Finance of America Companies Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

Subsequent Events

9 Months Ended

Sep. 30, 2022

27. Subsequent Events

The Company has evaluated subsequent events from the date of the condensed consolidated financial statements of September 30, 2022 through November 9, 2022, the date these condensed consolidated financial statements were issued. No events or transactions were identified that would have an impact on the financial position as of September 30, 2022 or results of operations of the Company for the three and nine months ended September 30, 2022, except as follows:

Mortgage Originations Segment

On October 20, 2022, the Board of the Company authorized a plan to discontinue substantially all of the operations of the Company’s Mortgage Originations segment in order to strategically optimize and invest in the Company’s Reverse Originations, Commercial Originations, Lender Services, and Portfolio Management segments (such plan, the “Resource Optimization Plan”). The Company anticipates that the Resource Optimization Plan will commence in the fourth quarter of 2022 and is expected to be substantially completed by the end of 2022.

For the reporting periods ended September 30, 2022 and December 31, 2021, the Mortgage Originations segment contributed $724.1 million and $2,148.5 million, respectively, of total assets and $693.1 million and $1,987.0 million, respectively, of total liabilities on Condensed Consolidated Statement of Financial Condition. These amounts include immaterial balances associated with the Company's home improvement channel, which will continue as part of the Company's operations.

Results for the affected Mortgage Originations segment for the periods presented in this report were as follows (in thousands):


	For the three months ended September 30, 2022		For the nine months ended September 30, 2022		For the three months ended September 30, 2021		For the six months ended September 30, 2021		For the three months ended March 31, 2021
	Successor								Predecessor
Gain on sale and other income from loans held for sale, net	$	46,310	$	239,430	$	200,294	$	385,680	$	286,481
Net fair value gains on loans and related obligations	—		—		1,145		1,145		—
Fee income	13,885		52,120		30,827		61,172		32,731
Net interest income	1,079		8,327		2,807		4,783		891
Total revenues	61,274		299,877		235,073		452,780		320,103
Total expenses	102,499		397,209		220,331		444,522		224,246
Impairment of intangibles and other assets	(128,884)		(128,884)		—		—		—
NET INCOME (LOSS) BEFORE INCOME TAXES	$	(170,109)	$	(226,216)	$	14,742	$	8,258	$	95,857

As part of the Plan, the Company will incur certain charges including but not limited to employee severance, retention and related benefits, contract terminations, and other charges. Amounts and timing of such charges will be assessed and recognized in accordance with accounting standards applicable to the respective charges. Additionally, the Company is reducing the total capacity of our other financing lines of credit associated with the Mortgage Origination segment.

Promissory Notes

On November 8, 2022, the Company amended the 2021 Promissory Notes with certain funds which are deemed affiliates of the Company, to increase the aggregate commitments for revolving borrowings thereunder from $30.0 million to $50.0 million and to extend their maturity from January 3, 2023 to July 31, 2023. The additional liquidity provides investment capital for growth initiatives and strategic opportunities currently under evaluation by the Company as well as other general corporate purposes. The 2021 Promissory Notes, which are structured with simultaneous draw and paydown terms, are secured by certain tangible assets of the Borrower and will continue to accrue interest monthly at a rate of 6.5% per annum. Refer to Note 23 - Related Party Transactions for additional information regarding the 2021 Promissory Notes.

Financing Lines of Credit

In October 31, 2022, the Company entered into a secured financing arrangement backed by reverse HECM MSR of up to $75.0 million with maturity date of October 31, 2027.