Digital Lending Threat Assessment: Rocket Mortgage

Rocket Mortgage’s acquisition of Redfin and Mr. Cooper positions it to achieve something no other industry player has accomplished. It is building an unparalleled end-to-end, digital-centric mortgage lending behemoth that threatens to disintermediate bank and credit union lenders at all stages of buying and owning a home. Rocket is moving aggressively to boost engagement by “buying” the attention of prospective homeowners through Redfin and capitalizing on servicing through Mr. Cooper. 

It’s a cautionary story for traditional lenders and Rocket’s rivals because buying a home begs for handholding, advice, and trust as often-inexperienced consumers dream of buying a home, explore options, tour homes, evaluate their budgets, negotiate sales, and commit to loans that can stretch for decades. No other type of industry participant engages in more than four of the six stages—and banks and credit unions typically engage only in the bidding war in the late stages, points at which many prospective borrowers have already been influenced to look elsewhere for mortgages.