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, 2021

18.	Other Financing Lines of Credit

The following summarizes the components of other financing lines of credit (dollars in thousands):


						Outstanding Borrowings at
						June 30, 2021		December 31, 2020
Facility	Maturity Date	Interest Rate	Collateral Pledged	Total Capacity (1)		Successor		Predecessor
Mortgage Lines:
March 2022 $300M Facility	March 2022	LIBOR + applicable margin	First Lien Mortgages	$	300,000	$	192,417	$	182,015
March 2022 $200M Facility	March 2022	LIBOR + applicable margin	N/A		200,000		189,464		302,877
May 2022 $200M Facility	May 2022	LIBOR + applicable margin	First Lien Mortgages		200,000		189,050		109,463
February 2022 $300M Facility	February 2022	LIBOR + applicable margin	First Lien Mortgages		300,000		186,754		—
July 2021 $200M Facility (2)	July 2021	LIBOR + applicable margin	First Lien Mortgages		200,000		167,207		122,075
October 2021 $200M Facility	October 2021	LIBOR + applicable margin	First Lien Mortgages		200,000		166,564		158,114
March 2022 $225M Facility	March 2022	LIBOR + applicable margin	First Lien Mortgages		225,000		163,678		154,097
March 2022 $200M Facility	March 2022	LIBOR + applicable margin	First Lien Mortgages		200,000		155,468		97,225
March 2026 $150M Facility - MSR	March 2026	LIBOR + applicable margin	MSRs		150,000		125,113		—
April 2022 $250M Facility	April 2022	LIBOR + applicable margin	First Lien Mortgages		250,000		122,412		225,837
May 2022 $350M Facility	May 2022	LIBOR + applicable margin	First Lien Mortgages		350,000		102,332		283,821
October 2021 $250M Facility	October 2021	LIBOR + applicable margin	First Lien Mortgages		250,000		65,541		170,174
August 2021 $200M Facility	August 2021	LIBOR + applicable margin	First Lien Mortgages		200,000		59,663		126,047
August 2021 $300M Facility (2)	August 2021	LIBOR + applicable margin	First Lien Mortgages		300,000		40,562		15,719
Securities Repo Line	N/A	LIBOR + applicable margin	Mortgage Related Asset		13,951		13,951		—
February 2021 $50M Facility - MSR (3)	February 2021	Prime + applicable margin; 5.00% floor	MSRs		50,000		—		50,000
June 2023 $300M Facility	June 2023	LIBOR + applicable margin	First Lien Mortgages		300,000		—		—

Subtotal mortgage lines of credit				$	3,688,951	$	1,940,176	$	1,997,464


Reverse Lines:
October 2021 $400M Facility	October 2021	LIBOR + applicable margin	First Lien Mortgages	$	400,000	$	257,257	$	84,124
April 2022 $250M Facility	April 2022	LIBOR + applicable margin	First Lien Mortgages		250,000		214,245		173,484
$200M Repo Facility	N/A	Bond accrual rate + applicable margin	Mortgage Related Assets		200,000		176,549		174,578
February 2024 $90M Facility	February 2024	LIBOR + applicable margin	MSRs		90,000		89,497		—
December 2021 $100M Facility	December 2021	LIBOR + applicable margin	First Lien Mortgages		100,000		89,226		61,220
March 2022 $100M Facility	March 2022	LIBOR + applicable margin	First Lien Mortgages		100,000		87,936		15,803


								Outstanding Borrowings at
								June 30, 2021		December 31, 2020
Facility	Maturity Date	Interest Rate		Collateral Pledged		Total Capacity (1)		Successor		Predecessor
June 2022 $75M Facility	June 2022		LIBOR + applicable margin		First Lien Mortgages		75,000		72,479		11,423
April 2022 $52.5M Facility	April 2022		LIBOR + applicable margin		Mortgage Related Assets		52,500		52,500		50,239
April 2022 $50M Facility	April 2022		Prime + applicable margin; 6.00% floor		Unsecuritized Tails		50,000		38,757		37,442
April 2022 $45M Facility	April 2022		9.00%		Mortgage Related Assets		45,000		28,220		26,875
June 2022 $200M Facility (2)	June 2022		LIBOR + applicable margin		First Lien Mortgages		200,000		26,883		128,723
August 2021 $50M Facility	August 2021		LIBOR + applicable margin		First Lien Mortgages		50,000		24,329		2,860
$1.2M Repo Facility	N/A		LIBOR + applicable margin		Mortgage Related Assets		1,215		1,215		1,188

Subtotal reverse lines of credit						$	1,613,715	$	1,159,093	$	767,959


Commercial Lines:
September 2022 $150M Facility	September 2022		LIBOR + applicable margin		Encumbered Agricultural Loans	$	150,000	$	112,229	$	52,300
April 2023 $145M Facility	April 2023		LIBOR + applicable margin		First Lien Mortgages		145,000		86,055		100,070
February 2022 $150M Facility	February 2022		LIBOR + applicable margin		First Lien Mortgages		150,000		33,768		—
November 2023 $65M Facility	November 2023		LIBOR + applicable margin		First Lien Mortgages		65,000		30,528		28,064
August 2022 $75M	August 2022		2.50% - 3.25%		Encumbered Agricultural Loans		75,000		24,746		—
August 202 2 $25M Facility	August 2022		10.00%		Second Lien Mortgages		25,000		20,900		21,475
$4M Securities Repo Line	N/A		LIBOR + applicable margin		Mortgage Related Assets		4,024		4,024		—
February 2022 $150M Facility	February 2022		LIBOR + applicable margin		First Lien Mortgages		150,000		715		—
$2M Securities Repo Line	N/A		Distributed Bond Interest + 50 bps		Mortgage Related Assets		—		—		6,411

Subtotal commercial lines of credit						$	764,024	$	312,965	$	208,320

Total other financing lines of credit						$	6,066,690	$	3,412,234	$	2,973,743

(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, 2021.

(2)	See Note 36 - Subsequent Events for additional information on facility amendments.

(3)	The February 2021 $50M facility - MSR was paid off and terminated in February 2021.

As of June 30, 2021 (Successor) and December 31, 2020 (Predecessor), the weighted average outstanding interest rates on outstanding debt of the Company were 2.57% and 3.15%, respectively.

The Company’s borrowing arrangements and credit facilities contain various financial covenants which primarily relate to required tangible net worth amounts, liquidity reserves, leverage requirements, and profitability requirements. As a result of market disruptions and fair value accounting adjustments taken in March 2020 resulting from the

COVID-19

pandemic, FACo was in violation of its first, second, and third quarter 2020 profitability covenants with two of its warehouse lenders. The Company received waivers of these covenant violations from both lenders as well as amendments to profitability covenants for the remaining quarters of 2020.

As a result of impacts from the Business Combination, FAM was not in compliance with the lender adjusted tangible net worth quarterly and

two-consecutive

quarter requirements by FNMA as detailed below. The Company received a waiver for the covenant violations from FNMA. As of June 30, 2021 (Successor), the Company had obtained waivers for these covenant violations and was in compliance with all other financial covenants.

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 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 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, 2021 (Successor), 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):


Successor
Financial Covenants	Requirement		June 30, 2021		Maximum Allowable Distribution (1)
FAM
Adjusted Tangible Net Worth	$	150,000	$	191,383	$	41,383
Liquidity		40,000		60,697		20,697
Leverage Ratio		15:1		13.3:1		21,591
Material Decline in Lender Adjusted Net Worth:
Lender Adjusted Tangible Net Worth (Quarterly requirement)	$	294,790	$	191,383	$	(103,406	)
Lender Adjusted Tangible Net Worth (Two-Consecutive Quarterly requirement)		215,803		191,383		(24,419	)
FACo
Adjusted Tangible Net Worth	$	85,000	$	93,411	$	8,411
Liquidity		20,000		28,579		8,579
Leverage Ratio		6:1		3.6:1		37,192
FAR
Adjusted Tangible Net Worth	$	398,288	$	449,271	$	50,983
Liquidity		20,000		25,120		5,120
Leverage Ratio		6:1		3.6:1		180,788
Material Decline in Lender Adjusted Net Worth:
Lender Adjusted Tangible Net Worth (Quarterly requirement)	$	302,921	$	448,047	$	145,126
Lender Adjusted Tangible Net Worth (Two-Consecutive Quarterly requirement)		354,344		448,047		93,703

As of December 31, 2020 (Predecessor), 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):


Predecessor
Financial Covenants	Requirement		December 31, 2020		Maximum Allowable Distribution (1)
FAM
Adjusted Tangible Net Worth	$	125,000	$	289,163	$	164,163
Liquidity		40,000		56,775		16,775
Leverage Ratio		15:1		9.3:1		110,267
Material Decline in Lender Adjusted Net Worth:
Lender Adjusted Tangible Net Worth (Quarterly requirement)	$	210,428	$	282,062	$	71,634
Lender Adjusted Tangible Net Worth (Two-Consecutive Quarterly requirement)		93,763		282,062		188,299
FACo
Adjusted Tangible Net Worth	$	85,000	$	126,672	$	41,672
Liquidity		20,000		46,385		26,385
Leverage Ratio		6:1		1.7:1		90,782
FAR
Adjusted Tangible Net Worth	$	300,000	$	474,128	$	174,128
Liquidity		20,000		36,425		16,425
Leverage Ratio		5.5:1		2.5:1		258,615
Material Decline in Lender Adjusted Net Worth:
Lender Adjusted Tangible Net Worth (Quarterly requirement)	$	314,091	$	472,458	$	158,367
Lender Adjusted Tangible Net Worth (Two-Consecutive Quarterly requirement)		205,619		472,458		266,839

(1)

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