Amid a tough market for mortgage lenders, Detroit-based parent company Rocket Mortgage continues to look for new ways to diversify its personal finance business.
First announced a year ago, the fledgling Rocket Solar business — which provides consulting, system design, financing, installation and ongoing service to solar customers in 16 states — is underway. integration into the wider network of Rocket companies. The solar business will partner with Rocket Loans, a personal loan company also controlled by the parent company, to help finance solar installations, according to a press release issued Tuesday by Rocket Companies Inc.
“We have invested heavily in creating a comprehensive personal finance experience that leverages artificial intelligence and machine learning to deliver loan offers tailored to the individual – automatically verifying identity and income with speed and certainty,” Todd Lunsford, president of Rocket Loans and former CTO for Rocket Mortgage, said in the statement. “Even more impressively, while making fast, automated decisions, Rocket Loans technology helps us accurately determine our customers’ ability to repay loans, with significantly better default rates and loss coverage ratios. than any other personal loan platform on the market today.”
A Rocket Companies spokesperson declined to provide revenue forecasts for the solar business, but the press release said solar panel installations grew 30% last year.
Additionally, “with aggressive cost reductions, supportive policies and large-scale electrification, solar power could account for up to 40% of the country’s electricity supply by 2035 and 45% of by 2050,” according to a U.S. Department of Energy Solar Futures. study.
“It was extremely important to Rocket Solar that we partner with a lender that shares the same passion for customer service as we do,” said Joel Gurman, president of Rocket Solar. “The Rocket Loans platform is able to give our solar customers fast loan decisions and is also extremely flexible to meet the needs of our rapidly growing business. This partnership is the latest example of how Rocket is creating technologies to simplify once-complicated transactions – something our customers tell us they really appreciate.”
In its first-quarter 2021 earnings report in May, the parent company said Rocket Solar facilitated transactions in 27 major markets in nine states, including Arizona, Florida and South Carolina.
A specific breakdown of Rocket Companies revenue by business enterprise is unclear. However, like many mortgage lenders, the company is currently on a rocky road as demand for mortgages has plummeted due to rising interest rates.
The company’s first-quarter earnings showed revenue and loan origination volume down more than 40% year-over-year, with the latter approaching a 48% decline.
Rocket Companies (NYSE: RKT) will release its second quarter results Thursday afternoon after the close of trading.
While expansions into other areas of personal finance such as solar, auto and other real estate services may make sense, some industry experts remain unconvinced that these moves will go a long way to hedge against the struggling mortgage market in a rising interest rate environment.
“We appreciate RKT’s expansion into title insurance, valuations and closing services, but remain weak relative to its position as the #1 mortgage lender in the United States,” wrote Ken Leon of CFRA Research in a May Note to Investors.