Rocket Mortgage adds special-purpose credit program

Rocket Mortgage expanded its special-purpose credit program that will offer a $3,000 credit for first-time homebuyers to use toward their downpayment in select cities.

The Detroit-headquarterd lender will offer Freddie Mac‘s BorrowSmart Access program for buyers who are purchasing a home in counties across 10 metropolitan areas — Atlanta, Chicago, Detroit, El Paso, Houston, McAllen, Memphis, Miami, Philadelphia and St. Louis, the lender said Tuesday. Buyers must have an income equal to or less than 140% of the area median income and meet all other Freddie Mac lending guidelines.

“BorrowSmart Access is the continuation of our commitment to narrow the homeownership gap,” Bob Walters, CEO of Rocket Mortgage said in a statement. “By offering solutions for borrowers in underrepresented communities, we can help families build financial freedom and generational wealth.”

Freddie Mac’s BorrowSmart is a low down payment home loan program available through specific lenders. For borrowers who make between 50.01% and 80% of the median income in their area, they could receive up to $1,250 worth of assistance available. The credit goes up to $2,500 if the borrower makes 50% or less of the median income in the area. 

Rocket’s first special-purpose credit program debuted in December. Dubbed “Purchase Plus,” the initiative provides $7,500 in credits for first-time homebuyers to use towards their mortgage costs in six major cities including Atlanta, Baltimore and Chicago.

The lender’s programs to expand access to homeownership efforts include Rocket Community Fund’s Rocket Wealth Accelerator Program which provides matching dollars for participants’ savings plans with up to $500 for people planning to buy a home or a vehicle and up to $300 for those with short-term or emergency savings goals.

Rocket’s expansion of its special-purpose credit program comes on the heels of the lender reporting its largest financial loss yet – negative $197 million in net adjusted income in the fourth quarter. By generally accepted accounting practices (GAAP), Rocket lost $493 million.

The lender originated $19 billion in mortgages in the final quarter of 2022 as the industry is on a course to rightsize. 

While reporting a plunged revenue of $481 million in the fourth quarter, the company revealed that it reduced its expenses by $3 billion or 40% annually in 2022. 

SEC filings showed Rocket reduced its headcount by about 28.8% to 18,500 by the end of 2022 from the previous 12 months when it had 26,000 employees. The filing didn’t specify the share of voluntary buyouts, layoffs or regular attrition. 

Along with the firm’s task of returning to profitability, the company is also seeking a permanent CEO following Jay Farner’s planned departure in June.