“Bay
has
encouraged
us
to
start
looking
[for
a
job]
as
Rocket
is
really
only
offering
loan
officer
positions
at
this
time,”
an
employee
told

HousingWire
under
the
condition
of
anonymity
for
fear
of
affecting
job
prospects. 

“I
know
we’ve
already
had
people
leave
without
waiting
for
the
potential
severance
package.
To
be
honest,
I
would
rather
have
a
great
job
than
a
few
months’
severance.
I’m
currently
looking,
and
if
something
comes
up
that
works
for
me,
I’m
going
to
take
it
and
leave
before
the
end
comes,”
the
same
source
said.

In
a
statement
to
HousingWire,
a
Rocket
spokesperson
said
the
company
is
“excited
for
the
highly
skilled
loan
officers
at
Bay
Equity
Home
Loans”
who
will
join
the
firm
after
the
acquisition
closes.
“They
will
be
a
great
fit.”

There
was
no
mention
of
other
non-sales
employees,
and
when
asked,
the
spokesperson
said
the
firm
is
working
on
the
details
of
the
integration
plan
and
will
share
updates
as
it
makes
progress.

The
Rocket–Redfin
deal
is
expected
to
close
in
Q2
or
Q3.
Redfin
CEO

Glenn
Kelman
will
continue
to
lead
the
brokerage,
reporting
directly
to
Rocket
CEO

Varun
Krishna. 

Redfin
brings
significant
scale
to
Rocket’s
ecosystem:
50
million
monthly
visitors
on
its

home
search
platform,
1
million
active
purchase
and
rental
listings
and
more
than
2,200
real
estate
agents.
The
acquisition
is
expected
to
generate
$200
million
in
run-rate
synergies
by
2027
through
streamlining
operations
and
expanding
cross-sell
opportunities
in
mortgage,
title,
and
real
estate
services.

The
deal
also
gives
Rocket
–
which
has
historically
focused
on
call
center
and
broker-driven
origination
–
a
new
retail
arm
through
Bay
Equity.
As
of
April
22,
the
platform
had
272
sponsored
loan
officers
across
90
branches,
according
to
the

Nationwide
Multistate
Licensing
System
(NMLS).  

Industry
observers
say
that
while
Bay
Equity
could
cannibalize
Rocket’s
existing
operations,
it
adds
roughly
$4.5
billion
in
annual
originations
and
could
benefit
from
Rocket’s
technology
and
scale
to
improve
its
financial
performance.

A
troubled
journey

Seattle-based
Redfin

acquired
Bay
Equity
Home
Loans
in
January
2022
for
$135
million
to
quickly
expand
its
mortgage
offerings
without
heavily
investing
in
lending
software.
Redfin
agents
could
instantly
refer
clients
to
Bay
Equity
loan
officers
in
a
one-stop-shop
for
brokerage
and
lending. 

Founded
in
2007
and
based
in
Corte
Madera,
California,
Bay
Equity
originated
$8.5
billion
in
loans
in
2021—nearly
10
times
Redfin’s
in-house
mortgage
volume.
But
originations
dropped
to
$4.3
billion
in
2022,
$4.2
billion
in
2023,
and
saw
only
modest
recovery
in
2024,
rising
to
$4.5
billion,
according
to
filings
with
the

Securities
and
Exchange
Commission
(SEC). 

“Bay
Equity
is
small
compared
to
the
$100
billion-ish
that
Rocket
is
doing,”
said
Bose
George,
managing
director
at

Keefe,
Bruyette
&
Woods
(KBW).
“Rocket
hasn’t
said
anything
to
suggest
they
want
to
do
more
in
the
distributed
retail
arena;
I
assume
Bay
Equity
will
be
rolled
into
Rocket
Mortgage
and
continue
doing
what
it’s
doing.” 

Eric
Hagen,
a
mortgage
and
specialty
finance
analyst
at

BTIG,
added
that
Rocket
likely
wants
to
retain
as
many
loan
officers
as
possible
to
support
recapture
efforts
when
rates
drop. 

“It
would
be
inconsistent
to
complete
the


Mr.
Cooper
 transaction
and
then
lay
off
a
bunch
of
LOs,”
Hagen
said.
“That
would
be
counterintuitive
and
not
in
line
with
expectations
for
them
to
give
up
some
of
that
recapture
capability.”

Bay
Equity
has
trimmed
its
net
losses
since
Redfin
took
over—from
$30.3
million
in
2022
to
$16.4
million
in
2023,
and
$9.8
million
in
2024.
Gross
margins
rose
by
550
basis
points
last
year,
driven
by
cuts
to
staffing,
bonuses,
occupancy,
and
production
costs.

According
to
Hagen,
Bay
Equity’s
financial
performance
is
one
reason
some
investors
believe
Rocket
might
have
overpaid
for
Redfin—especially
considering
Redfin’s
net
loss
of
$164.8
million
in
2024
(up
from
$130
million
in
2023).

“But
it’s
hard
to
say
[that
they
overpaid],
because
all
of
these
businesses
rely
so
much
on
scale,
which
is
a
major
driver
of
stock
valuation.
When
it
gets
barnacled
onto
a
big
platform
like
Rocket,
the
profitability
has
more
of
an
opportunity
to
improve.” 

Will
Rocket
embrace
distributed
retail?

This
isn’t
the
first
time
Rocket
has
dabbled
with
local
LOs.
In
2023,
the
company
ramped
up
efforts
to

hire
remote
LOs
to
boost
purchase
activity,
as

HousingWire
reported.
The
move
was
later
confirmed
by
a

company
executive.

This
time,
industry
analysts
and
rival
executives
doubt
Rocket
is
planning
a
major
investment
in
distributed
retail
—even
with
the
addition
of
Bay
Equity.
Rocket
was
the
top
retail
lender
in
the
U.S.
in
2024,
with
a
$59.2
billion
production.
It
was
also
the
sixth-largest
in
third-party
origination
(TPO),
with
$36.6
billion,
according
to

Inside
Mortgage
Finance
data. 

Joe
Panebianco,
CEO
of

AnnieMac,
said
that
with
a
“good
portion”
of
Rocket’s
business
coming
from
the
TPO
channel,
there’s
a
“cannibalization
when
they
go
down”
the
distributed
retail
channel
path. 

“You
can’t
keep
a
client
from
shopping,”
Panebianco
said.
“”Assuming
that
retail
LOs
and
brokers
bump
into
each
other—how
is
Rocket
going
to
solve
that?
Is
it
first
come,
first
serve?
Is
it
a
fight
between
them?”

KBW’s
George
views
the
Redfin
deal
as
a
long-term
play,
offering
Rocket
access
to
a
massive
market—50
million
monthly
visitors.
He
added
that
the
transaction
helps
Rocket
in
the
purchase
loan
segment,
while
the

Mr.
Cooper
acquisition
bolsters
its
refinance
capabilities.

Still,
scaling
distributed
retail
takes
commitment.
“You
need
to
hire
a
lot
of
loan
officers
and
be
committed
to
that
channel,”
George
said.
“At
the
moment,
we’re
assuming
that’s
not
what
Rocket
is
planning
to
do.
But
clearly,
they’ve
got
the
resources;
if
they
decide
to
compete
in
any
channel,
they’re
going
to
be
very
effective.” 

Hagen
agrees:
“Leveraging
the
app
to
fund
mortgage
loans
is
going
to
be
the
bread
and
butter,
while
having
the
broker
channel
as
complimentary
rather
than
the
main
focus.” 

For
now,
Rocket
believes
it
has
the
right
balance
in
its
sales
force.  

“Rocket’s
mortgage
bankers
and
our
extensive
network
of
mortgage
broker
partners
are
the
perfect
combination
to
meet
our
clients’
needs
with
the
right
products
and
level
of
assistance.

This
acquisition
will
create
more
opportunities
for
everyone
in
our
ecosystem
–
whether
a
mortgage
banker
with
Rocket,
a
skilled
LO
joining
Rocket
from
Bay
Equity
or
one
of
our
valued
broker
partners,”
the
spokesperson
said.