DETROIT, MI - Rocket Mortgage, LLC, a subsidiary of Rocket Companies, Inc. (NYSE:RKT), has renewed and amended its credit agreements with Citibank, N.A., enhancing its financial flexibility. The mortgage giant, currently valued at $1.79 billion, is making these moves amid challenging market conditions, with InvestingPro data showing the company is quickly burning through cash.
The amendments, effective December 10, 2024, extend the maturity dates of its Master Repurchase Agreement (MRA) and Mortgage Servicing Rights (MSR) Facility with Citibank by over a year, from November 6, 2025, to December 10, 2026.
The MRA Amendment and the related Amendment Number Ten to the Pricing Side Letter for the Master Repurchase Agreement also include certain technical changes. The MSR Facility Amendment similarly introduces technical changes and extends its expiration date to align with the MRA's new maturity.
As a result of these amendments, Rocket Companies' total funding capacity has increased to $27.0 billion, up from $24.5 billion as of September 30, 2024, and $24.3 billion at the end of the previous year. This expansion in capacity underscores the company's continued growth and the strengthening of its financial position. The company maintains strong short-term liquidity with a current ratio of 6.35, though it carries total debt of $15.3 billion.
The details of the amendments will be fully disclosed in Rocket Companies' annual report on Form 10-K for the period ending December 31, 2024. These strategic financial moves are expected to support Rocket Mortgage's operations and growth initiatives over the extended term of the agreements.
In other recent news, Rocket Companies has seen a mix of financial adjustments and legal developments. Keefe, Bruyette & Woods downgraded Rocket Cos shares to Underperform, citing concerns over the impact of current mortgage rates on the company's earnings. The firm also reduced the price target for the shares to $11.50. Meanwhile, BofA Securities upgraded the company's shares to Neutral and Piper Sandler maintained a Neutral rating but reduced its price target.
Rocket Companies reported a 32% year-over-year increase in adjusted revenue, reaching $1.323 billion in the third quarter. The company also revealed strategic plans to double its purchase market share and increase refinance market share by 2027. In addition to these financial developments, Rocket Mortgage filed a lawsuit against the US Department of Housing and Urban Development (NS:HUDC) over an appraiser independence issue.
Rocket Companies also extended its repurchase agreement with UBS AG until November 2024, increasing its total funding capacity to $27.0 billion. These recent developments are part of a broader context involving shifts in the mortgage rate landscape and the potential impact on lending institutions like Rocket Companies.
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