Summary
Rocket Companies, Inc. (RKT) has entered into a Master Repurchase Agreement with Barclays Bank PLC, through its wholly-owned subsidiary Quicken Loans, LLC. This agreement provides a significant financing facility to support the origination of conventional and GSE-eligible mortgage loans. The facility includes both committed and uncommitted tranches, totaling up to $1.5 billion, with a maturity date of September 24, 2021. This new financing enhances RKT's overall funding capacity, which reached $27.50 billion as of September 25, 2020, an increase from prior periods, demonstrating the company's ability to secure substantial resources for its mortgage origination business.
Key Highlights
- 1Quicken Loans, LLC, a subsidiary of RKT, entered into a Master Repurchase Agreement with Barclays Bank PLC.
- 2The agreement provides up to $750.0 million in committed financing and $750.0 million in uncommitted financing for mortgage loan origination.
- 3The total financing capacity under this agreement is $1.5 billion.
- 4The Master Repurchase Agreement has a maturity date of September 24, 2021.
- 5Borrowings under the agreement will accrue interest based on one-month LIBOR plus an applicable margin.
- 6The agreement includes standard covenants, events of default (including change of control), and financial maintenance covenants.
- 7Following this agreement, RKT's total funding capacity across all facilities reached $27.50 billion as of September 25, 2020, up from $22.28 billion on June 30, 2020, and $19.13 billion on December 31, 2019.
Frequently Asked Questions
The Master Repurchase Agreement is designed to provide financing for Quicken Loans, LLC, a subsidiary of Rocket Companies, Inc., to originate conventional and GSE-eligible mortgage loans. It effectively secures a funding source for the company's core business operations.
The agreement provides for a total financing capacity of $1.5 billion, comprising $750.0 million in committed financing and $750.0 million in uncommitted financing.
The agreement includes customary covenants and restrictions. These involve delivering financial reports, curing margin deficits, limitations on dividend payments during default, restrictions on asset disposals, and prohibitions on certain affiliate transactions. Additionally, the company must adhere to financial maintenance covenants related to debt-to-tangible net worth ratios, pre-tax net income, liquidity, and tangible net worth.
This agreement contributes to a significant increase in Rocket Companies' total funding capacity. As of September 25, 2020, the company's total funding capacity across all its agreements and facilities reached $27.50 billion, a notable rise from previous periods. This demonstrates a strengthening of its financial resources to support loan origination.