenue, net 3,722,747 722,449 4,445,196 139,041 4,584,237 Less: Increase in MSRs due to valuation assumptions (544,450) — (544,450) — (544,450) Adjusted revenue 3,178,297 722,449 3,900,746 139,041 4,039,787 Directly attributable expenses 1,018,495 179,777 1,198,272 65,067 1,263,339 Contribution margin $ 2,159,802 $ 542,672 $ 2,702,474 $ 73,974 $ 2,776,448 Three Months Ended Direct to Consumer Partner Network Segments Total All Other Total Revenues Gain on sale $ 1,610,832 $ 203,447 $ 1,814,279 $ 7,830 $ 1,822,109 Interest income 47,311 25,571 72,882 1,160 74,042 Interest expense on funding facilities (25,385) (13,720) (39,105) (354) (39,459) Servicing fee income 255,990 — 255,990 1,103 257,093 Changes in fair value of MSRs (991,252) — (991,252) — (991,252) Other income 145,023 19,609 164,632 79,144 243,776 Total U.S. GAAP Revenue, net 1,042,519 234,907 1,277,426 88,883 1,366,309 Plus: Decrease in MSRs due to valuation assumptions 743,327 — 743,327 — 743,327 Adjusted revenue 1,785,846 234,907 2,020,753 88,883 2,109,636 Directly attributable expenses 780,620 91,944 872,564 45,499 918,063 Contribution margin $ 1,005,226 $ 142,963 $ 1,148,189 $ 43,384 $ 1,191,573 |
Schedule of Reconciliation of Segment Contribution Margin to Combined U.S. GAAP Income Before Taxes | The following table represents a reconciliation of segment contribution margin to consolidated U.S. GAAP income before taxes for the three months ended: Three Months Ended March 31, 2021 2020 Contribution margin, excluding change in MSRs due to valuation assumptions $ 2,776,448 $ 1,191,573 (Decrease) increase in MSRs due to valuation assumptions 544,450 (743,327) Contribution margin, including change in MSRs due to valuation assumptions 3,320,898 448,246 Less expenses not allocated to segments : Salaries, commissions and team member benefits 230,094 198,850 General and administrative expenses 194,494 94,597 Depreciation and amortization 15,304 16,115 Interest and amortization expense on non-funding debt 35,571 33,107 Other expenses 2,265 5,298 Income before income taxes $ 2,843,170 $ 100,279 |
Non-controlling Interests (Tabl
Non-controlling Interests (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
Schedule of Non-controlling Interests | The following table summarizes the ownership of Holdings Units in Holdings as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Holdings Units Ownership Percentage Holdings Units Ownership Percentage Rocket Companies, Inc.'s ownership of Holdings Units 135,574,865 6.83 % 115,372,565 5.81 % Holdings Units held by our Chairman 1,101,822 0.06 % 1,101,822 0.06 % Holdings Units held by RHI 1,847,777,661 93.11 % 1,867,977,661 94.13 % Balance at end of period 1,984,454,348 100.00 % 1,984,452,048 100.00 % |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation Expense | A summary of share-based compensation expense recognized during the three months ended March 31, 2021 and March 31, 2020 related to RKT-denominated awards is as follows: Three Months Ended March 31, 2021 2020 RKT restricted stock units $ 27,601 $ — RKT stock options 10,035 — RKT Team Member Stock Purchase Plan 2,923 — RKT denominated share-based compensation expense $ 40,559 $ — A summary of share-based compensation expense recognized during the three months ended March 31, 2021 and March 31, 2020 related to RHI-denominated awards is as follows: Three Months Ended March 31, 2021 2020 RHI restricted stock units $ 1,372 $ 28,978 RHI stock options — 32 RHI cash settled awards — 12,678 RHI denominated share-based compensation expense $ 1,372 $ 41,688 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Basic and Diluted Earnings per Share | The following table sets for the calculation of the basic and diluted earnings per share for the period: Three Months Ended March 31, 2021 Net income $ 2,777,338 Net income attributable to non-controlling interest (2,653,636) Net income attributable to Rocket Companies 123,702 Add: Reallocation of Net income attributable to vested, undelivered stock awards 80 Net income attributable to common shareholders $ 123,782 Numerator: Net income attributable to Class A common shareholders - basic $ 123,782 Add: Reallocation of net income attributable to dilutive impact of share-based compensation awards (1) 6,349 Net income attributable to Class A common shareholders - diluted $ 130,131 Denominator: Weighted average shares of Class A common stock outstanding - basic 115,673,524 Add: Dilutive impact of share-based compensation awards (2) 6,338,392 Weighted average shares of Class A common stock outstanding - diluted 122,011,916 Earnings per share of Class A common stock outstanding - basic $ 1.07 Earnings per share of Class A common stock outstanding - diluted $ 1.07 (1) Reallocation of net income attributable to dilutive impact of share-based compensation awards comprised of $5,889 related to restricted stock units, $422 related to stock options and $38 related to TMSPP. (2) Dilutive impact of share-based compensation awards comprised of 5,879,491 related to restricted stock units, 421,267 related to stock options and 37,634 related to TMSPP. |
Business, Basis of Presentati_4
Business, Basis of Presentation and Accounting Policies - Narrative (Details) $ / shares in Units, $ in Thousands | Mar. 23, 2021$ / shares | Feb. 25, 2021USD ($)$ / shares | Aug. 14, 2020USD ($)$ / sharesshares | Sep. 09, 2020USD ($)shares | Mar. 31, 2021USD ($)segment$ / shares | Mar. 31, 2020USD ($) | Dec. 31, 2020$ / sharesshares | Dec. 31, 2019USD ($) |
Basis of Presentation [Line Items] | ||||||||
Number of segments | segment | 2 | |||||||
Holdings Units acquired | shares | 115,000,000 | 115,000,000 | ||||||
Net income | $ 123,702 | $ 0 | ||||||
ATI | ||||||||
Basis of Presentation [Line Items] | ||||||||
Total aggregate consideration | $ 14,400 | |||||||
Holding units issued in acquisition (in shares) | shares | 800,000 | |||||||
Value of holding units issued in acquisition (in dollars per share) | $ / shares | $ 18 | |||||||
ATI | ||||||||
Basis of Presentation [Line Items] | ||||||||
Net income | $ 4,700 | |||||||
Holdings | ||||||||
Basis of Presentation [Line Items] | ||||||||
Cash distribution | $ 2,200,000 | |||||||
Class A common stock | ||||||||
Basis of Presentation [Line Items] | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | ||||||
Common stock dividend declared (in dollars per share) | $ / shares | $ 1.11 | |||||||
Common stock dividend paid (in dollars per share) | $ / shares | $ 1.11 | |||||||
IPO | ||||||||
Basis of Presentation [Line Items] | ||||||||
Net proceeds from IPO | $ 2,023,000 | |||||||
IPO | Class A common stock | ||||||||
Basis of Presentation [Line Items] | ||||||||
Number of shares issued (in shares) | shares | 115,000,000 | |||||||
Underwriters option | Class A common stock | ||||||||
Basis of Presentation [Line Items] | ||||||||
Number of shares issued (in shares) | shares | 15,000,000 |
Business, Basis of Presentati_5
Business, Basis of Presentation and Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Core Digital Media lead generation revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 6,680 | $ 7,560 |
Professional services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 3,549 | 1,835 |
Real estate network referral fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 9,578 | 7,988 |
Contact center | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 11,632 | 7,341 |
Closing fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 157,167 | 73,486 |
Appraisal revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 22,491 | $ 17,619 |
Business, Basis of Presentati_6
Business, Basis of Presentation and Accounting Policies - Cash, Cash Equivalents, and Restricted Cash Reconciliation (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 2,864,906 | $ 1,971,085 | $ 2,295,988 | |
Restricted cash | 75,647 | 83,018 | 64,976 | |
Total cash, cash equivalents, and restricted cash in the statement of cash flows | 2,940,553 | $ 2,054,103 | 2,360,964 | $ 1,455,725 |
Bond | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Bond in restricted cash | $ 25,000 | $ 25,000 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured at Estimated Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Assets: | ||||
Mortgage loans held for sale | $ 18,825,444 | $ 22,865,106 | ||
MSRs | 4,304,762 | 2,862,685 | $ 2,170,638 | $ 2,874,972 |
MSRs collateral for financing liability | 233,687 | 205,033 | ||
Total assets | 25,038,261 | 27,850,602 | ||
Liabilities: | ||||
Derivative liability | 54,412 | 506,071 | ||
MSRs financing liability | 223,756 | 187,794 | ||
Total liabilities | 278,168 | 693,865 | ||
IRLCs | ||||
Assets: | ||||
Derivative asset | 765,215 | 1,897,194 | ||
Forward commitments | ||||
Assets: | ||||
Derivative asset | 909,153 | 20,584 | ||
Liabilities: | ||||
Derivative liability | 54,412 | 506,071 | ||
Level 1 | ||||
Assets: | ||||
Mortgage loans held for sale | 0 | 0 | ||
MSRs | 0 | 0 | ||
MSRs collateral for financing liability | 0 | 0 | ||
Total assets | 0 | 0 | ||
Liabilities: | ||||
MSRs financing liability | 0 | 0 | ||
Total liabilities | 0 | 0 | ||
Level 1 | IRLCs | ||||
Assets: | ||||
Derivative asset | 0 | 0 | ||
Level 1 | Forward commitments | ||||
Assets: | ||||
Derivative asset | 0 | 0 | ||
Liabilities: | ||||
Derivative liability | 0 | 0 | ||
Level 2 | ||||
Assets: | ||||
Mortgage loans held for sale | 17,834,610 | 22,285,440 | ||
MSRs | 0 | 0 | ||
MSRs collateral for financing liability | 0 | 0 | ||
Total assets | 18,743,763 | 22,306,024 | ||
Liabilities: | ||||
MSRs financing liability | 0 | 0 | ||
Total liabilities | 54,412 | 506,071 | ||
Level 2 | IRLCs | ||||
Assets: | ||||
Derivative asset | 0 | 0 | ||
Level 2 | Forward commitments | ||||
Assets: | ||||
Derivative asset | 909,153 | 20,584 | ||
Liabilities: | ||||
Derivative liability | 54,412 | 506,071 | ||
Level 3 | ||||
Assets: | ||||
Mortgage loans held for sale | 990,834 | 579,666 | ||
MSRs | 4,304,762 | 2,862,685 | ||
MSRs collateral for financing liability | 233,687 | 205,033 | ||
Total assets | 6,294,498 | 5,544,578 | ||
Liabilities: | ||||
MSRs financing liability | 223,756 | 187,794 | ||
Total liabilities | 223,756 | 187,794 | ||
Level 3 | IRLCs | ||||
Assets: | ||||
Derivative asset | 765,215 | 1,897,194 | ||
Level 3 | Forward commitments | ||||
Assets: | ||||
Derivative asset | 0 | 0 | ||
Liabilities: | ||||
Derivative liability | $ 0 | $ 0 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information for Level 3 Measurements (Details) - Level 3 | Mar. 31, 2021 | Dec. 31, 2020 |
Dealer pricing | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Mortgage loans held for sale | 0.87 | 0.89 |
Dealer pricing | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Mortgage loans held for sale | 1.03 | 1.05 |
Dealer pricing | Weighted Average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Mortgage loans held for sale | 1 | 0.99 |
Loan funding probability | IRLCs | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivatives | 0 | 0 |
Loan funding probability | IRLCs | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivatives | 1 | 1 |
Loan funding probability | IRLCs | Weighted Average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivatives | 0.77 | 0.74 |
Discount rate | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
MSRs, MSRs collateral for financing liability, and MSRs financing liability | 0.095 | 0.095 |
Discount rate | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
MSRs, MSRs collateral for financing liability, and MSRs financing liability | 0.120 | 0.120 |
Discount rate | Weighted Average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
MSRs, MSRs collateral for financing liability, and MSRs financing liability | 0.099 | 0.099 |
Conditional prepayment rate | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
MSRs, MSRs collateral for financing liability, and MSRs financing liability | 0.069 | 0.066 |
Conditional prepayment rate | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
MSRs, MSRs collateral for financing liability, and MSRs financing liability | 0.575 | 0.521 |
Conditional prepayment rate | Weighted Average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
MSRs, MSRs collateral for financing liability, and MSRs financing liability | 0.109 | 0.158 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Level 3 Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Loans Held for Sale | ||
Reconciliation of Level 3 Assets: | ||
Beginning balance | $ 579,666 | $ 308,793 |
Transfers in | 718,158 | 540,859 |
Transfers out/principal reduction | (307,462) | (425,369) |
Net transfers and revaluation losses | 0 | 0 |
Total gains (losses) included in net income | 472 | (6,193) |
Ending balance | 990,834 | 418,090 |
IRLCs | ||
Reconciliation of Level 3 Assets: | ||
Beginning balance | 1,897,194 | 508,135 |
Transfers in | 0 | 0 |
Transfers out/principal reduction | 0 | 0 |
Net transfers and revaluation losses | (1,131,979) | 706,730 |
Total gains (losses) included in net income | 0 | 0 |
Ending balance | $ 765,215 | $ 1,214,865 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Option for Mortgage Loans Held for Sale (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value Disclosures [Abstract] | ||
Mortgage loans held for sale, at fair value | $ 18,825,444 | $ 22,865,106 |
Mortgage loans held for sale, principal amount due upon maturity | 18,534,892 | 21,834,817 |
Difference | $ 290,552 | $ 1,030,289 |
Fair Value Measurements - Liabi
Fair Value Measurements - Liabilities not Recorded at Fair Value on Recurring or Nonrecurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Carrying Amount | 2028 Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior Notes | $ 995,528 | $ 994,986 |
Carrying Amount | 2029 Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior Notes | 742,197 | 741,946 |
Carrying Amount | 2031 Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior Notes | 1,236,452 | 1,236,114 |
Estimated Fair Value | 2028 Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior Notes | 1,064,793 | 1,079,629 |
Estimated Fair Value | 2029 Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior Notes | 725,648 | 766,365 |
Estimated Fair Value | 2031 Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior Notes | $ 1,204,888 | $ 1,298,175 |
Mortgage Servicing Rights - Cha
Mortgage Servicing Rights - Changes to MSR Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Changes to MSR Assets | ||
Fair value, beginning of period | $ 2,862,685 | $ 2,874,972 |
MSRs originated | 1,173,164 | 535,419 |
MSRs sales | (15,865) | (186,292) |
Changes in fair value: | ||
Due to changes in valuation model inputs or assumptions | 583,307 | (805,536) |
Due to collection/realization of cash flows | (298,529) | (247,925) |
Total changes in fair value | 284,778 | (1,053,461) |
Fair value, end of period | $ 4,304,762 | $ 2,170,638 |
Mortgage Servicing Rights - Nar
Mortgage Servicing Rights - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | |
Transfers and Servicing [Abstract] | |||
UPB of mortgage loans serviced | $ 431,497,603 | $ 371,494,905 | |
Delinquent loans as a percentage of total portfolio (percent) | 3.21% | ||
Delinquent loans as a percentage of total portfolio, excluding clients in forbearance plans (percent) | 0.72% | ||
Fair value of MSRs sold and not qualifying for sale accounting treatment | $ 4,885 | $ 193,739 | $ 340,303 |
Unrealized gains relating to the MSRs liability | 31,077 | 116,150 | |
Unrealized losses relating to the MSRs collateral asset | $ 31,077 | 116,150 | |
Period for sale price adjustments per agreement | 6 months | ||
Fair value of MSRs sold | $ 10,982 | $ 186,292 |
Mortgage Servicing Rights - Fai
Mortgage Servicing Rights - Fair Value Assumptions (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Transfers and Servicing [Abstract] | ||
Discount rate (percent) | 9.90% | 9.90% |
Prepayment speeds (percent) | 10.90% | 15.80% |
Life (in years) | 6 years 6 months 14 days | 5 years 18 days |
Mortgage Servicing Rights - Dis
Mortgage Servicing Rights - Discount Rate and Prepayment Speeds at Two Different Data Points (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Discount Rate | ||
Discount Rate, 100 BPS Adverse Change | $ (181,137) | $ (115,130) |
Discount Rate, 200 BPS Adverse Change | (337,856) | (212,119) |
Prepayment Speeds | ||
Prepayment Speeds, 10% Adverse Change | (166,962) | (147,420) |
Prepayment Speeds, 20% Adverse Change | $ (315,934) | $ (279,691) |
Mortgage Loans Held for Sale (D
Mortgage Loans Held for Sale (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Mortgage loans held for sale | ||
Balance at the beginning of period | $ 22,865,106 | $ 13,275,735 |
Disbursements of mortgage loans held for sale | 104,103,499 | 50,418,371 |
Proceeds from sales of mortgage loans held for sale | (110,276,266) | (52,257,635) |
Gain on sale of mortgage loans excluding fair value of other financial instruments, net | 2,133,105 | 1,406,913 |
Balance at the end of period | $ 18,825,444 | $ 12,843,384 |
Mortgage loans held for sale average holding period | 18 days |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Debt Instrument [Line Items] | |
Cash used to buy-down funding facilities and self-fund loans | $ 3,146,623 |
Buy-down funds | 475,000 |
Self-funding | $ 2,671,623 |
Funding facilities and Other financing facilities | Minimum | |
Debt Instrument [Line Items] | |
Commitment fees (percent) | 0.00% |
Funding facilities and Other financing facilities | Maximum | |
Debt Instrument [Line Items] | |
Commitment fees (percent) | 0.50% |
Borrowings - Funding Facilities
Borrowings - Funding Facilities (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | Apr. 01, 2021 | |
Line of Credit Facility [Line Items] | |||
Total Funding Facilities | $ 14,452,672,000 | $ 17,742,573,000 | |
Funding Facilities | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 25,400,000,000 | ||
Committed Line Amount | $ 7,187,500,000 | ||
Funding Facilities | Base rate | Minimum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.00% | 0.40% | |
Funding Facilities | Base rate | Maximum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 2.25% | 2.30% | |
Funding Facilities | MRA funding | |||
Line of Credit Facility [Line Items] | |||
Line Amount | $ 18,400,000,000 | ||
Committed Line Amount | 7,187,500,000 | ||
Master Repurchase Agreements | 10,264,136,000 | $ 14,258,968,000 | |
Funding Facilities | Master Repurchase Agreement Due Oct 22 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 2,000,000,000 | ||
Committed Line Amount | 100,000,000 | ||
Master Repurchase Agreements | 998,397,000 | 999,752,000 | |
Funding Facilities | Master Repurchase Agreement Due Dec 02 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 1,500,000,000 | ||
Committed Line Amount | 500,000,000 | ||
Master Repurchase Agreements | 1,128,746,000 | 1,320,484,000 | |
Funding Facilities | Master Repurchase Agreement Due Apr 22 2022 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 2,750,000,000 | ||
Committed Line Amount | 1,000,000,000 | ||
Master Repurchase Agreements | 904,931,000 | 2,407,156,000 | |
Funding Facilities | Master Repurchase Agreement Due Jan 26 2022 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 2,000,000,000 | ||
Committed Line Amount | 1,700,000,000 | ||
Master Repurchase Agreements | $ 1,672,731,000 | 1,953,949,000 | |
Facility term | 12 months | ||
Extension term | 3 months | ||
Timing option for extending facility | 3 months | ||
Funding Facilities | Master Repurchase Agreement Due Jan 26 2022 | Subsequent event | |||
Line of Credit Facility [Line Items] | |||
Line Amount | $ 1,600,000,000 | ||
Committed Line Amount | 1,500,000,000 | ||
Funding Facilities | Master Repurchase Agreement Due Apr 22 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | $ 3,000,000,000 | ||
Committed Line Amount | 500,000,000 | ||
Master Repurchase Agreements | 2,466,830,000 | 2,004,707,000 | |
Funding Facilities | Master Repurchase Agreement Due Sep 05 2022 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 2,000,000,000 | ||
Committed Line Amount | 1,000,000,000 | ||
Master Repurchase Agreements | 449,622,000 | 1,780,902,000 | |
Funding Facilities | Master Repurchase Agreement Due Sep 05 2022 | Subsequent event | |||
Line of Credit Facility [Line Items] | |||
Committed Line Amount | $ 500,000,000 | ||
Funding Facilities | Master Repurchase Agreement Due Sep 16 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 1,750,000,000 | ||
Committed Line Amount | 1,137,500,000 | ||
Master Repurchase Agreements | 1,108,254,000 | 1,343,130,000 | |
Funding Facilities | Master Repurchase Agreement Due Jun 12 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 400,000,000 | ||
Committed Line Amount | 0 | ||
Master Repurchase Agreements | 150,166,000 | 219,786,000 | |
Funding Facilities | Master Repurchase Agreement Due Sep 24 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 1,500,000,000 | ||
Committed Line Amount | 750,000,000 | ||
Master Repurchase Agreements | 790,446,000 | 983,126,000 | |
Funding Facilities | Master Repurchase Agreement Due Oct 09 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 500,000,000 | ||
Committed Line Amount | 0 | ||
Master Repurchase Agreements | 155,601,000 | 480,544,000 | |
Funding Facilities | Master Repurchase Agreement Due Dec 17 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 1,000,000,000 | ||
Committed Line Amount | 500,000,000 | ||
Master Repurchase Agreements | 438,412,000 | 765,432,000 | |
Funding Facilities | Early Funding | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 7,000,000,000 | ||
Committed Line Amount | 0 | ||
Early Funding Facilities | 4,188,536,000 | 3,483,605,000 | |
Funding Facilities | Early Funding Facility, one | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 4,000,000,000 | ||
Committed Line Amount | 0 | ||
Early Funding Facilities | 3,032,857,000 | 2,514,193,000 | |
Funding Facilities | Early Funding Facility, two | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 3,000,000,000 | ||
Committed Line Amount | 0 | ||
Early Funding Facilities | $ 1,155,679,000 | $ 969,412,000 | |
Timing for review of agreement | 90 days |
Borrowings - Other Financing Fa
Borrowings - Other Financing Facilities (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Apr. 01, 2021 | Dec. 31, 2020 | |
Line of Credit Facility [Line Items] | |||
Line of Credit Financing Facilities | $ 375,000,000 | $ 375,000,000 | |
Early Buy out Financing Facilities | 635,712,000 | 330,266,000 | |
Subsequent event | |||
Line of Credit Facility [Line Items] | |||
Early Buy out Financing Facilities | $ 2,000,000,000 | ||
Line of Credit Financing Facilities | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 3,500,000,000 | ||
Committed Line Amount | 1,200,000,000 | ||
Line of Credit Financing Facilities | $ 375,000,000 | 375,000,000 | |
Line of Credit Financing Facilities | Base rate | Minimum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.25% | ||
Line of Credit Financing Facilities | Base rate | Maximum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 4.00% | ||
Line of Credit | Unsecured line of credit, maturing Jul 27 2025, RHI | Affiliated entity | |||
Line of Credit Facility [Line Items] | |||
Line Amount | $ 2,000,000,000 | ||
Committed Line Amount | 0 | ||
Line of Credit Financing Facilities | 0 | 0 | |
Line of Credit | Unsecured line of credit, maturing Jul 31 2025, RHI | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 100,000,000 | ||
Committed Line Amount | 0 | ||
Line of Credit Financing Facilities | 0 | 0 | |
Line of Credit | MSRs line of credit, maturing Oct 22 2021 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 200,000,000 | ||
Committed Line Amount | 0 | ||
Line of Credit Financing Facilities | 0 | 0 | |
Line of Credit | MSRs line of credit, maturing Apr 30 2024 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 200,000,000 | ||
Committed Line Amount | 200,000,000 | ||
Line of Credit Financing Facilities | $ 75,000,000 | 75,000,000 | |
Facility term | 5 years | ||
Facility revolving period | 3 years | ||
Facility amortization period | 2 years | ||
Revolving Credit Facility | Revolving credit facility due Aug 10 2023 | |||
Line of Credit Facility [Line Items] | |||
Line Amount | $ 1,000,000,000 | ||
Committed Line Amount | 1,000,000,000 | ||
Line of Credit Financing Facilities | 300,000,000 | $ 300,000,000 | |
Early Buy out Financing Facility | |||
Line of Credit Facility [Line Items] | |||
Line Amount | 2,600,000,000 | ||
Committed Line Amount | $ 0 | ||
Early Buy out Financing Facility | Base rate | Minimum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.25% | ||
Early Buy out Financing Facility | Base rate | Maximum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 4.00% |
Borrowings - Unsecured Senior N
Borrowings - Unsecured Senior Notes (Details) - Unsecured Senior Notes - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 3,010,000 | $ 3,010,000 |
Weighted Average Interest Rate (percent) | 4.27% | 4.27% |
2028 Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest Rate (percent) | 5.25% | |
Outstanding Balance | $ 1,010,000 | $ 1,010,000 |
Unamortized debt issuance costs | 7,901 | 8,197 |
Unamortized discounts | $ 6,572 | 6,817 |
2029 Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest Rate (percent) | 3.625% | |
Outstanding Balance | $ 750,000 | 750,000 |
Unamortized debt issuance costs and discounts | $ 7,803 | 8,053 |
2031 Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest Rate (percent) | 3.875% | |
Outstanding Balance | $ 1,250,000 | 1,250,000 |
Unamortized debt issuance costs and discounts | $ 13,548 | $ 13,887 |
Transactions with Related Par_3
Transactions with Related Parties - Narrative (Details) - USD ($) | Jul. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Jul. 24, 2020 | Dec. 24, 2019 | Jun. 09, 2017 |
Related Party Transaction [Line Items] | |||||||
Lines of credit | $ 375,000,000 | $ 375,000,000 | |||||
Marketing and advertising expenses | 320,843,000 | $ 217,993,000 | |||||
Line of Credit | Unsecured line of credit, maturing Jul 31 2025, RHI | |||||||
Related Party Transaction [Line Items] | |||||||
Line amount | 100,000,000 | ||||||
Lines of credit | 0 | 0 | |||||
Affiliated entity | Line of Credit | Unsecured line of credit, maturing Jul 27 2025, RHI | |||||||
Related Party Transaction [Line Items] | |||||||
Line amount | 2,000,000,000 | ||||||
Lines of credit | $ 0 | 0 | |||||
Affiliated entity | RHI credit agreement | Line of Credit | Unsecured line of credit, maturing Nov 01 2024, RHI | |||||||
Related Party Transaction [Line Items] | |||||||
Line amount | $ 1,000,000,000 | $ 300,000,000 | |||||
Affiliated entity | RHI credit agreement | Line of Credit | Unsecured line of credit, maturing Jul 27 2025, RHI | |||||||
Related Party Transaction [Line Items] | |||||||
Line amount | $ 2,000,000,000 | ||||||
Affiliated entity | RHI credit agreement | Line of Credit | Unsecured line of credit, maturing Jul 27 2025, RHI | One-month LIBOR | |||||||
Related Party Transaction [Line Items] | |||||||
Basis spread on variable rate | 1.25% | ||||||
Affiliated entity | RHI credit agreement | Line of Credit | Unsecured line of credit, maturing Jul 31 2025, RHI | |||||||
Related Party Transaction [Line Items] | |||||||
Line amount | $ 100,000,000 | ||||||
Affiliated entity | RHI credit agreement | Line of Credit | Unsecured line of credit, maturing Jul 31 2025, RHI | One-month LIBOR | |||||||
Related Party Transaction [Line Items] | |||||||
Basis spread on variable rate | 1.25% | ||||||
Affiliated entity | RHI/ATI Debenture | |||||||
Related Party Transaction [Line Items] | |||||||
Surplus debenture with related party | $ 21,500,000 | $ 21,500,000 | |||||
Interest rate (percent) | 8.00% | 8.00% | |||||
Affiliated entity | Services, products and other transactions | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue from related parties | $ 3,729,000 | 3,100,000 | |||||
Affiliated receivables | 11,901,000 | $ 22,172,000 | |||||
General and administrative expenses from transactions with related parties | 16,257,000 | 10,872,000 | |||||
Affiliated payables | 52,269,000 | $ 52,396,000 | |||||
Affiliated entity | Parking agreements | |||||||
Related Party Transaction [Line Items] | |||||||
General and administrative expenses from transactions with related parties | 5,672,000 | 5,011,000 | |||||
Affiliated entity | Promotional sponsorships | |||||||
Related Party Transaction [Line Items] | |||||||
Marketing and advertising expenses | 2,335,000 | 2,323,000 | |||||
Affiliated entity | Bedrock lease agreements | |||||||
Related Party Transaction [Line Items] | |||||||
Expenses from transaction with related parties | $ 17,629,000 | $ 16,397,000 |
Transactions with Related Par_4
Transactions with Related Parties - Receivables from and Payables to Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Included in Notes receivable and due from affiliates on the Condensed Consolidated Balance Sheets | ||
Affiliated receivables and other notes | $ 11,901 | $ 22,172 |
Included in Notes payable and due to affiliates on the Condensed Consolidated Balance Sheets | ||
Notes payable and due to affiliates | 73,769 | 73,896 |
Affiliated entity | ||
Included in Notes payable and due to affiliates on the Condensed Consolidated Balance Sheets | ||
Notes payable and due to affiliates | 73,769 | 73,896 |
Affiliated entity | RHI/ATI Debenture | ||
Included in Notes payable and due to affiliates on the Condensed Consolidated Balance Sheets | ||
RHI/ATI Debenture | $ 21,500 | $ 21,500 |
Interest rate (percent) | 8.00% | 8.00% |
Affiliated entity | Services, products and other transactions | ||
Included in Notes receivable and due from affiliates on the Condensed Consolidated Balance Sheets | ||
Affiliated receivables and other notes | $ 11,901 | $ 22,172 |
Included in Notes payable and due to affiliates on the Condensed Consolidated Balance Sheets | ||
Affiliated payables | $ 52,269 | $ 52,396 |
Other Assets (Details)
Other Assets (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Mortgage production related receivables | $ 303,246,000 | $ 307,282,000 |
Disbursement funds advances | 128,468,000 | 80,877,000 |
Prepaid expenses | 86,614,000 | 98,529,000 |
Goodwill and other intangible assets | 46,498,000 | 47,230,000 |
Non-production-related receivables | 38,259,000 | 76,595,000 |
Ginnie Mae buyouts | 32,124,000 | 40,681,000 |
Other real estate owned | 1,184,000 | 1,131,000 |
Margin call receivable from counterparty | 0 | 247,604,000 |
Other | 66,984,000 | 41,548,000 |
Total Other assets | $ 703,377,000 | $ 941,477,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | May 14, 2021 | Sep. 09, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||||||
Income tax expense | $ 65,832 | $ 1,232 | ||||
Income before income taxes | $ 2,843,170 | $ 100,279 | ||||
Percentage of applicable tax savings payable per tax receivable agreement | 90.00% | |||||
Percentage of applicable tax savings retained by the Company per tax receivable agreement | 10.00% | |||||
Holdings Units acquired | 115,000,000 | 115,000,000 | ||||
Value of Holdings Units acquired | $ 2,070,000 | |||||
Valuation Allowance [Line Items] | ||||||
Increase in Tax receivable agreement liability | $ 119,456 | |||||
Offsetting amount to additional paid-in capital | $ 985 | |||||
Tax distributions to holders of Holdings Units | $ 200,150 | |||||
Class A common stock | ||||||
Valuation Allowance [Line Items] | ||||||
Shares received in exchange of paired interests | 20,200,000 | |||||
Investment in partnership | ||||||
Valuation Allowance [Line Items] | ||||||
Increase in deferred tax asset | $ 123,587 | |||||
Increase in valuation allowance | $ 3,146 | |||||
Subsequent event | ||||||
Valuation Allowance [Line Items] | ||||||
Tax distributions to holders of Holdings Units | $ 861,299 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Net Hedging Losses and Gains (Details) - Forward commitments - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedging gains | $ 1,642,280 | |
Hedging (losses) | $ (996,984) |
Derivative Financial Instrume_4
Derivative Financial Instruments - Notional and Fair Values (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative [Line Items] | ||
Derivative liability | $ 54,412 | $ 506,071 |
IRLCs, net of loan funding probability | ||
Derivative [Line Items] | ||
Derivative asset | 765,215 | 1,897,194 |
Derivative liability | 0 | 0 |
Forward commitments | ||
Derivative [Line Items] | ||
Derivative asset | 909,153 | 20,584 |
Derivative liability | 54,412 | 506,071 |
Not Designated | IRLCs, net of loan funding probability | ||
Derivative [Line Items] | ||
Notional value | 31,909,968 | 40,560,544 |
Not Designated | Forward commitments | ||
Derivative [Line Items] | ||
Notional value | $ 42,203,886 | $ 59,041,900 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Cash pledged to counterparties | $ 0 | $ 247,604,000 | |
Cash pledged from counterparties | 659,339,000 | $ 0 | |
Credit losses due to nonperformance of counterparty | $ 0 | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Gross Amounts Recognized Subject to Master Netting Agreements (Details) - Not Designated - Forward commitments - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Offsetting Assets [Line Items] | ||
Gross Amount of Recognized Assets | $ 1,359,887 | $ 35,746 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | (450,734) | (15,162) |
Net Assets Presented in the Condensed Consolidated Balance Sheets | 909,153 | 20,584 |
Gross Amount of Recognized Liabilities | (81,311) | (715,671) |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | 26,899 | 209,600 |
Net Liabilities Presented in the Condensed Consolidated Balance Sheets | $ (54,412) | $ (506,071) |
Commitments, Contingencies, a_3
Commitments, Contingencies, and Guarantees - Narrative (Details) $ in Thousands | Mar. 31, 2021USD ($)guarantee | Dec. 31, 2020USD ($)guarantee | Mar. 31, 2021USD ($)guarantee | Mar. 31, 2020USD ($) |
Other Commitments [Line Items] | ||||
Administrated escrow deposits for property taxes and insurance | $ 4,097,902 | $ 3,551,400 | $ 4,097,902 | |
Administrated escrow deposits for principal and interest | 11,791,564 | 13,065,549 | 11,791,564 | |
Other expenses | 235,731 | $ 121,135 | ||
Estimated Litigation Liability | $ 15,000 | $ 0 | 15,000 | |
IRLCs | ||||
Other Commitments [Line Items] | ||||
Average number of days until expiration of interest rate lock commitments | 43 days | 43 days | ||
Mortgages | ||||
Other Commitments [Line Items] | ||||
Commitments to sell loans | $ 6,286,655 | $ 3,139,816 | 6,286,655 | |
MSRs with Servicing Released | ||||
Other Commitments [Line Items] | ||||
Commitments to sell loans | 819,380 | 280,502 | 819,380 | |
Financial guarantee | ||||
Other Commitments [Line Items] | ||||
Guaranteed debt total amount | $ 15,000 | $ 15,000 | $ 15,000 | |
Number of separate guarantees | guarantee | 3 | 3 | 3 | |
Guarantee one | Financial guarantee | ||||
Other Commitments [Line Items] | ||||
Guaranteed debt total amount | $ 5,000 | $ 5,000 | $ 5,000 | |
Guarantee two | Financial guarantee | ||||
Other Commitments [Line Items] | ||||
Guaranteed debt total amount | 5,000 | 5,000 | 5,000 | |
Guarantee three | Financial guarantee | ||||
Other Commitments [Line Items] | ||||
Guaranteed debt total amount | $ 5,000 | $ 5,000 | 5,000 | |
Trademark license | ||||
Other Commitments [Line Items] | ||||
Other expenses | $ 625 | $ 1,875 |
Commitments, Contingencies, a_4
Commitments, Contingencies, and Guarantees - Interest Rate Lock Commitments (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
IRLCs UPB, Fixed Rate | $ 39,337,177 | $ 53,736,717 |
IRLCs UPB, Variable Rate | $ 2,306,869 | $ 1,065,936 |
Commitments, Contingencies, a_5
Commitments, Contingencies, and Guarantees - Investor Reserves Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Investor Reserves | ||
Balance at beginning of period | $ 87,191 | $ 54,387 |
Provision for investor reserves | 5,347 | 1,577 |
Premium recapture and indemnification losses paid | 1,399 | (297) |
Balance at end of period | $ 93,937 | $ 55,667 |
Minimum Net Worth Requirements
Minimum Net Worth Requirements (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items] | ||
Minimum capital ratio requirement, Adjusted/Tangible Net Worth to Total Assets | 0.06 | |
Minimum adjusted net worth balance | $ 2,005,065,000 | $ 2,175,968,000 |
Fannie Mae and Freddie Mac | ||
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items] | ||
Minimum base net worth requirement | $ 2,500,000 | |
Minimum net worth requirement, basis point component per outstanding UPB | 0.25% | |
Minimum liquidity requirement, basis points per total Agency servicing | 0.035% | |
Minimum liquidity requirement, basis points per total nonperforming Agency servicing | 2.00% | |
Minimum liquidity requirement, threshold percentage of nonperforming Agency servicing in excess of total Agency servicing | 6.00% | |
Ginnie Mae | ||
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items] | ||
Minimum base net worth requirement | $ 2,500,000 | |
Minimum net worth requirement, basis point component per single-family effective outstanding obligations | 0.35% | |
Minimum liquidity requirement, liquid assets amount | $ 1,000,000 | |
Minimum liquidity requirement, liquid assets as basis points per outstanding single-family MBS | 0.10% |
Segments - Key Operating Data f
Segments - Key Operating Data for Business Segments (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021USD ($)segment | Mar. 31, 2020USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 2 | |
Segment Reporting Information [Line Items] | ||
Gain on sale | $ 3,552,442 | $ 1,822,109 |
Interest income | 95,245 | 74,042 |
Interest expense on funding facilities | (67,844) | (39,459) |
Servicing fee income | 292,361 | 257,093 |
Change in fair value of MSRs | 245,921 | (991,252) |
Other income | 466,112 | 243,776 |
Total revenue, net | 4,584,237 | 1,366,309 |
Plus/Less: (Decrease) increase in MSRs due to valuation assumptions | (544,450) | 743,327 |
Adjusted revenue | 4,039,787 | 2,109,636 |
Directly attributable expenses | 1,263,339 | 918,063 |
Contribution margin | $ 2,776,448 | 1,191,573 |
Number of reportable segments | segment | 2 | |
Reportable Segments | ||
Segment Reporting Information [Line Items] | ||
Gain on sale | $ 3,548,028 | 1,814,279 |
Interest income | 94,729 | 72,882 |
Interest expense on funding facilities | (67,824) | (39,105) |
Servicing fee income | 291,652 | 255,990 |
Change in fair value of MSRs | 245,921 | (991,252) |
Other income | 332,690 | 164,632 |
Total revenue, net | 4,445,196 | 1,277,426 |
Plus/Less: (Decrease) increase in MSRs due to valuation assumptions | (544,450) | 743,327 |
Adjusted revenue | 3,900,746 | 2,020,753 |
Directly attributable expenses | 1,198,272 | 872,564 |
Contribution margin | 2,702,474 | 1,148,189 |
Reportable Segments | Direct to Consumer | ||
Segment Reporting Information [Line Items] | ||
Gain on sale | 2,863,600 | 1,610,832 |
Interest income | 58,668 | 47,311 |
Interest expense on funding facilities | (42,006) | (25,385) |
Servicing fee income | 291,652 | 255,990 |
Change in fair value of MSRs | 245,921 | (991,252) |
Other income | 304,912 | 145,023 |
Total revenue, net | 3,722,747 | 1,042,519 |
Plus/Less: (Decrease) increase in MSRs due to valuation assumptions | (544,450) | 743,327 |
Adjusted revenue | 3,178,297 | 1,785,846 |
Directly attributable expenses | 1,018,495 | 780,620 |
Contribution margin | 2,159,802 | 1,005,226 |
Reportable Segments | Partner Network | ||
Segment Reporting Information [Line Items] | ||
Gain on sale | 684,428 | 203,447 |
Interest income | 36,061 | 25,571 |
Interest expense on funding facilities | (25,818) | (13,720) |
Servicing fee income | 0 | 0 |
Change in fair value of MSRs | 0 | 0 |
Other income | 27,778 | 19,609 |
Total revenue, net | 722,449 | 234,907 |
Plus/Less: (Decrease) increase in MSRs due to valuation assumptions | 0 | 0 |
Adjusted revenue | 722,449 | 234,907 |
Directly attributable expenses | 179,777 | 91,944 |
Contribution margin | 542,672 | 142,963 |
All Other | ||
Segment Reporting Information [Line Items] | ||
Gain on sale | 4,414 | 7,830 |
Interest income | 516 | 1,160 |
Interest expense on funding facilities | (20) | (354) |
Servicing fee income | 709 | 1,103 |
Change in fair value of MSRs | 0 | 0 |
Other income | 133,422 | 79,144 |
Total revenue, net | 139,041 | 88,883 |
Plus/Less: (Decrease) increase in MSRs due to valuation assumptions | 0 | 0 |
Adjusted revenue | 139,041 | 88,883 |
Directly attributable expenses | 65,067 | 45,499 |
Contribution margin | $ 73,974 | $ 43,384 |
Segments - Reconciliation of Se
Segments - Reconciliation of Segment Contribution Margin to U.S. GAAP Net Income Before Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment reporting reconciliation [Line Items] | ||
Contribution margin, excluding change in MSRs due to valuation assumptions | $ 2,776,448 | $ 1,191,573 |
(Decrease) increase in MSRs due to valuation assumptions | 544,450 | (743,327) |
Contribution margin, including change in MSRs due to valuation assumptions | 3,320,898 | 448,246 |
Salaries, commissions and team member benefits | 842,199 | 683,606 |
General and administrative expenses | 291,419 | 194,074 |
Depreciation and amortization | 15,304 | 16,115 |
Interest and amortization expense on non-funding debt | 35,571 | 33,107 |
Other expenses | 235,731 | 121,135 |
Income before income taxes | 2,843,170 | 100,279 |
Expenses not allocated to segments | ||
Segment reporting reconciliation [Line Items] | ||
Salaries, commissions and team member benefits | 230,094 | 198,850 |
General and administrative expenses | 194,494 | 94,597 |
Depreciation and amortization | 15,304 | 16,115 |
Interest and amortization expense on non-funding debt | 35,571 | 33,107 |
Other expenses | $ 2,265 | $ 5,298 |
Variable Interest Entities (Det
Variable Interest Entities (Details) | 5 Months Ended |
Dec. 31, 2020 | |
Holdings | |
Variable Interest Entity [Line Items] | |
Management and voting interest as managing member in Holdings (percent) | 100.00% |
Non-controlling Interests - Sum
Non-controlling Interests - Summary of Ownership (Details) - Holdings - shares | Mar. 31, 2021 | Dec. 31, 2020 |
Noncontrolling Interest [Line Items] | ||
Holdings Units (shares) | 1,984,454,348 | 1,984,452,048 |
Ownership Percentage | 100.00% | 100.00% |
Rocket Companies Inc. | ||
Noncontrolling Interest [Line Items] | ||
Holdings Units (shares) | 135,574,865 | 115,372,565 |
Ownership Percentage | 6.83% | 5.81% |
Chairman | ||
Noncontrolling Interest [Line Items] | ||
Holdings Units (shares) | 1,101,822 | 1,101,822 |
Ownership Percentage | 0.06% | 0.06% |
RHI | ||
Noncontrolling Interest [Line Items] | ||
Holdings Units (shares) | 1,847,777,661 | 1,867,977,661 |
Ownership Percentage | 93.11% | 94.13% |
Non-controlling Interests - Nar
Non-controlling Interests - Narrative (Details) | Mar. 31, 2021shares |
Noncontrolling Interest [Line Items] | |
Increase in controlling interest (percent) | 1.00% |
Class A common stock | |
Noncontrolling Interest [Line Items] | |
Shares received in exchange of paired interests | 20,200,000 |
Share-based Compensation - Narr
Share-based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 41,983 | $ 41,737 |
TMSPP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock reserved for equity-based awards (shares) | 10,526,316 | |
Percentage of gross pay eligible for utilization | 15.00% | |
Percentage of closing market price for purchases | 85.00% | |
Shares purchased under the TMSPP | 0 |
Share-based Compensation -Share
Share-based Compensation -Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 41,983 | $ 41,737 |
RKT-denominated awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 40,559 | 0 |
RKT-denominated awards | Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 27,601 | 0 |
RKT-denominated awards | Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 10,035 | 0 |
RKT-denominated awards | Team Member Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 2,923 | 0 |
RHI-denominated awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 1,372 | 41,688 |
RHI-denominated awards | Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 1,372 | 28,978 |
RHI-denominated awards | Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 0 | 32 |
RHI-denominated awards | Team Member Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 0 | $ 12,678 |
Earnings Per Share - Calculatio
Earnings Per Share - Calculation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net income | $ 2,777,338 | $ 99,047 |
Net income attributable to non-controlling interest | (2,653,636) | (99,047) |
Net income attributable to Rocket Companies | 123,702 | $ 0 |
Add: Reallocation of Net income attributable to vested, undelivered stock awards | 80 | |
Net income attributable to common shareholders | 123,782 | |
Numerator: | ||
Net income attributable to Class A common shareholders - basic | 123,782 | |
Add: Reallocation of net income attributable to dilutive impact of share-based compensation awards (1) | 6,349 | |
Net income attributable to Class A common shareholders - diluted | $ 130,131 | |
Denominator: | ||
Weighted average shares of Class A common stock outstanding - basic | 115,673,524 | |
Add: Dilutive impact of share-based compensation awards (2) | 6,338,392 | |
Weighted average shares of Class A common stock outstanding - diluted | 122,011,916 | |
Earnings per share of Class A common stock outstanding - basic (in dollars per share) | $ 1.07 | |
Earnings per share of Class A common stock outstanding - diluted (in dollars per share) | $ 1.07 | |
Net income attributable to dilutive impact of share-based compensation awards, restricted stock units | $ 5,889 | |
Net income attributable to dilutive impact of share-based compensation awards, stock options | 422 | |
Net income attributable to dilutive impact of share-based compensation awards, TMSPP | $ 38 | |
Dilutive impact of share-based compensation awards, restricted stock units | 5,879,491 | |
Dilutive impact of share-based compensation awards, stock options | 421,267 | |
Dilutive impact of share-based compensation awards, TMSPP | 37,634 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) | 3 Months Ended |
Mar. 31, 2021shares | |
Holdings Units and corresponding Class D common stock | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from computation of diluted EPS | 1,868,855,039 |