Finance of America Companies (FOA) plans to sell its retail forward mortgage division and close its forward wholesale mortgage channel, according to multiple sources who confirmed the plans to RMD sister-site HousingWire.
Amid the planned restructuring and presuming the planned sale is completed, the company’s reverse mortgage division Finance of America Reverse (FAR) would be unaffected as the parent company will focus on areas including reverse mortgages and a recently-acquired subsidiary dedicated to home improvement. FOA will plan to maintain focuses on its specialty finance and service business (SF&S), according to sources.
The sale of the forward mortgage retail channel is reportedly being made to FOA competitor Guaranteed Rate, but negotiations are ongoing and the process is described as “fluid,” according to HousingWire’s original reporting.
The FOA wholesale channel is expected to close down by the end of 2022, according to HousingWire sources. Broker partners have yet to be informed of any changes to the division as of the story’s original publication.
RMD reached out for independent comment on the story from FOA and was provided with the same statement sent to HousingWire.
“It is company policy not to comment on rumors or speculation in the market,” an FOA spokesperson told HousingWire and RMD.
In a Q2 2022 earnings call this past August, FOA reported steep losses of $168 million, describing that such performance would lead to various cost control measures including a reduction in its workforce and a move away from a refinance-reliant direct-to-consumer forward channel.
However, FOA President and interim CEO Graham Fleming also took the time to describe the importance of the company’s reverse mortgage division, describing that growth in volumes and recent research illustrating the untapped potential of the market continue to demonstrate a need for further investment in this side of the business.
“Reverse origination volumes of $1.58 billion in Q2 set yet another quarterly funding record and was roughly $100 million above the first quarter,” Fleming said. “This growth is attributable primarily to market penetration in first-time reverse customers. As a result, we have seen a decrease in prepayment rates as production shifts from refinance to new volume.”
The story was largely similar in the Q1 2022 earnings call in May, where FAR’s losses on the forward side led to an emphasis on the performance of the reverse mortgage division by the executive team.
“[Our strategy centralizes] the power of our product set and how we can help our customers through the life of their financial journey, whether it’s to refinance the home improvement and ultimately to use a reverse loan to help fund their retirement and lower their payments,” said FOA CFO Johan Gericke on the May call. “And so, that whole operating model is going to become a lot more pronounced as we make investments in our technology and our organizational structure to drive this forward.”
Read the story that broke the news at HousingWire.