Rocket Co, formerly known as Rocket Mortgage, just posted a staggering $481 million net loss for Q3 2024. This is a direct result of the dramatic drop in mortgage servicing rights (MSRs)—to the tune of $878.3 million. It’s a stark reminder of what happens when companies aren’t properly hedged as interest rates plummet.
The numbers tell a clear story. Rocket’s total revenue for the quarter came in at $647 million, a sharp decline from previous periods. The company’s profitability was crushed, and it shows how vulnerable servicing assets can be to rate fluctuations.
This is what happens to the servicing asset when rates drop (if you aren't properly hedged)
If rates stay here they will have a better quarter in Q4 which will be muted by low origination volume
Higher delinquency will also bring earnings down…and it's a'rising pic.twitter.com/haDemscpKC
— Melody Wright (@m3_melody) November 13, 2024
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