Rocket's Redfin, Mr. Cooper Deals Draw Fire From US Senators Over Potential Market Dominance

A group of U.S. senators has sounded the alarm over Rocket Companies’ (RKT) aggressive expansion into housing, warning that its planned acquisitions of Redfin (RDFN) and Mr. Cooper Group (COOP) would create a dominant player with outsized influence over homebuying costs.

“These deals would combine the second-largest mortgage originator, the largest mortgage servicer, and the third-most-visited real estate brokerage website in the United States into a massive, vertically integrated conglomerate that may reduce choice and raise prices for American families in the housing market,” the senators wrote in a letter to federal regulators on Wednesday, seen by Reuters.

The letter, signed by Senators Elizabeth Warren, Cory Booker, Bernie Sanders, Mazie Hirono, and Tina Smith, was sent to the heads of the Department of Justice and the Federal Trade Commission. 

It questioned why the agencies have not moved to block Rocket’s $1.75 billion takeover of Redfin, which was announced in March and is set for a shareholder vote on Wednesday.

The lawmakers also cited Rocket’s recently announced $9.4 billion bid for mortgage servicer Mr. Cooper as compounding their concerns over consolidation in the sector. 

According to them, if both deals are completed, Rocket would control a critical portion of the housing transaction chain, from listing and home search to agent services, mortgage origination, and servicing.

According to Reuters, the senators warned the structure could allow Rocket to steer homebuyers using Redfin toward its in-house services and use behavioral data to adjust pricing in ways that hurt consumers.

Home prices in the U.S. are more than 50% higher than pre-pandemic levels and are expected to keep rising. Mortgage rates remain elevated, with the 30-year fixed rate reaching 6.89% last week amid pressure from ongoing fiscal negotiations in Congress.

Rocket Companies’ and Mr. Cooper’s shares edged 0.8% higher in morning trade on Wednesday, while Redfin’s stock was 0.5% higher.

Rocket Companies’ stock has gained nearly 13% this year, and Mr.Cooper’s stock has jumped more than 36% in the same period.

Redfin’s shares are up 25% year-to-date.

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