Rocket to Acquire Mr. Cooper; Visa Woos Apple; Affirm and Stride Partner
Cole Gottlieb, Research Analyst
Fed needs more confidence on inflation before cutting rates. Rocket to acquire Mr. Cooper. Affirm partners with Stride. Visa woos Apple Card business.
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Fed Comments on Inflation Data
In the wake of President Trump’s “Liberation Day” tariff announcements, if there’s one thing the market is lacking, it’s confidence. Whether or not that dropping confidence extends to the Fed is, as of now, unknown. Richmond Fed President Tom Barkin said the central bank would need greater confidence that inflation is moving towards its long-term 2% target before cutting rates. In a television interview last week, Barkin said, “You could get that confidence because it actually continues to settle. You could get that confidence because the economy is in such tough shape that you feel that whatever downturn you have will also settle inflation.”
Rocket to Acquire Mortgage Servicer Mr. Cooper
Rocket Companies, best known as a major non-bank mortgage lender, has been on something of a shopping spree lately. Last month, it agreed to purchase real-estate search site RedFin for about $1.75Bn. Now, it’s announced it will acquire mortgage servicing giant Mr. Cooper Group in an all-stock deal valued at $9.4Bn. The deals speak to Rocket’s apparent strategy of vertical integration: buyers can look for a home on RedFin, finance it through a mortgage from Rocket, which can then be serviced by Mr. Cooper. Per the companies’ statement, the companies will service a combined $2.1Tr of loans for nearly 10Mn borrowers. The deal is expected to close in Q4, pending regulatory approvals. There is some concern this type of integration results in less competition and may drive higher mortgage rates for homebuyers. Previously, the CFPB, during the Biden administration, had sued Rocket, alleging the company paid “kickbacks” to real-estate agents to steer business to the company. The CFPB, under current acting Director Russ Vought, dropped the suit, alongside many other cases filed during the previous administration.
Affirm Replaces Evolve with Stride for Debit Card
Buy now, pay later lender Affirm has announced a new bank partner for its Affirm Card: Stride Bank. Affirm previously issued cards through a partnership with Evolve Bank & Trust. The Affirm Card links to a user’s existing checking account, and allows them to pay in full, choose to split qualifying transactions after the fact, or to apply for longer-term financing for larger purchases. As of the end of 2024, Affirm reported 1.7Mn active cardholders. Of the partnership with Stride, Affirm SVP of Product Vishal Kapoor said, “Consumers love the Affirm Card because it works virtually everywhere, in-store or online, and anywhere Visa is accepted. Adding Stride Bank as a card issuing partner will help enable us to continue scaling Affirm Card while further strengthening and diversifying our platform so that we can improve millions more lives.”
Visa Woos Apple Card Business
While the Apple Card has been something of an albatross for Goldman Sachs, which has reportedly been trying to find another bank partner to take over the program, Visa is trying to entice Apple to select it to replace Mastercard going forward. The Wall Street Journal reported Visa is offering an upfront payment to Apple of approximately $100Mn. While such payments are typically only made for very large issuers or cobrand programs, Visa may be looking beyond just the Apple Card. With mobile phones increasingly replacing consumers’ wallets, including, in some states, for identity credentials like driver’s licenses, Visa may be looking to deepen its ties with the mobile phone maker.
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