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

Other Financing Lines of Credit

v3.25.0.1
Other Financing Lines of Credit
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
Other Financing Lines of Credit
14. Other Financing Lines of Credit
These facilities are generally structured as master repurchase agreements under which ownership of the related eligible loans is temporarily transferred to a lender, as participation arrangements pursuant to which the lender acquires a participation interest in the related eligible loans, or as loan and security agreements under which eligible loans are pledged to the lender as collateral. The funds advanced to us are generally repaid using the proceeds from the sale or securitization of the loans to, or pursuant to, programs sponsored by Ginnie Mae or private secondary market investors, although prior payment may be required based on, among other things, certain breaches of representations and warranties or other events of default.
When we draw on these facilities, we generally must transfer and/or pledge eligible loans to the lender and comply with various financial and other covenants. Under the facilities, loans are generally transferred and/or pledged at an advance rate less than the principal balance of the loans, which serves as the primary credit enhancement for the lender. Since the advances to us are generally for less than 100% of the principal balance of the loans, we are required to use working capital to fund the remaining portion of the principal balance of the loans. The amount of the advance that is provided under the various facilities typically ranges from 50% to 100% of the principal balance of the loans. Upon expiration, management believes it will either renew its existing facilities or obtain sufficient additional lines of credit.
The following summarizes the components of other financing lines of credit (in thousands):
Outstanding borrowings at
Maturity Date Interest Rate Collateral Pledged
Total Capacity(1)
December 31, 2024 December 31, 2023
Reverse Lines:
April 2025 - October 2026 Secured Overnight Financing Rate (“SOFR”) + applicable margin First and Second Lien Mortgages $ 1,080,000  $ 438,328  $ 432,918 
Various(2)
Bond accrual rate/SOFR + applicable margin Mortgage Related Assets 381,034  356,915  344,367 
October 2027 SOFR + applicable margin HECM MSR 70,000  69,231  69,231 
October 2025 SOFR + applicable margin Unsecuritized Tails 40,000  19,947  23,620 
Subtotal reverse lines of credit 1,571,034  884,421  870,136 
Mortgage Lines:
Various(2)
Bond accrual rate + applicable margin Mortgage Related Assets 33,826  33,826  36,208 
N/A N/A First Lien Mortgages —  —  2,135 
Subtotal mortgage lines of credit 33,826  33,826  38,343 
Commercial Lines:
N/A N/A Mortgage Related Assets —  —  20,000 
Total other financing lines of credit $ 1,604,860  $ 918,247  $ 928,479 
(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 December 31, 2024. The lines of credit with no capacity are terminated as of December 31, 2024.
(2)These lines of credit are tied to the maturity date of the underlying mortgage related assets that have been pledged as collateral.

As of December 31, 2024 and December 31, 2023, the weighted average interest rate on outstanding financing lines of credit of the Company was 7.14% and 6.90%, 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 December 31, 2024, 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 one of its lines of credit, the Company obtained a fourth quarter profitability financial covenant waiver effective as of December 31, 2024 in order to avoid breaching the covenant.
The terms of the Company’s financing arrangements and credit facilities contain covenants, and the terms of the Company’s GSE/seller servicer contracts contain requirements that may restrict FOA Equity 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 Equity or its subsidiaries to no longer be in compliance with any of its financial covenants or GSE requirements. Further, FOA Equity 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 FOA Equity (with certain exceptions) exceed the fair value of its assets. Subsidiaries of FOA Equity are generally subject to similar legal limitations on their ability to make distributions to FOA Equity.
The maximum allowable distributions available to the Company are based on the most restrictive financial covenant ratios and are presented in the tables below (in thousands, except for ratios):
Financial Covenants  Requirement December 31, 2024 Maximum Allowable Distribution
FAR
Adjusted Tangible Net Worth $ 250,000  $ 501,883  $ 251,883 
Liquidity 40,129  45,512  5,383 
Leverage Ratio
6:1
2.7:1
 276,823 
FAH
Adjusted Tangible Net Worth $ 200,000  $ 502,744  $ 302,744 
Liquidity 40,000  47,794  7,794 
Leverage Ratio
10:1
2.9:1
 355,886 
Financial Covenants  Requirement December 31, 2023 Maximum Allowable Distribution
FAM
Adjusted Tangible Net Worth $ 10,000  $ 15,264  $ 5,264 
Liquidity 1,000  2,254  1,254 
FAR
Adjusted Tangible Net Worth $ 250,000  $ 447,571  $ 197,571 
Liquidity 40,000  41,656  1,656 
Leverage Ratio
6:1
3.0:1
 223,460 
FAH
Adjusted Tangible Net Worth $ 220,000  $ 446,321  $ 226,321 
Liquidity 40,000  45,282  5,282 
Leverage Ratio
10:1
3.3:1
 297,445