Rocket Companies, Inc.RKT
Rocket Companies, Inc. Fair Value Disclosure
Fair Value Measurements
Fair value is the price that would be received if an asset were sold or the price that would be paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. Required disclosures include classification of fair value measurements within a three-level hierarchy (Level 1, Level 2 and Level 3). Classification of a fair value measurement within the hierarchy is dependent on the classification and significance of the inputs used to determine the fair value measurement. Observable inputs are those that are observed, implied from, or corroborated with externally available market information. Unobservable inputs represent the Company’s estimates of market participants’ assumptions.
Fair value measurements are classified in the following manner:
Level 1—Valuation is based on quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2—Valuation is based on either observable prices for identical assets or liabilities in inactive markets, observable prices for similar assets or liabilities, or other inputs that are derived directly from, or through correlation to, observable market data at the measurement date.
Level 3—Valuation is based on the Company’s internal models using assumptions at the measurement date that a market participant would use.
In determining fair value measurement, the Company uses observable inputs whenever possible. The level of a fair value measurement within the hierarchy is dependent on the lowest level of input that has a significant impact on the measurement as a whole. If quoted market prices are available at the measurement date or are available for similar instruments, such prices are used in the measurements. If observable market data is not available at the measurement date, judgment is required to measure fair value.
The following is a description of measurement techniques for items recorded at fair value on a recurring basis. There were no material items recorded at fair value on a nonrecurring basis for the year ended December 31, 2025, except the fair value measurements determined as part of the part of the Acquisitions as discussed in Note 2, Acquisitions. There were no material items recorded at fair value on a nonrecurring basis as of December 31, 2024.
Money market funds — Money market funds are highly liquid and are valued using quoted market prices for identical assets in active markets, which are classified as Level 1.
Mortgage loans held for sale — Loans held for sale that trade in active secondary markets are valued using Level 2 measurements derived from observable market data, including: (i) securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk, and (ii) recent observable market trades from similar loans, adjusted for credit risk and other individual loan characteristics.
Loans held for sale for which there is little to no observable trading activity of similar instruments are valued using Level 3 measurements based upon internal models using assumptions at the measurement date that a market participant would use.
Derivative assets and liabilities:
IRLCs and LPCs — The fair values of IRLCs and LPCs are based on observable current market prices of securities backed by similar mortgage loan held for sale (discussed above), net of costs to close the loans, subject to adjustments for the estimated loan funding probability, or “pull-through factor” and the inherent value of servicing. Given the significant and unobservable nature of the pull-through factor and value of servicing, IRLCs and LPCs are classified as Level 3.
Forward commitments and Treasury futures — The Company's Forward commitments are valued based on quoted prices for similar assets and liabilities in an active market with inputs that are observable and are classified within Level 2 of the valuation hierarchy. The Company's Treasury futures are valued based on quoted prices for similar assets and liabilities in an active market with inputs that are observable and are classified within Level 2 of the valuation hierarchy.
MSRs — The Company estimates the fair value of its MSRs on a recurring basis using a process that combines the use of a discounted cash flow model and analysis of current market data to arrive at an estimate of fair value. The discounted cash flow model includes estimates of prepayment speeds, OAS, cost to service, delinquencies, ancillary revenues, recapture rates and other assumptions. The key assumptions to determine fair value include prepayment speeds, OAS and cost to service. MSRs are classified as Level 3.
Beginning in the fourth quarter of 2025, the Company completed the following two refinements to its estimation process for determining the fair value of MSRs.
First, the Company implemented a stochastic OAS valuation technique, replacing its former static discount rate approach. Under this technique, OAS represents the incremental spread added to the risk-free rate to reflect embedded prepayment optionality and other risk inherent in the MSRs and is used to discount projected cash flows across simulated interest-rate paths.
Second, the Company incorporated an explicit estimate of future cash flows from loans that are expected to be recaptured. The estimate of recapture cash flows is consistent with pricing and data observed from various market participants, including the Company’s independent third-party valuation firms. As a result of incorporating these additional recapture cash flows, the Company adjusted its OAS assumption to ensure that the fair value of MSRs remained consistent with current market participant pricing and is reflective of an exit price.
The net impact of these refinements were not significant to the overall estimate of MSR fair value for the year ended December 31, 2025. Furthermore, the Company’s estimated MSR fair value was corroborated as of December 31, 2025 with benchmark valuations from two independent third-party firms.
Investment securities — Investment securities are trading debt securities that are recorded at fair value using observable market prices for similar securities or identical securities that are traded in less active markets, which are classified as Level 2 and include highly rated municipal, government and corporate bonds.
Equity investments — As part of the Mr. Cooper Acquisition, the Company acquired equity investments from a previously divested title and field services businesses. The fair value of this equity interest is measured quarterly based on the minimum exit value established at the time of the transaction, together with observable market indicators. Because of the nature of the unobservable inputs, the Company classifies these investments as Level 3.
Non-mortgage loans held for sale — Non-mortgage loans held for sale are personal loans. The fair value of non-mortgage loans is determined using an internal valuation model that calculates the present value of estimated net future cash flows. Non-mortgage loans are classified as Level 3.
Assets and Liabilities of the consolidated CFE — Assets and liabilities represent non-mortgage loans and investment debt certificates at the consolidated CFE, respectively. The Company has elected the fair value option and measures both the assets and liabilities of the consolidated CFE using the more observable of the fair value of the financial assets or the fair value of the financial liabilities. The Company determined inputs to the fair value measurement of the financial assets to be more observable. The fair value of the assets and liabilities of the consolidated CFE are determined using an internal valuation model that calculates the present value of estimated net future cash flows and are classified as Level 3. The net equity in the consolidated CFE represents the fair value of the Company’s beneficial interest in the entity.
Excess spread financing — As part of the Mr. Cooper Acquisition, the Company assumed excess spread financing. The fair value of excess spread financing is determined using a stochastic OAS on a recurring basis based on the present value of future expected discounted cash flows with the discount rate approximating current market value for similar financial instruments. Excess spread financing liabilities are classified as Level 3.
Mortgage servicing rights financing liability — As part of the Mr. Cooper Acquisition, the Company assumed MSRs financing liabilities. The fair value of MSRs financing liabilities is determined using an internal valuation model that calculates the present value of estimated net future cash flows. MSRs financing liabilities are classified as Level 3.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The table below shows a summary of financial statement items that are measured at estimated fair value on a recurring basis, including assets measured under the fair value option. There were no material transfers of assets or liabilities recorded at fair value on a recurring basis between Levels 1, 2 or 3 during the years ended December 31, 2025 or December 31, 2024.
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Balance at December 31, 2025 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | 47 | $ | — | $ | — | $ | 47 | |||||||||||||||
Mortgage loans held for sale (1) | — | 15,221 | 250 | 15,471 | |||||||||||||||||||
| Derivative assets: | |||||||||||||||||||||||
| IRLCs | — | — | 294 | 294 | |||||||||||||||||||
| LPCs | — | — | 4 | 4 | |||||||||||||||||||
| Forward commitments | — | 62 | — | 62 | |||||||||||||||||||
| MSRs | — | — | 19,442 | 19,442 | |||||||||||||||||||
| Other Assets: | |||||||||||||||||||||||
| Investment securities | — | 43 | — | 43 | |||||||||||||||||||
| Equity investments | — | — | 6 | 6 | |||||||||||||||||||
| Non-mortgage loans held for sale | — | — | 411 | 411 | |||||||||||||||||||
| Assets of the consolidated CFE | — | — | 152 | 152 | |||||||||||||||||||
| Total assets | $ | 47 | $ | 15,326 | $ | 20,559 | $ | 35,932 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative liabilities: | |||||||||||||||||||||||
| LPCs | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||
| Forward commitments | — | 98 | — | 98 | |||||||||||||||||||
| Treasury futures | — | 46 | — | 46 | |||||||||||||||||||
| Other liabilities | |||||||||||||||||||||||
| Liabilities of the consolidated CFE | — | — | 120 | 120 | |||||||||||||||||||
| Excess spread financing | — | — | 337 | 337 | |||||||||||||||||||
| MSRs financing liability | — | — | 11 | 11 | |||||||||||||||||||
| Total liabilities | $ | — | $ | 144 | $ | 469 | $ | 613 | |||||||||||||||
Balance at December 31, 2024 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Mortgage loans held for sale (1) | $ | — | $ | 8,778 | $ | 242 | $ | 9,020 | |||||||||||||||
| Derivative assets: | |||||||||||||||||||||||
| IRLCs | — | — | 103 | 103 | |||||||||||||||||||
| Forward commitments | — | 89 | — | 89 | |||||||||||||||||||
| MSRs | — | — | 7,633 | 7,633 | |||||||||||||||||||
| Other assets: | |||||||||||||||||||||||
| Investment securities | — | 41 | — | 41 | |||||||||||||||||||
| Non-mortgage loans held for sale | — | — | 262 | 262 | |||||||||||||||||||
| Assets of the consolidated CFE | — | — | 112 | 112 | |||||||||||||||||||
| Total assets | $ | — | $ | 8,908 | $ | 8,352 | $ | 17,260 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative liabilities: | |||||||||||||||||||||||
| Forward commitments | $ | — | $ | 11 | $ | — | $ | 11 | |||||||||||||||
| Other liabilities: | |||||||||||||||||||||||
| Liabilities of the consolidated CFE | — | — | 93 | 93 | |||||||||||||||||||
| Total liabilities | $ | — | $ | 11 | $ | 93 | $ | 104 | |||||||||||||||
(1) As of December 31, 2025 and 2024, $167 and $115 of UPB of the level 3 MLHFS were 90 days or more delinquent and were considered in non-accrual status, respectively. The fair value of these level 3 MLHFS was $137 and $100 as of December 31, 2025 and 2024, respectively.
The following tables present the quantitative information for significant unobservable inputs used in the fair value measurements of material recurring Level 3 fair value financial instruments as of:
| December 31, 2025 | ||||||||||||||
| Unobservable Input | Range | Weighted Average | ||||||||||||
| Mortgage loans held for sale | ||||||||||||||
Model pricing | 71.7% - 104.0% | 83.1 | % | |||||||||||
| IRLCs | ||||||||||||||
Pull-through probability | 0.0% - 100.0% | 71.7 | % | |||||||||||
| Value of servicing (reflected as a % of pull-through adjusted UPB) | 0.0% - 2.9% | 1.3 | % | |||||||||||
MSRs (1) | ||||||||||||||
OAS (2) | 7.3% - 11.3% | 8.3 | % | |||||||||||
Prepayment speeds | 9.6% - 13.4% | 10.7 | % | |||||||||||
Cost to service per loan (3) | $42 - $113 | $59 | ||||||||||||
| Non-mortgage loans held for sale | ||||||||||||||
| Discount rate | 7.0% - 9.3% | 7.0 | % | |||||||||||
| Assets and Liabilities of the consolidated CFE | ||||||||||||||
Discount rate | 7.0% - 7.0% | 7.0 | % | |||||||||||
Excess-spread financing (1) | ||||||||||||||
OAS (2) | 7.0% - 12.3% | 8.8 | % | |||||||||||
| Prepayment speeds | 6.6% - 8.4% | 7.7 | % | |||||||||||
Average life (4) | 6.5 years | |||||||||||||
| Mortgage servicing rights financing liability | ||||||||||||||
| Advance financing and counterparty fee rates | 6.8% - 8.7% | 7.9 | % | |||||||||||
| Annual advance recovery rates | 10.9% - 15.1% | 12.7 | % | |||||||||||
| December 31, 2024 | ||||||||||||||
| Unobservable Input | Range | Weighted Average | ||||||||||||
| Mortgage loans held for sale | ||||||||||||||
Model pricing | 69.3% - 103.6% | 89.0% | ||||||||||||
| IRLCs | ||||||||||||||
Pull-through probability | 0.0% - 100.0% | 73.2% | ||||||||||||
MSRs (1) | ||||||||||||||
Discount rate | 9.5% - 12.5% | 9.9% | ||||||||||||
Prepayment speeds | 6.7% - 21.8% | 7.6% | ||||||||||||
| Non-mortgage loans held for sale | ||||||||||||||
| Discount rate | 8.0% - 9.3% | 8.1% | ||||||||||||
| Assets and Liabilities of the consolidated CFE | ||||||||||||||
Discount rate | 8.0% | 8.0% | ||||||||||||
(1) The inputs are weighted by investor.
(2) OAS represents incremental spread above a risk-free rate (one-month SOFR), which is an observable input.
(3) Presented in whole dollar amounts.
(4) This is for informational purposes only.
The table below presents a reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2025 and 2024. MSRs are also classified as a Level 3 asset measured at fair value on a recurring basis. The related reconciliation is found in Note 4, Mortgage Servicing Rights and Related Liabilities. The Company had immaterial equity investments and LPCs assets and liabilities as of December 31, 2025.
Mortgage Loans Held for Sale | IRLCs | Non-Mortgage Loans Held for Sale | Assets of the consolidated CFE | Liabilities of the consolidated CFE | Excess-spread financing | MSRs financing liability | |||||||||||||||||||||||||||||||||||
Balance at December 31, 2024 | $ | 242 | $ | 103 | $ | 262 | $ | 112 | $ | 93 | $ | — | $ | — | |||||||||||||||||||||||||||
| Acquired in business combination | 65 | 53 | — | — | — | 346 | 23 | ||||||||||||||||||||||||||||||||||
Transfers in (1) | 680 | — | 1,109 | 156 | 123 | — | — | ||||||||||||||||||||||||||||||||||
Transfers out/principal reductions (1) | (703) | — | (955) | (102) | (96) | (14) | — | ||||||||||||||||||||||||||||||||||
| Net transfers and revaluation gains | — | 138 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total (losses) gains included in net income (loss) for assets held at the end of the reporting date | (34) | — | (5) | (14) | — | 5 | (12) | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2025 | $ | 250 | $ | 294 | $ | 411 | $ | 152 | $ | 120 | $ | 337 | $ | 11 | |||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | 439 | $ | 133 | $ | 163 | $ | — | $ | — | N/A | N/A | |||||||||||||||||||||||||||||
Transfers in (1) | 418 | — | 281 | 128 | 108 | N/A | N/A | ||||||||||||||||||||||||||||||||||
Transfers out/principal reductions (1) | (605) | — | (170) | (16) | (15) | N/A | N/A | ||||||||||||||||||||||||||||||||||
| Net transfers and revaluation losses | — | (30) | — | — | — | N/A | N/A | ||||||||||||||||||||||||||||||||||
| Total losses included in net income (loss) for assets held at the end of the reporting date | (10) | — | (12) | — | — | N/A | N/A | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2024 | $ | 242 | $ | 103 | $ | 262 | $ | 112 | $ | 93 | N/A | N/A | |||||||||||||||||||||||||||||
(1) Transfers in represent loans repurchased from investors or loans originated for which an active market currently does not exist. Transfers out primarily represent loans sold or transferred to third parties and loans paid in full.
Fair Value Option
The following is the estimated fair value and UPB of MLHFS, non-mortgage loans held for sale and assets of the consolidated CFE that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected for these assets as the Company believes fair value best reflects their expected future economic performance:
| Fair Value | Principal Amount Due Upon Maturity | Difference (1) | |||||||||||||||
Balance at December 31, 2025 | |||||||||||||||||
| Mortgage loans held for sale | $ | 15,471 | $ | 15,061 | $ | 410 | |||||||||||
| Non-mortgage loans held for sale | 411 | 406 | 5 | ||||||||||||||
| Assets of the consolidated CFE | 152 | 152 | — | ||||||||||||||
Balance at December 31, 2024 | |||||||||||||||||
| Mortgage loans held for sale | $ | 9,020 | $ | 8,889 | $ | 131 | |||||||||||
| Non-mortgage loans held for sale | 262 | 269 | (7) | ||||||||||||||
| Assets of the consolidated CFE | 112 | 112 | — | ||||||||||||||
(1) Represents the amount of gains (losses) included in Gain on sale of loans, net for Mortgage loans held for sale and Other income for Non-mortgage loans held for sale in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss), due to changes in fair value of items accounted for using the fair value option.
Disclosures of the fair value of certain financial instruments are required when it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.
The following table presents the carrying amounts and estimated fair value of financial liabilities that are not recorded at fair value on a recurring or nonrecurring basis. This table excludes Cash and cash equivalents, Restricted cash, Advance receivables, net, Loans subject to repurchase right from Ginnie Mae, Funding facilities and Other financing facilities as these financial instruments are highly liquid or short-term in nature and as a result, their carrying amounts approximate fair value.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||||||||||
| Total Senior Notes, net | $ | 10,423 | $ | 10,502 | $ | 4,039 | $ | 3,632 | |||||||||||||||
The fair value of Senior Notes was calculated using the observable bond price at December 31, 2025 and 2024, respectively. The Senior Notes are classified as Level 2 in the fair value hierarchy.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 24, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.