Rocket's mortgage servicing fees now match loan-sale revenue as rates hit a three-year high

Rocket Companies (NYSE: RKT) earned $1.03 billion in mortgage servicing fees in the third quarter, about the same as the $1.03 billion it booked on selling loans, while reporting GAAP net income of $709 million, according to its earnings release on October 29.

What happened

Servicing fee income was $1,032 million, up 149.9% (computed) from $413 million a year earlier. Gain on sale of loans, net, was $1,028 million against $1,027 million. Total revenue, net, was $3,284 million, compared with $1,695 million in the third quarter of 2025, and GAAP net income was $709 million against a loss of $124 million.

On the company's adjusted measure, which is not a GAAP figure, revenue was $2,574 million, up 37.4% (computed) from $1,873 million, and adjusted net income was $419 million against $158 million. Total expenses rose to $2,326 million from $1,880 million, a 23.7% increase (computed), well below the growth in revenue.

Rocket closed $43.6 billion of mortgage loans in the quarter and locked $40.4 billion. Its total gain on sale margin was 2.54%. It serviced $2.0 trillion of unpaid principal balance across 9.1 million loans at September 30, and sold the rights to service $23 billion of loans for $379 million in cash, retaining subservicing and recapture on nearly 70% of them.

"Rocket gained market share in both purchase and refinance, quarter over quarter and year over year, and delivered our highest profitability margin in nearly five years, even as mortgage rates climbed to a three-year high," said Varun Krishna, CEO and Director of Rocket Companies, in the release.

Why it matters

Mortgage lenders earn from two sides: they are paid when they originate and sell loans, and they are paid for collecting and administering payments on loans they keep servicing. The release shows the second side now matches the first at Rocket. The release refers to the "legacy Mr. Cooper's combined servicing portfolio", so the servicing book includes loans from that acquisition, and it does not break out how much of the year-over-year change comes from it.

Servicing also feeds origination. The company says its recapture engine uses its 9.1 million servicing relationships to win clients' future refinance and purchase loans, and that the combined portfolio reached its highest recapture levels to date in the quarter.

The company also reported its use of AI. It said AI pulled credit on nearly 20% of Direct to Consumer loan volume before a client spoke with a loan officer, up from zero a year ago, and that its AI voice platform handled 65% of inbound servicing calls and resolved more than half of them on its own.

The mortgage segment, which excludes its personal finance and real estate services, posted a contribution margin of $1,138 million, up from $564 million, on adjusted revenue of $2,092 million.

What to watch

Rocket gave a fourth-quarter outlook for adjusted revenue of $2.1 billion to $2.3 billion. Against the third quarter's $2,574 million, the midpoint of $2.2 billion would be 14.5% lower (computed).

The company said it would host an earnings call at 4:30 p.m. ET on October 29 and that its Form 10-Q is forthcoming, which will carry the segment notes behind the figures.