Skip to main content

Finance of America Plans To Sell Retail Unit, Close Forward Wholesale Channel

David Krechevsky
Sep 29, 2022
Finance of America companies

Company has posted 3 straight quarterly losses, reduced its workforce by 20% in 2022.

After three consecutive quarterly losses, Finance of America Companies (FoA) is negotiating to sell its retail mortgage division, while also planning to shut down its forward wholesale channel.

According to a former company official who requested anonymity, Plano, Texas-based FoA has signed a non-binding letter of intent to sell its retail division to Chicago-based Guaranteed Rate. The letter includes a provision that Guaranteed Rate would sell “fix-and-flip” and reverse mortgage loans exclusively to FoA and its Finance of America Reverse unit, the former company official said.

The official also confirmed that FoA plans to close down its forward wholesale division, adding that the company has provided no details on when that will happen or when it will stop accepting loan applications in that channel.

In an emailed statement, an FoA spokesperson said, “It is company policy not to comment on rumors or speculation in the market.”

FoA's plan to shut down its forward wholesale channel comes during a time when wholesale has taken a beating, with loanDepot and AmeriSave also closing their wholesale units. 

The Guaranteed Rate Cos. is a financial technology-based mortgage lender with more than 10,000 employees in over 850 branches across the U.S., serving all 50 states and Washington, D.C.

Guaranteed Rate did not immediately respond to request for comment.

In August, FoA reported a net loss of $168 million, or 70 cents per diluted share, for the second quarter of 2022, its third-consecutive quarterly loss. The company reported funding $4.23 billion in overall mortgage originations, down 17% from the previous quarter. 

Net rate-lock volume in the quarter totaled $3.8 billion, down 29% from the first quarter, as rising interest rates continued to pressure refinance volumes industry-wide.

During an earnings conference call following the release of the second-quarter report, FoA President and Interim CEO Graham Fleming stated that the company has "reduced overall company headcount and expenses by roughly 20%" since the start of the year. 

"To combat the operating pressures on our business, we are prudently managing costs across the company and continue to implement expense initiatives to right-size the business as we expect current volume levels to persist into the second half of the year," Fleming said. "We reduced our workforce in mortgage originations to match capacity with current market demand, taking out roughly 35% in costs on a run-rate basis, equating to over $100 million annualized. These reductions will be realized over the remainder of the year."

According to its website, FoA overall had 5,500 employees among its divisions, which include the multi-channel Finance of America Mortgage and Finance of America Reverse, as well as Finance of America Home Improvement, Finance of America Commercial, and Incenter Mortgage Advisors. A 20% reduction would amount to cutting 1,100 positions.

Published
Sep 29, 2022
More from
Wholesale
Cenlar Names New VP, Human Resources Business Partner

Nayda McKain has been with mortgage loan servicer since 2019.

Career
Nov 21, 2022
Logan Finance Credits OptifiNow TPO For Sales Team Growth

Non-QM wholesale lender credits CRM’s flexibility and innovative features as key to managing rapid growth.

Non-QM
Nov 17, 2022
Can Consumers Save Big By Using Wholesale Mortgage Brokers?

UWM, Homepoint tout joint study claiming more than $9K in savings, but won't share data used in analysis.

Analysis and Data
Nov 04, 2022
Carrington Cuts Staff From Wholesale

Around 100 staff members were laid off, according to a source that works for the company.

Industry News
Nov 03, 2022
Freedom Mortgage Names New SVP Of Wholesale Division

Company also launches 4EVER Wholesale campaign to celebrate more than 30 years of serving lenders and brokers.

Wholesale
Oct 24, 2022
Finance Of America Mortgage To Shut Down

Unable to sell its forward mortgage origination unit, FoA decides to close it.

Operations
Oct 22, 2022