Mortgage giant Rocket is making good on its goal of becoming a one-stop shop for homeowners with its $9.4 billion acquisition of Mr. Cooper Group COOP 15.66%increase; green up pointing triangle, the country’s largest mortgage servicer.
The combined company would service about one in every six U.S. mortgages, Rocket said when announcing the deal Monday. The acquisition would be one of the mortgage industry’s largest ever.
Rocket, the third-largest U.S. mortgage lender, has been trying to grow its market share by streamlining the home-buying process. Rocket announced a deal earlier in March to buy Redfin in an all-stock deal that valued the real-estate brokerage at $1.75 billion.
“Home search, brokerage, financing, title, closing and servicing should be seamless, but today they’re not,” said Varun Krishna, Rocket’s chief executive, on a conference call. “If we truly want to fix that, we have to own the client experience from beginning to its true end.”
Rocket’s acquisition marks the latest sign of consolidation in the mortgage business. The industry has shrunk since the pandemic-era housing boom, when ultralow mortgage rates sparked a surge of refinance and purchase activity. Now, the decline in lending is causing firms to merge to navigate this slower period.
Mortgage rates have more than doubled from just a few years ago. Mortgage originations in 2024 totaled $1.78 trillion, up 22% from 2023 but down 60% from 2021, according to the Mortgage Bankers Association.
There were 145 lenders who originated at least $2 billion in loans last year, down from 196 in 2022, said Garth Graham, a senior partner at STRATMOR Group, a mortgage advisory firm.
Housing market activity has dried up since 2021, tumbling to the lowest levels since 1995, though some prospective home buyers are starting to come back this year because they have to move.
The Mr. Cooper acquisition would help Rocket grow its share of the refinancing market, as it can offer refinancings to its servicing customers, said Bose George, an analyst at Keefe, Bruyette & Woods. “It just gives them this huge customer base,” he said.
Shares of Mr. Cooper jumped 15% to $120.50 as of midday Monday, while Rocket shares slid 9.1% to $11.85.
The transaction would immediately boost Rocket’s adjusted earnings and generate $100 million in additional pretax revenue, Rocket said.
If the deal closes as expected in the fourth quarter, it would be the second biggest ever for the mortgage industry. The only larger one was United Wholesale Mortgage’s deal to go public in 2021 through a special-purpose-acquisition company, according to Graham.
Once the transaction closes, Rocket shareholders would own about 75% of the combined company, and Mr. Cooper shareholders would own the rest.
The combined company would have a 15% market share among mortgage servicers, according to Inside Mortgage Finance, an industry research firm.
Write to Nicole Friedman at nicole.friedman@wsj.com and Dean Seal at dean.seal@wsj.com
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