- Detroit-based mortgage lender Quicken Loans is reportedly planning to forge ahead for an IPO
Detroit-based mortgage lender Quicken Loans is reportedly planning to forge ahead for an IPO, according to sources with CNBC. Quicken Loans — which was founded by billionaire investor and entrepreneur Dan Gilbert — privately filed an IPO prospectus in order to start pushing for investor interest. The IPO could happen as soon as next month.
In October 2019, Quicken Loans had announced $40 billion in home loans for Q3 2019. At the time of the announcement, Quicken Loans said that it was the highest in the company’s 35-year history. And mortgage volume hit a record high in September 2019 with $15 billion of closed loan volume. And in December, the company said that 2019 was going to be the best year in its history of the overall volume of home loans. The company was on pace to originate over $140 billion in mortgages for the year — which would shatter the previous volume record of $96 billion three years earlier.
It is unknown what the valuation will be when Quicken Loans goes public, but it is estimated to be in tens of billions. And it could potentially be the largest IPO this year. Goldman Sachs, Morgan Stanley, Credit Suisse, and JPMorgan are managing the IPO.
Gilbert is also known as being the owner of the Cleveland Cavaliers NBA team. And Gilbert also owns The American Hockey League’s Cleveland Monsters and the NBA G League’s Canton Charge. Plus he also operates the Rocket Mortgage FieldHouse in Cleveland, Ohio. And Gilbert is the chairman of JACK Entertainment (formerly known as Rock Gaming), which operates several casinos.
In 2000, Intuit had acquired Rock Financial from Gilbert and renamed the national web operations Quicken Loans. Gilbert stayed on as the CEO of the subsidiary. Then in 2002, Gilbert led a group of private investors to buy Quicken Loans and the affiliated title company called Title Source Inc. from Intuit.
The economic crisis associated with the COVID-19 pandemic has caused a drop in mortgage interest rates — which led to surges in mortgage applications. In order to keep up with the demand, Quicken Loans said last month that it is hiring 1,500 people over the next 3 months. That is on top of the 1,500 people the company hired since the middle of March.
While Quicken Loans originates the mortgages, they are quickly sold to government-backed entities such as Fannie Mae and Freddie Mac — which are bundled into mortgage-backed securities that are sold to investors.
Since millions of people went into unemployment and borrowers went into forbearance of mortgage payments during the COVID-19 pandemic, Quicken Loans still had to pay the investors holding the mortgage-backed securities — which could have been a major liquidity crunch. But things seem to be back on track for the company financially.
And Quicken Loans CEO Jay Farner told CNBC in April that the previous month was the biggest closing month in its history. For the first quarter, the company closed around $53 billion in mortgages and it was expected to hit nearly $75 million for the second quarter.
