Good afternoon —
Everybody wants in on title, and for good reason. As mortgage margins continue to compress, title is seen as a natural — and profitable — addition. We've been covering second-quarter earnings, and income from title business is a notably positive factor for mortgage lenders.
Rocket is a great example. Managing Editor James Kleimann outlines Rocket's strategy for dominating the whole home-buying process, including title, as discussed on their earnings call last week.
"In their idealized vision, a consumer would first find the perfect home through Rocket's listings site. They'd then utilize the services of a real estate agent found through the growing Rocket Homes platform. A few hours after applying for a mortgage, the consumer would receive underwriting approval. Then comes the mortgage — which their agent would monitor through Rocket Pro Insight. When at the finish line, the client would close with the aid of Amrock, Rocket's title and appraisal arm. A few years later, they might list the home for sale without an agent with the help of Rocket or refinance their mortgage and place solar panels on their roof"
Rocket CFO Julie Booth described one such scenario. A client buys a $300,000 home and utilizes Rocket for every facet, including Amrock for title and escrow. "When we think about the opportunities, that transaction would generate $18,000," Booth said. "And it doesn't stop there."
I'm sure smaller title companies are wondering where exactly it does stop. But as long as it keeps adding to the bottom line, the title piece of the pie will continue to be an attractive place for larger companies like Rocket to expand.
Indeed, in addition to the $84 billion they drew from mortgage origination, Rocket generated $376.4 million in other income in Q2 '21, driven primarily by Amrock, which tallied 260,300 closings. That's up 193% from Q2 '19.
Until next week —
Sarah Wheeler
HousingWire Editor in Chief
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