Mortgage lender Rocket Cos. has agreed to acquire mortgage servicer Mr. Cooper Group in another multibillion-dollar deal just three weeks after Rocket said it would buy the online brokerage Redfin.
The all-stock transaction of $9.4 billion represents a 35% premium over Mr. Cooper’s average stock price for the past 30 days ended Friday. Rocket said its latest move makes it the country’s largest combined residential lender and loan servicer.
Detroit-based Rocket's existing 3 million client base will increase to 10 million with this acquisition, the company said Monday. It’s the latest step in Rocket’s strategy to fold homebuying services into one platform led by CEO Varun Krishna, who took the helm 18 months ago.
A servicer such as Mr. Cooper manages the day-to-day operations of a loan, including collecting payments.
“Home search, brokerage, financing, titles, closing and servicing should be seamless, but today, they’re not,” Krishna said Monday during a conference call about the Mr. Cooper deal. “There’s too much friction, and that causes real stress for our clients. If we truly want to fix that, we have to own the client experience from beginning to its true end.”
A combined platform will remove recurring costs associated with the different steps in homebuying, he said, which account for up to 10% of a home’s price. This includes fees with mortgage lenders, servicers, and title companies, for example.
Dallas-based Mr. Cooper has 6 million customers, according to the firm, making it the largest mortgage servicer in the country. The acquisition includes the group’s brands, online real estate auction platform Xome, special servicer Rushmore Servicing, and document processing software Pyro.
As part of the deal, Mr. Cooper's CEO, Jay Bray, will take over as president and CEO of Rocket Mortgage. Krishna will remain Rocket's CEO.
On March 10, Rocket announced its plan to acquire Redfin in an all-stock transaction for $1.75 billion. Krishna has now said its latest planned acquisitions are set to power Rocket's artificial intelligence strategy through data, helping the company develop a business that has “the ability to anticipate client needs before they voice them.”
“This combination is about data and AI,” said Krishna.
The Redfin deal is anticipated to close in the second or third quarter, and the brokerage will retain its brand. The Mr. Cooper deal is slated for a fourth quarter completion.
Mr. Cooper itself has been busy with mergers and acquisitions in recent years. In November, the company completed its deal to acquire Flagstar Bank’s mortgage servicing business for $1.3 billion. And in August 2023, Mr. Cooper closed on its acquisitions of Home Point Capital and Roosevelt Management Company.
Rocket and Mr. Cooper did not immediately respond to requests to comment.