Rocket Companies, Inc.RKT
Rocket Companies, Inc. Commitments Disclosure
Commitments and Contingencies
Interest Rate Lock Commitments
IRLCs are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each client’s creditworthiness on a case-by-case basis.
The number of days from the date of the IRLC to expiration of fixed and variable rate lock commitments outstanding at December 31, 2025 and 2024 was 40 days, on average.
The UPB of IRLCs was as follows:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||
| Fixed Rate | Variable Rate | Fixed Rate | Variable Rate | |||||||||||||||||
| IRLCs | $ | 12,331 | $ | 1,066 | $ | 6,562 | $ | 393 | ||||||||||||
Commitments to Sell Mortgage Loans
In the ordinary course of business, the Company enters into contracts to sell existing MLHFS into the secondary market at specified future dates. In the event that a forward commitment is not filled and there has been an unfavorable market shift from the date of commitment to the date of settlement, the Company is contractually obligated to pay a pair-off fee on the undelivered balance. The fair value of MLHFS commitments to sell existing loans as of December 31, 2025 and 2024 was $53 and $1, respectively.
Investor Reserves
The following presents the activity in the investor reserves:
Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance at beginning of period | $ | 100 | $ | 92 | |||||||
| Acquired in business combination | 44 | — | |||||||||
| Provision for investor reserves | 11 | 36 | |||||||||
| Realized losses | (26) | (28) | |||||||||
| Balance at end of period | $ | 129 | $ | 100 | |||||||
The maximum exposure under the Company’s representations and warranties would be the outstanding principal balance and any premium received on all loans ever sold by the Company, less (i) loans that have already been paid in full by the mortgagee, (ii) loans that have defaulted without a breach of representations and warranties, (iii) loans that have been indemnified via settlement or make-whole, or (iv) loans that have been repurchased. Additionally, the Company may receive relief of certain representation and warranty obligations on loans sold to Fannie Mae or Freddie Mac on or after January 1, 2013 if Fannie Mae or Freddie Mac satisfactorily concludes a quality control loan file review or if the borrower meets certain acceptable payment history requirements within 12 or 36 months after the loan is sold to Fannie Mae or Freddie Mac.
Purchase Commitments
Future purchase commitments include various non-cancelable agreements primarily related to our apps and websites, cloud computing services, network infrastructure for data operations and certain marketing arrangements. As of December 31, 2025, future purchase commitments primarily span a four year period, from 2027 through 2030, and aggregate to $914 in total.
Tax Receivable Agreement
As indicated in Note 12, Income Taxes, the Company is party to an amended Tax Receivable Agreement.
Legal
Rocket Companies and its subsidiaries engage in, among other things, mortgage origination and servicing, title and settlement services, and other financial technology services and products. The Company operates in highly regulated industries and are routinely subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of business, including inquiries, complaints, subpoenas, audits, examinations, investigations and potential enforcement actions from regulatory agencies and state attorneys general; state and federal lawsuits and putative collective and class actions; arbitrations; and other litigation. Periodically, we assess our potential liabilities and contingencies in connection with outstanding legal and administrative proceedings utilizing the latest information available. While it is not possible to predict the outcome of any of these matters, based on our assessment of the facts and circumstances, we do not currently believe any of these matters, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows. However, actual outcomes may differ from those expected and could have a material effect on our financial position, results of operations or cash flows in a future period. The company accrues for losses when they are probable to occur and such losses are reasonably estimable. Legal costs are expensed as they are incurred.
Rocket Close, formerly known as Title Source, Inc., is currently involved in civil litigation related to a business dispute between Rocket Close and HouseCanary, Inc. (“HouseCanary”) in Bexar County, Texas. The lawsuit was filed on April 12, 2016, by Rocket Close and included claims against HouseCanary for breach of contract and fraudulent inducement stemming from a contract between Rocket Close and HouseCanary whereby HouseCanary was obligated to provide Rocket Close with appraisal and valuation software and services. HouseCanary filed counterclaims against Rocket Close for, among other things, breach of contract, fraud and misappropriation of trade secrets. On March 14, 2018, following trial of the claims in the lawsuit, a jury awarded damages in favor of HouseCanary and rejected Rocket Close's claims against HouseCanary. The district court entered judgment for HouseCanary on its misappropriation and fraud claims. On appeal, the Fourth Court of Appeals in San Antonio affirmed judgment of no-cause on Rocket Close’s claim for breach of contract, but reversed judgment on HouseCanary’s misappropriation of trade secrets and fraud claims and remanded the case for a new trial on HouseCanary’s claims. In November 2020, HouseCanary filed a petition requesting the Supreme Court of Texas review the court of appeals’ decision. The Supreme Court denied the petition on June 17, 2022, and the case was remanded to district court for a new trial. The outcome of this matter remains uncertain, and the ultimate resolution of the litigation may be several years in the future. At the new trial, Rocket Close intends to present new evidence, including evidence revealed by whistleblowers who came forward after the conclusion of the original trial and to vigorously defend this case and any subsequent actions.
Rocket Mortgage and Rocket Homes are defending themselves against a tag-along lawsuit filed by HouseCanary that also includes claims for misappropriation of trade secrets. That case is in its early stages and is stayed pending a resolution of Rocket Mortgage and Rocket Homes’ dispositive motion.
Since October 2023, a number of class action lawsuits have been filed on behalf of putative classes of home buyers and home sellers against the NAR, local real estate associations, MLS, and various residential real estate brokerages. Some of those lawsuits named Redfin Corp. as a defendant, including: Don Gibson, et al. v. NAR, et al., in the U.S. District Court for the Western District of Missouri; Mya Batton et al. v. Compass, Inc., et al., in the U.S. District Court for the Northern District of Illinois; Daniel Umpa v. NAR, et al., in the U.S. District Court for the Western District of Missouri; Nathaniel Whaley v. NAR, in the U.S. District Court for the District of Nevada; Angela Boykin v. NAR, et al., in the U.S. District Court for the District of Nevada; and Rajninder Jutla, et al. v. Redfin Corporation, et al., in the U.S. District Court for the Western District of Washington. These lawsuits allege a conspiracy to fix prices stemming from an NAR rule alleged to require brokers to make an offer of buyer broker compensation when listing a property on a multiple listing service. The plaintiffs generally seek injunctive relief, unspecified damages under federal antitrust law, and unspecified damages under various state laws. The Judicial Panel on Multidistrict Litigation denied a motion to consolidate some of these cases as In re Real Estate Commission Antitrust Litigation, MDL No. 3100 on April 12, 2024. On May 3, 2024, Redfin entered into a settlement term sheet (the “Proposed Settlement”) and on June 26, 2024, executed a settlement agreement (the “Settlement Agreement”) to resolve, on a nationwide basis, all claims asserted in the Gibson and the Umpa actions. The Settlement Agreement resolves all claims against Redfin in these two actions and similar claims on behalf of home sellers on a nationwide basis. Under the Settlement Agreement, Redfin paid $9.25 into a qualified settlement fund on August 26, 2024, and agreed to implement or continue certain practices. On July 15, 2024, the U.S. District Court for the Western District of Missouri granted preliminary approval of the Settlement Agreement and the court granted final approval of the Settlement Agreement on November 4, 2024. On December 3, 2024, a member of the Proposed settlement class appealed the court’s order granting final approval of the Settlement Agreement. On December 16, 2024, additional members of the settlement class separately appealed. The appeals are currently pending before the U.S. Court of Appeals for the Eighth Circuit.
On November 3, 2023, a putative class action lawsuit was filed against Mr. Cooper Group, Inc. in the U.S. District Court for the Northern District of Texas, on behalf of a class of persons purportedly impacted by a cyber attack against Mr. Cooper that occurred on October 31, 2023. The Company is vigorously defending this case. The complaint, filed by plaintiff Jennifer Cabezas, alleged that Mr. Cooper did not employ reasonable and adequate security measures to protect certain customer personal information accessed by the cyber attackers. Between November 2023 and February 7, 2024, 26 additional putative class actions were filed against Mr. Cooper and related entities asserting substantially similar claims and allegations; the cases were subsequently consolidated into a single class action. On July 15, 2024, 22 plaintiffs filed a consolidated complaint on behalf of themselves and an alleged putative nationwide class of “All individuals residing in the United States whose PII was accessed and/or acquired as a result of the Data Breach announced by Mr. Cooper in or around November 2023,” as well as 15 putative state subclasses. Plaintiffs asserted claims for breach of express contract, breach of implied contract, negligence, negligence per se, unjust enrichment, invasion of privacy, breach of confidence, and 19 state law claims. The consolidated complaint seeks damages, injunctive relief, disgorgement and restitution, and an award of costs, attorney fees and expenses, among other relief. On September 13, 2024, Mr. Cooper filed a motion to dismiss the consolidated complaint. On July 7, 2025, the Court granted the motion to dismiss as to the breach of express contract, unjust enrichment, invasion of privacy, and breach of confidence claims, denied the motion as to the breach of implied contract and negligence claims, and deferred ruling on the negligence per se and individual state law claims. The Company is also in discussions with various state regulators and attorneys general regarding ongoing investigations into the October 2023 cyber attack against Mr. Cooper.
As of December 31, 2025 and 2024, we have recorded reserves in accordance with ASC 450 related to potential damages in connection with legal and administrative proceedings of $74 and $5, respectively. For matters for which a loss is reasonably possible in future periods, an estimate may not be possible due to the early stage of the proceedings, the significant factual issues to be resolved, and/or the lack of specific damages requests. Generally, the less progress that has been made in the proceedings or the broader the range of potential results, the harder it is for the Company to estimate losses or ranges of losses that are reasonably possible the Company could incur. The ultimate outcome of these or other actions or proceedings, including any monetary awards against Rocket Companies or one or more of its subsidiaries, is uncertain and there can be no assurance as to the amount of any such potential awards. Rocket Companies and its subsidiaries will incur defense costs and other expenses in connection with these proceedings. Plus, if a judgment for money that exceeds specified thresholds is rendered against Rocket Companies or any of its subsidiaries and it or they fail to timely pay, discharge, bond or obtain a stay of execution of such judgment, it is possible that one or more of the companies could be deemed in default of loan funding facilities and other agreements governing indebtedness. If the final resolution in one or more of these proceedings is unfavorable, it could have a material adverse effect on the business, liquidity, financial condition, cash flows, and results of operations of Rocket Companies.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 24, 2021 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.