The Federal Housing Finance Agency (FHFA) yesterday gave the nod to Fannie Mae and Freddie Mac to approve Rocket Companies’ proposed acquisition of Mr. Cooper Group.
“In keeping with its statutory responsibilities as conservator of Fannie Mae and Freddie Mac,” FHFA said it has allowed both the GSEs to approve the acquisition, which was announced in March, “subject to appropriate conditions to ensure the ongoing safety and soundness of Fannie Mae and Freddie Mac.”
FHFA said its safety and soundness staff “conducted a rigorous analysis” of the proposed merger, and the staff independently recommended that Fannie Mae and Freddie Mac give their approval for the combined mortgage seller-servicer company to do business with them.
There’s a catch, however, pertaining to the “safety and soundness guardrails” of the mortgage industry and the economy at large: the GSEs’ approval of the acquisition should be conditioned on Rocket controlling no more than one-fifth of Fannie’s and Freddie’s servicing portfolio.
Fannie Mae and Freddie Mac “should “each retain strict counterparty concentration risk limits at 20% and impose other appropriate financial and operating safeguards to protect the Enterprises and the mortgage market,” FHFA stated. “No market participant should have greater than 20% of Fannie or Freddie’s servicing market in order to ensure the safety and soundness of the mortgage market and the overall economy.”
FHFA said its decision to allow Fannie and Freddie to approve the Mr. Cooper acquisition “ensures the housing finance system can continue to develop and innovate, while Fannie Mae and Freddie Mac are able to confidently serve as an ongoing source of liquidity to the market throughout the economic cycle.”
In a statement, Rocket Companies said it is “pleased to have cleared FHFA’s review in our pending acquisition of Mr. Cooper, which we expect to close in the fourth quarter.”
“Rocket is creating the platform for affordable and sustainable homeownership,” the statement continues, “by removing inefficiencies, streamlining the experience, and enabling accessibility for all to achieve the American Dream."
