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What changed in Rocket Companies, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Rocket Companies, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+418 added−466 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-27)

Top changes in Rocket Companies, Inc.'s 2024 10-K

418 paragraphs added · 466 removed · 344 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn our Wholesale channel, we have partnerships with mortgage brokers through Rocket Pro TPO (third party origination) and offer Rocket Mortgage marketing and technology resources to help our broker partners thrive. In our Premier Enterprise Partner channel, we partner with financial institutions and well-known consumer-focused companies to offer their clients mortgage solutions with our trusted, well-recognized brand.
Biggest changeIn our Premier Enterprise Partner channel, we partner with financial institutions and well-known consumer-focused companies to offer their clients mortgage solutions with our trusted, well-recognized brand. 4 As of December 31, 2024, the net client retention rate of our servicing portfolio was 97% on an annual basis.
Our system has been designed to integrate across business functions, continuously monitoring in‑progress transactions and leveraging our proprietary, data‑driven, decision engine to recommend the most efficient task for each team member. We have data and scale that uniquely positions Rocket to lead the next wave of industry transformation with generative AI.
Our system has been designed to integrate across business functions, continuously monitoring in‑progress transactions and leveraging our proprietary, data‑driven, decision engine to recommend the most efficient task for each team member. We have data and scale that uniquely positions Rocket to lead the next wave of industry transformation with AI.
We must also adhere to applicable laws and regulations promulgated by the various provinces and territories of Canada where we conduct business. We continue to work diligently to assess and understand the implications of the regulatory environment in which we operate and the regulatory changes that we are facing.
We must also adhere to applicable laws and regulations promulgated by the various provinces and territories of Canada where we conduct business. 7 We continue to work diligently to assess and understand the implications of the regulatory environment in which we operate and the regulatory changes that we are facing.
From time to time, we may use our website as a channel of distribution of material information. Financial and other material information regarding the Company is routinely posted on and accessible at rocketcompanies.com. Our ESG report, can be accessed at ir.rocketcompanies.com.
From time to time, we may use our website as a channel of distribution of material information. Financial and other material information regarding the Company is routinely posted on and accessible at rocketcompanies.com. Our 2024 ESG report, can be accessed at ir.rocketcompanies.com.
The Rock Academy provides team members the opportunity to access over 500 online academic programs and certificates from accredited colleges and universities that fit the schedule of working adults with 100% tuition assistance for select programs and up to $5,250 for others. The program provides equitable access to post-secondary education for all eligible team members.
The Rocket Academy provides team members the opportunity to access over 500 online academic programs and certificates from accredited colleges and universities that fit the schedule of working adults with 100% tuition assistance for select programs and up to $5,250 for others. The program provides equitable access to post-secondary education for all eligible team members.
In turn, this could make our compliance responsibilities more complex. We are also subject to judicial and administrative decisions that impose requirements and restrictions on our business. Numerous U.S. federal and state regulatory consumer protection laws impact our business.
In turn, this could make our compliance responsibilities more complex. We are also subject to judicial and administrative decisions that impose requirements and restrictions on our business. Numerous U.S. federal and state consumer protection laws and regulations impact our business.
Rocket Data and Technology We aim to continuously improve on delivering speed, certainty and value to our clients through scalable, technology-driven solutions. We believe artificial intelligence will be at the center of how clients buy, sell and finance homes. We have strategically invested in technology for nearly four decades and developed our technology in modules to facilitate agile enhancements.
Rocket Data and Technology We aim to continuously improve on delivering speed, certainty and value to our clients through scalable, technology-driven solutions. We believe AI will be at the center of how clients buy, sell and finance homes. We have strategically invested in technology for nearly four decades and developed our technology in modules to facilitate agile enhancements.
We have registered or are in the process of registering several trademarks related to our name, “Rocket”, the names of our affiliated companies, and our “Rocket O” logo. We believe our name and logo are important brand identifiers for our shareholders and clients.
We have registered or are in the process of registering several trademarks related to our name, “Rocket”, the names of our affiliated companies, and our “Rocket Halo” logo. We believe our name and logo are important brand identifiers for our clients and shareholders.
Team Members participated in impactful learning through TMRN programming including technology and coding workshops and finance and home ownership planning featuring our Chief Financial Officer. To understand and improve team member retention and engagement, the Company surveys team members with the assistance of third-party consultants.
Team Members participated in impactful learning through TMRN programming including technology and coding workshops and finance and home ownership planning featuring our Chief Financial Officer. To understand and improve team member retention and engagement, the Company surveys team members with the assistance of third-party consultants. In 2024, 87% of our team members completed these engagement surveys.
The CFPB has been active in supervision and enforcement, and continues to amend rules and regulations within its purview. Furthermore, our expansion of operations into Canada has made us subject to Canadian laws, 7 regulations and rules which have additional and distinct oversight, supervision, and enforcement requirements.
The CFPB has been active in supervision and enforcement and continues to adopt new and amend existing regulations within its purview. Furthermore, our expansion of operations into Canada has made us subject to Canadian laws, regulations and rules which have additional and distinct oversight, supervision, and enforcement requirements.
Our TMRNs are a community of team members cultivating a culture of belonging, engagement, and business impact in support of Rocket’s mission, strategic objectives, and goals. Total membership in 2023 exceeded 4,500 team members across our 11 networks.
Our TMRNs are a community of team members cultivating a culture of belonging, engagement, and business impact in support of Rocket’s mission, strategic objectives, and goals. Total membership in 2024 exceeded 4,100 team members across our 11 networks.
Our in‑house marketing agency has a long history of creating bold and visible events and campaigns and reaching potential clients through highly targeted marketing strategies. Our scale and data analytics provide distinct advantages in the efficiency of our marketing initiatives.
We have a long history of creating bold and visible events and campaigns and reaching potential clients through highly targeted marketing strategies. Our scale and data analytics provide distinct advantages in the efficiency of our marketing initiatives.
Cash flows are directly correlated to the balances of outstanding mortgages and can fluctuate based on the volume of loans added or that are paid off in any given period. Additionally, we earn ancillary revenue such as late fees and modification incentives on the loans we service. Subservicing revenue is primarily based on contractual per loan fees.
Cash flows correlate to the collection of required mortgage payments from the client and can fluctuate based on the volume of loans added or that are paid off in any given period. Additionally, we earn ancillary revenue such as late fees and modification incentives on the loans we service. Subservicing revenue is primarily based on contractual per loan fees.
We believe AI will transform our business, and in turn, the client experience and the industry, from lead generation and allocation to underwriting, closing, and servicing. Marketing We believe our national Rocket brand is a competitive advantage that is difficult to replicate. In our industry, we believe we are the only company of scale with significant digital‑first brand recognition.
We believe AI will transform our business, and in turn, the client experience and the industry, from lead generation and allocation to underwriting, closing and servicing. 5 Marketing We believe our national Rocket brand is a competitive advantage that is difficult to replicate.
The company allows consumers to search for homes, connect with a real estate professional and obtain mortgage approval – through sister company Rocket Mortgage – creating a seamless, fully integrated home buying and selling experience.
Our proprietary home search platform and real estate agent referral network, Rocket Homes provides technology-enabled services to support the home buying and selling experience. The company allows consumers to search for homes, connect with a real estate professional and obtain mortgage approval – through the sister company Rocket Mortgage – creating a seamless, fully integrated home buying and selling experience.
Servicing the loans that we originate provides us with an opportunity to build long‑term relationships and continually deliver a seamless experience to our clients. We employ our same client‑centric philosophy and technology cultivated through our origination business towards the servicing of loans to deliver a digital client experience in servicing, specifically designed around the needs and expectations of our clients.
We employ our same client‑centric philosophy and technology cultivated through our origination business towards the servicing of loans to deliver a digital client experience in servicing, specifically designed around the needs and expectations of our clients.
Our team members have access to training and mentorship opportunities, specialized leadership programs and a variety of educational programs. These programs include ROCK Academy, our tuition assistance program, as well as our internal mobility program, THRIVE. We offer competitive, best in class benefit and wellness offerings that start on day one for all team members.
These programs include Rocket Academy, our tuition assistance program, as well as our internal mobility program, THRIVE. We offer competitive, best in class benefit and wellness offerings that start on day one for all team members.
We have 10 petabytes of data in our environments, and thousands of attributes to establish accurate client profiles. We generate over 50 million call logs annually, which help us develop technology and processes to continuously improve upon our client experience. In a single year, we used AI to generate approximately 3.7 billion customer interactions and 5 assessments.
We have over 10 petabytes of data in our environments and thousands of attributes to establish accurate client profiles. We generate over 65 million call logs annually, which help us develop technology and processes to continuously improve upon our client experience.
We believe our widely recognized “Rocket” brand is synonymous with simple, fast, and trusted digital experiences. Since our inception in 1985, we have consistently demonstrated our ability to launch new consumer experiences, scale and automate operations, and extend our proprietary technologies to partners.
We believe our widely recognized “Rocket” brand is synonymous with simple, fast, and trusted digital experiences. Since our inception in 1985, we have demonstrated a consistent ability to develop and scale technology-driven solutions that enhance client experiences, automate operations, and extend our capabilities to partners.
In the DTC channel, our clients have the ability to interact with Rocket Mortgage online and/or with our mortgage bankers. Our DTC channel markets to potential clients through various brand campaigns and performance marketing channels. Within the Partner Network segment we operate across two channels, Wholesale and Premier Enterprise Partner.
We market to potential clients in this segment through various brand campaigns and performance marketing channels. Within the Partner Network segment we operate across two channels, Wholesale and Premier Enterprise Partner.
In 2023, 86% of our team members completed these engagement surveys. 8 Based on these results, we are building a culture of inclusion where 87% of our team members feel they can be their authentic self at work and 81% feel a sense of belonging at the Company.
Based on these results, we are building a culture of inclusion where 86% of our team members feel they can be their authentic self at work and 80% feel a sense of belonging at the Company. 8 We also actively provide and promote opportunities for our team members to share their voice and engage with our community.
Women comprise 65% of enrolled team members in the program and 44% of the team members enrolled are racially/ethnically diverse. As a result, 87% of team members indicated they have access to the learning and development needed to do their job well. The Company strongly encourages collaboration, connection, and inclusion through participation in our Team Member Resource Networks (“TMRN”).
In 2024, more than 850 team members pursued degrees and certifications, with nearly 100 successfully earning their degrees. As a result, 84% of team members indicated they have access to the learning and development needed to do their job well. The Company strongly encourages collaboration, connection, and inclusion through participation in our Team Member Resource Networks (“TMRN”).
As a reflection of our commitment to prioritize our team members, Rocket Companies ranked #11 on Fortune Magazine’s list of 100 Best Companies to Work For in 2023 and has ranked in the top-30 companies on the list for 20 consecutive years.
As a reflection of our commitment to prioritizing our team members, Rocket Companies was recognized on Fortune Magazine’s list of 100 Best Companies to Work For 21 consecutive years.
Through Rocket Mortgage, clients can view their loan information and activity, obtain insight into their home value and equity, and obtain personalized videos that simplify complex topics such as escrow changes utilizing the clients’ actual loan information and figures.
Through Rocket Mortgage, clients can view their loan information and activity, obtain insight into their home value and equity and obtain personalized videos that simplify complex topics such as escrow changes. This differentiated servicing experience focuses on client service with positive, regular touchpoints and a better understanding of our clients’ future needs. • Rocket Homes.
Our digital process utilizes automated data retrieval and advanced underwriting technology to deliver fast, tailored solutions to our clients. Our clients leverage the Rocket Mortgage app and website to apply for mortgages, interact with our team members, upload documents, e-sign documents, receive statements, and complete monthly payments. Rocket Mortgage is both a mortgage originator and a mortgage servicer.
Our clients leverage the Rocket Mortgage app and website to apply for mortgages, interact with our team members, upload documents, e-sign documents, receive statements and complete monthly payments. Rocket Mortgage is both a mortgage originator and a mortgage servicer. Since 2010, Rocket Mortgage has won 22 J.D. Power Awards in total across mortgage origination and mortgage servicing.
As of December 31, 2023, we had approximately 14,700 team members all of whom are based in the United States and Canada. As part of our talent strategy, we provide tools and resources to our team members that enable them to reach their full potential, build their own career paths, enhance their well-being and support their financial goals.
As part of our talent strategy, we provide tools and resources to our team members that enable them to reach their full potential, build their own career paths, enhance their well-being and support their financial goals. Our team members have access to training and mentorship opportunities, specialized leadership programs and a variety of educational programs.
Since 2010, Rocket Mortgage has won 21 J.D. Power Awards in total across mortgage origination and mortgage servicing. Our net promoter score was 74 for full year 2023, placing us among companies recognized for best-in-class service. Our mortgage origination business includes our Direct-To-Consumer (DTC) segment and our Partner Network segment.
Our net promoter score was 76 for full year 2024, placing us among companies recognized for best-in-class service. Our mortgage origination business includes our Direct to Consumer segment and our Partner Network segment. In the Direct to Consumer segment, our clients have the ability to interact with Rocket Mortgage digitally and/or with our mortgage bankers.
Some of these offerings include a 100% company paid benefit plan, comprehensive mental health support services, and an onsite health care clinic dedicated to improving team members’ health. In 2022, the Company introduced LinkedIn Learning, an award-wining industry leader in online training with over 8,000 available courses covering a wide range of technical, business, software and creative topics.
Some of these offerings include a 100% company paid benefit plan, comprehensive mental health support services, and an onsite health care clinic dedicated to improving team members’ health.
Rocket Money offers clients a suite of financial wellness services including subscription cancellation, budget management and credit score improvement that save them time and money. • Rocket Loans. Our personal loan business that offers a simple, fast and intuitive user experience by leveraging a single, automated technology platform, with particular focus on high quality, prime borrowers.
Our personal finance app that helps clients manage their financial lives. Rocket Money offers clients a suite of financial wellness services including subscription cancellation, budget management and credit score improvement that save them time and money. • Rocket Loans.
Rocket Homes also empowers clients to buy or sell properties directly through a streamlined process to create high-impact listings and offers one-on-one support from home selling specialists. • Rocket Money. Our personal finance app that helps clients manage their financial lives.
Rocket Homes also empowers clients to buy or sell properties directly through a streamlined process to create high-impact listings and offers one-on-one support from home selling specialists. • Rocket Close. Formerly known as Amrock, Rocket Close is our national title producer, settlement provider and appraisal management company, leveraging proprietary technology that integrates seamlessly into the Rocket platform and processes.
We also actively provide and promote opportunities for our team members to share their voice and engage with our community. Based on engagement survey results, approximately 90% of our team members support the various ways the Company contributes to the community. In 2022, 65% of our team members participated in community volunteering or giving events.
Based on engagement survey results, approximately 93% of our team members support the various ways the Company contributes to the community. In 2024, 77% of our team members participated in community volunteering or giving events. Also in 2023, Rocket Companies achieved the milestone of one million hours of volunteering in our communities.
Human Capital Rocket Companies invests for the long term and places tremendous value in supporting our team members, clients and hometowns. Our ISMs are our DNA, compass and foundation. Our team members put the ISMs into action every day. The result is an empowered and passionate team aligned in a common mission.
Seasonality also plays a key role, as property purchases tend to slow down during the winter months in every market in which we operate. Human Capital Rocket Companies invests for the long term and places tremendous value in supporting our team members, clients and communities. Our ISMs are our DNA, compass and foundation.
Rocket Money earns monthly subscription revenue from premium members, as well as other service-based fees from users. Rocket Homes earns fees from real estate agent referrals, while at the same time matching Rocket Mortgage clients with highly rated agents and improving the certainty of closing.
Rocket Homes earns fees from real estate agent referrals, while at the same time matching Rocket Mortgage clients with highly rated agents and improving the certainty of closing. Rocket Loans generates revenue similar to our mortgage business, earning origination, interest and servicing income. Government Regulations We operate in heavily regulated industries that are highly focused on consumer protection.
Rocket Portfolio of Companies Rocket Companies is a series of connected mortgage, real estate and financial services businesses centered on enabling AI-fueled homeownership. • Rocket Mortgage. The nation’s largest retail mortgage lender, providing what we believe is the simplest and most convenient way to get a mortgage.
Through our For-More-Than-Profit approach, we continue to invest in our communities and team members, reinforcing our commitment to long-term, sustainable growth. Rocket Portfolio of Companies Rocket Companies is a series of connected mortgage, real estate and financial services businesses centered on enabling AI-fueled homeownership. • Rocket Mortgage.
Item 1. Business Overview We are a Detroit‑based fintech company including mortgage, real estate and personal finance business. We are committed to delivering industry-best client experiences through our AI-fueled homeownership strategy. Our full suite of products empowers our clients across financial wellness, personal loans, home search, mortgage finance, title and closing.
Item 1. Business Overview We are a Detroit-based financial technology company with operations spanning mortgage, real estate, and personal finance. Our proprietary technology platform is designed to deliver a seamless, AI-driven homeownership experience, integrating home search, mortgage origination, title and closing, and personal financial management.
Title, Services and Other Fee Income Other income includes revenues from services provided to clients or partners across our platform. Amrock generates revenue as a leading provider of title insurance services, property valuations and settlement services. This business complements our mortgage origination platform with digital appraisal and closing services integrated throughout our Rocket Mortgage technology and processes.
Other Fee Income Other fee income includes revenues from services provided to clients or partners across our platform. Rocket Close services complement the Company's end-to-end mortgage origination experience and generate revenues associated with title, closing and appraisal fees. Rocket Money earns revenue from premium members, or paying subscribers, as well as other service-based fees from members.
On December 31 2023, the net client retention rate of our servicing portfolio was 97% on an annual basis. There is a strong correlation between this metric and client lifetime value, and we believe these levels are far superior to others in the mortgage industry and rival subscription-based models across industries such as 4 cable and wireless service companies.
There is a strong correlation between this metric and client lifetime value and we believe these levels are far superior to others in the mortgage industry. Servicing the loans that we originate provides us with an opportunity to build long‑term relationships and continually deliver a seamless experience to our clients.
This provides a digital, seamless experience for our clients with speed and efficiency from their first interaction with Rocket Mortgage through closing. • Lendesk. Our Canadian software company specializing in a point-of-sale system for mortgage professionals and a loan origination system for private lenders. • Rocket Mortgage Canada.
This provides a digital, seamless experience for our clients with speed and efficiency from their first interaction with Rocket Mortgage through closing. As described in the "Marketing" section below, Rocket is rebranding key businesses as part of its evolution. Effective February 10, 2025, Amrock, LLC ("Amrock") amended its name to Rocket Close, LLC ("Rocket Close"). • Rocket Money.
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Our flagship business, Rocket Mortgage, is an industry leader, having provided over $1.7 trillion in home loans since inception. Dan Gilbert, our founder and Chairman, purposefully created a strong cultural foundation of core principles, or “ISMs”, as an operating system to guide decision‑making by all our team members.
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Our flagship business, Rocket Mortgage, is a leading mortgage provider, having originated more than $1.8 trillion in home loans since inception. Our culture is rooted in foundational principles, or "ISMs", which serve as a guiding framework for decision-making across the organization.
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At the heart of the ISMs is a simple, yet powerful, concept: “Love our team members. Love our clients.” We believe artificial intelligence ("AI") is evolving rapidly and approaching a critical inflection point, where knowledge engineering, machine learning, automation, and personalization will be at the center of how clients buy, sell and finance homes.
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Created by our founder and Chairman, Dan Gilbert, these principles reinforce our commitment to prioritizing team members and clients, encapsulated in the philosophy: “Love our team members. Love our clients.” We believe artificial intelligence ("AI") is transforming the homeownership journey through advancements in knowledge engineering, machine learning, automation, and personalization.
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Rocket is uniquely positioned for the next wave of transformation with generative AI given our vast data assets and technology foundation. In June 2023, we published our second ESG (environmental, social, governance) report which outlines our ESG impact on all our stakeholders. We take pride in investing in our communities and team members through our For-More-Than-Profit approach.
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With our extensive data assets and technology infrastructure, we are well-positioned to drive AI adoption across the real estate and mortgage industries. In June 2024, we published our third Environmental, Social, and Governance ("ESG") Report, outlining our impact on stakeholders.
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This differentiated servicing experience focuses on client service with positive, regular touchpoints and a better understanding of our clients’ future needs. • Rocket Homes. Our proprietary home search platform and real estate agent referral network, Rocket Homes provides technology-enabled services to support the home buying and selling experience.
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The nation’s largest mortgage lender, providing what we believe is the simplest and most convenient way to get a mortgage. Our digital process utilizes automated data retrieval and advanced underwriting technology to deliver fast, tailored solutions to our clients.
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Rocket Loans offers personal loans and financing for solar panel purchases. • Amrock. Our leading provider of title insurance services, property valuation and settlement services, leveraging proprietary technology that integrates seamlessly into the Rocket platform and processes.
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Through Rocket Pro, our Wholesale channel, independent mortgage professionals gain access to our technology, loan products, and operational support, allowing them to provide a seamless mortgage experience to borrowers while maintaining their own brand and client relationships.
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Our Windsor, Canada based digital mortgage broker that serves the needs of consumers across Canada by leveraging technology to simplify the mortgage experience. • Core Digital Media. Our online marketing platform, a customer acquisition leader in the mortgage and personal financial product sectors. Core Digital Media enables growth for our broader platform by offering marketing insights and lead generation technology.
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Our personal loan business that offers a simple, fast and intuitive user experience by leveraging a single, automated technology platform, with particular focus on high quality, prime borrowers. • Other. Lendesk, our Canadian software company, specializes in a point-of-sale system for mortgage professionals and a loan origination system for private lenders.
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Rocket Loans allows clients to apply for personal loans online and receive same day funding through a proprietary technology stack. Rocket Loans generates fees in a similar fashion to our mortgage business, receiving an origination fee, an investor fee from the end buyer, and an ongoing servicing fee for the work the company performs.
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We have deployed AI across our business and estimate that technology has unlocked over one million team member hours in 2024.
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Core Digital Media receives fees from the generation and sale of client leads in the mortgage and other industries in additional to promoting growth for our broader ecosystem by offering unique insight into the lead generation market. Government Regulations We operate in heavily regulated industries that are highly focused on consumer protection.
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While Rocket is already the most recognized name in the mortgage industry, we are making strategic investments to ensure the Rocket brand is one that people know, trust and connect with on a deeper level. At the beginning of 2025, we unveiled a new visual identity and unified our businesses under the overarching "Rocket" brand.
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Also in 2023, Rocket Companies achieved the milestone of one million hours of volunteering in our communities. We are committed to fostering a diverse and inclusive workplace and we proactively recruit for and hire diverse talent across a wide range of candidates to achieve the highest performing teams.
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The objective of our brand restage is to position Rocket as one of the most inclusive brands in America and create an influential end-to-end homeownership brand. As part of this effort, we have acquired Rocket.com and introduced a reimagined logo marque, word marque, typeface and color palette.
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Our Diversity, Equity and Inclusion team is committed to fostering an inclusive environment built on open doors, open minds and an open culture rooted in trust.
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Our team members put the ISMs into action every day. The result is an empowered and passionate team aligned in a common mission. As of December 31, 2024, we had approximately 14,200 team members all of whom are based in the United States and Canada.
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Rocket Companies also ranked #2 on People Magazine’s 100 Companies That Care and #2 on Fortune’s list of the Best Workplaces in Financial Services & Insurance in 2023. During 2023, the Company offered a voluntary career transition program to certain eligible team members.
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Continuing this momentum into 2024, we expanded our impact by contributing an additional 100,000 hours of service. We are committed to fostering an inclusive workplace and strategically recruiting and hiring top talent from a broad range of candidates to build high-performing teams that drive business success. We cultivate a culture of open doors, open minds, and trust.
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The career transition program included a compensation package, healthcare coverage, career transition services, and accelerated vesting of certain equity awards, if applicable.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks include, but are not limited to, the following: • The success and growth of our business, results of operations, and financial condition will depend upon our ability to adapt to and implement technological changes to meet our business needs and the changing demands of the market and our clients. • Cyberattacks, security breaches, or a failure to comply with information security laws or regulations could result in serious harm to our reputation and adversely affect our business. • We are, and intend to continue, developing new products and services, and our failure to accurately predict their demand or growth could have an adverse effect on our business. • We are required to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances. • We may be required to repurchase or substitute mortgage loans or mortgage servicing rights (“MSRs”) that we have sold, or indemnify purchasers of our mortgage loans or MSRs. • We rely upon the accuracy and completeness of information about borrowers and any misrepresented information or fraud could result in significant financial losses and harm to our reputation. • Loss of our key leadership could result in a material adverse effect on our business. • Failure of vendors to perform to contractual agreements embedded in our products and services and our failure to effectively oversee vendor operations could adversely affect our business. • Rocket Loans, as a rapidly growing business, faces a range of interconnected risks and challenges that could have a material adverse effect on its operations. • Our Rocket Homes business is subject to challenges not faced by traditional real estate brokerages. • We may be unable to make acquisitions and investments, successfully integrate acquired companies into our business, or our acquisitions and investments may not meet our expectations, any of which could adversely affect our business, financial condition, and results of operations. • Negative public opinion could damage our brand and reputation, which could adversely affect our business and earnings. • Our risk management efforts may not be effective at mitigating potential losses resulting in increased costs or business disruption. • We face intense competition that could adversely affect us. • Our business is significantly impacted by interest rates.
Biggest changeThese risks include, but are not limited to, the following: • The success and growth of our business, results of operations and financial condition will depend upon our ability to adapt to and implement technological changes to meet our business needs and the changing demands of the market and our clients. • Cyberattacks, security breaches, or a failure to comply with information security laws or regulations could result in serious harm to our reputation and adversely affect our business. • Issues related to the development, proliferation and use of AI could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business. • We are, and intend to continue, developing new products and services and our failure to accurately predict their demand or growth could have an adverse effect on our business. • We are required to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances. • We may be required to repurchase or substitute mortgage loans or mortgage servicing rights (“MSRs”) that we have sold, or indemnify purchasers of our mortgage loans or MSRs. • We rely upon the accuracy and completeness of information about borrowers and any misrepresented information or fraud could result in significant financial losses and harm to our reputation. • Loss of our key leadership could result in a material adverse effect on our business. • Failure of vendors to perform to contractual agreements embedded in our products and services and our failure to effectively oversee vendor operations could adversely affect our business. • Rocket Loans, as a rapidly growing business, faces a range of interconnected risks and challenges that could have a material adverse effect on its operations. • Our Rocket Homes business is subject to challenges not faced by traditional real estate brokerages. • We may be unable to make acquisitions and investments, successfully integrate acquired companies into our business, or our acquisitions and investments may not meet our expectations, any of which could adversely affect our business, financial condition and results of operations. • Negative public opinion could damage our brand and reputation, which could adversely affect our business and earnings. • Our risk management efforts may not be effective at mitigating potential losses resulting in increased costs or business disruption. • We face intense competition that could adversely affect us. • Our business is significantly impacted by interest rates.
Changes in prevailing interest rates or U.S. monetary policies that affect interest rates have and may continue to have a detrimental effect on our business. • A disruption in the secondary home loan market, including the mortgage-backed security (“MBS”) market, could have a detrimental effect on our business. 10 • We are subject to various legal actions that if decided adversely, or if viewed unfavorably by the public, could be detrimental to our business. • If we cannot maintain our corporate culture, we could lose the innovation, collaboration and focus on the mission that contribute to our business. • Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities. • We are controlled by RHI, an entity controlled by Dan Gilbert, whose interests may conflict with our interests and the interests of other stockholders.
Changes in prevailing interest rates, U.S. monetary policies or other macroeconomic conditions affecting interest rates have and may continue to have a detrimental effect on our business. 10 • A disruption in the secondary home loan market, including the mortgage-backed security (“MBS”) market, could have a detrimental effect on our business. • We are subject to various legal actions that if decided adversely, or if viewed unfavorably by the public, could be detrimental to our business. • If we cannot maintain our corporate culture, we could lose the innovation, collaboration and focus on the mission that contribute to our business. • Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities. • We are controlled by RHI, an entity controlled by Dan Gilbert, whose interests may conflict with our interests and the interests of other stockholders.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWith this in mind, we maintain an Information Security Program to protect the confidentiality, integrity, and availability of client information. 45 The Rocket Companies Information Security Program (“Program”) is managed by the Rocket Companies Chief Information Security Officer (“CISO”), who is responsible for the creation and execution of our information security strategy.
Biggest changeThe Rocket Companies Information Security Program (“Program”) is managed by the Rocket Companies Chief Information Security Officer (“CISO”), who is responsible for the creation and execution of our information security strategy. The CISO has more than 30 years’ experience managing business risk and developing and implementing information security strategy.
Rocket performs ongoing assessments of its Program to measure both the sufficiency of the safeguards to control risk and the design and operating effectiveness of our security requirements and controls.
The Company performs ongoing assessments of its Program to measure both the sufficiency of the safeguards to control risk and the design and operating effectiveness of our security requirements and controls.
We implement information security policies throughout our operations, and our enterprise risk management (“ERM”) process considers information security risks alongside other company risks as part of our overall risk assessment process. The Rocket Companies Vendor Risk Management Program extends our safeguards to third-party service providers.
We implement information security policies throughout our operations, and our enterprise risk management (“ERM”) process considers information security risks alongside other company risks as part of our overall risk assessment process. The Rocket Companies Vendor Risk Management Program performs initial and ongoing information security safeguards of our third-party service providers.
The CISO has more than 30 years’ experience managing business risk and developing and implementing information security strategy. Rocket Companies aligns its Program to the National Institute of Standards (NIST) Cyber Security framework. The Program is reviewed and updated by regular risk assessments, which identify reasonable and foreseeable internal and external risks.
Rocket Companies aligns its Program to the National Institute of Standards (NIST) Cyber Security framework. The Program is reviewed and updated by regular risk assessments, which identify reasonable and foreseeable internal and external risks.
Cybersecurity Governance Our Board oversees our Information Security Program and cybersecurity risks, this includes receiving periodic management reports on cybersecurity and information security trends and regulatory updates, technology risks, and the implications for our business strategy. On a periodic basis, the CISO provides reports and presentations to the Board, Audit Committee, and Rocket Senior Leadership, including the Rocket Risk Council.
Cybersecurity Governance Our Board oversees our Information Security Program and cybersecurity risks, this includes receiving periodic management reports on cybersecurity and information security trends and regulatory updates, technology risks, and the implications for our business strategy.
These CISO updates include recent industry developments, evolving standards, vulnerability assessments and technological trends. During 2023, the CISO updates included information regarding areas of increasing cybersecurity threats, the ongoing enhancements to our information security framework, processes to mitigate threats, and the results of a simulated cybersecurity incident tabletop exercise.
During 2024, the CISO updates included information regarding areas of increasing cybersecurity threats, the ongoing enhancements to our information security framework, deployment of security tools, processes to mitigate threats, and the results of a simulated cybersecurity incident tabletop exercise.
Our Vendor Risk Management Program includes a robust due diligence process to review and affirm on an initial and periodic basis that our third-party service providers protect our information with the same rigor we require of ourselves.
Our Vendor Risk Management Program includes a robust due diligence process to review and affirm on an initial and periodic basis that our third-party service providers protect our information with the same rigor we require of ourselves. 46 As far as internal training and compliance, we spend significant time and resources to communicate the Program to all team members via annual trainings, ongoing communications, and periodic testing of team member capabilities.
We require the secure, efficient, and uninterrupted operation of those networks and systems to provide our clients with the best possible experience.
We require the secure, efficient, and uninterrupted operation of those networks and systems to provide our clients with the best possible experience. With this in mind, we maintain an Information Security Program to protect the confidentiality, integrity, and availability of client information.
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As far as internal training and compliance, we spend significant time and resources to communicate the Program to all team members via annual trainings, ongoing communications, and periodic testing of team member capabilities.
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On a periodic basis, the CISO provides reports and presentations to the board of directors, Audit Committee, and Rocket Senior Leadership, including the Rocket Risk Council. These CISO updates include recent industry developments, evolving standards, vulnerability assessments and technological trends.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We currently operate through a network of fifteen corporate offices, ten client support locations and four call centers, located throughout the United States and Canada, which are all leased. Our headquarters and principal executive offices are located at 1050 Woodward Avenue, Detroit, Michigan 48226.
Biggest changeItem 2. Properties We currently operate through a network of fifteen corporate offices and twelve client support locations located throughout the United States and Canada, which are all leased. Our headquarters and principal executive offices are located at 1050 Woodward Avenue, Detroit, Michigan 48226.
At this location, as of December 31, 2023, we lease office space totaling approximately 505,535 rentable square feet from an affiliate of Rocket Companies. The lease for our offices at 1050 Woodward Avenue expires on December 31, 2028 unless terminated earlier under certain circumstances specified in our leases.
At this location, as of December 31, 2024, we lease office space totaling approximately 556,739 rentable square feet from an affiliate of Rocket Companies. The lease for our offices at 1050 Woodward Avenue expires on December 31, 2028 unless terminated earlier under certain circumstances specified in our leases.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings For a discussion of our “Legal Proceedings,” refer to Note 14 Commitments, Contingencies, and Guarantees in the notes to our audited consolidated financial statements of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 46 Part II
Biggest changeItem 3. Legal Proceedings For a discussion of our “Legal Proceedings,” refer to Note 14 Commitments, Contingencies and Guarantees in the notes to our audited consolidated financial statements of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 47 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeReconciliation of Adjusted Net (Loss) Income to Net (Loss) Income Attributable to Rocket Companies Year Ended December 31, ($ in thousands) 2023 2022 2021 Net (loss) income attributable to Rocket Companies $ (15,514) $ 46,421 $ 308,210 Net (loss) income impact from pro forma conversion of Class D common shares to Class A common shares (1) (372,541) 655,863 5,766,284 Adjustment to the benefit from (provision for) income tax (2) 84,995 (138,803) (1,428,937) Tax-effected net (loss) income (2) $ (303,060) $ 563,481 $ 4,645,557 Share-based compensation expense (3) 177,389 233,760 163,738 Change in fair value of MSRs due to valuation assumptions (net of hedges) (4) (29,007) (1,210,947) (487,473) Loss on extinguishment of Senior Notes — — 87,262 Litigation accrual (5) — — 15,000 Career transition program (6) 51,495 81,132 — Change in Tax receivable agreement liability (7) 6,565 (34,159) 18,835 Tax impact of adjustments (8) (50,372) 225,949 55,211 Other tax adjustments (9) 3,885 3,822 3,732 Adjusted Net (Loss) Income $ (143,105) $ (136,962) $ 4,501,862 (1) Reflects net (loss) income to Class A common stock from pro forma exchange and conversion of corresponding shares of our Class D common shares held by non-controlling interest holders as of December 31, 2023, 2022 and 2021.
Biggest changeReconciliation of Adjusted revenue to Total revenue, net Years Ended December 31, ($ in thousands) 2024 2023 2022 Total revenue, net $ 5,100,798 $ 3,799,269 $ 5,838,493 Change in fair value of MSRs due to valuation assumptions (net of hedges) (1) (199,188) (29,007) (1,210,947) Adjusted revenue $ 4,901,610 $ 3,770,262 $ 4,627,546 (1) Reflects changes in market interest rates and assumptions, including discount rates and prepayment speeds, gains or losses on sales of MSRs during the period and the effects of contractual prepayment protection associated with sales or purchases of MSRs. 52 Reconciliation of Adjusted net income (loss) to Net income (loss) attributable to Rocket Companies Year Ended December 31, ($ in thousands) 2024 2023 2022 Net income (loss) attributable to Rocket Companies $ 29,370 $ (15,514) $ 46,421 Net income (loss) impact from pro forma conversion of Class D common shares to Class A common shares (1) 607,509 (372,541) 655,863 Adjustment to the (provision for) benefit from income tax (2) (130,502) 84,995 (138,803) Tax-effected net income (loss) (2) $ 506,377 $ (303,060) $ 563,481 Share-based compensation expense (3) 145,483 177,389 233,760 Change in fair value of MSRs due to valuation assumptions (net of hedges) (4) (199,188) (29,007) (1,210,947) Litigation accrual reversal (5) (15,000) — — Career transition program (6) — 51,495 81,132 Change in Tax receivable agreement liability (7) (3,512) 6,565 (34,159) Tax impact of adjustments (8) 17,563 (50,372) 225,949 Other tax adjustments (9) 3,911 3,885 3,822 Adjusted net income (loss) $ 455,634 $ (143,105) $ (136,962) (1) Reflects net income (loss) to Class A common stock from pro forma exchange and conversion of corresponding shares of our Class D common shares held by non-controlling interest holders as of December 31, 2024 , 2023 and 2022 .
Any future determination to pay dividends on our common stock will be made at the discretion of the Board of Directors and will depend upon, among other factors, our financial condition operating results, current and anticipated cash needs and other factors that the Board may deem relevant.
Any future determination to pay dividends on our common stock will be made at the discretion of the board of directors and will depend upon, among other factors, our financial condition operating results, current and anticipated cash needs and other factors that the board of directors may deem relevant.
Non-GAAP Financial Measures To provide investors with information in addition to our results as determined by GAAP, we disclose Adjusted Revenue, Adjusted Net (Loss) Income, Adjusted Diluted (Loss) Earnings Per Share and Adjusted EBITDA (collectively “our non-GAAP financial measures”) as non-GAAP measures which management believes provide useful information to investors.
Non-GAAP Financial Measures To provide investors with information in addition to our results as determined by GAAP, we disclose Adjusted revenue, Adjusted net income (loss), Adjusted diluted earnings (loss) per share and Adjusted EBITDA (collectively “our non-GAAP financial measures”) as non-GAAP measures which management believes provide useful information to investors.
Gain on sale of loans, net includes the net gain on sale of loans, fair value of originated MSRs, fair value adjustments on originated loans held for sale and IRLC’s, and revaluation of forward commitments economically hedging loans held for sale and IRLCs.
Gain on sale of loans, net includes the net gain on sale of loans, fair value of originated MSRs, fair value adjustments on originated loans held for sale and IRLC’s and revaluation of forward commitments economically hedging loans held for sale and IRLCs.
The Revaluation gain from forward commitments economically hedging loans held for sale and IRLCs component reflects the forward hedge commitments intended to offset the various fair value adjustments that impact the Fair value adjustment on loans held for sale and IRLCs and the Net gain (loss) on sale of loans components.
The Revaluation from forward commitments economically hedging loans held for sale and IRLCs component reflects the forward hedge commitments intended to offset the various fair value adjustments that impact the Fair value adjustment on loans held for sale and IRLCs and the Net gain (loss) on sale of loans components.
MSR assets are created at the time Mortgage Loans Held for Sale are securitized and sold to investors for cash, while the Company retains the right to service the loan. An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of an estimated pull-through factor.
MSR assets are created at the time mortgage loans held for sale are securitized and sold to investors for cash, while the Company retains the right to service the loan. 57 An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of an estimated pull-through factor.
We will also deploy cash to self-fund loan originations, a portion of which can be transferred to a mortgage loan funding facility or the early buy out line, provided that such loans meet the eligibility criteria to be placed on such lines.
We will also deploy cash to self-fund loan originations, a portion of which can be transferred to a funding facility or the early buy out line, provided that such loans meet the eligibility criteria to be placed on such lines.
Historically, our primary uses of funds have included: • origination of loans; 66 • interest expense; • repayment of debt; • operating expenses; • acquisition of mortgage servicing rights; and • distributions to RHI including those to fund distributions for payment of taxes by RHI shareholders.
Historically, our primary uses of funds have included: • origination of loans; • interest expense; • repayment of debt; • operating expenses; • acquisition of mortgage servicing rights; and • distributions to RHI including those to fund distributions for payment of taxes by RHI shareholders.
On February 24, 2022, our board of directors authorized and declared a cash dividend (the “2022 Special Dividend”) of $1.01 per share to the holders of our Class A common stock.
Special Dividends On February 24, 2022, our board of directors authorized and declared a cash dividend (the “2022 Special Dividend”) of $1.01 per share to the holders of our Class A common stock.
For the years ended December 31, 2023, 2022 and 2021, Class D common shares were dilutive and are included in the dilutive weighted average Class A common shares outstanding in the table above.
For the years ended December 31, 2023 and 2022, Class D common shares were dilutive and are included in the dilutive weighted average Class A common shares outstanding in the table above.
This discussion and analysis contains forward-looking statements that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in these forward-looking statements, including, but not limited to, risks and uncertainties discussed below under the heading “ Special Note Regarding Forward-Looking Statements ,” and in Part I and elsewhere in this Form 10-K. 48 Special Note Regarding Forward-Looking Statements This Form 10-K contains forward-looking statements, which involve risks and uncertainties.
This discussion and analysis contains forward-looking statements that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in these forward-looking statements, including, but not limited to, risks and uncertainties discussed below under the heading “ Special Note Regarding Forward-Looking Statements ,” and in Part I and elsewhere in this Form 10-K. 49 Special Note Regarding Forward-Looking Statements This Form 10-K contains forward-looking statements, which involve risks and uncertainties.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
(5) This revenue is reported annually. (6) Rockethomes.com average unique monthly visits is calculated by a third party service that monitors website activity. This metric doesn't necessarily have a direct correlation to revenues and is used primarily to monitor consumer interest in the Rockethomes.com site.
(5) This revenue is reported annually. (6) Rockethomes.com average unique monthly visits is calculated by a third party service that monitors website and app engagement activity. This metric doesn't necessarily have a direct correlation to revenues and is used primarily to monitor consumer interest in the Rockethomes.com site and app.
Our definitions of each of our non-GAAP financial measures allow us to add back certain cash and non-cash charges, and deduct certain gains that are included in calculating Total revenues, net, Net income (loss) attributable to Rocket Companies or Net income (loss). However, these expenses and gains vary greatly, and are difficult to predict.
Our definitions of each of our non-GAAP financial measures allow us to add back certain cash and non-cash charges and deduct certain gains that are included in calculating Total revenue, net, Net income (loss) attributable to Rocket Companies or Net income (loss). However, these expenses and gains vary greatly and are difficult to predict.
The weighted average annualized retained servicing fee for our MSR portfolio was 0.28%, 0.29%, and 0.28% for the years ended December 31, 2023, 2022, and 2021, respectively. The vast majority of our portfolio consists of originated MSRs and consequently, the impact of purchased MSRs does not have a material impact on our weighted average service fee.
The weighted average annualized retained servicing fee for our MSR portfolio was 0.28%, 0.28% and 0.29% for the years ended December 31, 2024, 2023 and 2022, respectively. The vast majority of our portfolio consists of originated MSRs and consequently, the impact of purchased MSRs does not have a material impact on our weighted average service fee.
We define “Adjusted Diluted (Loss) Earnings Per Share” as Adjusted Net (Loss) Income divided by the diluted weighted average number of Class A common stock outstanding for the applicable period, which assumes the pro forma exchange and conversion of all outstanding Class D common stock for Class A common stock.
We define “Adjusted diluted earnings (loss) per share” as Adjusted net income (loss) divided by the adjusted diluted weighted average shares outstanding which includes diluted weighted average number of Class A common stock outstanding for the applicable period, which assumes the pro forma exchange and conversion of all outstanding Class D common stock for Class A common stock.
For Class A Common Stock, the actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial owners but whose share are held in street name by brokers and other nominees.
For Class A Common Stock, the actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
The 2022 Special Dividend was paid on March 22, 2022 to holders of the Class A common stock of record as of the close of business on March 8, 2022. The Company funded the 2022 Special Dividend from cash distributions of approximately $2.0 billion by RKT Holdings, LLC to all of its members, including the Company.
The 2022 Special Dividend was paid on March 22, 2022 to holders of the Class A common stock of record as of the close of business on March 8, 2022. The Company funded the 2022 Special Dividend from cash distributions of approximately $2.0 billion by Rocket, LLC to all of its members, including the Company.
This graph covers the period of the initial listing of our stock on August 6, 2020 to year ended December 31, 2023. This graph assumes an initial investment of $100 on August 6, 2020 and reflects the 47 cumulative total return on that investment, including the reinvestment of all dividends where applicable, through December 31, 2023.
This graph covers the period of the initial listing of our stock on August 6, 2020 to year ended December 31, 2024. This graph assumes an initial investment of $100 on August 6, 2020 and reflects the cumulative total return on that investment, including the reinvestment of all dividends where applicable, through December 31, 2024.
Share Repurchase Authorization On November 10, 2020, our board of directors approved a share repurchase program of up to $1.0 billion of our Common Stock, including both Class A and Class D, which repurchases may be made, from time to time, in privately negotiated transactions or in the open market, in accordance with applicable securities laws (the “Share Repurchase Program”).
Share Repurchase Authorization On November 10, 2020, our board of directors approved a share repurchase program of up to $1.0 billion of our Common Stock, including both Class A and Class D, which authorized repurchases, from time to time, in privately negotiated transactions or in the open market, in accordance with applicable securities laws (the “Share Repurchase Program”).
As of December 31, 2023, w e were in full compliance with the new ratios, which went into effect on September 30, 2023. See Note 15, Minimum Net Worth Requirements of the notes to the consolidated financial statements included in this Form 10-K for further information.
As of December 31, 2024, w e were in full compliance with the new ratios, which went into effect on December 31, 2024. See Note 15, Minimum Net Worth Requirements of the notes to the consolidated financial statements included in this Form 10-K for further information.
See below for our overview and discussion of segment results for the years ended December 31, 2023, 2022 and 2021.
See below for our overview and discussion of segment results for the years ended December 31, 2024, 2023 and 2022.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
(4) This metric measures our retention across a greater percentage of our client bases versus our recapture rate.
(4) This metric measures our retention across a greater percentage of our client base versus our recapture rate.
Tax Receivable Agreement In connection with the reorganization completed prior to our IPO in 2020, the Company entered into a Tax Receivable Agreement with RHI and our Chairman (“LLC Members”) that will obligate the Company to make payments to the LLC Members generally equal to 90% of the applicable cash tax savings that the Company actually realizes or in some cases is deemed to realize as a result of the tax attributes generated by (i) certain increases in our 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 58 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.
For additional information regarding our provision for income taxes refer to Note 12, Income Taxes. 59 Tax Receivable Agreement The Company has a Tax Receivable Agreement with RHI and our Chairman (“LLC Members”) that will obligate the Company to make payments to the LLC Members generally equal to 90% of the applicable cash tax savings that the Company actually realizes or in some cases is deemed to realize as a result of the tax attributes generated by (i) certain increases in our 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.
(8) Tax impact of adjustments gives effect to the income tax related to share-based compensation expense, change in fair value of MSRs due to valuation assumptions, loss on extinguishment of Senior Notes, litigation accrual, career transition program and the change in Tax receivable agreement liability at the effective tax rates for each period.
(8) Tax impact of adjustments gives effect to the income tax related to share-based compensation expense, change in fair value of MSRs due to valuation assumptions (net of hedges), litigation accrual reversal, career transition program and the change in Tax receivable agreement liability at the effective tax rates for each period.
We also exclude effects of contractual prepayment protection associated with sales of MSRs. Adjusted EBITDA includes Interest expense on funding facilities, which are recorded as a component of Interest income, net, as these expenses are a direct cost driven by loan origination volume.
We also exclude the effects of gains or losses on sales of MSRs during the period and the effects of contractual prepayment protection associated with sales or purchases of MSRs. Adjusted EBITDA includes interest expense on funding facilities, which are recorded as a component of interest income, net, as these expenses are a direct cost driven by loan origination volume.
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. This also includes providing title insurance services, appraisals and settlement services to these clients as part of our end-to-end mortgage origination experience.
The Direct to Consumer segment generates revenue from originating, closing, selling and servicing predominantly agency-conforming loans, which are pooled and sold to the secondary market. This segment also produces revenue by providing title and settlement services and appraisal management to these clients as part of our end-to-end mortgage origination experience.
We define “Adjusted Net (Loss) Income” as tax-effected earnings before share-based compensation expense, the change in fair value of MSRs due to valuation assumptions (net of hedges), loss on extinguishment of Senior Notes, a litigation accrual, career transition program, change in Tax receivable agreement liability, and the tax effects of those adjustments as applicable.
We define “Adjusted net income (loss)” as tax-effected net income (loss) before share-based compensation expense, the change in fair value of MSRs due to valuation assumptions (net of hedges), a litigation accrual reversal, career transition program, change in Tax receivable agreement liability and the tax effects of those and other adjustments as applicable.
Components of operating expenses Our operating expenses as presented in the statement of operations data include Salaries, commissions and team member benefits, General and administrative expenses, Marketing and advertising expenses, Interest and amortization expense on non-funding-debt and Other expenses.
Components of operating expenses Our operating expenses as presented in the statement of operations data include Salaries, commissions and team member benefits, General and administrative expenses, Marketing and advertising expenses, Interest and amortization expense on non-funding-debt and Other expenses. 58 Salaries, commissions and team member benefits Salaries, commissions and team member benefits include all payroll, benefits and share-based compensation expenses for our team members.
Our funding facilities and financing facilities also generally require us to comply with certain operating and financial covenants and the availability of funds under these facilities is subject to, among other conditions, our continued compliance with these covenants.
Our funding facilities, early buy out facilities, MSRs facilities and unsecured lines of credit also generally require us to comply with certain operating and financial covenants and the availability of funds under these facilities is subject to, among other conditions, our continued compliance with these covenants.
Our selected peer group is comprised of PennyMac Financial Services Inc, Rithm Capital Corp, Mr Cooper Group Inc, Anywhere Real Estate Inc., Zillow Group Inc Class C, Redfin Corp, Stewart Information Services Corp, SoFi Technologies Inc, Guild Holdings Company, Compass, Inc. loanDepot, Inc., UWM Holdings Corporation, and Blend Labs, Inc. Certain companies were not publicly traded companies at inception date.
Cooper Group Inc, Anywhere Real Estate Inc., Zillow Group Inc Class C, Redfin Corp, Stewart Information Services Corp, SoFi Technologies Inc, Guild Holdings Company, Compass, Inc. loanDepot, Inc., UWM Holdings Corporation and Blend Labs, Inc. Certain companies were not publicly traded companies at inception date.
Liquidity and Capital Resources Historically, our primary sources of liquidity have included: • cash flow from our operations, including: • sale of whole loans into the secondary market; • sale of mortgage servicing rights and excess servicing cash flows into the secondary market; • loan origination fees; • servicing fee income; and • interest income on loans held for sale • borrowings, including under our funding facilities, financing facilities, and unsecured senior notes; and • cash and marketable securities on hand.
The increase in Contribution margin was driven by an increase in Gain on sales of loans, net, as described above. 67 Liquidity and Capital Resources Historically, our primary sources of liquidity have included: • cash flow from our operations, including: • sale of whole loans into the secondary market; • sale of mortgage servicing rights and excess servicing cash flows into the secondary market; • loan origination fees; • servicing fee income; • interest income on loans held for sale; and • other income • borrowings, including under our funding facilities; financing facilities; unsecured senior notes; and • cash and marketable securities on hand.
This metric is a measure of gain on sale revenue and excludes revenues from Rocket Loans, changes in the loan repurchase reserve and fair value adjustments on repurchased loans held on our balance sheet, such as early buyouts.
This metric is a measure of gain on sale revenue and excludes revenues from Rocket Loans, changes in the loan repurchase reserve and fair value adjustments on repurchased loans held on our balance sheet, such as early buyouts. (2) 2024 market share information is based on Fannie Mae mortgage volume market share estimates as of January 2025.
Refer to Note 17, Non-controlling Interest for more information on non-controlling interests. 59 Results of Operations for the years ended December 31, 2023, 2022 and 2021 Summary of Operations Condensed Statement of Operations Data Year Ended December 31, ($ in thousands) 2023 2022 2021 Revenue Gain on sale of loans, net $ 2,066,292 $ 3,137,417 $ 10,468,574 Servicing fee income 1,401,780 1,458,637 1,325,938 Change in fair value of MSRs (700,982) 185,036 (689,432) Interest income, net 120,860 184,203 168,940 Other income 911,319 873,200 1,640,446 Total revenue, net 3,799,269 5,838,493 12,914,466 Expenses Salaries, commissions and team member benefits 2,257,291 2,797,868 3,356,815 General and administrative expenses 802,865 906,195 1,183,418 Marketing and advertising expenses 736,676 945,694 1,249,583 Interest and amortization expense on non-funding-debt 153,386 153,596 230,740 Other expenses 251,948 293,229 709,009 Total expenses 4,202,166 5,096,582 6,729,565 (Loss) income before income taxes $ (402,897) $ 741,911 $ 6,184,901 Benefit from (provision for) income taxes 12,817 (41,978) (112,738) Net (Loss) Income (390,080) 699,933 6,072,163 Net loss (income) attributable to non-controlling interest 374,566 (653,512) (5,763,953) Net (loss) income attributable to Rocket Companies $ (15,514) $ 46,421 $ 308,210 Gain on sale of loans, net The components of Gain on sale of loans, net for the periods presented were as follows: Year Ended December 31, ($ in thousands) 2023 2022 2021 Net gain (loss) on sale of loans(1) $ 684,415 $ (579,562) $ 7,462,202 Fair value of originated MSRs 1,092,332 1,970,647 3,864,359 (Provision for) benefit from investor reserves (112,372) (58,140) 8,557 Fair value adjustment on loans held for sale and IRLCs 224,605 (822,289) (2,106,952) Revaluation gain from forward commitments economically hedging loans held for sale and IRLCs 177,312 2,626,761 1,240,408 Gain on sale of loans, net $ 2,066,292 $ 3,137,417 $ 10,468,574 (1) Net gain (loss) on sale of loans represents the premium received in excess of the UPB, plus net origination fees. 60 The table below provides details of the characteristics of our mortgage loan production for each of the periods presented: Year Ended December 31, ($ in thousands) 2023 2022 2021 Closed loan origination volume by type Conventional Conforming $ 48,007,013 $ 96,103,677 $ 273,463,292 FHA/VA 24,035,770 28,208,025 55,231,445 Non Agency 6,669,211 8,817,581 22,498,615 Total mortgage closed loan origination volume $ 78,711,994 $ 133,129,283 $ 351,193,352 Portfolio metrics Average loan amount $ 270 $ 283 $ 281 Weighted average loan-to-value ratio 74.86 % 72.30 % 67.87 % Weighted average credit score 733 733 749 Weighted average loan rate 6.62 % 4.45 % 2.80 % Percentage of loans sold To GSEs and government 91.38 % 91.70 % 92.98 % To other counterparties 8.62 % 8.30 % 7.02 % Servicing-retained 94.86 % 93.45 % 95.23 % Servicing-released 5.14 % 6.55 % 4.77 % Net rate lock volume(1) $ 78,648,717 $ 117,756,897 $ 333,790,140 Gain on sale margin(2) 2.63 % 2.82 % 3.13 % (1) Net rate lock volume includes the UPB of loans subject to IRLCs, net of the pull-through factor as described in the “ Description of Certain Components of Financial Data ” section above.
Refer to Note 17, Non-controlling Interest for more information on non-controlling interests. 60 Results of Operations for the years ended December 31, 2024, 2023 and 2022 Summary of Operations Condensed Statement of Operations Data Year Ended December 31, ($ in thousands) 2024 2023 2022 Revenue Gain on sale of loans, net $ 3,012,913 $ 2,066,292 $ 3,137,417 Servicing fee income 1,462,173 1,401,780 1,458,637 Change in fair value of MSRs (578,681) (700,982) 185,036 Interest income, net 97,566 120,860 184,203 Other income 1,106,827 911,319 873,200 Total revenue, net 5,100,798 3,799,269 5,838,493 Expenses Salaries, commissions and team member benefits 2,261,245 2,257,291 2,797,868 General and administrative expenses 893,154 802,865 906,195 Marketing and advertising expenses 824,042 736,676 945,694 Interest and amortization expense on non-funding-debt 153,637 153,386 153,596 Other expenses 300,668 251,948 293,229 Total expenses 4,432,746 4,202,166 5,096,582 Income (loss) before income taxes $ 668,052 $ (402,897) $ 741,911 (Provision for) benefit from income taxes (32,224) 12,817 (41,978) Net income (loss) 635,828 (390,080) 699,933 Net (income) loss attributable to non-controlling interest (606,458) 374,566 (653,512) Net income (loss) attributable to Rocket Companies $ 29,370 $ (15,514) $ 46,421 Gain on sale of loans, net The components of Gain on sale of loans, net for the periods presented were as follows: Year Ended December 31, ($ in thousands) 2024 2023 2022 Net gain (loss) on sale of loans (1) $ 1,504,149 $ 684,415 $ (579,562) Fair value of originated MSRs 1,330,216 1,092,332 1,970,647 Provision for investor reserves (36,248) (112,372) (58,140) Fair value adjustment on loans held for sale and IRLCs (26,546) 224,605 (822,289) Revaluation from forward commitments economically hedging loans held for sale and IRLCs 241,342 177,312 2,626,761 Gain on sale of loans, net $ 3,012,913 $ 2,066,292 $ 3,137,417 (1) Net gain (loss) on sale of loans represents the premium received in excess of the UPB, plus net origination fees. 61 The table below provides details of the characteristics of our mortgage loan production for each of the periods presented: Year Ended December 31, ($ in thousands) 2024 2023 2022 Closed loan origination volume by type Conventional Conforming $ 60,467,550 $ 48,007,013 $ 96,103,677 FHA/VA 28,002,000 24,035,770 28,208,025 Non Agency 12,682,582 6,669,211 8,817,581 Total mortgage closed loan origination volume $ 101,152,132 $ 78,711,994 $ 133,129,283 Portfolio metrics: Average loan amount $ 277 $ 270 $ 283 Weighted average loan-to-value ratio 73.16 % 74.86 % 72.30 % Weighted average credit score 737 733 733 Weighted average loan rate 6.62 % 6.62 % 4.45 % Percentage of loans sold: To GSEs and government 84.77 % 91.38 % 91.70 % To other counterparties 15.23 % 8.62 % 8.30 % Servicing-retained 92.74 % 94.86 % 93.45 % Servicing-released 7.26 % 5.14 % 6.55 % Net rate lock volume (1) $ 100,824,736 $ 78,648,717 $ 117,756,897 Gain on sale margin (2) 2.95 % 2.63 % 2.82 % (1) Net rate lock volume includes the UPB of loans subject to IRLCs, net of the pull-through factor as described in the “ Description of Certain Components of Financial Data ” section above.
(2) Market share information is based on Fannie Mae mortgage volume market share estimates as of December 2023. 55 (3) MSR fair market value multiple is a metric used to determine the relative value of the MSR asset in relation to the annualized retained servicing fee, which is the cash that the holder of the MSR asset would receive from the portfolio as of such date.
(3) MSR fair market value multiple is a metric used to determine the relative value of the MSR asset in relation to the annualized retained servicing fee, which is the cash that the holder of the MSR asset would receive from the portfolio as of such date.
At December 31, 2023, the aggregate available amount under our facilities was $21.2 billion, with combined outstanding balances of $3.6 billion and unutilized capacity of $17.6 billion.
At December 31, 2024, the aggregate available amount under our facilities was $24.5 billion, with combined outstanding balances of $6.8 billion and unutilized capacity of $17.7 billion.
In the Direct to Consumer segment, clients have the ability to interact with the Rocket Mortgage app and/or with our mortgage bankers, consisting of sales team members across our platform. We market to potential clients in this segment through various performance marketing channels.
In the Direct to Consumer segment, clients have the ability to interact with Rocket Mortgage digitally and/or with our mortgage bankers. We market to potential clients in this segment through various brand campaigns and performance marketing channels.
Salaries, commissions and team member benefits Salaries, commissions and team member benefits include all payroll, benefits, and share-based compensation expenses for our team members. 57 General and administrative expenses General and administrative expenses primarily include occupancy costs, professional services, loan processing expenses on loans that do not close or that are not charged to clients on closed loans, commitment fees, fees on loan funding facilities, license fees, office expenses and other operating expenses.
General and administrative expenses General and administrative expenses primarily include occupancy costs, professional services, loan processing expenses on loans that do not close or that are not charged to clients on closed loans, commitment fees, fees on loan funding facilities, license fees, office expenses and other operating expenses.
Our presentation of our non-GAAP financial measures should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Our non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.
Our non-GAAP financial measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.
Furthermore, at the point of sale of the loan, the Fair value of originated MSRs and the (Provision for) benefit from investor reserves are recognized each in their respective components shown above. 61 Year ended December 31, 2023 summary Gain on sale of loans, net was $2.1 billion, a decrease of $1.1 billion, or 34%, as compared with $3.1 billion for the same period in 2022.
Furthermore, at the point of sale of the loan, the Fair value of originated MSRs and the Provision for investor reserves are recognized each in their respective components shown above. 62 Year ended December 31, 2024 summary Gain on sale of loans, net was $3.0 billion, an increase of $0.9 billion, or 46%, compared to $2.1 billion in 2023.
(6) Reflects net expenses associated with compensation packages, healthcare coverage, career transition services, and accelerated vesting of certain equity awards. (7) Reflects changes in estimates of tax rates and other variables of the Tax receivable agreement liability.
(5) Reflects litigation accrual reversal related to a specific legal matter recorded as an adjustment in 2021. (6) Reflects net expenses associated with compensation packages, healthcare coverage, career transition services and accelerated vesting of certain equity awards. (7) Reflects changes in estimates of tax rates and other variables of the Tax receivable agreement liability.
Reconciliation of Adjusted EBITDA to Net (Loss) Income Year Ended December 31, ($ in thousands) 2023 2022 2021 Net (loss) income $ (390,080) $ 699,933 $ 6,072,163 Interest and amortization expense on non-funding debt 153,386 153,596 230,740 (Benefit from) provision for income taxes (12,817) 41,978 112,738 Depreciation and amortization 110,271 94,020 74,713 Share-based compensation expense (1) 177,389 233,760 163,738 Change in fair value of MSRs due to valuation assumptions (net of hedges) (2) (29,007) (1,210,947) (487,473) Litigation accrual (3) — — 15,000 Career transition program (4) 51,495 81,132 — Change in Tax receivable agreement liability (5) 6,565 (34,159) 18,835 Adjusted EBITDA $ 67,202 $ 59,313 $ 6,200,454 (1) The years ended December 31, 2023 and 2022 amounts exclude the impact of the career transition program.
Reconciliation of Adjusted EBITDA to Net income (loss) Year Ended December 31, ($ in thousands) 2024 2023 2022 Net income (loss) $ 635,828 $ (390,080) $ 699,933 Interest and amortization expense on non-funding debt 153,637 153,386 153,596 Provision for (benefit from) income taxes 32,224 (12,817) 41,978 Depreciation and amortization 112,917 110,271 94,020 Share-based compensation expense (1) 145,483 177,389 233,760 Change in fair value of MSRs due to valuation assumptions (net of hedges) (2) (199,188) (29,007) (1,210,947) Litigation accrual reversal (3) (15,000) — — Career transition program (4) — 51,495 81,132 Change in Tax receivable agreement liability (5) (3,512) 6,565 (34,159) Adjusted EBITDA $ 862,389 $ 67,202 $ 59,313 (1) The years ended December 31, 2023 and 2022 amounts exclude the impact of the career transition program. 54 (2) Reflects changes in market interest rates and assumptions, including discount rates and prepayment speeds, gains or losses on sales of MSRs during the period and the effects of contractual prepayment protection associated with sales or purchases of MSRs.
As of February 20, 2024 there were approximately 114 holders of record of our Class A Common Stock and 2 holders of record of our Class D Common Stock.
As of February 24, 2025 there were approximately 109 holders of record of our Class A Common Stock and 4 holders of record of our Class D Common Stock.
Contractual Obligations, Commercial Commitments, and Other Contingencies Our material expected cash requirements also include the following contractual commitments: Repurchase and indemnification obligations In the ordinary course of business, we are exposed to liability under representations and warranties made to purchasers of mortgage loans.
The increase was primarily a result of a net income of $635.8 million, as well as an increase in share-based compensation of $140.5 million. 69 Contractual Obligations, Commercial Commitments and Other Contingencies Our material expected cash requirements also include the following contractual commitments: Repurchase and indemnification obligations In the ordinary course of business, we are exposed to liability under representations and warranties made to purchasers of mortgage loans.
The following summarizes key performance indicators of the business: Year Ended December 31, (Units and $ in thousands) 2023 2022 2021 Rocket Mortgage Loan Production Data Closed loan origination volume $ 78,711,994 $ 133,129,283 $ 351,193,352 Direct to Consumer origination volume $ 43,763,278 $ 78,641,022 $ 199,894,693 Partner Network origination volume $ 34,948,716 $ 54,488,261 $ 151,298,659 Gain on sale margin(1) 2.63 % 2.82 % 3.13 % Refinance market share(2) 12.1 % 11.0 % 10.8 % Purchase market share(2) 3.7 % 3.2 % 3.3 % Servicing Portfolio Data Total serviced UPB (includes subserviced) $ 509,105,421 $ 534,704,602 $ 551,866,424 MSRs UPB of loans serviced $ 468,237,971 $ 486,540,840 $ 485,087,214 UPB of loans subserviced and temporarily serviced $ 40,867,450 $ 48,163,762 $ 66,779,210 Total loans serviced (includes subserviced) 2,457.1 2,534.5 2,565.1 Number of MSRs loans serviced 2,357.2 2,412.1 2,384.2 Number of loans subserviced and temporarily serviced 99.9 122.4 180.9 MSR fair value multiple(3) 4.94 4.98 3.91 Total serviced MSR delinquency rate (60+) 1.23 % 1.20 % 1.60 % Net client retention rate(4) 97 % 95 % 91 % Select Other Rocket Companies Amrock gross revenue(5) $ 244,224 $ 504,270 $ 1,393,174 Amrock closings 161.8 344.0 1,115.1 Rocket Homes gross revenue(5) $ 53,155 $ 52,796 $ 57,559 Rocket Homes real estate transactions 25.3 32.7 33.1 Rockethomes.com average unique monthly visitors(6) 1,498.1 2,053.3 1,829.7 Rocket Loans gross revenue(5) $ 62,305 $ 68,828 $ 95,442 Rocket Loans closed units 39.2 28.2 17.4 Total Select Other Rocket Companies gross revenue $ 359,684 $ 625,894 $ 1,546,175 Total Select Other Rocket Companies net revenue(7) $ 351,766 $ 617,434 $ 1,537,714 (1) Gain on sale margin is calculated by dividing Gain on sale of loans, net by the net rate lock volume for the period.
The following summarizes key performance indicators of the business: Year Ended December 31, (Units and $ in thousands) 2024 2023 2022 Rocket Mortgage Loan Production Data Closed loan origination volume $ 101,152,132 $ 78,711,994 $ 133,129,283 Direct to Consumer origination volume $ 54,761,020 $ 43,763,278 $ 78,641,022 Partner Network origination volume $ 46,391,112 $ 34,948,716 $ 54,488,261 Gain on sale margin (1) 2.95 % 2.63 % 2.82 % Refinance market share (2) 12.1 % 12.1 % 11.0 % Purchase market share (2) 4.0 % 3.7 % 3.2 % Servicing Portfolio Data Total serviced UPB (includes subserviced) $ 593,261,034 $ 509,105,421 $ 534,704,602 MSRs UPB of loans serviced $ 525,517,829 $ 468,237,971 $ 486,540,840 UPB of loans subserviced and temporarily serviced $ 67,743,205 $ 40,867,450 $ 48,163,762 Total loans serviced (includes subserviced) 2,765.5 2,457.1 2,534.5 Number of MSRs loans serviced 2,588.9 2,357.2 2,412.1 Number of loans subserviced and temporarily serviced 176.6 99.9 122.4 MSR fair value multiple (3) 5.13 4.94 4.98 Total serviced MSR delinquency rate (60+) 1.54 % 1.23 % 1.20 % Net client retention rate (4) 97 % 97 % 95 % Select Other Rocket Companies Rocket Close gross revenue (5) $ 311,464 $ 244,224 $ 504,270 Rocket Close closings 224.6 161.8 344.0 Rocket Money gross revenue (5) $ 321,180 $ 209,826 $ 145,381 Rocket Money paying subscribers, at period end 4,116.5 3,017.5 2,263.5 Rocket Homes gross revenue (5) $ 55,393 $ 53,155 $ 52,796 Rocket Homes real estate transactions 21.2 25.3 32.7 Rockethomes.com average unique monthly visitors (6) 1,279.8 1,498.1 2,053.3 Rocket Loans gross revenue (5) $ 80,555 $ 62,305 $ 68,828 Rocket Loans closed units 43.4 39.2 28.2 Total Select Other Rocket Companies gross revenue $ 768,592 $ 569,510 $ 771,275 Total Select Other Rocket Companies net revenue (7) $ 748,910 $ 550,463 $ 759,051 56 (1) Gain on sale margin is calculated by dividing Gain on sale of loans, net by the net rate lock volume for the period.
A breach of these covenants can result in an event of default under these facilities and as such allows the lenders to pursue certain remedies. In addition, some of these facilities include cross default or cross acceleration provisions that could result in some facilities terminating if an event of default or acceleration of maturity occurs.
A breach of these covenants can result in an event of default under these facilities and as such allows the lenders to pursue certain remedies.
Expenses Expenses for the periods presented were as follows: Year Ended December 31, ($ in thousands) 2023 2022 2021 Salaries, commissions and team member benefits $ 2,257,291 $ 2,797,868 $ 3,356,815 General and administrative expenses 802,865 906,195 1,183,418 Marketing and advertising expenses 736,676 945,694 1,249,583 Interest and amortization expense on non-funding debt 153,386 153,596 230,740 Other expenses 251,948 293,229 709,009 Total expenses $ 4,202,166 $ 5,096,582 $ 6,729,565 Total expenses were $4.2 billion, a decrease of $0.9 billion or 18%, as compared with $5.1 billion for the same period in 2022.
Expenses Expenses for the periods presented were as follows: Year Ended December 31, ($ in thousands) 2024 2023 2022 Salaries, commissions and team member benefits $ 2,261,245 $ 2,257,291 $ 2,797,868 General and administrative expenses 893,154 802,865 906,195 Marketing and advertising expenses 824,042 736,676 945,694 Interest and amortization expense on non-funding debt 153,637 153,386 153,596 Other expenses 300,668 251,948 293,229 Total expenses $ 4,432,746 $ 4,202,166 $ 5,096,582 Total expenses were $4.4 billion, an increase of $230.6 million, or 5%, compared to $4.2 billion in 2023.
The comparisons in this graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock.
The comparisons in this graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock. 48 Our selected peer group is comprised of PennyMac Financial Services Inc, Rithm Capital Corp, Mr.
Loan servicing income, net For the periods presented, loan servicing income, net consisted of the following: Year Ended December 31, ($ in thousands) 2023 2022 2021 Retained servicing fee $ 1,350,595 $ 1,416,488 $ 1,292,031 Subservicing income 9,446 9,066 9,389 Ancillary income 41,739 33,083 24,518 Servicing fee income 1,401,780 1,458,637 1,325,938 Change in valuation model inputs or assumptions 37,570 1,279,945 510,869 Change in fair value of MSR hedge (8,563) (68,998) (23,396) Collection/realization of cash flows (729,989) (1,025,911) (1,176,905) Change in fair value of MSRs (700,982) 185,036 (689,432) Loan servicing income, net $ 700,798 $ 1,643,673 $ 636,506 December 31, ($ in thousands) 2023 2022 2021 MSR UPB of loans serviced $ 468,237,971 $ 486,540,840 $ 485,087,214 Number of MSR loans serviced 2,357,209 2,412,117 2,384,150 UPB of loans subserviced and temporarily serviced $ 40,867,450 $ 48,163,762 $ 66,779,210 Number of loans subserviced and temporarily serviced 99,938 122,380 180,900 Total serviced UPB $ 509,105,421 $ 534,704,602 $ 551,866,424 Total loans serviced 2,457,147 2,534,497 2,565,050 MSR fair value $ 6,439,787 $ 6,946,940 $ 5,385,613 Total serviced delinquency count (60+) as % of total 1.23% 1.20% 1.60% Weighted average credit score 733 736 738 Weighted average LTV 71.40% 71.08% 70.57% Weighted average loan rate 3.74% 3.40% 3.17% Weighted average service fee 0.28% 0.29% 0.28% Loan servicing income, net was $0.7 billion, a decrease of $0.9 billion, or 57%, which compares to $1.6 billion for the same period in 2022.
Loan servicing income, net For the periods presented, Loan servicing income, net consisted of the following: Year Ended December 31, ($ in thousands) 2024 2023 2022 Retained servicing fee $ 1,400,857 $ 1,350,595 $ 1,416,488 Subservicing income 8,428 9,446 9,066 Ancillary income 52,888 41,739 33,083 Servicing fee income 1,462,173 1,401,780 1,458,637 Change in valuation model inputs or assumptions 207,760 37,570 1,279,945 Change in fair value of MSR hedge (8,572) (8,563) (68,998) Collection/realization of cash flows (777,869) (729,989) (1,025,911) Change in fair value of MSRs (578,681) (700,982) 185,036 Loan servicing income, net $ 883,492 $ 700,798 $ 1,643,673 December 31, ($ in thousands) 2024 2023 2022 MSR UPB of loans serviced $ 525,517,829 $ 468,237,971 $ 486,540,840 Number of MSR loans serviced 2,588,882 2,357,209 2,412,117 UPB of loans subserviced and temporarily serviced $ 67,743,205 $ 40,867,450 $ 48,163,762 Number of loans subserviced and temporarily serviced 176,624 99,938 122,380 Total serviced UPB $ 593,261,034 $ 509,105,421 $ 534,704,602 Total loans serviced 2,765,506 2,457,147 2,534,497 MSR fair value $ 7,633,371 $ 6,439,787 $ 6,946,940 Total serviced delinquency count (60+) as % of total 1.54% 1.23% 1.20% Weighted average credit score 733 733 736 Weighted average LTV 71.85% 71.40% 71.08% Weighted average loan rate 4.28% 3.74% 3.40% Weighted average service fee 0.28% 0.28% 0.29% Loan servicing income, net was $883.5 million, an increase of $182.7 million, or 26%, compared to $700.8 million in 2023, primarily due to the $170.2 million increase in valuation reflected in Change in valuation model inputs or assumptions.
Net loan origination fees and costs related to the origination of mortgage loans are recognized as a component of the fair value of IRLCs. 56 We establish reserves for our estimated liabilities associated with the potential repurchase or indemnity of purchasers of loans previously sold due to representation and warranty claims by investors.
We establish reserves for our estimated liabilities associated with the potential repurchase or indemnity of purchasers of loans previously sold due to representation and warranty claims by investors.
We were in compliance with all covenants as of December 31, 2023 and 2022. December 31, 2023 compared to December 31, 2022 Cash Flows Our cash and cash equivalents and restricted cash were $1.1 billion at December 31, 2023, an increase of $0.3 billion, or 44%, compared to $0.8 billion at December 31, 2022.
December 31, 2024 compared to December 31, 2023 Cash Flows Our cash and cash equivalents and restricted cash were $1.3 billion at December 31, 2024, an increase of $0.2 billion, or 13%, compared to $1.1 billion at December 31, 2023.
Net gain (loss) on sale of loans, Fair value adjustment on loans held for sale and IRLCs and Revaluation gain from forward commitments economically hedging loans held for sale and IRLCs was $1.1 billion, a decrease of $0.1 billion, or 11%, as compared with $1.2 billion for the same period in 2022.
Net gain (loss) on sale of loans, Fair value adjustment on loans held for sale and IRLCs and Revaluation from forward commitments economically hedging loans held for sale and IRLCs was $1.7 billion, an increase of $0.6 billion, or 58%, compared to $1.1 billion in 2023.
As discussed in Note 6, Borrowings, of the notes to the consolidated financial statements included in this Form 10-K, as of December 31, 2023, we had 15 different funding facilities and financing facilities in different amounts and with various maturities together with the Senior Notes.
Delays or failures to sell loans in the secondary market could have an adverse effect on our liquidity position. 68 As discussed in Note 6, Borrowings, of the notes to the consolidated financial statements included in this Form 10-K, as of December 31, 2024, we had 17 different funding facilities and financing facilities in different amounts and with various maturities together with the Senior Notes.
We define “Adjusted EBITDA” as earnings (losses) before interest and amortization expense on non-funding debt, income tax, depreciation and amortization, share-based compensation expense, change in fair value of MSRs due to valuation assumptions (net of hedges), a litigation accrual, career transition program, and change in Tax receivable agreement liability. 50 We exclude from each of our non-GAAP financial measures the change in fair value of MSRs due to valuation assumptions (net of hedges) as this represents a non-cash non-realized adjustment to our total revenues, reflecting changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates, which is not indicative of our performance or results of operation.
We exclude from each of our non-GAAP financial measures the change in fair value of MSRs due to valuation assumptions (net of hedges), as this represents a non-cash non-realized adjustment to our total revenues, reflecting changes in market interest rates and assumptions, including discount rates and prepayment speeds, which are not indicative of our performance or results of operation.
These activities position us to be the natural choice for clients’ next refinance or purchase transaction. 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.
These activities position us to be the natural choice for clients’ next refinance or purchase transaction. We provide industry-leading client service and leverage our widely recognized brand to strengthen our wholesale relationships, through Rocket Pro, as well as enterprise partnerships, both driving growth in our Partner Network segment.
(4) Reflects net expenses associated with compensation packages, healthcare coverage, career transition services, and accelerated vesting of certain equity awards. (5) Reflects changes in estimates of tax rates and other variables of the Tax receivable agreement liability. 54 Key Performance Indicators We monitor a number of key performance indicators to evaluate the performance of our business operations.
(5) Reflects changes in estimates of tax rates and other variables of the Tax receivable agreement liability. 55 Key Performance Indicators We monitor a number of key performance indicators to evaluate the performance of our business operations.
The Adjustment to the benefit from (provision for) income tax reflects the difference between (a) the income tax computed using the effective tax rates below applied to the (loss) income before income taxes assuming Rocket Companies, Inc. owns 100% of the non-voting common interest units of Holdings and (b) the (benefit from) provision for income taxes. 52 Year Ended December 31, 2023 2022 2021 Net (loss) income attributable to Rocket Companies $ (15,514) $ 46,421 $ 308,210 Net (loss) income impact from pro forma conversion of Class D common shares to Class A common shares (372,541) 655,863 5,766,284 (Benefit from) provision for income taxes (12,817) 41,978 112,738 Adjusted (loss) income before income taxes (400,872) 744,262 6,187,232 Effective Income Tax Rate for Adjusted Net (Loss) Income 24.40 % 24.29 % 24.92 % Adjusted (benefit from) provision for income taxes (97,812) 180,781 1,541,675 (Benefit from) provision for income taxes (12,817) 41,978 112,738 Adjustment to the benefit from (provision for) income tax $ 84,995 $ (138,803) $ (1,428,937) December 31, 2023 2022 2021 Statutory U.S.
Year Ended December 31, 2024 2023 2022 Net income (loss) attributable to Rocket Companies $ 29,370 $ (15,514) $ 46,421 Net income (loss) impact from pro forma conversion of Class D common shares to Class A common shares 607,509 (372,541) 655,863 Provision for (benefit from) income taxes 32,224 (12,817) 41,978 Adjusted income (loss) before income taxes 669,103 (400,872) 744,262 Effective income tax rate for adjusted net income (loss) 24.32 % 24.40 % 24.29 % Adjusted provision for (benefit from) income taxes 162,726 (97,812) 180,781 Provision for (benefit from) income taxes 32,224 (12,817) 41,978 Adjustment to the (provision for) benefit from income tax $ (130,502) $ 84,995 $ (138,803) December 31, 2024 2023 2022 Statutory U.S.
Marketing and advertising expenses Marketing and advertising expenses are primarily related to performance and brand marketing. Interest and amortization expense on non-funding debt Interest and amortization expense related to our Senior Notes.
Marketing and advertising expenses Marketing and advertising expenses are primarily related to performance and brand marketing. Interest and amortization expense on non-funding debt Interest and amortization expense related to our Senior Notes. Other expenses Other expenses primarily consist of depreciation and amortization on property and equipment, mortgage servicing related expenses and expenses generated from Rocket Close (title and settlement services).
Consequently, we view gross revenue of individual Select Other Rocket Companies as a key performance indicator, and we consider net revenue of Select Other Rocket Companies on a combined basis. Description of Certain Components of Financial Data Components of revenue Our sources of revenue include gain on sale of loans, loan servicing income, interest income, and other income.
Description of Certain Components of Financial Data Components of revenue Our sources of revenue include Gain on sale of loans, net , Loan servicing income, net , Interest income, net , and Other income .
Federal Income Tax Rate 21.00 % 21.00 % 21.00 % Canadian taxes 0.01 0.01 0.01 State and Local Income Taxes (net of federal benefit) 3.39 3.28 3.91 Effective Income Tax Rate for Adjusted Net (Loss) Income 24.40 % 24.29 % 24.92 % (3) The years ended December 31, 2023 and 2022 amounts exclude the impact of the career transition program.
Federal Income Tax Rate 21.00 % 21.00 % 21.00 % Canadian taxes 0.01 0.01 0.01 State and local income taxes (net of federal benefit) 3.31 3.39 3.28 Effective income tax rate for adjusted net income (loss) 24.32 % 24.40 % 24.29 % (3) The years ended December 31, 2023 and 2022 amounts exclude the impact of the career transition program. 53 (4) Reflects changes in market interest rates and assumptions, including discount rates and prepayment speeds, gains or losses on sales of MSRs during the period and the effects of contractual prepayment protection associated with sales or purchases of MSRs.
We record interest and penalties related to uncertain income tax positions in income tax expense. For additional information regarding our provision for income taxes refer to Note 12, Income Taxes.
We record interest and penalties related to uncertain income tax positions in income tax expense.
(9) Represents tax benefits due to the amortization of intangible assets and other tax attributes resulting from the purchase of Holdings units, net of payment obligations under Tax Receivable Agreement. 53 Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Out standing Year Ended December 31, ($ in thousands, except per share) 2023 2022 2021 Diluted weighted average Class A common shares outstanding 1,980,523,690 1,971,620,573 1,989,433,567 Assumed pro forma conversion of Class D shares (1) — — — Adjusted diluted weighted average shares outstanding 1,980,523,690 1,971,620,573 1,989,433,567 Adjusted Net (Loss) Income $ (143,105) $ (136,962) $ 4,501,862 Adjusted Diluted (Loss) Earnings Per Share $ (0.07) $ (0.07) $ 2.26 (1) Reflects the pro forma exchange and conversion of non-dilutive Class D common stock to Class A common stock.
Reconciliation of Adjusted diluted weighted average shares outstanding to Diluted weighted average Class A common shares outstanding Year Ended December 31, ($ in thousands, except per share) 2024 2023 2022 Diluted weighted average Class A common shares outstanding 141,037,083 1,980,523,690 1,971,620,573 Assumed pro forma conversion of Class D shares (1) 1,848,879,483 — — Adjusted diluted weighted average shares outstanding 1,989,916,566 1,980,523,690 1,971,620,573 Adjusted net income (loss) $ 455,634 $ (143,105) $ (136,962) Adjusted diluted earnings (loss) per share $ 0.23 $ (0.07) $ (0.07) (1) Reflects the pro forma exchange and conversion of non-dilutive Class D common stock to Class A common stock.
Loan origination costs include lender paid mortgage insurance, recording taxes, investor fees and other related expenses.
Loan origination costs include lender paid mortgage insurance, recording taxes, investor fees and other related expenses. Net loan origination fees and costs related to the origination of mortgage loans are recognized as a component of the fair value of IRLCs.
From time to time in the future, we may include or exclude other items if we believe that doing so is consistent with the goal of providing useful information to investors.
From time to time in the future, we may include or exclude other items if we believe that doing so is consistent with the goal of providing useful information to investors. 51 Although we use our non-GAAP financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business.
Our Net Loss was $390.1 million, compared to a Net Income of $699.9 million for the same period in 2022. We also generated $67.2 million of Adjusted EBITDA, which was an increase of $7.9 million, or 13.3%, compared to $59.3 million for the same period in 2022. See “Non-GAAP Financial Measures” below for more information on Adjusted EBITDA.
We also generated $862.4 million of Adjusted EBITDA, which was an increase of $795.2 million, compared to $67.2 million in 2023. See “Non-GAAP Financial Measures” below for more information on Adjusted EBITDA.
Interest income, net The components of interest income, net for the periods presented were as follows: Year Ended December 31, ($ in thousands) 2023 2022 2021 Interest income $ 327,448 $ 350,591 $ 430,086 Interest expense on funding facilities (206,588) (166,388) (261,146) Interest income, net $ 120,860 $ 184,203 $ 168,940 Interest income, net was $120.9 million, a decrease of $63.3 million, or 34%, as compared to $184.2 million for the same period in 2022.
In 2024, the Change in valuation model inputs or assumptions was $207.8 million, driven by an increase in interest rates year over year, compared to $37.6 million in 2023, which was driven by relatively flat interest rates during the respective prior year period. 63 Interest income, net The components of Interest income, net for the periods presented were as follows: Year Ended December 31, ($ in thousands) 2024 2023 2022 Interest income $ 413,159 $ 327,448 $ 350,591 Interest expense on funding facilities (315,593) (206,588) (166,388) Interest income, net $ 97,566 $ 120,860 $ 184,203 Interest income, net was $97.6 million, a decrease of $23.3 million, or 19%, compared to $120.9 million in 2023.
Summary results by segment for the years ended December 31, 2023, 2022 and 2021 Our operations are organized by distinct marketing channels which promote client acquisition and are categorized under two reportable segments: Direct to Consumer and Partner Network.
Other expenses were $300.7 million, an increase of $48.7 million, or 19%, compared to $251.9 million in 2023, due to an increase in title related expenses at Rocket Close associated with higher volume. 64 Summary results by segment for the years ended December 31, 2024, 2023 and 2022 Our operations are organized by distinct marketing channels which promote client acquisition and are categorized under two reportable segments: Direct to Consumer and Partner Network.
The decrease in contribution margin was driven primarily by lower gain on sale revenue, offset by a reduction in directly attributable expenses and the above referenced difference in the Change in fair value of MSRs year over year. 65 Partner Network Results Year Ended December 31, ($ in thousands) 2023 2022 2021 Sold Loan Volume $ 34,892,877 $ 60,498,569 $ 138,802,940 Sold Loan Gain on Sale Margin 1.05 % 1.05 % 1.20 % Revenue Gain on sale 371,392 540,234 1,597,569 Interest income 145,351 125,034 161,256 Interest expense on funding facilities (91,793) (59,818) (99,226) Other income 13,902 33,163 105,976 Total Revenue, net $ 438,852 $ 638,613 $ 1,765,575 Change in fair value of MSRs due to valuation assumptions, net of hedges — — — Adjusted Revenue $ 438,852 $ 638,613 $ 1,765,575 Less: Directly attributable expenses 240,402 362,317 686,296 Total Contribution Margin $ 198,450 $ 276,296 $ 1,079,279 Year ending December 31, 2023 summary Partner Network Adjusted Revenue was $438.9 million, a decrease of $199.8 million, or 31%, as compared to $638.6 million for the same period in 2022.
The increase in Contribution margin was driven primarily by an increase in Gain on sale of loans, net, partially offset by higher Directly attributable expenses, as described above. 66 Partner Network Results Year Ended December 31, ($ in thousands) 2024 2023 2022 Sold Loan Volume $ 45,093,626 $ 34,892,877 $ 60,498,569 Sold Loan Gain on Sale Margin 1.47 % 1.05 % 1.05 % Revenue Gain on sale of loans, net 605,373 371,392 540,234 Interest income 189,333 145,351 125,034 Interest expense on funding facilities (144,749) (91,793) (59,818) Other income 19,871 13,902 33,163 Total revenue, net $ 669,828 $ 438,852 $ 638,613 Change in fair value of MSRs due to valuation assumptions (net of hedges) — — — Adjusted revenue $ 669,828 $ 438,852 $ 638,613 Salaries, commissions and team member benefits 196,831 200,958 276,756 General and administrative expenses 25,278 21,477 40,923 Marketing and advertising expenses 9,327 10,309 33,449 Other expenses 8,880 7,658 11,189 Less: Directly attributable expenses 240,316 240,402 362,317 Total Contribution margin $ 429,512 $ 198,450 $ 276,296 Year ending December 31, 2024 summary Partner Network Adjusted revenue was $669.8 million, an increase of $231.0 million, or 53%, as compared to $438.9 million in 2023, primarily driven by Gain on sale of loans, net.
Other key performance indicators for other Rocket Companies, besides Rocket Mortgage ( “ Other Rocket Companies ”) , allow us to monitor both revenues and unit sales generated by these businesses. We also include Rockethomes.com average unique monthly visits, as we believe traffic on the site is an indicator of consumer interest.
Other key performance indicators for other Rocket Companies, besides Rocket Mortgage ( “ Other Rocket Companies ”) , allow us to monitor both revenues and unit sales generated by these businesses.
Other income Year Ended December 31, ($ in thousands) 2023 2022 2021 Deposit income $ 372,917 $ 90,298 $ 30,396 Amrock revenue 243,605 503,137 1,390,305 Rocket Money revenue (1) 198,697 141,618 2,349 Rocket Homes revenue 49,970 48,293 54,208 Rocket Loans revenue 18,757 41,885 80,577 Other (2) 27,373 47,969 82,611 Total Other income $ 911,319 $ 873,200 $ 1,640,446 (1) Rocket Money was acquired on December 23, 2021 and therefore, 2021 does not reflect a full year of revenue.
Other income Year Ended December 31, ($ in thousands) 2024 2023 2022 Deposit income $ 404,233 $ 372,917 $ 90,298 Rocket Money revenue 297,200 198,697 141,618 Rocket Close revenue 297,125 243,605 503,137 Rocket Homes revenue 53,556 49,970 48,293 Rocket Loans revenue 25,971 18,757 41,885 Other (1) 28,742 27,373 47,969 Total Other income $ 1,106,827 $ 911,319 $ 873,200 (1) Other consists of additional subsidiary and miscellaneous revenue.
For additional discussion, see Note 16, Segments of the consolidated financial statements of this Form 10-K. 64 Direct to Consumer Results Year Ended December 31, ($ in thousands) 2023 2022 2021 Sold Loan Volume $ 43,598,231 $ 84,142,087 $ 213,888,883 Sold Loan Gain on Sale Margin 3.86 % 4.14 % 4.75 % Revenue Gain on sale $ 1,660,038 $ 2,573,970 $ 8,843,040 Interest income 182,097 222,621 265,438 Interest expense on funding facilities (114,447) (106,561) (161,867) Service fee income 1,396,639 1,455,121 1,323,171 Changes in fair value of MSRs (700,982) 185,036 (689,432) Other income 565,882 449,813 1,001,060 Total Revenue, net $ 2,989,227 $ 4,780,000 $ 10,581,410 Change in fair value of MSRs due to valuation assumptions, net of hedges (29,007) (1,210,947) (487,473) Adjusted Revenue $ 2,960,220 $ 3,569,053 $ 10,093,937 Less: Directly attributable expenses(1) 1,924,273 2,517,850 3,697,774 Contribution Margin $ 1,035,947 $ 1,051,203 $ 6,396,163 (1) Direct expenses attributable to operating segments exclude corporate overhead, depreciation and amortization, and interest and amortization expense on non-funding debt.
For additional discussion, see Note 16, Segments of the consolidated financial statements of this Form 10-K. 65 Direct to Consumer Results Year Ended December 31, ($ in thousands) 2024 2023 2022 Sold Loan Volume $ 52,615,583 $ 43,598,231 $ 84,142,087 Sold Loan Gain on Sale Margin 4.14 % 3.86 % 4.14 % Revenue Gain on sale of loans, net $ 2,362,879 $ 1,660,038 $ 2,573,970 Interest income 223,826 182,097 222,621 Interest expense on funding facilities (170,844) (114,447) (106,561) Service fee income 1,456,348 1,396,639 1,455,121 Changes in fair value of MSRs (578,681) (700,982) 185,036 Other income 599,019 565,882 449,813 Total revenue, net $ 3,892,547 $ 2,989,227 $ 4,780,000 Change in fair value of MSRs due to valuation assumptions (net of hedges) (199,188) (29,007) (1,210,947) Adjusted revenue $ 3,693,359 $ 2,960,220 $ 3,569,053 Salaries, commissions and team member benefits 1,065,202 1,014,178 1,310,069 General and administrative expenses 279,141 189,294 208,867 Marketing and advertising expenses 653,132 601,841 808,822 Other expenses 145,573 118,960 190,092 Less: Directly attributable expenses 2,143,048 1,924,273 2,517,850 Contribution margin $ 1,550,311 $ 1,035,947 $ 1,051,203 Year ending December 31, 2024 summary Direct to Consumer Adjusted revenue was $3.7 billion, an increase of $733.1 million, or 25%, compared to $3.0 billion in 2023, primarily driven by Gain on sale of loans, net.
The increase was primarily driven by MSR sales during the period, partially offset by our net loss for the period. Equity Equity was $8.3 billion as of December 31, 2023, a decrease of $0.2 billion, or 2%, as compared to $8.5 billion as of December 31, 2022.
The increase was primarily driven by less corporate cash used to self-fund loan originations, partially offset by the increase in MSR purchases during the period. Equity Equity was $9.0 billion as of December 31, 2024, an increase of $0.7 billion, or 9%, as compared to $8.3 billion as of December 31, 2023.
Contribution margin is intended to measure the direct profitability of each segment and is calculated as Adjusted Revenue less directly attributable expenses. Adjusted Revenue is a non-GAAP financial measure described above. Directly attributable expenses include salaries, commissions and team member benefits, general and administrative expenses, marketing and advertising expenses and other expenses, such as direct servicing costs and origination costs.
These organizations connect their clients directly to us through marketing channels and referrals. We measure the performance of the segments primarily on a contribution margin basis. Contribution margin is intended to measure the direct profitability of each segment and is calculated as Adjusted Revenue less directly attributable expenses. Adjusted Revenue is a non-GAAP financial measure described above.
Gain on sale revenue was $371.4 million, a decrease of $168.8 million, or 31%. The decrease in gain on sale revenue was driven by a decrease in net rate lock volume from reduced mortgage demand. Partner Network directly attributable expenses was $240.4 million, a decrease of $121.9 million, or 34%, compared to $362.3 million in 2022.
Gain on sale of loans, net increased $234.0 million, or 63%, driven by an increase in net rate lock volume and gain on sale margin from higher mortgage demand in 2024. Partner Network Directly attributable expenses was $240.3 million, flat compared to 2023.
(7) Net revenue presented above is calculated as gross revenues less intercompany revenue eliminations, as a portion of the Select Other Rocket Companies revenues is generated through intercompany transactions. These intercompany transactions take place with entities that are part of our platform.
(7) Net revenue is calculated as gross revenues less intercompany revenue eliminations, as a portion of the Select Other Rocket Companies revenues is generated through intercompany transactions. Consequently, we view gross revenue of individual Select Other Rocket Companies as a key performance indicator and we consider net revenue of Select Other Rocket Companies on a combined basis.
As of February 20, 2024 Rocket Companies repurchased 32.1 million shares at a weighted average price of $12.73. We have returned $409.3 million to shareholders in aggregate under the $1 billion Share Repurchase Program.
We returned $409.3 million to shareholders in aggregate under the $1.0 billion Share Repurchase Program. At the time of its expiration, approximately $590.7 million remained available under the Share Repurchase Program.
New Accounting Pronouncements Not Yet Effective See Note 1, Business, Basis of Presentation and Accounting Policies of t he notes to the consolidated financial statements for details of recently issued accounting pronouncements and their expected impact on our consolidated financial statements.
Following is a summary of the notional amounts of commitments: December 31, ($ in thousands) 2024 2023 Interest rate lock commitments—fixed rate $ 6,562,026 $ 6,317,330 Interest rate lock commitments—variable rate $ 393,175 $ 258,045 Commitments to sell mortgage loans $ 1,120 $ — Forward commitments to sell mortgage-backed securities $ 12,091,939 $ 9,275,041 Forward commitments to purchase mortgage-backed securities $ 735,000 $ 375,000 New Accounting Pronouncements Not Yet Effective See Note 1, Business, Basis of Presentation and Accounting Policies of t he notes to the consolidated financial statements for details of recently issued accounting pronouncements and their expected impact on our consolidated financial statements. 70
Other income Other income includes revenues generated from Amrock (title insurance services, property valuation, and settlement services), Rocket Homes (real estate network referral fees), Rocket Auto (auto marketplace sales revenues), Core Digital Media (third party lead generation revenues), Rock Connections (third party sales and support revenues), Rocket Money (personal finance), Rocket Loans (personal loans), deposit income related to revenu e earned on deposits, including escrow deposits, and professional service fees.
Other income Other income includes revenues gene rated from Deposit income related to revenue earned on deposits, including escrow deposits, Rocket Close (title, closing and appraisal fees), Rocket Money ( subscription revenue and other service-based fees ), Rocket Homes (real estate network referral fees) and Rocket Loans (personal loan interest earned and other income) and Other (additional subsidiary and miscellaneous revenue) .
See Note 14, Commitments, Contingencies, and Guarantees of the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Interest rate lock commitments, loan sale and forward commitments In the normal course of business, we are party to financial instruments with off-balance sheet risk.
See Note 14, Commitments, Contingencies and Guarantees of the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Purchase commitments Future purchase commitments include various non-cancelable agreements primarily related to our apps and websites, cloud computing services and certain marketing arrangements.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

179 edited+36 added−73 removed328 unchanged
Biggest changeThese hedging strategies may be less effective than our current hedging strategies in mitigating the risks described above, which could be detrimental to our business and financial condition. We rely on internal models to manage risk and to make business decisions. Our business could be adversely affected if those models fail to produce reliable and/or valid results.
Biggest changeWe rely on internal models to manage risk and to make business decisions. Our business could be adversely affected if those models fail to produce reliable and/or valid results. We make significant use of business and financial models in connection with our proprietary technology to measure and monitor our risk exposures and to manage our business.
Changes in interest rates are also a key driver of the performance of our servicing business, particularly because our portfolio is composed primarily of MSRs related to high-quality loans, the values of which are highly sensitive to changes in interest rates.
Changes in interest rates are also a key driver of the performance of our servicing business, particularly because our servicing portfolio is composed primarily of MSRs related to high-quality loans, the values of which are highly sensitive to changes in interest rates.
Additional risks related to our loan funding facilities include: • limitations imposed on us under the indentures governing our 2.875% Senior Notes due 2026, 3.625% Senior Notes due 2029, 3.875% Senior Notes due 2031, and our 4.000% Senior Notes due 2033 and other existing and future financing facilities that contain restrictive covenants and borrowing conditions that may limit our ability to raise additional debt; • a decline in liquidity in the credit markets; • prevailing interest rates; • the financial strength of the lenders from whom we borrow; • the decision of lenders from whom we borrow to reduce their exposure to mortgage loans and MSRs due to a change in such lenders’ strategic plan, future lines of business, regulatory restrictions or otherwise; • the amount of eligible collateral pledged on advance facilities, which may be less than the borrowing capacity of the facility; • the larger portion of our loan funding facilities that is uncommitted, versus committed; • more stringent financial covenants in such refinanced facilities, which we may not be able to achieve; and • accounting changes that impact calculations of covenants in our debt agreements.
Additional risks related to our funding and financing facilities include: • limitations imposed on us under the indentures governing our 2.875% Senior Notes due 2026, 3.625% Senior Notes due 2029, 3.875% Senior Notes due 2031 and our 4.000% Senior Notes due 2033 and other existing and future financing facilities that contain restrictive covenants and borrowing conditions that may limit our ability to raise additional debt; • a decline in liquidity in the credit markets; • prevailing interest rates; • the financial strength of the lenders from whom we borrow; • the decision of lenders from whom we borrow to reduce their exposure to mortgage loans and MSRs due to a change in such lenders’ strategic plan, future lines of business, regulatory restrictions or otherwise; • the amount of eligible collateral pledged on advance facilities, which may be less than the borrowing capacity of the facility; • the larger portion of our loan funding facilities that is uncommitted, versus committed; • more stringent financial covenants in such refinanced facilities, which we may not be able to achieve; and • accounting changes that impact calculations of covenants in our debt agreements.
Certain of our loan funding, early buy-out facilities, and MSR-backed facilities are subject to margin calls based on the lender’s opinion of the value of the loan collateral securing such financing, and certain of our hedges related to newly originated mortgages are also subject to margin calls.
Certain of our funding and financing facilities, early buy-out facilities, and MSR-backed facilities are subject to margin calls based on the lender’s opinion of the value of the loan collateral securing such financing and certain of our hedges related to newly originated mortgages are also subject to margin calls.
These provisions include: • having a dual class common stock structure, which provides RHI with the ability to control the outcome of matters requiring stockholder approval, even if it beneficially owns significantly less than a majority of the shares of our outstanding common stock; • having a classified board of directors; • providing that, when the RHI Affiliated Entities and permitted transferees (collectively, the “RHI Parties”) beneficially own less than a majority of the combined voting power of the common stock, a director may only be removed with cause by the affirmative vote of 75% of the combined voting power of our common stock; • providing that, when the RHI Parties beneficially own less than a majority of the combined voting power of our common stock, vacancies on our board of directors, whether resulting from an increase in the number of directors or the death, removal or resignation of a director, will be filled only by our board of directors and not by stockholders; • providing that, when the RHI Parties beneficially own less than a majority of the combined voting power of our common stock, certain amendments to our certificate of incorporation or amendments to our bylaws will require the approval of 75% of the combined voting power of our common stock; • prohibiting stockholders from calling a special meeting of stockholders; • authorizing stockholders to act by written consent only until the RHI Parties cease to beneficially own a majority of the combined voting power of our common stock; • establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; 41 • authorizing “blank check” preferred stock, the terms and issuance of which can be determined by our board of directors without any need for action by stockholders; and • providing that the decision to transfer our corporate headquarters outside of Detroit, Michigan will require the approval of 75% of the combined voting power of our common stock.
These provisions include: • having a dual class common stock structure, which provides RHI with the ability to control the outcome of matters requiring stockholder approval, even if it beneficially owns significantly less than a majority of the shares of our outstanding common stock; • having a classified board of directors; • providing that, when the RHI Affiliated Entities and permitted transferees (collectively, the “RHI Parties”) beneficially own less than a majority of the combined voting power of the common stock, a director may only be removed with cause by the affirmative vote of 75% of the combined voting power of our common stock; • providing that, when the RHI Parties beneficially own less than a majority of the combined voting power of our common stock, vacancies on our board of directors, whether resulting from an increase in the number of directors or the death, removal or resignation of a director, will be filled only by our board of directors and not by stockholders; 41 • providing that, when the RHI Parties beneficially own less than a majority of the combined voting power of our common stock, certain amendments to our certificate of incorporation or amendments to our bylaws will require the approval of 75% of the combined voting power of our common stock; • prohibiting stockholders from calling a special meeting of stockholders; • authorizing stockholders to act by written consent only until the RHI Parties cease to beneficially own a majority of the combined voting power of our common stock; • establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; • authorizing “blank check” preferred stock, the terms and issuance of which can be determined by our board of directors without any need for action by stockholders; and • providing that the decision to transfer our corporate headquarters outside of Detroit, Michigan will require the approval of 75% of the combined voting power of our common stock.
Our certificate of incorporation provides that, to the 39 fullest extent permitted by applicable law, we renounce our right to certain business opportunities, and that each RHI Party has no duty to communicate or offer such business opportunity to us and is not liable to us or any of our stockholders for breach of any fiduciary or other duty under statutory or common law, as a director, officer or controlling stockholder, or otherwise, by reason of the fact that any such individual pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to us.
Our certificate of incorporation provides that, to the fullest extent permitted by applicable law, we renounce our right to certain business opportunities, and that each RHI Party has no duty to communicate or offer such business opportunity to us and is not liable to us or any of our stockholders for breach of any fiduciary or other duty under statutory or common law, as a director, officer or controlling stockholder, or otherwise, by reason of the fact that any such individual pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to us.
We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting the Detroit, Phoenix, Cleveland or Charlotte areas, and our business interruption insurance may be insufficient to compensate us for losses that may occur. 21 Our risk management efforts may not be effective at mitigating potential losses resulting in increased costs or business disruption.
We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting the Detroit, Phoenix, Cleveland or Charlotte areas and our business interruption insurance may be insufficient to compensate us for losses that may occur. Our risk management efforts may not be effective at mitigating potential losses resulting in increased costs or business disruption.
These rules and regulations generally provide for licensing as a loan servicing company, loan origination company, loan marketing company, loan brokering company, debt collection agency or third-party default specialist, as applicable, requirements as to the form and content of contracts and other documentation, licensing of employees and employee hiring background checks, restrictions on collection practices, disclosure and record- keeping requirements and enforcement of borrowers’ rights.
These rules and regulations generally provide for licensing as a loan servicing company, loan origination company, loan marketing company, loan brokering company, debt collection agency or third-party default specialist, as applicable, and impose requirements as to the form and content of contracts and other documentation, licensing of employees and employee hiring background checks, restrictions on collection practices, disclosure and record- keeping requirements and enforcement of borrowers’ rights.
Furthermore, disputes and negative outcomes may arise from earn-outs, escrows, and other arrangements related to acquisitions. Disputes with shareholders of a company in which we have invested may also occur, particularly concerning governance or operations. Any of these risks have the potential to adversely affect the company's business, financial condition, and results of operations.
Furthermore, disputes and negative outcomes may arise from earn-outs, escrows and other performance-related arrangements from acquisitions. Disputes with shareholders of a company in which we have invested may also occur, particularly concerning governance or operations. Any of these risks have the potential to adversely affect the company's business, financial condition and results of operations.
Such significant adverse development, particularly in the current volatile interest rate environment, could result in changes in legislation or regulatory requirements that could materially adversely affect our business, financial condition and operating results. 23 Our ability to refinance existing debt and borrow additional funds is affected by a variety of factors.
Such significant adverse development, particularly in the current volatile interest rate environment, could result in changes in legislation or regulatory requirements that could materially adversely affect our business, financial condition and operating results. Our ability to refinance existing debt and borrow additional funds is affected by a variety of factors.
In addition, the GSEs and 33 the FHFA, Ginnie Mae, the FTC, the HUD, various investors, non-agency securitization trustees, warehouse line providers, and others subject us to periodic reviews. A determination of our failure to comply with applicable law or other relevant requirements could lead to enforcement action, administrative fines and penalties, or other administrative action.
In addition, the GSEs and the FHFA, Ginnie Mae, the FTC, the HUD, various investors, non-agency securitization trustees, warehouse line providers, and others subject us to periodic reviews. A determination of our failure to comply with applicable law or other relevant requirements could lead to enforcement action, administrative fines and penalties, or other administrative action.
Specifically, it is possible that lenders that make only Qualified Mortgages may be exposed to discrimination claims under a disparate impact theory. Beyond exposure to potential fair lending or servicing claims under disparate impact theory, lenders face increasing regulatory, enforcement and litigation risk under the FHA and ECOA from claims of “redlining” and “reverse redlining”.
Specifically, it is possible that lenders that make only Qualified Mortgages may be exposed to discrimination claims under a disparate impact theory. 32 Beyond exposure to potential fair lending or servicing claims under disparate impact theory, lenders face increasing regulatory, enforcement and litigation risk under the FHA and ECOA from claims of “redlining” and “reverse redlining”.
If we are unable to keep pace with technological change affecting the markets for our services or if we are unable to successfully innovate, integrate and adopt new technologies to continue to deliver a superior client experience, the demand for our products and services may decrease, we may be unable to attract clients and our growth and results of operations may be harmed.
If we are unable to keep pace with technological change affecting the markets for our services or if we are unable to successfully innovate, integrate and adopt new technologies to continue to deliver a superior client experience, the demand for our products and services may decrease and our ability to attract clients and our growth and results of operations may be harmed.
If the refinancing or borrowing guidelines become more stringent and such changes result in increased costs to comply or decreased mortgage origination volume, such changes could negatively impact our business. Our loan origination and servicing revenues are highly dependent on macroeconomic and U.S. residential real estate market conditions.
If the refinancing or borrowing guidelines become more stringent and such changes result in increased costs to comply or decreased mortgage origination volume, such changes could negatively impact our business. 24 Our loan origination and servicing revenues are highly dependent on macroeconomic and U.S. residential real estate market conditions.
Excessive home building or high foreclosure rates resulting in an oversupply of housing in a particular area may also increase the amount of losses incurred on defaulted mortgage loans. Furthermore, 24 several state and local governments in the United States are experiencing, and may continue to experience, budgetary strain.
Excessive home building or high foreclosure rates resulting in an oversupply of housing in a particular area may also increase the amount of losses incurred on defaulted mortgage loans. Furthermore, several state and local governments in the United States are experiencing, and may continue to experience, budgetary strain.
A failure to adequately supervise service providers and vendors, including outside foreclosure counsel, may also have these negative results. 30 The laws and regulations applicable to us are subject to administrative or judicial interpretation, but some of these laws and regulations have been enacted only recently and may not yet have been interpreted or may be interpreted infrequently.
A failure to adequately supervise service providers and vendors, including outside foreclosure counsel, may also have these negative results. The laws and regulations applicable to us are subject to administrative or judicial interpretation, but some of these laws and regulations have been enacted only recently and may not yet have been interpreted or may be interpreted infrequently.
For example, the Federal Trade Commission (“FTC”) has promulgated a revised Safeguards Rule, the New York Department of Financial Services recently promulgated updated cybersecurity regulations, and the SEC recently adopted disclosure requirements designed to enhance and standardize public company disclosures regarding cybersecurity risk management and incident reporting.
For example, the Federal Trade Commission (“FTC”) has promulgated a revised Safeguards Rule, the New York Department of Financial Services promulgated updated cybersecurity regulations and the SEC adopted disclosure requirements designed to enhance and standardize public company disclosures regarding cybersecurity risk management and incident reporting.
For example, a significant natural disaster in Detroit, such as an earthquake, fire or flood, could have a material adverse impact on our business, operating results and financial condition, and our insurance coverage may be insufficient to compensate us for losses that may occur.
For example, a significant natural disaster in Detroit, such as an earthquake, tornado, fire or flood, could have a material adverse impact on our business, operating results and financial condition and our insurance coverage may be insufficient to compensate us for losses that may occur.
Uncertainty remains regarding the future of the GSEs, including with respect to the duration of conservatorship, the extent of their roles in the market and what forms they will have, and whether they will be government agencies, government- sponsored agencies or private for-profit entities. 25 In September 2021, FHFA and the U.S.
Uncertainty remains regarding the future of the GSEs, including with respect to the duration of conservatorship, the extent of their roles in the market and what forms they will have and whether they will be government agencies, government- sponsored agencies or private for-profit entities. In September 2021, FHFA and the U.S.
There can be no assurance 35 that future tax law changes will not increase the rate of the corporate income tax significantly, impose new limitations on deductions, credits or other tax benefits, or make other changes that may adversely affect our business, cash flows or financial performance.
There can be no assurance that future tax law changes will not increase the rate of the corporate income tax significantly, impose new limitations on deductions, credits or other tax benefits, or make other changes that may adversely affect our business, cash flows or financial performance.
Our failure to secure, maintain, protect and enforce our intellectual property rights could adversely affect our brands and adversely impact our business. Our success and ability to compete also depends in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property or proprietary rights of third parties.
Our failure to secure, maintain, protect and enforce our intellectual property rights could adversely affect our brands and adversely impact our business. 37 Our success and ability to compete also depends in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property or proprietary rights of third parties.
Additionally, we may not be able to recover amounts from some third parties from whom we may seek indemnification or against whom we may assert a loan repurchase demand in connection with a breach of a representation or warranty due to financial difficulties or otherwise.
Additionally, we may not be able to recover amounts from some third parties from whom we may seek indemnification or against whom we may assert a loan or MSR repurchase demand in connection with a breach of a representation or warranty due to financial difficulties or otherwise.
In a default, clients not occupying the mortgaged property may be more likely to abandon the property, increasing our financial exposure. The above referenced loans may be more expensive to service because they require more frequent interaction with clients and greater monitoring and oversight.
In a default, clients not occupying the mortgaged property may be more likely to abandon the property, increasing our financial exposure. 18 The above referenced loans may be more expensive to service because they require more frequent interaction with clients and greater monitoring and oversight.
A margin call would require us to repay a portion of the outstanding borrowings. A large, unanticipated margin call could have a material adverse effect on our liquidity. A disruption in the secondary home loan market, including the MBS market, could have a detrimental effect on our business.
A margin call would require us to repay a portion of the outstanding borrowings. A large, unanticipated margin call could have a material adverse effect on our liquidity. 25 A disruption in the secondary home loan market, including the MBS market, could have a detrimental effect on our business.
Furthermore, attempts to enforce our intellectual property rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against us, or result in a holding that invalidates or narrows the scope of 37 our rights, in whole or in part.
Furthermore, attempts to enforce our intellectual property rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against us, or result in a holding that invalidates or narrows the scope of our rights, in whole or in part.
The inability to attract or retain qualified personnel could have a detrimental impact on cost and performance for our business. If we cannot maintain our corporate culture, we could lose the innovation, collaboration and focus on the mission that contribute to our business.
The inability to attract, develop or retain qualified personnel could have a detrimental impact on cost and performance for our business. If we cannot maintain our corporate culture, we could lose the innovation, collaboration and focus on the mission that contribute to our business.
We could make payments to 40 RHI and Dan Gilbert under the Tax Receivable Agreement that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact our liquidity.
We could make payments to RHI and Dan Gilbert under the Tax Receivable Agreement that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact our liquidity.
These claims could also 13 result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our software, any of which could adversely affect our business.
These claims could also result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our software, any of which could adversely affect our business.
Moreover, increasing regulation and enforcement efforts by federal and state agencies and the prospects for private litigation claims related to our data collection, privacy policies or other e-commerce practices become more likely.
Moreover, regulation and enforcement efforts by federal and state agencies and the prospects for private litigation claims related to our data collection, privacy policies or other e-commerce practices become more likely.
If we are unable to continue to grow our loan origination business, this could adversely affect our business. On the other hand, we may experience significant growth in our mortgage loan volume and mortgage servicing rights (MSRs).
If we are unable to continue to grow our loan origination business, this could adversely affect our business. On the other hand, we may experience significant growth in our loan origination business and mortgage servicing rights (MSRs).
Upon electing to exercise this unilateral right to repurchase the delinquent loan, we effectively regain control over the loan, 15 meaning that we must recognize the loan on our balance sheet and recognize a corresponding financial liability.
Upon electing to exercise this unilateral right to repurchase the delinquent loan, we effectively regain control over the loan, meaning that we must recognize the loan on our balance sheet and recognize a corresponding financial liability.
Further, while we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise.
Further, while we aim to develop and use AI responsibly and attempt to identify and mitigate legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise.
While these laws may not explicitly hold the lenders responsible for the legal violations 36 of such brokers, U.S. federal and state agencies increasingly have sought to impose such liability.
While these laws may not explicitly hold the lenders responsible for the legal violations of such brokers, U.S. federal and state agencies increasingly have sought to impose such liability.
Geopolitical instability caused by terrorist attacks, the anticipation of any such attacks, the consequences of any military or other response by the United States and its allies, and other armed conflicts globally, including the wars in Ukraine and the Middle East, and geopolitical events stemming from such conflicts, have in the past caused, and in the future may cause, consumer confidence and spending to decrease, and have resulted, and may in the future result, in increased volatility and disruption in the United States and worldwide financial markets and economy.
Instability caused by terrorist attacks, the anticipation of any such attacks, political or domestic instability, the consequences of any military or other response by the United States and its allies and other armed conflicts globally, including the wars in Ukraine and the Middle East and geopolitical events stemming from such conflicts, have in the past caused, and in the future may cause, consumer confidence and spending to decrease, and have resulted, and may in the future result, in increased volatility and disruption in the United States and worldwide financial markets and economy.
To the extent that the “disparate impact” theory continues to apply, we may be faced with significant administrative burdens in attempting to comply and potential liability for failures to comply. Furthermore, many industry observers believe that the “ability to repay” rule issued by the CFPB, discussed above, will have the unintended consequence of having a disparate impact on protected classes.
To the extent that the “disparate impact” theory continues to apply, we may be faced with significant administrative burdens in attempting to comply and potential liability for failures to comply. Furthermore, many industry observers believe that the “ability to repay” rule issued by the CFPB will have the unintended consequence of having a disparate impact on protected classes.
Our mission defines our business philosophy as well as the emphasis that we place on our clients, our people and our culture and is consistently reinforced to and by our team members.
Our mission defines our business philosophy as well as the emphasis that we place on our clients, our people and our culture and is consistently reinforced to and by our team members and leaders.
The laws and regulations governing insurance companies continue to evolve and vary by state, adding uncertainty and complexity to compliance. Financial conditions and claim management practices are subject to regulator examinations and high scrutiny. Departures from compliance, sound underwriting practices or adequate reserves for unknown claims could result in fines, enforcement actions or loss of authority to insure.
The laws and regulations governing insurance companies continue to evolve and vary by state, adding uncertainty and complexity to compliance. Financial conditions and claim management practices are subject to regulatory examinations and high scrutiny. Departures from compliance, sound underwriting practices or adequate reserves for unknown claims could result in fines, enforcement actions or loss of authority to insure.
But if we do not effectively manage our growth through the deployment of resources including processes, technology and talent, the quality of our services could suffer, which could negatively affect our brand and operating results. We are required to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances.
If we do not effectively manage our growth through the deployment of resources including processes, technology and talent, the quality of our services could suffer, which could negatively affect our brand and operating results. 15 We are required to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances.
Additionally, due to the geographic scope of our operations and the nature of the services we provide, certain of our subsidiaries may be required to obtain and maintain certain licenses in all states where they operate, including: • Rocket Homes is required to obtain and maintain real estate brokerage licenses. • Amrock is required to obtain and maintain various licenses as a title agent, settlement service provider, and appraisal management company.
Additionally, due to the geographic scope of our operations and the nature of the services we provide, certain of our subsidiaries may be required to obtain and maintain certain licenses in all states where they operate, including: • Rocket Homes is required to obtain and maintain real estate brokerage licenses. • Rocket Close is required to obtain and maintain various licenses as a title agent, settlement service provider, and appraisal management company.
Lawsuits such as these may result in other, derivative lawsuits being filed, may be expensive to defend, and may divert our management’s attention from the conduct of our business, which could have an adverse effect on our business. The conduct of the brokers through whom we originate loans could subject us to fines or other penalties.
Lawsuits such as these may result in other, derivative lawsuits, may be expensive to defend, and may divert our management’s attention from the conduct of our business, which could have an adverse effect on our business. The conduct of the brokers through whom we originate loans could subject us to fines or other penalties.
These regulations could hinder the underwriter’s and the agent’s ability to promptly adapt to changing market dynamics through price adjustments, which could adversely affect operations, particularly in a rapidly declining market. ATIC is also subject to regulations and reporting requirements imposed by the National Association of Insurance Commissioners.
These regulations could hinder the underwriter’s and the agent’s ability to promptly adapt to changing market dynamics through price adjustments, which could adversely affect operations, particularly in a rapidly declining market. RTIC is also subject to regulations and reporting requirements imposed by the National Association of Insurance Commissioners.
As interest rates increase, our debt service obligations on certain of our variable-rate indebtedness will also increase. In the future, we may enter into interest rate swaps, which involve the exchange of floating for fixed-rate interest payments, to reduce interest rate volatility.
As interest rates remain elevated, our debt service obligations on certain of our variable-rate indebtedness will also increase. In the future, we may enter into interest rate swaps, which involve the exchange of floating for fixed-rate interest payments, to reduce interest rate volatility.
These factors include, among others, intense 44 competition in the markets we serve; failure to accurately predict the demand or growth of new financial products and services that we are developing; fluctuations in quarterly revenue and operating results, as well as differences between our actual financial and operating results and those expected by investors; the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; announcements relating to litigation; guidance, if any, that we provide to the public, any changes in such guidance or our failure to meet such guidance; changes in financial estimates or ratings by any securities analysts who follow our Class A common stock, our failure to meet such estimates or failure of those analysts to initiate or maintain coverage of our Class A common stock; the sustainability of an active trading market for our Class A common stock; investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives; the inclusion, exclusion or deletion of our Class A stock from any trading indices; future sales of our Class A common stock by our officers, directors and significant stockholders; the effect on our business and results of operations from system failures and disruptions, hurricanes, wars, acts of terrorism, pandemics, other natural disasters or responses to such events; novel and unforeseen market forces and trading strategies by third parties; events or commentary reported in the media, including social media, whether or not accurate or involving us, that may create, amplify and/or rapidly spread negative publicity for us or for the industry or markets in which we operate; short selling of our Class A common stock or related derivative securities; and price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole.
These factors include, among others, intense competition in the markets we serve; fluctuations in interest rates and general economic conditions, failure to accurately predict the demand or growth of new financial products and services that we are developing; fluctuations in quarterly revenue and operating results, as well as differences between our actual financial and operating results and those expected by investors; the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; announcements relating to litigation; guidance, if any, that we provide to the public, any changes in such guidance or our failure to meet such guidance; changes in financial estimates or ratings by any securities analysts who follow our Class A common stock, our failure to meet such estimates or failure of those analysts to initiate or maintain coverage of our Class A common stock; the sustainability of an active trading market for our Class A common stock; investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives; the inclusion, exclusion or deletion of our Class A stock from any trading indices; future sales of our Class A common stock by our officers, directors and significant stockholders; the effect on our business and results of operations from system failures and disruptions, hurricanes, wars, acts of terrorism, pandemics, other natural disasters or responses to such events; novel and unforeseen market forces and trading strategies by third parties; events or commentary reported in the media, including social media, whether or not accurate or involving us, that may create, amplify and/or rapidly spread negative publicity for us or for the industry or markets in which we operate; short selling of our Class A common stock or related derivative securities; price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole and changes in the volume of shares of our common stock available for public sale.
If we are unable to meet or maintain the necessary covenant requirements or satisfy, or obtain waivers for, the continuing covenants, we may lose the ability to borrow under all of our financing facilities, which could be detrimental to our business.
If we are unable to meet or maintain the necessary covenant requirements or satisfy, or obtain waivers for, the continuing covenants, we may lose the ability to borrow under all of our funding and financing facilities, which could be detrimental to our business.
We may not be successful in maintaining our existing relationships or expanding our broker networks. Our production and consumer direct lending operations are subject to overall market factors that can impact our ability to grow our loan production volume.
We may not be successful in maintaining our existing relationships or in expanding our broker network. Our production and consumer direct lending operations are subject to overall market factors that can impact our ability to grow our loan production volume.
Among other requirements, the TCPA requires us to obtain prior express written consent for certain communications and to adhere to “do-not-call” registry requirements which, in part, mandate that we maintain and regularly update lists of consumers who have chosen not to be called and restrict calls to consumers who are on the national do-not-call list.
Among other requirements, the TCPA and TSR require us to obtain prior express written consent for certain communications and to adhere to “do-not-call” registry requirements which, in part, mandate that we maintain and regularly update lists of consumers who have chosen not to be called and restrict calls to consumers who are on the national do-not-call list.
We have experienced, and may in the future experience, service disruptions and failures caused by system or software failure, fire, power loss, telecommunications failures, human error or misconduct, external attacks (e.g., computer hackers, hacktivists, nation state-backed hackers), denial of service or information, malicious or destructive code (e.g., ransomware, computer viruses and disabling devices), as well as natural disasters, health pandemics, strikes, and other similar events, and our contingency planning may not be sufficient for all situations.
We have experienced, and may in the future experience, service disruptions and failures caused by system or software failure, fire, power loss, telecommunications failures, human error or misconduct, external attacks (e.g., computer hackers, hacktivists, nation state-backed hackers), denial of service or information, malicious or destructive code, as well as natural disasters, health pandemics, strikes, and other similar events and our contingency planning may not be sufficient for all situations.
We originate mortgage loans according to GSE and regulatory guidelines, as applicable to the related mortgage loan product, using automated underwriting engines from Fannie Mae and Freddie Mac that predict a borrower’s ability and willingness to pay. Despite these standards, our underwriting guidelines may not always correlate with, or accurately predict, the underlying mortgage defaults.
We originate mortgage loans according to GSE and other investor/insurer and regulatory guidelines, as applicable to the related mortgage loan product, using automated underwriting engines from Fannie Mae and Freddie Mac that predict a borrower’s ability and willingness to pay. Despite these standards, our underwriting guidelines may not always correlate with, or accurately predict, the underlying mortgage defaults.
In turn, this could decrease the demand for our products, increase regulatory scrutiny and detrimentally affect our business. In addition, consumer advocacy groups and some media reports have recently advocated for governmental actions placing additional requirements on non-bank consumer loans which could result in more restrictive laws and regulations and/or changes in consumer perceptions and preferences.
In turn, this could decrease the demand for our products, increase regulatory scrutiny and detrimentally affect our business. In addition, consumer advocacy groups and some media reports have advocated for governmental actions placing additional requirements on non-bank consumer lenders which could result in more restrictive laws and regulations and/or changes in consumer perceptions and preferences.
Negative public opinion can result from our actual or alleged conduct in any number of activities, including loan origination, loan servicing, debt collection practices, negative events (e.g., data breaches, executive misconduct, violations of law, etc.) 20 corporate governance and other activities, such as the lawsuits against us.
Negative public opinion can result from our actual or alleged conduct in any number of activities, including loan origination, loan servicing, debt collection practices, rebranding campaigns, negative events (e.g., data breaches, executive misconduct, violations of law, etc.) corporate governance and other activities, such as the lawsuits against us.
For instance, Amrock is subject to federal laws such as GLBA and RESPA and state insurance laws. These laws can be costly to comply with, require significant management attention, and could subject us to claims, government enforcement actions, civil and criminal liability, or other remedies, including revocation of licenses and suspension of business operations.
For instance, Rocket Close is subject to federal laws such as GLBA and RESPA and state insurance laws. These laws can be costly to comply with, require significant management attention, and could subject us to claims, government enforcement actions, civil and criminal liability, or other remedies, including revocation of licenses and suspension of business operations.
Further, the personal and solar loans offered by Rocket Loans involve risks of default, influenced by client payment obligations and the unsecured nature of personal loans, which could result in a lack of availability and interest of third parties to provide such loan funding. Any of the foregoing could adversely affect our business, financial condition, and result of operations.
Further, the personal loans serviced by Rocket Loans involve risks of default, influenced by client payment obligations and the unsecured nature of personal loans, which could result in a lack of availability and interest of third parties to provide such loan funding. Any of the foregoing could adversely affect our business, financial condition and result of operations.
In the United States, regulations and interpretations concerning NPI and data security promulgated by state and federal regulators, including, but not limited to, the CFPB, FTC, NYDFS and CPPA (California’s regulatory body authorized to enforce CPRA), could conflict or give rise to differing views of privacy and security rights around NPI.
In the United States, regulations and interpretations concerning NPI and data security promulgated by state and federal regulators, including, but not limited to, the CFPB, FTC, NYDFS and CPPA (California’s regulatory body authorized to enforce California’s consumer privacy laws), could conflict or give rise to differing views of privacy and security rights around NPI.
Our share price has been, and may in the future be, volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation.
Our share price has been, and may in the future be, volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to securities litigation.
Those parties may also attempt to fraudulently induce clients, loan applicants, team members’ or other users of our systems to disclose sensitive information to gain access to our systems or data.
Those parties may also attempt to fraudulently induce clients, loan applicants, team members or other users of our systems to disclose sensitive information to gain access to our systems or data.
Of the $584.7 million Tax receivable agreement liability recorded, we estimate that, as a result of the amount of the increases in the tax basis in Holdings’ assets from the purchase of Holdings Units (along with the corresponding shares of our Class D common stock) in connection with the initial public offering, the over-allotment option (Greenshoe), and the March 2021 paired interest exchange, assuming no material changes in the relevant tax law and that we will have sufficient taxable income to utilize all of the tax attributes covered by the Tax Receivable Agreement when they are first available to be utilized under applicable law, future payments to RHI and Dan Gilbert under the Tax Receivable Agreement would aggregate to approximately $301.3 million over the next 20 years and for yearly payments over that time to range between zero to $25.0 million per year.
Of the $581.2 million Tax receivable agreement liability recorded, we estimate that, as a result of the amount of the increases in the tax basis in Holdings’ assets from the purchase of Holdings Units (along with the corresponding shares of our Class D common stock) in connection with the initial public offering, the over-allotment option (Greenshoe), and the March 2021 paired interest exchange, assuming no material changes in the relevant tax law and that we will have sufficient taxable income to utilize all of the tax attributes covered by the Tax Receivable Agreement when they are first available to be utilized under applicable law, future payments to RHI and Dan Gilbert under the Tax Receivable Agreement would aggregate to approximately $337.4 million over the next 20 years and for yearly payments over that time to range between zero to $25.0 million per year.
If this information is inappropriately accessed and used by a third party or a team member for illegal purposes, the affected individuals may attempt to hold us responsible for any losses they may have incurred as a result of misappropriation.
If this information is inappropriately accessed and used by a third party or a team member for illegal purposes, the affected individuals may attempt to hold us responsible for any losses they may have incurred because of misappropriation.
Title insurance rates are regulated 31 differently in various states, with most states requiring ATIC to file and receive approval of rates before such rates become effective to be utilized by title agents. Other states set promulgated rates controlling the title insurance rates that can be charged.
Title insurance rates are regulated differently in various states, with most states requiring RTIC to file and receive approval of rates before such rates become effective to be utilized by title agents. Other states set promulgated rates controlling the title insurance rates that can be charged.
Risks Relating to our Human Capital We may not be able to hire, train and retain qualified personnel to support our growth, and difficulties with hiring, team member training and other labor issues could adversely affect our ability to implement our business objectives and disrupt our operations. Our operations depend on the work of our approximately 14,700 team members.
Risks Relating to our Human Capital We may not be able to hire, train and retain qualified personnel to support our growth, and difficulties with hiring, team member training and other labor issues could adversely affect our ability to implement our business objectives and disrupt our operations. Our operations depend on the work and skills of our team members.
Additionally, cyberattacks on local and state government databases and offices, including the rising trend of ransomware attacks, expose us to the risk of losing access to critical data and the ability to provide services to our clients, including but not limited, to issuing title insurance policies and closing on properties located in the affected counties or states.
Additionally, cyberattacks on local and state government databases and offices, including the rising trend of ransomware attacks and of cyberattacks as a tactical risk of modern warfare, expose us to the risk of losing access to critical data and the ability to provide services to our clients, including but not limited, to issuing title insurance policies and closing on properties located in the affected counties or states.
If any of Fannie Mae, Freddie Mac or Ginnie Mae were to terminate us as a servicer, or increase our costs related to such servicing by way of additional fees, fines or penalties, such changes could have a material adverse effect on the revenue we derive from servicing activity, as well as the value of the related MSRs.
If any of Fannie Mae, Freddie Mac, Ginnie Mae, or any private investor for which we subservice were to terminate us as a servicer, or increase our costs related to such servicing by way of additional fees, fines or penalties, such changes could have a material adverse effect on the revenue we derive from servicing activity, as well as the value of the related MSRs.
Our hedging strategies also require us to provide cash margin to our hedging counterparties from time to time. The Financial Industry Regulatory Authority, Inc. requires us to provide daily cash margin to (or receive daily cash margin from, depending on the daily value of related MBS) our hedging counterparties from time to time.
The Financial Industry Regulatory Authority, Inc. requires us to provide daily cash margin to (or receive daily cash margin from, depending on the daily value of related MBS) our hedging counterparties from time to time.
We have acquired and may continue to attempt to acquire or invest in new or complementary businesses, technologies, services, or products.
We have acquired and may continue to acquire or invest in new or complementary businesses, technologies, services, products, or teams.
Amrock Title Insurance Company (“ATIC”), a title insurance underwriter, is heavily regulated by its domiciled state of Texas and by the department of insurance in each state where it holds a certificate of authority to transact title insurance. It is subject to state title insurance statutes and insurance codes as well as federal law.
Rocket Title Insurance Company (“RTIC”), a title insurance underwriter, is heavily regulated by its domiciled state of Texas and by the department of insurance in each state where it holds a certificate of authority to transact title insurance. It is subject to state title insurance statutes and insurance codes as well as federal law.
The capital expense of acquisitions or investments, diversion of management, team members, or other resources needed elsewhere in the business could negatively impact our business. We also may be unable to retain key team members or customers/vendors of acquired entities, which could undermine the acquisition value proposition.
The capital expense of acquisitions or investments, diversion of management’s time and allocating team members, or other resources, needed elsewhere in the business could negatively impact our business. We also may be unable to retain key team members or customers/vendors of acquired entities, which could undermine the acquisition value proposition.
Our research and development of such technology remains ongoing, and our ability to develop effective and ethical AI technology will be critical to our financial performance and long-term success.
Our proactive research and development of such technology remains ongoing and our ability to develop effective and responsible AI technology will be critical to our financial performance and long-term success.
Further, we have relied, and will rely in the future, on third-party service providers to facilitate due diligence on acquisition and investment targets.
Further, we have relied, and will rely in the future, on third-party service providers to facilitate parts of our due diligence on acquisition and investment targets.
If we are unable to identify issues through the due diligence process, we may face obstacles in achieving anticipated synergies or integrating acquisitions into its corporate culture and operations, which could result in an inability to realize the expected benefit of such acquisitions or investments.
If we are unable to identify issues through the due diligence process, we may face obstacles in achieving anticipated synergies or integrating acquisitions into our operations, which could result in an inability to realize the expected benefit of such acquisitions or investments.
As of December 31, 2023, we had accrued $92.4 million in connection with our reserve for repurchase and indemnification obligations. Actual repurchase and indemnification obligations could materially exceed the reserves we have recorded in our financial statements. Any significant repurchases, substitutions, indemnifications or premium recapture could be detrimental to our business.
As of December 31, 2024, we had accrued $100.0 million in connection with our reserve for repurchase and indemnification obligations. Actual repurchase and indemnification obligations could materially exceed the reserves we have recorded in our financial statements. Any significant repurchases, substitutions, indemnifications or premium recapture could be detrimental to our business.
RHI, an entity controlled by Dan Gilbert, our founder and Chairman, holds 93.2% of our issued and outstanding Class D common stock and controls 79% of the combined voting power of our common stock.
RHI, an entity controlled by Dan Gilbert, our founder and Chairman, holds 92.7% of our issued and outstanding Class D common stock and controls 79% of the combined voting power of our common stock.
Any of these, or other, changes in laws or regulations could have a detrimental effect on our business or require extensive change to our compliance management system. Regulatory agencies and consumer advocacy groups are becoming more aggressive in asserting claims that the practices of lenders and loan servicers result in a disparate impact on protected classes.
Any of these, or other, changes in laws or regulations could have a detrimental effect on our business or require extensive change to our compliance management system. Regulatory agencies and consumer advocacy groups may assert claims that the practices of lenders and loan servicers result in a disparate impact on protected classes.
Under the Exchange rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirements that: • a majority of the board of directors consist of independent directors; • the nominating and corporate governance committee be composed entirely of independent directors; and • the compensation committee be composed entirely of independent directors.
Under the Exchange rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirements that: • a majority of the board of directors consist of independent directors; • the nominating and corporate governance committee be composed entirely of independent directors; and • the compensation committee be composed entirely of independent directors. 43 These requirements will not apply to us as long as we remain a controlled company.
Delays in the sale of mortgage loans, increased borrowing costs or increased hedge risk also increase our exposure to market risks, which could adversely affect our profitability on sales of loans. Any such delays or failure to sell loans could have a materially adverse effect on our business.
Delays in the sale of mortgage loans, loss in confidence in the debt, obligations or in the U.S. government, increased borrowing costs or increased hedge risk also increase our exposure to market risks, which could adversely affect our profitability on sales of loans. Any such delays or failure to sell loans could have a materially adverse effect on our business.
Our loan origination business also operates through third-party mortgage brokers who operate more locally and routinely work with realtors and builders, but who are not contractually obligated to do business with us. Further, our competitors also have relationships with these brokers and actively compete with us in our efforts to expand our broker networks.
Our loan origination business also includes third-party mortgage brokers who operate on a more local basis and routinely work with realtors and builders, but who are not contractually obligated to do business with us. Further, our competitors also have relationships with these brokers and actively compete with us in our efforts to expand our broker networks.
We have been, and may in the future be, subject to securities litigation, which may cause us to incur substantial costs and resources and divert the attention of management from our business.
We have been, and may in the future be, subject to securities litigation, which may cause us to incur substantial costs and resources and divert the attention of management from our business. Item 1B. Unresolved Staff Comments None.
If borrowers refinance with a different originator, this decreases the profitability of our MSRs because the original loan will be repaid, and we will not have an opportunity to earn further servicing fees after the original loan is repaid.
If borrowers refinance with a different originator, this potentially decreases the expected cash flows from our MSRs because the original loan will be repaid and we will not have an opportunity to earn further servicing fees after the original loan is repaid.
As is standard in the industry, under the terms of our master servicing agreements with the Agencies, they have the right to terminate us as servicer of the loans we service on their behalf at any time and also have the right to cause us to sell the MSRs to a third party.
As is standard in the industry, under the terms of our master servicing agreements with the Agencies and investors (including non-GSE loan purchasers, each has the right to terminate us as servicer of the loans we service on their behalf at any time and also have the right to cause us to sell the MSRs to a third party.
A court may treble the amount of damages upon a finding of a “willful or knowing” violation. There is no statutory cap on maximum aggregate exposure (although some courts have applied in TCPA class actions constitutional limits on excessive penalties). An action may be brought by the FCC, a state attorney general, an individual, or a class of individuals.
There is no statutory cap on maximum aggregate exposure (although some courts have applied in TCPA class actions constitutional limits on excessive penalties). An action may be brought by the FCC, a state attorney general, an individual, or a class of individuals.
Our borrowings are in turn generally repaid with the proceeds we receive from mortgage loan sales. We are currently, and may in the future continue to be, dependent upon lenders to provide the primary funding facilities for our loans.
We fund a significant portion of the mortgage loans we close through borrowings under our loan funding facilities. Our borrowings are in turn generally repaid with the proceeds we receive from mortgage loan sales. We are currently, and may in the future continue to be, dependent upon lenders to provide the primary funding facilities for our loans.
Further, in the event a court finds either exclusive forum provision contained in our certificate of incorporation to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition. 42 We are controlled by RHI, an entity controlled by Dan Gilbert, whose interests may conflict with our interests and the interests of other stockholders.
Further, in the event a court finds either exclusive forum provision contained in our certificate of incorporation to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe use forward loan purchase commitments to economically hedge the risk of potential changes in the value of MSR assets that have been identified for sale and mitigate interest rate risk for this portion of the MSR portfolio. Our IRLCs and mortgage loans held for sale are exposed to interest rate volatility.
Biggest changeWe actively manage our MSR portfolio and from time to time identify assets for sale that do not meet our MSR strategy. We use forward loan purchase commitments to economically hedge the risk of potential changes in the value of MSR assets that have been identified for sale and mitigate interest rate risk for this portion of the MSR portfolio.
Changes in fair value of mortgage loans held for sale are included in gain on sale of loans in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). Changes in economic or other relevant conditions could cause our assumptions with respect to market prices of securities backed by similar mortgage loans to be different than our estimates.
Changes in fair value of mortgage loans held for sale are included in Gain on sale of loans, net in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). Changes in economic or other relevant conditions could cause our assumptions with respect to market prices of securities backed by similar mortgage loans to be different than our estimates.
We expect that the changes in fair value of the forward commitments will either substantially or partially offset the 71 changes in fair value of the IRLCs, uncommitted mortgage loans held for sale, and MSR assets that we intend to sell.
We expect that the changes in fair value of the forward commitments will either substantially or partially offset the changes in fair value of the IRLCs, uncommitted mortgage loans held for sale and MSR assets that we intend to sell.
Derivative assets in the Consolidated Balance Sheets represent derivative contracts in a gain position net of loss positions with the same counterparty and, therefore, also represent our maximum counterparty credit risk. We incurred no losses due to nonperformance by any of our cou nterparties during the years ended December 31, 2023 and 2022.
Derivative assets in the Consolidated Balance Sheets represent derivative contracts in a gain position net of loss positions with the same counterparty and, therefore, also represent our maximum counterparty credit risk. We incurred no losses due to nonperformance by any of our cou nterparties during the years ended December 31, 2024 and 2023.
W e believe that this risk is mitigated through the implementation of stringent underwriting standards, strong fraud detection tools, and technology designed to comply with applicable laws and our standards. In addition, we believe that this risk is mitigated through the quality of our loan portfolio.
We believe that this risk is mitigated through the implementation of stringent underwriting standards, strong fraud detection tools, and technology designed to comply with applicable laws and our standards. In addition, we believe that this risk is mitigated through the quality of our loan portfolio.
Fair value is determined on a monthly basis using a valuation model that calculates the present value of estimated future net servicing fee income. The model uses estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, among others. These estimates are supported by market and economic data collected from various outside sources.
Fair value is determined using a valuation model that calculates the present value of estimated future net servicing fee income. The model uses estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, among others. These estimates are supported by market and economic data collected from various outside sources.
We manage this risk by selecting only counterparties that we believe to be financially strong, spreading the risk among many such counterparties, and entering into netting agreements with the counterparties as appropriate. In accordance with Treasury Market Practices Group’s recommendation, we execute Securities Industry and Financial Markets Association trading agreements with all material trading partners.
We manage this risk by selecting only counterparties that we believe to be financially strong, spreading the risk among many such counterparties and entering into netting agreements with the counterparties as appropriate. 71 In accordance with Treasury Market Practices Group’s recommendation, we execute Securities Industry and Financial Markets Association Master Securities Forward Trading Agreements with all material trading partners.
Also, in the case of our financing facilities, we are subject to risk if the counterparty chooses not to renew a borrowing agreement and we are unable to obtain financing to originate mortgage loans.
Also, in the case of our financing facilities, we are subject to risk if the counterparty chooses not to, or is unable to, renew a borrowing agreement and we are unable to obtain financing to originate mortgage loans.
The cash flows related to forward commitments to sell and purchase mortgage loans are included within the gain on sale of loans and the change in fair value of MSRs in the Consolidated Statement of Cash Flows.
The cash flows related to forward commitments to sell and purchase mortgage loans are included within the Gain on sale of loans excluding fair value of MSRs, net and the Change in fair value of MSRs, net in the Consolidated Statement of Cash Flows.
Each such agreement provides for an exchange of margin money sh ould either party’s exposure exceed a predetermined contractual limit. Such margin requirements limit our overall counterparty exposure.
Each such agreement provides for an exchange of margin money should either party’s exposure exceed a predetermined contractual limit. Such margin requirements limit our overall counterparty exposure.
On a quarterly basis we obtain an independent third-party valuation to corroborate the value estimated by our internal model. All of our MSRs are classified as a Level 3 asset. Changes in economic and other relevant conditions could cause our assumptions, such as with respect to the prepayment speeds, to be different than our estimates.
On a quarterly basis we obtain an independent third-party valuation to corroborate the value estimated by our internal model. All of our MSRs are classified as Level 3 assets. Changes in economic and other relevant conditions could cause our assumptions, including prepayment speeds, to be different than our estimates.
We record interest and penalties related to uncertain income tax positions in income tax expense. 72
We record interest and penalties related to uncertain income tax positions in income tax expense. 74
The fair value of loans held for sale that trade in active secondary markets is estimated using Level 2 measurements derived from observable market data, including market prices of securities backed by similar mortgage loans adjusted for certain 70 factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk.
The fair value of loans held for sale that trade in active secondary markets is estimated using Level 2 measurements derived from observable market data, including: (i) 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, and (ii) recent observable market trades from similar loans, adjusted for credit risk and other individual loan characteristics.
In periods of rising interest rates, the fair value of the MSRs generally increases as prepayments decrease, and therefore the estimated life of the MSRs and related expected cash flows increase. 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.
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.
Income taxes Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes predominantly in the United States and Canada. These tax laws are often complex and may be subject to different interpretations.
Income taxes Our income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes predominantly in the United States and Canada.
Changes in the fair value of the IRLCs are recognized in gain on sale of loans, net and salaries and commission expense in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
Changes in the fair value of the IRLCs are recognized in Gain on sale of loans, net and Salaries, commissions and team member benefits expense in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
MSR assets (including the MSR value associated with outstanding IRLCs) that have been identified to be sold expose us to the risk that the price of MSRs might decline due to decreases in mortgage interest rates prior to the sale of these assets.
MSR assets (including the MSR value associated with outstanding IRLCs) that we intend to sell expose us to the risk that the price of MSRs might decline due to decreases in mortgage interest rates prior to the sale of these assets.
For the year ended December 31, 2023, our clients’ weighted average credit score was 733 and its approximate average loan size was $270,000 wit h a weighted average loan-to-value ratio of approximately 74.9%. Counterparty risk We are subject to risk that arises from our financing facilities and interest rate risk hedging activities.
For the year ended December 31, 2024, our clients’ weighted average credit score was 737 and their approximate average loan size was $277,000 wit h a weighted average loan-to-value ratio of approximately 73.2%. Counterparty risk We are subject to risk that arises from our financing facilities and interest rate risk hedging activities.
Deferred income taxes arise from temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence.
These tax laws are often complex and may be subject to different interpretations. 73 Deferred income taxes arise from temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence.
See Note 3, Mortgage Servicing Rights of the notes in the consolidated financial statements included elsewhere in this Form 10-K for an illustration of the hypothetical effect on the fair value of the MSRs using various unfavorable variations of the expected levels of the assumed discount rate and prepayment speeds used in valuing MSRs.
See Note 3, Mortgage Servicing Rights of the consolidated financial statements for an illustration of the hypothetical effect on the fair value of the MSRs using various unfavorable variations of the discount rate and prepayment speeds used in valuing MSRs.
During the origination, pooling, and delivery process, this pipeline value rises and falls with changes in interest rates. To mitigate this exposure, we employ a hedge strategy designed to minimize basis risk and maximize effectiveness.
Our IRLCs and mortgage loans held for sale are exposed to interest rate volatility. During the origination, pooling, and delivery process, this pipeline value rises and falls with changes in interest rates. To mitigate this exposure, we employ a hedge strategy designed to minimize basis risk and maximize effectiveness.
Subsequent changes in fair value of MSRs due to the collection and realization of cash flows and changes in model inputs and assumptions are recognized in current period earnings and included as a separate line item in the consolidated statements of income and comprehensive income.
MSRs are recognized as a component of the gain on sale of loans when loans are sold and the associated servicing rights are retained. 72 Subsequent changes in fair value of MSRs due to the collection and realization of cash flows and changes in model inputs and assumptions are recognized in current period earnings and included as a separate line item in the consolidated statements of income and comprehensive income.
Interest rate risk We are subject to interest rate risk which may impact our origination volume and associated revenue, MSR valuations, IRLCs and mortgage loans held for sale valuations, and the net interest margin derived from our funding facilities. The fair value of MSRs are driven primarily by interest rates, which impact the likelihood of loan prepayments and refinancing.
Interest rate risk We are subject to interest rate risk which may impact our origination volume and associated revenue, MSR valuations, IRLCs and mortgage loans held for sale valuations, and the net interest margin derived from our funding facilities.
Increases in the market yields of similar mortgage loans result in a lower mortgage loans held for sale fair value. Mortgage servicing rights We have elected to record MSRs at fair value. MSRs are recognized as a component of the gain on sale of loans when loans are sold and the associated servicing rights are retained.
Increases in the market yields of similar mortgage loans result in a lower mortgage loans held for sale fair value. Mortgage servicing rights We have elected to record MSRs at fair value.
Interest rate risk also occurs in periods where changes in short-term interest rates result in mortgage loans being originated with terms that provide a smaller interest rate spread above the financing terms of our loan funding facilities, which can negatively impact our net interest income. 69 Credit risk We are subject to credit risk, which is the risk of default that results from a borrower’s inability or unwillingness to make contractually required mortgage payments.
Interest rate risk also occurs in periods where changes in short-term interest rates result in mortgage loans being originated with terms that provide a smaller interest rate spread above the financing terms of our loan funding facilities, which can negatively impact our net interest income.
Because origination volumes tend to increase in declining interest rate environments and decrease in increasing rate environments, we believe that servicing provides a natural hedge to our origination business through the natural counter-cyclicality of servicing and mortgaging originations. We actively manage our MSR portfolio and from time to time identify assets for sale that do not meet our MSR strategy.
Because origination volumes tend to increase in declining interest rate environments and decrease in increasing rate environments, we believe that retained servicing provides a natural hedge to our origination business through the natural counter-cyclicality of servicing and mortgaging originations.
Generally, all loans sold into the secondary market are sold without recourse. For such loans, our credit risk is limited to repurchase obligations due to fraud or origination defects.
Credit risk We are subject to credit risk, which is the risk of default that results from a borrower’s inability or unwillingness to make contractually required mortgage payments. Generally, all loans sold into the secondary market are sold without recourse. For such loans, our credit risk is limited to repurchase obligations due to fraud or origination defects.
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 quotations and internal models which typically results in credit spreads (i.e., purchase price discounts).
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 internal models using assumptions at the measurement date that a market participant would use.
Added
For example, the fair value of MSRs are driven primarily by interest rates, which impact the likelihood of loan prepayments and refinancing. In periods of rising interest rates, the fair value of the MSRs generally increases as prepayments decrease, and therefore the estimated life of the MSRs and related expected cash flows increase.

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