Rocket adds debt ahead of Mr. Cooper, Redfin deals

Rocket Mortgage has secured a $1.15 billion revolving credit agreement with JPMorgan Chase, which can increase to $2.25 billion pending the megalender's acquisition of Mr. Cooper. 

The credit line, which matures in July 2028, is unsecured and meant for general corporate purposes, according to a Securities and Exchange Commission filing last week. Redfin, which Rocket has also agreed to acquire, could also be used as a guarantor for the $2.25 billion amount should the companies carry any obligations tied to any senior debt.

The Detroit-based industry giant in March agreed to buy Mr. Cooper for $9.4 billion, a deal which would increase Rocket's servicing portfolio to over $2 trillion. A few weeks prior, the lender said it would pay $1.75 billion for Redfin. Those deals are expected to close in the second half of this year.

Rocket's new agreement replaces a similar $1.15 billion line with JPMorgan Chase which the lender signed last year and was set to expire in 2027. According to the filing, Rocket didn't incur any termination penalties nor prepayment premiums.

Further details of the agreement, including an interest rate, will be disclosed in Rocket's first quarter earnings report Thursday, it said.

The deal contains covenants regarding minimum liquidity and specific quarterly net leverage and corporate debt ratio figures. The brief filing also describes covenants on Rocket regarding taking on additional debts or creating liens on certain assets.

Rocket has the largest coffers among industry peers, with $8.2 billion in total liquidity at the end of last year, according to its most recent earnings report. That includes $3.3 billion total in undrawn lines of credit, separate from mortgage servicing rights, cash and other monies to self-fund loan originations.

The company has also weathered headwinds in the housing market with $636 million of net income in the fourth quarter. Despite stubbornly high mortgage rates and lofty home prices, the lender generated $101.15 billion in loan volume last year.