Rocket Pro TPO, a division of Rocket Mortgage, launched a set of new tools this week for non-delegated correspondent lenders.
Through the program, the homebuyer uses Rocket Pro TPO’s digital client portal to apply, submit documents and e-sign. Rocket then generates loan estimates, closing disclosures and final closing documents to the client through the portal. This new option is similar to the process mortgage brokers use with Rocket Pro TPO, and the lender says it can eliminate costs, streamline processes and accelerate loan purchases for the correspondent lender.
If a lender opts for the “correspondent flex” option, Rocket will still manage all aspects of underwriting the loan. However, the correspondent lender will handle the rest of the transaction, from application to closing, including generating their own disclosures and closing documents, Rocket said.
“Rocket has always supported choice for our mortgage broker partners and their clients. Now, we are providing correspondent lenders with more options while we underwrite their loans,” Austin Niemiec, Rocket Pro TPO’s executive vice president, said in a statement. “We are looking forward to providing our industry-leading technology and partner support teams so correspondent lenders can better help their clients. We will continue investing in our platform to provide partners world-class speed and certainty.”
Through the platform, Rocket’s correspondent partners receive qualified mortgage (QM) tests and visibility into loan cures. Partners also receive a dedicated support team. Rocket says it will purchase the loan from its correspondent partner within three to five days after closing, helping provide liquidity in a volatile market.
While lenders operating across all three channel have gotten rocked over the last quarter, the correspondent channel has fared better than its peers. In the second quarter, production in the correspondent channel was down just 1.8% from the prior quarter to $162 billion, according to Inside Mortgage Finance. Wholesale originations dropped 16.1% to $94.1 billion and retail fell 12.1% to roughly $394 billion.
Rocket, the largest mortgage lender in America, has been making moves to increase production in its PTO division of late. In September, it was the first lender to raise conforming loan limits to $715,000 for broker and correspondent partners. It also launched a temporary rate buydown program for homebuyers.
The Detroit-based lender is still facing major headwinds following two exceptional years, when interest rates were low and millions of borrowers refinanced. The refi volumes that enabled Rocket to significantly outpace competitors are largely gone, and the lender is losing ground as the mortgage originations leader. Rocket originated $34.5 billion in mortgages in the second quarter, just ahead of Wells Fargo‘s $34.1 billion. According to the lender’s earnings statement, $19.53 billion in loans were produced by its direct-to-consumer channel and $13.58 billion came through its TPO channel.
Rocket in the second quarter posted profits of just $60 million, down from $1 billion a quarter earlier. Executives on the earnings call said they were focused on managing costs. Origination volume in Q3 was forecast at between $23 billion and $28 billion, with gain-on-sale margins between 2.50% and 2.80%.