Item 1.01 Entry into a Material Definitive Agreement.
On October 9, 2020 (the “Closing Date”), Quicken Loans, LLC (the “Company”), a
Michigan limited liability company and wholly-owned subsidiary of Rocket
Companies, Inc., as Seller, entered into a Master Repurchase Agreement (the
“Master Repurchase Agreement”) with Bank of Montreal, as Buyer (the “Buyer”).
The Master Repurchase Agreement provides for uncommitted financing of $500.0
million for the origination of GSE-eligible mortgage loans. The maturity date of
the Master Repurchase Agreement is October 9, 2021. Borrowings under the Master
Repurchase Agreement accrue interest at rates per annum calculated as the
one-month LIBOR plus an applicable margin (determined based on the type of
mortgage loans originated by each borrowing).
The Master Repurchase Agreement contains certain customary events of default,
including in the event of a change of control, and certain covenants and
restrictions that, among other things, require the Company to deliver specified
financial reports; and cure any margin deficit; as well as limit the Company’s
ability to pay dividends on or make distributions in respect of its capital
stock if an event of default has occurred and is continuing; consolidate, merge,
sell, or otherwise dispose of all or substantially all of its assets; and enter
into certain transactions with its affiliates. The Company is also subject to
certain financial maintenance covenants under the Master Repurchase Agreement,
which require the Company to not exceed a specified ratio of total debt to
tangible net worth at the end of each calendar month, and to maintain certain
minimum pre-tax net income, liquidity and tangible net worth requirements.
Additionally, the Master Repurchase Agreement provides that the Company is
required to cure any margin deficit at the request of the Buyer.
If the Company fails to perform its obligations under these and other covenants,
or should any event of default occur, the financing of mortgage loans under the
Master Repurchase Agreement may be terminated and any outstanding loans,
together with accrued interest, under the Master Repurchase Agreement could be
declared immediately due and payable.
The foregoing description of the Master Repurchase Agreement does not purport to
be complete and is subject to, and qualified in its entirety by reference to the
full text of the Master Repurchase Agreement, a copy of which will be filed with
the annual report on Form 10-K of Rocket Companies, Inc.
Following the execution of the Master Repurchase Agreement, as of October 9,
2020, the total funding capacity of the Company, including pursuant to all
master repurchase agreements, early funding facilities, unsecured lines of
credit, MSR lines of credit and early buy out facilities, was $27.75 billion.
This figure compares with $22.28 billion and $19.13 billion as of June 30, 2020
and December 31, 2019, respectively.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 1.01 above is hereby incorporated in this Item
2.03 by reference.
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