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

9 Months Ended

Sep. 30, 2023

15. Other Financing Lines of Credit

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


					Outstanding borrowings at
Maturity Date	Interest Rate	Collateral Pledged	Total Capacity(1)		September 30, 2023		December 31, 2022
Mortgage Lines:
October 2023(2)	Bloomberg short-term bank yield ("BSBY") index + applicable margin	First Lien Mortgages	$	15,000	$	9,332	$	83,814
November 2023(2)	Secured Overnight Financing Rate ("SOFR") + applicable margin	Home Improvement Consumer Loans	50,000		3,384		7,495
Various(3)	Bond accrual rate + applicable margin	Mortgage Related Assets	36,828		36,828		37,604
N/A	N/A	MSR	—		—		10,312
Subtotal mortgage lines of credit			$	101,828	$	49,544	$	139,225
Reverse Lines:
October 2023(2) - June 2024	BSBY/SOFR + applicable margin	First Lien Mortgages	$	935,000	$	353,524	$	584,658
Various(3)	Bond accrual rate/SOFR + applicable margin	Mortgage Related Assets	360,514		340,514		320,715
October 2027	SOFR + applicable margin	MSR	70,000		69,231		33,036
March 2024	Prime + .50%; 6% floor	Unsecuritized Tails	20,000		20,000		45,001
Subtotal reverse lines of credit			$	1,385,514	$	783,269	$	983,410
Commercial Lines:
January 2024	SOFR + applicable margin	Mortgage Related Assets	$	20,000	$	20,000	$	12,500
N/A	N/A	First Lien Mortgages	—		—		159,938
N/A	N/A	Encumbered Agricultural Loans	—		—		7,561
N/A	N/A	Second Lien Mortgages	—		—		25,000
Subtotal commercial lines of credit			$	20,000	$	20,000	$	204,999
Total other financing lines of credit			$	1,507,342	$	852,813	$	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 September 30, 2023. The lines of credit with no capacity are terminated as of September 30, 2023.

(2)The other financing lines of credit with maturity dates in October and November of 2023 have either been renewed or paid off subsequent to September 30, 2023.

(3)These lines of credit are tied to the maturity date of the underlying mortgage related assets that have been pledged as collateral.

As of September 30, 2023 and December 31, 2022, the weighted average outstanding interest rates on outstanding financing lines of credit of the Company were 7.52% 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 September 30, 2023, the Company was in compliance with its financial covenants related to required liquidity reserves. With respect to certain financial covenants related to tangible net worth, debt service coverage ratio, and required profitability, the Company obtained financial covenant waivers, amendments to such financial covenants effective as of September 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 September 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		September 30, 2023		Maximum Allowable Distribution(1)
FAM
Adjusted Tangible Net Worth	$	10,000	$	16,543	$	6,543
Liquidity	1,000		2,984		1,984








FAR
Adjusted Tangible Net Worth	$	250,000	$	254,739	$	4,739
Liquidity	45,000		61,863		16,863
Leverage Ratio	6:1		4.9:1		44,990
FAH
Adjusted Tangible Net Worth	$	300,000	$	217,055	$	—
Liquidity	40,000		62,539		22,539
Leverage Ratio	10:1		6.5:1		75,861

(1) The Maximum Allowable Distribution for any of the originations subsidiaries is the lowest of the amounts shown for the particular originations subsidiary. We obtained financial covenant waivers as of September 30, 2023 or subsequently paid off a line of credit for not being in compliance with the adjusted tangible net worth requirements for FAH.

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	$	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	$	250,000	$	267,067	$	17,067
Liquidity	24,724		28,718		3,994
Leverage Ratio	6:1		5.3:1		31,808
FAH
Adjusted Tangible Net Worth	$	300,000	$	310,850	$	10,850
Liquidity	45,000		52,270		7,270
Leverage Ratio	10:1		6.6:1		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.