FHFA approved Rocket Companies' acquisition of Mr. Cooper Group while imposing a 20% cap on Fannie Mae and Freddie Mac servicing exposure. BTIG estimated Rocket controls $400 billion unpaid principal balance in GSE MSRs and Mr. Cooper holds $560 billion, under 15% of the $7.5 trillion GSE market, leaving room to grow. A 5% headroom could equate to $350+ billion UPB growth, likely requiring another top-5 acquisition. KBW placed combined market share near 13% and warned subservicing could push it to or above 20%. Mr. Cooper was the largest subservicer with an $820 billion portfolio at year-end 2024, prompting client reevaluations. FHFA staff concluded no participant should exceed 20% to protect safety and soundness.
BTIG analysts Eric Hagen and Jake Katsikas estimate Rocket controls $400 billion unpaid principal balance in Fannie and Freddie mortgage servicing rights (MSRs), while Mr. Cooper holds $560 billion. That's less than 15% of the $7.5 trillion GSE market leaving room to grow. Every other servicer is currently below 10% share. Having 5% headroom for Rocket to take additional market share is still considerable growth $350+ billion UPB, Hagen and Katsikas wrote in the report.
Keefe, Bruyette & Woods analyst Bose George, however, put the combined market share at around 13%, but said including subservicing could push it at or over 20%. While the combined entity could grow owned servicing, there might need to be an offset through reduced subservicing, George added. Given the more modest profitability of subservicing, we expect no discernible earnings impact relative to our estimates. Bose highlighted that the FHFA was not clear about adding subservicing to the cap.
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