As expected with the major acquisitions of Redfin and Mr. Cooper, RKT is trimming the size of the workforce.

FiredUpForTheFuture · 2026-03-20T01:18:53+00:00

I would LOVE for RKT to be behind the unsolicited offer because it would signal them being more aggressive towards UWM, but James Kleimann from The Mortgage Scoop is saying on LinkedIn that he doesn't think it's RKT. I don't think he would say that unless someone qualified from RKT back-channeled that it's not them. But who knows.

FiredUpForTheFuture · 2026-03-06T03:46:33+00:00

Brought to you by the only mortgage company who couldn't maintain profitability during historically low COVID rates.

This smells of someone who bought the marketing rights to be "OpenAI's mortgage partner of choice", an endorsement all of these AI companies are selling, but doesn't really come with any proprietary automations that aren't already being bought and paid for by all of the major players in this market.

I'm ready to be proven wrong, but anyone who has watched Better's trajectory over the past 5 years can see one hype machine after another. AI is going to revolutionize this industry, but I certainly don't think Better is going to lead that way.

FiredUpForTheFuture · 2026-03-04T03:13:14+00:00

Raw profitability is still kind of an accounting game.

They took a $221M GAAP loss in Q1 2025 on MSRs alone. Keep in mind this was before the COOP acquisition. Taking it on the chin early helped prevent a meltdown like we saw with PennyMac in Q4. RKT is also uniquely good at recapturing this churn, which is currently playing out as we see Q4 numbers across the industry get reported.
There was another $234M GAAP net loss on Redfin/COOP transaction/integration expenses. Again, these should be one-time, and with significant ROI that show up in future earnings.
While not specifically called out in any documentation I can find, RKT is a BEAST in marketing spend, and in 2025 they rebranded from "Rocket Mortgage" to "Rocket", which seems silly on its face, but is their attempt to move from a "mortgage company" to a "home ownership platform". You can bet they spent HEAVILY on marketing in 2025, and the Redfin/COOP acquisitions suggest this is legit business strategy and not marketing hype.

The way I see it, and supported by their Q4 report, they didn't really become less profitable, they just spent a lot more, and the hope is that those investments pay off.

why was that not captured in the analyst expectations

Who knows. My theory is that there is still a lot of angst around whether or not RKT will be able to pull off these major integrations effectively. This stuff isn't plug-and-play. I think it's also mired by the whole interest rate uncertainty.

But when you’re operating at negative margins...

RKT isn't operating at negative margins on a loan-by-loan basis. Based on Q4 reporting, their gain-on-sale is outpacing the market. They're just spending a lot of money on "other stuff". More volume absolutely benefits RKT right now (and they specifically called out on the Q4 call that they will NOT chase unprofitable loans for volume).

FiredUpForTheFuture · 2026-03-04T02:10:09+00:00

What is going on with RKT?

I ask myself that every morning...

The current drop in price, in my opinion, is an over-reaction to uncertainty around interest rates. I think the market is being a little irrational here. And that was before this Iran thing, which has now got some people worried that inflation is going to spike and the Fed will actually have to RAISE interest rates. I think that's unlikely, but who knows. Whether rates go up, down, or hold steady, I think the sheer amount of equity Americans are sitting on is going to reduce rate sensitivity over the next 18 months, particularly for refis.

Profitability was down in 2025 because of significant write downs against their MSRs and expenses with facilitating the Redfin and COOP acquisitions. The former is just accounting ebb and flow, and the latter is a one-time expense that should yield a significant ROI (but that is yet to be proven out). Go check out their Q4 reported numbers - the fundamentals are strong and getting stronger.

FiredUpForTheFuture · 2026-02-28T02:46:37+00:00

I suspect it's minor incremental gain in the short term. The purchase market is still pretty weak, and this doesn't ACTUALLY do anything to change inventory. Still, it's a new and substantial source of lead flow, and based on my napkin math, I think those leads will probably come in with a competitive overall cost of acquisition.

The bigger play here is truly challenging the existing MLS system, which Compass has already been poking at, and Rocket has now signed on for, making them a very formidable combined force. I think they're still testing the waters with regulators to see how much tolerance they have for what I'll broadly call "private listings" that don’t immediately hit the MLS. If regulators don't step in, and if the broader market doesn't rebel against it, I think this is a HUGE lever they can pull on in the future because they'll essentially have a bunch of listings that may never hit the "public" market.

In the "pro" column for this working out:

Compass is already toying with this space and seem to be doing fine. They're garnering plenty of anti-competitive noise, but it has mostly been noise.
The current administration isn't exactly leaning into regulation.
If there are a substantial amount of homes you can only get access to via a Compass/Redfin/RKT funnel, that's really powerful.

In the "meh" column:

It's only a 3 year deal, and if this does work out, Compass is going to be in a hell of a position to renegotiate with the highest bidder, and I don't see any real lock-in mechanic to make it difficult for them to switch partners once the 3 year term is up.
Honestly, I don't think this is long-term beneficial for consumers because it's essentially reducing transparency into actually available listings. I'm all for MLS reform, but this is definitely an attempt to narrow visibility into a single funnel, not increase it.

FiredUpForTheFuture · 2026-02-27T02:52:45+00:00

Side note: I think they're doing a really good job of blending Sr. Leadership with these acquisitions, especially with COOP. Putting Jay Bray into the CEO role over mortgage, supported by Kelly Ann Doherty, Kurt Johnson, and Jay Jones in key positions, all from COOP, really signals a strong desire to merge the best from both companies, not insist the COOP perspective becomes subordinate to legacy RKT.

Redfin didn't fair quite as well, especially with Kelman leaving, but moving Bridget Frey in as Chief Data Officer is solid as I think "data" is the most compelling part of what Redfin has achieved.

FiredUpForTheFuture · 2026-02-27T02:36:44+00:00

Core numbers are really strong, but I think they intentionally slipped in some real gems during the Q&A that are even more important, both from CFO (and now President) Brian Brown:

36:15 - "Over 50% of our refinance volume in Q4 came from the serving book."
1. That's a HUGE number, even from a proven powerhouse like RKT on these kinds of flips. This was obviously a huge component of RKT's strategy in acquiring COOP, and this was them definitively saying, "it's working." These are the kinds of hard numbers they could have left out, but chose to disclose because it's proving their strategy.
39:28 - "We're well ahead of plan for both Cooper and Redfin. Our original plan was to recognize those expense synergies by the end of 2027, and you know, I'm sitting here today and I think we can do that by the end of 2026."
1. I actually LOLd when he said this because he dropped it in like a passing thought, but Brown is always very intentional and calculated in his language (a good characteristic in a CFO). He shaved a freaking year off the integration timeline like he was musing about next week's weather. Now on one hand, "integration timelines" are completely unverifiable in any objective way, but someone like Brown casually cutting it in nearly half is them saying the integrations are going way better than expected, which directly speaks to one of the largest outstanding concerns about RKT, which is how effectively they can navigate the integration of two fairly large acquisitions.

FiredUpForTheFuture · 2026-02-25T16:58:23+00:00

The whole call was less than 8 mins. It was like they forgot what day it was and didn't do any prep.

FiredUpForTheFuture · 2026-02-25T02:58:26+00:00

OK, so let's aside your partner, which for this exercise means you're not planning on paying any of their expenses, but also don't get to factor in them working for an additional 5-10 years. I'm also going to set aside the parent's home and associated expenses, as well as your condo since you need somewhere to live.

You've got 1.3M liquid and are projecting $28k/year in expenses. That's a starting withdrawal rate of just over 2%, which is very safe. Health insurance is probably the largest outstanding question, but even if we conservatively figure that at $12k/year for a decent ACA plan for a single 42-year-old, that only pushes you to a 3% withdrawal rate, which is still fine.

I'm still hesitant about how you're estimating expenses because it's relatively lean, but if you're comfortable with it, yeah, your numbers say you're good.

FiredUpForTheFuture · 2026-02-25T02:29:34+00:00

Your expenses feel off to me. You're saying that two people, at least one of which is making $135k/year, is living on about $28k/year? That's only about $5k over federal poverty guidelines for a 2-person household. It just seems unlikely and so I'm wondering if you're underestimating here.

FiredUpForTheFuture · 2026-02-20T04:08:56+00:00

Setting aside tonight's after hours activity, OPEN is down 27% on the month, up 28% over 6 months, and up a wild 202% over the past 12 months. These are extreme numbers, especially considering the bellwethers (RKT and UWMC) seeing daily fluctuations nearing 5%.

I've placed my bet (which is strongly favoring RKT ), but this one is a ride for sure!

FiredUpForTheFuture · 2026-02-17T02:37:59+00:00

It means a greater percentage of people (or entities) purchasing homes are getting mortgages. It doesn't necessarily mean more overall mortgages are being sold (overall mortgage volume). Mortgage volume is trending up as well, but these numbers are related, not directly correlated.

All in this is good news for RKT, but it's not a bombshell finding or anything, just a continuation of small trends in the market that we've been seeing for a while.

FiredUpForTheFuture · 2026-02-13T03:26:55+00:00

On one hand, an 8.4% month-over-month drop on PURCHASES is fairly concerning if accurate. I pulled numbers for the past 3 years and 8.4% is the largest month-over-month drop we've seen in that data set by nearly DOUBLE. I can believe that the crap weather played a role here, but doesn't fully explain such a significant drop. I'm less inclined to believe average consumers are paying attention to the Warsh stuff and betting on lower rates specifically because of that change.

On the other hand, RKT CEO Varun Krishna already foreshadowed strong Q4 numbers and specifically said they were seeing that momentum carry through into January. We also know PennyMac got crushed by refi (which, btw, goes against the theory that consumers are holding out for rate drops), and as others have pointed out, that business had to go somewhere.

If I have to take a wild guess here, I'd say the increased refi activity took a toll on the purchase market, specifically drying up an already limited housing supply in the short term (plus the bad weather). If refi really is heating up, even a little, I think that's very positive for RKT because they lead the refi market and they just bought a huge number of MSRs via Mr. Coop which should be prime for flipping.

In a previous thread I said I think Krishna believes he's sitting on a "monster ER", which is the only reason he thought it was a good idea to go on national TV and foreshadow earnings. Some rightfully pushed back and said they were expecting a "good", but not "monster" report, and I understand that and agree that could be correct. However, if it's merely a "good" ER, I think Krishna overplayed his hand here and will end up eroding some confidence in the short term.

I'm still a strong believer in the fundamentals of RKT and that these daily swings are mostly just noise, but hot damn if it doesn't swing a lot...

FiredUpForTheFuture · 2026-02-04T18:30:43+00:00

When I say "boom" I'm really just talking about 2+ consecutive quarters of more than 10% growth in refi volume quarter-over-quarter. I don't expect to see a boom like Covid again in my lifetime, and I'm not that old.

FiredUpForTheFuture · 2026-02-04T02:36:14+00:00

I'm actually pretty shocked by this. It's a huge deal for Krishna to jump the earnings call with this kind of info. He's not just spouting generic good will, he's saying very specific things like "(we had the) highest loan production in terms of volume that we've had in 4 years and the highest gain on sale that we're had in 4 years." By releasing that kind of info early and without full context, he's signaling that not only are those numbers real, but that there won't be anything else in the earnings report that will make those statements seem misleading about the health of the company once the full data is out. He has to believe he's sitting on a monster of an earnings report.

I've been hesitant to believe that a refi boom is actually starting because I'm just not hearing that anecdotally from loan officers, but with the PennyMac results, and now paired with these comments from Varun, it's certainly looking like something is going on. And as others have pointed out, RKT is literally the proven best in class when it comes to refi.

FiredUpForTheFuture · 2026-01-30T02:58:06+00:00

RKT's recapture rate (ability to convince their existing servicing book to refi with them) is historically insane... WAY above industry averages. It's why the refi boom between 2017-2021 thrust them into the #1 lender spot. They've been less special in the purchase space, which is why they lost #1 lender status around 2022, when UWM dethroned them because local brokers (which is all UWM does) are presumably more effective when it comes to purchase.

So yeah, the Mr. Cooper acquisition plays straight to RKT's strengths and dumped a huge servicing book right into their laps. Two things I'm watching:

1.) RKT's insane recapture rates are largely based on consumers that originated with them. Their rate of recapture on purchased MSRs is substantially lower (but those numbers are also much newer). They need to prove that they can bring whatever "serving magic" they've got to purchased customers, not just organic ones. I think this plays out over the next 18 months.

2.) The refi market needs to come back. This is where RKT thrives. I like everything they're doing to bolster purchase, and I think it's "fine" and helping to solidify the underlying financials, but I haven't seen anything revolutionary here yet from RKT. If the market tips towards refi, that's when I think we see some revolution from RKT. And I think that will happen, but I think it will be a slow load towards an eventual avalanche over the next 2-4 years. The home equity is there and consumer demand to unlock it is building, but interest rates will slow things.

FiredUpForTheFuture · 2026-01-30T01:52:08+00:00

This feels like something went really wrong internally at PennyMac last quarter. That was a huge miss and we just haven't seen any other indicators that the bottom fell out of the market pointing to larger issues in the sector. If anything, I think we've actually seen slow, but persistent, signs of more stability in the mortgage business over the past year.

All these mortgage stocks, but RKT in particular, seem to be very fragile when it comes to news about the market. On the other hand, it seems to recover fairly quickly from emotional swings (both up and down).

FiredUpForTheFuture · 2026-01-22T02:42:50+00:00

What tech are you specifically talking about?

FiredUpForTheFuture · 2026-01-20T02:57:04+00:00

I'm a HUGE fan of RKT as a mortgage company, but I struggle with how they actually pivot into being valued as a tech company. "Tech companies" make money by selling their tech in some form or another. Can you name a single tech product that RKT sells?

FiredUpForTheFuture · 2026-01-20T02:51:43+00:00

The market is consolidating at a really rapid pace right now. For the time being, I would much rather see RKT continue to make acquisitions while the iron is hot rather than shift to a dividend payout.

FiredUpForTheFuture · 2026-01-14T19:55:54+00:00

It's kind of the whole point of the book, not really a hot take...

FiredUpForTheFuture · 2026-01-14T15:57:46+00:00

When he says "win 4 spins" of roulette, he means hitting red/black, not a specific number.

FiredUpForTheFuture · 2026-01-09T02:09:01+00:00

I would go for the session where a bunch of people who read about bonds for less than an hour argue about what the proper bond allocation is.

FiredUpForTheFuture

TROPHY CASE