| Other Financing Lines of Credit |
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Other Financing Lines of Credit |
The following summarizes the components of other financing lines of credit (dollars in thousands):
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Outstanding Borrowings at |
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October 2021 - June 2023 (2)
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LIBOR +
applicable margin |
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First Lien
Mortgages |
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$ |
3,575,000 |
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$ |
1,997,464 |
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March 2026 |
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LIBOR +
applicable margin |
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MSRs |
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150,000 |
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— |
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December 2021 - November 2022 |
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LIBOR +
applicable margin |
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Mortgage Related
Assets |
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87,106 |
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— |
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Subtotal mortgage lines of credit |
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$ |
3,812,106 |
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$ |
1,997,464 |
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October 2021 - August 2022 (2)
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LIBOR +
applicable margin |
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First Lien
Mortgages |
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$ |
1,200,000 |
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$ |
477,637 |
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April 2022 - September 2023 |
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Bond accrual rate
+ applicable
margin |
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Mortgage Related
Assets |
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398,719 |
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252,880 |
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February 2024 |
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LIBOR +
applicable margin |
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MSRs |
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90,000 |
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April 2022 |
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Prime + .50%;
6% floor |
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Unsecuritized
Tails |
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50,000 |
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37,442 |
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Subtotal reverse lines of credit |
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$ |
1,738,719 |
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$ |
767,959 |
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February 2022 - November 2023 |
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LIBOR +
applicable margin |
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First Lien
Mortgages |
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$ |
510,000 |
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$ |
128,134 |
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August 2022 - September 2022 |
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LIBOR +
applicable margin |
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Encumbered
Agricultural
Loans |
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225,000 |
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52,300 |
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August 2022 |
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10% |
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Second Lien
Mortgages |
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25,000 |
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21,475 |
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N/A |
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LIBOR +
applicable margin |
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Mortgage Related
Assets |
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1,509 |
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6,411 |
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Subtotal commercial lines of credit |
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$ |
761,509 |
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$ |
208,320 |
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Total other financing lines of credit |
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$ |
6,312,334 |
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$ |
2,973,743 |
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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, 2021. |
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See Note 31 - Subsequent Events for additional information on f a cility amendments. |
As of September 30, 2021 (Successor) and December 31, 2020 (Predecessor), the weighted average outstanding interest rates on outstanding debt of the Company were 3.06% 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 second quarter 2021 lender adjusted tangible net worth quarterly requirement and the second and third quarter 2021 two-consecutive quarter requirements by FNMA. The Company received a waiver for the covenant violations from FNMA. As of September 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 September 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):
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Maximum Allowable Distribution (1)
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Adjusted Tangible Net Worth |
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Material Decline in Lender Adjusted Net Worth: |
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Lender Adjusted Tangible Net Worth (Quarterly requirement) |
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Lender Adjusted Tangible Net Worth (Two-Consecutive Quarterly requirement) |
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Adjusted Tangible Net Worth |
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Adjusted Tangible Net Worth |
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Material Decline in Lender Adjusted Net Worth: |
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Lender Adjusted Tangible Net Worth (Quarterly requirement) |
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Lender Adjusted Tangible Net Worth (Two-Consecutive Quarterly requirement) |
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(1) |
The Maximum Allowable Distribution for any of the originations subsidiaries is the lowest of the amounts shown for the particular originations subsidiary. | 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):
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Maximum Allowable Distribution (1)
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Adjusted Tangible Net Worth |
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$ |
125,000 |
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$ |
289,163 |
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$ |
164,163 |
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40,000 |
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56,775 |
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16,775 |
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15:1 |
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9.3:1 |
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110,267 |
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Material Decline in Lender Adjusted Net Worth: |
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Lender Adjusted Tangible Net Worth (Quarterly requirement) |
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$ |
210,428 |
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$ |
282,062 |
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$ |
71,634 |
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Lender Adjusted Tangible Net Worth (Two-Consecutive Quarterly requirement) |
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93,763 |
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282,062 |
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188,299 |
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Adjusted Tangible Net Worth |
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$ |
85,000 |
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$ |
126,672 |
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$ |
41,672 |
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20,000 |
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46,385 |
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26,385 |
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6:1 |
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1.7:1 |
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90,782 |
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Adjusted Tangible Net Worth |
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$ |
300,000 |
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$ |
474,128 |
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$ |
174,128 |
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20,000 |
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36,425 |
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16,425 |
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5.5:1 |
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2.5:1 |
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258,615 |
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Material Decline in Lender Adjusted Net Worth: |
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Lender Adjusted Tangible Net Worth (Quarterly requirement) |
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$ |
314,091 |
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$ |
472,458 |
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$ |
158,367 |
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Lender Adjusted Tangible Net Worth (Two-Consecutive Quarterly requirement) |
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205,619 |
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472,458 |
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266,839 |
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The Maximum Allowable Distribution for any of the originations subsidiaries is the lowest of the amounts shown for the particular originations subsidiary. |
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