Rocket Pro TPO, Rocket Mortgage's wholesale and partnership business, is running a one-month promotion in which they are waiving the $795 origination fee on mortgage applications.
The promotion will run through Aug. 18 and is “without any strings attached,” said Mike Fawaz, executive vice president of Rocket Pro TPO.
These include that the first lien loan does not have to be with Rocket and there are no contract length or business volume requirements from participating mortgage brokers.
Rocket Pro TPO recently added an automated valuation model component to its HEL product that will accommodate loan amounts up to $400,000 (Fawaz says most competitors are at $250,000).
“We've waived fees, we've been consistently pricing this product very aggressively, and we've had fast processing times — we're completing transactions within 15 days,” Fawaz said. “That's the secret sauce to helping brokers in this market.”
Fawaz said the promotion has been in the works for some time, noting that planning such an offer typically takes two to five weeks to bring to fruition.
According to Optimal Blue, the timing is consistent with recent events impacting the home equity mortgage market, including an increase in cash-out and refinance lock-in activity in June, both in interest rates and terms. According to credit availability data from the Mortgage Bankers Association, the increase in June was driven by an increase in cash-out refinance offers.
“This is a great option and the feedback from brokers is that there's a need for it in this market,” Fawaz said. “We've seen an uptick in this business over the last couple of months and our broker partners are really promoting this product.”
Cash-out refinancing, in particular, is a competing product with mortgages, which is one of the reasons the Federal Housing Finance Agency approved Freddie Mac's second-lien purchase pilot on June 21.
With home equity at or near record levels and interest rates remaining high, the market is looking for products that allow borrowers to leverage their home equity.
Asked about Freddie Mac's pilot program, Fawaz said Rocket Pro TPO has been providing mortgage loans for the past two years.
But the company believes the lower origination fees and the addition of AVMs will allow more borrowers to qualify, he said. The company noted that the AVM feature will remain in place even after this promotion ends.
The unconditional comment (a point Fawaz made multiple times during the interview) was likely aimed at rival United Wholesale Mortgage, which just announced Govy125, a refinancing product for Federal Housing Administration and Department of Veterans Affairs loans that is contingent on using the company's services.
UWM also rolled out 0% down payment loans, which are actually 3% second mortgages that must be paid back when the first mortgage is refinanced or amortized.
Rocket will monitor the market to see how the promotion garners reaction, but Fawaz said early feedback has been very positive.
“My ultimate goal is to go out to the broker community and put something out there and make it available to brokers and loan officers without having to jump through all the hoops,” Fawaz said.