foa-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-40308

_________________________

FINANCE OF AMERICA COMPANIES INC.

(Exact name of registrant as specified in its charter)

_________________________

Delaware

85-3474065

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

5830 Granite Parkway, Suite 400

Plano, Texas

75024

(Address of Principal Executive Offices)

(Zip Code)

(877) 202-2666

Registrant's telephone number, including area code

_________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	FOA	The New York Stock Exchange
Warrants to purchase shares of Class A Common Stock	FOA.WS	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	x
Non-accelerated filer	☐	Smaller reporting company	x
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of November 3, 2023, there were issued and outstanding 87,943,931 shares of the registrant’s Class A Common Stock, par value $0.0001, and 15 shares of the registrant's Class B Common Stock, par value $0.0001.


			Finance of America Companies Inc. and Subsidiaries Quarterly Report on Form 10-Q Table of Contents


		Page
	PART I - Financial Information
Item 1.	Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	60
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	89
Item 4.	Controls and Procedures	90

	PART II - Other Information
Item 1.	Legal Proceedings	91
Item 1A.	Risk Factors	91
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	91
Item 3.	Defaults Upon Senior Securities	91
Item 4.	Mine Safety Disclosures	91
Item 5.	Other Information	91
Item 6.	Exhibits	91

Signatures		93

Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts or statements of current conditions, but instead represent only management’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of Finance of America Companies Inc.'s (the “Company”) control. It is possible that our actual results, financial condition, and liquidity may differ, possibly materially, from the anticipated results, financial condition, and liquidity in these forward-looking statements. The Company’s actual results may differ from its expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. The Company cautions readers not to place undue reliance upon any forward-looking statements, which are current only as of the date of this report. Results for any specified quarter are not necessarily indicative of the results that may be expected for the full year or any future period. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. All subsequent written and oral forward-looking statements concerning the Company or other matters and attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. A number of important factors exist that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to:

•the transformation of our business from a vertically-integrated, diversified lending platform to a modern retirement solutions platform, with access to an innovative range of retirement offerings centered on the home;

•our ability to obtain sufficient capital and liquidity to meet the financing and operational requirements of our business, and our ability to comply with our debt agreements and pay down our substantial debt;

•our recently closed asset acquisition from American Advisors Group and sale of our Commercial Originations and Lender Services businesses, and their respective expected benefits and increased liquidity, anticipated cost savings, and financial and accounting impact;

•our ability to successfully and timely integrate the business of American Advisors Group into the legacy business of the Company;

•the possibility that the Company may be adversely affected by other economic, business or competitive factors in our business markets and worldwide financial markets, including a sustained period of higher interest rates and increased instability in the banking sector as a result of several recent bank failures;

•our ability to respond to significant changes in prevailing interest rates and to resume profitable business operations;

•our ability to manage disruptions in the secondary home loan market, including the mortgage-backed securities market;

•our ability to finance and recover costs of our reverse servicing operations;

•our ability to manage changes in our licensing status, business relationships, or servicing guidelines with the Government National Mortgage Association, the United States Department of Housing and Urban Development, or other governmental entities;

•our geographic market concentration if the economic conditions in our current markets should decline or as a result of natural disasters;

•our use of estimates in measuring or determining the fair value of the majority of our financial assets and liabilities, which may require us to write down the value of these assets or write up the value of these liabilities if they prove to be incorrect;

•our ability to manage various legal proceedings and compliance matters, federal or state governmental examinations, and enforcement investigations we are subject to from time to time, including consumer protection laws applicable to reverse mortgage lenders, which may be highly complex and slow to develop, and results are difficult to predict or estimate;

•our ability to prevent cyber intrusions and mitigate cyber risks;

•our ability to compete with national banks, which are not subject to state licensing and operational requirements;

•our holding company status and dependency on distributions from Finance of America Equity Capital LLC;

•our “controlled company” status under New York Stock Exchange rules, which exempts us from certain corporate governance requirements and affords stockholders fewer protections; and

•our common stock trading history has been characterized by low trading volume, which may result in an inability to sell your shares at a desired price, if at all.

All of these factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for our management to predict all such factors or to assess the effect of each such new factor on our business. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and any of these statements included herein may prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements, or our objectives and plans will be achieved. Please refer to Item 1A. Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this report, and in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the U.S Securities and Exchange Commission (the "SEC") on March 16, 2023, for further information on these and other risk factors affecting us, as such factors may be amended and updated from time to time in the Company’s subsequent periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

Part I - Financial Information

Item 1. Financial Statements

Condensed Consolidated Financial Statements (Unaudited)


			Finance of America Companies Inc. and Subsidiaries Condensed Consolidated Statements of Financial Condition (In thousands, except share data)


	September 30, 2023		December 31, 2022
	(unaudited)
ASSETS
Cash and cash equivalents	$	66,341	$	61,149
Restricted cash	216,273		179,764
Loans held for investment, subject to Home Equity Conversion Mortgage-Backed Securities ("HMBS") related obligations, at fair value	17,185,552		11,114,100
Loans held for investment, subject to nonrecourse debt, at fair value	7,912,759		7,454,638
Loans held for investment, at fair value	467,319		907,998
Loans held for sale, at fair value	23,956		173,984
Mortgage servicing rights ("MSR"), at fair value, $0 and $60,562 subject to nonrecourse MSR financing liability, respectively	7,944		95,096

Fixed assets and leasehold improvements, net	8,055		9,131
Intangible assets, net	269,228		297,119
Other assets, net	231,679		266,316
Assets of discontinued operations	8,356		313,360
TOTAL ASSETS	$	26,397,462	$	20,872,655

LIABILITIES AND EQUITY
HMBS related obligations, at fair value	$	16,978,168	$	10,996,755
Nonrecourse debt, at fair value	7,812,570		7,343,177
Other financing lines of credit	852,813		1,327,634
Payables and other liabilities	220,818		173,732
Notes payable, net (includes amounts due to related parties of $59,130 and $46,790, respectively)	411,124		399,402
Liabilities of discontinued operations	18,360		227,114
TOTAL LIABILITIES	26,293,853		20,467,814
Commitments and Contingencies (Note 18)
EQUITY (Note 24)
Class A Common Stock, $0.0001 par value; 6,000,000,000 shares authorized; 92,038,371 and 67,681,856 shares issued, respectively, and 87,779,871 and 63,423,356 shares outstanding, respectively	9		6
Class B Common Stock, $0.0001 par value; 1,000,000 shares authorized; 15 and 14 shares issued and outstanding, respectively	—		—
Additional paid-in capital	940,717		888,488
Accumulated deficit	(775,744)		(634,295)
Accumulated other comprehensive loss	(221)		(273)
Noncontrolling interest	(61,152)		150,915
TOTAL EQUITY	103,609		404,841
TOTAL LIABILITIES AND EQUITY	$	26,397,462	$	20,872,655

See accompanying notes to unaudited condensed consolidated financial statements


			Finance of America Companies Inc. and Subsidiaries Condensed Consolidated Statements of Financial Condition (In thousands)

The following table presents the assets and liabilities of the Company's consolidated variable interest entities ("VIEs"), which are included in the Condensed Consolidated Statements of Financial Condition above, and excludes retained bonds and beneficial interests that eliminate in consolidation.


	September 30, 2023		December 31, 2022
	(unaudited)
ASSETS
Restricted cash	$	202,047	$	173,714
Loans held for investment, subject to nonrecourse debt, at fair value	7,525,331		7,340,528
Other assets, net	74,724		75,977
TOTAL ASSETS	$	7,802,102	$	7,590,219

LIABILITIES
Nonrecourse debt, at fair value	$	7,443,603	$	7,175,857
Payables and other liabilities	588		757
TOTAL LIABILITIES	$	7,444,191	$	7,176,614

NET CARRYING VALUE OF ASSETS SUBJECT TO NONRECOURSE DEBT	$	357,911	$	413,605

See accompanying notes to unaudited condensed consolidated financial statements


			Finance of America Companies Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except share data)


	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
REVENUES
Loss on sale and other income from loans held for sale, net	$	(6,984)	$	(6,508)	$	(23,464)	$	(242)
Net fair value gains (losses) on loans and related obligations	(53,135)		(10,244)		30,126		(5,109)
Fee income	13,201		10,212		33,377		72,225
Net interest expense:
Interest income	4,443		2,527		9,734		5,320
Interest expense	(27,965)		(33,534)		(91,255)		(84,039)
Net interest expense	(23,522)		(31,007)		(81,521)		(78,719)
TOTAL REVENUES	(70,440)		(37,547)		(41,482)		(11,845)

EXPENSES
Salaries, benefits, and related expenses	48,557		45,788		140,469		163,691
Occupancy, equipment rentals, and other office related expenses	2,097		1,576		6,560		5,465
General and administrative expenses	54,772		44,987		152,179		148,042
TOTAL EXPENSES	105,426		92,351		299,208		317,198
IMPAIRMENT OF INTANGIBLES AND OTHER ASSETS	(558)		(3,800)		(558)		(3,800)
OTHER, NET	3,853		20,468		2,852		37,606
NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(172,571)		(113,230)		(338,396)		(295,237)
Benefit for income taxes from continuing operations	(103)		(8,491)		(786)		(18,414)
NET LOSS FROM CONTINUING OPERATIONS	(172,468)		(104,739)		(337,610)		(276,823)
NET LOSS FROM DISCONTINUED OPERATIONS	(2,464)		(196,961)		(45,211)		(256,695)
NET LOSS	(174,932)		(301,700)		(382,821)		(533,518)
Net loss attributable to noncontrolling interest from continuing operations	(107,940)		(89,148)		(212,190)		(226,772)
Net loss attributable to noncontrolling interest from discontinued operations	(1,629)		(128,066)		(29,182)		(173,087)
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO CONTROLLING INTEREST	(64,528)		(15,591)		(125,420)		(50,051)
NET LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO CONTROLLING INTEREST	(835)		(68,895)		(16,029)		(83,608)
NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST	$	(65,363)	$	(84,486)	$	(141,449)	$	(133,659)

EARNINGS PER SHARE (Note 23)
Basic weighted average shares outstanding	87,726,231		62,804,809		79,804,493		61,993,353
Basic net loss per share from continuing operations	$	(0.74)	$	(0.25)	$	(1.57)	$	(0.81)

Basic net loss per share	$	(0.75)	$	(1.35)	$	(1.77)	$	(2.16)
Diluted weighted average shares outstanding	87,726,231		187,877,936		79,804,493		188,375,945
Diluted net loss per share from continuing operations	$	(0.74)	$	(0.46)	$	(1.57)	$	(1.21)

Diluted net loss per share	$	(0.75)	$	(1.34)	$	(1.77)	$	(2.34)

See accompanying notes to unaudited condensed consolidated financial statements


			Finance of America Companies Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (In thousands)


	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
NET LOSS	$	(174,932)	$	(301,700)	$	(382,821)	$	(533,518)
COMPREHENSIVE INCOME (LOSS) ITEM:
Impact of foreign currency translation adjustment	33		(105)		52		(257)
TOTAL COMPREHENSIVE LOSS	(174,899)		(301,805)		(382,769)		(533,775)
Less: Comprehensive loss attributable to noncontrolling interest	(109,548)		(217,285)		(241,339)		(400,033)
COMPREHENSIVE LOSS ATTRIBUTABLE TO CONTROLLING INTEREST	$	(65,351)	$	(84,520)	$	(141,430)	$	(133,742)

See accompanying notes to unaudited condensed consolidated financial statements


			Finance of America Companies Inc. and Subsidiaries Condensed Consolidated Statements of Equity (Unaudited) (In thousands, except share data)


	Class A Common Stock			Class B Common Stock									Noncontrolling Interest
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Class A LLC Units	Amount		Total Equity

Balance at June 30, 2023	87,627,918	$	9	15	$	—	$	935,911	$	(710,381)	$	(254)	141,543,623	$	48,450	$	273,735
Net loss	—	—		—	—		—		(65,363)		—		—	(109,569)		(174,932)



Equity-based compensation, net	—	—		—	—		4,976		—		—		—	—		4,976
Conversion of LLC Units for Class A Common Stock (Note 24 - Equity)	771	—		—	—		—		—		—		(771)	—		—
Settlement of long-term incentive plan ("LTIP") restricted stock units ("RSUs"), net (Note 24 - Equity)	182,461	—		—	—		32		—		—		(182,461)	(33)		(1)
Settlement of other RSUs	82,456	—		—	—		—		—		—		—	—		—
Cancellation of shares to fund employee tax withholdings (Note 24 - Equity)	(113,735)	—		—	—		(202)		—		—		—	—		(202)


Foreign currency translation adjustment	—	—		—	—		—		—		33		—	—		33
Balance at September 30, 2023	87,779,871	$	9	15	$	—	$	940,717	$	(775,744)	$	(221)	141,360,391	$	(61,152)	$	103,609

See accompanying notes to unaudited condensed consolidated financial statements


			Finance of America Companies Inc. and Subsidiaries Condensed Consolidated Statements of Equity (Unaudited) (In thousands, except share data)


	Class A Common Stock			Class B Common Stock									Noncontrolling Interest
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Class A LLC Units	Amount		Total Equity







Balance at June 30, 2022	62,474,553	$	6	15	$	—	$	860,232	$	(492,786)	$	(262)	125,413,507	$	496,010	$	863,200
Net loss	—	—		—	—		—		(84,486)		—		—	(217,214)		(301,700)

Noncontrolling interest distributions	—	—		—	—		—		—		—		—	(56)		(56)
Equity-based compensation, net	—	—		—	—		15,735		—		—		—	—		15,735
Conversion of LLC Units for Class A Common Stock (Note 24 - Equity)	3,096	—		—	—		42		—		—		(3,096)	(12)		30
Settlement of LTIP RSUs, net (Note 24 - Equity)	576,810	—		—	—		2,075		—		—		(576,810)	(2,149)		(74)
Settlement of other RSUs	252,678	—		—	—		—		—		—		—	—		—
Cancellation of shares to fund employee tax withholdings (Note 24 - Equity)	(347,861)	—		—	—		(1,944)		—		—		—	—		(1,944)
Foreign currency translation adjustment	—	—		—	—		—		—		(105)		—	—		(105)
Balance at September 30, 2022	62,959,276	$	6	15	$	—	$	876,140	$	(577,272)	$	(367)	124,833,601	$	276,579	$	575,086

See accompanying notes to unaudited condensed consolidated financial statements


			Finance of America Companies Inc. and Subsidiaries Condensed Consolidated Statements of Equity (Unaudited) (In thousands, except share data)


	Class A Common Stock			Class B Common Stock									Noncontrolling Interest
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Class A LLC Units	Amount		Total Equity















Balance at December 31, 2022	63,423,356	$	6	14	$	—	$	888,488	$	(634,295)	$	(273)	124,453,301	$	150,915	$	404,841
Net loss	—	—		—	—		—		(141,449)		—		—	(241,372)		(382,821)


Equity-based compensation, net	—	—		—	—		20,337		—		—		—	—		20,337
Conversion of LLC Units for Class A Common Stock (Note 24 - Equity)	4,852	—		—	—		4		—		—		(4,852)	(4)		—
Settlement of LTIP RSUs, net (Note 24 - Equity)	2,781,048	1		—	—		3,951		—		—		(2,781,048)	(3,863)		89
Settlement of other RSUs	1,385,262	—		—	—		—		—		—		—	—		—
Cancellation of shares to fund employee tax withholdings (Note 24 - Equity)	(1,553,779)	—		—	—		(2,061)		—		—		—	—		(2,061)
Issuance of shares (Note 22 - Related-Party Transactions and Note 24 - Equity)	21,739,132	2		—	—		29,998		—		—		—	—		30,000
Issuance of units (Note 3 - Acquisitions and Note 24 - Equity)	—	—		1	—		—		—		—		19,692,990	33,172		33,172
Foreign currency translation adjustment	—	—		—	—		—		—		52		—	—		52
Balance at September 30, 2023	87,779,871	$	9	15	$	—	$	940,717	$	(775,744)	$	(221)	141,360,391	$	(61,152)	$	103,609
See accompanying notes to unaudited condensed consolidated financial statements


			Finance of America Companies Inc. and Subsidiaries Condensed Consolidated Statements of Equity (Unaudited) (In thousands, except share data)


	Class A Common Stock			Class B Common Stock									Noncontrolling Interest
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Class A LLC Units	Amount		Total Equity

Balance at December 31, 2021	60,755,069	$	6	15	$	—	$	831,620	$	(443,613)	$	(110)	128,693,867	$	695,107	$	1,083,010
Net loss	—	—		—	—		—		(133,659)		—		—	(399,859)		(533,518)
Noncontrolling interest contributions	—	—		—	—		—		—		—		—	42		42
Noncontrolling interest distributions	—	—		—	—		—		—		—		—	(248)		(248)
Equity-based compensation, net	—	—		—	—		36,618		—		—		—	—		36,618
Conversion of LLC Units for Class A Common Stock (Note 24 - Equity)	111,209	—		—	—		466		—		—		(111,209)	(552)		(86)
Settlement of LTIP RSUs, net (Note 24 - Equity)	3,749,057	—		—	—		13,086		—		—		(3,749,057)	(17,911)		(4,825)
Settlement of other RSUs	346,133	—		—	—		—		—		—		—	—		—
Cancellation of shares to fund employee tax withholdings (Note 24 - Equity)	(2,002,192)	—		—	—		(5,650)		—		—		—	—		(