Annual report [Section 13 and 15(d), not S-K Item 405]

Discontinued Operations

v3.25.0.1
Discontinued Operations
 12 Months Ended
Dec. 31, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
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, as described in further detail below, in order to transform our business from a vertically integrated lending and complementary services platform to a unified 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 had or will have a major effect on our operations and financial results. As such, the results of our previously reported Mortgage Originations, Commercial Originations, and Lender Services segments, as described below, are reported as discontinued operations for all periods presented.
Mortgage Originations Segment
On October 20, 2022, the Board of the Company authorized a plan to discontinue the operations of the Company’s previously reported Mortgage Originations segment operated by FAM, other than its home improvement lending business, which process commenced in the fourth quarter of 2022 and was completed on February 28, 2023.
On August 31, 2023, the Company entered into an agreement to sell certain operational assets of the home improvement lending business. This transaction closed on September 15, 2023 for cash consideration of $0.3 million. 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 was not considered by the Company to be a strategic shift that has had or will have a major effect on our operations and financial results. Therefore, the previous operations of the home improvement lending business are reported as part of the Company’s Retirement Solutions segment rather than as discontinued operations.
Lender Services Segment
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 ANTIC, a direct subsidiary of Incenter and an indirect subsidiary of the Company, and (ii) the issued and outstanding membership interests of 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. Incenter received $92.6 million in cash, which is the base purchase price of $100.0 million adjusted at closing in accordance with the provisions of the agreement, and transferred $27.0 million of cash to the purchaser. The Company has 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 sold such assets on June 30, 2023 in two separate transactions for an aggregate consideration of $17.5 million, which includes $4.8 million in cash and a $12.7 million note receivable. The note receivable is included in the Consolidated Statements of Cash Flows as a non-cash investing activity. 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 was not considered by the Company to be a strategic shift that has had or will have a major effect on our operations and financial results. Therefore, the previous operations of Incenter Solutions LLC are reported within Corporate and Other in Note 24 - Business Segment Reporting, rather than as discontinued operations.
Commercial Originations Segment
On February 19, 2023, the Company entered into an agreement to sell certain commercial originations operational assets of FAM, operating under the brand FACo. This transaction closed on March 14, 2023 for consideration of $2.5 million, of which $0.5 million is cash consideration. 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.
The following table summarizes the major classes of assets and liabilities classified as discontinued operations as of December 31, 2024 and December 31, 2023 (in thousands):

December 31, 2024 December 31, 2023
Assets
Other assets, net $ 2,451  $ 6,721 
Liabilities
Payables and other liabilities 11,677  18,304 
The following table summarizes the major components of net loss from discontinued operations (in thousands):

For the year ended December 31, 2024 For the year ended December 31, 2023
Portfolio interest income
Interest income $ —  $ 824 
Interest expense —  (966)
Net portfolio interest income (expense) —  (142)
Other income (expense)
Net origination gains —  308 
Net fair value changes on loans and related obligations —  308 
Fee income —  68,138 
Loss on sale and other income from loans held for sale, net —  (2,222)
Net other income (expense) —  66,224 
Total revenues —  66,082 
Expenses
Salaries, benefits, and related expenses —  51,780 
Loan production and portfolio related expenses —  1,224 
Marketing and advertising expenses —  1,042 
Depreciation and amortization —  5,176 
General and administrative expenses 1,622  54,070 
Total expenses 1,622  113,292 
Impairment of intangibles and other assets(1)
—  (4,455)
Other, net(2)
(3,105) (1,444)
Net loss from discontinued operations before income taxes (4,727) (53,109)
Benefit for income taxes from discontinued operations —  (1,200)
Net loss from discontinued operations (4,727) (51,909)
Net loss from discontinued operations attributable to noncontrolling interest (2,719) (33,108)
Net loss from discontinued operations attributable to controlling interest $ (2,008) $ (18,801)
(1) The Company evaluates the carrying value of long-lived assets, including intangible assets, fixed assets, and ROU assets, when indicators of impairment exist in accordance with ASC 360. Based on the analyses, the Company recognized impairment charges for the year ended December 31, 2023 related to the sales of the previously reported Lender Services and Commercial Originations segments.
(2) Amount includes gains on disposals of $0.3 million for the year ended December 31, 2023. The gains on disposals consist of a $12.8 million gain on the sale of the remaining assets of the Lender Services segment, a $11.7 million loss on the sale of our commercial originations operational assets, and a $0.8 million loss on the sale of ANTIC and BNT.
There were no material cash flow activities related to discontinued operations for the year ended December 31, 2024. The Consolidated Statement of Cash Flows for the year ended December 31, 2023 included the following material activities related to discontinued operations (in thousands):
For the year ended December 31, 2023
Loss on sale and other income from loans held for sale, net $ (2,222)
Unrealized fair value changes on loans, related obligations, and derivatives 308 
Impairment of intangibles and other assets 4,455 
Depreciation and amortization 5,176 
Acquisition of fixed assets 1,815