Finance of America Companies Inc. (FOA) is a financial services holding company.
The company, 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.
In 2024, the company focused on unifying and enhancing its streamlined retirement solutions business and solidifying its posi...
Finance of America Companies Inc. (FOA) is a financial services holding company.
The company, 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.
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.
The company’s strategy and long-term growth initiatives are built upon a few key fundamental factors:
The company is focused on growing its core retirement solutions business, which benefits from demographic and economic tailwinds. The company can continue to enhance, expand, and more effectively dispatch its suite of home equity-based financing solutions to help senior homeowners achieve their retirement goals.
The company distributes its products through multiple channels and utilize flexible technology platforms in order to scale the company’s business.
The company connects borrowers with investors. The company’s consumer-facing business leaders interface directly with the investor-facing professionals in its Portfolio Management segment, facilitating the development of attractive lending solutions for the company’s customers with the confidence that the loans the company generates can be efficiently and profitably sold to a deep pool of investors, either directly via whole-loan sales or indirectly via the issuance and sale of mortgage-backed securities. The company seeks to programmatically and profitably monetize the company’s loans, which minimizes capital at risk, while often retaining a future performance-based participation interest in the underlying cash flows of the company’s monetized loans.
The company is 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. The company is principally focused on offering reverse mortgage loan products throughout the U.S. The company’s offerings are specifically designed to unlock home equity for homeowners aged 55 and over.
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. The company has 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. For example, in 2023, the company 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 mortgaged property. In 2024, the company 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. The launch and expansion of the second lien product has enabled the company 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 the company’s commitment to meet and serve new kinds of borrowers whose needs are not satisfied by existing available products. The company is a leader in this market and is focused on developing and offering products for borrowers with interest in using a reverse mortgage loan as a retirement planning tool, which will continue to increase the company’s addressable customer base and ultimately raise its origination volumes.
The company originates loans through a retail channel (consisting primarily of a centralized retail platform) and a third-party originator (‘TPO’) channel (primarily consisting of a network of mortgage brokers). In 2024, the company took steps to streamline and enhance its marketing and originations operations and digital capabilities. The company transitioned its sales teams onto one loan origination system, making the company’s 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. This brand unification included the launching of new brand assets across the company’s platforms. Further, in the second quarter of 2024, the company modified its go-to-market strategy within the company’s retail channel to focus on its most efficient business lines and stepped away from business lines and campaigns that had been less effective. Additionally, efforts are underway to develop the company’s digital capabilities. The company’s digital innovation strategy is designed to deliver financial services to seniors in a way that is both modern and user friendly. The company is working to build a digital channel that will supplement the company’s existing lines of business and leverage automated digital tools to improve efficiency and the overall ease of transacting. The company is similarly engaging in efforts to refine the systems used by the company’s mortgage broker partners to improve the efficiency and ease of originations via the company’s TPO channel. These efforts will increase brand and product recognition and awareness within the addressable market of the U.S. seniors and among mortgage brokers, make the company’s marketing efforts and originations processes more efficient and less costly, improve the originations experience for borrowers and mortgage broker partners, expand the number and depth of the company’s relationships with borrowers and mortgage broker partners, and ultimately raise the company’s origination volumes.
The company’s Portfolio Management segment provides structuring and product development expertise, as well as broker/dealer and institutional asset management capabilities, which facilitates innovation and the successful monetization of the company’s loans. The company securitizes HECM into Home Equity Conversion Mortgage-Backed Securities (‘HMBS’), which Ginnie Mae guarantees, and sell the HMBS in the secondary market while retaining the rights to service the HECM. 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, the company 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. Once implemented, the HMBS 2.0 program will enable the company to securitize into HMBS additional HECM that are required to be bought out of pools of HECM securitized pursuant to Ginnie Mae’s existing HMBS program or otherwise not eligible for securitization pursuant to Ginnie Mae’s existing HMBS program (subject to expanded eligibility parameters applicable to the HMBS 2.0 program), increasing the HECM that the company is able to securitize into HMBS. The company securitizes non-agency reverse mortgage loans into mortgage-backed securities sold to investors and sell them as whole loans to investors. The company may also decide to strategically hold certain non-agency reverse mortgage loans for investment. The capabilities provided by the Portfolio Management segment allowed the company to complete several issuances and sales of mortgage-backed securities backed by the company’s loan products in 2024, including the company’s first issuance and sale of mortgage-backed securities backed exclusively by the company’s non-agency second lien reverse mortgage loan product, demonstrating the high quality and liquidity of the loan products the company originate, the deep relationships the company has with its investors, and the resilience of the company’s business model in many economic environments.
The company’s lending model is supported by a robust funding structure financed by an established and diversified mix of capital partners. The company maintains and monitors its liquidity in order to fund the company’s loan origination business, manage day-to-day operations, and protect against unforeseeable market events. In 2024, the company entered into two new warehouse lines of credits with financial institutions that were new to reverse mortgage lending.
The company’s culture plays a significant role in producing superior outcomes for both the company’s customers and its business.
The company’s involvement in the loan process throughout its life cycle coupled with the company’s commitment to its intention gives the company the ability to deliver a value proposition unmatched in the industry.
Segments
The company operates through two reportable segments: Retirement Solutions and Portfolio Management. The company’s previously reported Mortgage Originations (with the exception of its home improvement lending business), Commercial Originations, and Lender Services (with the exception of Incenter Solutions LLC) segments are now reported as discontinued operations.
Retirement Solutions
The company’s Retirement Solutions segment conducts all of its loan origination activity, including the origination and acquisition of HECM and non-agency reverse mortgage loans through both the retail and TPO channels. The Retirement Solutions segment generates revenue from fees earned at the time of loan origination, as well as from the initial estimate of net origination gains, with all originated loans accounted for at fair value. Once originated, the loans are transferred to the company’s Portfolio Management segment, and any future fair value adjustments, including interest earned, on these originated loans are reflected in the revenues of the company’s Portfolio Management segment until final disposition.
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.
Portfolio Management
The company’s Portfolio Management segment provides product development, loan securitization, loan sales, risk management, servicing oversight, and asset management services to the company. The company’s Portfolio Management team acts as the connector between borrowers and investors. The direct connections to investors, provided by the company’s Financial Industry Regulatory Authority (‘FINRA’) registered broker-dealer, allows the company to innovate and manage risk through better price and product discovery. Given the company’s scale, the company is 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 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.
Seasonality
The company’s business is generally subject to seasonal trends with activity generally decreasing during the winter months. The company’s lowest revenue and net income levels during the year have historically been in the first quarter (year ended December 2024), but this is not indicative of future results.
Regulation
The company is 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 the company’s 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 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. 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’).
The company conducts its operations so that the company is not required to register as an investment company under the Investment Company Act.
The company is licensed as a loan originator in all 50 states and the District of Columbia and is also licensed as a loan servicer and loan broker in a number of states and jurisdictions in which such licenses are required.
History
Finance of America Companies Inc., a Delaware corporation, was founded in 2013.
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