Quicken Loans mortgage lender files for market listing

Quicken Loans, the largest US mortgage lender, has filed to list on the stock market in what could be the biggest initial public offering of the year, following a recent run of flotations.

The Detroit-based mortgage powerhouse has filed confidentially with the US securities regulator, said people with direct knowledge of the plans, and a listing could be as soon as next month.

Goldman Sachs, Morgan Stanley, JPMorgan and Credit Suisse were managing the IPO, said those briefed about the matter. 

A public listing, which could occur by the autumn, would mark a milestone for Dan Gilbert, the group’s founder, a billionaire who owns the Cleveland Cavaliers basketball team and has poured billions of dollars into projects to revitalise Detroit.

Quicken Loans has emerged as the top challenger to traditional lenders, becoming the largest mortgage originator ahead of Wells Fargo in 2018, with more than $80bn in new loans. In 2019, the company closed nearly $145bn in mortgages.

The company would be valued in the tens of billions of dollars, the people said.

News of the planned listing comes after several companies have moved forward plans to list on the US stock market to capitalise on the bumper investor demand for listings and the big rally in US stocks which has added more than a third of value to US blue-chips since late March.

Last week marked the busiest for US IPOs in a year with the $3bn in proceeds raised led by the $1.9bn listing of Warner Music, the biggest of the year. 

The filing comes as businesses across the US grapple with the economic downturn caused by the coronavirus, which has prompted companies to raise large sums of money in the capital markets.

The economic stress has created a leap in forbearance. The number of US mortgages in forbearance jumped from 3.7 per cent in the first week of April to 8.5 per cent by the end of May, according to data released this week by the Mortgage Bankers Association. Borrowers can defer mortgage payments for up to a year under the terms of a bill passed in March, but the sums will be eventually repaid, in many cases by extending the term of the loan.

The government takes on the mortgage payments in the long run but in the short term mortgage servicers, such as Quicken Loans, pick up the bill when paying bondholders for loans packaged as mortgage-backed securities.

The Federal Reserve’s decision to cut rates to nearly zero has also triggered a wave of mortgage refinancing, which adds a boost to the revenues of groups like Quicken Loans, which take a fee on the deals.

News of the planned listing was first reported by CNBC. The banks managing the listing declined to comment. Quicken Loans did not immediately respond to a request for comment.