Quicken Loans, best known for its Rocket Mortgage, overtook longtime leader Wells Fargo to become the largest retail mortgage lender in the fourth quarter.
The privately held Detroit company said it originated $25 billion in direct-to-consumer home loans. That compares to $23 billion for Wells, $13 billion for Bank of America and $11 billion for Chase, according to company filings.
Wells was still bigger than Quicken in the fourth quarter if you include mortgages Wells purchased from other lenders shortly after they were originated. Including these so-called correspondent loans, its total production volume was $53 billion for the fourth quarter, Wells said in an email. “Customers benefit from a healthy and competitive marketplace for home financing,” it added.
Quicken is retail only; it does not purchase correspondent loans or make loans through independent brokers.
Including correspondent loans inflates a lender’s volume. It results in double counting because they are reported by the lender that originated the loan and the one that purchased the loan. But the industry has always reported volume with and without “wholesale” loans made by independent brokers and correspondent banks, said Guy Cecala, publisher of Inside Mortgage Finance, which publishes industry statistics.
Overtaking Wells on the retail side is still an accomplishment for Quicken, Cecala said.
Wells has been the nation’s largest mortgage lender since before the financial crisis. The last company to edge out Wells Fargo was Countrywide Financial in 2004.
Cecala said it will be interesting to see how long Quicken can stay on top. “They are primarily a refi lender,” he said, “which they hate to acknowledge. The recent rise in (mortgage) rates is going to put the brakes on the refi business.” Refinance loans remained strong last year because rates stayed lower than expected.
Quicken does not disclose its ratio of purchase to refinance mortgages but “we have a healthy mix of both,” its chief executive, Jay Farner, said. “The purchase business for us is very robust. We would be one of the largest lenders in the country if you look only at our purchase business.”
Cecala said Quicken ranked ninth in home-purchase mortgages in the first nine months of last year.
Quicken is a non-bank lender. It does not take in deposits. It uses its own resources to make loans, then quickly sells them to get money to make more loans. It was owned by Intuit for about 2½ years but was repurchased by its founder, Dan Gilbert, and a small group of investors in August 2002 and has been privately held since. It’s no longer affiliated with Intuit or with Quicken software, which Intuit sold in 2016.
The company has no brick-and-mortar stores; it makes loans over the phone and, more recently, online.
It created a stir two years ago when it advertised its Rocket Mortgage during the Super Bowl with the tagline, “Push Button, Get Mortgage.” Getting a mortgage on a mobile phone is fairly common now, but at that time it conjured up memories of the subprime crisis.
Yet Quicken never made subprime loans. “They were one of the few lenders that came through the financial crisis unscathed,” Cecala said. “Going in, they were largely a small lender” that sold loans to Fannie Mae and Freddie Mac and other federal guarantee agencies. After the crisis, non-agency lending dried up, which put Quicken in a good position to grow.
After a one-year hiatus, Quicken is returning to the Super Bowl this Sunday but won’t spill the beans about its new ad.
Farner, who was Quicken’s chief marketing officer two years ago, said Rocket Mortgage has expanded “our reach into first-time buyers and Millennials.”
It also epitomizes how lenders are competing for borrowers today: not on rates but on technology and service.
“Since the financial crisis, no one wants to compete on rates. In fact, very few are even competing on underwriting” requirements, such as down payments and credit scores, Cecala said. “You lose money” competing on rates and underwriting, he said.
Farner said, “Our rates are very competitive,” but “that’s not why consumers go to mortgage companies. When you ask someone why they liked (a lender), very rarely do they say the interest rates. They say the service provided.”
Maybe that’s because they’re not getting a chance to shop on the basis of rates.
Kathleen Pender is a San Francisco Chronicle columnist. Email: [email protected] Twitter: @kathpender