Finance of America Reports Fourth Quarter Loss but Yearly Profit
Finance of America (FOA), a prominent player in the reverse mortgage sector, disclosed a significant quarterly loss for the fourth quarter of 2024. However, the company achieved overall profitability for the year, demonstrating resilience amid market fluctuations.
Quarterly Performance Overview
During a recent earnings call, FOA officials discussed the company’s current standing and its outlook for the reverse mortgage market. The fourth-quarter report revealed a net loss of $143 million, equating to $5.95 per share. Conversely, the company recorded a GAAP net income of $40 million for the entire year, with an adjusted net income of $14 million.
Chief Financial Officer Matt Engel explained that while the company faced challenges contributing to lower margins, it preserved a solid operational foundation. “Our adjusted net income of $5 million or $0.21 per share reflects our continued strong performance for 2024,” he stated. The adjustments the company made throughout the year positioned it well for the future, Engel added.
Market Strategies and Executive Changes
In an optimistic outlook for 2024, FOA management characterized the year as one marked by strategic achievements that contributed to future momentum. CEO Graham Fleming noted significant operational reforms, including an integrated retail platform and a corporate bond exchange. “We believe these actions have positioned us well to execute our 2025 strategic objectives,” he remarked.
To further bolster its operational capabilities, FOA appointed two new executives tasked with the development of innovative digital tools aimed at enhancing efficiency and customer engagement.
Growth in Key Product Lines
The company conveyed strong support for its proprietary closed-end second-lien reverse mortgage product, known as “HomeSafe Second.” FOA experienced a remarkable 77% growth in its distribution between the first and second halves of 2024, with a year-over-year funding volume increase of 19%, reaching $1.9 billion.
President Kristen Sieffert expressed enthusiasm regarding the market potential for HomeSafe Second, emphasizing, “the market opportunity is staggering relative to our current penetration.” Additionally, the product was made available in new states with revised terms, further enhancing its market presence.
Stock Market Reaction and Financial Goals
Though the quarterly loss initially impacted FOA’s stock price—falling from $21.19 to $17.89 following the earnings announcement—the share price rebounded by market close to $21.75. This recovery indicates investor confidence in the company’s long-term potential despite the immediate financial setback.
Future Outlook amid Market Challenges
Looking ahead, Engel expressed cautious optimism about navigating the current interest rate environment. He acknowledged recent volatility, stating, “I think it’s fair to say rates have been a little volatile. However, we’ve seen a lot of that start to decrease here in the first quarter.”
As FOA continues to solidify its leading position in the Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) market, it also reported a notable 73% increase in non-agency reverse mortgage volume year-over-year. The firm remains focused on its strategic goals while adapting to the challenges characterized by the broader mortgage industry.
