‘It was love at first sight!’ Inside Rocket’s pursuit of Redfin, Mr. Cooper

Glenn Kelman’s wife was starting to get worried. The Redfin founder and CEO’s behavior was unusual lately. He was staying up late into the night exchanging texts with someone.

But there was no other woman. Kelman was group texting Varun Krishna, the CEO of Rocket Companies, and Jay Bray, the CEO of Mr. Cooper. They would share their unified vision for transforming the homeownership journey and — importantly — making it more affordable for consumers.

The texts between three industry titans would lead to arguably the biggest mortgage and real estate play in decades — Rocket striking a $1.75 billion deal to acquire Redfin, followed by a $9.4 billion deal for Mr. Cooper and its servicing portfolio.

For the first time since the news of the acquisitions were announced, the three CEOs sat down with HousingWire‘s Clayton Collins to talk about how and why the deals went down.

How the deals happened

Krishna, a product guru who previously worked at Paypal and Intuit, is a diehard fan of Redfin. He uses it every day — and it’s really his fandom that led to the acquisition.

In fact, he talked about what Redfin could do at Rocket during his interview process. He and Kelman began chatting, they met in Seattle and “one thing led to another,” Krishna told Collins.

With Mr. Cooper, he met with leaders across the industry over the first eight weeks of his tenure at Rocket. Bray took him under his wing, shared with him the nuances of the servicing business and the value of lifetime relationships.
“It was love at first sight,” Bray said.

Krishna said it felt that the trio had a shared vision and a “moral responsibility” to champion and create a better housing market for consumers.

“It’s a chance to redfine homebuying in the consumer’s favor,” Kelman added. “We’ve been at it for a long time. … People under 40 don’t believe they have a shot at owning a home. That seems like a fundamental revolution in the American mindset, and I want to spend my professional life working to make that better.”

Room for more

Krishna told Collins that Rocket’s thesis is rather simple at its core.

It has a theory for how well the sales funnel works, attaching experiences like mortgage, converting leads and demonstrating efficacy throughout the mortgage process. That’s followed by “delighting” homeowners in servicing. They’re focused on a “kick-ass consumer experience” to grow their share of profitability.

Krishna also said that Rocket is focused on building an ecosystem that other companies in the housing space could join.

He identified three specific value propositions to the consumer: low costs and low fees; easy and fast; and certainty and confidence that the deal will close.
If they can deliver on all three, they’ll have customers for life, he said.

Thoughtful branding

Kelman said that their slavish devotion to the best customer experience means they’ll be distributing leads to the best agent for that consumer, even if it comes at the expense of a Redfin agent getting the deal done.

Kelman added that its Bay Equity mortgage business (a retail lender) will remain in play, and he expressed admiration for Rocket’s efficiencies in originating loans.

The branding integration of Mr. Cooper will be done “thoughtfully,” Krishna said. The company, formerly known as Nationstar, is America’s largest mortgage servicer and is expected to be rebranded to Rocket (another top-five servicer) over time.

But Redfin will remain Redfin. Krishna told Collins that it’s an incredibly important brand. “Millions of consumers will continue to love and appreciate the Redfin brand,” he said.

Rocket already did a large brand reunification, renaming its Amrock title company as Rocket Close.

Mr. Cooper business channels

Asked what’s changed on the client side since the announcement of the deal, Bray told the audience that, essentially, it was business as usual.

“The correspondent relationships we’ve built are very deep; they’re excited about what the combined company can do,” he said, adding that brokers feel the same way.

“We want to grow that channel. I think we have a massive opportunity there.”

Bray said the company can use the power of internal data and share it with broker partners so they can capture the refi.

“Our subservicing business, that community is excited as well,” he said, adding that Mr. Cooper has one large distributed retail partner that has done important work to help with customer retention. “We’re sharing data and retention tools with them. We look at this as a partnership. We want to be a solution for the industry.”

New future of openness

Bray, who will be head of mortgage at Rocket Companies if and when the deal closes, said Mr. Cooper didn’t consider partnering with any other company. It’s grown inorganically through portfolio and company acquisitions.

“With Rocket, I’m reenergized. … Combine the three of us and I think it’s super exciting.”

Kelman expressed similar sentiments.

“What Rocket has done is what I wanted to do. It’s not the enemy. … It’s what we always wanted to become.”

Krishna closed the conversation by saying that Rocket could have been “a better partner” in the past to some in the industry. But this is the start of a different era where “we want to be an enabler,” he added, describing the industry as very “adversarial.”

“I think we can fix that. We want this to symbolize an opportunity to grow business with better tools and tech. We’d love to hear from you.”
He asked the audience to email him with their feedback. Just don’t text him late at night.