Form 8-K
8-K — Rocket Companies, Inc.
Accession: 0001104659-26-071607
Filed: 2026-06-09
Period: 2026-06-09
CIK: 0001805284
SIC: 6162 (MORTGAGE BANKERS & LOAN CORRESPONDENTS)
Item: Other Events
Item: Financial Statements and Exhibits
Documents
8-K — tm2614339d1_8k.htm (Primary)
EX-99.1 — EXHIBIT 99.1 (tm2614339d1_ex99-1.htm)
EX-99.2 — EXHIBIT 99.2 (tm2614339d1_ex99-2.htm)
EX-99.3 — EXHIBIT 99.3 (tm2614339d1_ex99-3.htm)
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8-K — FORM 8-K
8-K (Primary)
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2026-06-09
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 9, 2026
Rocket Companies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
001-39432
84-4946470
(State
or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S.
Employer Identification No.)
1050 Woodward Avenue
Detroit, MI 48226
(Address of principal executive offices) (Zip Code)
(313) 373-7990
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol
Name
of each exchange on which registered
Class A common stock, par value $0.00001 per share
RKT
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934
(17 CFR §240.12b-2).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ¨
Item 8.01
Other Events.
Offering of Notes
On June 9,
2026, Rocket Companies, Inc. (the “Company”) announced the private offering of $600,000,000
aggregate principal amount of senior notes due 2031 and $600,000,000 aggregate principal amount
of senior notes due 2034 (collectively, the “Notes” and such offering, the “Offering”).
The Notes will initially be fully and unconditionally
guaranteed, jointly and severally, on a senior unsecured basis by each of the Company’s direct and indirect domestic subsidiaries
that are guarantors under the Company’s existing senior notes.
The Company intends to use the proceeds from
the Offering to repay Rocket Mortgage, LLC’s 2.875% Senior Notes due 2026 and certain other indebtedness of the Company and its
subsidiaries.
A copy of the press release announcing the Offering
is attached to this Current Report on Form 8-K (this “Current Report”) as Exhibit 99.1 and incorporated
by reference herein.
The Notes have not been and will not be registered
under the Securities Act of 1933, as amended (the “Securities Act”) or the securities laws of any state or other jurisdiction,
and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from such registration
requirements. Accordingly, the Notes are being offered and sold only to persons reasonably believed to be qualified institutional buyers
in reliance on Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States in reliance
on Regulation S under the Securities Act.
This Current Report on Form 8-K does not
constitute an offer to sell or a solicitation of an offer to buy, nor will there be any sale of, the Notes in any state or other jurisdiction
in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such
state or other jurisdiction.
Additional Financial Information
As previously reported, on October 1, 2025,
the Company completed the acquisition of Mr. Cooper Group Inc. (“Mr. Cooper”), a Delaware corporation.
This Current Report on Form 8-K includes:
(i) the unaudited condensed consolidated financial statements of Mr. Cooper and (ii) the unaudited pro forma combined
financial information for the Company, in each case as described below. This Current Report on Form 8-K does not modify or update
the condensed consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2025 and Quarterly Report on Form 10-Q for the three months ended March 31, 2026.
The historical condensed consolidated balance
sheets of Mr. Cooper as of September 30, 2025 (unaudited) and December 31, 2024 and the related unaudited condensed consolidated
statements of operations and statements of stockholders’ equity of Mr. Cooper for each of the three and nine months ended
September 30, 2025 and 2024, and unaudited condensed consolidated statements of cash flows of Mr. Cooper for each of the nine
months ended September 30, 2025 and 2024, together with the notes thereto, are filed as Exhibit 99.2 to this Current Report
on Form 8-K and incorporated herein by reference.
The unaudited pro forma condensed combined financial
information of the Company, consisting of the unaudited pro forma condensed combined statement of income (loss) of the Company for the
three months ended March 31, 2026, the three months ended March 31, 2025 and the year ended December 31, 2025, giving effect to
the Transactions (as defined therein) as if they had occurred on January 1, 2025, the first day of the Company’s fiscal year
2025, together with the notes thereto, is filed as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein
by reference.
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits
Exhibit No.
Description
99.1
Press release, dated June 9, 2026
99.2
Unaudited condensed consolidated financial statements
of Mr. Cooper Group Inc.
99.3
Unaudited pro forma condensed combined financial information
of Rocket Companies, Inc.
104
Cover Page Interactive Data File (embedded within
the Inline XBRL document)
Forward-Looking Statements
This Current Report contains forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended,
which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology,
including the terms “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,”
“target,” “will,” “would” and, in each case, their negative or other various or comparable terminology.
All statements other than statements of historical facts, including statements regarding the Offering, our strategy, future operations,
future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are
forward-looking statements. As you read this Current Report, you should understand that these statements are not guarantees of performance
or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading “Risk
Factors” in our Annual Report on the Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities
and Exchange Commission (the “SEC”) on March 2, 2026, and our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2026, submitted to the SEC on May 11, 2026. Although we believe that these forward-looking statements are based
upon reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations
and could cause actual results to differ materially from those in the forward-looking statements. The forward-looking statements made
herein are made only as of the date of this Current Report. We expressly disclaim any intent, obligation or undertaking to update or revise
any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions
or circumstances on which any such statements are based. All subsequent written and oral forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this Current Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: June 9, 2026
ROCKET COMPANIES, INC.
By:
/s/ Noah Edwards
Name:
Noah Edwards
Title:
Chief Accounting Officer
EX-99.1 — EXHIBIT 99.1
EX-99.1
Filename: tm2614339d1_ex99-1.htm · Sequence: 2
Exhibit 99.1
Rocket Companies Announces Offering of Senior
Notes due 2031 and Senior Notes due 2034
DETROIT, June 9,
2026 – Rocket Companies, Inc. (NYSE: RKT) (the “Company”), the Detroit-based fintech platform including
mortgage, real estate, title and personal finance businesses, is proposing to issue and sell $600,000,000
aggregate principal amount of senior notes due 2031 and $600,000,000 aggregate principal amount
of senior notes due 2034 (collectively, the “Notes”) in an offering that will be exempt from the registration requirements
of the Securities Act of 1933, as amended (the “Securities Act”) (the “Offering”).
The Notes will initially be fully and unconditionally
guaranteed, jointly and severally, on a senior unsecured basis by each of the Company’s direct and indirect domestic subsidiaries
that are guarantors under the Company’s existing senior notes.
The Company intends to use the proceeds from
the Offering to repay Rocket Mortgage, LLC’s 2.875% Senior Notes due 2026 and certain other indebtedness of the Company and its
subsidiaries.
The Notes are being offered only to persons reasonably
believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act, and outside the United States,
to non-U.S. investors pursuant to Regulation S. The Notes and related guarantees will not be registered under the Securities Act or the
securities laws of any other jurisdiction and may not be offered or sold in the United States absent an effective registration statement
or an applicable exemption from registration requirements or in a transaction not subject to the registration requirements of the Securities
Act or any state securities laws.
This press release shall not constitute an offer
to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction
in which such offering, solicitation or sale would be unlawful.
2
Forward-Looking Statements
This press release contains forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended,
which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology,
including the terms “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,”
“target,” “will,” “would” and, in each case, their negative or other various or comparable terminology.
All statements other than statements of historical facts, including statements regarding the Offering, our strategy, future operations,
future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are
forward-looking statements. As you read this press release, you should understand that these statements are not guarantees of performance
or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading “Risk
Factors” in our Annual Report on the Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities
and Exchange Commission (the “SEC”) on March 2, 2026, and our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2026, submitted to the SEC on May 11, 2026. Although we believe that these forward-looking statements are based
upon reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations
and could cause actual results to differ materially from those in the forward-looking statements. The forward-looking statements made
herein are made only as of the date of this press release. We expressly disclaim any intent, obligation or undertaking to update or revise
any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions
or circumstances on which any such statements are based. All subsequent written and oral forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this press release.
Investor Relations Contact:
Sharon Ng
ir@rocket.com
(313) 769-2058
Media Contact:
Aaron Emerson
aaronemerson@rocket.com
(313) 373-3035
EX-99.2 — EXHIBIT 99.2
EX-99.2
Filename: tm2614339d1_ex99-2.htm · Sequence: 3
Exhibit 99.2
Unaudited Quarterly
Financial Statements
September 30,
2025
MR. COOPER GROUP
INC.
QUARTERLY FINANCIAL
STATEMENTS
TABLE OF CONTENTS
Page
FINANCIAL INFORMATION
Financial Statements
3
Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024
3
Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024
4
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024
5
Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2025 and 2024
7
Notes to Condensed Consolidated Financial Statements (unaudited)
8
1. Nature of Business and Basis of Presentation
8
2.
Acquisitions
9
3. Mortgage Servicing Rights and Related Liabilities
9
4. Advances and Other Receivables
12
5. Mortgage Loans Held for Sale
13
6. Loans Subject to Repurchase from Ginnie Mae
14
7. Goodwill and Intangible Assets
14
8. Derivative Financial Instruments
14
9. Indebtedness
16
10. Securitizations and Financings
18
11. Earnings Per Share
19
12. Income Taxes
19
13. Fair Value Measurements
19
14. Capital Requirements
23
15. Commitments and Contingencies
23
16. Segment Information
25
17. Subsequent Events
27
2
MR. COOPER GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions of dollars, except share data)
September 30, 2025
December 31, 2024
(unaudited)
Assets
Cash and cash equivalents
$ 762
$ 753
Restricted cash
184
220
Mortgage servicing rights at fair value
11,604
11,736
Advances and other receivables, net of reserves of $123 and $112, respectively
1,005
1,345
Mortgage loans held for sale at fair value
2,726
2,211
Property and equipment, net of accumulated depreciation of $148 and $157, respectively
93
58
Deferred tax assets, net
94
230
Other assets
2,611
2,386
Total assets
$ 19,079
$ 18,939
Liabilities and Stockholders’ Equity
Unsecured senior notes, net
$ 4,907
$ 4,891
Advance, warehouse and MSR facilities, net
6,439
6,495
Payables and other liabilities
2,207
2,322
MSR related liabilities - nonrecourse at fair value
369
418
Total liabilities
13,922
14,126
Commitments and contingencies (Note 15)
Common stock at $0.01 par value - 300 million shares authorized, 93.2 million shares issued
1
1
Additional paid-in-capital
1,068
1,077
Retained earnings
5,305
4,971
Treasury shares at cost - 29.1 million and 29.6 million shares, respectively
(1,217 )
(1,236 )
Total stockholders’ equity
5,157
4,813
Total liabilities and stockholders’ equity
$ 19,079
$ 18,939
See accompanying Notes to the Condensed Consolidated Financial Statements
(unaudited).
3
MR. COOPER GROUP INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(millions of dollars, except for earnings per share
data)
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Revenues:
Service related, net
$ 383
$ 288
$ 1,295
$ 1,251
Net gain on mortgage loans held for sale
184
136
440
320
Total revenues
567
424
1,735
1,571
Expenses:
Salaries, wages and benefits
200
182
584
509
General and administrative
142
153
518
443
Total expenses
342
335
1,102
952
Interest income
232
227
638
574
Interest expense
(213 )
(199 )
(643 )
(556 )
Other expense, net
(2 )
(5 )
(14 )
(16 )
Total other income (expense), net
17
23
(19 )
2
Income before income tax expense
242
112
614
621
Less: Income tax expense
62
32
148
156
Net income
$ 180
$ 80
$ 466
$ 465
Earnings per share
Basic
$ 2.81
$ 1.24
$ 7.29
$ 7.21
Diluted
$ 2.76
$ 1.22
$ 7.15
$ 7.06
See accompanying Notes to the Condensed Consolidated Financial Statements
(unaudited).
4
MR. COOPER GROUP INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(millions of dollars, except share data)
Common
Stock
Total
Shares
(in thousands)
Amount
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Shares
Stockholders’
Equity
Balance at June 30, 2024
64,484
$ 1
$ 1,058
$ 4,687
$ (1,152 )
$ 4,594
Shares issued / (surrendered)
under incentive compensation plan
11
—
(1 )
—
—
(1 )
Share-based compensation
—
—
11
—
—
11
Repurchase of common stock
(516 )
—
—
—
(46 )
(46 )
Net income
—
—
—
80
—
80
Balance at September 30,
2024
63,979
$ 1
$ 1,068
$ 4,767
$ (1,198 )
$ 4,638
Balance at June 30, 2025
63,989
$ 1
$ 1,063
$ 5,257
$ (1,222 )
$ 5,099
Shares issued / (surrendered)
under incentive compensation plan
120
—
(5 )
—
5
—
Share-based compensation
—
—
10
—
—
10
Dividend to shareholders
—
—
—
(132 )
—
(132 )
Net income
—
—
—
180
—
180
Balance at September 30,
2025
64,109
$ 1
$ 1,068
$ 5,305
$ (1,217 )
$ 5,157
See accompanying Notes to the Condensed Consolidated Financial Statements
(unaudited).
5
MR. COOPER GROUP INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(millions of dollars, except share data)
Common
Stock
Total
Shares
(in thousands)
Amount
Additional
Paid-in Capital
Retained
Earnings
Treasury
Shares
Stockholders’
Equity
Balance at January 1,
2024
64,599
$ 1
$ 1,087
$ 4,302
$ (1,108 )
$ 4,282
Shares
issued / (surrendered) under incentive compensation plan
731
—
(47 )
—
19
(28 )
Share-based
compensation
—
—
28
—
—
28
Repurchase
of common stock
(1,351 )
—
—
—
(109 )
(109 )
Net
income
—
—
—
465
—
465
Balance
at September 30, 2024
63,979
$ 1
$ 1,068
$ 4,767
$ (1,198 )
$ 4,638
Balance at January 1,
2025
63,581
$ 1
$ 1,077
$ 4,971
$ (1,236 )
$ 4,813
Shares
issued / (surrendered) under incentive compensation plan
528
—
(45 )
—
19
(26 )
Share-based
compensation
—
—
36
—
—
36
Dividend
to shareholders
—
—
—
(132 )
—
(132 )
Net
income
—
—
—
466
—
466
Balance
at September 30, 2025
64,109
$ 1
$ 1,068
$ 5,305
$ (1,217 )
$ 5,157
See accompanying Notes to the Condensed Consolidated Financial Statements
(unaudited).
6
MR. COOPER GROUP INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(millions of dollars)
Nine Months Ended September 30,
2025
2024
Operating Activities
Net income
$ 466
$ 465
Adjustments to reconcile net income to net cash attributable to operating activities:
Deferred tax expense
136
156
Net gain on mortgage loans held for sale
(440 )
(320 )
Provision for servicing and non-servicing reserves
54
19
Fair value changes in mortgage servicing rights
1,194
694
Fair value changes in MSR related liabilities
(4 )
26
Depreciation and amortization for property and equipment and intangible assets
40
25
Adjustment of bargain purchase gain
—
4
Gain on MSR hedging activities
(310 )
(64 )
Loss (gain) on MSR and excess yield sales
14
(10 )
Other operating activities
80
70
Sales proceeds and loan payment proceeds for mortgage loans held for sale
29,504
13,862
Mortgage loans originated and purchased for sale, net of fees
(28,702 )
(13,664 )
Repurchases of loan assets out of Ginnie Mae securitizations
(1,273 )
(1,171 )
Changes in assets and liabilities:
Advances and other receivables
260
4
Other assets
279
178
Payables and other liabilities
(485 )
(195 )
Net cash attributable to operating activities
813
79
Investing Activities
Property and equipment additions, net of disposals
(52 )
(27 )
Purchase of mortgage servicing rights
(823 )
(1,767 )
Proceeds on sale of mortgage servicing rights and excess yield
348
317
Other investing activities
(45 )
(20 )
Net cash attributable to investing activities
(572 )
(1,497 )
Financing Activities
(Decrease) increase in advance, warehouse and MSR facilities
(54 )
84
Settlements and repayment of excess spread financing
(45 )
(49 )
Issuance of unsecured senior notes
—
1,750
Repurchase of common stock
—
(109 )
Dividend to shareholders
(128 )
—
Other financing activities
(41 )
(79 )
Net cash attributable to financing activities
(268 )
1,597
Net (decrease) increase in cash, cash equivalents, and restricted cash
(27 )
179
Cash, cash equivalents, and restricted cash - beginning of period
973
740
Cash, cash equivalents, and restricted cash - end of period(1)
$ 946
$ 919
Supplemental Disclosures of Non-cash Investing Activities
Dividend to shareholders
$ 4
$ —
Purchase of mortgage servicing rights holdback payable
$ 39
$ 10
Sale of mortgage servicing rights holdback receivable
$ 8
$ 5
(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts
reported within the condensed consolidated balance sheets.
September 30, 2025
September 30, 2024
Cash and cash equivalents
$ 762
$ 733
Restricted cash
184
186
Total cash, cash equivalents, and restricted cash
$ 946
$ 919
See accompanying Notes to the Condensed Consolidated
Financial Statements (unaudited).
7
MR COOPER GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(millions of dollars, except per share data, or
unless otherwise stated)
1. Nature of Business and Basis of Presentation
Nature of Business
Mr. Cooper Group Inc., collectively with
its consolidated subsidiaries, (“Mr. Cooper,” the “Company,” “we,” “us” or “our”)
provides servicing, origination and transaction-based services related to single family residences throughout the United States with operations
under its primary brands: Mr. Cooper®, Xome® and Rushmore Servicing®. Mr. Cooper is the largest home loan servicers
and a major mortgage originator in the country focused on delivering a variety of servicing and lending products, services and technologies.
Basis of Presentation
The interim condensed consolidated financial statements
of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial
information. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial
statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s
Annual Reports on Form 10-K for the year ended December 31, 2024.
The interim condensed consolidated financial statements
are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring items, considered necessary
for a fair presentation of the results of the interim periods have been included. Dollar amounts are reported in millions, except
per share data and other key metrics, unless otherwise noted.
Basis of Consolidation
The condensed consolidated financial statements
include the accounts of the Company, its wholly-owned subsidiaries, other entities in which the Company has a controlling financial interest
and those variable interest entities (“VIE”) where the Company’s wholly-owned subsidiaries are the primary beneficiaries.
Assets and liabilities of VIEs and their respective results of operations are consolidated from the date that the Company became the primary
beneficiary through the date the Company ceases to be the primary beneficiary. The Company applies the equity method of accounting to
investments where it is able to exercise significant influence, but not control, over the policies and procedures of the entity and owns
less than 50% of the voting interests. Investments in certain companies over which the Company does not exert significant influence are
recorded at fair value, or at cost upon election of measurement alternative, at the end of each reporting period. Intercompany balances
and transactions on consolidated entities have been eliminated.
Use of Estimates
The preparation of the condensed consolidated
financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in
the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates, and such differences
could be material, due to factors such as adverse changes in the economy, changes in interest rates, secondary market pricing for loans
held for sale and derivatives, strength of underwriting and servicing practices, changes in prepayment assumptions, declines in home prices
or discrete events adversely affecting specific customers.
Recent Accounting Guidance Adopted
The Company
did not adopt any accounting guidance during the nine months ended September 30, 2025 that had a material impact on its condensed
consolidated financial statements or disclosures.
8
2. Acquisitions
Acquisition of Certain Mortgage Operations
of Flagstar Bank, N.A.
On July 24, 2024, the Company entered into
an asset purchase agreement (the “Asset Purchase Agreement”) and an Agreement for the Bulk Purchase and Sale of Mortgage Servicing
Rights (the “MSR Purchase Agreement”) with Flagstar Bank, N.A. (“Flagstar”) in contemplation of one another (collectively
“the Flagstar Transaction”). Per the Asset Purchase Agreement, the Company agreed to purchase certain MSRs held by Flagstar.
The Flagstar transaction closed in the fourth quarter of 2024 for total considerations of approximately $1.3 billion in cash, funded through
available cash and drawdowns of existing MSR lines. The acquired assets primarily consist of approximately $1.2 billion of MSRs and
related advances, and $101 of client relationship intangibles associated with subservicing contracts. The Company accounted for the transaction
as an asset acquisition in accordance with Accounting Standard Codification Topic 805, Business Combinations (“ASC 805”),
whereby the purchase price was allocated to net assets based on their relative fair values.
3. Mortgage Servicing Rights and Related Liabilities
The following table sets forth the carrying value
of the Company’s MSR and the related liabilities. In estimating the fair value of all MSRs and related liabilities, the impact of
the current environment was considered in the determination of key assumptions.
MSRs and Related Liabilities
September 30, 2025
December 31, 2024
MSRs at fair value
$ 11,604
$ 11,736
Excess spread financing at fair value
$ 346
$ 386
Mortgage servicing rights financing at fair value
23
32
MSR related liabilities - nonrecourse at fair value
$ 369
$ 418
Mortgage Servicing Rights
The following table sets forth the activities
of MSRs:
Nine Months Ended September 30,
MSRs - Fair Value
2025
2024
Balance - beginning of period
$ 11,736
$ 9,090
Additions:
Servicing retained from mortgage loans sold
596
267
Purchases and acquisitions of servicing rights
789
1,640
Dispositions:
Sales of servicing assets and excess yield
(350 )
(297 )
Changes in fair value:
Changes in valuation inputs or assumptions used in the valuation model (MSR MTM)
(374 )
(44 )
Changes in valuation due to amortization
(820 )
(650 )
Other changes(1)
27
29
Balance - end of period
$ 11,604
$ 10,035
(1) Amounts primarily represent negative fair values reclassified from the MSR asset to reserves as underlying
loans are removed from the MSR and other reclassification adjustments.
During the nine months ended September 30,
2025 and 2024, the Company sold $14,059 and $7,716 in unpaid principal balance (“UPB”) of MSRs, of which $13,234 and $7,319
were retained by the Company as subservicer, respectively.
During the nine months ended September 30,
2025 and 2024, certain agencies entered into agreements with the Company to purchase excess servicing cash flows (“excess yield”)
on certain agency loans with a total UPB of approximately $20,562 and $27,841 for proceeds of $138 and $226, respectively. During the
nine months ended September 30, 2025 and 2024, the Company recorded a loss of $10 and a gain of $27, respectively, through the mark-to-market
adjustments within “revenues - service related, net” in the condensed consolidated statements of operations.
9
MSRs are segregated between investor type into
agency and non-agency pools (referred to herein as “investor pools”) based upon contractual servicing agreements with investors
at the respective balance sheet date to evaluate the MSR portfolio and fair value of the portfolio. Agency investors consist of Government
National Mortgage Association (“Ginnie Mae” or “GNMA”) and the GSEs, Federal National Mortgage Association
(“Fannie Mae” or “FNMA”) and Federal Home Loan Mortgage Corp (“Freddie Mac” or “FHLMC”).
Non-agency investors consist of investors in private-label securitizations.
The following table provides a breakdown of UPB
and fair value for the Company’s MSRs:
September 30, 2025
December 31, 2024
MSRs - UPB and Fair Value Breakdown by Investor Pools
UPB
Fair Value
UPB
Fair Value
Agency
$ 717,780
$ 11,319
$ 710,997
$ 11,397
Non-agency
28,192
285
25,074
339
Total
$ 745,972
$ 11,604
$ 736,071
$ 11,736
Refer to
Note 13, Fair Value Measurements, for further discussion on key weighted-average inputs and assumptions used in estimating the
fair value of MSRs.
The following table shows the hypothetical effect
on the fair value of the Company’s MSRs when applying certain unfavorable variations of key assumptions to these assets for the
dates indicated:
Option Adjusted Spread
Total Prepayment Speeds
Cost to Service per Loan
MSRs - Hypothetical Sensitivities
100 bps
Adverse
Change
200 bps
Adverse
Change
10%
Adverse
Change
20%
Adverse
Change
10%
Adverse
Change
20%
Adverse
Change
September 30, 2025
Mortgage servicing rights
$ (448 )
$ (862 )
$ (329 )
$ (634 )
$ (77 )
$ (155 )
December 31, 2024
Mortgage servicing rights
$ (470 )
$ (904 )
$ (308 )
$ (597 )
$ (84 )
$ (169 )
These hypothetical sensitivities should be evaluated
with care. The effect on fair value of an adverse change in assumptions generally cannot be determined because the relationship of the
change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair
value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors,
which could impact the above hypothetical effects.
Excess Spread Financing - Fair Value
The Company had excess spread financing liability
of $346 and $386, related to the UPB of $61,394 and $66,519 as of September 30, 2025 and December 31, 2024, respectively. Refer
to Note 13, Fair Value Measurements, for key weighted-average inputs and assumptions used in the valuation of excess spread financing
liability.
The following table shows the hypothetical effect
on the Company’s excess spread financing fair value when applying certain unfavorable variations of key assumptions to these liabilities
for the dates indicated:
Option Adjusted Spread
Prepayment Speeds
Excess Spread Financing - Hypothetical
Sensitivities
100 bps
Adverse
Change
200 bps
Adverse
Change
10%
Adverse
Change
20%
Adverse
Change
September 30, 2025
Excess spread financing
$ 12
$ 24
$ 8
$ 16
December 31, 2024
Excess spread financing
$ 13
$ 28
$ 8
$ 17
10
These hypothetical sensitivities should be evaluated
with care. The effect on fair value of an adverse change in assumptions generally cannot be determined because the relationship of the
change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair
value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors,
which could impact the above hypothetical effects. Also, a positive change in the above assumptions would not necessarily correlate with
the corresponding decrease in the net carrying amount of the excess spread financing. Excess spread financing’s cash flow assumptions
that are utilized in determining fair value are based on the related cash flow assumptions used in the financed MSRs. Any fair value change
recognized in the financed MSRs attributable to related cash flows assumptions would inherently have an inverse impact on the carrying
amount of the related excess spread financing.
Mortgage Servicing Rights Financing - Fair
Value
The Company had MSR financing liability of $23
and $32 as of September 30, 2025 and December 31, 2024. Refer to Note 13, Fair Value Measurements, for key weighted-average
inputs and assumptions used in the valuation of the MSR financing liability.
Revenues - Service related, net
The following table sets forth the items comprising
total “revenues - service related, net”:
Three Months Ended September 30,
Nine Months Ended September 30,
Revenues - Service related, net
2025
2024
2025
2024
Contractually specified servicing fees(1)
$ 609
$ 556
1,840
1,617
Other service-related income(1)
26
18
80
56
Incentive and modification income(1)
17
16
64
50
Servicing late fees(1)
40
33
116
94
Mark-to-market adjustments - Servicing
MSR MTM
(164 )
(388 )
(374 )
(44 )
Gain on MSR hedging activities
130
289
310
64
Loss (gain) on MSR and excess yield sales
(2 )
(1 )
(14 )
10
Reclassifications to reserve provision(2)
(7 )
(5 )
(23 )
(17 )
Excess spread / MSR financing MTM
(4 )
(20 )
4
(26 )
Total mark-to-market adjustments - Servicing
(47 )
(125 )
(97 )
(13 )
Amortization, net of accretion
MSR amortization
(302 )
(245 )
(820 )
(650 )
Excess spread accretion
9
10
26
28
Total amortization, net of accretion
(293 )
(235 )
(794 )
(622 )
Originations service related fees(3)
33
24
89
59
Corporate/Xome service related fees
16
18
49
60
Other(4)
(18 )
(17 )
(52 )
(50 )
Total revenues - Service related, net
$ 383
$ 288
$ 1,295
$ 1,251
(1) Amounts include subservicing related revenues. Amounts also include servicing fees from loans sold with
servicing retained of $214 and $189 for the three months ended September 30, 2025 and 2024, respectively and $625 and $563 for the
nine months ended September 30, 2025 and 2024, respectively.
(2) Reclassifications to reserve provision include the impact of negative modeled cash flows which have been
transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated
with inactive and liquidated loans that are no longer part of the MSR portfolio.
(3) Amounts include fees collected from customers for originated loans and from other lenders for loans purchased
through the correspondent channel, and include loan application, underwriting, and other similar fees.
(4) Other represents the excess servicing fee that the Company pays to the counterparties under the excess
spread financing arrangements, portfolio runoff and the payments made associated with MSR financing arrangements.
11
4. Advances and Other Receivables
Advances and other receivables, net, consists
of the following:
Advances and Other Receivables, Net
September 30, 2025
December 31, 2024
Servicing advances, net of $5 and $6 purchase discount, respectively
$ 1,089
$ 1,410
Receivables from agencies, investors and prior servicers
39
47
Reserves
(123 )
(112 )
Total advances and other receivables, net
$ 1,005
$ 1,345
The following table sets forth the activities
of the servicing reserves for advances and other receivables:
Three Months Ended September 30,
Nine Months Ended September 30,
Reserves for Advances and Other Receivables
2025
2024
2025
2024
Balance - beginning of period
$ 116
$ 149
$ 112
$ 170
Provision(1)
18
8
54
19
Reclassifications(2)
1
6
(4 )
23
Write-offs(3)
(12 )
(48 )
(39 )
(97 )
Balance - end of period
$ 123
$ 115
$ 123
$ 115
(1) The Company recorded a provision of $7 and
$5 through the MTM adjustments in “revenues - service related, net” in the condensed
consolidated statements of operations during the three months ended September 30, 2025
and 2024, respectively, and a provision of $23 and
$17 during the nine months ended September 30, 2025 and 2024, respectively.
(2) Reclassifications represent required reserves provisioned within other balance sheet accounts as associated
serviced loans become inactive or liquidate.
(3) Write-offs represent balances removed from the servicing platform during the respective periods, including
fully reserved balances related to third-party settlements where further loss recovery of prior servicer errors is limited.
Purchase Discount for Advances and Other
Receivables
Purchase
discounts for servicing advances was $5 and $7 as
of September 30, 2025 and 2024, respectively. There was immaterial utilization of purchase
discounts during the three and nine months ended September 30, 2025. During the three
and nine months ended September 30, 2024, the Company utilized $5 and $6 of the purchase discounts, respectively.
Credit
Loss for Advances and Other Receivables
The following
table sets forth the activities of the CECL allowance for advances and other receivables:
Three Months Ended September 30,
Nine Months Ended September 30,
CECL Allowance for Advances and Other Receivables
2025
2024
2025
2024
Balance - beginning of period
$ 11
$ 19
$ 13
$ 35
Provision
1
1
—
4
Write-offs(1)
(4 )
(2 )
(5 )
(21 )
Balance - end of period(2)
$ 8
$ 18
$ 8
$ 18
(1) Write-offs represent balances removed from the servicing platform during the respective periods, including
fully reserved balances related to third-party settlements where further loss recovery of prior servicer errors is limited.
(2) Amounts were included in reserves.
The Company determined that the credit-related
risk associated with applicable financial instruments typically increases with the passage of time. The CECL reserve methodology considers
these financial instruments collectible to a point in time of 39 months. Any projected remaining balance at the end of the collection
period is considered a loss and factors into the overall CECL loss rate required.
12
5. Mortgage Loans Held for Sale
Mortgage loans held for sale are recorded at fair
value as set forth below:
Mortgage Loans Held for Sale
September 30, 2025
December 31, 2024
Mortgage loans held for sale – UPB
$ 2,654
$ 2,187
Mark-to-market adjustment(1)
72
24
Total mortgage loans held for sale
$ 2,726
$ 2,211
(1) The mark-to-market adjustment includes net change in unrealized gain/loss, premium on correspondent loans
and certain fees on direct-to-consumer loans. The mark-to-market adjustment is recorded in “revenues - net gain on mortgage loans
held for sale” in the condensed consolidated statements of operations.
The following table sets forth the activities
of mortgage loans held for sale:
Nine Months Ended September 30,
Mortgage Loans Held for Sale
2025
2024
Balance - beginning of period
$ 2,211
$ 927
Loans sold (at carrying value) and loan payments received
(29,497 )
(13,821 )
Mortgage loans originated and purchased, net of fees
28,702
13,664
Repurchase of loans out of Ginnie Mae securitizations(1)
1,273
1,171
Net change in unrealized gain on retained loans held for sale
41
23
Net transfers of mortgage loans held for sale(2)
(4 )
(2 )
Balance - end of period
$ 2,726
$ 1,962
(1) The Company has the optional right to repurchase any individual loan in a Ginnie Mae securitization pool
if that loan meets certain criteria, including being delinquent greater than 90 days. The majority of Ginnie Mae repurchased loans are
required to be repurchased in connection with loan modifications and loan resolution activity, with the intent to re-pool into new Ginnie
Mae securitizations upon re-performance of the loan or to otherwise sell to third-party investors. Therefore, these loans are classified
as held for sale.
(2) Amounts reflect transfers to other assets for loans transitioning into REO status and transfers
to advances and other receivables, net, for claims made on certain government insurance mortgage loans. Transfers out are net of
transfers in upon receipt of proceeds from an REO sale or claim filing.
For the nine months ended September 30, 2025
and 2024, the Company recorded a total realized gain of $7 and $41 from total sales proceeds of $29,635 and $13,896, respectively, on
the sale of mortgage loans held for sale.
The total UPB and fair value of mortgage loans
held for sale on non-accrual status was as follows:
September 30, 2025
December 31, 2024
Mortgage Loans Held for Sale
UPB
Fair Value
UPB
Fair Value
Non-accrual(1)
$ 62
$ 53
$ 47
$ 38
(1) Non-accrual UPB includes $55 and $38 of UPB related to Ginnie Mae repurchased loans as of September 30,
2025 and December 31, 2024, respectively.
The total UPB of mortgage loans held for sale
for which the Company has begun formal foreclosure proceedings was $39 and $22 as of September 30,
2025 and December 31, 2024, respectively.
13
6. Loans Subject to Repurchase from Ginnie
Mae
Loans are sold to Ginnie Mae in conjunction with
the issuance of mortgage-backed securities. The Company, as the issuer of the mortgage-backed securities, has the unilateral right to
repurchase any individual loan in a Ginnie Mae securitization pool if that loan meets certain criteria, including payments not being received
from customers for greater than 90 days. Once the Company has the unilateral right to repurchase a delinquent loan, it has effectively
regained control over the loan and recognizes these rights to the loan on its condensed consolidated balance sheets and establishes a
corresponding repurchase liability regardless of the Company’s intention to repurchase the loan. The Company had loans subject to
repurchase from Ginnie Mae of $1,423 and $1,176 as of September 30, 2025 and December 31, 2024, respectively, which are included
in both “other assets” and “payables and other liabilities” in the condensed
consolidated balance sheets.
7. Goodwill and Intangible Assets
The Company had goodwill of $141 as of September 30,
2025 and December 31, 2024, and intangible assets of $95 and $119 as of September 30, 2025 and December 31, 2024, respectively.
Goodwill and intangible assets are included in “other assets” within the condensed consolidated balance sheets.
8. Derivative Financial Instruments
Derivative instruments are used as part of the
overall strategy to manage exposure to interest rate risks related to mortgage loans held for sale and IRLCs (“the pipeline”)
and the MSR portfolio. The Company economically hedges the pipeline separately from the MSR portfolio primarily using third-party derivative
instruments. Such derivative instruments utilized by the Company include IRLCs, loan purchase commitments (“LPCs”), forward
MBS and Treasury futures. The changes in value on the derivative instruments associated with pipeline hedging are recorded in earnings
as a component of “revenues - net gain on mortgage loans held for sale” on the condensed consolidated statements of operations
and condensed consolidated statements of cash flows, while changes in the value of derivative instruments associated with the MSR portfolio
fair value are recorded in “revenues - service related, net” on the condensed
consolidated statements of operations and in “loss (gain) on MSR hedging activities” on the condensed consolidated statements
of cash flows.
14
The following tables provide the outstanding notional
balances, fair values of outstanding positions and recorded gains/(losses) for the derivative financial instruments. Gains/(losses) include
both realized and unrealized gains/(losses) of each derivative financial instrument.
September 30, 2025
Nine Months Ended
September 30, 2025
Derivative Financial Instruments
Expiration
Dates
Outstanding
Notional
Fair
Value
Gain/(Loss)
Assets
Mortgage loans held for sale
Loan sale commitments
2025
$ 1,006
$ 14
$ 1
Derivative financial instruments
Treasury futures
2025
$ 4,572
$ 53
$ 114
IRLCs
2025
1,735
48
26
Forward MBS trades
2025
3,118
10
370
LPCs
2025
895
5
—
Total derivative financial instruments - assets
$ 10,320
$ 116
$ 510
Liabilities
Derivative financial instruments
Forward MBS trades
2025
$ 13,028
$ 64
$ (255 )
Treasury futures
2025
590
5
(5 )
LPCs
2025
620
2
5
IRLCs
2025
67
—
—
Total derivative financial instruments - liabilities
$ 14,305
$ 71
$ (255 )
September 30, 2024
Nine Months Ended
September 30, 2024
Derivative Financial Instruments
Expiration
Dates
Outstanding
Notional
Fair
Value
Gain/(Loss)
Assets
Mortgage loans held for sale
Loan sale commitments
2024
$ 992
$ 27
$ 16
Derivative financial instruments
IRLCs
2024
$ 1,464
$ 41
$ 21
Treasury futures
2024
4,272
16
113
Forward MBS trades
2024
2,152
7
156
LPCs
2024
558
3
—
Total derivative financial instruments - assets
$ 8,446
$ 67
$ 290
Liabilities
Derivative financial instruments
Forward MBS trades
2024
$ 9,633
$ 44
$ (237 )
LPCs
2024
571
3
(2 )
IRLCs
2024
49
—
—
Total derivative financial instruments - liabilities
$ 10,253
$ 47
$ (239 )
As of September 30, 2025, the Company held
$132 in collateral deposits on derivative instruments. As of December 31, 2024 the Company held $216 and $3 in collateral deposits
and collateral obligations on derivative instruments, respectively. Collateral deposits and collateral obligations are recorded in “other
assets” and “payables and other liabilities,” respectively, in the condensed consolidated balance sheets. The Company
does not offset fair value amounts recognized for derivative instruments with amounts collected or deposited on derivative instruments
in the condensed consolidated balance sheets.
15
9. Indebtedness
Advance, Warehouse and MSR Facilities
September 30,
2025
December 31,
2024
Maturity
Date
Collateral
Capacity
Amount
Outstanding
Collateral
Pledged
Outstanding
Collateral
Pledged
Advance
Facilities
$500
advance facility(1)
Jul
2027
Servicing
advance receivables
$ 500
$ 242
$ 351
$ 285
$ 394
$500 advance
facility
Aug 2027
Servicing
advance receivables
500
248
279
423
475
$350 advance
facility
Oct 2026
Servicing
advance receivables
350
99
125
119
151
$30
advance facility(2)
Jul
2026
Servicing
advance receivables
30
20
33
22
40
Advance facilities principal amount
609
788
849
1,060
Warehouse
Facilities
$1,500
warehouse facility
Jun 2026
Mortgage
loans or MBS
1,500
47
46
68
71
$1,200
warehouse facility(3)
Sep 2027
Mortgage
loans or MBS
1,200
258
295
131
148
$1,000
warehouse facility
Oct 2026
Mortgage
loans or MBS
1,000
735
772
489
530
$750 warehouse
facility
Mar 2027
Mortgage
loans or MBS
750
351
382
112
140
$600 warehouse
facility
Dec 2025
Mortgage
loans or MBS
600
308
314
368
381
$500 warehouse
facility
Nov 2025
Mortgage
loans or MBS
500
417
433
247
256
$500 warehouse
facility
Jun 2026
Mortgage
loans or MBS
500
75
81
90
99
$300 warehouse
facility
Jun 2026
Mortgage
loans or MBS
300
97
99
—
—
$250 warehouse
facility
Jul 2026
Mortgage
loans or MBS
500
154
166
238
253
$200 warehouse
facility
Dec 2026
Mortgage
loans or MBS
200
—
—
112
123
$200
warehouse facility(4)
Apr 2025
Mortgage
loans or MBS
200
—
—
—
—
$200
warehouse facility (2)
Jul 2026
Mortgage
loans or MBS
200
48
49
105
105
$100 warehouse
facility
Apr 2026
Mortgage
loans or MBS
100
—
—
—
—
$100 warehouse
facility
Apr 2026
Mortgage
loans or MBS
100
22
25
56
62
$1
warehouse facility(5)
Dec
2025
Mortgage
loans or MBS
1
—
—
—
—
Warehouse
facilities principal amount
2,512
2,662
2,016
2,168
MSR
Facilities
$1,750
warehouse facility
Apr 2027
MSR
1,750
800
2,474
950
2,669
$1,500
warehouse facility(1)
Jul 2027
MSR
1,500
475
2,720
475
2,607
$950
warehouse facility(3)
Sep 2027
MSR
950
360
1,552
550
1,711
$950 warehouse
facility
Jul 2027
MSR
950
500
974
670
1,066
$500 warehouse
facility
Jun 2027
MSR
500
250
472
250
519
$500 warehouse
facility
Apr 2027
MSR
500
300
704
250
781
$500 warehouse
facility
Jun 2027
MSR
500
150
820
150
726
$500 warehouse
facility
Jul 2027
MSR
500
330
590
330
629
$300 warehouse
facility
Jun 2027
MSR
300
150
350
—
—
$50
warehouse facility
Nov
2026
MSR
50
25
117
25
80
MSR facilities principal amount
3,340
10,773
3,650
10,788
Advance, warehouse and MSR facilities principal amount
6,461
$ 14,223
6,515
$ 14,016
Unamortized debt issuance costs
(22 )
(20 )
Advance, warehouse and MSR facilities, net
$ 6,439
$ 6,495
(1) Total capacity for this facility is $2,000, of which $500 is internally allocated for advance financing
and $1,500 is internally allocated for MSR financing; capacity is fully fungible and is not restricted by these allocations.
(2) Total capacity for this facility is $200, of which $30 is a sublimit for advance financing.
(3) The capacity for this facility is $1,200, of which $950 is a sublimit for MSR financing.
(4) This facility was terminated in April 2025.
(5) This facility was under an entity that was sold in July 2025.
16
The weighted average interest rate for advance
facilities was 6.7% and 7.4% for the three months ended September 30, 2025 and 2024, respectively, and 6.8% and 7.6% for the nine
months ended September 30, 2025 and 2024, respectively. The weighted average interest rate for warehouse and MSR facilities was 6.1%
and 7.6% for the three months ended September 30, 2025 and 2024, respectively, and 6.3% and 7.8% for the nine months ended September 30,
2025 and 2024, respectively.
Unsecured Senior Notes
Unsecured senior notes consist of the following:
Unsecured Senior Notes
September 30, 2025
December 31, 2024
$1,000 face value, 7.125% interest rate payable semi-annually, due February 2032(1)
$ 1,000
$ 1,000
$850 face value, 5.500% interest rate payable semi-annually, due August 2028
850
850
$750 face value, 6.500% interest rate payable semi-annually, due August 2029(2)
750
750
$650 face value, 5.125% interest rate payable semi-annually, due December 2030
650
650
$600 face value, 6.000% interest rate payable semi-annually, due January 2027
600
600
$600 face value, 5.750% interest rate payable semi-annually, due November 2031
600
600
$550 face value, 5.000% interest rate payable semi-annually, due February 2026
500
500
Unsecured senior notes principal amount
4,950
4,950
Purchase discount and unamortized debt issuance costs
(43 )
(59 )
Unsecured senior notes, net
$ 4,907
$ 4,891
(1) In February 2024, the Company completed the offering of $1,000 unsecured senior notes due 2032 (the “2032 Notes”)
and used the net proceeds from the offering to repay a portion of the amounts outstanding on its MSR facilities.
(2) In August 2024, the Company completed the offering of $750 unsecured senior notes due 2029 (the “2029 Notes”) and
used the net proceeds from the offering to repay a portion of the amounts outstanding on its MSR facilities.
The ratios included in the indentures for the
unsecured senior notes are incurrence-based compared to the customary ratio covenants that are often found in credit agreements that require
a company to maintain a certain ratio. The incurrence-based covenants limit the issuer(s) and restricted subsidiaries ability to
incur additional indebtedness, pay dividends, make certain investments, create liens, consolidate, merge or sell substantially all of
their assets or enter into certain transactions with affiliates. The indentures contain certain events of default, including (subject,
in some cases, to customary cure periods and materiality thresholds) defaults based on (i) the failure to make payments under the
applicable indenture when due, (ii) breach of covenants, (iii) cross-defaults to certain other indebtedness, (iv) certain
bankruptcy or insolvency events, (v) material judgments and (vi) invalidity of material guarantees.
The indentures provide that on or before certain
fixed dates, the Company may redeem up to 40% of the aggregate principal amount of the unsecured senior notes with the net proceeds of
certain equity offerings at fixed redemption prices, plus accrued and unpaid interest, to the redemption dates, subject to compliance
with certain conditions. In addition, the Company may redeem all or a portion of the unsecured senior notes at any time on or after certain
fixed dates at the applicable redemption prices set forth in the indentures plus accrued and unpaid interest, to the redemption dates.
No notes were repurchased or redeemed during the nine months ended September 30, 2025
and 2024.
As of September 30, 2025, the expected maturities
of the Company’s unsecured senior notes based on contractual maturities are as follows:
Year Ending December 31,
Amount
2025
$ —
2026
500
2027
600
2028
850
2029
750
Thereafter
2,250
Total unsecured senior notes principal amount
$ 4,950
17
Financial Covenants
The Company’s credit facilities contain
various financial covenants which primarily relate to required tangible net worth amounts, liquidity reserves, leverage requirements,
and profitability requirements, which are measured at Nationstar Mortgage LLC, the Company’s operating subsidiary. The Company was
in compliance with its required financial covenants as of September 30, 2025.
10. Securitizations and Financings
Variable Interest Entities
In the normal
course of business, the Company enters into various types of on- and off-balance sheet transactions with special purpose entities (“SPEs”)
determined to be VIEs, which primarily consist of securitization trusts established for a limited purpose. Generally, these SPEs are formed
for the purpose of securitization transactions in which the Company transfers assets to an SPE, which then issues to investors various
forms of debt obligations supported by those assets.
The Company
has determined that the SPEs created in connection with certain advance facilities trusts should be consolidated as the Company is the
primary beneficiary of each of these entities.
A summary of the assets and liabilities of the
Company’s transactions with VIEs included in the Company’s condensed consolidated balance sheets is presented below:
September 30, 2025
December 31, 2024
Consolidated Transactions with VIEs
Transfers
Accounted for as
Secured
Borrowings
Transfers
Accounted for as
Secured
Borrowings
Assets
Restricted cash
$ 153
$ 188
Advances and other receivables, net
755
1,020
Total assets
$ 908
$ 1,208
Liabilities
Advance facilities, net(1)
$ 586
$ 824
Warehouse facilities, net(1)
609
—
MSR facilities, net(1)
468
469
Payables and other liabilities
3
3
Total liabilities
$ 1,666
$ 1,296
(1) Refer to Note 9, Indebtedness, for additional information.
The following table shows a summary of the outstanding
collateral and certificate balances for securitization trusts for which the Company was the transferor, including any retained beneficial
interests and MSRs, that were not consolidated by the Company:
Unconsolidated Securitization Trusts
September 30, 2025
December 31, 2024
Total collateral balances - UPB
$ 735
$ 798
Total certificate balances
$ 727
$ 773
The Company has not retained any variable interests
in the unconsolidated securitization trusts that were outstanding as of September 30, 2025 and December 31, 2024. Therefore,
it does not have a significant exposure to loss related to these unconsolidated VIEs.
A summary of mortgage loans transferred by the
Company to unconsolidated securitization trusts that are 60 days or more past due are presented below:
Principal Amount of Transferred Loans 60 Days or More Past Due
September 30, 2025
December 31, 2024
Unconsolidated securitization trusts
$ 72
$ 81
18
11. Earnings Per Share
Basic earnings per share of common stock is computed
by dividing net income by the weighted average number of common stock outstanding during the period. Diluted earnings per share of common
stock is computed by dividing net income by the sum of the weighted average number of shares of common stock and any dilutive securities
outstanding during the period. The Company’s potentially dilutive securities are share-based awards. The Company applies the treasury
stock method to determine the dilutive weighted average number of shares of common stock outstanding based on the outstanding share-based
awards. As of September 30, 2025 and December 31, 2024, the Company had 10 million preferred shares authorized at par value
of $0.00001 per share, with zero shares issued and outstanding and aggregate liquidation preference of zero dollars.
During the three months ended September 30,
2025, the Company’s Board of Directors declared a dividend to the holders of common stock and unvested restricted stock units of
Mr. Cooper, consisting of $2.00 in cash per share, for a total of $132. The close of business on September 29, 2025 was fixed
as the record date for determining the holders of Mr. Cooper common stock and unvested restricted stock units entitled to receive
the dividend.
The following table sets forth the computation
of basic and diluted net income per common share (amounts in millions, except per share amounts):
Three Months Ended September 30,
Nine Months Ended September 30,
Computation of Earnings Per Share
2025
2024
2025
2024
Net income
$ 180
$ 80
$ 466
$ 465
Weighted average shares of common stock outstanding (in thousands):
Basic
63,995
64,272
63,900
64,503
Dilutive effect of stock awards
1,258
1,240
1,241
1,356
Diluted
65,253
65,512
65,141
65,859
Earnings per common share
Basic
$ 2.81
$ 1.24
$ 7.29
$ 7.21
Diluted
$ 2.76
$ 1.22
$ 7.15
$ 7.06
12. Income Taxes
The effective tax rate for operations was 25.6% and 24.1% for the three
and nine months ended September 30, 2025, and 29.1% and 25.2% for the three and nine months ended September 30, 2024, respectively.
The effective tax rates differed from the statutory federal rate of 21% primarily due to state tax benefits and nondeductible executive
compensation.
The change in effective tax rate during the three
and nine months ended September 30, 2025, as compared to 2024, is primarily attributable to the quarterly discrete tax items relative
to income before taxes for the respective period, including state income taxes.
13. Fair Value Measurements
Fair value is a market-based measurement, not
an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset
or liability. As a basis for considering market participant assumptions in fair value measurements, a three-tiered fair value hierarchy
has been established based on the level of observable inputs used in the measurement of fair value (e.g., Level 1 representing quoted
prices for identical assets or liabilities in an active market; Level 2 representing values using observable inputs other than quoted
prices included within Level 1; and Level 3 representing estimated values based on significant unobservable inputs).
There have
been no significant changes to the valuation techniques and inputs used by the Company in estimating fair values of Level 2 and Level
3 assets and liabilities as disclosed in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2024.
The following tables present the estimated carrying
amount and fair value of the Company’s financial instruments and other assets and liabilities measured at fair value on a recurring
basis:
19
September 30, 2025
Recurring Fair Value Measurements
Fair Value - Recurring Basis
Total Fair Value
Level 1
Level 2
Level 3
Assets
Mortgage servicing rights
$ 11,604
$ —
$ —
$ 11,604
Mortgage loans held for sale
2,726
—
2,658
68
Equity investments
6
—
—
6
Derivative financial instruments
Treasury futures
53
—
53
—
IRLCs
48
—
—
48
Forward MBS trades
10
—
10
—
LPCs
5
—
—
5
Liabilities
Derivative financial instruments
Forward MBS trades
64
—
64
—
Treasury futures
5
—
5
—
LPCs
2
—
—
2
Excess spread financing
346
—
—
346
Mortgage servicing rights financing
23
—
—
23
December 31, 2024
Recurring Fair Value Measurements
Fair Value - Recurring Basis
Total Fair Value
Level 1
Level 2
Level 3
Assets
Mortgage servicing rights
$ 11,736
$ —
$ —
$ 11,736
Mortgage loans held for sale
2,211
—
2,151
60
Equity investments
9
1
—
8
Derivative financial instruments
IRLCs
22
—
—
22
Forward MBS trades
18
—
18
—
LPCs
6
—
—
6
Liabilities
Derivative financial instruments
Forward MBS trades
95
—
95
—
Treasury futures
59
—
59
—
LPCs
7
—
—
7
Excess spread financing
386
—
—
386
Mortgage servicing rights financing
32
—
—
32
20
The tables below set forth the activities for
all of the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis:
Nine Months Ended September 30, 2025
Assets
Liabilities
Fair Value - Level 3 Assets and Liabilities
Mortgage
servicing rights
Mortgage loans
held for sale
IRLCs
Excess spread
financing
Mortgage
servicing rights
financing
Balance - beginning of period
$ 11,736
$ 60
$ 22
$ 386
$ 32
Changes in fair value included in earnings
(1,194 )
2
26
5
(9 )
Purchases/additions(1)
789
119
—
—
—
Issuances
596
—
—
—
—
Sales/dispositions(2)
(350 )
(112 )
—
—
—
Repayments
—
(1 )
—
(1 )
—
Settlements
—
—
—
(44 )
—
Other changes
27
—
—
—
—
Balance - end of period
$ 11,604
$ 68
$ 48
$ 346
$ 23
Nine Months Ended September 30, 2024
Assets
Liabilities
Fair Value - Level 3 Assets and Liabilities
Mortgage
servicing rights
Mortgage loans
held for sale
IRLCs
Excess spread
financing
Mortgage
servicing rights
financing
Balance - beginning of period
$ 9,090
$ 81
$ 21
$ 437
$ 29
Changes in fair value included in earnings
(694 )
2
20
15
11
Purchases/additions(1)
1,640
95
—
—
—
Issuances
267
—
—
—
—
Sales/dispositions(2)
(297 )
(110 )
—
—
—
Repayments
—
(3 )
—
—
—
Settlements
—
—
—
(49 )
—
Other changes
29
—
—
—
—
Balance - end of period
$ 10,035
$ 65
$ 41
$ 403
$ 40
(1) Additions for mortgages loans held for sale include loans that are purchased or transferred in.
(2) Dispositions for mortgage loans held for sales include loans that are sold or transferred out.
The Company had immaterial equity investments,
LPCs assets and LPCs liabilities as of September 30, 2025 and September 30, 2024. No transfers were made in or out of Level
3 fair value assets and liabilities for the Company during the nine months ended September 30, 2025 and 2024.
21
The table below presents the quantitative information
for significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities.
September 30, 2025
December 31, 2024
Range
Weighted
Range
Weighted
Level 3 Inputs
Min
Max
Average
Min
Max
Average
MSRs(1)
Option adjusted spread(2)
6.7 %
12.0 %
7.6 %
6.9 %
12.2 %
7.6 %
Prepayment speed
7.3 %
10.4 %
8.8 %
6.8 %
9.3 %
7.7 %
Cost to service per loan(3)
$ 42
$ 118
$ 58
$ 45
$ 114
$ 58
Average life(4)
7.2 years
7.8 years
Mortgage loans held for sale
Market pricing
45.0 %
97.8 %
85.1 %
45.0 %
97.3 %
80.1 %
IRLCs
Value of servicing (reflected as a percentage of loan commitment)
0.8 %
3.7 %
1.7 %
— %
3.6 %
1.7 %
Excess spread financing(1)
Option adjusted spread(2)
7.0 %
12.3 %
8.8 %
6.9 %
12.3 %
8.7 %
Prepayment speed
7.6 %
8.3 %
8.0 %
7.2 %
7.6 %
7.5 %
Average life(4)
6.4 years
6.8 years
Mortgage servicing rights financing
Advance financing and counterparty fee rates
7.4 %
8.5 %
7.9 %
7.2 %
9.0 %
8.5 %
Annual advance recovery rates
10.7 %
14.6 %
12.4 %
14.9 %
16.8 %
16.0 %
(1) The inputs are weighted by investor.
(2) OAS represents incremental spread above a risk-free rate (one-month SOFR), which is an observable input.
(3) Presented in whole dollar amounts.
(4) Average life is included for informational purposes.
The tables below present a summary of the estimated
carrying amount and fair value of the Company’s financial instruments not carried at fair value:
September 30, 2025
Carrying
Fair Value
Financial Instruments
Amount
Level 1
Level 2
Level 3
Financial assets
Cash and cash equivalents
$ 762
$ 762
$ —
$ —
Restricted cash
184
184
—
—
Advances and other receivables, net
1,005
—
—
1,005
Loans subject to repurchase from Ginnie Mae
1,423
—
1,423
—
Financial liabilities
Unsecured senior notes, net
4,907
—
5,029
—
Advance, warehouse and MSR facilities, net
6,439
—
6,461
—
Liability for loans subject to repurchase from Ginnie Mae
1,423
—
1,423
—
22
December 31, 2024
Carrying
Fair Value
Financial Instruments
Amount
Level 1
Level 2
Level 3
Financial assets
Cash and cash equivalents
$ 753
$ 753
$ —
$ —
Restricted cash
220
220
—
—
Advances and other receivables, net
1,345
—
—
1,345
Loans subject to repurchase from Ginnie Mae
1,176
—
1,176
—
Financial liabilities
Unsecured senior notes, net
4,891
—
4,862
—
Advance, warehouse and MSR facilities, net
6,495
—
6,515
—
Liability for loans subject to repurchase from Ginnie Mae
1,176
—
1,176
—
14. Capital Requirements
Fannie Mae, Freddie Mac, Ginnie Mae and certain
private label mortgage investors require the Company to maintain minimum net worth (“capital”) requirements, as specified
in the respective selling and servicing agreements. In addition, these investors may require capital ratios in excess of the stated requirements
to approve large servicing transfers. To the extent that these requirements are not met, the Company’s secondary market investors
may utilize a range of remedies ranging from sanctions, suspension or ultimately termination of the Company’s selling and servicing
agreements, which would prohibit the Company from further originating or securitizing these specific types of mortgage loans or being
an approved servicer. The Company’s various capital requirements related to its outstanding selling and servicing agreements are
measured based on the Company’s operating subsidiary, Nationstar Mortgage LLC. As of September 30, 2025, the Company was in
compliance with its selling and servicing capital requirements.
15. Commitments and Contingencies
Litigation and Regulatory
The Company and its subsidiaries are routinely
and currently involved in a number of legal proceedings, including, but not limited to, judicial, arbitration, regulatory and governmental
proceedings related to matters that arise in connection with the conduct of the Company’s business. While it is not possible to
predict the outcome of any of these matters, based on the Company’s assessment of the facts and circumstances, it does not believe
any of these matters, individually or in the aggregate, will have a material adverse effect on the financial position, results of operations
or cash flows of the Company. However, actual outcomes may differ from those expected and could have a material effect on the Company’s
financial position, results of operations, or cash flows in a future period.
23
On November 3, 2023, a putative class action
lawsuit was filed against the Company, captioned Cabezas v. Mr. Cooper Group, Inc., No. 23-cv-02453 (“Cabezas”),
in the United States District Court for the Northern District of Texas, by plaintiff Jennifer Cabezas purportedly on behalf of a class
consisting of those persons impacted by the cybersecurity incident that occurred on October 31, 2023. The class action complaint
alleged claims for negligence, negligence per se, breach of express contract, breach of implied contract, invasion of privacy, unjust
enrichment, breach of confidence, and breach of fiduciary duty based upon allegations that the Company did not employ reasonable and adequate
security measures to protect customer personal information accessed in the cybersecurity incident. The Cabezas complaint sought damages,
declaratory and injunctive relief, and an award of costs, attorney fees and expenses, among other relief. Between November 2023 and
February 7, 2024, 26 additional putative class actions were filed against the Company asserting substantially similar claims and
allegations as those asserted in the Cabezas action. The Cabezas court consolidated all 26 pending cases with the Cabezas action, and
the 26 separate matters were administratively closed. By Order dated June 25, 2024, the Cabezas court set July 15, 2024 as the
last day for Plaintiffs to file a Consolidated Amended Complaint. On July 15, 2024, plaintiffs Jose Ignacio Garrigo, Izabela
Debowcsyk, Joshua Watson, Brett Padalecki, Chris Leptiak, Denver Dale, Emily Burke, Mary Crawford, Kay Pollard, Jonathan Josi, Jeff Price,
Mychael Marrone, Katy Ross, Lynette Williams, Karen Lynn Williams, Gary Allen, Larry Siegal, Rohit Burani, Elizabeth Curry, Justin Snider,
Linda Hansen, and Deira Robertson (collectively, “Plaintiffs”) filed a Consolidated Class Action Complaint on behalf
of themselves and an alleged putative nationwide class of “All individuals residing in the United States whose PII was accessed
and/or acquired as a result of the Data Breach announced by Mr. Cooper in or around November 2023,” as well as 15 state
subclasses. Plaintiffs assert seven of the same claims as in the original Cabezas complaint, (1) Breach of Express Contract; (2) Breach
of Implied Contract; (3) Negligence; (4) Negligence Per Se; (5) Unjust Enrichment; (6) Invasion of Privacy; (7) Breach
of Confidence; as well as a claim for Declaratory and Injunctive Relief, and 19 state law claims. The Consolidated Class Action Complaint
seeks damages, injunctive relief, disgorgement and restitution, and an award of costs, attorney fees and expenses, among other relief.
The Cabezas court set September 13, 2024 as the last day for Defendants to move to dismiss the Consolidated Class Action Complaint.
On September 13, 2024, the Company filed a motion to dismiss the Consolidated Class Action Complaint. Plaintiffs opposed the
motion and the Company filed a reply in further support of its motion on March 27, 2025. On July 22, 2025, the Court issued
an Opinion & Order on Defendants’ motion which granted the motion to dismiss in-part. The Order granted the motion as to
the standing arguments on the declaratory judgment claim and injunctive relief but otherwise held that plaintiffs have standing to pursue
their claims. The Order also granted the motion as to the breach of express contract, unjust enrichment, invasion of privacy, and breach
of confidence claims and denied the motion to dismiss as to the breach of implied contract and negligence claims. The Court deferred ruling
on the negligence per se and individual state law claims until a ruling on class certification. On August 18, 2025, the Court issued
a scheduling order setting the following deadlines: Plaintiffs’ deadline to serve the Motion for Class Certification is November 24,
2025; Class Certification discovery closes on March 30, 2026; Defendants’ deadline to oppose the Class Certification
motion is April 14, 2026; Plaintiffs’ deadline to serve a reply in further support of Class Certification is May 14,
2026 and the Class Certification briefing submission date is May 29, 2026.
The Company will continue to monitor legal matters
for further developments that could affect the amount of the accrued liability that has been previously established. Legal-related expenses
for the Company include legal settlements and the fees paid to external legal service providers and are included in general and administrative
expenses on the condensed consolidated statements of operations. The Company recorded legal-related expenses, net of recoveries, which
includes legal settlements and fees paid to external legal service providers, of $11 and $36 during the three and nine months ended September 30,
2025 and $15 and $34 during the three and nine months ended September 30, 2024, respectively, which are included in “expenses
- general and administrative” on the condensed consolidated statements of operations. Management currently believes the aggregate
range of reasonably possible loss is $26 to $40 in excess of the accrued liability (if any) related to those matters as of September 30,
2025. For some of these matters, the Company is able to estimate reasonably possible losses above existing reserves and for other matters,
such an estimate is not possible at this time. This estimated range of possible loss is based upon currently available information and
is subject to significant judgment, numerous assumptions and known and unknown uncertainties. The matters underlying the estimated range
will change from time to time, and actual results may vary substantially from the current estimate.
Other Loss Contingencies
As part of the Company’s ongoing operations,
it acquires servicing rights of mortgage loan portfolios that are subject to indemnification based on the representations and warranties
of the seller. From time to time, the Company will seek recovery under these representations and warranties for incurred costs. As
of September 30, 2025, the Company believes all recorded balances for which recovery is sought from the seller are valid claims,
and no evidence suggests additional reserves are warranted.
24
As a seller of mortgage loans to Agencies and
other third parties, the Company may be required to indemnify or repurchase mortgage loans that fail to meet certain customary representations
and warranties made in conjunction with sales of mortgage loans. The repurchase reserve liability related to such customary representations
and warranties was $39 and $62 as of September 30, 2025 and December 31, 2024, respectively, which are included in “payables
and other liabilities” within the condensed consolidated balance sheets.
Loan and Other Commitments
The Company enters into IRLCs with prospective
customers whereby the Company commits to lend a certain loan amount under specific terms and interest rates to the customer. The Company
also enters into LPCs with prospective sellers. These loan commitments are treated as derivatives and are carried at fair value. See Note
8, Derivative Financial Instruments, for more information.
16. Segment Information
The Company’s segments reflect the internal
reporting used to evaluate operating performance and are based upon the Company’s organizational structure, which focuses primarily
on the services offered. The Company’s operations are primarily conducted through two segments: Servicing and Originations. A brief
description of the current business segments is as follows:
Servicing: This segment performs operational
activities on behalf of investors or owners of the underlying mortgages and mortgage servicing rights, including collecting and disbursing
customer payments, investor reporting, customer service, modifying loans where appropriate to help customers stay current, and when necessary
performing collections, foreclosures, and the sale of REO. In the fourth quarter of 2024, the Company expanded its servicing and subservicing
portfolio with the acquisition and subsequent integration of the mortgage operations from the Flagstar transaction.
Originations: This segment originates residential
mortgage loans through its direct-to-consumer channel, which provides refinance options for its existing customers, and through its correspondent
channel, which purchases or originates loans from mortgage bankers.
Corporate/Other: Corporate/Other includes
the results of Xome’s and Roosevelt Management Company’s operations, the Company’s unallocated overhead expenses (which
include the costs of executive management and other corporate functions that are not directly attributable to our operating segments),
changes in equity investments and interest expense on our unsecured senior notes. In addition, Corporate/Other includes eliminations related
to intersegment hedge fair value changes. Functional expenses are allocated to individual segments based on the actual cost of services
performed, direct resource utilization, or headcount percentage for shared services. Facility costs are allocated to individual segments
based on cost per headcount for specific facilities utilized. Group insurance costs are allocated to individual segments based on global
cost per headcount. Non-allocated corporate expenses include the administrative costs of executive management and other corporate functions
that are not directly attributable to the Company’s operating segments. Revenues generated on inter-segment services performed are
valued based on similar services provided to external parties. Eliminations are included in Corporate/Other.
25
The tables below summarize the result of operations
and total assets by segment that are provided to the Chief Operating Decision Makers (CODMs), which consists of the Chief Executive Officer,
the President and the Chief Financial Officer. Pretax income (loss) is a key measurement used by the CODMs to evaluate segment results
and is one of the factors considered in determining capital allocation among the segments and determined in accordance with the measurement
principles used in the consolidated financial statements.
Three Months Ended September 30, 2025
Financial Information by Segment
Servicing
Originations
Corporate/Other
Consolidated
Revenues
Service related, net
$ 334
$ 33
$ 16
$ 383
Net gain on mortgage loans held for sale
7
177
—
184
Total revenues
341
210
16
567
Expenses
Salaries, wages and benefits
95
58
47
200
General and administrative
76
39
27
142
Total expenses
171
97
74
342
Interest income
191
40
1
232
Interest expense
(95 )
(37 )
(81 )
(213 )
Other expenses, net
—
—
(2 )
(2 )
Total other income (expenses), net
96
3
(82 )
17
Income (loss) before income tax expense (benefit)
$ 266
$ 116
$ (140 )
$ 242
Depreciation and amortization for property and equipment and intangible assets
$ 7
$ 1
$ 3
$ 11
Total assets
$ 14,683
$ 2,765
$ 1,631
$ 19,079
Three Months Ended September 30, 2024
Financial Information by Segment
Servicing
Originations
Corporate/Other
Consolidated
Revenues
Service related, net
$ 246
$ 24
$ 18
$ 288
Net gain on mortgage loans held for sale
10
126
—
136
Total revenues
256
150
18
424
Expenses
Salaries, wages and benefits
86
50
46
182
General and administrative
94
33
26
153
Total expenses
180
83
72
335
Interest income
201
25
1
227
Interest expense
(100 )
(23 )
(76 )
(199 )
Other expenses, net
—
—
(5 )
(5 )
Total other income (expenses), net
101
2
(80 )
23
Income (loss) before income tax expense (benefit)
$ 177
$ 69
$ (134 )
$ 112
Depreciation and amortization for property and equipment and intangible assets
$ 2
$ —
$ 7
$ 9
Total assets
$ 12,462
$ 2,001
$ 1,723
$ 16,186
26
Nine Months Ended September 30, 2025
Financial Information by Segment
Servicing
Originations
Corporate/Other
Consolidated
Revenues
Service related, net
$ 1,157
$ 89
$ 49
$ 1,295
Net gain on mortgage loans held for sale
21
419
—
440
Total revenues
1,178
508
49
1,735
Expenses
Salaries, wages and benefits
274
166
144
584
General and administrative
285
126
107
518
Total expenses
559
292
251
1,102
Interest income
532
102
4
638
Interest expense
(307 )
(93 )
(243 )
(643 )
Other expenses, net
—
—
(14 )
(14 )
Total other income (expenses), net
225
9
(253 )
(19 )
Income (loss) before income tax expense (benefit)
$ 844
$ 225
$ (455 )
$ 614
Depreciation and amortization for property and equipment and intangible assets
$ 28
$ 5
$ 7
$ 40
Total assets
$ 14,683
$ 2,765
$ 1,631
$ 19,079
Nine Months Ended September 30, 2024
Financial Information by Segment
Servicing
Originations
Corporate/Other
Consolidated
Revenues
Service related, net
$ 1,132
$ 59
$ 60
$ 1,251
Net gain on mortgage loans held for sale
30
290
—
320
Total revenues
1,162
349
60
1,571
Expenses
Salaries, wages and benefits
255
124
130
509
General and administrative
281
90
72
443
Total expenses
536
214
202
952
Interest income
521
52
1
574
Interest expense
(303 )
(48 )
(205 )
(556 )
Other expenses, net
—
—
(16 )
(16 )
Total other income (expenses), net
218
4
(220 )
2
Income (loss) before income tax expense (benefit)
$ 844
$ 139
$ (362 )
$ 621
Depreciation and amortization for property and equipment and intangible assets
$ 7
$ 2
$ 16
$ 25
Total assets
$ 12,462
$ 2,001
$ 1,723
$ 16,186
17. Subsequent Events
In preparing these condensed consolidated financial
statements, the Company evaluated events and transactions for potential recognition or disclosure through October 31, 2025, the date
these condensed consolidated financial statements were issued.
Merger of Mr. Cooper Group Inc. and
Rocket Companies, Inc.
On March 31, 2025, Mr. Cooper Group
Inc. and Rocket Companies, Inc. (“Rocket”) announced entry into a definitive agreement for Rocket to acquire all outstanding
shares of Mr. Cooper in an all-stock transaction. The transaction closed on October 1, 2025 for $14.2 billion in equity
value, based on an 11.0x exchange ratio.
27
EX-99.3 — EXHIBIT 99.3
EX-99.3
Filename: tm2614339d1_ex99-3.htm · Sequence: 4
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
In the following unaudited pro forma
condensed combined financial information and the accompanying notes, unless the context otherwise requires, references to “Rocket,”
“we,” “us,” “our” and the “Company” refer to Rocket Companies, Inc. and its consolidated
subsidiaries. Additional terms used in the unaudited pro forma condensed combined financial information and the accompanying notes
are defined throughout this section. All dollar amounts presented are in millions, except per share amounts.
Introduction
The following unaudited pro forma condensed combined
financial information has been prepared in accordance with Article 11 of Regulation S-X in order to give effect to the following
transactions (collectively the “Transactions”):
· On June 30, 2025, Rocket Companies, Inc.
(“Rocket”) completed the previously announced simplification of its organizational and capital structure pursuant to that
certain Transaction Agreement, dated as of March 9, 2025 (as amended on April 7, 2025, the “Transaction Agreement”).
Pursuant to the Transaction Agreement, on June 30, 2025, Rocket collapsed its “Up-C” structure, caused each class of
common stock of Rocket to become entitled to one vote per share, and reduced its classes of common stock from four to two (the “Up-C
Collapse”). As part of the Up-C Collapse:
o Rock Holdings Inc. (“RHI”) contributed all assets and liabilities of RHI (other than its common
limited liability company interests (the “Holdings LLC Units”) of Rocket, LLC (“Holdings LLC”), its shares of
Class D common stock, par value $0.00001 per share of Rocket (“Class D common stock”) and equity interests in Rocket
Community Fund, Woodward Insurance Holdings LLC and Woodward Insurance LLC (such entities collectively the “Retained Entities”))
to RHI II (as defined below), and distributed the interests in RHI to the holders of voting common shares of RHI. Thereafter, RHI merged
with and into a wholly owned subsidiary of Rocket.
o Rocket effected an internal reorganization pursuant to which the separate existence of Holdings LLC ceased
and Eclipse Merger Limited Partnership (“Holdings LP”) continued as the surviving entity under the name “Rocket Limited
Partnership,” and each issued and outstanding Holdings LLC Unit was exchanged for a number of fully paid and nonassessable partnership
units of Holdings LP (“Holdings LP Units”).
o Rocket amended its certificate of incorporation to authorize a new class of Class L common stock,
par value $0.00001 per share (“Class L common stock”). Each shareholder of RHI received a number of shares of Class L
common stock equal to (1) the number of shares of RHI (“RHI Shares”) held by such RHI shareholder multiplied by (2) the
ratio of the number of shares of Class D common stock owned by RHI to the number of all outstanding RHI Shares, which was 56.54 shares
of Class L common stock per each RHI Share. Mr. Gilbert, in consideration for his Class D common stock and paired Holdings
LP Units, received a number of newly issued shares of Class L common stock equivalent to one share of Class L common stock for
each share of Class D common stock held by Mr. Gilbert. In connection with the above, on June 30, 2025, Rocket issued 1,848,879,455
shares of Class L common stock.
o Rocket and RHI II, LLC (“RHI II”) entered into an Indemnity Agreement, pursuant to which,
among other things, RHI II agreed to indemnify Rocket for RHI’s liabilities that are not related to Rocket’s business.
o The Exchange Agreement between Rocket, RHI, Mr. Gilbert, and Holdings LP was terminated, and certain
information and other rights were preserved through a separate letter agreement between Rocket and Mr. Gilbert.
o The Rock Acquisition Corporation Shareholders Agreement between RHI and its stockholders was terminated.
o The Tax Receivable Agreement between Rocket, RHI and Mr. Gilbert (the “TRA”) and the
Amended and Restated Limited Partnership Agreement of Holdings LP were each amended. Following this amendment, the TRA does not apply
to any exchanges, including for the avoidance of doubt, any Holdings LLC Units exchanged as part of the reorganization described above,
that occur on or following March 9, 2025. Additionally, RHI contributed its rights to receive payments under the TRA in respect of
RHI’s prior exchanges to RHI II, LLC, a Michigan limited liability company and a direct wholly owned subsidiary of RHI (“RHI
II”), and RHI II completed a joinder, and became party, to the TRA.
o Rocket paid a special cash dividend of $0.80 per share to holders of Class A common stock, par value
$0.00001 per share (“Class A common stock”) as of March 20, 2025 (“Special Dividend”) on April 3,
2025.
· On July 1, 2025, Rocket completed the previously
announced acquisition of Redfin Corporation (“Redfin”). Pursuant to the Agreement and Plan of Merger, dated as of March 9,
2025 (the “Redfin Merger Agreement”), by and among Rocket, Redfin, and Neptune Merger Sub, Inc., a wholly owned subsidiary
of Rocket (“Redfin Merger Sub”), Redfin Merger Sub merged with and into Redfin, with Redfin continuing as a direct wholly
owned subsidiary of Rocket (the “Redfin Merger”). At the effective time of the Redfin Merger, each outstanding share of Redfin
common stock, par value $0.001 per share (the “Redfin Shares”) (other than shares held by (i) Redfin, including in treasury,
(ii) Rocket or (iii) Rocket’s subsidiaries, including Redfin Merger Sub), was automatically converted into the right to
receive 0.7926 shares of Rocket’s Class A common stock, and the cash payable in lieu of fractional shares of the merger consideration,
without interest and subject to any applicable withholding taxes. In connection with the above, on July 1, 2025, Rocket issued 103,391,679
shares of Class A common stock.
· On October 1, 2025, Rocket completed the
previously announced acquisition of Mr. Cooper Group Inc. (“Mr. Cooper”). Pursuant to the Agreement and Plan of
Merger, dated as of March 31, 2025 (the “Mr. Cooper Merger Agreement”), by and among Rocket, Mr. Cooper, Maverick
Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Rocket (“Maverick Merger Subsidiary”),
and Maverick Merger Sub 2, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Rocket (“Forward Merger
Subsidiary”), Maverick Merger Subsidiary merged with and into Mr. Cooper (the “Maverick Merger”), with Mr. Cooper
surviving the Maverick Merger and continuing as a direct, wholly owned subsidiary of Rocket and immediately following such Maverick Merger,
in accordance with the Delaware General Corporation Law and the Delaware Limited Liability Company Act, Mr. Cooper merged with and
into Forward Merger Subsidiary (the "Forward Merger" and, together with the Maverick Merger, the "Mr. Cooper Mergers"),
with Forward Merger Subsidiary surviving the Forward Merger. The Mr. Cooper Mergers together with the Redfin Merger are herein referred
to as the “Mergers.” At the effective time of the Mr. Cooper Mergers, each outstanding share of Mr. Cooper common
stock, par value $0.01 per share (other than Mr. Cooper common stock owned directly or indirectly by Rocket, Mr. Cooper, Maverick
Merger Subsidiary or Forward Merger Subsidiary immediately prior to the Maverick Effective Time), was automatically converted into the
right to receive 11.00 shares of Rocket’s Class A common stock, and the cash payable in lieu of fractional shares of the merger
consideration, without interest and subject to any applicable withholding taxes. In connection with the above, on October 1, 2025,
Rocket issued 705,205,413 shares of Class A common stock.
· In connection with entering into the Mr. Cooper
Merger Agreement, Rocket entered into a commitment letter (the “Commitment Letter”), dated as of March 31, 2025, with
JPMorgan Chase Bank, N.A., which was subsequently amended and restated on April 22, 2025 to include certain additional commitment
parties (the “Commitment Parties”), pursuant to which, on the terms and subject to the conditions set forth therein, the Commitment
Parties committed to provide a 364-day senior unsecured bridge term loan facility (the “Bridge Facility”) in an aggregate
principal amount of up to $4,950, subject to the terms and conditions of the Commitment Letter. The commitment amount under the Commitment
Letter was subsequently reduced to $950. The commitment amount was reduced to zero and the Commitment Letter was terminated upon the completion
of the Mr. Cooper Financing Transactions (as defined herein).
· The Company did not draw on the Bridge Facility,
as it has incurred permanent financing in the form of $2,000 of new senior unsecured notes due 2030 and $2,000 of new senior unsecured
notes due 2033. Rocket used the proceeds from the notes to (i) redeem Mr. Cooper’s 5.000% senior notes due 2026, 6.000%
senior notes due 2027 and 5.500% senior notes due 2028 at redemption prices equal to 100% of the principal amount of such notes, plus
accrued and unpaid interest to, but excluding, the redemption date (which was October 1, 2025), (ii) purchase for cash in a
tender offer, which included a successful consent solicitation to the amendment of certain terms, Mr. Cooper’s 5.125% senior
notes due 2030 (of which $574 were tendered and purchased by Rocket) and 5.750% senior notes due 2031 (of which $536 were tendered and
purchased by Rocket), (iii) pay fees and expenses relating to an exchange offer for newly issued notes of Rocket Companies, which
included a successful consent solicitation to the amendment of certain terms, of Mr. Cooper’s 6.500% senior notes due 2029
(of which $738 were tendered and exchanged) and 7.125% senior notes due 2032 (of which $955 were tendered and exchanged), (iv) pay
fees and expenses related to the issuance of the Rocket notes mentioned above and the use of the proceeds therefrom, including the transactions
described in clauses (ii) and (iii) above (collectively, the “Mr. Cooper Financing Transactions”) and (v) after
the consummation of the Transactions, repay secured debt of Rocket and its consolidated subsidiaries (including Redfin, Mr. Cooper
and their respective subsidiaries). All Mr. Cooper senior notes referenced in clauses (i), (ii) and (iii) above are referred
to as the “Mr. Cooper Notes.”
The unaudited pro forma condensed combined statement
of income (loss) for the three months ended March 31, 2026, three months ended March 31, 2025 and year ended December 31,
2025 gives effect to the Transactions as if they had occurred on January 1, 2025, the first day of Rocket’s fiscal year 2025.
The unaudited pro forma condensed combined statement of income (loss) for the three months ended March 31, 2026 is based on the unaudited
consolidated statement of income (loss) of Rocket for the three months ended March 31, 2026, which includes the results of Redfin
and Mr. Cooper. The unaudited pro forma condensed combined statement of income (loss) for the three months ended March 31, 2025,
combines the unaudited consolidated statement of income (loss) of Rocket for the three months ended March 31, 2025 and the unaudited
consolidated statements of income (loss) of Redfin and Mr. Cooper, each for the three months ended March 31, 2025. The unaudited
pro forma condensed combined statement of income (loss) for the fiscal year ended December 31, 2025, combines the audited consolidated
statement of income (loss) of Rocket for the fiscal year ended December 31, 2025, which includes the results of Redfin and Mr. Cooper
from their respective acquisition dates, and the unaudited consolidated statements of income (loss) of Redfin and Mr. Cooper for
the pre-acquisition periods of the six months ended June 30, 2025 for Redfin and the nine months ended September 30, 2025 for
Mr. Cooper. The unaudited pro forma condensed combined financial information contained herein does not give effect to any of the
financial results of Rocket, Redfin, or Mr. Cooper following March 31, 2026.
The historical consolidated financial statements
of Rocket, Redfin, and Mr. Cooper have been adjusted in the accompanying unaudited pro forma condensed combined financial information
to give effect to the Transactions, which are necessary to account for the Transactions in accordance with U.S. GAAP. The unaudited pro
forma adjustments are based upon available information and certain assumptions that our management believes are reasonable. The following
unaudited pro forma condensed combined financial information does not reflect the costs of any integration activities or benefits that
may result from the realization of future cost savings from operating efficiencies, including the future impacts of Redfin’s 2025
multifamily rental listing arrangement with Zillow Inc. (“Zillow”), or any other business changes or synergies that may result
from the Transactions.
The unaudited pro forma condensed combined financial information should
be read in conjunction with:
· The accompanying notes to the unaudited pro forma condensed combined financial
information;
· The unaudited consolidated financial statements
of Rocket for the three months ended March 31, 2026 and 2025 and the related notes, which are included in Rocket’s Quarterly
Report on Form 10-Q for the three months ended March 31, 2026, and are incorporated by reference herein;
· The audited consolidated financial statements
of Rocket for the year ended December 31, 2025 and the related notes, which are included in Rocket’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2025, and are incorporated by reference herein;
· The unaudited consolidated financial statements
of Redfin for the three months ended March 31, 2025 and the related notes, which are included in Redfin’s Quarterly Report
on Form 10-Q for the three months ended March 31, 2025, and are incorporated by reference herein;
· The unaudited consolidated financial statements
of Redfin for the six months ended June 30, 2025 and the related notes, which are included in Rocket’s Current Report on Form 8-K
filed with the SEC on August 11, 2025, and are incorporated by reference herein;
· The unaudited consolidated financial statements
of Mr. Cooper for the three months ended March 31, 2025 and the related notes, which are included in Mr. Cooper’s
Quarterly Report on Form 10-Q for the three months ended March 31, 2025, and are incorporated by reference herein; and
· The unaudited consolidated financial statements
of Mr. Cooper for the nine months ended September 30, 2025 and the related notes, which are included in this Rocket’s
Current Report on Form 8-K, on which this unaudited pro forma condensed combined financial information is attached and are incorporated
by reference herein;
2
Accounting for the
Transactions
The mergers pursuant to the Transaction Agreement (the “Up-C
Collapse Mergers”) have been accounted for as an equity reorganization of Rocket, under which the stockholders of RHI became direct
stockholders of Rocket. Pursuant to the Transaction Agreement, RHI stockholders exchanged their shares in RHI for shares of Class L
common stock. At the effective time of the Up-C Collapse Mergers, RHI’s only material assets were its equity interests in Rocket
and RHI did not have material liabilities, which would be required to be disclosed in its financial statements.
The Redfin Merger was
accounted for as a business combination using the acquisition method with Rocket as the accounting acquirer in accordance with Accounting
Standards Codification (“ASC”) Topic 805, Business Combinations. Under this method of accounting, the aggregate merger consideration
was allocated to Redfin’s assets acquired and liabilities assumed based upon their estimated fair values as of July 1, 2025.
The process of valuing the net assets of Redfin immediately prior to the Redfin Merger, as well as evaluating accounting policies for
conformity, is substantially complete; however, the tax-related liabilities and other contingencies are preliminary and subject to change
as additional information becomes available and certain tax matters are finalized. Any differences between the estimated fair value of
the consideration transferred and the estimated fair value of the assets acquired and liabilities assumed were recorded as goodwill. Refer
to Note 1 - Basis of Presentation for more information.
The Mr. Cooper Mergers
were accounted for as a business combination using the acquisition method with Rocket as the accounting acquirer in accordance with ASC
Topic 805, Business Combinations. Under this method of accounting, the aggregate merger consideration was allocated to Mr. Cooper’s
assets acquired and liabilities assumed based upon their estimated fair values as of October 1, 2025. The process of valuing the
net assets of Mr. Cooper immediately prior to the Mr. Cooper Mergers, as well as evaluating accounting policies for conformity,
is substantially complete; however, the tax-related liabilities and other contingencies are preliminary and subject to change as additional
information becomes available and certain tax matters are finalized. Any differences between the estimated fair value of the consideration
transferred and the estimated fair value of the assets acquired and liabilities assumed were recorded as goodwill. Refer to Note 1 - Basis
of Presentation for more information.
All financial data included
in the unaudited pro forma condensed combined financial information is presented in millions of U.S. Dollars unless otherwise noted, and
it has been prepared on the basis of U.S. GAAP and Rocket’s accounting policies. The unaudited pro forma condensed combined financial
information presented is for informational purposes only and is not necessarily indicative of the financial position or results of operations
that would have been realized if the Transactions had been completed on the dates set forth above, nor is it indicative of the future
results or financial position of the combined company.
3
Rocket
Companies, Inc.
Unaudited
Pro Forma Condensed Combined Statement of Income (Loss)
For
the Three Months Ended March 31, 2026
($
In Millions, Except Per Share Amounts or Unless Otherwise Noted)
Rocket
Redfin
Transaction
Accounting
Adjustments
(Note
4)
Mr. Cooper
Transaction
Accounting
Adjustments
(Note
6)
Mr. Cooper
Financing
Adjustments
(Note
7)
Rocket
Pro
Forma
Combined
Revenue
Gain
on sale of loans:
Gain
on sale of loans excluding fair value of originated MSRs, net
$ 688
$ -
$ -
$ -
$ 688
Fair
value of originated MSRs
688
-
-
-
688
Gain on
sale of loans, net
1,376
-
-
-
1,376
Loan
servicing income:
Servicing
fee income
1,083
-
-
-
1,083
Change
in fair value of MSRs, net
(485 )
-
-
-
(485 )
Loan servicing
income, net
598
-
-
-
598
Interest
income
507
-
-
-
507
Other
income
460
-
-
-
460
Total revenue,
net
2,941
-
-
-
2,941
Expenses
Salaries,
commissions, and team member benefits
1,079
(3 )
(a)
(17 )
(a)
-
1,059
General
and administrative expenses
535
-
-
-
535
Marketing
and advertising expenses
345
-
-
-
345
Interest
expense
349
-
-
-
349
Depreciation
and amortization
146
-
-
-
146
Other
expenses
87
-
-
-
87
Total
expenses
2,541
(3 )
(17 )
-
2,521
Income
(loss) before income taxes
400
3
17
-
420
(Provision
for) benefit from income taxes
(103 )
6
(d)
(4 )
(d)
-
(101 )
Net income
(loss)
297
9
13
-
319
Net
(income) loss attributable to non-controlling interest
-
-
-
-
-
Net
income (loss) attributable to Rocket Companies
$ 297
$ 9
$ 13
$ -
$ 319
Earnings
(loss) per share of common stock
Note
(8)
Basic
$ 0.11
-
-
-
$ 0.11
Diluted
$ 0.10
-
-
-
$ 0.11
Weighted average shares
outstanding
Basic
2,828,455,368
-
-
-
2,828,455,368
Diluted
2,846,974,742
-
-
-
2,846,974,742
See accompanying Notes to the Unaudited Pro Forma
Condensed Combined Financial Information.
4
Rocket
Companies, Inc.
Unaudited
Pro Forma Condensed Combined Statement of Income
For the
Three Months Ended March 31, 2025
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Rocket
Up-C
Collapse
(Note
2)
Rocket
Pro
Forma
for
Up-C
Collapse
Redfin
Reclassified
(Note
3)
Redfin
Transaction
Accounting
Adjustments
(Note
4)
Rocket
Pro
Forma
Adjusted
for
Redfin
Merger
Mr. Cooper
Reclassified
(Note 5)
Mr. Cooper
Transaction
Accounting
Adjustments
(Note
6)
Mr. Cooper
Financing
Adjustments
(Note
7)
Rocket
Pro
Forma
Combined
Revenue
Gain
on sale of loans:
Gain on
sale of loans excluding fair value of originated MSRs, net
$ 507
$ -
$ 507
$ 24
$ -
$ 531
$ (17 )
$ -
$ -
$ 514
Fair
value of originated MSRs
265
-
265
3
-
268
164
-
-
432
Gain on
sale of loans, net
772
-
772
27
-
799
147
-
-
946
Loan
servicing income:
Servicing
fee income
401
-
401
-
-
401
688
-
-
1,089
Change
in fair value of MSRs, net
(449 )
-
(449 )
-
-
(449 )
(295 )
-
-
(744 )
Loan servicing
income, net
(48 )
-
(48 )
-
-
(48 )
393
-
-
345
Interest
income
201
-
201
3
-
204
197
-
-
401
Other
income
176
-
176
192
-
368
21
-
-
389
Total revenue,
net
1,101
-
1,101
222
-
1,323
758
-
-
2,081
Expenses
Salaries,
commissions, and team member benefits
610
1
(a)
611
185
6
(a)
802
201
99
(a)
-
1,102
General
and administrative expenses
261
(3 )
(a)
258
60
-
318
131
-
-
449
Marketing
and advertising expenses
276
-
276
41
-
317
11
-
-
328
Interest
expense
109
-
109
10
1
(b)
120
204
(82 )
(b)
96
(a)
321
-
-
-
-
-
-
-
-
(17 )
(b)
-
Depreciation
and amortization
27
-
27
10
44
(c)
81
18
66
(c)
-
165
Other
expenses
41
-
41
9
-
50
98
-
-
148
Total
expenses
1,324
(2 )
1,322
315
51
1,688
663
83
79
2,513
Income
(loss) before income taxes
(223 )
2
(221 )
(93 )
(51 )
(365 )
95
(83 )
(79 )
(432 )
(Provision
for) benefit from income taxes
11
42
(b)
53
-
35
(d)
88
(7 )
4
(d)
19
(d)
104
Net income
(loss)
(212 )
44
(168 )
(93 )
(16 )
(277 )
88
(79 )
(60 )
(328 )
Net
(income) loss attributable to non-controlling interest
202
(202 )
(c)
-
-
-
-
-
-
-
-
Net
income (loss) attributable to Rocket Companies
$ (10 )
$ (158 )
$ (168 )
$ (93 )
$ (16 )
$ (277 )
$ 88
$ (79 )
$ (60 )
$ (328 )
Earnings
(loss) per share of common stock
Note
(8)
Basic
$ (0.07 )
-
-
-
-
-
-
-
-
$ (0.12 )
Diluted
$ (0.08 )
-
-
-
-
-
-
-
-
$ (0.12 )
Weighted average shares
outstanding
Basic
147,717,296
1,848,879,483
-
-
103,391,679
-
-
705,205,413
-
2,805,193,871
Diluted
2,001,936,379
-
-
-
103,391,679
-
-
705,205,413
-
2,810,533,471
See accompanying Notes to the Unaudited Pro Forma
Condensed Combined Financial Information.
5
Rocket
Companies, Inc.
Unaudited
Pro Forma Condensed Combined Statement of Income
For the
Year Ended December 31, 2025
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Rocket
Up-C
Collapse
(Note
2)
Rocket
Pro
Forma
for
Up-C
Collapse
Redfin
Reclassified
(Note
3)
Redfin
Transaction
Accounting
Adjustments
(Note
4)
Rocket
Pro
Forma
Adjusted
for
Redfin
Merger
Mr. Cooper
Reclassified
(Note 5)
Mr. Cooper
Transaction
Accounting
Adjustments
(Note
6)
Mr. Cooper
Financing
Adjustments
(Note
7)
Rocket
Pro
Forma
Combined
Revenue
Gain
on sale of loans:
Gain
on sale of loans excluding fair value of originated MSRs, net
$ 2,086
$ -
$ 2,086
$ 49
$ -
$ 2,135
$ (63 )
$ -
$ -
$ 2,072
Fair
value of originated MSRs
1,721
-
1,721
7
-
1,728
595
-
-
2,323
Gain
on sale of loans, net
3,807
-
3,807
56
-
3,863
532
-
-
4,395
Loan
servicing income:
Servicing
fee income
2,317
-
2,317
-
-
2,317
2,031
-
-
4,348
Change
in fair value of MSRs, net
(1,530 )
-
(1,530 )
-
-
(1,530 )
(895 )
-
-
(2,425 )
Loan
servicing income, net
787
-
787
-
-
787
1,136
-
-
1,923
Interest
income
1,191
-
1,191
8
-
1,199
662
-
-
1,861
Other
income
1,286
-
1,286
441
-
1,727
68
-
-
1,795
Total
revenue, net
7,071
-
7,071
505
-
7,576
2,398
-
-
9,974
Expenses
Salaries,
commissions, and team member benefits
3,307
3
(a)
3,310
376
(9 )
(a)
3,677
620
2
(a)
-
4,299
General
and administrative expenses
1,439
9
(a)
1,448
120
-
1,568
361
-
-
1,929
Marketing
and advertising expenses
1,088
-
1,088
87
-
1,175
35
-
-
1,210
Interest
expense
839
-
839
21
(1 )
(b)
859
606
(246 )
(b)
384
(a)
1,380
-
-
-
-
-
-
-
-
(55 )
(b)
-
-
-
-
-
-
-
-
-
(168 )
(c)
-
Depreciation
and amortization
290
-
290
20
88
(c)
398
40
163
(c)
-
601
Other
expenses
322
-
322
12
-
334
122
-
-
456
Total
expenses
7,285
12
7,297
636
78
8,011
1,784
(81 )
161
9,875
Income
(loss) before income taxes
(214 )
(12 )
(226 )
(131 )
(78 )
(435 )
614
81
(161 )
99
(Provision
for) benefit from income taxes
(20 )
74
(b)
54
-
50
(d)
104
(148 )
(18 )
(d)
38
(d)
(24 )
Net
income (loss)
(234 )
62
(172 )
(131 )
(28 )
(331 )
466
63
(123 )
75
Net
(income) loss attributable to non-controlling interest
166
(166 )
(c)
-
-
-
-
-
-
-
-
Net
income (loss) attributable to Rocket Companies
$ (68 )
$ (104 )
$ (172 )
$ (131 )
$ (28 )
$ (331 )
$ 466
$ 63
$ (123 )
$ 75
Earnings
(loss) per share of common Stock
Note
(8)
Basic
$ (0.05 )
-
-
-
-
-
-
-
-
$ (0.03 )
Diluted
$ (0.05 )
-
-
-
-
-
-
-
-
$ (0.03 )
Weighted
average shares outstanding
Basic
1,322,362,708
911,776,183
-
-
51,695,840
-
-
528,904,060
-
2,814,738,791
Diluted
1,322,362,708
911,776,183
-
-
51,695,840
-
-
528,904,060
-
2,814,738,791
See accompanying Notes to the Unaudited Pro Forma
Condensed Combined Financial Information.
6
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Note 1 – Basis
of Presentation
The unaudited pro forma
condensed combined financial information and related notes were prepared in accordance with Article 11 of Regulation S-X.
The pro forma condensed
combined statements of income (loss), including all adjustments, were prepared in accordance with U.S. GAAP, presented in U.S. dollars,
and give effect to each of the following transactions:
Up-C Collapse
As discussed in Note
2, the unaudited pro forma condensed combined financial information reflects the effects of the Up-C Collapse, which was accounted for
as a reorganization of entities under common control. The exchange of Class D common stock and Holdings LLC Units for newly issued
shares of Class L common stock does not result in a change in control under U.S. GAAP. Accordingly, the historical carrying amounts
of assets and liabilities are retained. The elimination of the non-controlling interest in Holdings LLC as part of the Up-C Collapse has
been accounted for in accordance with the guidance in ASC 810, Consolidation, with the difference between the carrying amount of the non-controlling
interest and the consideration transferred reflected as an equity transaction.
Redfin Merger
As discussed in Note
3, certain reclassifications were made to conform the historical presentation of Redfin to that of Rocket’s financial statement
presentation. Rocket has completed its evaluation of Redfin’s accounting policies and has determined that no significant adjustments
were necessary to conform Redfin’s financial statements to the accounting policies used by Rocket.
The unaudited pro forma
condensed combined financial information was prepared by applying the acquisition method of accounting in accordance with ASC 805, with
Rocket as the accounting acquirer, using the fair value concepts defined in ASC 820, Fair Value Measurement, and based on the historical
financial statements of Rocket and Redfin. Under ASC 805, all assets acquired and liabilities assumed in a business combination are recognized
and measured at their assumed acquisition date fair value (or other measurement as directed by ASC 805), while transaction costs associated
with the business combination are expensed as incurred. The process of valuing the net assets of Redfin immediately prior to the Redfin
Merger, as well as evaluating accounting policies for conformity, is substantially complete; however, the tax-related liabilities and
other contingencies are preliminary and subject to change as additional information becomes available and certain tax matters are finalized.
The excess of merger consideration over the estimated fair value of assets acquired and liabilities assumed was allocated to goodwill.
Mr. Cooper Mergers
As discussed in Note 5, certain reclassifications
were made to conform the historical presentation of Mr. Cooper to that of Rocket’s financial statement presentation. Rocket
has completed its evaluation of Mr. Cooper’s accounting policies and has determined that no significant adjustments were necessary
to conform Mr. Cooper’s financial statements to the accounting policies used by Rocket.
The unaudited pro forma condensed combined
financial information was prepared by applying the acquisition method of accounting in accordance with ASC 805, with Rocket as the accounting
acquirer, using the fair value concepts defined in ASC 820, Fair Value Measurement, and based on the historical financial statements of
Rocket and Mr. Cooper. Under ASC 805, all assets acquired and liabilities assumed in a business combination are recognized and measured
at their assumed acquisition date fair value (or other measurement as directed by ASC 805), while transaction costs associated with the
business combination are expensed as incurred. The process of valuing the net assets of Mr. Cooper immediately prior to the Mr. Cooper
Mergers, as well as evaluating accounting policies for conformity, is substantially complete; however, the tax-related liabilities and
other contingencies are preliminary and subject to change as additional information becomes available and certain tax matters are finalized.
The excess of merger consideration over the estimated fair value of assets acquired and liabilities assumed, if any, was allocated to
goodwill.
The Mr. Cooper Financing Transactions
The Mr. Cooper Mergers triggered change in
control provisions contained in certain of Mr. Cooper’s outstanding debt facilities (including the Mr. Cooper Notes) that
required the repayment of such indebtedness. Consequently, Rocket entered into the Commitment Letter with the Commitment Parties, pursuant
to which the Commitment Parties committed to provide the Bridge Facility with a capacity up to $4,950. The commitment amount under the
Commitment Letter was subsequently reduced to $950 and, upon completion of the Mr. Cooper Financing Transactions, the commitment
amount was further reduced to zero. The Company did not draw on the Bridge Facility, as it incurred permanent financing in the form of
$4,000 of Senior Notes. Rocket used the proceeds from the notes to fund the Mr. Cooper Financing Transactions, and after consummation
of the Transactions, will repay secured debt of Rocket and its consolidated subsidiaries (including Redfin, Mr. Cooper, and their
subsidiaries). The debt issuance costs associated with the exchanged Mr. Cooper Notes have been capitalized and are amortized over
the term of the notes. On October 1, 2025, Rocket repaid or exchanged, pursuant to the tender offer and the exchange offer described
above, (a) $574 of Mr. Cooper’s 5.125% senior notes due 2030, (b) $536 of Mr. Cooper’s 5.750% senior notes
due 2031, (c) $738 of Mr. Cooper’s 6.500% senior notes due 2029, and (d) $955 of Mr. Cooper’s 7.125% senior
notes due 2032. Additionally, through the related consent solicitations, Rocket amended certain provisions of the above Mr. Cooper
Notes, among which eliminated the change of control repurchase requirements of such notes.
Overall Presentation
The unaudited pro forma condensed combined
statement of income (loss) for the three months ended March 31, 2026 has been prepared as if the Transactions had occurred on January 1,
2025 and is based on Rocket’s historical statement of income (loss) for the three months ended March 31, 2026 which includes
the results of Redfin and Mr. Cooper.
The unaudited pro forma condensed combined
statement of income (loss) for the three months ended March 31, 2025 has been prepared as if the Transactions had occurred on January 1,
2025 and combines Rocket’s historical statement of income (loss) for the three months ended March 31, 2025 with the historical
statements of income (loss) for Redfin and Mr. Cooper, each for the three months ended March 31, 2025.
The unaudited pro forma condensed combined
statement of income (loss) for the year ended December 31, 2025 has been prepared as if the Transactions had occurred on January 1,
2025 and combines Rocket’s historical statement of income (loss) for the year ended December 31, 2025, which includes the results
of Redfin and Mr. Cooper from their respective acquisition dates, with the historical statements of income (loss) for Redfin and
Mr. Cooper for the pre-acquisition periods of the six months ended June 30, 2025 for Redfin and nine months ended September 30,
2025 for Mr. Cooper.
7
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Beginning with the first quarter of 2026, we reclassified certain interest-related
activity within the Condensed Consolidated Statements of Income (Loss). Prior period amounts have been reclassified to conform to this
presentation. These changes have no impact on prior period consolidated net income, financial position, or cash flows. The Rocket historical
amounts for the years ended December 31, 2025, 2024, and 2023 presented within the unaudited pro forma condensed financial information
have been recast from historical amounts to conform to the current presentation. The nature and amount of the reclassifications were as
follows:
(a) Deposit income related to revenue earned on deposits and other interest-related income, which were previously classified as a component
of Other income, was reclassified to Interest income. The amounts reclassified were $110 for the three months ended March 31, 2025
and $690 for the year ended December 31, 2025.
(b) Interest expense on funding facilities, which was previously presented as a component of Interest income, net, was reclassified to
Interest expense within Expenses. Interest expense was previously captioned as Interest and amortization expense on non-funding debt.
The amounts reclassified were $64 for the three months ended March 31, 2025 and $376 for the year ended December 31, 2025.
(c) Interest expense on non-mortgage activity, which was previously classified as a component of Other expenses, was reclassified to Interest
expense. The amounts reclassified were $8 for the three months ended March 31, 2025 and $25 for the year ended December 31,
2025.
(d) Interest and amortization expense on non-funding debt, which was historically presented as a separate line item, was renamed to Interest
expense under the current presentation.
The unaudited pro forma condensed combined
financial information does not reflect any anticipated synergies or dyssynergies, operating efficiencies or cost savings that may result
from the Redfin Merger or Mr. Cooper Mergers and integration costs that may be incurred. The pro forma adjustments represent
management’s best estimates and are based upon currently available information and certain assumptions that Rocket believes are
reasonable under the circumstances. Rocket is not aware of any material transactions between Rocket and Redfin, Rocket and Mr. Cooper,
and Redfin and Mr. Cooper during the periods presented. Accordingly, adjustments to eliminate transactions between Rocket and Redfin,
between Rocket and Mr. Cooper, and between Redfin and Mr. Cooper have not been reflected in the unaudited pro forma condensed
combined financial information.
Note 2 – Up-C Collapse Adjustments
Adjustments related to
the Up-C Collapse in the accompanying unaudited pro forma condensed combined statement of income (loss) for the three months ended March 31,
2025 and the year ended December 31, 2025 are as follows:
(a) Reflects the consolidation of the operations of the Retained Entities, net of eliminations, as a result
of the Up-C Collapse Mergers.
(b) Reflects the estimated income tax provision assuming Rocket’s unaudited pro forma condensed combined
Income (loss) before income taxes had been subject to federal and state income tax as a C-corporation utilizing an estimated blended statutory
tax rate of approximately 24% for the three months ended March 31, 2025 and year ended December 31, 2025. The tax rates used
for the pro forma financial information were based on the blended statutory tax rate, which differed from the actual effective tax rate.
Management evaluated this difference and believes it would not have a material impact on the unaudited pro forma condensed combined
financial information.
(c) Reflects the elimination of the allocation of income (loss) to the non-controlling interest holders on
the pro forma statement of income (loss) for the three months ended March 31, 2025 and year ended December 31, 2025, as a result
of the transfer of 1,848,879,455 shares of Class D common stock and Holdings LLC Units in exchange for an equivalent number of shares
of Class L common stock.
Note 3 – Redfin Reclassification
Adjustments
During the preparation
of the unaudited pro forma condensed combined financial information, Rocket’s management performed an analysis of Redfin’s
financial information to identify differences in financial statement presentation as compared to the presentation of Rocket. Certain reclassification
adjustments have been made to conform Redfin’s historical financial statement presentation to Rocket’s financial statement
presentation.
8
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
A. Refer to the table below for a summary of adjustments made to present Redfin’s consolidated statement of loss for the three
months ended March 31, 2025 to conform with that of Rocket’s:
Redfin
Historical Statement of Loss Line Items
Redfin Historical
for the Three
Months Ended
March 31, 2025
Reclassification
Rocket
Historical Statement of Income (Loss) Line Items(1)
Reclassification
Redfin
Reclassified for
the Three
Months Ended
March 31, 2025
Revenue
221
(221 )
Gain on sale of loans excluding fair value of originated MSRs, net
24
Cost of revenue
150
(150 )
Revenue
24
Technology and development
40
(40 )
Fair value of originated MSRs
3
Marketing
39
(39 )
Revenue
3
General and administrative
56
(56 )
Interest income
3
Restructuring and reorganization
21
(21 )
Revenue
2
Interest income
1
(1 )
Interest income
1
Interest expense
(8 )
8
Other income
192
Income tax expense
-
-
Revenue
192
Other expense, net
(1 )
1
Salaries, commissions, and team member benefits
185
Net loss
(93 )
-
Cost of revenue
111
Technology and development
26
Marketing
5
General and administrative
29
Restructuring and reorganization
14
General and administrative expenses
60
Cost of revenue
26
Technology and development
10
Marketing
1
General and administrative
23
Marketing and advertising expenses
41
Cost of revenue
8
Marketing
33
Interest expense
10
Interest expense
8
Cost of revenue
2
Depreciation and amortization
10
Cost of revenue
2
Technology and development
4
General and administrative
4
Other expenses
9
Cost of revenue
1
Restructuring and reorganization
7
Other expense, net
1
(Provision for) benefit from income taxes
-
Net loss
(93 )
1) The indented Redfin line items listed beneath each Rocket line item represent amounts reclassified from the respective Redfin statement
of loss line items to the corresponding Rocket statement of income (loss) line items.
9
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
B. Refer to the table below for a summary of adjustments made to present Redfin’s consolidated statement of loss for the six months
ended June 30, 2025 to conform with that of Rocket’s:
Redfin Historical Statement of Loss Line Items
Redfin Historical
for the Six
Months Ended
June 30, 2025
Reclassification
Rocket Historical Statement of Income (Loss) Line Items(1)
Reclassification
Redfin
Reclassified for
the Six
Months Ended
June 30, 2025
Revenue
502
(502 )
Gain on sale of loans excluding fair value of originated MSRs, net
49
Cost of revenue
329
(329 )
Revenue
49
Technology and development
78
(78 )
Fair value of originated MSRs
7
Marketing
87
(87 )
Revenue
7
General and administrative
98
(98 )
Interest income
8
Restructuring and reorganization
28
(28 )
Revenue
5
Interest income
3
(3 )
Interest income
3
Interest expense
(16 )
16
Other income
441
Income tax expense
-
-
Revenue
441
Other expense, net
-
-
Salaries, commissions, and team member benefits
376
Net loss
(131 )
-
Cost of revenue
246
Technology and development
51
Marketing
10
General and administrative
50
Restructuring and reorganization
19
General and administrative expenses
120
Cost of revenue
58
Technology and development
19
Marketing
2
General and administrative
40
Restructuring and reorganization
1
Marketing and advertising expenses
87
Cost of revenue
12
Marketing
75
Interest expense
21
Interest expense
16
Cost of revenue
5
Depreciation and amortization
20
Cost of revenue
5
Technology and development
8
General and administrative
7
Other expenses
12
Cost of revenue
3
General and administrative
1
Restructuring and reorganization
8
(Provision for) benefit from income taxes
-
Net loss
(131 )
1) The indented Redfin line items listed beneath each Rocket line item represent amounts reclassified from the respective Redfin statement
of loss line items to the corresponding Rocket statement of income (loss) line items.
10
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Note 4 – Redfin Merger Adjustments
The following pro forma
adjustments have been reflected in the Redfin Transaction Accounting Adjustments column in the accompanying unaudited pro forma condensed
combined statements of income (loss).
a) Reflects the adjustment to Salaries, commissions and team member benefits with respect to net stock-based
compensation expense for Rocket replacement equity awards. The pro forma impacts reflected in Salaries, commissions and team member benefits
are shown in the table below:
For the Three Months
Ended March 31, 2026
For the Three Months Ended March 31, 2025
For the
Year
Ended
December 31,
2025
Pro forma transaction accounting adjustments:
Removal of historical Redfin stock-based compensation expense
$
(10
)
$
(15
)
$
(65
)
Record stock-based compensation expense from replacement awards
7
21
56
Net pro forma transaction accounting adjustment to Salaries, commissions, and team member benefits
$
(3
)
$
6
$
(9
)
b) Reflects the pro forma impact to Interest expense as a result of the adjustment to the Redfin senior convertible
notes to their fair values based on a 6.0% weighted average interest rate. This adjustment also reflects the elimination of historical
interest expense incurred in connection with the Redfin term loan that was settled as a result of the change-in-control. The pro forma
impacts reflected in Interest expense are calculated in the table below:
For the Three
Months Ended
March 31, 2026
For the Three Months
Ended
March 31, 2025
For the Year
Ended
December 31, 2025
Pro forma transaction accounting adjustments:
Removal of historical interest expense
$
-
$
(8
)
$
(33
)
Pro forma interest expense
-
9
32
Net pro forma transaction accounting adjustment to Interest expense
$
-
$
1
$
(1
)
c) Represents the pro forma impact to Depreciation and amortization as a result of the adjustment to intangible
assets, which reflects the elimination of historical Redfin amortization and the recognition of amortization on the fair value of the
acquired intangible assets. This adjustment also reflects the elimination of amortization related to capitalized costs that Redfin had
previously recharacterized from intangible assets to other assets related to the Zillow partnership announced in February 2025. The
pro forma impacts reflected in Depreciation and amortization are shown in the table below:
For the Three
Months Ended
March 31, 2026
For the Three Months
Ended
March 31, 2025
For the Year
Ended
December 31, 2025
Pro forma transaction accounting adjustments:
Removal of historical Redfin amortization of intangible assets and contract asset(1)
$
-
$
(5
)
$
(107
)
Amortization of intangible assets
-
49
195
Net pro forma transaction accounting adjustment to Depreciation and amortization
$
-
$
44
$
88
1) In March 2025, Redfin had a recharacterization of intangibles
assets on its consolidated balance sheet to contract asset as part of the Zillow partnership agreement entered into in February 2025.
d) The estimated income tax impact on Redfin’s Income (loss) before income taxes, inclusive of the
pro forma adjustments, utilizing an estimated blended statutory tax rate of approximately 24% for the three months ended March 31,
2026, three months ended March 31, 2025, and year ended December 31, 2025, as a result of the release of certain valuation allowance
amounts in the Redfin Merger. The tax rates used for the pro forma financial information were based on the blended statutory tax rate,
which differed from the actual effective tax rate. Management evaluated this difference and believes it would not have a material impact
on the unaudited pro forma condensed combined financial information.
11
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Note 5 – Mr. Cooper Reclassification
Adjustments
During the preparation
of the unaudited pro forma condensed combined financial information, Rocket’s management performed an analysis of Mr. Cooper’s
financial information to identify differences in financial statement presentation as compared to the presentation of Rocket. Certain reclassification
adjustments have been made to conform Mr. Cooper’s historical financial statement presentation to Rocket’s financial
statement presentation.
A. Refer to the table below for a summary of adjustments made to present Mr. Cooper’s consolidated
statement of income (loss) for the three months ended March 31, 2025 to conform with that of Rocket’s:
Mr. Cooper Historical
Statement of Operations
Line Items
Mr. Cooper
Historical
for the Three
Months Ended
March 31, 2025
Reclassification
Rocket Historical
Statement of Income
(Loss) Line Items (1)
Reclassification
Mr. Cooper
Reclassified
for the Three
Months Ended
March 31, 2025
Service related, net
440
(440 )
Gain on sale of loans excluding fair value of originated MSRs, net
(17 )
Net gain on mortgage loans held for sale
120
(120 )
Service related, net
27
Salaries, wages and benefits
193
(193 )
Net gain on mortgage loans held for sale
(44 )
General and administrative
237
(237 )
Fair value of originated MSRs
164
Interest income
189
(189 )
Net gain on mortgage loans held for sale
164
Interest expense
(213 )
213
Servicing fee income
688
Other income (expense), net
(11 )
11
Service related, net
688
Income tax expense
7
(7 )
Change in fair value of MSRs, net
(295 )
Net income
88
-
Service related, net
(295 )
Interest income
197
Interest income
197
Other income
21
Service related, net
20
Other income, net
1
Salaries, commissions and team member benefits
201
Salaries, wages and benefits
193
General and administrative
8
General and administrative expenses
131
Interest expense
12
General and administrative
119
Marketing and advertising expenses
11
General and administrative
11
Interest expense(2)
204
Interest expense
196
Interest income
8
Depreciation and amortization
18
General and administrative
18
Other expenses
98
General and administrative
81
Interest income
5
Other income, net
12
(Provision for) benefit from income taxes
(7 )
Net income
88
1) The indented Mr. Cooper line items listed beneath each Rocket line item represent amounts reclassified from the respective Mr. Cooper
statement of operations line items to the corresponding Rocket statement of income (loss) line items.
12
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
B. Refer to the table below for a summary of adjustments made to present Mr. Cooper’s consolidated
statement of income (loss) for the nine months ended September 30, 2025 to conform with that of Rocket’s:
Mr. Cooper Historical
Statement of Operations
Line Items
Mr. Cooper
Historical
for the Nine
Months Ended
September 30,
2025
Reclassification
Rocket Historical
Statement of Income
(Loss) Line Items (1)
Reclassification
Mr. Cooper
Reclassified for
the Nine
Months Ended
September 30,
2025
Service related, net
1,295
(1,295 )
Gain on sale of loans excluding fair value of originated MSRs, net
(63 )
Net gain on mortgage loans held for sale
440
(440 )
Service related, net
92
Salaries, wages and benefits
584
(584 )
Net gain on mortgage loans held for sale
(155 )
General and administrative
518
(518 )
Fair value of originated MSRs
595
Interest income
638
(638 )
Net gain on mortgage loans held for sale
595
Interest expense
(643 )
643
Servicing fee income
2,031
Other income (expense), net
(14 )
14
Service related, net
2,031
Income tax expense
148
-
Change in fair value of MSRs, net
(895 )
Net income
466
-
Service related, net
(895 )
Interest income
662
Interest income
662
Other income
68
Service related, net
67
Other income (expense), net
1
Salaries, commissions and team member benefits
620
Salaries, wages and benefits
583
General and administrative
37
General and administrative expenses
361
General and administrative
325
Interest expense
35
Salaries, wages and benefits
1
Marketing and advertising expenses
35
General and administrative
35
Interest expense
606
Interest expense(2)
582
Interest income
24
Depreciation and amortization
40
General and administrative
40
Other expenses
122
General and administrative
81
Interest expense
26
Other income (expense), net
15
(Provision for) benefit from income taxes
(148 )
Net income
466
1) The indented Mr. Cooper line items listed beneath each Rocket line item represent amounts reclassified from the respective Mr. Cooper
statement of operations line items to the corresponding Rocket statement of income (loss) line items.
13
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Note 6 – Mr. Cooper Mergers
Adjustments
The following pro forma
adjustments have been reflected in the Mr. Cooper Transaction Accounting Adjustments column in the accompanying unaudited pro forma
condensed combined statement of income (loss).
a) Reflects the adjustment to Salaries, commissions and team member benefits with respect to the net stock-based
compensation expense for Rocket replacement equity awards. The pro forma impacts reflected in Salaries, commissions and team member benefits
are shown in the table below:
For the Three
Months Ended
March 31, 2026
For the Three
Months Ended
March 31, 2025
For the
Year Ended
December 31, 2025
Pro forma transaction accounting adjustments:
Removal of historical Mr. Cooper stock-based compensation expense
$ (24 )
$ (14 )
$ (150 )
Record stock-based compensation expense from replacement awards
7
113
152
Net pro forma transaction accounting adjustment to Salaries, commissions, and team member benefits
$ (17 )
$ 99
$ 2
b) Reflects the pro forma impact to Interest expense as a result of the elimination of historical interest
expense attributed to the Mr. Cooper Notes that were settled in connection with the Mr. Cooper Mergers, and the amortization
of the fair value adjustment on the assumed and exchanged Mr. Cooper Notes. The pro forma impacts reflected in Interest expense are
shown in the table below:
For the Three
Months Ended
March 31, 2026
For the Three
Months Ended
March 31, 2025
For the
Year Ended
December 31, 2025
Pro forma transaction accounting adjustments:
Removal of historical interest expense on settled Mr. Cooper Notes
$ -
$ (79 )
$ (238 )
Removal of historical amortization fair value adjustment on assumed and exchanged Mr. Cooper Notes
-
-
3
Amortization of fair value adjustment on assumed and exchanged Mr. Cooper Notes
-
(3 )
(11 )
Net pro forma transaction accounting adjustment to Interest expense
$ -
$ (82 )
$ (246 )
c) Represents the pro forma impact to Depreciation and amortization as a result of the adjustment to intangible assets, which reflects
the elimination of historical Mr. Cooper amortization and the recognition of amortization on the fair value of the acquired intangible
assets. The pro forma impacts reflected in Depreciation and amortization are shown in the table below:
For the Three
Months Ended
March 31, 2026
For the Three
Months Ended
March 31, 2025
For the
Year Ended
December 31, 2025
Pro forma transaction accounting adjustments:
Removal of historical Mr. Cooper amortization of intangible assets
$ -
$ (10 )
$ (101 )
Amortization of intangible assets
-
76
264
Net pro forma transaction accounting adjustment to Depreciation and amortization
$ -
$ 66
$ 163
d) The estimated income tax impact on Mr. Cooper's Income (loss) before income taxes, inclusive of the
pro forma adjustments, utilizing an estimated blended statutory tax rate of approximately 24% for the three months ended March 31,
2026, three months ended March 31, 2025, and year ended December 31, 2025. The tax rates used for the pro forma financial information
were based on the blended statutory tax rate, which differed from the actual effective tax rate. Management evaluated this difference
and believes it would not have a material impact on the unaudited pro forma condensed combined financial information.
14
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Note 7 – Mr. Cooper Financing
Adjustments
The following pro forma
adjustments have been reflected in the Mr. Cooper Financing Adjustments column in the accompanying unaudited pro forma condensed
combined statement of income (loss).
a) Reflects the pro forma impact for interest expense and amortization of deferred financing costs of the
6.125% Senior Notes due 2030 and the 6.375% Senior Notes due 2033 issued by Rocket and the assumed and exchanged Mr. Cooper Notes
in Interest expense of $96, and $384 for the three months ended March 31, 2025, and the year ended December 31, 2025, respectively.
b) Reflects the adjustment to Interest expense for the elimination of the historical interest expense attributed to MSR facilities paid
down with the proceeds of the Senior Notes due 2030 and 2033 of $17 and $55 for the three months ended March 31, 2025 and the year
ended December 31, 2025, respectively.
c) Reflects the adjustment to Interest expense for the elimination of the historical interest expense and amortization attributed to
the 6.125% Senior Notes due 2030 and the 6.375% Senior Notes due 2033 of $168 for the year ended December 31, 2025.
d) The estimated income tax impact on the financing pro forma adjustments, utilizing an estimated blended statutory tax rate of approximately
24% for the three months ended March 31, 2025, and the year ended December 31, 2025. The tax rates used for the pro forma financial
information were based on the blended statutory tax rate, which differed from the actual effective tax rate. Management evaluated this
difference and believes it would not have a material impact on the unaudited pro forma condensed combined financial information.
15
Rocket
Companies, Inc.
Notes
to the Unaudited Pro Forma Condensed Combined Financial Information
($ In
Millions, Except Per Share Amounts or Unless Otherwise Noted)
Note 8 – Earnings Per Share
The pro forma basic and diluted weighted average
shares outstanding are as follows:
(in 000's)
For the Three
Months Ended
March 31, 2026
For the Three
Months Ended
March 31, 2025
For the
Year Ended
December 31, 2025
Numerator
Pro forma net income (loss)
$ 319
$ (328 )
$ 75
Special dividend on common stock
-
-
(120 )
Dividend equivalents on unvested Rocket share-based awards
-
-
(27 )
Pro forma net income attributable to common shareholders
$ 319
$ (328 )
$ (72 )
Denominator(1)
Historical Rocket weighted average shares outstanding-basic
2,828,455,368
147,717,296
1,322,362,708
Assumed pro forma conversion of Class D shares
-
1,848,879,483
911,776,183
Shares of Class A common stock issued to Redfin stockholders (2)
-
103,391,679
51,695,840
Shares of Class A common stock issued to Mr. Cooper stockholders (3)
-
705,205,413
528,904,060
Pro Forma Weighted average shares of common stock outstanding - basic
2,828,455,368
2,805,193,871
2,814,738,791
Rocket weighted average shares outstanding-diluted
2,828,455,368
147,717,296
1,322,362,708
Assumed pro forma conversion of Class D shares
-
1,848,879,483
911,776,183
Rocket dilutive share-based awards
18,519,374
5,339,600
-
Shares of Class A common stock issued to Redfin stockholders (2)
-
103,391,679
51,695,840
Shares of Class A common stock to Mr. Cooper stockholders (3)
-
705,205,413
528,904,060
Pro Forma Weighted average shares of common stock outstanding - diluted
2,846,974,742
2,810,533,471
2,814,738,791
Pro forma net income per share of common stock outstanding - basic
$ 0.11
$ (0.12 )
$ (0.03 )
Pro forma net income per share of common stock outstanding - diluted
$ 0.11
$ (0.12 )
$ (0.03 )
(1) Class A common stock and Class L common stock are presented as a single class of common stock for calculating pro forma
EPS as both the Class A common stock and Class L common stock share equally in dividends and residual net assets on a per share
basis.
(2) Shares issued in connection with the Redfin Merger have been adjusted to give pro forma effect as if the transaction had occurred
on January 1, 2025.
(3) Shares issued in connection with the Mr. Cooper Mergers have been adjusted to give pro forma effect as if the transaction had
occurred on January 1, 2025.
16
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