Does Rocket Mortgage Sell Their Loans and What It Means for You

Rocket Mortgage is a popular choice for homebuyers, but one question that often comes up is whether they sell their loans. The short answer is yes, Rocket Mortgage does sell their loans, but what does that mean for you?

This practice is not unique to Rocket Mortgage, as many lenders sell their loans to investors. In fact, according to the article, 60% of mortgages are sold within 30 days of closing. This means that the lender you initially work with may not be the one holding your loan long-term.

Selling loans to investors can be beneficial for lenders, as it allows them to free up capital to make more loans. However, it can also raise concerns for borrowers, who may wonder if their loan will be serviced by the same company.

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Rocket Mortgage's loan sales are a common occurrence, with the company selling around $20 billion in mortgage servicing rights (MSRs) to JPMorgan Chase in April.

Rocket Mortgage sold about 4% of its servicing portfolio in April, with borrowers transitioning to JPMorgan Chase in June.

The sale is significant, as JPMorgan Chase likely surpassed Wells Fargo as America's largest mortgage servicer last month.

Rocket Mortgage retains almost all of its loans to service borrowers, according to Bill Banfield, the company's executive vice president of capital markets.

Rocket's transaction follows the sale of billions in MSRs this year in the secondary market, with Wells Fargo recently putting an MSR portfolio worth roughly $50 billion up for auction.

Despite the sale, Rocket Mortgage's executives hinted at buying servicing portfolios in a call with analysts several weeks ago.

Selling mortgages is a common practice in the industry, and often, your loan servicing remains the same and you'll continue making payments just as you did before.

Rocket Mortgage doesn't sell their loans directly to investors. Instead, they sell them to large investors like Fannie Mae and Freddie Mac.

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These government-sponsored enterprises (GSEs) purchase mortgages like the ones Rocket Mortgage originates. Fannie Mae and Freddie Mac then package and sell them to investors as mortgage-backed securities.

Rocket Mortgage may also sell their loans to private investors like hedge funds and pension funds. However, this is less common than selling to the GSEs.

The loans are typically sold soon after origination, often within 30 to 45 days. This is because the GSEs and other investors are looking for a steady stream of new mortgages to purchase.

Rocket Mortgage may also hold onto some of their loans, but this is rare. They usually sell the majority of their loans to investors to free up capital for new loans.

The terms of the sale, including the price and any conditions, are typically negotiated between Rocket Mortgage and the buyer.

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Mortgage servicing rights (MSR) are often transferred to a third-party that takes over the administrative tasks of servicing a mortgage in exchange for a fee.

Rocket Mortgage, like many other lenders, can sell their mortgage servicing rights to a third-party, which means they'll no longer be responsible for collecting payments or handling other administrative tasks.

This transfer of MSR allows Rocket Mortgage to focus on originating new loans and other business activities, while the third-party handles the ongoing servicing of the mortgage.

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