Rocket’s profits drop dramatically to $60M in Q2 2022

Rocket Companies, the parent of America’s top mortgage lender Rocket Mortgage, reported a $60 million profit in the second quarter, down from $1 billion in profits just the previous quarter.

The stunning decline in profitability suggests Rocket has much work to do as higher mortgage rates wipe out refinancing opportunities and even depress purchase sales.

Jay Farner, vice chairman and CEO of Rocket Companies, said the company introduced new lending programs, forged new mortgage partnerships, launched the solar business and expanded the brand to Canada during the quarter.

“These moves provide us immediate opportunities today, and a tremendous runway for growth and expansion well into the future,” he said. 

In the second quarter, however, the company generated $1.4 billion in revenue, down 47.5% compared to the same period last year. Meanwhile, total expenses dropped from $1.6 billion a year ago to $1.3 billion in the second quarter of 2022. 

“We reduced expenses by approximately $300 million during the second quarter and will continue to execute a prudent approach to cost management,” Julie Booth, CFO and treasurer of Rocket Companies, said in a statement. 

The company originated $34.5 billion in closed loans from April to June, down from $83.7 billion in the same period last year. The gain-on-sale margin, however, grew from 2.78% to 2.92% in the period. 

Rocket Mortgage reported $19.53 billion in originations through its direct-to-consumer channel and $13.58 billion through its TPO channel, its conduit to mortgage brokers and historically a stronger source of purchase business. (The company doesn’t break out purchase business versus refinancings in its earnings reports.)

Rocket is forecasting closed loan volume in the third quarter between $23 billion and $28 billion, with gain-on-sale margins between 2.50% and 2.80%.

The company’s servicing book unpaid principal balance reached $538 billion at June 30, 2022, up 6% from June 30, 2021.

Check back for updates following the earnings call.

The post Rocket’s profits drop dramatically to $60M in Q2 2022 appeared first on HousingWire.

Leave a Reply

Your email address will not be published. Required fields are marked *