The Federal Housing Finance Agency (FHFA) allowed both government-sponsored entities (GSEs) to approve Rocket Companies’ proposed acquisition of Mr. Cooper Group, subject to conditions intended to ensure the ongoing safety and soundness of the GSEs.
As conservator of Fannie Mae and Freddie Mac, the FHFA’s approval was required for the acquisition to move forward.
In April, Rocket announced a $9.4 billion all-stock acquisition agreement with Mr. Cooper. With this acquisition, Rocket will represent one in every six mortgages in the U.S., the company said at the time.
Following this acquisition agreement, the FHFA’s safety and soundness staff conducted an analysis of the proposed merger of two of the GSEs’ largest individual seller-mortgage servicer counterparties.
The staff recommended the GSEs approve the combined entity to do business with them so long as Fannie Mae and Freddie Mac each retain strict counterparty concentration risk limits at 20 percent and impose other appropriate financial and operating safeguards to protect the GSEs and the mortgage market.
No market participant should have greater than 20 percent of Fannie or Freddie’s servicing market in order to ensure the safety and soundness of the mortgage market and the overall economy, the FHFA said.