Finance of America Reports 2022 Net Loss Of $716M
Losses attributed to business lines it is vacating in 2023.
Finance of America reported for the full year 2022 a net loss of $716 million or $3.06 basic loss per share. For the fourth quarter of 2022, the Plano, Texas-based specialty lending business reported a net loss of $182 million, or 90 cents per diluted share.
Those numbers, though, are an improvement over the third quarter when FOA reported a net loss of $302 million, or $1.35 per diluted share. That was a 39.7% improvement from quarter to quarter. FOA’s last profitable quarter was the third quarter of 2021, when it posted net income of $50 million, or 22 cents per diluted share.
On an adjusted basis, FOA said the full-year net loss is entirely attributable to the operational losses associated with the mortgage originations, commercial originations, and lender services segments. These segments are expected to be discontinued or divested by the end of Q2 2023.
The wind-down of mortgage originations, announced in the fourth quarter of 2022, was completed in February 2023. During the first quarter of 2023, FOA also announced the execution of definitive agreements for the sale of its title insurance and commercial originations businesses. The transaction is expected to close in the second quarter of 2023.
Graham A. Fleming, president and interim CEO, said 2022 “was a transformative year for FOA. We made decisions to account for uncertainty in the residential mortgage market while continuing to invest in areas where we see solid, sustainable growth. By divesting our non-core operations and adding to our reverse lending business, we are well-positioned for future growth and will continue to invest and expand on our strategy to help Americans achieve their retirement goals.”
FOA also announced the acquisition of the assets and operations of AAG, a leading reverse mortgage lender. The transaction has received regulatory approval, is scheduled to close on March 31, 2023, and is expected to create the leading U.S. reverse mortgage originator.
The company reported in 2022, reverse originations funded $4.834 billion, an increase of 13% over 2021, which was driven by strong refinance volume in the first half of 2022 and an increase in new-to-reverse volumes. Revenue for 2022 declined 26% from 2021 to $289 million due primarily to the impact of widening credit spreads experienced during the year, partially offset by higher volumes.