foa-20240331

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 March 31, 2024


☐			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	New York Stock Exchange
Warrants to purchase shares of Class A Common Stock	FOA.WS	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 May 6, 2024, there were issued and outstanding 98,809,099 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. Quarterly Report on Form 10-Q Table of Contents


		Page
	PART I - Financial Information
Item 1.	Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	71
Item 4.	Controls and Procedures	72

	PART II - Other Information
Item 1.	Legal Proceedings	73
Item 1A.	Risk Factors	73
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3.	Defaults Upon Senior Securities	73
Item 4.	Mine Safety Disclosures	73
Item 5.	Other Information	73
Item 6.	Exhibits	73

Signatures		75

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the “Form 10-Q”) contains 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 our 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. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “budgets,” “forecasts,” “anticipates,” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated in these statements, including those risks described below. 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. 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. A number of important factors exist that could cause future results to differ materially from historical performance and these forward-looking statements. In addition to the other information in the Form 10-Q, the following risk factors should be considered carefully in evaluating the Company and our business:

•our ability to manage the unique challenges presented by operating as a modern retirement solutions platform rather than a vertically integrated, diversified lending and complementary services platform due to the transformation of our business;

•our ability to successfully operate the recently integrated lending platform that we acquired from American Advisors Group in March 2023 and generally, our ability to operate our business profitably;

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

•our geographic market concentration if the economic conditions in our current markets should decline or if our current markets are impacted by 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 the estimates prove to be incorrect;

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

•the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors in our business markets and worldwide financial markets, including a sustained period of higher interest rates;

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

•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, including warehouse lending facilities, and pay down our substantial debt;

•our ability to refinance our debt on reasonable terms as it becomes due;

•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 mortgage servicing operations;

•our ability to maintain compliance with the extensive regulations we are subject to, including consumer protection laws applicable to reverse mortgage lenders, which may be highly complex;

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

•our ability to manage various legal proceedings, federal or state governmental examinations and enforcement investigations we are subject to from time to time, the results of which are difficult to predict or estimate;

•our continued ability to remain in compliance with the terms of the consent orders issued by the Consumer Financial Protection Bureau, which we assumed in connection with our acquisition of operational assets from American Advisors Group;

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

•our ability to comply with the continued listing standards of the New York Stock Exchange (“NYSE”) and avoid the delisting of our common stock from trading on its exchange;

•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; and

•our “controlled company” status under NYSE rules, which exempts us from certain corporate governance requirements and affords stockholders fewer protections.

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, 2023, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 15, 2024, 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
			Finance of America Companies Inc. Condensed Consolidated Statements of Financial Condition (in thousands, except share data)


	March 31, 2024		December 31, 2023
	(unaudited)
ASSETS
Cash and cash equivalents	$	48,229	$	46,482
Restricted cash	195,349		178,319
Loans held for investment, subject to Home Equity Conversion Mortgage-Backed Securities (“HMBS”) related obligations, at fair value	18,050,772		17,548,763
Loans held for investment, subject to nonrecourse debt, at fair value	8,407,602		8,272,393
Loans held for investment, at fair value	535,910		575,228
Intangible assets, net	244,233		253,531
Other assets, net	194,183		226,153
Assets of discontinued operations	7,290		6,721
TOTAL ASSETS	$	27,683,568	$	27,107,590

LIABILITIES AND EQUITY
HMBS related obligations, at fair value	$	17,827,060	$	17,353,720
Nonrecourse debt, at fair value	7,897,896		7,904,200
Other financing lines of credit	1,071,191		928,479
Notes payable, net (includes amounts due to related parties of $84,630 and $59,130, respectively)	436,193		410,911
Payables and other liabilities	174,858		219,569
Liabilities of discontinued operations	20,647		18,304
TOTAL LIABILITIES	27,427,845		26,835,183
Commitments and Contingencies (Note 13)
EQUITY (Note 19)
Class A Common Stock, $0.0001 par value; 6,000,000,000 shares authorized; 100,820,259 and 100,599,241 shares issued, respectively, and 96,561,759 and 96,340,741 shares outstanding, respectively	10		10
Class B Common Stock, $0.0001 par value; 1,000,000 shares authorized; 15 shares issued and outstanding, respectively	—		—
Additional paid-in capital	950,588		946,929
Accumulated deficit	(721,921)		(714,383)
Accumulated other comprehensive loss	(266)		(249)
Noncontrolling interest	27,312		40,100
TOTAL EQUITY	255,723		272,407
TOTAL LIABILITIES AND EQUITY	$	27,683,568	$	27,107,590

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements


			Finance of America Companies Inc. 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.


	March 31, 2024		December 31, 2023
ASSETS	(unaudited)
Restricted cash	$	183,490	$	168,010
Loans held for investment, subject to nonrecourse debt, at fair value	8,026,026		7,881,566
Other assets, net	56,386		68,178
TOTAL ASSETS	$	8,265,902	$	8,117,754

LIABILITIES
Nonrecourse debt, at fair value	$	7,536,990	$	7,531,412
Payables and other liabilities	501		546
TOTAL LIABILITIES	$	7,537,491	$	7,531,958

NET CARRYING VALUE OF ASSETS SUBJECT TO NONRECOURSE DEBT	$	728,411	$	585,796

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements


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


	For the three months ended March 31, 2024		For the three months ended March 31, 2023
REVENUES
Net fair value gains on loans and related obligations	$	92,635	$	176,394
Fee income	6,236		6,352
Gain (loss) on sale and other income from loans held for sale, net	86		(12,426)
Net interest expense:
Interest income	4,266		2,091
Interest expense	(28,541)		(31,556)
Net interest expense	(24,275)		(29,465)
TOTAL REVENUES	74,682		140,855

EXPENSES
Salaries, benefits, and related expenses	39,023		40,814
Loan production and portfolio related expenses	8,613		7,992
Loan servicing expenses	8,218		6,636
Marketing and advertising expenses	8,512		1,956
Depreciation and amortization	9,678		10,105
General and administrative expenses	17,271		16,274
TOTAL EXPENSES	91,315		83,777
IMPAIRMENT OF OTHER ASSETS	(600)		—
OTHER, NET	1,453		936
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(15,780)		58,014
Provision for income taxes from continuing operations	—		2,532
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	(15,780)		55,482
NET LOSS FROM DISCONTINUED OPERATIONS	(4,524)		(40,890)
NET INCOME (LOSS)	(20,304)		14,592
Net income (loss) from continuing operations attributable to noncontrolling interest	(10,145)		36,755
Net loss from discontinued operations attributable to noncontrolling interest	(2,621)		(25,217)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO CONTROLLING INTEREST	(5,635)		18,727
NET LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO CONTROLLING INTEREST	(1,903)		(15,673)
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST	$	(7,538)	$	3,054

EARNINGS PER SHARE (Note 18)
Basic weighted average shares outstanding	96,485,585		64,016,845
Basic net income (loss) per share from continuing operations	$	(0.06)	$	0.29
Basic net income (loss) per share	$	(0.08)	$	0.05
Diluted weighted average shares outstanding	96,485,585		190,301,012
Diluted net income (loss) per share from continuing operations	$	(0.06)	$	0.22
Diluted net income (loss) per share	$	(0.08)	$	0.07

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements


			Finance of America Companies Inc. Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (in thousands)


	For the three months ended March 31, 2024		For the three months ended March 31, 2023
NET INCOME (LOSS)	$	(20,304)	$	14,592
COMPREHENSIVE INCOME ITEM:
Impact of foreign currency translation adjustment	(17)		64
TOTAL COMPREHENSIVE INCOME (LOSS)	(20,321)		14,656
Less: Comprehensive income (loss) attributable to noncontrolling interest	(10)		11,580
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST	$	(20,311)	$	3,076

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements


			Finance of America Companies Inc. 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, 2023	96,340,741	$	10	15	$	—	$	946,929	$	(714,383)	$	(249)	132,970,816	$	40,100	$	272,407
Net loss	—	—		—	—		—		(7,538)		—		—	(12,766)		(20,304)
Equity-based compensation, net	—	—		—	—		3,769		—		—		—	—		3,769
Conversion of LLC Units for Class A Common Stock (Note 19 - Equity)	618	—		—	—		—		—		—		(618)	—		—
Settlement of long-term incentive plan (“LTIP”) restricted stock units (“RSUs”), net (Note 19 - Equity)	88,289	—		—	—		22		—		—		(88,289)	(22)		—
Settlement of other RSUs	271,841	—		—	—		—		—		—		—	—		—
Cancellation of shares to fund employee tax withholdings (Note 19 - Equity)	(139,730)	—		—	—		(132)		—		—		—	—		(132)
Foreign currency translation adjustment	—	—		—	—		—		—		(17)		—	—		(17)
Balance at March 31, 2024	96,561,759	$	10	15	$	—	$	950,588	$	(721,921)	$	(266)	132,881,909	$	27,312	$	255,723

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements


			Finance of America Companies Inc. 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		Retained Earnings (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 income	—	—		—	—		—		3,054		—		—	11,538		14,592
Equity-based compensation, net	—	—		—	—		8,109		—		—		—	—		8,109
Conversion of LLC Units for Class A Common Stock (Note 19 - Equity)	3,601	—		—	—		4		—		—		(3,601)	(4)		—
Settlement of LTIP RSUs, net (Note 19 - Equity)	582,698	1		—	—		748		—		—		(582,698)	(658)		91
Settlement of other RSUs	123,604	—		—	—		—		—		—		—	—		—
Cancellation of shares to fund employee tax withholdings (Note 19 - Equity)	(292,360)	—		—	—		(437)		—		—		—	—		(437)
Issuance of shares (Note 17 - Related-Party Transactions)	21,739,132	2		—	—		29,998		—		—		—	—		30,000
Issuance of units (Note 3 - Acquisitions and Note 19 - Equity)	—	—		1	—		—		—		—		19,692,990	33,172		33,172
Foreign currency translation adjustment	—	—		—	—		—		—		64		—	—		64
Balance at March 31, 2023	85,580,031	$	9	15	$	—	$	926,910	$	(631,241)	$	(209)	143,559,992	$	194,963	$	490,432

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements


			Finance of America Companies Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)


	For the three months ended March 31, 2024		For the three months ended March 31, 2023
Operating Activities(1)
Net income (loss)	$	(20,304)	$	14,592
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities	(111,939)		207,226



















Net cash provided by (used in) operating activities	(132,243)		221,818

Investing Activities(1)
Purchases and originations of loans held for investment	(684,204)		(875,292)
Proceeds/payments received on loans held for investment	551,350		407,024
Purchases and originations of loans held for investment, subject to nonrecourse debt	(10,522)		(26,981)
Proceeds/payments on loans held for investment, subject to nonrecourse debt	188,219		332,659



Proceeds on sale of mortgage servicing rights (“MSR”)	4,733		80,149
Acquisition of American Advisors Group net assets	—		(140,854)

Acquisition of fixed assets	(461)		(1,923)






Other investing activities, net	358		(1,539)
Net cash provided by (used in) investing activities	49,473		(226,757)

Financing Activities(1)
Proceeds from issuance of HMBS related obligations	468,520		293,669
Payments on HMBS related obligations	(482,739)		(384,618)

Proceeds from issuance of nonrecourse debt	128,185		662,101
Payments on nonrecourse debt	(181,113)		(208,909)
Proceeds from other financing lines of credit	1,277,218		1,335,415
Payments on other financing lines of credit	(1,134,506)		(1,677,418)


Changes in notes payable	26,265		9,790


Issuance of Class A Common Stock	—		30,000


Other financing activities, net	(266)		(837)
Net cash provided by financing activities	101,564		59,193

Effect of exchange rate changes on cash and cash equivalents	(17)		64
Net increase in cash and cash equivalents and restricted cash	18,777		54,318
Cash and cash equivalents and restricted cash, beginning of period(1)	224,801		277,436
Cash and cash equivalents and restricted cash, end of period(1)	$	243,578	$	331,754

Cash and cash equivalents	$	48,229	$	103,141
Restricted cash	195,349		228,613
Total cash and cash equivalents and restricted cash, end of period(1)	$	243,578	$	331,754

Supplementary Cash Flows Information
Cash paid for interest	$	100,346	$	72,110






Loans transferred to loans held for sale, at fair value, from loans held for investment, at fair value	3,787		2,151

(1) Amounts presented contain results from both continuing and discontinued operations. Refer to Note 4 - Discontinued Operations for additional information regarding cash flow associated with the results of discontinued operations.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization and Description of Business

Finance of America Companies Inc. (“FoA,” the “Company,” “we,” “us,” or “our”) was incorporated in Delaware on October 9, 2020. 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.

FoA has a controlling financial interest in Finance of America Equity Capital LLC (“FoA Equity”). FoA Equity owns all of the outstanding equity interests in Finance of America Funding LLC (“FOAF”). FOAF wholly owns Finance of America Holdings LLC (“FAH”) and Incenter LLC (“Incenter” and collectively, with FoA Equity, FOAF, and FAH, known as “holding company subsidiaries”).

The Company, through its FAH holding company subsidiary, operates a lending company, Finance of America Reverse LLC (“FAR”). Through FAR, the Company originates, purchases, sells, securitizes, and services home equity conversion mortgages (“HECM”), which are insured by the Federal Housing Administration (“FHA”), and non-agency reverse mortgages. The Company, through its Incenter holding company subsidiary, has operating service companies (the “operating service subsidiaries” and together with FAR, the “operating subsidiaries”) which provide capital markets and portfolio management capabilities such as secondary markets advisory services, mortgage trade brokerage, and capital management services.

Organizational Transformation and Realignment of Segments

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. This transformation included the wind-down of the previously reported Mortgage Originations segment and sale of the previously reported Commercial Originations and Lender Services segments. During the quarter ended March 31, 2023, to more closely align with the business strategy, the Company restructured the reporting segments into the following: Retirement Solutions and Portfolio Management. Refer to Note 15 - Business Segment Reporting for additional information.

Transactions Relating to Discontinued Business Lines

On October 20, 2022, the Board of Directors (the “Board”) of the Company authorized a plan to discontinue the operations of the Company’s previously reported Mortgage Originations segment, other than its home improvement lending business, which commenced in the fourth quarter of 2022 and was completed on February 28, 2023. Refer to Note 4 - Discontinued Operations for additional information.

On August 31, 2023, the Company’s indirect subsidiary, Finance of America Mortgage LLC (“FAM”), 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. 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. 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.

On February 1, 2023, Incenter entered into an agreement to sell one hundred percent of (i) the issued and outstanding shares of capital stock of Agents National Title Holding Company (“ANTIC”), a direct subsidiary of Incenter and an indirect subsidiary of the Company, and (ii) the issued and outstanding membership interests of Boston National Holdings LLC (“BNT”), a direct subsidiary of Incenter and an indirect subsidiary of the Company. The closing of the ANTIC and BNT sale was completed on July 3, 2023. The Company historically included the operations of ANTIC and BNT in its previously reported Lender Services segment. On March 30, 2023, the FoA Equity Board authorized a plan to sell assets making up the remainder of the Company’s previously reported Lender Services segment, with the exception of its Incenter Solutions LLC operating service subsidiary. The Company completed the sale of such assets on June 30, 2023. Refer to Note 4 - Discontinued Operations for additional information.


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

During the quarter ended September 30, 2023, the Company ceased the operations of the Company’s Incenter Solutions LLC operating service subsidiary. The wind-down of Incenter Solutions LLC was substantially complete as of December 31, 2023. The wind-down of 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 Incenter Solutions LLC are reported within Corporate and Other in Note 15 - Business Segment Reporting, rather than as discontinued operations.

On February 19, 2023, FAH and FAM entered into an agreement to sell certain commercial originations operational assets of FAM, operating under the brand Finance of America Commercial (“FACo”). This transaction closed on March 14, 2023. The Company historically included the commercial originations operations of FACo in its previously reported Commercial Originations segment. In connection with the transaction, the Company discontinued the operations of and wound-down its Commercial Originations segment. Refer to Note 4 - Discontinued Operations for additional information.

American Advisors Group Transaction

On March 31, 2023, FAR acquired a majority of the assets and certain of the liabilities of American Advisors Group, now known as Bloom Retirement Holdings Inc. (“AAG/Bloom” or “Seller”), including, among other things, certain residential reverse mortgage loans and the right to service certain HECM (such acquisition, the “AAG Transaction”). These assets and liabilities were acquired pursuant to an Asset Purchase Agreement, a Servicing Rights Purchase and Sale Agreement, and a Loan Sale Agreement entered into on December 6, 2022 with AAG/Bloom. The assets, liabilities, and operations acquired by the Company as a result of the AAG Transaction are included in the Company’s Retirement Solutions segment reporting. Refer to Note 3 - Acquisitions for additional information.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements comprise the financial statements of FoA and its controlled subsidiaries. The condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial statements and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The accompanying financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of its financial condition as of March 31, 2024 and its results of operations and cash flows for the three months ended March 31, 2024 and 2023. The Condensed Consolidated Statement of Financial Condition at December 31, 2023 was derived from audited financial statements but does not contain all of the footnote disclosures from the annual financial statements. Operating results for the interim periods are not necessarily indicative of the results that may be expected for any future period or for the full year. The condensed consolidated financial statements, including the significant accounting policies, should be read in conjunction with the consolidated financial statements and notes as of and for the year ended December 31, 2023 within the Company’s Annual Report on Form 10-K.

The significant accounting policies, together with the other Notes to Condensed Consolidated Financial Statements, are an integral part of the condensed consolidated financial statements.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates regarding loans held for investment, subject to HMBS related obligations, loans held for investment, subject to nonrecourse debt, loans held for investment, HMBS related obligations, and nonrecourse debt are particularly subject to change. Actual results may differ from those estimates and assumptions due to factors such as changes in the economy, interest rates, secondary market pricing, prepayment assumptions, home prices, or discrete events affecting specific borrowers, and such differences could be material.


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

Recently Issued Accounting Guidance, Not Yet Adopted as of March 31, 2024

Standard

Description

Date of Planned Adoption

Effect on Condensed Consolidated Financial Statements

Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07 which requires disclosures of significant reportable expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss.

This ASU also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

We are currently evaluating the impact that this guidance will have on the disclosures within our financial statements, and expect to adopt this ASU for the year ending December 31, 2024.

This ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 that enhances income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and by requiring disclosure of the amount of income taxes paid disaggregated by federal, state, and foreign taxes, as well as disaggregated by material individual jurisdictions.

We are currently evaluating the impact that this guidance will have on the disclosures within our financial statements, and expect to adopt this ASU for the year ending December 31, 2025.

This ASU is effective for annual periods beginning after December 15, 2024.

Adoption of this ASU should be applied on a prospective basis, but retrospective application is permitted. Early adoption is permitted.

3. Acquisitions

Asset Acquisition

On March 31, 2023, the Company completed the acquisition of the assets and liabilities associated with the AAG Transaction for a total purchase consideration of $215.4 million.

The Company determined that the AAG Transaction should be considered an asset acquisition, because substantially all of the fair value of the acquired assets was concentrated in a single group of similar assets. Under the accounting for asset acquisitions, the acquisition is recorded using a cost accumulation and allocation model under which the cost of the acquisition is allocated on a relative fair value basis to the assets acquired and liabilities assumed. Acquisition-related transaction costs are capitalized as a component of the cost of the assets acquired. Consequently, no goodwill was recognized as part of this transaction.

The following table summarizes the fair value of the consideration transferred and the major classes of assets acquired and liabilities assumed in relation to the March 31, 2023 acquisition (in thousands):


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)


Consideration transferred:
FoA Class B Common Stock(1) (Note 19 - Equity)	$	—
Cash consideration(2)	3,100
Notes payable to Seller	4,500
Pay off indebtedness(2)	136,984
Initial equity consideration – Class A LLC Units(3) (Note 19 - Equity)	24,419
Deferred equity consideration – Class A LLC Units(4) (Note 19 - Equity)	13,137
Other liabilities assumed	8,429
Buyer transaction expenses(2)	770
Forgiveness of bridge working capital notes payable	24,034
Total cost	$	215,373
Assets acquired:


Loans held for investment, subject to HMBS related obligations	$	5,448,712

Loans held for investment	138,270


Fixed assets and leasehold improvements	2,400
Right-of-use leased assets	491
Other assets	6,270
Total assets acquired	$	5,596,143
Liabilities assumed:
HMBS related obligations	$	5,354,372
Operating lease liabilities	492

Payables and other liabilities	25,906

Total liabilities assumed	5,380,770
Net identifiable assets acquired	$	215,373

(1) The Seller owns one share of FoA Class B Common Stock. Class B Common Stock has no economic rights but entitles each holder of at least one such share (regardless of the number of shares held) to a number of votes that is equal to the aggregate number of units of FoA Equity (“Class A LLC Units”) held by the holder on all matters on which Class A Common Stockholders are entitled to vote. The fair value of the Class B Common Stock was determined to be negligible as there are no economic rights associated with the Class B Common Stock.

(2) Amounts represent the cash portion of the consideration paid to acquire the net assets of AAG/Bloom. Total cash consideration was $140.9 million.

(3) At the closing of the AAG Transaction, FoA Equity issued 19,692,990 Class A LLC Units to the Seller, which hold 1:1 conversion rights for Class A Common Stock of FoA. At the closing date, the fair value of these Class A LLC Units were equal to the Class A Common Stock share price of $1.24 per share.

(4) The deferred equity consideration is comprised of two forms of issuable Class A LLC Units; 7,058,416 units with a fair value of $8.7 million that are equity classified and indemnity holdback units totaling up to 7,142,260 units as of the acquisition date with a fair value of $4.4 million that are liability classified. The deferred equity consideration that is liability classified is recorded in payables and other liabilities in the Condensed Consolidated Statements of Financial Condition.

The indemnity holdback units to be issued to the Seller are based on set thresholds and, subject to meeting the control condition, are settled two and three years following the closing date. The amount of units released to the Seller depends on the dollar amount of indemnified claims FoA pays out on behalf of the Seller related to litigation liabilities and indemnifiable loan losses. Two years following the closing date, FoA Equity will issue to the Seller Class A LLC Units equal to the excess of the remaining indemnity holdback units over the threshold of 3,571,130. The remaining Class A LLC Units the Seller is entitled to are issued three years following the closing date. Management has included the fair value of indemnity holdback units, reduced for estimated litigation liabilities and indemnifiable loan losses, above in the consideration given to the Seller.


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

4. 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, diversified lending and complementary services platform to a modern retirement solutions platform. This transformation included the wind-down of the previously reported Mortgage Originations segment and sale of the previously reported Commercial Originations and Lender Services segments. This constitutes a strategic shift that has or will have a major effect on our operations and financial results.

The following table summarizes the major classes of assets and liabilities classified as discontinued operations as of March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024		December 31, 2023
Assets
Other assets, net	$	7,290	$	6,721
Liabilities
Payables and other liabilities	20,647		18,304

The following table summarizes the major components of net loss from discontinued operations (in thousands):


	For the three months ended March 31, 2024		For the three months ended March 31, 2023
Revenues
Net fair value gains on loans and related obligations	$	—	$	308
Fee income	—		32,628
Gain on sale and other income from loans held for sale, net	—		396
Net interest expense:
Interest income	—		517
Interest expense	—		(820)
Net interest expense	—		(303)
Total revenues	—		33,029

Expenses
Salaries, benefits, and related expenses	—		30,851
Loan production and portfolio related expenses	—		1,037
Marketing and advertising expenses	—		540
Depreciation and amortization	—		2,778
General and administrative expenses	1,524		25,150
Total expenses	1,524		60,356
Impairment of other assets(1)	—		(1,055)
Other, net(2)	(3,000)		(9,089)
Net loss from discontinued operations before income taxes	(4,524)		(37,471)
Provision for income taxes from discontinued operations	—		3,419
Net loss from discontinued operations	(4,524)		(40,890)
Net loss from discontinued operations attributable to noncontrolling interest	(2,621)		(25,217)
Net loss from discontinued operations attributable to controlling interest	$	(1,903)	$	(15,673)

(1) The Company evaluates the carrying value of long-lived assets, including fixed assets, leasehold improvements as well as right-of-use assets in operating leases when indicators of impairment exist in accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant, and Equipment. Based on the analysis, the Company recognized an impairment


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

charge in the three months ended March 31, 2023, related to the sale of the previously reported Commercial Originations segment.

(2) Includes a $3.0 million contingent liability related to our discontinued operations for the three months ended March 31, 2024 and a $10.2 million loss on the sale of our commercial originations operational assets for the three months ended March 31, 2023.

The Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 included the following material activities related to discontinued operations (in thousands):


	For the three months ended March 31, 2024		For the three months ended March 31, 2023
Gain on sale and other income from loans held for sale, net	$	—	$	396
Unrealized fair value changes on loans, related obligations, and derivatives	—		308
Impairment of other assets	—		1,055
Depreciation and amortization	—		2,778
Acquisition of fixed assets	—		1,815

5. Variable Interest Entities and Securitizations

The Company determined that the special purpose entities created in connection with its securitizations are VIEs. A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary, which is the entity that, through its variable interests, has both the power to direct the activities that significantly impact the VIE’s economic performance and the obligations to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Consolidated VIEs

FAR

FAR securitizes certain of its interests in HECM buyouts and non-agency reverse mortgage loans. The transactions provide investors with the ability to invest in a pool of reverse mortgage loans secured by residential properties. The transactions provide FAR with access to liquidity for these assets, ongoing servicing fees, and potential residual returns. The principal and interest on the outstanding certificates are paid using the cash flows from the underlying reverse mortgage loans, which serve as collateral for the debt. The securitizations are callable at or following the optional redemption date as defined in the respective indenture agreements.

In the three months ended March 31, 2024, the Company redeemed outstanding securitized notes related to certain non-agency reverse product securitizations. As part of the redemptions, the Company paid off notes with outstanding principal balances of $424.7 million. The notes were paid off at par.

FAM

FAM securitized certain of its interests in commercial mortgage loans. The transactions provided debt security holders the ability to invest in a pool of loans secured by an investment in real estate. The transactions provided the Company with access to liquidity for the loans and ongoing management fees. The principal and interest on the outstanding debt securities are paid using the cash flows from the underlying loans, which serve as collateral for the debt.

Servicing-Securitized Loans

In their capacity as servicer of the securitized loans, FAR and FAM retain the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance. FAR and FAM also retain certain beneficial interests in these trusts which provide exposure to potential gains and losses based on the performance of the trust. As FAR and FAM have both the power to direct the activities that significantly impact the VIE’s economic performance and the obligations to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, the definition of primary beneficiary is met and the trusts are consolidated by the Company through its FAR and FAM subsidiaries.


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

Certain obligations may arise from the agreements associated with transfers of loans. Under these agreements, the Company may be obligated to repurchase the loans or otherwise indemnify or reimburse the investor for losses incurred due to material breach of contractual representations and warranties. There were no charge-offs associated with these transferred mortgage loans related to the standard securitization representations and warranties obligations for the three months ended March 31, 2024 or 2023.

The following table presents the assets and liabilities of the Company’s consolidated VIEs, which are included in the Condensed Consolidated Statements of Financial Condition, and excludes intercompany balances, except for retained bonds and beneficial interests (in thousands):


	March 31, 2024		December 31, 2023
ASSETS
Restricted cash	$	183,490	$	168,010
Loans held for investment, subject to nonrecourse debt, at fair value	8,026,026		7,881,566
Other assets, net	56,386		68,178
TOTAL ASSETS	$	8,265,902	$	8,117,754

LIABILITIES
Nonrecourse debt, at fair value	$	8,015,402	$	7,859,065
Payables and other liabilities	501		546
TOTAL VIE LIABILITIES	8,015,903		7,859,611
Retained bonds and beneficial interests eliminated in consolidation	(478,412)		(327,653)
TOTAL CONSOLIDATED LIABILITIES	$	7,537,491	$	7,531,958

Unconsolidated VIEs

Transfer of loans accounted for as sales

The Company securitized certain of its interests in non-agency reverse mortgage loans and in agency-eligible residential mortgage loans. The transactions provided investors with the ability to invest in a pool of mortgage loans secured by residential properties and provided the Company with access to liquidity for these assets and ongoing service fees. The Company’s beneficial interest in the securitizations is limited to a 5% eligible vertical interest in the trusts. The Company determined that the securitization structures meet the definition of a VIE and concluded that the Company does not hold a significant variable interest in the securitizations and that the contractual role as servicer is not a variable interest. The transfers of the loans to the VIEs were determined to be sales. The Company derecognized the mortgage loans and did not consolidate the trusts.

The Company’s continuing involvement with and exposure to loss from the VIEs includes the carrying value of the retained bonds, the servicing asset recognized in the sale of the loans, servicing advances in the role as servicer, and obligations under representations and warranties contained in the loan sale agreements. Creditors of the VIEs have no recourse to the Company’s assets or general credit. The underlying performance of the mortgage loans transferred has a direct impact on the fair values and cash flows of the beneficial interests held and the servicing asset recognized.

Transfer of loans accounted for as secured borrowings

The Company securitized certain non-agency reverse mortgage loans and commercial mortgage loans where its beneficial interest in the securitizations is limited to a 5% eligible vertical interest in the trusts. The Company determined that these securitization structures meet the definition of a VIE and concluded that the Company does not hold a significant variable interest in the securitizations and the Company does not have the power to direct the activities that most significantly affect the economic performance of the VIEs. However, the transfers of the loans to the VIEs were determined not to be sales. As such, the Company continues to recognize the loans and recognized a nonrecourse liability for the proceeds received from third parties for the transfer of the loans. Bonds issued in the securitization that were retained by the Company are not recognized. The Company’s continuing involvement with and exposure to loss from the VIEs includes the carrying value of the retained bonds, servicing advances in the role as servicer, and obligations under representations and warranties contained in the loan sale agreements. Creditors of the VIEs have no recourse to the Company’s assets or general credit. The underlying performance of the mortgage loans held has a direct impact on the fair values and cash flows of the beneficial interests held.


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

The tables below present a summary of the unconsolidated VIEs for which the Company holds variable interests (in thousands).


	March 31, 2024
	Carrying value
	Assets		Liabilities		Maximum exposure to loss		Total assets in VIEs
Transfers of loans - sale treatment
Retained interests	$	50,124	$	—	$	50,124	$	996,999
Transfers of loans - secured borrowing
Loans and nonrecourse liability	388,565		367,582		20,983		388,565
TOTAL	$	438,689	$	367,582	$	71,107	$	1,385,564


	December 31, 2023
	Carrying value
	Assets		Liabilities		Maximum exposure to loss		Total assets in VIEs
Transfers of loans - sale treatment
Retained interests	$	50,774	$	—	$	50,774	$	1,008,152
Transfers of loans - secured borrowing
Loans and nonrecourse liability	389,557		368,343		21,214		389,557
TOTAL	$	440,331	$	368,343	$	71,988	$	1,397,709

As of March 31, 2024 and December 31, 2023, there were $0.8 million and $0.7 million, respectively, of mortgage loans transferred by the Company to unconsolidated securitization trusts that are 90 days or more past due.

6. Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is based on the assumptions market participants would use when pricing an asset or liability and follows a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

All aspects of nonperformance risk, including the Company’s own credit standing, are considered when measuring the fair value of a liability.

Following is a description of the three levels of the fair value hierarchy:

Level 1 Inputs: Quoted prices for identical instruments in active markets.

Level 2 Inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs: Instruments with unobservable inputs that are significant to the fair value measurement.

The Company classifies assets and liabilities in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company recognizes transfers between levels of the fair value hierarchy as of the


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

end of the reporting period. There were no transfers within the hierarchy during the three months ended March 31, 2024 and 2023.

Following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and the details of the valuation models, key inputs to those models, and significant assumptions utilized. Within the assumption tables presented, not meaningful (“NM”) refers to a range of inputs that is too broad to provide meaningful information to the user or to an input that has no range and consists of a single data point.

Instrument

Valuation techniques

Classification of Fair Value Hierarchy

Assets

Loans held for investment, subject to HMBS related obligations(1)

HECM loans - securitized into Ginnie Mae HMBS

These loans are valued utilizing a present value methodology that discounts estimated projected cash flows over the life of the loan portfolio using conditional prepayment rate (“CPR”), loss frequency, loss severity, borrower draw, and discount rate assumptions.

Level 3

Loans held for investment, subject to nonrecourse debt(1)

HECM buyouts - securitized (nonperforming)

These loans are valued utilizing a present value methodology that discounts estimated projected cash flows over the life of the portfolio using CPR, loss frequency, loss severity, and discount rate assumptions.

Level 3

HECM buyouts - securitized (performing)

These loans are valued utilizing a present value methodology that discounts estimated projected cash flows over the life of the portfolio using weighted average remaining life (“WAL”), CPR, loss severity, and discount rate assumptions.

Level 3

Non-agency reverse mortgage loans - securitized

These loans are valued utilizing a present value methodology that discounts estimated projected cash flows over the life of the portfolio using WAL, loan-to-value (“LTV”), CPR, loss severity, home price appreciation (“HPA”), and discount rate assumptions.

Level 3

Commercial mortgage loans - securitized

This product is valued using a discounted cash flow model utilizing a single monthly mortality prepayment rate (“SMM”), discount rate, and loss rate assumptions.

Level 3

(1) The Company aggregates loan portfolios based on the underlying securitization trust and values these loans using these aggregated pools. The range of inputs provided is based on the range of inputs utilized for each securitization trust.

Loans held for investment

Inventory buyouts

The fair value of repurchased loans is based on expected cash proceeds of the liquidation of the underlying properties and expected claim proceeds from HUD. The primary assumptions utilized in valuing nonperforming repurchased loans include CPR, loss frequency, loss severity, and discount rate.

Termination proceeds are adjusted for expected loss frequencies and severities to arrive at net proceeds that will be provided upon final resolution, including assignments to FHA. Historical experience is utilized to estimate the loss rates resulting from scenarios where FHA insurance proceeds are not expected to cover all principal and interest outstanding and, as servicer, the Company is exposed to losses upon resolution of the loan.

Level 3

Non-agency reverse mortgage loans

The fair value of non-agency reverse mortgage loans is based on values for investments with similar investment grade ratings and the value the Company would expect to receive if the whole loans were sold to an investor.

The Company values non-agency reverse mortgage loans utilizing a present value methodology that discounts estimated projected cash flows over the life of the loan portfolio. The primary assumptions utilized in valuing the loans include WAL, LTV, CPR, loss severity, HPA, and discount rate.

Level 3


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)

Commercial mortgage loans

This product is valued using a discounted cash flow (“DCF”) model with SMM, discount rate, and constant default rate (“CDR”) assumptions.

Level 3

Other assets

Loans held for sale - residential mortgage loans

This includes all mortgage loans that can be sold to the agencies, which are valued predominantly by published forward agency prices. This will also include all non-agency loans where recently negotiated market prices for the loan pool exist with a counterparty (which approximates fair value), or quoted market prices for similar loans are available.

Level 2

Retained bonds

Management obtains third-party valuations to assess the reasonableness of the fair value calculations provided by the internal valuation model. The primary assumptions utilized include WAL and discount rate.

Level 3

MSR

The Company valued MSR internally through a DCF analysis and calculated using a pricing model. This pricing model is based on the objective characteristics of the portfolio (loan amount, note rate, etc.) and commonly used industry assumptions such as discount rate and weighted average CPR. The range and weighted average of the unobservable inputs of MSR are not meaningful at March 31, 2024 or December 31, 2023.

Level 3

Liabilities

HMBS related obligations

The estimated fair value is based on the net present value of projected cash flows over the estimated life of the liability. The estimated fair value of the HMBS related obligations also includes the consideration required by a market participant to transfer the HECM and HMBS servicing obligations, including exposure resulting from shortfalls in FHA insurance proceeds as well as assumptions that it believes a market participant would consider in valuing the liability, including, but not limited to, assumptions for repayment, costs to transfer servicing obligations, shortfalls in FHA insurance proceeds, and discount rates. The significant unobservable inputs used in the measurement include CPR and discount rates.

Level 3

Nonrecourse debt

Nonrecourse reverse mortgage loan financing liability

The estimated fair value is based on the net present value of projected cash flows over the estimated life of the liability. The significant unobservable inputs used in the measurement include WAL, CPR, and discount rates.

Level 3

Nonrecourse commercial loan financing liability

The estimated fair value is based on the net present value of projected cash flows over the estimated life of the liability.

The primary assumptions utilized include WAL, weighted average SMM, and discount rates. The Company estimates prepayment speeds giving consideration that the Company may in the future transfer additional loans to the trust, subject to the availability of funds provided for within the trust.

Level 3

Deferred purchase price liabilities

These liabilities are measured based on the estimated amount of indemnified claims associated with the AAG Transaction and the closing market price of the Company’s publicly-traded stock on the applicable date of the Condensed Consolidated Statements of Financial Condition. Refer to Note 3 - Acquisitions for additional information.

Level 3

Tax Receivable Agreements (“TRA”) obligation

The fair value is derived through the use of a DCF model. The significant unobservable assumptions used in the DCF include the ability to utilize tax attributes based on current tax forecasts, a constant U.S. federal income tax rate, and a discount rate.

Level 3

Warrant liability

Warrants

The warrants are publicly-traded and are valued based on the closing market price of the applicable date of the Condensed Consolidated Statements of Financial Condition.

Level 1


			Finance of America Companies Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)


		March 31, 2024			December 31, 2023
Instrument / Unobservable Inputs		Range	Weighted Average		Range	Weighted Average
Assets
Loans held for investment, subject to HMBS related obligations
	CPR	NM	20.7	%	NM	20.1	%
	Loss frequency	NM	4.2	%	NM	4.5	%
	Loss severity	3.6% - 14.5%	3.8	%	3.4% - 12.9%	3.5	%
	Discount rate	NM	5.1	%	NM	5.0	%
	Average draw rate	NM	1.1	%	NM	1.1	%
Loans held for investment, subject to nonrecourse debt:
	HECM buyouts - securitized (nonperforming)
	CPR	NM	39.3	%	NM	39.8	%
	Loss frequency	23.1% - 100.0%	49.3	%	23.1% - 100%	51.0	%
	Loss severity	3.6% - 14.5%	7.0	%	3.4% - 12.8%	6.4	%
	Discount rate	NM	9.0	%	NM	8.6	%
	HECM buyouts - securitized (performing)
	WAL (in years)	NM	7.3		NM	7.4
	CPR	NM	15.2	%	NM	15.1	%
	Loss severity	3.6% - 14.5%	7.0	%	3.4% - 12.8%	6.9	%
	Discount rate	NM	8.5	%	NM	8.2	%
	Non-agency reverse mortgage loans - securitized
	WAL (in years)	NM	9.9		NM	9.7
	LTV	0.0% - 106.0%	45.6	%	0.0% - 79.6%	45.9	%
	CPR	NM	14.6	%	NM	14.7	%
	Loss severity	NM	10.0	%	NM	10.0	%
	HPA	(6.3)% - 7.1%	3.3	%	(9.8)% - 7.6%	3.3	%
	Discount rate	NM	7.2	%	NM	6.9	%
	Commercial mortgage loans - securitized
	SMM	NM	9.2	%	NM	10.7	%
	Discount rate	NM	18.5	%	NM	16.5	%
	Loss rate	NM	3.8	%	NM	1.0	%
Loans held for investment:
	Inventory buyouts
	CPR	NM	40.6	%	NM	41.5	%
	Loss frequency	NM	46.8	%	NM	48.2	%
	Loss severity