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3. Rocket Mortgage is a fintech finance company that is now the largest originator of residential mortgages in the U.S. However, rather than hold mortgages on its balance sheet until maturity, it sells almost all the mortgages it originates to government-sponsored entities (GSES) like FNMA. This means that Rocket Mortgage a. is not performing the two key financial institution (FI) functions of connecting borrowers and investors and evaluating financial claims. Both functions require that the FI hold loans on their balance sheets until maturity, using a lot of debt financing (leverage) to maintain performance incentives; Rocket does not do this. b. is performing the key FI function of connecting borrowers and investors, but not the function of evaluating financial claims. Rocket has little incentive to evaluate loans it originates and sells to GSEs because the loans' quality is the GSES' problem. c. is performing the two key FI functions of connecting borrowers and investors and evaluating financial claims. Mortgage borrowers get the GSES' funds thanks to Rocket, and if Rocket gets a reputation for making lots of loans that go bad, no one will want to borrow from them. d. is performing the two key FI functions of connecting borrowers and investors and evaluating financial claims. Mortgage borrowers get the GSEs funds thanks to Rocket, and if Rocket gets a reputation for making lots of loans that go bad, they won't be able to sell their loans to the GSES

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