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What changed in Finance of America Companies Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Finance of America Companies Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+646 added−628 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-15)

Top changes in Finance of America Companies Inc.'s 2024 10-K

646 paragraphs added · 628 removed · 452 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

55 edited+29 added−13 removed43 unchanged
Biggest changeThis is because the wind-down of the home improvement lending business is not considered by the Company to be a strategic shift that has or will have a major effect on our operations and financial results. Portfolio Management Our Portfolio Management segment provides product development, loan securitization, loan sales, risk management, servicing oversight, and asset management services to the Company.
Biggest changeFor reporting purposes, the previous operations of the home improvement lending business are reported as part of the Company’s Retirement Solutions segment rather than as discontinued operations as the wind-down of the home improvement lending business was not considered by the Company to be a strategic shift that has had or will have a major effect on our operations and financial results.
FoA was incorporated in Delaware on October 9, 2020 and became a publicly-traded company on NYSE in April 2021, with trading beginning on April 5, 2021 under the ticker symbol “FOA.” FoA has a controlling financial interest in FoA Equity. FoA Equity owns all of the outstanding equity interests in Finance of America Funding LLC (“FOAF”).
FOA was incorporated in Delaware on October 9, 2020 and became a publicly-traded company on the NYSE in April 2021, with trading beginning on April 5, 2021 under the ticker symbol “FOA.” FOA has a controlling financial interest in FOA Equity. FOA Equity owns all of the outstanding equity interests in Finance of America Funding LLC (“FOAF”).
We are required to comply with numerous federal and state consumer protection and other laws, including, but not limited to: • restrictions on the manner in which consumer loans are marketed, originated, and serviced, including, but not limited to, the making of required consumer disclosures, such as the Truth in Lending Act (“TILA”) (which regulates mortgage loan origination activities, imposes requirements related to advertising, requires certain disclosures be made to mortgagors regarding terms of mortgage financing, and regulates certain mortgage servicing activities), the Home Equity Loan Consumer Protection Act (which amends TILA to require additional disclosures relating to home equity loans and to regulate advertising of home equity loans), the Fair Credit Reporting Act (“FCRA”) (which regulates the use and reporting of information related to the credit history of consumers), the Equal Credit Opportunity Act (“ECOA”) (which prohibits discrimination on the basis of age, race, and certain other characteristics in the extension of credit), the Fair Housing Act (which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics), the Real Estate Settlement Procedures Act (“RESPA”) (which governs certain mortgage loan origination activities and practices and the actions of servicers related to escrow accounts, transfers, lender-placed insurance, loss mitigation, error resolution, and other customer communications), the Mortgage Acts and Practices Rule (which prohibits deceptive acts and practices in the marketing of mortgage loans), and similar state laws; • federal laws that require and govern communications with consumers or reporting of public data such as the Gramm-Leach-Bliley Act (“GLBA”), which requires initial and periodic communication with consumers 11 on privacy matters and the maintenance of privacy regarding certain consumer data in our possession, and the Home Mortgage Disclosure Act (“HMDA”), together with its implementing regulations (Regulation C), which requires reporting of certain public loan data; • federal disclosure requirements including those in Regulation AB under the Securities Act of 1933, as amended (the “Securities Act”), which requires registration, reporting, and disclosure for mortgage-backed securities; • state and federal restrictions on the marketing activities conducted by telephone, mail, email, mobile device, or the internet, including the Telemarketing Sales Rule, the Telephone Consumer Protection Act, state telemarketing laws, federal and state privacy laws, the Controlling the Assault of Non-Solicited Pornography and Marketing Act, and the Federal Trade Commission Act and their accompanying regulations and guidelines; • federal and state laws requiring company, branch, and individual licensing for the solicitation, brokering, or third-party processing of consumer loans, including the Secure and Fair Enforcement for Mortgage Licensing Act; • the Electronic Fund Transfer Act (which regulates electronic fund transfers to and from individual consumers); • federal and state laws relating to the retention of records; • federal and state laws relating to identity theft; • the Fair Debt Collection Practices Act (the “FDCPA”), which regulates the timing and content of communications on debt collections; • the California Consumer Privacy Act, which provides California consumers with privacy rights and increases the privacy and security obligations of entities handling certain personal information of such consumers; • the Servicemembers’ Civil Relief Act; • the anti-money laundering and counter-terrorist financing provisions of the Bank Secrecy Act, including the USA Patriot Act, which require non-bank lenders to monitor for, detect, and report suspicious activity to the U.S.
We are required to comply with numerous federal and state consumer protection and other laws, including, but not limited to: • restrictions on the manner in which consumer loans are marketed, originated, and serviced, including, but not limited to, the making of required consumer disclosures, such as the Truth in Lending Act (“TILA”) (which regulates mortgage loan origination activities, imposes requirements related to advertising, requires certain disclosures be made to mortgagors regarding terms of mortgage financing, and regulates certain mortgage servicing activities), the Home Equity Loan Consumer Protection Act (which amends TILA to require additional disclosures relating to home equity loans and to regulate advertising of home equity loans), the Fair Credit Reporting Act (“FCRA”) (which regulates the use and reporting of information related to the credit history of consumers), the Equal Credit Opportunity Act (“ECOA”) (which prohibits discrimination on the basis of age, race, and certain other characteristics in the extension of credit), the Fair Housing Act (which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics), the Real Estate Settlement Procedures Act (“RESPA”) (which governs certain mortgage loan origination activities and practices and the actions of servicers related to escrow accounts, transfers, lender-placed insurance, loss mitigation, error resolution, and other customer communications), the Mortgage Acts and Practices Rule (which prohibits deceptive acts and practices in the marketing of mortgage loans), and similar state laws; • federal laws that require and govern communications with consumers or reporting of public data such as the Gramm-Leach-Bliley Act (“GLBA”), which requires initial and periodic communication with consumers on privacy matters and the maintenance of privacy regarding certain consumer data in our possession, and the Home Mortgage Disclosure Act (“HMDA”), together with its implementing regulations (Regulation C), which requires reporting of certain public loan data; 12 • federal disclosure requirements including those in Regulation AB under the Securities Act of 1933, as amended (the “Securities Act”), which requires registration, reporting, and disclosure for mortgage-backed securities; • state and federal restrictions on the marketing activities conducted by telephone, mail, email, mobile device, or the internet, including the Telemarketing Sales Rule, the Telephone Consumer Protection Act, state telemarketing laws, federal and state privacy laws, the Controlling the Assault of Non-Solicited Pornography and Marketing Act, and the Federal Trade Commission Act, and their accompanying regulations and guidelines; • federal and state laws requiring company, branch, and individual licensing for the solicitation, brokering, or third-party processing of consumer loans, including the Secure and Fair Enforcement for Mortgage Licensing Act; • the Electronic Fund Transfer Act (which regulates electronic fund transfers to and from individual consumers); • federal and state laws relating to the retention of records; • federal and state laws relating to identity theft and elder abuse; • the Fair Debt Collection Practices Act (the “FDCPA”), which regulates the timing and content of communications on debt collections; • the California Consumer Privacy Act, which provides California consumers with privacy rights and increases the privacy and security obligations of entities handling certain personal information of such consumers; • the Servicemembers’ Civil Relief Act; • the anti-money laundering and counter-terrorist financing provisions of the Bank Secrecy Act, including the USA Patriot Act, which require non-bank lenders to monitor for, detect, and report suspicious activity to the U.S.
We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), available free of charge under the Investor Relations section of our website as soon as reasonably practicable after we electronically file the reports with, or furnish them to, the SEC.
We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), available free of charge under the Investor Relations section of our investor oriented website as soon as reasonably practicable after we electronically file the reports with, or furnish them to, the SEC.
Excluded from the term “investment securities,” among other things, are U.S. federal government securities and securities issued by majority owned 12 subsidiaries that are not themselves investment companies and are not relying on the exceptions from the definition of investment company set forth in Section 3(c)(1) or 3(c)(7) of the Investment Company Act.
Excluded from the term “investment securities,” among other things, are U.S. federal government securities and securities issued by majority owned 13 subsidiaries that are not themselves investment companies and are not relying on the exceptions from the definition of investment company set forth in Section 3(c)(1) or 3(c)(7) of the Investment Company Act.
Any increase in these competitive pressures could be detrimental to our business. 9 Intellectual Property We use a combination of proprietary and third-party intellectual property, all of which we believe maintain and enhance our competitive position and protect our products. Such intellectual property includes owned or licensed trademarks, trademark applications, and domain names.
Any increase in these competitive pressures could be detrimental to our business. 10 Intellectual Property We use a combination of proprietary and third-party intellectual property, all of which we believe maintain and enhance our competitive position and protect our products. Such intellectual property includes owned or licensed trademarks, trademark applications, and domain names.
Second, the CFPB has supervision, examination, and enforcement authority over consumer financial products and services offered by certain non-depository institutions and large insured depository institutions. The CFPB also has authority, under the Dodd-Frank Act, to prevent unfair, deceptive or abusive acts and practices in connection with the offering of consumer financial products.
Second, the CFPB has supervision, examination, and enforcement authority over consumer financial products and services offered by certain non-depository institutions and large insured depository institutions. The CFPB also has authority, under the Dodd-Frank Act and specifically the CFPA, to prevent unfair, deceptive, or abusive acts and practices in connection with the offering of consumer financial products.
All new employees are assigned a series of training courses during onboarding, spanning topics such as ethics and insider trading, and are required to attest to our core Company policies such as our information security 10 policy. Such policies are also accessible to employees on the Company’s intranet site.
Further, all new employees are assigned a series of training courses during onboarding, spanning topics such as ethics and insider trading, and are required to attest to our core Company policies such as our information security policy. Such policies are also accessible to employees on the Company’s intranet site.
Our reports, proxy and information statements and other information filed electronically with the SEC can also be accessed at www.sec.gov. Our website also provides access to reports filed by our directors, executive officers and certain significant stockholders pursuant to Section 16 of the Exchange Act.
Our reports, proxy and information statements, and other information filed electronically with the SEC can also be accessed at www.sec.gov. Our investor oriented website also provides access to reports filed by our directors, executive officers, and certain significant stockholders pursuant to Section 16 of the Exchange Act.
American Advisors Group Transaction On March 31, 2023, FAR acquired a majority of the assets and certain of the liabilities of AAG/Bloom, including, among other things, certain residential reverse mortgage loans and the right to service certain HECM, pursuant to (i) an Asset Purchase Agreement, dated as of December 6, 2022 (the “Original Asset Purchase Agreement” and as amended by the Amendment Agreement entered into on March 31, 2023, the “Asset Purchase Agreement”), by and between the Company, FoA Equity, FAR, AAG/Bloom and, for the limited purposes described therein, Reza Jahangiri, an individual residing in the State of California (the “AAG Principal”), (ii) a Servicing Rights Purchase and Sale Agreement, dated as of December 6, 2022 (as amended, the “MSR Purchase Agreement”), by and between FAR and AAG/Bloom and (iii) a Loan Sale Agreement, dated as of December 6, 2022 (as amended, the “Mortgage Loan Purchase Agreement” and collectively with the Asset Purchase Agreement and the MSR Purchase Agreement, the “AAG Purchase Agreements”), by and between FAR and AAG/Bloom (such acquisition, the “AAG Transaction”).
American Advisors Group Transaction On March 31, 2023, FAR acquired a majority of the assets and certain of the liabilities of AAG/Bloom, including, among other things, AAG/Bloom’s retail loan originations platform, certain residential reverse mortgage loans, and the right to service certain HECM, pursuant to (i) an Asset Purchase Agreement, dated as of December 6, 2022 (the “Original Asset Purchase Agreement” and as amended by the Amendment Agreement entered into on March 31, 2023, the “Asset Purchase Agreement”), by and between the Company, FOA Equity, FAR, AAG/Bloom 8 and, for the limited purposes described therein, Reza Jahangiri, an individual residing in the State of California (the “AAG Principal”), (ii) a Servicing Rights Purchase and Sale Agreement, dated as of December 6, 2022 (as amended, the “MSR Purchase Agreement”), by and between FAR and AAG/Bloom, and (iii) a Loan Sale Agreement, dated as of December 6, 2022 (as amended, the “Mortgage Loan Purchase Agreement” and collectively with the Asset Purchase Agreement and the MSR Purchase Agreement, the “AAG Purchase Agreements”), by and between FAR and AAG/Bloom (such acquisition, the “AAG Transaction”).
We enter into confidentiality, intellectual property invention assignment and/or non-competition and non-solicitation agreements or restrictions with our employees, independent contractors and business partners, and we strictly control access to and distribution of our intellectual property.
We enter into confidentiality and/or non-competition and non-solicitation agreements or restrictions with our employees, independent contractors, and business partners, and we strictly control access to and distribution of our intellectual property.
Our business is generally subject to seasonal trends with activity generally decreasing during the winter months. Our lowest revenue and net income levels during the year have historically been in the first quarter, but this is not indicative of future results. Employees and Human Capital Resources As of December 31, 2023, we had 922 U.S.-based employees.
Our business is generally subject to seasonal trends with activity generally decreasing during the winter months. Our lowest revenue and net income levels during the year have historically been in the first quarter, but this is not indicative of future results. Employees and Human Capital Resources As of December 31, 2024, we had 747 U.S.-based employees.
In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics and charters for the standing committees of our Board of Directors are available on our website. Any information on our website is not incorporated by reference into the Form 10-K.
In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and charters for the standing committees of our Board of Directors are available on our investor oriented website. Any information on our websites is not incorporated by reference into the Form 10-K.
During periods of rising rates such as the current economic environment, competitors that have locked in lower costs of capital may have a competitive advantage. Furthermore, a cyclical decline in the industry’s overall level of originations, or decreased demand for loans due to a higher interest rate environment, may lead to increased competition for the remaining loans.
During periods of rising rates, competitors that have locked in lower costs of capital may have a competitive advantage. Furthermore, a cyclical decline in the industry’s overall level of originations, or decreased demand for loans due to a higher interest rate environment, may lead to increased competition for the remaining loans.
Therefore, a reverse mortgage loan represents a practical solution for a significant portion of the senior population, but only 2% of the population age 62 and older currently utilizes a reverse mortgage loan according to a report published by Reverse Mortgage Insight from June 2022.
Therefore, a reverse mortgage loan represents a practical solution for a significant portion of the senior population, but only 2% of the population aged 62 and over currently utilizes a reverse mortgage loan according to a report published by Reverse Mortgage Insight from June 2022.
We both securitize proprietary reverse mortgage loans into mortgage-backed securities sold to investors and sell proprietary reverse mortgage loans as whole loans to investors. We may also decide to strategically hold certain proprietary reverse mortgage loans for investment.
We both securitize non-agency reverse mortgage loans into mortgage-backed securities sold to investors and sell them as whole loans to investors. We may also decide to strategically hold certain non-agency reverse mortgage loans for investment.
We are subject to extensive regulation by federal, state, and local authorities, and a variety of statutes, rules, regulations, policies, and procedures in various jurisdictions in the United States.
We are subject to extensive regulation by federal, state, and local authorities, and a variety of statutes, rules, regulations, policies, and procedures in various jurisdictions in the U.S.
Treasury’s Financial Crimes Enforcement Network; • restrictions imposed by the rules promulgated by the Office of Foreign Assets Control; and • restrictions imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and current or future rules promulgated thereunder, including, but not limited to, limitations on fees charged by mortgage lenders, mortgage broker disclosures, and rules promulgated by the CFPB, which was created under the Dodd-Frank Act.
Treasury’s Financial Crimes Enforcement Network; • restrictions imposed by the rules promulgated by the Office of Foreign Assets Control; and • restrictions imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and current or future rules promulgated thereunder, including, but not limited to, limitations on fees charged by mortgage lenders, mortgage broker disclosures, and rules promulgated by the CFPB, which was created pursuant to Title X of the Dodd-Frank Act, also known as the Consumer Financial Protection Act of 2010 (the “CFPA”).
Pursuant to the AAG Purchase Agreements, in consideration for the assets acquired thereunder, on March 31, 2023, (i) FAR paid to AAG/Bloom $5.5 million in cash less cash on hand and issued to AAG/Bloom a promissory note with an aggregate principal amount of $4.5 million (which was paid in July 2023 in accordance with its terms), (ii) FAR paid off, retired, or assumed specified liabilities, (iii) the Company issued to AAG/Bloom one share of Class B Common Stock, par value $0.0001 per share, of the Company (“Company Class B Common Stock”), and (iv) FoA Equity issued to AAG/Bloom 19,692,990 Class A Units of FoA Equity (“Class A LLC Units”).
Pursuant to the AAG Purchase Agreements, in consideration for the assets acquired thereunder, on March 31, 2023, (i) FAR paid to AAG/Bloom $5.5 million in cash less cash on hand and issued to AAG/Bloom a promissory note with an aggregate principal amount of $4.5 million (which was paid in July 2023 in accordance with its terms), (ii) FAR paid off, retired, or assumed specified liabilities, (iii) the Company issued to AAG/Bloom one share of Class B Common Stock, par value $0.0001 per share, of the Company (“Company Class B Common Stock”), and (iv) FOA Equity issued to AAG/Bloom 1,969,299 Class A Units of FOA Equity (“Class A LLC Units”) (which number reflects the 10:1 reverse split of Class A LLC Units effective on July 25, 2024).
Our strategy and long-term growth initiatives are built upon a few key fundamental factors: • We are focused on growing our core retirement solutions businesses, which benefit from a shared set of demographic and economic tailwinds.
Our strategy and long-term growth initiatives are built upon a few key fundamental factors: • We are focused on growing our core retirement solutions business, which benefits from demographic and economic tailwinds.
We also monitor the types of benefits available in the market and consider adding new benefits from time to time in order to better meet the needs of our employees. Regulation Our consumer-facing businesses market and provide services through a number of different channels across the United States.
We also monitor the types of benefits available in the market and consider adding new benefits from time to time in order to better meet the needs of our employees. Regulation Our consumer-facing business markets and provides services through a number of different channels across the U.S.
Of these, there were 919 full-time and 3 part-time employees. We had an additional 14 employees based in the Philippines. As of December 31, 2023, we also employed 18 full-time contractors. None of our employees are represented by a labor union, and we consider our employee relations to be good.
Of these, there were 745 full-time and two part-time employees. We had an additional six employees based in the Philippines. As of December 31, 2024, we also employed 8 full-time contractors in the U.S. and 98 part-time contractors in the Philippines. None of our employees are represented by a labor union, and we consider our employee relations to be good.
The capabilities provided by the Portfolio Management segment allowed us to complete issuances and sales of mortgage-backed securities backed by our loan products in 2023, demonstrating the high quality and liquidity of the loan products we originate, the deep relationships we have with our investors, and the resilience of our business model in many economic environments.
The capabilities provided by the Portfolio Management segment allowed us to complete several issuances and sales of mortgage-backed securities backed by our loan products in 2024, including our first issuance and sale of mortgage-backed securities backed exclusively by our non-agency second lien reverse mortgage loan product, demonstrating the high quality and liquidity of the loan products we originate, the deep relationships we have with our investors, and the resilience of our business model in many economic environments.
The aggregate Class A LLC Units issued to AAG/Bloom on March 31, 2023, together with the Class A LLC Units that are issuable to AAG/Bloom pursuant to the Purchase Agreements, would be exchangeable for 33,893,666 shares of Class A Common Stock pursuant to the Exchange Agreement, dated as of April 1, 2021 (the “Exchange Agreement”), by and among FoA, FoA Equity and the holders of Class A LLC Units from time to time, as an “LLC Unitholder” thereunder.
The aggregate Class A LLC Units issued to AAG/Bloom on March 31, 2023, together with the Class A LLC Units that have been issued or are issuable to AAG/Bloom pursuant to the Purchase Agreements, would be exchangeable for 3,389,366 shares of Class A Common Stock pursuant to the Exchange Agreement, dated as of April 1, 2021 (the “Exchange Agreement”), by and among FOA, FOA Equity, and the holders of Class A LLC Units from time to time, as an “LLC Unitholder” thereunder (which number reflects the 10:1 reverse splits of Class A Common Stock and Class A LLC Units, each effective on July 25, 2024).
Failure to comply with these rules can result in delays or rescission of foreclosure and subject the servicer to penalties and damages. 13 Additional Information To learn more about Finance of America Companies Inc., please visit our website at www.financeofamerica.com. From time to time, we use our website as a channel of distribution of material Company information.
Failure to comply with these rules can result in delays or rescission of foreclosure and subject the servicer to penalties and damages. 14 Additional Information To learn more about Finance of America Companies Inc., please visit our investor oriented website at www.financeofamericacompanies.com and our consumer oriented website at www.financeofamerica.com.
Through the end of the third fiscal quarter of 2022, the Company was principally focused on offering (1) a wide array of loan products throughout the United States of America (“U.S.”), including reverse mortgage loans, 5 traditional mortgage loans, business purpose loans to residential real estate investors, and home improvement loans, and (2) complementary lender services such as title insurance and settlement services to mortgage businesses.
FAH is the parent of a lending company, Finance of America Reverse LLC (“FAR”), while Incenter is the parent of operating service companies (together with FAR, the “operating subsidiaries”) that provide capital markets and portfolio management capabilities. 5 Through the end of the third fiscal quarter of 2022, the Company was principally focused on offering (1) a wide array of loan products throughout the United States of America (the “U.S.”), including reverse mortgage loans, traditional mortgage loans, business purpose loans to residential real estate investors, and home improvement loans, and (2) complementary lender services, such as title insurance and settlement services, to mortgage businesses.
Through FAR, the Company originates, acquires, and services home equity conversion mortgages (“HECM”), which are originated pursuant to the Federal Housing Administration (the “FHA”) HECM program and are insured by the FHA, and proprietary reverse mortgage loans and hybrid mortgage loans (which combine features of both traditional residential mortgage loans and reverse mortgage loans), which are not insured by the FHA.
Through FAR, the Company originates, acquires, and services (in partnership with third-party subservicers) home equity conversion mortgages (“HECM”), which are originated pursuant to the Federal Housing Administration (the “FHA”) HECM program and are insured by the FHA, and non-agency reverse mortgage loans, which are not insured by the FHA.
Our compliance training program covers an array of legal and regulatory topics. All consumer-facing employees are assigned required courses that educate them on compliance with consumer protection laws for the industries in which we operate.
All consumer-facing employees are assigned required courses that educate them on compliance with 11 consumer protection laws for the industries in which we operate.
Our Segments In connection with the transformation of our business from a vertically integrated, diversified lending and complementary services platform to a modern retirement solutions platform as described above under “Organizational Transformation ,” we realigned our business to operate through two reportable segments: Retirement Solutions and Portfolio Management.
In connection with the brand unification, the Company also aligned under a shared set of core values in furtherance of the Company’s mission to help people live retirement to the fullest. 9 Our Segments In connection with the transformation of our business from a vertically integrated lending and complementary services platform to a unified modern retirement solutions platform as described above under “Organizational Transformation ,” we realigned our business to operate through two reportable segments: Retirement Solutions and Portfolio Management.
When HECM are not eligible for securitization into HMBS or are required to be bought out of a 6 pool of HECM previously securitized into an HMBS, we securitize them into privately placed mortgage-backed securities or hold them for investment.
When HECM are not eligible for securitization into HMBS or are required to be bought out of a pool of HECM previously securitized into an HMBS, we securitize them into privately placed mortgage-backed securities or hold them for investment. In November 2024, Ginnie Mae announced the finalized term sheet for its HMBS 2.0 program expected to be implemented in 2025.
The primary objective is to equip employees with the essential knowledge, skills, and resources needed to adjust quickly to their new work environment, enabling them to make meaningful contributions to the organization’s objectives.
The primary objective is to equip employees with the essential knowledge, skills, and resources needed to adjust quickly to their new work environment, enabling them to make meaningful contributions to the organization’s objectives. Additionally, we have a robust compliance training program that covers an array of legal and regulatory topics.
Against this economic backdrop, we believe the U.S. reverse mortgage market opportunity remains strong and is a key component of an existing underserved market of seniors in the U.S.
We believe the U.S. home equity market opportunity is strong and that reverse mortgages are a key component in addressing an existing underserved market of seniors in the U.S.
The Company completed the sale of such assets on June 30, 2023. During the quarter ended September 30, 2023, the Company ceased the operations of Incenter Solutions LLC.
The Company completed the sale of such assets on June 30, 2023. During the quarter ended September 30, 2023, the Company ceased the operations of its Incenter Solutions LLC operating service subsidiary. The wind-down of Incenter Solutions LLC was substantially complete as of December 31, 2023.
We are a leader in this market and we are focused on developing and offering products for borrowers with interest in using the reverse mortgage loan product as a retirement planning tool.
We are a leader in this market and we are focused on developing and offering products for borrowers with interest in using a reverse mortgage loan as a retirement planning tool, which we believe will continue to increase our addressable customer base and ultimately raise our origination volumes.
We originate loans through a retail channel (consisting primarily of a centralized retail platform) and a third-party originator (“TPO”) channel (consisting primarily of a network of mortgage brokers).
We originate loans through a retail channel (consisting primarily of a centralized retail platform) and a third-party originator (“TPO”) channel (consisting primarily of a network of mortgage brokers). In 2024, we took steps to streamline and enhance our marketing and originations operations and digital capabilities.
We seek to programmatically and profitably monetize our loans, which minimizes capital at risk, while often retaining a future performance-based participation interest in the underlying cash flows of our monetized loans. • We distribute our products through multiple channels, including through newer channels as a result of the asset acquisition from American Advisors Group, now known as Bloom Retirement Holdings Inc.
We seek to programmatically and profitably monetize our loans, which minimizes capital at risk, while often retaining a future performance-based participation interest in the underlying cash flows of our monetized loans.
On August 31, 2023, FAM entered into an agreement to sell certain operational assets of the home improvement lending business. This transaction closed on September 15, 2023.
On August 31, 2023, the Company entered into an agreement to sell certain operational assets of the home improvement lending business. This transaction closed on September 15, 2023. In connection with such transaction, the Company began the process of winding down the operations of the home improvement lending business, which was substantially complete as of March 31, 2024.
Further, based on quarterly estimates published by the National Reverse Mortgage Lenders Association in conjunction with RiskSpan, Inc. regarding the reverse mortgage market, homeowners 62 and older have approximately $13.08 trillion in home equity as of the third quarter of 2023.
However, according to data from Statista, over 79% of Americans aged 65 and over own their home. Further, based on quarterly estimates published by the National Reverse Mortgage Lenders Association in conjunction with RiskSpan, Inc., homeowners aged 62 and over have $14 trillion in home equity as of the third quarter of 2024.
We have launched several proprietary reverse mortgage loan products (including our hybrid mortgage loan product) to serve the U.S. senior population and have plans for additional innovative products to satisfy this vast and largely underserved market. We also service the loans that we originate, contracting with various third-party subservicers for the subservicing of our loans.
We have launched several non-agency reverse mortgage loan products to serve the U.S. senior population and have plans for additional innovative products to satisfy this vast and largely underserved market.
Americans are often not financially prepared for retirement, with the aggregate retirement savings shortfall estimated to be $3.68 trillion, according to an estimate from the Employee Benefit Research Institute. However, according to data from Statista, over 79% of Americans ages 65 or older own their home.
While the number of Americans at retirement age is increasing and projected to continue to increase, Americans are often not financially prepared for retirement, with the aggregate retirement savings shortfall estimated to be $3.68 trillion, according to an estimate from the Employee Benefit Research Institute.
This segment includes all loan origination activity for the Company, including the origination of HECM, proprietary reverse mortgage loans, and hybrid mortgage loans through both the retail and wholesale/TPO channels.
Retirement Solutions Our Retirement Solutions segment conducts all of our Company’s loan origination activity, including the origination and acquisition of HECM and non-agency reverse mortgage loans through both the retail and TPO channels.
The wind-down of Incenter Solutions LLC was substantially complete by the end of December 2023. 7 On February 19, 2023, FAH entered into an agreement to sell certain commercial originations operational assets of FAM, operating under the brand Finance of America Commercial, which transaction closed on March 14, 2023.
On February 19, 2023, the Company entered into an agreement to sell certain commercial originations operational assets of FAM, operating under the brand Finance of America Commercial. This transaction closed on March 14, 2023. In connection with the transaction, the Company discontinued the operations of and wound-down its commercial lending segment.
Our core values center around the mantra “customers first, last, and always.” We aim to always do the right thing for our customers, investors, and other counterparties. We believe our commitment to customer service coupled with our involvement in the loan process throughout its life cycle gives us the ability to deliver a value proposition unmatched in the industry.
We believe our involvement in the loan process throughout its life cycle coupled with our commitment to our mission gives us the ability to deliver a value proposition unmatched in the industry.
We believe we can more effectively dispatch our innovative suite of solutions to help senior homeowners achieve their retirement goals through the use of home equity. • We seamlessly connect borrowers with investors.
We believe we can continue to enhance, expand, and more effectively dispatch our innovative suite of home equity-based financing solutions to help senior homeowners achieve their retirement goals. • We distribute our products through multiple channels and utilize flexible technology platforms in order to scale our business and manage costs efficiently. • We connect borrowers with investors.
As of December 31, 2023, we had approximately $0.6 billion of liquidity sources available to fund continuing operations, comprised of (i) $46.5 million of cash and cash equivalents and (ii) $0.6 billion of undrawn warehouse lines of credit.
As of December 31, 2024, we had $0.7 billion of liquidity sources 7 available to fund continuing operations, comprised of (i) $47.4 million of cash and cash equivalents and (ii) $0.7 billion of undrawn warehouse lines of credit. We believe that our culture plays a significant role in producing superior outcomes for both our customers and our business.
Organizational Transformation During the fourth quarter of 2022 and calendar year 2023, the Company entered into a series of transactions, discontinuing certain business lines while enhancing our reverse mortgage loan business, as described in further detail below, in order to transform our business from a vertically integrated, diversified lending and complementary services platform to a modern retirement solutions platform.
Organizational Transformation During the fourth quarter of 2022 and calendar year 2023, the Company entered into a series of transactions, discontinuing certain business lines, while enhancing our reverse mortgage loan business through the acquisition of operational assets from American Advisors Group, now known as Bloom Retirement Holdings Inc. (“AAG/Bloom”).
Our Portfolio Management team acts as the connector between borrowers and investors. The direct connections to investors, provided by our Financial Industry Regulatory Authority (“FINRA”) registered broker-dealer, allows us to innovate and manage risk through better price and product discovery.
The direct connections to investors, provided by our Financial Industry Regulatory Authority (“FINRA”) registered broker-dealer, allows us to innovate and manage risk through better price and product discovery. Given our scale, we are able to work directly with investors and, where appropriate, retain assets on the balance sheet for attractive return opportunities.
These objectives are accomplished through a commitment to diversity, equity, and inclusion (“DEI”), an emphasis on training and development, and the provision of a comprehensive benefits package with a focus on physical and mental wellness.
These values drive our actions and decisions every day, fostering a culture of trust, collaboration, and excellence and ensuring our employees work together effectively. These objectives are accomplished through an emphasis on training and development and the provision of a comprehensive benefits package with a focus on physical and mental wellness.
Compliance with consumer protection regulations is supported by robust technology and monitored by our Compliance department.
FOA utilizes a modern learning management platform that houses our centralized training and organizational development content. Compliance with consumer protection regulations is supported by robust technology and monitored by our Compliance department.
While FAM has sold certain operational assets of its home improvement lending business and expects to substantially complete the process of winding down the operations of the home improvement lending business by the end of March 2024, the operations of the home improvement lending business are reported as part of the Company’s Retirement Solutions segment rather than as discontinued operations.
The Company sold the operational assets of its home improvement lending business and substantially completed the process of winding down the operations of the home improvement lending business as of March 31, 2024.
As of December 31, 2023, we had $1.5 billion of committed or uncommitted loan funding capacity related to continuing operations, comprised of 13 lending facilities with 10 different counterparties.
In 2024, our Company entered into two new warehouse lines of credits with financial institutions that were new to reverse mortgage lending. As of December 31, 2024, we had $1.6 billion of committed or uncommitted loan funding capacity, comprised of 14 lending facilities with 11 different counterparties.
Item 1. Business Finance of America Companies Inc. Finance of America Companies Inc. is a financial services holding company which, through its operating subsidiaries, is a modern retirement solutions platform that provides customers with access to an innovative range of retirement offerings centered on the home.
Item 1. Business Finance of America Companies Inc. Finance of America Companies Inc. (“FOA”) is a financial services holding company which, through its operating subsidiaries, is a leading provider of home equity-based financing solutions for a modern retirement. In addition, FOA offers capital markets and portfolio management capabilities primarily to optimize the distribution of its originated loans to investors.
Our long-term success as an organization depends upon our ability to maintain and develop our human capital. We strive to foster an environment that is safe and healthy. We also strive to promote a strong culture across our business that recognizes the importance of respecting one another and our customers.
Our long-term success as an organization depends upon our ability to maintain and develop our human capital. We strive to promote a strong culture across our business that is driven by our core values: (1) be customer obsessed, they are why we exist, (2) raise the bar, (3) take extreme ownership, (4) practice genuine collaboration, and (5) unleash your excellence.
Under the AAG Purchase Agreements, FoA Equity may issue to AAG/Bloom up to 14,200,676 additional Class A LLC Units upon the occurrence of certain events. The maximum number of Class A LLC Units issuable to AAG/Bloom under the AAG Purchase Agreements is 33,893,666 Class A LLC Units.
Under the AAG Purchase Agreements, FOA Equity may issue to AAG/Bloom up to 1,420,067 additional Class A LLC Units upon the occurrence of certain events, 705,841 of which had been issued as of December 31, 2024 (which numbers reflect the 10:1 reverse split of Class A LLC Units effective on July 25, 2024).
The Portfolio Management segment generates revenue from the sale or securitization of loans, fair value gains on portfolio assets, interest income, fee income related to mortgage servicing rights (“MSR”), and mortgage advisory fees earned on various investment and capital markets services we provide to our internal and external customers .
These retained investments are a source of growing and recurring interest and other servicing-related income. The Portfolio Management segment primarily generates revenue from the net interest income and fair value changes on portfolio assets, monetized through securitization, sale, or other financing of those assets.
Removed
In addition, FoA offers capital markets and portfolio management capabilities primarily to optimize the distribution of its originated loans to investors.
Added
In 2024, the Company focused on unifying and enhancing its streamlined retirement solutions business and solidifying its position as a leading provider of home equity-based financing solutions for a modern retirement.
Removed
FAH is the parent of a lending company, Finance of America Reverse LLC (“FAR”), while Incenter is the parent of operating service companies (together with FAR, the “operating subsidiaries”) that provide capital markets and portfolio management capabilities such as secondary markets advisory services, mortgage trade brokerage, and capital management services .
Added
We are a leading provider of home equity-based financing solutions for a modern retirement, offering innovative financing tools to help homeowners aged 55 and over make the most of their housing wealth and achieve a more secure retirement. Today, we are principally focused on offering reverse mortgage loan products throughout the U.S.
Removed
(“AAG/Bloom”), that closed on March 31, 2023, and utilize flexible technology platforms in order to scale our businesses and manage costs efficiently. Today, we are principally focused on offering reverse mortgage loan products throughout the U.S. Our pivot to retirement-focused lending was the result of macroeconomic factors, including high inflation coupled with a prolonged higher interest rate environment.
Added
Based on U.S. census data, the U.S. population aged 65 and over grew nearly five times faster than the total population from 1920 to 2020, with the decade before 2020 experiencing the fastest increase in the U.S. population aged 65 and over since 1880 to 1890.
Removed
Based on U.S. census data, nearly 10,000 people in the U.S. have turned 65 every day since 2010 and, over time, seniors are expected to reach 20% of the population in the U.S.
Added
According to data published by the Administration for Community Living (an operating division of the U.S.
Removed
We believe that our culture, which seeks to promote the highest ethical standards, plays a significant role in producing superior outcomes not only for our customers but also for our business. We place a high value on honesty, transparency, and integrity, which we believe has engendered trust from our customers, lenders, and investors.
Added
Department of Health and Human Services), this growth resulted in 57.8 million Americans aged 65 and over in 2022, representing more than 1 in every 6 Americans, and the population of Americans aged 65 and over is projected to reach over 78 million by 2040.
Removed
In connection with such transaction, the Company began the process of winding down the operations of the home improvement lending business, which is expected to be substantially complete by the end of March 2024.
Added
We believe that we can meaningfully increase penetration of this addressable market because our offerings are specifically designed to unlock home equity for homeowners aged 55 and over.
Removed
In connection with the transaction, the Company discontinued the operations of and wound-down its commercial lending segment.
Added
For example, in 2023, we launched a non-agency second lien reverse mortgage loan product, second in priority behind the first lien of an existing traditional forward mortgage loan or home equity line of credit collateralized by the same 6 mortgaged property.
Removed
See Note 1 - 8 Organization and Description of Business in the Notes to Consolidated Financial Statements for more information about the realignment of our reportable segments. Retirement Solutions The mission of our Retirement Solutions segment is to help senior homeowners achieve their financial goals in retirement.
Added
In 2024, we invested more capital and resources into the second lien product, including marketing and digital efforts, in order to expand its reach through a leading broker facing platform and expansion of the product to additional states.
Removed
Given our scale, we are able to work directly with investors and, where appropriate, retain assets on the balance sheet for attractive return opportunities. These retained investments are a source of growing and recurring interest and servicing income categorized within its net fair value gains.
Added
The launch and expansion of the second lien product has enabled us to serve borrowers who already have and desire to maintain a low-rate primary mortgage but want the convenience of a flexible second lien with no required monthly principal and interest payments, exemplifying our commitment to meet and serve new kinds of borrowers whose needs are not satisfied by existing available products.
Removed
While technology and intellectual property enhance our competitive position, given the nature of our lending business, patents, trademarks, and licenses are not material to our operations as a whole or to any of our segments.
Added
As described in further detail below under “Organizational Transformation— Integration of AAG/Bloom Assets; Brand Unification ,” we transitioned our sales teams onto one loan origination system, making our origination operations more efficient, and unified under the single brand name “Finance of America,” creating a recognizable identity that clarifies the Company’s offerings in the market.
Removed
Diversity, Equity, and Inclusion In 2023, we continued our commitment to DEI and took steps to make that commitment clear to our employees, investors, stakeholders, and future talent. Diversity is simply a fact in our geographically dispersed workforce.
Added
This brand unification included the launching of new brand assets across the Company’s platforms. Further, in the second quarter of 2024, we modified our go-to-market strategy within our retail channel to focus on our most efficient business lines and stepped away from business lines and campaigns that had been less effective. Additionally, efforts are underway to develop our digital capabilities.
Removed
It is important to acknowledge our differences and the value that our varied experiences and perspectives can bring to the Company, which can lead to innovation and revenue growth.
Added
Our digital innovation strategy is designed to deliver financial services to seniors in a way that is both modern and user friendly. We are working to build a digital channel that will supplement our existing lines of business and leverage automated digital tools to improve efficiency and the overall ease of transacting.
Removed
We believe that we can increase employee engagement and retention and improve recruitment of the best talent by creating an inclusive culture, compensating employees fairly, and providing opportunities to grow and thrive. Employee Training and Development Finance of America utilizes a modern learning management platform that houses our centralized training and organizational development content, including compliance training.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs of December 31, 2023, the Company has 4,258,500 shares of Class A Common Stock issued and unvested and 5,899,400,759 shares of Class A Common Stock authorized but unissued, including 121,277,826 shares of Class A Common Stock issuable upon exchange of Class A LLC Units that are held by the FoA Equity unitholders, 11,692,990 shares of Class A Common Stock issuable upon exchange of Class A LLC Units that are held by AAG/Bloom, 14,200,676 shares of Class A Common Stock issuable upon exchange of Class A LLC Units that are issuable to AAG/Bloom in connection with our acquisition of operational assets from AAG/Bloom and 14,375,000 shares of Class A Common Stock issuable upon exercise of the Warrants.
Biggest changeAs of December 31, 2024, the Company had 425,850 shares of Class A Common Stock issued and unvested and 5,989,639,701 shares of Class A Common Stock authorized but unissued, including 12,016,628 shares of Class A Common Stock issuable upon exchange of Class A LLC Units that are held by FOA Equity unitholders (other than AAG/Bloom and the Company), 1,875,140 shares of Class A Common Stock issuable upon exchange of Class A LLC Units that are held by AAG/Bloom, 714,226 shares of Class A Common Stock issuable upon exchange of Class A LLC Units that are potentially issuable to AAG/Bloom in connection with our acquisition of operational 58 assets from AAG/Bloom, 5,337,928 shares of Class A Common Stock issuable upon exchange of Exchangeable Secured Notes, 720,000 shares of Class A Common Stock issuable upon exchange of Class A LLC Units that are issuable upon exercise of options granted to certain of the Company’s executive officers, 1,298,877 shares of Class A Common Stock issuable upon settlement of outstanding Non-LTIP Restricted Stock Units (“Non-LTIP RSUs”), 899,995 shares of Class A Common Stock issuable upon the occurrence of the First Earnout Achievement Date (or upon exchange of Class A LLC Units that are issuable upon the occurrence of the First Earnout Achievement Date) (72,900 of which would be exchanged to fund the settlement of the Earnout Right Restricted Stock Units (“Earnout Right RSUs”) that vest on the First Earnout Achievement Date), 899,995 shares of Class A Common Stock issuable upon the occurrence of the Second Earnout Achievement Date (or upon exchange of Class A LLC Units that are issuable upon the occurrence of the Second Earnout Achievement Date) (72,900 of which would be exchanged to fund the settlement of the Earnout Right RSUs that vest on the Second Earnout Achievement Date), and 1,437,500 shares of Class A Common Stock issuable upon exercise of certain warrants.
In addition, HUD changed the determination of the debenture interest rate (the interest earned on loss claims between the due & payable date and the date of the loss claim) to be as of the date the loan becomes due & payable rather than the initial date the loan was endorsed by the FHA.
In addition, HUD changed the determination of the debenture interest rate (the interest earned on loss claims between the due and payable date and the date of the loss claim) to be as of the date the loan becomes due and payable rather than the initial date the loan was endorsed by the FHA.
These laws, regulations and oversight can significantly affect the way that we do business, can restrict the scope of our existing business, limit our ability to expand our product offerings or to pursue acquisitions, or can make our costs to service or originate loans higher, which could impact our financial results.
These laws, regulations, and oversight can significantly affect the way that we do business, restrict the scope of our existing business, limit our ability to expand our product offerings or to pursue acquisitions, or make our costs to service or originate loans higher, which could impact our financial results.
We must comply with a large number of federal, state and local consumer protection laws including, among others, TILA, as amended, together with its implementing regulations (Regulation Z), the FDCPA, RESPA, as amended, together with its implementing regulations (Regulation X), ECOA, as amended, together with its implementing regulations (Regulation B), FCRA, as amended, and its implementing regulations (Regulation V), the Fair Housing Act, the Telephone Consumer Protection Act, as amended, GLBA, together with its implementing regulations (Regulation P), the Mortgage Advertising Practices Rules (Regulation N), the Electronic Funds Transfer Act, as amended, and its implementing regulations (Regulation E), the Servicemembers’ Civil Relief Act, as amended, HMDA, together with its implementing regulations (Regulation C), the Secure and Fair Enforcement for Mortgage Licensing Act, as amended, the Federal Trade Commission Act, the Dodd-Frank Act, as amended, together with its implementing regulations, U.S. federal and state laws prohibiting unfair, deceptive or abusive acts or practices and state foreclosure laws.
We must comply with a large number of federal, state, and local consumer protection laws including, among others, TILA, as amended, together with its implementing regulations (Regulation Z), the FDCPA, RESPA, as amended, together with its implementing regulations (Regulation X), ECOA, as amended, together with its implementing regulations (Regulation B), FCRA, as amended, together with its implementing regulations (Regulation V), the Fair Housing Act, the Telephone Consumer Protection Act, as amended, GLBA, together with its implementing regulations (Regulation P), the Mortgage Advertising Practices Rules (Regulation N), the Electronic Funds Transfer Act, as amended, together with its implementing regulations (Regulation E), the Servicemembers’ Civil Relief Act, as amended, HMDA, together with its implementing regulations (Regulation C), the Secure and Fair Enforcement for Mortgage Licensing Act, as amended, the Federal Trade Commission Act, the Dodd-Frank Act, as amended, together with its implementing regulations, U.S. federal and state laws prohibiting unfair, deceptive, or abusive acts or practices, and state foreclosure laws.
Moreover, regulatory changes resulting from the Dodd-Frank Act, other regulatory changes such as the CFPB’s examination and enforcement authority and the “whistleblower” provisions of the Dodd-Frank Act and guidance on whistleblowing programs issued by the New York State Department of Financial Services could increase the number of legal and regulatory enforcement proceedings against us.
Moreover, regulatory changes resulting from the Dodd-Frank Act and other regulatory changes such as the CFPB’s examination and enforcement authority, the “whistleblower” provisions of the Dodd-Frank Act, and guidance on whistleblowing programs issued by the New York State Department of Financial Services could increase the number of legal and regulatory enforcement proceedings against us.
Upon the occurrence and during the continuance of an event of default, the holders of our indebtedness could elect to declare all the funds borrowed to be due and payable.
Upon the occurrence and during the continuance of an event of default, the holders of our indebtedness could elect to declare all the funds borrowed to be due and payable.
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and NYSE in particular, has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected.
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and the NYSE in particular, has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected.
The Company is a “controlled company” within the meaning of NYSE rules and, as a result, qualifies for exemptions from certain corporate governance requirements. The stockholders of the Company do not have the same protections afforded to stockholders of companies that are subject to such requirements.
The Company is a “controlled company” within the meaning of the NYSE rules and, as a result, qualifies for exemptions from certain corporate governance requirements. The stockholders of the Company do not have the same protections afforded to stockholders of companies that are subject to such requirements.
As a result, the Company is a “controlled company” within the meaning of NYSE corporate governance standards.
As a result, the Company is a “controlled company” within the meaning of the NYSE corporate governance standards.
Among other things, these provisions: • provide that subject to the rights of the holders of any preferred stock and the rights granted pursuant to the Stockholders Agreement, vacancies and newly created directorships may be filled only by the remaining directors at any time the principal stockholders beneficially own less than 30% of the total voting power of all then outstanding shares of the Company’s capital stock entitled to vote generally in the election of directors; • allow the Company to authorize the issuance of shares of one or more series of preferred stock, including in connection with a stockholder rights plan, financing transactions or otherwise, the terms of which series may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent from and after the date on which the principal stockholders beneficially own at least 30% of the total voting power of all then outstanding shares of the Company’s capital stock entitled to vote generally in the election of directors unless such action is recommended by all directors then in office; • provide for certain limitations on convening special stockholder meetings; and • establish advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Among other things, these provisions: • provide that subject to the rights of the holders of any preferred stock and the rights granted pursuant to the Stockholders Agreement, vacancies and newly created directorships may be filled only by the remaining directors at any time the principal stockholders beneficially own less than 30% of the total voting power of all then outstanding shares of the Company’s capital stock entitled to vote generally in the election of directors; • allow the Company to authorize the issuance of shares of one or more series of preferred stock, including in connection with a stockholder rights plan, financing transactions, or otherwise, the terms of which series may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent from and after the date on which the principal stockholders beneficially own at least 30% of the total voting power of all then outstanding shares of the Company’s 57 capital stock entitled to vote generally in the election of directors unless such action is recommended by all directors then in office; • provide for certain limitations on convening special stockholder meetings; and • establish advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Our high level of debt could have important consequences, including the following: • making it more difficult for us to satisfy our obligations with respect to our debt; 42 • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a disadvantage compared to other, less leveraged competitors; and • increasing our cost of borrowing.
Our high level of debt could have important consequences, including the following: • making it more difficult for us to satisfy our obligations with respect to our debt; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, or other general corporate requirements; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions, and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a disadvantage compared to other, less leveraged competitors; and • increasing our cost of borrowing.
To the extent that an examination or other regulatory engagement reveals a failure by us to comply with applicable law, regulations or licensing requirements, this could lead to (i) loss of our licenses and approvals to engage in our business, (ii) damage to our reputation in the industry and loss of client relationships, (iii) governmental investigations and enforcement actions resulting in administrative fines and penalties, (iv) litigation, (v) civil and criminal liability, including class action lawsuits, and actions to recover incentive and other payments made by governmental entities, (vi) enhanced compliance requirements, (vii) breaches of covenants and representations under our servicing, debt or other agreements, (viii) inability to raise capital and (ix) inability to execute on our business strategy.
To the extent that an examination or other regulatory engagement reveals a failure by us to comply with applicable law, regulations, or licensing requirements, this could lead to (i) loss of our licenses and approvals to engage in our business, (ii) damage to our reputation in the industry and loss of client relationships, (iii) governmental investigations and enforcement actions resulting in administrative fines and penalties, (iv) litigation, (v) civil and criminal liability, including class action lawsuits, and actions to recover incentive and other payments made by 44 governmental entities, (vi) enhanced compliance requirements, (vii) breaches of covenants and representations under our servicing, debt, or other agreements, (viii) inability to raise capital, and (ix) inability to execute on our business strategy.
See “Risks Related to Laws and Regulations—Unlike competitors that are national banks, we are subject to state licensing and operational requirements that result in substantial compliance costs and risks.” Failure of the Subservicers to comply with applicable laws and regulations may expose them to fines, responsibility for refunds to borrowers, loss of licenses needed to conduct their business, and third-party litigation, all of which may adversely impact the Subservicers’ financial condition and ability to perform their responsibilities under the related subservicing agreement.
See “—Risks Related to Laws and Regulations—Unlike competitors that are national banks, we are subject to state licensing and operational requirements that result in substantial compliance costs and risks.” Failure of the Subservicers to comply with applicable laws and regulations may expose them to fines, responsibility for refunds to borrowers, loss of licenses needed to conduct their business, and third-party litigation, all of which may adversely impact the Subservicers’ financial condition and ability to perform their responsibilities under the related subservicing agreement.
The Board of Directors of the Company (the “Board”), in its sole discretion, will make any determination from time to time with respect to the use of any such excess cash so accumulated, which may include, among other uses, acquiring additional newly issued Class A LLC Units from FoA Equity at a per unit price determined by reference to the 48 market value of the Class A Common Stock; paying dividends, which may include special dividends, on its Class A Common Stock; funding repurchases of Class A Common Stock; or any combination of the foregoing.
The Board of Directors of the Company (the “Board”), in its sole discretion, will make any determination from time to time with respect to the use of any such excess cash so accumulated, which may include, among other uses, acquiring additional newly issued Class A LLC Units from FOA Equity at a per unit price determined by reference to the market value of the Class A Common Stock; paying dividends, which may include special dividends, on its Class A Common Stock; funding repurchases of Class A Common Stock; or any combination of the foregoing.
Given our Company’s transformation into a modern retirement solutions platform and the related steps that we have taken to streamline our business, integrate acquired operations and reduce expenses, we are subject to certain legal claims from third parties including transaction counterparties, prior vendors or contract counterparties and current and former employees, in each case, of the Company (including its discontinued operations) or another transaction counterparty or legacy seller or company.
Given our Company’s transformation into a unified modern retirement solutions platform and the related steps that we have taken to streamline our business, integrate acquired operations, and reduce expenses, we are subject to certain legal claims from third parties including transaction counterparties, prior vendors or contract counterparties, and current and former employees, in each case, of the Company (including its discontinued operations) or another transaction counterparty or legacy seller or company.
If our marketing and disclosure documentation is alleged or found to contain material inaccuracies or omissions, we may be liable under federal and state securities laws (or under other laws) for damages to third parties that invest in these securitization transactions, including in circumstances where we relied on a third-party in preparing accurate disclosures, or we may incur other expenses and costs in connection with disputing these allegations or settling claims.
If our marketing and disclosure documentation is alleged or found to contain material inaccuracies or omissions, we may be liable under federal and state securities laws (or under other 32 laws) for damages to third parties that invest in these securitization transactions, including in circumstances where we relied on a third-party in preparing accurate disclosures, or we may incur other expenses and costs in connection with disputing these allegations or settling claims.
The risks associated with acquisitions include, among others: • failing to identify or adequately assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring or investing in a company, including potential exposure to regulatory 19 sanctions or liabilities resulting from an acquisition target’s previous activities, internal controls and information security environment; • significant costs and expenses, including those related to retention payments, equity compensation, severance pay, intangible asset amortization and asset impairment charges, assumed litigation and other liabilities, and legal, accounting and financial advisory fees; • unanticipated issues in integrating information, management style, controls and procedures, servicing practices, communications and other systems including information technology system; • unanticipated incompatibility of purchasing, logistics, marketing and administration methods; • failing to retain key employees or clients; • inaccuracy of valuation and/or operating assumptions supporting our purchase price; and • representation and warranty liability relating to a target’s previous lending activities.
The risks associated with acquisitions include, among others: • failing to identify or adequately assess the magnitude of certain liabilities, shortcomings, or other circumstances prior to acquiring or investing in a company, including potential exposure to regulatory sanctions or liabilities resulting from an acquisition target’s previous activities, internal controls, and information security environment; • significant costs and expenses, including those related to retention payments, equity compensation, severance pay, intangible asset amortization and asset impairment charges, assumed litigation, and other liabilities, and legal, accounting, and financial advisory fees; • unanticipated issues in integrating information, management style, controls and procedures, servicing practices, communications, and other systems including information technology systems; • unanticipated incompatibility of purchasing, logistics, marketing, and administration methods; • failing to retain key employees or clients; • inaccuracy of valuation and/or operating assumptions supporting our purchase price; and • representation and warranty liability relating to a target’s previous lending activities.
The use of artificial intelligence can lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which 21 could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies and the risk that using such technologies could result in leakage of our confidential information.
The use of artificial intelligence can lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies and the risk that using such technologies could result in leakage of our confidential information.
Moreover, the proliferation of social media websites as well as the personal use of social media by our employees and others, including personal blogs and social network profiles, also may increase the risk that negative, inappropriate or unauthorized information may be posted or released publicly that could harm our reputation or have other negative consequences, including as a result of our employees interacting with our customers in an unauthorized manner in various social media outlets.
Moreover, the proliferation of social media websites as well as the personal use of social media by our employees and others, including personal blogs and social network profiles, also may increase the risk that negative, inappropriate, or unauthorized information may be posted or released publicly that could harm our reputation or 24 have other negative consequences, including as a result of our employees interacting with our customers in an unauthorized manner in various social media outlets.
To the extent any of these service providers are liable for damages to third parties that have invested in these securitization transactions, we may incur costs and expenses as a result of these indemnities. 30 Third-Party Loan Broker Risk: The brokers through whom we originate have parallel and separate legal obligations to which they are subject.
To the extent any of these service providers are liable for damages to third parties that have invested in these securitization transactions, we may incur costs and expenses as a result of these indemnities. Third-Party Loan Broker Risk: The brokers through whom we originate have parallel and separate legal obligations to which they are subject.
If we were required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use 39 borrowings), management, operations, transactions with affiliated persons (as defined in the Investment Company Act) and portfolio composition, including disclosure requirements and restrictions with respect to diversification and industry concentration and other matters.
If we were required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use borrowings), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), and portfolio composition, including disclosure requirements and restrictions with respect to diversification and industry concentration and other matters.
To the extent that the Company needs funds and FoA Equity is unable to make distributions to the Company due to its financial condition, restrictions under applicable law or regulation, restrictions under the terms of our financing arrangements or for any other reason, such 46 inability to make distributions could materially adversely affect our liquidity, financial condition and ability to pay dividends to shareholders.
To the extent that the Company needs funds and FOA Equity is unable to make distributions to the Company due to its financial condition, restrictions under applicable law or regulation, restrictions under the terms of our financing arrangements, or for any other reason, such inability to make distributions could materially adversely affect our liquidity, financial condition, and ability to pay dividends to shareholders.
Unfavorable rulings could result in adverse impacts on our business, financial condition or results of operations. Conducting our business in a manner so that we are exempt from registration under, and in compliance with, the Investment Company Act, may reduce our flexibility and could limit our ability to pursue certain opportunities.
Unfavorable rulings could result in adverse impacts on our business, financial condition, or results of operations. 41 Conducting our business in a manner so that we are exempt from registration under, and in compliance with, the Investment Company Act, may reduce our flexibility and could limit our ability to pursue certain opportunities.
If the assumptions we use in our models prove to be inaccurate, if market conditions change or if errors are found in our models or weaknesses in our model governance, we may be required to write down the value of such assets or the value of certain of our assets may decrease, which could adversely affect our business, financial condition and results of operations.
If the assumptions we use in our models prove to be inaccurate, if market conditions change, or if errors are found in our models or weaknesses in our model governance, we may be required to write down the value of such assets or the value of certain of our assets may decrease, which could adversely affect our business, financial 20 condition, and results of operations.
In accordance with Accounting Standards Codification (“ASC”) 350, Intangibles-Goodwill and Other, to the extent goodwill and intangible assets are recorded on the statement of financial condition, the Company is required to test goodwill and any other intangible assets with an indefinite life for possible impairment on an annual 23 basis and on an interim basis if there are indicators of a possible impairment.
In accordance with Accounting Standards Codification (“ASC”) 350, Intangibles-Goodwill and Other, to the extent goodwill and intangible assets are recorded on the statement of financial condition, the Company is required to test goodwill and any other intangible assets with an indefinite life for possible impairment on an annual basis and on an interim basis if there are indicators of a possible impairment.
This could have a material adverse effect on our business, liquidity, financial condition, cash flows and results of operations. 28 Further, if we are unable to refinance or obtain additional funds for borrowing (including through the securitization markets), our ability to maintain or grow our business could be limited.
This could have a material adverse effect on our business, liquidity, financial condition, cash flows, and results of operations. Further, if we are unable to refinance or obtain additional funds for borrowing (including through the securitization markets), our ability to maintain or grow our business could be limited.
Prior to 2015, HECM products were not underwritten to confirm the ability of borrowers to pay taxes and insurance; while the proceeds provided initial cash benefits to the borrowers, if they ultimately were unable or unwilling to pay property taxes and insurance, foreclosures for default would result, and eventually the reverse mortgage borrowers would be evicted.
Prior to 2015, HECM 23 products were not underwritten to confirm the ability of borrowers to pay taxes and insurance; while the proceeds provided initial cash benefits to the borrowers, if they ultimately were unable or unwilling to pay property taxes and insurance, foreclosures for default would result, and eventually the reverse mortgage borrowers would be evicted.
Foreclosures where the reverse mortgage borrower is still living in the home—or even when the borrower is no longer occupying the home—may lead to increased reputational risk. In addition, negative publicity due to actions by other reverse mortgage lenders could cause regulatory focus on our business as well.
Foreclosures where the reverse mortgage borrower is still living in the home—or even when the borrower is no longer occupying the home—may lead to increased reputational risk. Negative publicity due to actions by other reverse mortgage lenders could cause regulatory focus on our business as well.
Accordingly, our ability to fund our mortgage originations, to make servicing advances and 27 to continue investments depends on our ability to secure financing on acceptable terms, to comply with the conditions of our existing financings and to renew and/or replace existing financings as they expire. These financings may not be available on acceptable terms or at all.
Accordingly, our ability to fund our mortgage originations, to make servicing advances, and to continue investments depends on our ability to secure financing on acceptable terms, to comply with the conditions of our existing financings, and to renew and/or replace existing financings as they expire. These financings may not be available on acceptable terms or at all.
In order to satisfy an exclusion from being defined as an investment company, other entities, among other things, maintain at least 55% of their assets in certain 38 qualifying real estate assets (the “55% Requirement”) and also maintain an additional 25% of their assets in such qualifying real estate assets or certain other types of real estate-related assets (the “25% Requirement”).
In order to satisfy an exclusion from being defined as an investment company, other entities, among other things, maintain at least 55% of their assets in certain qualifying real estate assets (the “55% Requirement”) and also maintain an additional 25% of their assets in such qualifying real estate assets or certain other types of real estate-related assets (the “25% Requirement”).
For example, controlled companies: • are not required to have a board of directors that is composed of a majority of “independent directors,” as defined under NYSE rules; • are not required to have a compensation committee that is composed entirely of independent directors; and 53 • are not required to have director nominations be made, or recommended to the full board of directors, by its independent directors or by a nominations committee that is composed entirely of independent directors.
For example, controlled companies: • are not required to have a board of directors that is composed of a majority of “independent directors,” as defined under the NYSE rules; • are not required to have a compensation committee that is composed entirely of independent directors; and • are not required to have director nominations be made, or recommended to the full board of directors, by its independent directors or by a nominations committee that is composed entirely of independent directors.
Each subsidiary is a distinct legal entity and under certain circumstances may not be able to, or may not be permitted due to legal or contractual restrictions to, make distributions or repay intercompany loans to enable the applicable entity in our corporate structure to make payments in respect of its indebtedness.
Each subsidiary is a distinct legal entity and under certain circumstances may not be able to, or may not be permitted due to legal or contractual restrictions to, make distributions or repay 46 intercompany loans to enable the applicable entity in our corporate structure to make payments in respect of its indebtedness.
The Company will generally retain the benefit of the remaining 15% of these cash tax benefits. Estimating the amount of payments that may be made under the Tax Receivable Agreements is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors.
The Company will generally retain the benefit of the remaining 15% of these cash tax benefits. 50 Estimating the amount of payments that may be made under the Tax Receivable Agreements is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace of willing buyers and sellers of our securities at any given time, which presence is dependent upon the individual decisions of investors, over which we have no control.
A public trading market having the desired characteristics of depth, liquidity, and orderliness depends upon the presence in the marketplace of willing buyers and sellers of our securities at any given time, which 54 presence is dependent upon the individual decisions of investors, over which we have no control.
If an event of default were to occur and be continuing, the holders of the defaulted 45 debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. By reason of cross-acceleration or cross-default provisions, other indebtedness may then become immediately due and payable.
If an event of default were to occur and be continuing, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. By reason of cross-acceleration or cross-default provisions, other indebtedness may then become immediately due and payable.
Moreover, if Celink is not vigilant in encouraging borrowers to make their real estate tax and property insurance premium payments, the borrowers may be less likely to make these payments, which could result in a higher frequency of default for failure to make these payments.
Moreover, if Celink is not vigilant in encouraging borrowers to make their real estate tax and property insurance premium payments, the borrowers may be less likely to make these 33 payments, which could result in a higher frequency of default for failure to make these payments.
To the extent that we do not have a right to reimburse ourselves 32 for the same amounts under our servicing agreements or if there are insufficient collections in respect of the mortgage loans for such reimbursements, we may face losses in our servicing business.
To the extent that we do not have a right to reimburse ourselves for the same amounts under our servicing agreements or if there are insufficient collections in respect of the mortgage loans for such reimbursements, we may face losses in our servicing business.
Allegations may relate to past conduct and/or past business operations, such as the prior activity of acquired entities, and certain legislative actions and judicial decisions can give rise to the initiation of lawsuits against us for activities we conducted in the past.
Allegations may relate to past conduct and/or past business operations, such as the prior 38 activity of acquired entities, and certain legislative actions and judicial decisions can give rise to the initiation of lawsuits against us for activities we conducted in the past.
Most of these “change of control” statutes require that, if there is an acquisition, merger or initial public offering, the acquiring company or companies being merged or going public must notify the state regulatory agency and receive agency 37 approval before the acquisition, merger or initial public offering is finalized.
Most of these “change of control” statutes require that, if there is an acquisition, merger, or initial public offering, the acquiring company or companies being merged or going public must notify the state regulatory agency and receive agency approval before the acquisition, merger, or initial public offering is finalized.
It may also be more expensive to obtain director and officer liability insurance. Risks associated with the Company’s status as a public company may make it more difficult to attract and retain qualified persons to serve on 52 the Board or as executive officers.
It may also be more expensive to obtain director and officer liability insurance. Risks associated with the Company’s status as a public company may make it more difficult to attract and retain qualified persons to serve on the Board or as executive officers.
In particular, for so long as the principal stockholders continue to own a significant percentage of the Company’s stock, the principal stockholders will be able to cause or prevent a change of control of the Company or a change in the composition of the Board and could preclude any unsolicited acquisition of the Company.
In particular, for so long as the principal stockholders continue to own a significant percentage of the Company’s stock, the principal stockholders will be able to cause or prevent a change of control of the Company or 56 a change in the composition of the Board and could preclude any unsolicited acquisition of the Company.
See “Risks Related to Our Indebtedness—The agreements that govern our senior notes, warehouse facilities and lines of credit impose significant operating and financial restrictions on the Company and its restricted subsidiaries, which may prevent us from capitalizing on business opportunities” and “Risks Related to Our Indebtedness—The agreements that govern our warehouse facilities and lines of credit typically contain covenants relating to our financial condition and we may experience difficulties in complying with such financial covenants.” If we were to experience difficulties in complying with covenants in the future and we were not able to secure a waiver or amendment or terminate the applicable financing arrangement, we could breach such a covenant and an event of default could occur.
See “—Risks Related to Our Indebtedness—The agreements that govern our senior notes, warehouse facilities, and lines of credit impose significant operating and financial restrictions on the Company and its restricted subsidiaries, which may prevent us from capitalizing on business opportunities” and “—Risks Related to Our Indebtedness—The agreements that govern our warehouse facilities and lines of credit typically contain covenants relating to our financial condition and we may experience difficulties in complying with such financial covenants.” If we were to experience difficulties in complying with covenants in the future and we were not able to secure a waiver or amendment or terminate the applicable financing arrangement, we could breach such a covenant and an event of default could occur.
See “Risks Related to Laws and Regulations—Unlike competitors that are national banks, we are subject to state licensing and operational requirements that result in substantial compliance costs and risks.” Depository institutions also enjoy regular access to very inexpensive capital.
See “—Risks Related to Laws and Regulations—Unlike competitors that are national banks, we are subject to state licensing and operational requirements that result in substantial compliance costs and risks.” Depository institutions also enjoy regular access to very inexpensive capital.
In December 2022, Reverse Mortgage Funding LLC (“RMF”), one of the nation’s largest reverse mortgage lenders, filed for Chapter 11 bankruptcy primarily due to its inability to secure adequate financing relating to its Ginnie Mae HECM repurchase obligations.
In December 2022, Reverse Mortgage Funding LLC (“RMF”), one of the nation’s largest reverse mortgage lenders, filed for Chapter 11 bankruptcy primarily due to its inability to secure adequate financing relating to its Ginnie Mae HECM repurchase 28 obligations.
Most state licensing laws require that before a “change of control” can occur, including in connection with a merger, acquisition or initial public offering, applicable state banking departments must approve the change.
Most state 40 licensing laws require that before a “change of control” can occur, including in connection with a merger, acquisition, or initial public offering, applicable state banking departments must approve the change.
There cannot be any 41 assurance that the ultimate resolution of our litigation and regulatory matters will not involve losses, which may be material, in excess of our recorded accruals or estimates of reasonably probable losses.
There cannot be any assurance that the ultimate resolution of our litigation and regulatory matters will not involve losses, which may be material, in excess of our recorded accruals or estimates of reasonably probable losses.
The Company incurs significant increased expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition and results of operations. The Company faces legal, accounting, administrative and other costs and expenses as a public company.
The Company incurs significant expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition, and results of operations. The Company faces legal, accounting, administrative, and other costs and expenses as a public company.
In addition, the principal stockholders may have an interest in the Company pursuing acquisitions, divestitures and other transactions that, in their 54 judgment, could enhance their investment, even though such transactions might involve risks to the Company and its stockholders.
In addition, the principal stockholders may have an interest in the Company pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to the Company and its stockholders.
Furthermore, provisions in our loan product documentation, including but not limited to the mortgage and promissory notes we use in loan originations, could be 35 challenged in and construed as unenforceable by a court.
Furthermore, provisions in our loan product documentation, including but not limited to the mortgage and promissory notes we use in loan originations, could be challenged in and construed as unenforceable by a court.
Further, defaults may ultimately result in losses, particularly if property values are depressed and it becomes difficult to recover the outstanding loan balance via foreclosure and sale of the mortgaged property.
Further, 27 defaults may ultimately result in losses, particularly if property values are depressed and it becomes difficult to recover the outstanding loan balance via foreclosure and sale of the mortgaged property.
Factors affecting the trading price of our securities may include, but are not limited to, the following: • if our Class A Common Stock is delisted by NYSE; • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; • changes in the market’s expectations about our operating results; • sustained increases in market interest rates that may lead purchasers of our shares to demand higher yield; • success of competitors; • our operating results failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning the Company or the reverse mortgage industry or mortgage industry in general; • a ratings action by a rating agency with respect to our Company; • operating and share price performance of other companies that investors deem comparable to us; • our ability to market new and enhanced products on a timely basis; • changes in laws and regulations affecting our business; • our ability to meet compliance requirements; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of Class A Common Stock available for public sale; • any major change in our Board or management; • sales of substantial amounts of Class A Common Stock by our directors, executive officers or significant shareholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rate changes, continued inflation and acts of war or terrorism.
Factors affecting the trading price of our securities may include, but are not limited to, the following: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; • changes in the market’s expectations about our operating results; • sustained increases in market interest rates that may lead purchasers of our shares to demand higher yield; • success of competitors; • our operating results failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning the Company or the reverse mortgage industry or mortgage industry in general; • a ratings action by a rating agency with respect to our Company; • operating and share price performance of other companies that investors deem comparable to us; • our ability to market new and enhanced products on a timely basis; • changes in laws and regulations affecting our business; • our ability to meet compliance requirements; 53 • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of Class A Common Stock available for public sale; • any major change in our Board or management; • sales of substantial amounts of Class A Common Stock by our directors, executive officers, or significant shareholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rate changes, continued inflation, and acts of war or terrorism.
In particular, a change in the value of any of our assets could negatively affect our ability to avoid registration under the Investment Company Act and cause the need for a restructuring of our investment portfolio.
In particular, a change in the value of any of our assets could negatively affect our ability to avoid registration under 42 the Investment Company Act and cause the need for a restructuring of our investment portfolio.
Adverse changes in the California economy may be caused by inflation, recession, unemployment, state or local real estate laws and regulations or other factors beyond our control.
Adverse changes in the California 18 economy may be caused by inflation, recession, unemployment, state or local real estate laws and regulations, or other factors beyond our control.
If we were to have our servicing or subservicing rights terminated on a material portion of our servicing portfolio, this could adversely affect our business. 33 Risks Related to Laws and Regulations We operate in a heavily regulated industry, and our loan origination and servicing activities expose us to risks of noncompliance with an increasing and inconsistent body of complex laws and regulations at the U.S. federal, state and local levels.
If we were to have our servicing or subservicing rights terminated on a material portion of our servicing portfolio, this could adversely affect our business. 36 Risks Related to Laws and Regulations We operate in a heavily regulated industry, and our loan origination and servicing activities expose us to risks of noncompliance with an increasing and inconsistent body of complex laws and regulations at the U.S. federal, state, and local levels.
The CFPB has broad enforcement powers and has been active in investigations and enforcement actions and, when necessary, has issued civil money penalties to parties the CFPB determines has violated the laws and regulations it enforces.
The CFPB has broad enforcement powers and has been active in investigations and enforcement actions and, when necessary, has issued civil money penalties to parties the CFPB determines have violated the laws and regulations it enforces.
You may be diluted by the future issuance of additional Class A Common Stock or Class A LLC Units in connection with the Company’s incentive plans, acquisitions or otherwise.
You may be diluted by the future issuance of additional Class A Common Stock or Class A LLC Units in connection with the Company’s incentive plans, acquisitions, warrants, or otherwise.
For additional information, see “Business—Investment Company Act Considerations.” There may be material changes to the laws, regulations, rules or practices applicable to the FHA, HUD or Ginnie Mae which could materially adversely affect the reverse mortgage industry as a whole, including our business. The reverse mortgage industry is largely dependent upon the FHA, HUD and government agencies like Ginnie Mae.
For additional information, see “Business—Investment Company Act Considerations.” There may be material changes to the laws, regulations, rules, or practices applicable to the FHA, HUD, or Ginnie Mae that could materially adversely affect the reverse mortgage industry as a whole, including our business. The reverse mortgage industry is largely dependent upon the FHA, HUD, and government agencies like Ginnie Mae.
See “—Our geographic concentration could materially and adversely affect us if the economic conditions in our current markets should decline or if our current markets are impacted by natural 22 disasters.” Mortgagee properties securing the loans that we originate are required to be covered by hazard insurance customary to the area in which the property is located, however there could be circumstances where insurance premiums have not been timely paid or the insurance coverage otherwise fails or is insufficient (for example, the National Flood Insurance Program has a cap of $250,000).
See “—Our geographic concentration could materially and adversely affect us if the economic conditions in our current markets should decline or if our current markets are impacted by natural disasters.” Mortgaged properties securing the loans that we originate are required to be covered by hazard insurance customary to the area in which the property is located, however, there could be circumstances where insurance premiums have not been timely paid or the insurance coverage otherwise fails or is insufficient (for example, the National Flood Insurance Program has a cap of $250,000).
See “Risks Related to Our Indebtedness—Our failure to comply with the requirements of our outstanding indebtedness could result in an event of default that could materially and adversely affect our financial condition and ultimately force us into liquidation or bankruptcy.” Our financings also have fair value risk pursuant to which our lending counterparties have the right to value the related collateral.
See “—Risks Related to Our Indebtedness—Our failure to comply with the requirements of our outstanding indebtedness could result in an event of default that could materially and adversely affect our financial condition and ultimately force us into liquidation or bankruptcy.” Our financings also have fair value risk pursuant to which our lending counterparties have the right to value the related collateral.
Among other things, the CCPA requires covered companies to provide new disclosures to California residents, including consumers, employees and contractors, provide such individuals new data protection and privacy rights, including the ability to opt-out of the sale of personal information or the sharing of personal information for cross-context behavioral advertising, and create additional requirements to limit the retention of 36 personal information.
Among other things, the CCPA requires covered companies to provide new disclosures to 39 California residents, including consumers, employees, and contractors, provide such individuals new data protection and privacy rights, including the ability to opt-out of the sale of personal information or the sharing of personal information for cross-context behavioral advertising, and create additional requirements to limit the retention of personal information.
Furthermore, our employees operate under a hybrid workforce model and such model may be more vulnerable to security breaches. 20 We rely on encryption and other information security technologies licensed from third parties to provide security controls necessary to help in securing online transmission of confidential information pertaining to customers, employees and other aspects of our business.
Furthermore, our employees operate under a hybrid workforce model and such model may be more vulnerable to security breaches. 22 We rely on encryption and other information security technologies licensed from third parties to provide security controls necessary to help in securing online transmission of confidential information pertaining to customers, employees, and other aspects of our business.
If the CFPB or a court determined that the Company’s existing program was not in compliance with RESPA regulations, or otherwise asserted a new basis for non-compliance with any similar regulations, it could have a detrimental effect on our reverse mortgage lending business, our financial condition and results of operation.
If the CFPB or a court determined that the Company’s existing program was not in compliance with RESPA regulations, or otherwise asserted a new basis for non-compliance with any similar regulations, it could have a detrimental effect on our reverse mortgage lending business, financial condition, and results of operations.
We are also subject to legal actions or proceedings resulting from actions alleged to have occurred prior to our 40 acquisition of a company or a business.
We are also subject to legal actions or proceedings resulting from actions alleged to have occurred prior to our acquisition of a company or a business.
When a lender seeks to rely on this exception, it must be prepared to demonstrate that the services or facilities for which compensation is paid are separate and distinct from any referral and the amount paid is reasonable. If the 34 amount paid exceeds the reasonable value, the excess could be attributable to the referral.
When a lender seeks to rely on this exception, it must be prepared to demonstrate that the services or facilities for which compensation is paid are separate and distinct from any referral and the amount paid is reasonable. If the 37 amount paid exceeds the reasonable value, the excess could be attributable to the referral.
See “Risks Related to Laws and Regulations—There may be material changes to the laws, regulations, rules or practices applicable to the FHA, HUD or Ginnie Mae which could materially adversely affect the reverse mortgage industry as a whole, including our business.” We are subject to risks arising from conditions in the real estate and mortgage markets, in particular, the reverse mortgage market; we rely on the initiatives of HUD and Ginnie Mae to support the HECM program.
See “—Risks Related to Laws and Regulations—There may be material changes to the laws, regulations, rules, or practices applicable to the FHA, HUD, or Ginnie Mae that could materially adversely affect the reverse mortgage industry as a whole, including our business.” We are subject to risks arising from conditions in the real estate and mortgage markets, in particular, the reverse mortgage market; we rely on the initiatives of HUD and Ginnie Mae to support the HECM program.
FAR originates and acquires proprietary reverse mortgage loans as well as HECM in accordance with the FHA’s HECM program. HECM are insured by the FHA. As an approved non-supervised FHA mortgagee and an approved Ginnie Mae issuer, FAR pools interests in HECM (also known as participations) into HMBS.
FAR originates and acquires non-agency reverse mortgage loans as well as HECM in accordance with the FHA’s HECM program. HECM are insured by the FHA. As an approved non-supervised FHA mortgagee and an approved Ginnie Mae issuer, FAR pools interests in HECM (also known as participations) into HMBS.
Further, we may have to agree to amortization or other covenants in connection with securing waivers or amendments in the future.
Further, we may have to agree to other covenants in connection with securing waivers or amendments in the future.
See “Risks related to Ownership of our Class A Common Stock and Warrants—The Company incurs significant increased expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition and results of operations” and “Risks related to Ownership of our Class A Common Stock and Warrants—The Company may not be able to effectively continue to implement and maintain controls and procedures required by the Sarbanes-Oxley Act that are applicable to us.” We may fail to identify or adequately assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring or investing in a company or business, including potential exposure to regulatory sanctions or liabilities resulting from an acquisition target’s previous activities, internal controls and security environment.
See “—Risks related to Ownership of our Class A Common Stock—The Company incurs significant expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition, and results of operations” and “—Risks related to Ownership of our Class A Common Stock—The Company may not be able to effectively continue to implement and maintain controls and procedures required by the Sarbanes-Oxley Act that are applicable to us.” 21 We may fail to identify or adequately assess the magnitude of certain liabilities, shortcomings, or other circumstances prior to acquiring or investing in a company or business, including potential exposure to regulatory sanctions or liabilities resulting from an acquisition target’s previous activities, internal controls, and security environment.
Further, with respect to mortgaged properties in California, if the related insurer determines there is a heightened risk of property damage due to wildfires, such insurer may elect not to renew the related hazard policies or may charge higher premiums.
However, with respect to mortgaged properties in California, if the related insurer determines there is a heightened risk of property damage due to wildfires, such insurer may elect not to renew the related hazard policies or may charge higher premiums.
We could also be subjected to cyber-attacks, such as ransomware, that could result in slow performance and loss or temporary unavailability of our information systems, adversely effecting our operational efficiency and ultimately our results of operations and financial condition.
We could also be subjected to cyber-attacks, such as ransomware, that could result in slow performance and loss or temporary unavailability of our information systems, adversely affecting our operational efficiency and ultimately our results of operations and financial condition.
We have historically had, continue to have, and may in the future have a number of open investigations, subpoenas, examinations and inquiries by these agencies related to our origination practices, violations of the FHA’s requirements, our financial reporting and other aspects of our businesses.
We have historically had, continue to have, and may in the future have a number of open investigations, subpoenas, examinations, and inquiries by these agencies related to our origination practices, violations of the FHA’s requirements, our financial reporting, and other aspects of our business.
Adverse results in any of these matters could further increase our operating expenses and reduce our revenues, require us to change business practices, limit our ability to grow and otherwise materially and adversely affect our business, reputation, financial condition or results of operation.
Adverse results in any of these matters could further increase our operating expenses and reduce our revenues, require us to change business practices, limit our ability to grow, and otherwise materially and adversely affect our business, reputation, financial condition, or results of operations.
Any of these occurrences could further increase our operating expenses and reduce our revenues, require us to change business practices and procedures and limit our ability to grow or otherwise materially and adversely affect our business, reputation, financial condition or results of operation.
Any of these occurrences could further increase our operating expenses and reduce our revenues, require us to change business practices and procedures, and limit our ability to grow or otherwise materially and adversely affect our business, reputation, financial condition, or results of operations.
Among other things, HUD issued a mortgagee letter which streamlined certain processes relating to assignment of mortgage loans to HUD, thereby creating efficiency in the assignment process for mortgagees and easing the financial burden relating to assignments.
Among other things, HUD issued a mortgagee letter that streamlined certain processes relating to assignment of mortgage loans to HUD, thereby creating efficiency in the assignment process for mortgagees and easing the financial burden relating to assignments.
FAR also requires pre-application counseling by a HUD-approved counseling agency for its proprietary reverse mortgages, and also underwrites these loans for the borrower’s willingness and ability to pay property taxes and hazard insurance premiums.
FAR also requires pre-application counseling by a HUD-approved counseling agency for its non-agency reverse mortgages, and also underwrites these loans for the borrower’s willingness and ability to pay property taxes and hazard insurance premiums.
See “—Our failure to comply with the requirements of our outstanding indebtedness could result in an event of default that could materially and adversely affect our financial condition and ultimately force us into liquidation or bankruptcy.” Our failure to comply with the requirements of our outstanding indebtedness could result in an event of default that could materially and adversely affect our financial condition and ultimately force us into liquidation or bankruptcy.
Our failure to comply with the requirements of our outstanding indebtedness could result in an event of default that could materially and adversely affect our financial condition and ultimately force us into liquidation or bankruptcy.
Recently, other mortgage lenders and servicers have been the subject of cyber-attacks resulting in data breaches and temporary unavailability of information systems. Mortgage lenders, servicers and other mortgage industry participants may continue to be targeted in such attacks in the future.
Other mortgage lenders and servicers have in the past been the subject of cyber-attacks resulting in data breaches and temporary unavailability of information systems. Mortgage lenders, servicers, and other mortgage industry participants may continue to be targeted in such attacks in the future.
Further, if we are unable to repay, refinance or restructure our indebtedness under our secured debt upon an event of default, including our warehouse facilities or lines of credit, the holders of such debt could elect to terminate their commitments thereunder, cease making loans and institute foreclosure proceedings against our assets.
Further, if we are unable to repay, refinance, or restructure our indebtedness under our secured debt upon an event of default, including our warehouse facilities, lines of credit, or senior secured 49 notes, the holders of such debt could elect to terminate their commitments thereunder, cease making loans, and institute foreclosure proceedings against our assets.
Additionally, if we failed to comply with these restrictions, an event of default could occur and the holders of our indebtedness could elect to declare all the funds borrowed to be 43 due and payable.
Additionally, if we failed to comply with these restrictions, an event of default could occur and the holders of our indebtedness could elect to declare all the funds borrowed to be 48 due and payable.
The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition or 50 results of operations.
The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies that investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition, or results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRobertson worked for the National Security Agency and the United States Army, where he held various leadership positions in computer network defense, computer network exploitation and intelligence oversight. Mr. Robertson holds a BA in Organizational Management, an MS in Cybersecurity Policy and an MBA.
Biggest changeArmy, where he held various leadership positions in computer network defense, computer network exploitation, and intelligence oversight. Mr. Robertson holds a BA in Organizational Management, an MS in Cybersecurity Policy, and an MBA.
Risk Factors— Risks Related to the Business of the Company — A security breach or a cyber-attack could adversely affect our results of operations and financial condition.” 57 Cybersecurity Governance Board of Directors Oversight The Board of Directors oversees the risks to the Company from cybersecurity threats by periodically reviewing information technology security reports from management, including our Chief Information Security Officer (“CISO”), as well as reports from the Audit Committee of the Board of Directors.
Risk Factors— Risks Related to the Business of the Company — A security breach or a cyber-attack could adversely affect our results of operations and financial condition.” Cybersecurity Governance Board of Directors Oversight The Board of Directors oversees the risks to the Company from cybersecurity threats by periodically reviewing information technology security reports from management, including our Chief Information Security Officer (“CISO”), as well as reports from the Audit Committee of the Board of Directors.
The Company also has a data incident response plan in place that outlines expected actions in the event of a data security incident. The Company prioritizes protecting and informing customers, clients and employees in the event of a data security incident, as is appropriate.
The 59 Company also has a data incident response plan in place that outlines expected actions in the event of a data security incident. The Company prioritizes protecting and informing customers, clients, and employees in the event of a data security incident, as is appropriate.
Robertson currently advises several companies in the Cyber Security Industry and is active in a number of information security communities and groups. Prior to his appointment as CISO in October 2021, he served as our Deputy CISO. Before joining the Company, Mr.
Robertson currently advises several companies in the Cyber Security Industry and is active in a number of information security communities and groups. Prior to his 60 appointment as CISO in October 2021, he served as our Deputy CISO. Before joining the Company, Mr. Robertson worked for the National Security Agency and the U.S.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate, operations, and branch real estate portfolio consists of approximately 415,000 square feet of leased office and retail space, which is used to support our business. Of this overall portfolio, approximately 133,000 square feet of space is dedicated for various corporate office use and approximately 282,000 square feet of space is for operations and branches.
Biggest changeItem 2. Properties Our corporate, operations, and branch real estate portfolio consists of 70,000 square feet of leased office and retail space which is used to support our unified modern retirement solutions platform. Our headquarters is in Plano, Texas. We maintain additional office space for other various corporate use and operations in Oklahoma, Minnesota, and California.
Removed
Our headquarters is in Plano, Texas and is included in our corporate office space. We maintain corporate office space primarily in Pennsylvania, Texas, Oklahoma, Minnesota, and New York. Our 282,000 square feet of operations and branches are primarily across California, Arizona, North Carolina, Oregon, Washington, Colorado, Georgia, Wisconsin, and Illinois. Leased properties are utilized amongst all reported subsidiaries.
Added
We regularly evaluate current and projected space requirements, considering the constraints of our existing lease agreements and the expected scale of our business. We operate through a hybrid workforce model which combines remote work for substantially all of our workforce and in-office when required.
Removed
We consider these facilities to be suitable and adequate for the management and operations of our business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor our Class A Common Stock, the actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. There is no public market for our Class B Common Stock. Item 6. [Reserved] 59
Biggest changeFor our Class A Common Stock, the actual number of shareholders is greater than this number of record holders and includ es shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. There is no public market for our Class B Common Stock.
Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock has been traded on the NYSE under the ticker symbol “FOA” since April 5, 2021.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information O ur Class A Common Stock has been traded on the NYSE under the ticker symbol “FOA” since April 5, 2021.
As of March 11, 2024, there were 22 stockholders of record of our Class A Common Stock and 15 stockholders of record of our Class B Common Stock.
As of March 11, 2025, there were 20 stockholders of record of our Class A Common Stock and 14 stockholders of record of our Class B Common Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeKEY METRICS The following table provides a summary of the assets and liabilities under management by our Portfolio Management segment (in thousands) : December 31, 2023 December 31, 2022 Cash and cash equivalents $ 32,245 $ 37,964 Restricted cash 178,319 177,814 Loans held for investment, subject to HMBS related obligations, at fair value 17,548,763 11,114,100 Loans held for investment, subject to nonrecourse debt, at fair value 8,272,393 7,454,638 Loans held for investment, at fair value 575,228 907,998 MSR, at fair value 6,436 95,096 Other assets, net 155,471 224,385 Total long-term investment assets 26,768,855 20,011,995 Loans held for sale, at fair value 4,246 173,984 Total earning assets 26,773,101 20,185,979 HMBS related obligations, at fair value 17,353,720 10,996,755 Nonrecourse debt, at fair value 7,904,200 7,343,177 Other financing lines of credit 928,479 1,327,634 Payables and other liabilities 107,664 82,175 Total financing of portfolio 26,294,063 19,749,741 Net carrying value of earning assets $ 479,038 $ 436,238 72 The following table provides a summary of our Portfolio Management segment’s key metrics (dollars in thousands): December 31, 2023 December 31, 2022 Reverse Mortgages Loan count 91,888 62,879 Active UPB $ 24,923,313 $ 17,914,422 Due and payable 371,913 334,303 Foreclosure 524,988 489,261 Claims pending 130,928 103,408 Ending UPB $ 25,951,142 $ 18,841,394 Average UPB $ 282 $ 300 Weighted average coupon 7.35 % 6.11 % Weighted average age (in months) 40 41 Percentage in foreclosure 2.0 % 2.6 % MSR Portfolio Loan count 3,385 27,037 Ending UPB $ 1,056,660 $ 8,602,338 Average UPB $ 312 $ 318 Weighted average coupon 3.71 % 3.59 % Weighted average age (in months) 27 18 Weighted average FICO credit score 763 752 90+ day delinquency rate 0.3 % 0.5 % Total prepayment speed 8.1 % 6.5 % For the year ended December 31, 2023 For the year ended December 31, 2022 Investment and Capital Markets Number of structured deals 5 8 Structured deals (size in notes) $ 1,925,699 $ 3,660,359 73 Revenues In the table below is a summary of the components of our Portfolio Management segment’s total revenues (in thousands): For the year ended December 31, 2023 For the year ended December 31, 2022 REVENUES Net fair value gains (losses) on loans and related obligations: Interest income on mortgage loans $ 1,617,954 $ 890,857 Interest expense on HMBS and nonrecourse obligations (1,273,159) (600,689) Servicing related income, net (1) 25,583 11,599 Fair value changes from model amortization (2) (228,391) (127,576) Net fair value gains from portfolio activity 141,987 174,191 Net fair value gains (losses) from changes in market inputs or model assumptions 58,696 (369,422) Net fair value gains (losses) on loans and related obligations 200,683 (195,231) Fee income: Servicing income (MSR) 1,447 50,572 Other fees 8,836 16,189 Total fee income 10,283 66,761 Loss on sale and other income from loans held for sale, net (18,691) (6,298) Net interest expense (76,916) (85,607) Total revenues $ 115,359 $ (220,375) (1) Servicing related income, net, is comprised of premiums realized on the securitization of reverse mortgage tails and miscellaneous contractual servicing fees, net of guarantee fees paid.
Biggest changeNet fair value changes in our Portfolio Management segment include fair value adjustments primarily related to the following assets and liabilities: • Loans held for investment, subject to HMBS related obligations, at fair value • Loans held for investment, subject to nonrecourse debt, at fair value • Loans held for investment, at fair value • Loans held for sale, at fair value • HMBS related obligations, at fair value; and • Nonrecourse debt, at fair value. 75 Key Metrics The following table provides a summary of the assets and liabilities under management by our Portfolio Management segment (in thousands) : December 31, 2024 December 31, 2023 Cash and cash equivalents $ 29,355 $ 32,245 Restricted cash 254,335 178,319 Loans held for investment, subject to HMBS related obligations, at fair value 18,669,962 17,548,763 Loans held for investment, subject to nonrecourse debt, at fair value 9,288,403 8,272,393 Loans held for investment, at fair value 520,103 575,228 Other assets, net 115,120 166,153 Total earning assets 28,877,278 26,773,101 HMBS related obligations, at fair value 18,444,370 17,353,720 Nonrecourse debt, at fair value 8,954,068 7,904,200 Other financing lines of credit 918,247 928,479 Payables and other liabilities 55,746 107,664 Total financing of portfolio 28,372,431 26,294,063 Net carrying value of earning assets $ 504,847 $ 479,038 The following tables provide a summary of our Portfolio Management segment’s key metrics (dollars in thousands): December 31, 2024 December 31, 2023 Reverse Mortgages Loan count 90,340 91,888 Active UPB $ 26,477,354 $ 24,923,313 Due and payable 415,400 371,913 Foreclosure 504,675 524,988 Claims pending 79,138 130,928 Ending UPB $ 27,476,567 $ 25,951,142 Average UPB $ 304 $ 282 Weighted average coupon 7.11 % 7.35 % Weighted average age (in months) 45 40 Percentage in foreclosure 1.8 % 2.0 % For the year ended December 31, 2024 For the year ended December 31, 2023 Investment and Capital Markets Number of structured deals 8 5 Structured deals (size in notes) $ 3,617,495 $ 1,925,699 Revenues In the table below is a summary of the components of our Portfolio Management segment’s total revenues (in thousands): 76 For the year ended December 31, 2024 For the year ended December 31, 2023 Portfolio interest income: Interest income $ 1,905,214 $ 1,628,877 Interest expense (1,637,286) (1,360,998) Net portfolio interest income 267,928 267,879 Other income (expense): Gain on securitization of HECM tails, net 45,535 25,583 Fair value changes from model amortization (201,101) (228,391) Fair value changes from market inputs or model assumptions 55,924 58,696 Net fair value changes on loans and related obligations (99,642) (144,112) Fee income 3,183 10,283 Gain (loss) on sale and other income from loans held for sale, net 378 (18,691) Net other income (expense) (96,081) (152,520) Total revenues $ 171,847 $ 115,359 Certain of our financial instruments are valued utilizing a process that combines the use of a discounted cash flow (“DCF”) model and analysis of current market data to arrive at an estimate of fair value.
FoA was incorporated in Delaware on October 9, 2020 and became a publicly-traded company on NYSE in April 2021, with trading beginning on April 5, 2021 under the ticker symbol “FOA.” FoA has a controlling financial interest in FoA Equity. FoA Equity owns all of the outstanding equity interests in FOAF. FOAF wholly owns FAH and Incenter.
FOA was incorporated in Delaware on October 9, 2020 and became a publicly-traded company on the NYSE in April 2021, with trading beginning on April 5, 2021 under the ticker symbol “FOA.” FOA has a controlling financial interest in FOA Equity. FOA Equity owns all of the outstanding equity interests in FOAF. FOAF wholly owns FAH and Incenter.
Volatility in market conditions resulting from the foregoing events have caused and may continue to cause credit spreads to widen, which reduces, among other things, availability of credit to our Company on favorable terms, liquidity in the market, the fair market value of the assets on our balance sheet, and price transparency of real estate related or asset-backed assets.
Volatility in market conditions resulting from the foregoing events have caused and may continue to cause credit spreads to widen, which reduces, among other things, availability of credit to our Company on favorable terms, liquidity in the market, the fair value of the assets on our balance sheet, and price transparency of real estate related or asset-backed assets.
Remittances received on the reverse loans, if any, and proceeds received from the sale of real estate owned, and our funds used to repurchase reverse loans are used to reduce the HMBS related obligations by making payments to the securitization pools, which then remit the payments to the beneficial interest holders of the HMBS.
Remittances received on the reverse loans, if any, proceeds received from the sale of real estate owned, and our funds used to repurchase reverse loans are used to reduce the HMBS related obligations by making payments to the securitization pools, which then remit the payments to the beneficial interest holders of the HMBS.
Our warehouse facilities require our borrowing subsidiaries to comply with various customary operating and financial covenants, including, without limitation, the following tests: • minimum tangible or adjusted tangible net worth; • maximum leverage ratio of total liabilities (which may include off-balance sheet liabilities) or indebtedness to tangible or adjusted tangible net worth; • minimum liquidity or minimum liquid assets; and • minimum profitability.
Our warehouse facilities require our borrowing subsidiaries to comply with various customary operating and financial covenants, including, without limitation, the following tests: • minimum tangible or adjusted tangible net worth; 88 • maximum leverage ratio of total liabilities (which may include off-balance sheet liabilities) or indebtedness to tangible or adjusted tangible net worth; • minimum liquidity or minimum liquid assets; and • minimum profitability.
The Ginnie Mae HMBS securitization program includes certain terms that do not meet the participating interest requirements and require or provide an option for the Company to reacquire the loans prior to maturity. Due to these terms, the transfer of the loans does not meet the requirements of sale accounting.
The Ginnie Mae 91 HMBS securitization program includes certain terms that do not meet the participating interest requirements and require or provide an option for the Company to reacquire the loans prior to maturity. Due to these terms, the transfer of the loans does not meet the requirements of sale accounting.
Deterioration in the financial condition, earnings, or cash flow of FoA Equity and its subsidiaries for any reason could limit or impair FoA Equity’s ability to make such distributions.
Deterioration in the financial condition, earnings, 84 or cash flow of FOA Equity and its subsidiaries for any reason could limit or impair FOA Equity’s ability to make such distributions.
GAAP, and our use of this measure and term may vary from other companies in our industry. Adjusted EBITDA provides visibility to the underlying operating performance by excluding the impact of certain items that management does not believe are representative of our core earnings.
GAAP, and our definition and use of this measure may vary from other companies in our industry. Adjusted EBITDA provides visibility to the underlying operating performance by excluding the impact of certain items that management does not believe are representative of our core earnings.
This constitutes a strategic shift that has or will have a major effect on our operations and financial results.
This constitutes a strategic shift that has had or will have a major effect on our operations and financial results.
Change in fair value of deferred purchase price obligations represents impacts to revenue or expense due to changes in the estimated fair value of expected payouts as a result of changes in various assumptions, including future performance, timing and realization of tax benefits, and discount rates.
Change in fair value of deferred purchase price obligations represents impacts to revenue or expense due to changes in the estimated fair value of expected payouts as a result of changes in various assumptions, including future performance, FOA stock price, timing and realization of tax benefits, and discount rates.
“Dry” loans are loans for which all the sale documentation has been completed at the time of funding. Wet loans are held by a lender for a contractual period, typically between five and ten business days and are subject to a reduction in the advance amount.
“Dry” loans are loans for which all the sale documentation has been completed at the time of funding. “Wet” loans are held by a lender for a contractual period, typically between five and ten business days and are subject to a reduction in the advance amount.
New Accounting Pronouncements Refer to Note 2 - Summary of Significant Accounting Policies within the Notes to Consolidated Financial Statements for a summary of recently adopted and recently issued accounting standards and their related effects or anticipated effects in the consolidated financial statements. 91
New Accounting Pronouncements Refer to Note 2 - Summary of Significant Accounting Policies within the Notes to Consolidated Financial Statements for a summary of recently adopted and recently issued accounting standards and their related effects or anticipated effects in the consolidated financial statements. 92
We have determined that loan transfers in the HMBS program do not meet the accounting definition of a participating interest because of the servicing requirements in the product that require the issuer/servicer to absorb some level of interest rate risk, cash flow timing risk, and incidental credit risk due to the buyout of HECM assets as discussed below.
We have determined that loan transfers in the HMBS program do not meet the participating interest requirements because of the servicing requirements in the product that require the issuer/servicer to absorb some level of interest rate risk, cash flow timing risk, and incidental credit risk due to the buyout of HECM assets as discussed below.
Our Company is actively monitoring these events and their effects on the Company’s financial condition, liquidity, operations, industry, and workforce. 63 These continuing economic impacts may cause additional volatility in the financial markets and may have an adverse effect on the Company’s results of future operations, financial position, intangible assets, and liquidity in 2024 and beyond. See Results of Operations.
Our Company is actively monitoring these events and their effects on the Company’s financial condition, liquidity, operations, industry, and workforce. These continuing economic impacts may cause additional volatility in the financial markets and may have an adverse effect on the Company’s results of future operations, financial position, intangible assets, and liquidity in 2025 and beyond. See Results of Operations.
When we draw on these facilities, we generally must transfer and pledge eligible loans to the lender and comply with various financial and other covenants. The facilities generally have one-year terms and expire at various times during 2024 and 2026.
When we draw on these facilities, we generally must transfer and/or pledge eligible loans to the lender and comply with various financial and other covenants. The facilities generally have one-year terms and expire at various times during 2025 and 2026.
The wind-down of the home improvement lending business is not considered by the Company to be a strategic shift that has or will have a major effect on our operations and financial results.
The wind-down of the home improvement lending business was not considered by the Company to be a strategic shift that has had or will have a major effect on our operations and financial results.
The Company’s wind-down of the home improvement lending business and Incenter Solutions LLC is not considered by the Company to be a strategic shift that has or will have a major effect on our operations and financial results. Therefore, the operations of the home improvement lending business and Incenter Solutions LLC are not reported as discontinued operations.
The Company’s wind-down of the home improvement lending business and Incenter Solutions LLC was not considered by the Company to be a strategic shift that has had or will have a major effect on our operations and financial results. Therefore, the previous operations of the home improvement lending business and Incenter Solutions LLC are not reported as discontinued operations.
Sources and Uses of Cash Our primary sources of funds for liquidity include: (i) payments received from the sale or securitization of loans; (ii) payments from the liquidation or securitization of our outstanding participating interests in loans; and (iii) advances on warehouse facilities, other secured borrowings, and the unsecured senior notes.
Sources and Uses of Cash Our primary sources of funds for liquidity include: (i) payments received from the sale or securitization of loans; (ii) payments from the liquidation or securitization of our outstanding participating interests in loans; and (iii) advances on warehouse facilities, other secured borrowings, and our senior and working capital promissory notes.
Gain (loss) on sale and other income from loans held for sale, net Gain (loss) on sale and other income from loans held for sale, net, includes realized and unrealized gains and losses on loans held for sale and hedging derivatives.
Gain (loss) on sale and other income from loans held for sale, net Gain (loss) on sale and other income from loans held for sale, net, includes realized and unrealized gains and losses on loans held for sale.
GAAP, excluding the period-to-date estimated impact of the change in fair value attributable to current period additions and the change in fair value attributable to model amortization (i.e. portfolio run-off), net of hedge gains and losses, and any securitization expenses incurred in securitizing our mortgage loans held for investment, subject to nonrecourse debt.
GAAP, excluding the period-to-date estimated impact of the change in fair value attributable to current period additions and the change in fair value attributable to post-origination loan advances, accretion, and model amortization (i.e., portfolio run-off), net of hedge gains and losses, and any securitization expenses incurred in securitizing our mortgage loans held for investment, subject to nonrecourse debt.
Discontinued Operations During the fourth quarter of 2022 and calendar year 2023, the Compan y entered into a series of transactions, discontinuing certain business lines while enhancing our reverse mortgage loan business, in order to transform our business from a vertically integrated, diversified lending and complementary services platform to a modern retirement solutions platform.
Discontinued Operations During the fourth quarter of 2022 and calendar year 2023, the Company entered into a series of transactions, discontinuing certain business lines while enhancing our reverse mortgage loan business, in order to transform our business from a vertically integrated lending and complementary services platform to a unified modern retirement solutions platform.
Changes in fair value of loans and securities held for investment and related liabilities due to assumption changes - This adjustment relates to changes in the significant market or model input components of the fair value for loans and securities and related obligations, which are held for investment.
Changes in fair value of loans and securities held for investment and related obligations due to market inputs or model assumptions - This adjustment relates to changes in the significant market or model input components of the fair value for loans and securities and related obligations, which are held for investment.
Under the facilities, loans are generally transferred at an advance rate less than the principal 85 balance of the loans (the “haircut”), which serves as the primary credit enhancement for the lender.
Under the facilities, loans are generally transferred and/or pledged at an advance rate less than the principal balance of the loans (the “haircut”), which serves as the primary credit enhancement for the lender.
We both securitize proprietary reverse mortgage loans into mortgage-backed securities sold to investors and sell proprietary reverse mortgage loans as whole loans to investors. We may also decide to strategically hold certain proprietary reverse mortgage loans for investment.
We both securitize non-agency reverse mortgage loans into mortgage-backed securities sold to investors and sell them as whole loans to investors. We may also decide to strategically hold certain non-agency reverse mortgage loans for investment.
These facilities are generally structured as master repurchase agreements under which ownership of the related eligible loans is temporarily transferred to a lender or as participation arrangements pursuant to which the lender acquires a participation interest in the related eligible loans.
These facilities are generally structured as master repurchase agreements under which ownership of the related eligible loans is temporarily transferred to a lender, as participation arrangements pursuant to which the lender acquires a participation interest in the related eligible loans, or as loan and security agreements under which eligible loans are pledged to the lender as collateral.
Adjusted EBITDA is a supplemental metric utilized by our management team to assess the underlying key drivers and operational performance of the continuing operations of the business and our operating segments. In addition, analysts, investors, and creditors may use these measures when analyzing our operating performance. Adjusted EBITDA is not a presentation made in accordance with U.S.
This supplemental metric is utilized by our management team to assess the underlying key drivers and operational performance of the continuing operations of the business. In addition, analysts, investors, and creditors may use this measure when analyzing our operating performance and comparability to peers. Adjusted EBITDA is not a presentation made in accordance with U.S.
We rely upon our operating cash flows to fund these additional borrowings on a short-term basis prior to securitization. The additional borrowings are generally securitized within 30 days after funding. The obligation to fund these additional borrowings could have a significant impact on our liquidity.
We rely upon certain of our warehouse financing arrangements and our operating cash flows to fund these additional borrowings on a short-term basis prior to securitization. The additional borrowings are generally securitized within 30 days after funding. The obligation to fund these additional borrowings could have a significant impact on our liquidity.
As of December 31, 2023, we had HMBS-related borrowings of $17.4 billion and HECM pledged as collateral to the pools of $17.5 billion, both carried at fair value. Additionally, as the servicer of reverse mortgage loans, we are obligated to fund additional borrowing capacity primarily in the form of undrawn lines of credit on floating rate reverse mortgage loans.
As of December 31, 2024, we had HMBS related obligations of $18.4 billion and HECM pledged as collateral to the pools of $18.7 billion, both carried at fair value. Additionally, as the servicer of reverse mortgage loans, we are obligated to fund additional borrowing capacity primarily in the form of undrawn lines of credit on floating rate reverse mortgage loans.
The transactions provide investors with the ability to invest in these pools of assets. The transactions provide us with access to liquidity for these assets, ongoing servicing fees, and potential residual returns for the residual securities we retain at the time of securitization.
The transactions provide us with access to liquidity for these assets, ongoing servicing fees, and potential residual returns for the residual securities we retain at the time of securitization.
The adjustment for changes in fair value of loans and securities held for investment and related obligations due to assumption changes is calculated based on changes in fair value associated with the above assets and liabilities calculated in accordance with U.S.
The adjustment for changes in fair value of loans and securities held for investment and related obligations due to market inputs or model assumptions is calculated based on changes in fair value associated with the above assets and liabilities calculated in accordance with U.S.
FoA has no independent means of generating revenue. FoA Equity may make distributions to its holders of Class A LLC Units, including FoA and the Equity Capital Unitholders, in an amount sufficient to cover all applicable taxes at assumed tax rates, payments under the TRA, and dividends, if any, declared by FoA.
FOA Equity may make distributions to its holders of Class A LLC Units, including FOA, in an amount sufficient to cover all applicable taxes at assumed tax rates, payments under the TRA, and dividends, if any, declared by FOA.
Other Secured Lines of Credit As of December 31, 2023, we collectively had $0.5 billion in additional secured facilities with $0.5 billion aggregate principal amount drawn through credit agreements or master repurchase agreements with six funding facility arrangements and five active lenders. These facilities are secured by, among other things, eligible asset-backed securities, MSR, and HECM tails.
Other Secured Lines of Credit As of December 31, 2024, we collectively had $524.9 million in additional secured facilities with $479.9 million aggregate principal amount drawn through credit agreements or master repurchase agreements with six funding facility arrangements and five active lenders. These facilities are secured by, among other things, eligible asset-backed securities, HECM MSR, and unsecuritized tails.
Refer to Note 4 - Discontinued Operations in the Notes to Consolidated Financial Statements for additional information regarding cash flow associated with the results of discontinued operations. Our cash decreased by $52.6 million for the year ended December 31, 2023 compared to a decrease of $186.2 million during the comparable period in 2022.
Refer to Note 4 - Discontinued Operations in the Notes to Consolidated Financial Statements for additional information regarding cash flow associated with the results of discontinued operations. Our cash and cash equivalents and restricted cash increased by $77.2 million for the year ended December 31, 2024 compared to a decrease of $52.6 million during the comparable period in 2023.
Adjusted Net Income (Loss) may also include other adjustments, as applicable based upon facts and circumstances, consistent with our intent of providing a supplemental means of evaluating our operating performance. 78 Adjusted EBITDA We define Adjusted EBITDA as net loss from continuing operations adjusted for: 1. Taxes 2. Interest on non-funding debt 3. Depreciation 4.
Adjusted net income (loss) may also include other adjustments, as applicable, based upon facts and circumstances, consistent with our intent of providing a supplemental means of evaluating our operating performance. Adjusted EBITDA We define adjusted EBITDA as net income (loss) from continuing operations adjusted for: 1. Income taxes 2.
(2) Tails consist of subsequent borrower draws, mortgage insurance premiums, service fees, and other advances, which we are able to subsequently pool into a security.
(2) Tails consist of subsequent borrower draws, mortgage insurance premiums, service fees, and other advances, which we are able to subsequently securitize.
Revenues from our Retirement Solutions segment include both our initial estimate of net origination gains from reverse mortgage loans, which is determined by utilizing quoted prices on similar securities or internally-developed models utilizing observable market inputs, in addition to fees earned at the time of origination of the associated loans.
Revenues from our Retirement Solutions segment include both our initial estimate of net origination gains from originated loans, which is determined by utilizing quoted prices on similar securities or internally-developed models utilizing observable market inputs, in addition to fees earned at the time of origination of the associated loans. We elect to account for all originated loans at fair value.
Our cash flow from operating activities when combined with net proceeds from our portfolio financing activities, as well as capacity through existing facilities, provide adequate resources to fund our anticipated ongoing cash requirements . We rely on these facilities to fund operating activities. As the facilities mature, we anticipate renewal of these facilities will be achieved.
Our cash flow from operating activities when combined with net proceeds from our portfolio financing activities, as well as capacity through existing facilities, provide adequate resources to fund our anticipated ongoing cash requirements . We rely on these facilities to fund operating activities.
Our strategy and long-term growth initiatives are built upon a few key fundamental factors: • We are focused on growing our core retirement solutions businesses, which benefit from a shared set of demographic and economic tailwinds.
Our strategy and long-term growth initiatives are built upon a few key fundamental factors: • We are focused on growing our core retirement solutions business, which benefits from demographic and economic tailwinds.
When we draw on these facilities, we generally must transfer and pledge eligible assets to the lender and comply with various financial and other covenants. Under our facilities, we generally transfer the assets at a haircut, which serves as the primary credit enhancement for the lender. Four of these facilities are guaranteed by FAH, a consolidated subsidiary of the Company.
When we draw on these facilities, we generally must transfer and pledge eligible assets to the lender and comply with various financial and other covenants. Under our facilities, we generally transfer the assets at a haircut, which serves as the primary credit enhancement for the lender.
We elect to account for all originated loans at fair value. The loans are immediately transferred to our Portfolio Management segment, and any future fair value adjustments, including interest earned, on these originated loans are reflected in revenues of our Portfolio Management segment until final disposition.
Once originated, the loans are transferred to our Portfolio Management segment, and any future fair value adjustments, including interest earned, on these originated loans are reflected in the revenues of our Portfolio Management segment until final disposition.
The transactions are structured as secured borrowings with the loan assets and liabilities, respectively, included in the Consolidated Statements of Financial Condition as loans held for investment, subject to nonrecourse debt, at fair value, and nonrecourse debt, at fair value. As of December 31, 2023, we had nonrecourse debt-related borrowings of $7.9 billion.
The transactions are structured as secured borrowings with the loan assets and liabilities, respectively, included in the Consolidated Statements of Financial Condition as Loans held for investment, subject to nonrecourse debt, at fair value, and Nonrecourse debt, at fair value.
Participations in the HECM are pooled into HMBS securities which are sold into the secondary market with servicing rights retained.
We originate HECM insured by the FHA. Participations in the HECM are pooled into HMBS securities which are sold into the secondary market with servicing rights retained.
Warehouse Lines of Credit Reverse mortgage facilities As of December 31, 2023, we had $1.0 billion in warehouse lines of credit capacity collateralized primarily by first lien mortgages with a $0.4 billion aggregate principal amount drawn through seven funding facility arrangements with six active lenders.
Other Financing Lines of Credit Reverse Mortgage Warehouse Facilities As of December 31, 2024, we had $1.1 billion in warehouse lines of credit capacity collateralized primarily by first lien mortgages with a $438.3 million aggregate principal amount drawn through eight funding facility arrangements with seven active lenders.
Changes in fair value of loans and securities held for investment and related obligations include changes in fair value and related hedge gains and losses for the following MSR, loans held for investment, and related liabilities: 1. Reverse mortgage loans held for investment, subject to HMBS related obligations, at fair value; 2.
Changes in fair value of loans and securities held for investment and related obligations include changes in fair value and related hedge gains and losses for the following: 1. Loans held for investment, subject to HMBS related obligations, at fair value; 2. Loans held for investment, subject to nonrecourse debt, at fair value; 83 3.
Analysts, investors, and creditors may use this measure when analyzing our operating performance and comparability to peers. Adjusted Earnings (Loss) Per Share is not a presentation made in accordance with U.S. GAAP, and our definition and use of this measure may vary from other companies in our industry.
Adjusted earnings (loss) per share is not a presentation made in accordance with U.S. GAAP, and our definition and use of this measure may vary from other companies in our industry.
Marketing and advertising expenses Marketing and advertising expenses are related to brand marketing and providing loan product information to our customers. Depreciation and amortization Depreciation and amortization expenses include depreciation and amortization of fixed assets and leasehold improvements and definite-lived intangible assets.
Loan servicing expenses Loan servicing expenses include costs related to the servicing and sub-servicing of loans. 68 Marketing and advertising expenses Marketing and advertising expenses are related to brand marketing and providing loan product information to our customers. Depreciation and amortization Depreciation and amortization expenses include depreciation and amortization of fixed assets and definite-lived intangible assets.
The Retirement Solutions segment recognized $121.6 million in net origination gains on originations of $1.6 billion of reverse mortgage loans for the year ended December 31, 2023 compared to $283.8 million in net origination gains on originations of $4.8 billion of reverse mortgage loans for the comparable 2022 period.
The Retirement Solutions segment recognized $179.8 million in net origination gains on loan originations of $1.9 billion for the year ended December 31, 2024 compared to $121.6 million in net origination gains on loan originations of $1.6 billion for the comparable 2023 period.
The capabilities provided by the Portfolio Management segment allowed us to complete issuances and sales of mortgage-backed securities backed by our loan products in 2023, demonstrating the high quality and liquidity of the loan products we originate, the deep relationships we have with our investors, and the resilience of our business model in many economic environments.
The capabilities provided by the Portfolio Management segment allowed us to complete several issuances and sales of mortgage-backed securities backed by our loan products in 2024, including our first issuance and sale of mortgage-backed securities backed exclusively by our non-agency second lien reverse mortgage loan product, demonstrating the high quality and liquidity of the loan products we originate, the deep relationships we have with our investors, and the resilience of our business model in many economic environments.
FAH is the parent of a lending company, FAR, while Incenter is the parent of operating service companies that provide capital markets and portfolio management capabilities such as secondary markets advisory services, mortgage trade brokerage, and capital management services .
FAH is the parent of a lending company, FAR, while Incenter is the parent of operating service companies that provide capital markets and portfolio management capabilities.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors. Except where the context otherwise requires, the terms “Finance of America,” “FoA,” the “Company,” “we,” “us,” or “our” refer to the business of Finance of America Companies Inc. and its consolidated subsidiaries.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors. Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” “FOA,” or the “Company” refer to Finance of America Companies Inc. and its consolidated subsidiaries.
During the third fiscal quarter of 2023, the Company sold certain operational assets of the home improvement lending business and began the process of winding down the operations of the home improvement lending business, which is expected to be substantially complete by the end of March 2024.
During the third fiscal quarter of 2023, the Company sold the operational assets of the home improvement lending business and began the process of winding down the operations of the home improvement lending business, which was substantially complete as of March 31, 2024 .
A summary of key factors impacting our revenues include: • prevailing interest rates which impact loan origination volume, with declining interest rates leading to increases in volume, and an increasing interest rate environment leading to decreases in volume; • our ability to successfully operate the newly integrated lending platform that we acquired from American Advisors Group in March 2023; • housing market trends which also impact loan origination volume, with a strong housing market leading to higher loan origination volume, and a weak housing market leading to lower loan origination volume; • demographic and housing stock trends which impact the addressable market size; • movement of market interest rates and yields required by investors, with the increasing of market interest rates and yields generally having negative impacts on the fair value of our financial assets, and the decreasing of market interest rates and yields generally having positive impacts on the fair value of our financial assets; • increases or decreases in default status of loans and prepayment speeds; and • broad economic factors such as the strength and stability of the overall economy, including sustained higher or lower interest rates and inflation, the unemployment level, and real estate values.
A summary of key factors impacting our revenues include: • prevailing interest rates which impact loan origination volume, with declining interest rates leading to increases in volume, and an increasing interest rate environment leading to decreases in volume; • housing market trends which also impact loan origination volume, with a strong housing market leading to higher loan origination volume, and a weak housing market leading to lower loan origination volume; • demographic and housing stock trends which impact the addressable market size; • movement of market interest rates and yields required by investors, with the increasing of market interest rates and yields generally having negative impacts on the fair value of our financial assets, and the decreasing of market interest rates and yields generally having positive impacts on the fair value of our financial assets; • increases or decreases in default status of loans and prepayment speeds; and • broad economic factors such as the strength and stability of the overall economy, including sustained higher or lower interest rates and inflation, the unemployment level, and real estate values. 65 Other factors that may affect our cost base include trends in salaries and benefits costs, sales commissions, loan production and servicing costs, technology, rent, legal, compliance, and other general and administrative costs.
Our Segments In connection with the transformation of our business from a vertically integrated, diversified lending and complementary services platform to a modern retirement solutions platform, we realigned our business to operate through two reportable segments: Retirement Solutions and Portfolio Management.
Refer to Note 3 - Acquisitions in the Notes to Consolidated Financial Statements for additional information. Our Segments In connection with the transformation of our business from a vertically integrated lending and complementary services platform to a unified modern retirement solutions platform, we realigned our business to operate through two reportable segments: Retirement Solutions and Portfolio Management.
Mortgage loans held for investment, subject to nonrecourse debt, at fair value; 80 3. Mortgage loans held for investment, at fair value; 4. Debt securities, at fair value; 5. MSR, at fair value; 6. HMBS related obligations, at fair value; and 7. Nonrecourse debt, at fair value.
Loans held for investment, at fair value; 4. Retained bonds, at fair value; 5. MSR, at fair value; 6. HMBS related obligations, at fair value; and 7. Nonrecourse debt, at fair value.
Future debt maturities will be funded with cash and cash equivalents, cash flow from operating activities, and, if necessary, future access to capital markets. We continue to optimize the use of balance sheet cash to avoid unnecessary interest-carrying costs.
As the facilities mature, management believes it will either renew existing facilities or obtain sufficient additional lines of credit. Future debt maturities will be funded with cash and cash equivalents, cash flow from operating activities, and, if necessary, future access to capital markets. We continue to optimize the use of balance sheet cash to avoid unnecessary interest-carrying costs.
GAAP results and using our non-GAAP financial measures only as a supplement. Users of our consolidated financial statements are cautioned not to place undue reliance on our non-GAAP financial measures. Adjusted Net Income (Loss) We define Adjusted Net Income (Loss) as consolidated net loss from continuing operations adjusted for: 1.
GAAP results and using our non-GAAP financial measures only as a supplement. Users of our consolidated financial statements are cautioned not to place undue reliance on our non-GAAP financial measures.
See Note 1 - Organization and Description of Business in the Notes to Consolidated Financial Statements for discussion of recent actions affecting the overall go-forward business operations, including details regarding the series of transactions entered into in order to transform our business from a vertically integrated, diversified lending and complementary services platform to a modern retirement solutions platform. 61 American Advisors Group Transaction On March 31, 2023, FAR acquired a majority of the assets and certain of the liabilities of AAG/Bloom, including, among other things, certain residential reverse mortgage loans and the right to service certain HECM, pursuant to (i) an Asset Purchase Agreement, dated as of December 6, 2022 (the “Original Asset Purchase Agreement” and as amended by the Amendment Agreement entered into on March 31, 2023, the “Asset Purchase Agreement”), by and between the Company, FoA Equity, FAR, AAG/Bloom and, for the limited purposes described therein, Reza Jahangiri, an individual residing in the State of California (the “AAG Principal”), (ii) a Servicing Rights Purchase and Sale Agreement, dated as of December 6, 2022 (as amended, the “MSR Purchase Agreement”), by and between FAR and AAG/Bloom and (iii) a Loan Sale Agreement, dated as of December 6, 2022 (as amended, the “Mortgage Loan Purchase Agreement” and collectively with the Asset Purchase Agreement and the MSR Purchase Agreement, the “AAG Purchase Agreements”), by and between FAR and AAG/Bloom (such acquisition, the “AAG Transaction”).
American Advisors Group Transaction On March 31, 2023, FAR acquired a majority of the assets and certain of the liabilities of AAG/Bloom, including, among other things, AAG/Bloom’s retail loan originations platform, certain residential reverse mortgage loans, and the right to service certain HECM, pursuant to (i) an Asset Purchase Agreement, dated as of December 6, 2022 (the “Original Asset Purchase Agreement” and as amended by the Amendment Agreement entered into on March 31, 2023, the “Asset Purchase Agreement”), by and between the Company, FOA Equity, FAR, AAG/Bloom, and, for the limited purposes described therein, Reza Jahangiri, an individual residing in the State of California (the “AAG Principal”), (ii) a Servicing Rights Purchase and Sale Agreement, dated as of December 6, 2022 (as amended, the “MSR Purchase Agreement”), by and between FAR and AAG/Bloom, and (iii) a Loan Sale Agreement, dated as of December 6, 2022 (as amended, the “Mortgage Loan Purchase Agreement” and collectively with the Asset Purchase 64 Agreement and the MSR Purchase Agreement, the “AAG Purchase Agreements”), by and between FAR and AAG/Bloom (such acquisition, the “AAG Transaction”).
These 77 reductions were partially offset by a $61.7 million decrease in shared services allocations due to the reduction in supported business lines in 2023. • General and administrative expenses, net of shared services allocations, decreased $22.4 million or 34.0% due to a $22.4 million decrease in communications and data processing and other expenses and a $6.6 million decrease in professional and consulting fees.
These reductions were partially offset by a $6.9 million decrease in shared services allocations due to the reduction in supported business lines in the year ended December 31, 2024. 79 • General and administrative expenses, net of shared services allocations, decreased $22.3 million or 51.1% due to a $19.8 million decrease in communications and data processing and other expenses and a $7.6 million decrease in professional and consulting fees.
These groups support our operating segments, and the cost of services directly supporting the operating segments are allocated to those operating segments on a cost-of-service basis. Enterprise-focused Corporate and Other expenses that are not incurred in direct support of the operating segments are kept unallocated within Corporate and Other.
Corporate and Other Corporate and Other consists of our corporate services groups. These groups support our operating segments, and the cost of services directly supporting the operating segments are allocated to those operating segments on a cost-of-service basis.
We pay commitment fees based upon the limit of the facility and unused fees are paid if utilization falls below a certain amount.
We pay certain up-front and ongoing fees based on our utilization with respect to many of these facilities. We pay commitment fees based upon the limit of the facility and unused fees are paid if utilization falls below a certain amount.
Therefore, the operations of the home improvement lending business are reported as part of the Company’s Retirement Solutions segment rather than as discontinued operations. 69 KEY METRICS The following table provides a summary of our Retirement Solutions segment’s key metrics (dollars in thousands): For the year ended December 31, 2023 For the year ended December 31, 2022 Reverse mortgage loan origination volume Total loan origination volume (1) $ 1,615,133 $ 4,833,918 Total loan origination volume - tails (2) 1,041,470 660,558 Total loan origination volume $ 2,656,603 $ 5,494,476 Total reverse loan origination volume - units 8,763 13,852 Reverse mortgage loan origination volume - by channel (1) TPO $ 982,687 $ 4,180,149 Retail 632,446 653,769 Total reverse mortgage loan origination volume $ 1,615,133 $ 4,833,918 Home improvement loan origination volume Total loan origination volume $ 146,696 $ 241,716 Total loan origination volume - units 11,606 20,306 (1) Loan origination volumes consist of initial reverse mortgage loan borrowing amounts.
Therefore, the previous operations of the home improvement lending business are reported as part of the Company’s Retirement Solutions segment rather than as discontinued operations. 72 Key Metrics The following table provides a summary of our Retirement Solutions segment’s key metrics (in thousands, except units): For the year ended December 31, 2024 For the year ended December 31, 2023 Reverse mortgage loan origination volume Loan origination volume (1) $ 1,917,298 $ 1,615,133 Loan origination volume - tails (2) 1,022,379 1,041,470 Total loan origination volume $ 2,939,677 $ 2,656,603 Total reverse mortgage loan origination volume - units 8,995 8,763 Reverse mortgage loan origination volume - by channel (1) TPO $ 1,159,382 $ 982,687 Retail 757,916 632,446 Total reverse mortgage loan origination volume $ 1,917,298 $ 1,615,133 Home improvement loan origination volume Total loan origination volume $ 807 $ 146,696 Total loan origination volume - units 36 11,606 (1) Loan origination volumes consist of initial reverse mortgage loan borrowing amounts.
When HECM are not eligible for securitization into HMBS or are required to be bought out of a pool of HECM previously securitized into an HMBS, we securitize them into privately placed mortgage-backed securities or hold them for investment.
When HECM are not eligible for securitization into HMBS or are required to be bought out of a pool of HECM previously securitized into an HMBS, we securitize them into privately placed mortgage-backed securities or hold them for investment. In November 2024, Ginnie Mae announced the finalized term sheet for its HMBS 2.0 program expected to be implemented in 2025.
The following table presents additional information about our warehouse facility as of December 31, 2023 (in thousands): Mortgage Warehouse Facility Maturity Date Total Capacity Outstanding Balance Uncommitted October 2024 $ 12,500 $ 2,135 General With respect to each of our warehouse facilities, we pay certain up-front and/or ongoing fees which can be based on our utilization of the facility.
The following table presents additional information about our warehouse facilities as of December 31, 2024 (in thousands): Reverse Warehouse Facilities Maturity Date Total Capacity Outstanding Balance Committed June 2025 - September 2025 $ 420,000 $ 260,089 Uncommitted April 2025 - October 2026 660,000 178,239 Total reverse warehouse facilities $ 1,080,000 $ 438,328 With respect to each of our warehouse facilities, we pay certain up-front and/or ongoing fees which can be based on our utilization of the facility.
Fee income We earn various fees from our customers during the process of origination and servicing of loans. Revenue is recognized when the performance obligations have been satisfied, which is typically at the time of loan origination or over the life of the loans serviced.
Revenue is recognized when the performance obligations have been satisfied, which is typically at the time of loan origination or over the life of the loans serviced.
We originated $1.6 billion of reverse mortgage loans for the year ended December 31, 2023, a decrease of 66.6%, compared to $4.8 billion for the comparable 2022 period.
We originated $1.9 billion of reverse mortgage loans for the year ended December 31, 2024, an increase of 18.7%, compared to $1.6 billion for the comparable 2023 period.
Under these facilities, we are generally required to comply with various customary operating and financial covenants. The financial covenants are similar to those under the warehouse lines of credit.
Under these facilities, we are generally required to comply with various customary operating and financial covenants. The financial covenants are similar to those under the warehouse lines of credit. The Company was in compliance with or has received waivers for all financial covenants as of December 31, 2024.
Investing Cash Flow The increase of $2.0 billion in cash provided by our investing activities during the year ended December 31, 2023 compared to the 2022 period was primarily attributable to a $2.9 billion decrease in cash used for purchases and originations of loans held for investment, net of proceeds/payments.
Investing Cash Flow The decrease of $43.3 million in cash provided by our investing activities during the year ended December 31, 2024 compared to the 2023 period was primarily attributable to a decrease of $392.4 million in proceeds/payments on loans held for investment, subject to nonrecourse debt, net of cash used for purchases and originations, a decrease of $80.1 million in proceeds on the sale of MSR, and a decrease in net proceeds from the sale of businesses of $68.2 million.
The prior period segment disclosures have been recast to reflect the new structure. Refer to Note 1 - Organization and Description of Business in the Notes to Consolidated Financial Statements for additional information. AAG Transaction On March 31, 2023, the Company completed the acquisition of the assets and liabilities associated with the AAG Transaction.
Refer to Note 1 - Organization and Description of Business and Note 4 - Discontinued Operations in the Notes to Consolidated Financial Statements for additional information. 66 AAG Transaction On March 31, 2023, the Company completed the acquisition of the assets, including the retail loan originations platform, and liabilities associated with the AAG Transaction.
This discussion is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP. Management believes these key financial measures provide an additional view of our performance over the long-term and provide useful information that we use in order to maintain and grow our business.
Management believes these key financial measures provide an additional view of our performance over the long-term and provide useful information that we use in order to maintain and grow our business. These non-GAAP financial measures should not be considered as an alternative to net income (loss), operating cash flows, or any other performance measures determined in accordance with U.S. GAAP.
The facilities may also require the outstanding principal to be repaid if a loan remains on the line longer than a contractual period of time, which generally ranges from 45 to 365 calendar days. Interest on our warehouse facilities vary by facility and may depend on the type of asset that is being financed.
The facilities may also require the outstanding principal to be repaid if a loan remains on the line longer than a contractual period of time, which generally ranges from 45 to 365 calendar days. Loans financed under certain of our warehouse facilities are subject to changes in fair value and margin calls.
The cash flow assumptions and prepayment assumptions used in the model are based on various factors. Refer to Note 6 - Fair Value in the Notes to Consolidated Financial Statements for further discussion of the key assumptions and valuation techniques. We use various internal financial models that use market participant data to value these loans.
Refer to Note 6 - Fair Value in the Notes to Consolidated Financial Statements for additional information regarding the key inputs, assumptions, and valuation techniques utilized to measure fair value. We use various internal financial models that use market participant data to value these loans.
The cash flow assumptions and prepayment assumptions used in the model are based on various factors. Refer to Note 6 - Fair Value in the Notes to Consolidated Financial Statements for further discussion of the key assumptions and valuation techniques. HMBS Related Obligations, at Fair Value We have elected to account for all outstanding HMBS related obligations at fair value.
Refer to Note 6 - Fair Value in the Notes to Consolidated Financial Statements for additional information regarding the key inputs, assumptions, and valuation techniques utilized to measure fair value. HMBS Related Obligations, at Fair Value We have elected to account for all outstanding HMBS related obligations at fair value.
We are a leader in this market and we are focused on developing and 60 offering products for borrowers with interest in using the reverse mortgage loan product as a retirement planning tool.
We are a leader in this market and we are focused on developing and offering products for borrowers with interest in using a reverse mortgage loan as a retirement planning tool, which we believe will continue to increase our addressable customer base and ultimately raise our origination volumes.
The decrease in net origination gains in the Retirement Solutions segment was due to lower reverse mortgage loan origination volumes, which was partially offset by higher margins associated with the increase in volumes from our newly acquired retail platform from AAG/Bloom during the year ended December 31, 2023.
The increase in net origination gains in the Retirement Solutions segment was due to both higher loan origination volumes and higher margins associated with the increase in volumes from our retail platform acquired from AAG/Bloom.
Nonrecourse Debt We securitize and issue interests in pools of loans that are not eligible for the Ginnie Mae securitization program. These include reverse mortgage loans that were previously repurchased out of a HMBS pool, which are referred to as HECM buyouts, commercial mortgage loans, and non-agency reverse mortgages.
These include non-agency reverse mortgages, reverse mortgage loans that were previously repurchased out of a HMBS pool, which are referred to as HECM buyouts, and commercial mortgage loans. The transactions provide investors with the ability to invest in these pools of assets.
The cash flow assumptions and prepayment assumptions used in the model are based on various factors. Refer to Note 6 - Fair Value in the Notes to Consolidated Financial Statements for further discussion of the key assumptions and valuation techniques. Nonrecourse Debt, at Fair Value We have elected to account for all outstanding nonrecourse debt at fair value.
Refer to Note 6 - Fair Value in the Notes to Consolidated Financial Statements for additional information regarding the key inputs, assumptions, and valuation techniques utilized to measure fair value. Nonrecourse Debt, at Fair Value We have elected to account for all outstanding nonrecourse debt at fair value.
Revenues In the table below is a summary of the components of our Retirement Solutions segment’s total revenues (in thousands): For the year ended December 31, 2023 For the year ended December 31, 2022 Net origination gains: TPO $ 108,016 $ 427,112 Retail 58,412 50,130 Acquisition costs (44,782) (193,434) Total net origination gains 121,646 283,808 Fee income 33,167 15,526 Gain (loss) on sale and other income from loans held for sale, net (6,303) 367 Net interest expense — (11) Total revenues $ 148,510 $ 299,690 For the year ended December 31, 2023 versus the year ended December 31, 2022 Total revenues decreased $151.2 million or 50.4% as a result of the following: • Net origination gains decreased $162.2 million or 57.1% as a result of lower reverse mortgage loan origination volumes, primarily due to higher interest rates, which was partially offset by higher margins associated with the increase in volumes from our retail platform acquired from AAG/Bloom during the year ended December 31, 2023.
Revenues In the table below is a summary of the components of our Retirement Solutions segment’s total revenues (in thousands): For the year ended December 31, 2024 For the year ended December 31, 2023 Net origination gains: TPO $ 147,961 $ 108,016 Retail 81,026 58,412 Acquisition costs (49,150) (44,782) Total net origination gains 179,837 121,646 Fee income 26,553 33,167 Loss on sale and other income from loans held for sale, net (76) (6,303) Total revenues $ 206,314 $ 148,510 For the year ended December 31, 2024 versus the year ended December 31, 2023 Total revenues increased $57.8 million or 38.9% as a result of the following: • Net origination gains increased $58.2 million or 47.8% as a result of higher reverse mortgage loan origination volumes and higher margins associated with the increase in volumes from our retail platform acquired from AAG/Bloom.
Financial Covenants Our credit facilities contain various financial covenants, which primarily relate to required tangible net worth amounts, liquidity reserves, leverage ratio requirem ents, and profitability requirements. These covenants are measured at our holding company subsidiary or our operating subsidiaries.
This was partially offset by a $467.0 million increase in payments on HMBS related obligations, net of proceeds. Financial Covenants Our credit facilities contain various financial covenants, which primarily relate to required tangible net worth amounts, liquidity reserves, leverage ratios , and profitability. These covenants are measured at our holding company subsidiary or our operating subsidiaries.
Changes in fair value of loans and securities held for investment and related obligations due to assumption changes, deferred purchase price obligations (including earnouts and TRA obligations), contingent earnout, warrant liability, and minority investments 2. Amortization and impairment of intangibles and other assets 3. Equity-based compensation 4. Certain non-recurring costs 5.
Changes in fair value of loans and securities held for investment and related obligations due to market inputs or model assumptions, deferred purchase price obligations, contingent earnout, warrant liability, minority investments, and the exchange of our senior notes. 3. Amortization or impairment of intangibles and impairment of certain other long-lived assets. 4.
We originate loans through a retail channel (consisting primarily of a centralized retail platform) and a TPO channel (consisting primarily of a network of mortgage brokers).
We originate loans through a retail channel (consisting primarily of a centralized retail platform) and a TPO channel (consisting primarily of a network of mortgage brokers). In 2024, we took steps to streamline and enhance our marketing and originations operations and digital capabilities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed7 unchanged
Biggest changeIn reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects. 92 The following table summarizes the estimated change in the fair value of our significant assets and liabilities sensitive to interest rates as of December 31, 2023 (in thousands).
Biggest changeIn reality, changes in one factor may lead to changes in other factors, which could impact the hypothetical effects. 93 The following table summarizes the estimated change in the fair value of our significant assets and liabilities sensitive to interest rates as of December 31, 2024 (in thousands): December 31, 2024 Down 25 bps Up 25 bps Increase (decrease) in assets Loans held for investment, subject to HMBS related obligations $ 31,649 $ (31,580) Loans held for investment, subject to nonrecourse debt: Reverse mortgage loans 130,724 (128,008) Loans held for investment: Reverse mortgage loans 4,556 (4,465) Total assets $ 166,929 $ (164,053) Increase (decrease) in liabilities HMBS related obligations $ 27,273 $ (27,089) Nonrecourse debt 55,867 (67,435) Total liabilities $ 83,140 $ (94,524) 94
We estimate the fair value of the outstanding mortgage loans and related liabilities using a process that combines the use of a DCF model and analysis of current market data. The cash flow assumptions and prepayment assumptions used in the model are based on various factors.
We estimate the fair value of the outstanding mortgage loans and related liabilities using a process that combines the use of a DCF model and analysis of current market data. The cash flow assumptions used in the model are based on various factors.
Refer to Note 6 - Fair Value in the Notes to Consolidated Financial Statements for further discussion of the key assumptions and valuation techniques. Our total market risk is impacted by a variety of other factors including market spreads and the liquidity of the markets.
Refer to Note 6 - Fair Value in the Notes to Consolidated Financial Statements for additional information regarding the key inputs, assumptions, and valuation techniques utilized to measure fair value. Our total market risk is impacted by a variety of other factors including market spreads and the liquidity of the markets.
Removed
December 31, 2023 Down 25 bps Up 25 bps Increase (decrease) in assets Loans held for investment, subject to HMBS related obligations $ 25,001 $ (24,967) Loans held for investment, subject to nonrecourse debt: Reverse mortgage loans 109,154 (107,614) Commercial mortgage loans 218 (217) Loans held for investment: Reverse mortgage loans 5,976 (5,612) Total assets $ 140,349 $ (138,410) Increase (decrease) in liabilities HMBS related obligations $ 21,624 $ (21,559) Nonrecourse debt 62,421 (63,514) Total liabilities $ 84,045 $ (85,073) 93

Other FOA 10-K year-over-year comparisons