Positioning brokers for "a great Christmas in this market"
Rocket Pro TPO has increased its loan limits for conventional loans to $750,000 ahead of the imminent Federal Housing Finance Agency’s official announcement expected in November.
In making the move, company officials boasted about being the first lender to make what it labeled as a “monumental change” while noting the loan increase can drastically improve pricing when compared to high balance loans and can give more borrowers access to conventional loans – which are far less restrictive than jumbo.
Mortgage Professional America reached out to Mike Fawaz (pictured), executive vice president of Rocket Pro TPO, for more details. “As you know, our goal is to continue to provide optionality to the broker community and put the broker community in a position to win,” Fawaz said during a telephone interview. “We did this last year when we were the first to market when it came to announcing 2022-23 loan limits, and this year is no different.”
Indeed, Rocket Pro TPO – the wholesale arm of Rocket Mortgage – hiked its conforming loan limits to $715,000 last year. Like this year, Rocket was the first to increase loan limits. At the time, a Rocket Pro TPO official ticked off the advantages of the increased loan limit – more borrowers able to secure better rates, more attractive pricing, less money down on purchases, greater cash-out availability on refis and an easier underwrite than that involving a jumbo loan.
Heightened loan cap comes amid economic challenges
With mortgage rates hovering at around 8% against a backdrop of inflation and soaring property values, the timing of the loan cap increase is fortuitous for brokers seeking to increase their volume amid economic challenges. “The market in the last 12 to 14 months has been tough,” Fawaz said. “So, this year, based on where the market is and based on where the economy is, it’s more important – and, I believe, more impactful – than ever before. My team has been working very hard to give the broker community a weapon.”
Fawaz reiterated how the lender is the first to offer the higher loan cap: “Going out in the market as the only lender so far that can offer such an incredible opportunity for the brokers in this market is a big deal to us.”
How does Rocket update its loan limits so early?
In making the announcement, the company described how it’s able to update its loan limits early because loans are sold to Fannie Mae and Freddie Mac up to several months after the loan is closed. Lenders will hold loans on their books until they can be sold to a mortgage investor in the routine of doing business, the company noted.
In addition to increasing its conforming loan limit to $750,000 for a one-unit property in the contiguous states, the limit for a single-unit home in Alaska and Hawaii has been set at $1,125,000.
“It’s a time to provide, not a time to divide”
Fawaz noted the company is always looking to launch products with brokers in mind – especially in a tough economy. As an example, he cited the lender’s May launch of a 1% down program, dubbed ONE+, that was designed to enable homebuyers to make a down payment of no more than 1% of a property’s purchase price, with Rocket covering the remaining 2% needed to meet the usual loan threshold amount. Additionally, ONE+ also does away with the monthly mortgage insurance fee typically required from buyers paying less than 20% on their purchase.
Like that product, the increase was made with brokers in mind and guided by their feedback, Fawaz said. “If you think about it, these are loans we’re going to hold,” he said. “This is a risk we’re willing to take to give our broker partners a win. I see this as setting up our partners to have a great Christmas in this market. This is your commission check you’re using for Christmas gifts and to spend time with family. It’s also a gift to the client – to the American borrower.”
In summarizing the end goal in raising the limits, he recalled what he told a recent gathering of brokers: “This is a time to provide, not a time to divide.”
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