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

Quarterly report pursuant to Section 13 or 15(d)

Other Financing Lines of Credit

Other Financing Lines of Credit

6 Months Ended

Jun. 30, 2023

15. Other Financing Lines of Credit

The following summarizes the components of other financing lines of credit relating to continuing operations (in thousands):


					Outstanding borrowings at
Maturity Date	Interest Rate	Collateral Pledged	Total Capacity(1)		June 30, 2023		December 31, 2022
Mortgage Lines:
October 2023	Bloomberg short-term bank yield ("BSBY") index + applicable margin	First Lien Mortgages	$	14,000	$	3,757	$	83,814
November 2023	Secured Overnight Financing Rate ("SOFR") + applicable margin	Home Improvement Consumer Loans	75,000		28,129		7,495
N/A	Bond accrual rate + applicable margin	Mortgage Related Assets	37,559		37,559		37,604
N/A	N/A	MSR	—		—		10,312
Subtotal mortgage lines of credit			$	126,559	$	69,445	$	139,225
Reverse Lines:
July 2023 - June 2024	BSBY/SOFR + applicable margin	First Lien Mortgages	$	1,085,000	$	507,480	$	584,658
N/A	Bond accrual rate/SOFR + applicable margin	Mortgage Related Assets	368,991		348,991		320,715
October 2027	SOFR + applicable margin	MSR	70,000		69,231		33,036
September 2023	Prime + .50%; 6% floor	Unsecuritized Tails	45,000		44,874		45,001
Subtotal reverse lines of credit			$	1,568,991	$	970,576	$	983,410
Commercial Lines:
July 2023 - October 2023	SOFR/BSBY + applicable margin	First Lien Mortgages	$	51,000	$	12,092	$	159,938
January 2024	SOFR + applicable margin	Mortgage Related Assets	20,000		20,000		12,500
N/A	N/A	Encumbered Agricultural Loans	—		—		7,561
N/A	N/A	Second Lien Mortgages	—		—		25,000
Subtotal commercial lines of credit			$	71,000	$	32,092	$	204,999
Total other financing lines of credit			$	1,766,550	$	1,072,113	$	1,327,634

(1)Capacity is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions, and covenants of the respective agreements, including asset-eligibility requirements. Capacity amounts presented are as of June 30, 2023. The lines of credit with no capacity are terminated as of June 30, 2023.

As of June 30, 2023 and December 31, 2022, the weighted average outstanding interest rates on outstanding financing lines of credit of the Company were 8.10% and 7.35%, respectively.

The Company's financing arrangements and credit facilities contain various financial covenants, which primarily relate to required tangible net worth amounts, liquidity reserves, leverage ratios, and profitability.

As of June 30, 2023, the Company was in compliance with its financial covenants related to required liquidity reserves, debt service coverage ratio, and tangible net worth amounts. With respect to certain financial covenants related to required profitability, the Company obtained financial covenant waivers, amendments to such financial covenants effective as of June 30, 2023, or paid off the line of credit, in order to avoid breaching such financial covenants.

The terms of the Company's financing arrangements and credit facilities contain covenants, and the terms of the Company's government sponsored entities ("GSE")/seller servicer contracts contain requirements that may restrict the Company and its subsidiaries from paying distributions to its members. These restrictions include restrictions on paying distributions whenever the payment of such distributions would cause FoA or its subsidiaries to no longer be in compliance with any of its financial covenants or GSE requirements. Further, the Company is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the Company (with certain exceptions) exceed the fair value of its assets. Subsidiaries of the Company are generally subject to similar legal limitations on their ability to make distributions to FoA.

As of June 30, 2023, the maximum allowable distributions available to the Company based on the most restrictive of such financial covenant ratios is presented in the table below (in thousands, except for ratios):


Financial Covenants	Requirement		June 30, 2023		Maximum Allowable Distribution(1)
FAM
Adjusted Tangible Net Worth(2)	$	10,000	$	53,876	$	43,876
Liquidity	1,000		13,751		12,751








FAR
Adjusted Tangible Net Worth(2)	$	250,000	$	276,458	$	26,458
Liquidity	36,731		38,949		2,218
Leverage Ratio	6:1		4.9:1		51,680
FAH
Adjusted Tangible Net Worth(2)	$	300,000	$	300,498	$	498
Liquidity	40,000		52,225		12,225
Leverage Ratio	10:1		5.6:1		131,413

(1) The Maximum Allowable Distribution for any of the originations subsidiaries is the lowest of the amounts shown for the particular originations subsidiary.

(2) This amount is based on the most restrictive financing line of credit covenant.

As of December 31, 2022, the maximum allowable distributions available to the Company based on the most restrictive of such financial covenant ratios is presented in the table below (in thousands, except for ratios):


Financial Covenants	Requirement		December 31, 2022		Maximum Allowable Distribution(1)
FAM
Adjusted Tangible Net Worth(2)	$	100,000	$	100,907	$	907
Liquidity	20,000		23,368		3,368
Leverage Ratio	13:1		9.3:1		28,732



FAR
Adjusted Tangible Net Worth(2)	$	250,000	$	267,067	$	17,067
Liquidity	24,724		28,718		3,994
Leverage Ratio	6:1		5.29:1		31,808
FAH
Adjusted Tangible Net Worth(2)	$	300,000	$	310,850	$	10,850
Liquidity	45,000		52,270		7,270
Leverage Ratio	10:1		6.55:1		107,292

(1) The Maximum Allowable Distribution for any of the originations subsidiaries is the lowest of the amounts shown for the particular originations subsidiary.

(2) This amount is based on the most restrictive financing line of credit covenant.