Financial Data and Key Metrics Changes - For Q3 2025, the company reported GAAP net income of $131 million, or $5.78 per basic share, benefiting from lower interest rates and tighter spreads, despite softer home price appreciation projections [5] - Adjusted net income for Q3 was $33 million, or $1.33 per share, representing a significant sequential improvement and more than double the level from a year ago [5][14] - Year-to-date, funded volumes increased by over 28%, and adjusted net income grew from $9 million in 2024 to $60 million in the first nine months of 2025, translating to $2.33 of adjusted earnings per share [6][15] - Adjusted EBITDA for the first nine months of 2025 was $114 million, a 171% improvement compared to the same period a year ago [6] Business Line Data and Key Metrics Changes - Origination performance remained robust, with funded volume reaching $603 million and submission volume reaching $887 million for Q3, compared to $764 million in the same period last year [10] - By the end of October 2025, the company funded $1.97 billion in reverse mortgages, surpassing the entire 2024 production of $1.92 billion [10] - Unique web leads increased by 16% quarter over quarter, and customer email retention increased by 36% since the AAG platform acquisition [12] Market Data and Key Metrics Changes - The company completed over $3 billion in securitizations during the quarter, including a nearly $2 billion securitization in September, the largest in its history [7][16] - The market for securitizations has been performing well, with tight spreads and good demand, leading to a different class of investors participating in larger deals [25][26] Company Strategy and Development Direction - The company is focused on operational excellence, proactive balance sheet management, and long-term growth, with investments in digital innovation, AI, and data analytics [5][8] - A strategic partnership with Better.com was announced to expand product offerings and enhance technology capabilities [7][12] - The company aims to define the future of home equity solutions, enhancing productivity and expanding operating leverage through digital automation and AI [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 60% year-over-year increase in adjusted EPS guidance for 2026, driven by strong momentum in lead generation and digital engagement [18][19] - The company anticipates volume growth of 20%-25% year over year for 2026, supporting adjusted earnings per share guidance of $4.25-$4.75 [17] Other Important Information - The company repaid $85 million of higher-cost working capital facilities and entered into an agreement to repurchase Blackstone's equity stake in FOA [6][7] - Cash and cash equivalents increased from $46 million as of June 30 to $110 million as of September 30, providing liquidity for upcoming corporate bond payments [7][16] Q&A Session Summary Question: Update on the buyback completion timeframe - The buyback has not been completed yet, but it is on track to begin later this month and into December [21] Question: Cash total and uses of current cash position - The cash total for the buyback is about $80 million, with $110 million on hand at the end of September and $60 million available to be redrawn [23][24] Question: Securitization cadence and market update - The company typically aims for one large securitization each quarter, with a smaller securitization expected to complete this month; the market is performing well with tight spreads and good demand [25][26] Question: Cash generation in a typical year - The company expects that within 24 to 36 months after posting PTI, the earnings will turn to cash, with approximately $300 million of residuals and retained securities on the balance sheet [29][32] Question: New capitalization and share count - The total shares outstanding will decrease from about 31 million to approximately 24 million after the buyback and convertible notes [33] Question: Cash earnings per share - The company indicated that with $100 million in PTI, it would generate about $4 per share in cash earnings [34]

FINANCE OF AMERICA REPORTS THIRD QUARTER 2025 RESULTS – $5.78 in basic earnings per share or $131 million of net income from continuing operations for the first nine months of 2025 – – $2.33 in adjusted earnings per share or $60 million of adjusted net income for the first nine months of 2025 – (1) (1) ($ amounts in millions, except per share data) Variance (%) Variance (%) Variance (%) Q3'25 Q2'25 Q3'25 vs Q2'25 Q3'24 Q3'25 vs Q3'24 YTD 2025 YTD 2024 2025 vs 2024 Funded volume $ 603 $ 602 — % $ 513 18 % $ ...

Group 1 - The company Finance of America Companies (NYSE: FOA) was rated a buy due to its cheap valuation, growing end market, and good execution after its 1Q25 results [1] - The analyst focuses on value investing and conducts fundamental research across various sectors including chemicals, homebuilders, building materials, industrials, and metals & mining [1] - The investment horizon for the company ranges from a quarter to two years, indicating a medium-term investment strategy [1]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section provides essential details about the company's Form 10-Q filing, including registrant information and classification [Registrant Information](index=1&type=section&id=Registrant%20Information) Finance of America Companies Inc. (FOA) filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025, incorporated in Delaware, with Class A Common Stock traded on the NYSE under FOA, classified as a non-accelerated filer and smaller reporting company - Finance of America Companies Inc. (FOA) filed its Quarterly Report on Form 10-Q for the period ended **June 30, 2025**[2](index=2&type=chunk) Trading Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Class A Common Stock, par value $0.0001 per share | FOA | New York Stock Exchange | Filer Classification | | | | | | :-------------------- | :-- | :---------------- | :-- | | Large accelerated filer | ☐ | Accelerated filer | ☐ | | Non-accelerated filer | x | Smaller reporting company | x | | | | Emerging growth company | ☐ | [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section outlines the Form 10-Q's structure, detailing its two main parts: Financial Information and Other Information [Report Structure](index=3&type=section&id=Report%20Structure) The Form 10-Q is structured into two main parts: Part I - Financial Information, covering financial statements, management's discussion and analysis, market risk, and controls, and Part II - Other Information, which includes legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Form 10-Q Structure | | | Page | | :--- | :--- | :--- | | | PART I - Financial Information | | | Item 1. | Financial Statements | 6 | | Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 45 | | Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 71 | | Item 4. | Controls and Procedures | 72 | | | PART II - Other Information | | | Item 1. | Legal Proceedings | 74 | | Item 1A. | Risk Factors | 74 | | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 75 | | Item 3. | Defaults Upon Senior Securities | 75 | | Item 4. | Mine Safety Disclosures | 75 | | Item 5. | Other Information | 75 | | Item 6. | Exhibits | 75 | | Signatures | | 77 | [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially [Nature and Risks of Forward-Looking Statements](index=4&type=section&id=Nature%20and%20Risks%20of%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially. Key risks include the ability to expand the customer base, finance and monetize reverse mortgage portfolios, respond to interest rate changes, manage market concentration, prevent cyber intrusions, and comply with extensive regulations - Forward-looking statements are subject to various risks and uncertainties that could cause actual outcomes or results to differ **materially** from those indicated[8](index=8&type=chunk) - Key risks include expanding the customer base, efficiently originating reverse mortgage loans, financing and profitably securitizing the reverse mortgage portfolio, managing interest rate changes, and preventing cyber intrusions[10](index=10&type=chunk) - Other significant risks involve managing secondary home loan market disruptions, financing and recovering reverse mortgage servicing costs, maintaining compliance with complex regulations, competing with national banks, and managing legal proceedings[13](index=13&type=chunk) [Additional Information](index=5&type=section&id=Additional%20Information) The company provides investor and consumer-oriented websites for additional information, making SEC filings available free of charge [Company Resources and SEC Filings](index=5&type=section&id=Company%20Resources%20and%20SEC%20Filings) The company provides investor and consumer-oriented websites for additional information. Annual, quarterly, and current reports filed with the SEC are made available free of charge on its investor relations website and can also be accessed via the SEC's website - Investors can find more information on the company's investor-oriented website (**www.financeofamericacompanies.com**) and consumer-oriented website (**www.financeofamerica.com**)[12](index=12&type=chunk) - Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments are available **free of charge** on the investor-oriented website and the SEC's website (**www.sec.gov**)[12](index=12&type=chunk) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's condensed consolidated financial statements, including statements of financial condition, operations, comprehensive income, equity, and cash flows [Condensed Consolidated Statements of Financial Condition](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) The company's total assets increased to $30.15 billion as of June 30, 2025, from $29.16 billion at December 31, 2024, primarily driven by an increase in loans held for investment. Total liabilities also increased to $29.67 billion from $28.84 billion, mainly due to higher HMBS related obligations and nonrecourse debt. Total equity saw a significant increase to $473.4 million from $315.7 million Condensed Consolidated Statements of Financial Condition (in thousands) | ASSETS | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------------------------------------- | :------------ | :------------------ | | Cash and cash equivalents | $ 46,476 | $ 47,383 | | Restricted cash | 190,176 | 254,585 | | Loans held for investment, subject to HMBS related obligations, at fair value | 18,858,220 | 18,669,962 | | Loans held for investment, subject to nonrecourse debt, at fair value | 9,888,492 | 9,288,403 | | Loans held for investment, at fair value | 634,935 | 520,103 | | Intangible assets, net | 198,209 | 216,342 | | Other assets, net | 329,677 | 157,261 | | Assets of discontinued operations | 1,264 | 2,451 | | **TOTAL ASSETS** | **$ 30,147,449** | **$ 29,156,490** | | LIABILITIES AND EQUITY | | | | HMBS related obligations, at fair value | $ 18,643,094 | $ 18,444,370 | | Nonrecourse debt, at fair value | 9,426,194 | 8,954,068 | | Other financing lines of credit | 1,076,434 | 918,247 | | Notes payable, net | 383,941 | 374,511 | | Payables and other liabilities | 139,350 | 137,953 | | Liabilities of discontinued operations | 5,011 | 11,677 | | **TOTAL LIABILITIES** | **29,674,024** | **28,840,826** | | **TOTAL EQUITY** | **473,425** | **315,664** | | **TOTAL LIABILITIES AND EQUITY** | **$ 30,147,449** | **$ 29,156,490** | - Total assets increased by approximately **$991 million**, and total liabilities increased by approximately **$833 million** from December 31, 2024, to June 30, 2025[15](index=15&type=chunk) - Total equity increased significantly from **$315.7 million** to **$473.4 million**, primarily driven by net income and noncontrolling interest changes[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a significant turnaround in profitability, with net income attributable to controlling interest of $34.9 million for Q2 2025, compared to a net loss of $2.1 million in Q2 2024. Total revenues for Q2 2025 surged to $177.4 million from $79.0 million in Q2 2024, primarily due to substantial net fair value changes on loans and related obligations Condensed Consolidated Statements of Operations (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | NET PORTFOLIO INTEREST INCOME | $ 59,464 | $ 65,473 | $ 129,899 | $ 135,648 | | NET OTHER INCOME (EXPENSE) | 117,912 | 13,566 | 213,172 | 18,073 | | **TOTAL REVENUES** | **177,376** | **79,039** | **343,071** | **153,721** | | TOTAL EXPENSES | 89,060 | 85,047 | 175,429 | 176,362 | | NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 81,955 | (3,768) | 163,648 | (19,548) | | NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST | $ 34,923 | $ (2,089) | $ 65,132 | $ (9,627) | | Basic earnings (loss) per share | $ 3.16 | $ (0.21) | $ 6.14 | $ (0.99) | | Diluted earnings (loss) per share | $ 2.13 | $ (0.30) | $ 4.56 | $ (1.06) | - Net income attributable to controlling interest significantly improved to **$34.9 million** for the three months ended June 30, 2025, from a loss of **$2.1 million** in the prior year period[18](index=18&type=chunk) - Total revenues for the three months ended June 30, 2025, increased by **$98.3 million (124.4%)** year-over-year, primarily driven by a **$111.7 million** increase in net fair value changes on loans and related obligations[18](index=18&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income attributable to controlling interest for the three months ended June 30, 2025, was $34.9 million, a substantial improvement from a loss of $2.1 million in the same period last year. For the six months ended June 30, 2025, it was $65.1 million, compared to a loss of $9.6 million in the prior year Condensed Consolidated Statements of Comprehensive Income (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | NET INCOME (LOSS) | $ 79,823 | $ (5,124) | $ 154,823 | $ (25,428) | | Impact of foreign currency translation adjustment | 2 | (30) | (7) | (47) | | TOTAL COMPREHENSIVE INCOME (LOSS) | 79,825 | (5,154) | 154,816 | (25,475) | | Less: Comprehensive income (loss) attributable to noncontrolling interest | 44,901 | (3,052) | 89,687 | (15,828) | | COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST | $ 34,924 | $ (2,102) | $ 65,129 | $ (9,647) | - Comprehensive income attributable to controlling interest improved from a loss of **$2.1 million** in Q2 2024 to an income of **$34.9 million** in Q2 2025[21](index=21&type=chunk) [Condensed Consolidated Statements of Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity increased from $315.7 million at December 31, 2024, to $473.4 million at June 30, 2025, primarily driven by net income of $154.8 million and equity-based compensation, partially offset by noncontrolling interest distributions and share cancellations for employee tax withholdings Changes in Total Equity (in thousands) | | December 31, 2024 | June 30, 2025 | | :-------------------------------------------------------------------------------- | :---------------- | :------------ | | Balance at period start | $ 315,664 | $ 315,664 | | Net income | 154,823 | 154,823 | | Noncontrolling interest distributions | (288) | (288) | | Equity-based compensation, net | 4,804 | 4,804 | | Conversion of Class A LLC Units for Class A Common Stock | — | — | | Settlement of RSUs | — | — | | Cancellation of shares to fund employee tax withholdings | (3,767) | (3,767) | | Issuance of Class A LLC Units | 2,196 | 2,196 | | Class B share retirement | — | — | | Foreign currency translation adjustment | (7) | (7) | | Balance at period end | $ 473,425 | $ 473,425 | - Total equity increased by **$157.8 million** from December 31, 2024, to June 30, 2025, primarily due to net income[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities decreased by $47.7 million for the six months ended June 30, 2025, compared to the prior year, indicating improved operational cash generation. However, net cash provided by investing activities decreased by $68.3 million, and net cash used in financing activities increased by $66.5 million, leading to an overall decrease in cash and cash equivalents and restricted cash Condensed Consolidated Statements of Cash Flows (in thousands) | | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash used in operating activities | $ (188,555) | $ (236,241) | | Net cash provided by investing activities | 183,472 | 251,797 | | Net cash provided by (used in) financing activities | (60,226) | 6,303 | | Effect of exchange rate changes on cash and cash equivalents | (7) | (47) | | Net increase (decrease) in cash and cash equivalents and restricted cash | $ (65,316) | $ 21,812 | | Cash and cash equivalents and restricted cash, end of period | $ 236,652 | $ 246,613 | - Net cash used in operating activities improved by **$47.7 million** for the six months ended June 30, 2025, compared to the corresponding 2024 period[27](index=27&type=chunk) - Overall cash and cash equivalents and restricted cash decreased by **$65.3 million** for the six months ended June 30, 2025, compared to an increase of **$21.8 million** in the prior year, primarily due to changes in investing and financing activities[27](index=27&type=chunk) [Note 1. Organization and Description of Business](index=16&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) Finance of America Companies Inc. (FOA) is a financial services holding company specializing in home equity-based financing solutions for retirement, operating through subsidiaries offering HECM and non-agency reverse mortgage loans, along with capital markets and portfolio management services - FOA is a financial services holding company providing home equity-based financing solutions for modern retirement, with **capital markets and portfolio management capabilities**[28](index=28&type=chunk) - The company originates, purchases, sells, securitizes, and services **HECM loans (FHA-insured)** and **non-agency reverse mortgage loans** through its subsidiary Finance of America Reverse LLC (FAR)[30](index=30&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=16&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim reporting, including normal recurring adjustments, with significant estimates for fair value measurements and recently adopted accounting guidance - The financial statements are prepared in accordance with **U.S. GAAP** for interim periods, with all necessary normal recurring adjustments[31](index=31&type=chunk) - Estimates for loans held for investment and related obligations are particularly subject to change due to factors like **economy, interest rates, and home prices**[33](index=33&type=chunk) Recently Adopted Accounting Guidance | Standard | Description | Effective Date | Effect on Consolidated Financial Statements | | :------- | :---------- | :------------- | :------------------------------------------ | | ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures | Enhances annual income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and by requiring disclosure of the amount of income taxes paid disaggregated by federal, state, and foreign taxes, as well as disaggregated by material individual jurisdictions. | January 1, 2025 | This ASU will result in additional income tax disclosures in our Form 10-K, but the Company does not expect it will have a material impact on our consolidated financial statements. | [Note 3. Discontinued Operations](index=17&type=section&id=Note%203.%20Discontinued%20Operations) The company discontinued certain business lines in late 2022 and 2023 to transition to a unified modern retirement solutions platform, resulting in decreased assets and liabilities of discontinued operations and a net loss of zero for Q2 2025 - The Company discontinued certain business lines in **2022 and 2023** to transform into a unified modern retirement solutions platform[36](index=36&type=chunk) Assets and Liabilities of Discontinued Operations (in thousands) | | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :------------------ | | Assets: Other assets, net | $ 1,264 | $ 2,451 | | Liabilities: Payables and other liabilities | 5,011 | 11,677 | Net Loss from Discontinued Operations (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net loss from discontinued operations before and after income taxes | $ — | $ (203) | $ (4,750) | $ (4,727) | [Note 4. Variable Interest Entities and Securitizations](index=18&type=section&id=Note%204.%20Variable%20Interest%20Entities%20and%20Securitizations) The company consolidates special purpose entities (VIEs) created for securitizations where it is the primary beneficiary, holding both power to direct activities and exposure to significant gains/losses. Consolidated VIE assets totaled $10.14 billion at June 30, 2025, up from $9.38 billion at December 31, 2024. The company also has variable interests in unconsolidated VIEs, with a maximum exposure to loss of $64.6 million at June 30, 2025 - The Company consolidates special purpose entities (**VIEs**) in its securitizations where it is deemed the primary beneficiary[38](index=38&type=chunk) Consolidated VIEs Assets and Liabilities (in thousands) | ASSETS | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------- | :------------ | :------------------ | | Restricted cash | $ 183,849 | $ 248,905 | | Loans held for investment, subject to nonrecourse debt, at fair value | 9,499,796 | 8,904,303 | | Loans held for investment, at fair value | 276,450 | 168,641 | | Other assets, net | 184,455 | 53,400 | | **TOTAL ASSETS** | **$ 10,144,550** | **$ 9,375,249** | | LIABILITIES | | | | Nonrecourse debt, at fair value | $ 9,464,406 | $ 8,947,378 | | Other financing lines of credit | 211,808 | 136,157 | | Payables and other liabilities | 1,314 | 1,277 | | **TOTAL VIE LIABILITIES** | **$ 9,677,528** | **$ 9,084,812** | Unconsolidated VIEs Summary (in thousands) | | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------- | :------------ | :------------------ | | Carrying value of Retained interests (Assets) | $ 45,669 | $ 47,568 | | Carrying value of Loans and nonrecourse liability (Assets) | 400,833 | 393,405 | | Maximum exposure to loss | $ 64,614 | $ 66,902 | | Total assets in VIEs | $ 1,312,906 | $ 1,341,769 | [Note 5. Fair Value](index=21&type=section&id=Note%205.%20Fair%20Value) The company measures a significant portion of its assets and liabilities at fair value, primarily using Level 3 inputs due to unobservable inputs. Total assets measured at fair value were $29.60 billion at June 30, 2025, and total liabilities were $28.08 billion. Key unobservable inputs for valuation include weighted average life (WAL), conditional prepayment rate (CPR), loss frequency/severity, home price appreciation (HPA), and discount rates. There were no transfers into or out of Level 3 during the reporting periods - Fair value measurements are based on a hierarchy, with most significant assets and liabilities classified as **Level 3** due to unobservable inputs[52](index=52&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) Fair Value of Assets and Liabilities (in thousands) | | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------------------------------------- | :------------ | :------------------ | | **Total Fair Value Assets** | **$ 29,602,789** | **$ 28,522,329** | | Loans held for investment, subject to HMBS related obligations | 18,858,220 | 18,669,962 | | Loans held for investment, subject to nonrecourse debt | 9,888,492 | 9,288,403 | | Loans held for investment | 634,935 | 520,103 | | Loans held for sale - reverse mortgage loans | 180,899 | — | | Retained bonds | 39,720 | 40,407 | | **Total Fair Value Liabilities** | **$ 28,082,727** | **$ 27,415,122** | | HMBS related obligations | 18,643,094 | 18,444,370 | | Nonrecourse debt | 9,426,194 | 8,954,068 | | Deferred purchase price liabilities | 8,328 | 13,370 | | TRA obligation | 5,111 | 3,314 | - The fair value of notes payable, net, was **$449.6 million** at June 30, 2025, compared to a carrying value of **$383.9 million**, determined using **Level 2 inputs**[67](index=67&type=chunk)[68](index=68&type=chunk) [Note 6. Reverse Mortgage Loan Portfolio](index=29&type=section&id=Note%206.%20Reverse%20Mortgage%20Loan%20Portfolio) The total serviced reverse mortgage loan portfolio increased to $28.21 billion at June 30, 2025, from $27.48 billion at December 31, 2024. This portfolio is predominantly composed of adjustable rate loans ($20.38 billion) and fixed rate loans ($7.69 billion). Loans 90 days or more past due and on non-accrual status decreased from $33.89 million (UPB) at December 31, 2024, to $24.42 million at June 30, 2025 Reverse Mortgage Loan Portfolio (in thousands) | | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------------------------------------- | :------------ | :------------------ | | Reverse mortgage loans held for investment, subject to HMBS related obligations | $ 17,817,676 | $ 17,652,495 | | Reverse mortgage loans held for investment, subject to nonrecourse debt | 9,516,324 | 9,186,447 | | Reverse mortgage loans held for investment | 577,117 | 503,727 | | Loans held for sale - reverse mortgage loans | 162,349 | — | | **Total owned reverse mortgage loan portfolio** | **28,073,466** | **27,342,669** | | Loans serviced for others | 87,104 | 88,125 | | **Total serviced reverse mortgage loan portfolio** | **$ 28,209,458** | **$ 27,476,567** | Owned Reverse Mortgage Loan Portfolio by Product Type (in thousands) | | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Adjustable rate loans | $ 20,379,928 | $ 19,966,185 | | Fixed rate loans | 7,693,538 | 7,376,484 | | **Total owned reverse mortgage loan portfolio** | **$ 28,073,466** | **$ 27,342,669** | - Loans **90 days or more past due** and on non-accrual status decreased from **$33.89 million (UPB)** at December 31, 2024, to **$24.42 million** at June 30, 2025[66](index=66&type=chunk) [Note 7. Other Assets, Net](index=30&type=section&id=Note%207.%20Other%20Assets,%20Net) Other assets, net, related to continuing operations significantly increased to $329.68 million at June 30, 2025, from $157.26 million at December 31, 2024. This rise was primarily driven by a substantial increase in loans held for sale, at fair value, from $3.45 million to $181.42 million Other Assets, Net (in thousands) | | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------------------------------------- | :------------ | :------------------ | | Loans held for sale, at fair value | $ 181,422 | $ 3,454 | | Government guaranteed receivables | 45,104 | 41,948 | | Retained bonds, at fair value | 39,720 | 40,407 | | Right-of-use assets | 19,074 | 20,533 | | Receivables, net of allowance | 13,166 | 20,935 | | Prepaid expenses | 11,375 | 11,998 | | Fixed assets, net | 3,326 | 3,824 | | Other | 16,490 | 14,162 | | **Total other assets, net** | **$ 329,677** | **$ 157,261** | - Other assets, net, more than doubled from **$157.26 million** to **$329.68 million**, largely due to an increase in loans held for sale[72](index=72&type=chunk) [Note 8. Nonrecourse Debt, at Fair Value](index=30&type=section&id=Note%208.%20Nonrecourse%20Debt,%20at%20Fair%20Value) Total nonrecourse debt, at fair value, increased to $9.43 billion at June 30, 2025, from $8.95 billion at December 31, 2024. This includes securitizations of non-agency reverse mortgage loans and performing/nonperforming HECM loans. The nonrecourse debt associated with commercial loan securitization was fully paid off during Q2 2025 Nonrecourse Debt, at Fair Value (in thousands) | Issue Date | Final Maturity Date | Interest Rate | Original Issue Amount | June 30, 2025 | December 31, 2024 | | :--------- | :------------------ | :------------ | :-------------------- | :------------ | :------------------ | | Securitization of non-agency reverse mortgage loans | April 2051 - May 2075 | 1.25% - 7.00% | $ 10,340,442 | $ 8,736,119 | $ 8,304,568 | | Securitization of performing/nonperforming HECM loans | October 2034 | 4.00% - 6.00% | 705,400 | 620,991 | 677,035 | | Securitization of commercial loans | N/A | N/A | N/A | — | 8,245 | | Total consolidated VIE nonrecourse debt UPB | | | | 9,357,110 | 8,989,848 | | Nonrecourse loan financing liability | | | | 381,888 | 374,071 | | Fair value adjustments | | | | (312,804) | (409,851) | | **Total nonrecourse debt, at fair value** | | | | **$ 9,426,194** | **$ 8,954,068** | - The nonrecourse debt associated with the securitization of commercial loans was **fully paid off** during the three months ended June 30, 2025[73](index=73&type=chunk) Estimated Maturities for Nonrecourse Debt (in thousands) | Year Ending December 31, | Estimated Maturities | | :----------------------- | :------------------- | | Remainder of 2025 | $ 1,451,705 | | 2026 | 3,528,625 | | 2027 | 1,928,454 | | 2028 | 1,003,506 | | 2029 | 189,354 | | Thereafter | 1,637,354 | | **Total payments on nonrecourse debt** | **$ 9,738,998** | [Note 9. Other Financing Lines of Credit](index=31&type=section&id=Note%209.%20Other%20Financing%20Lines%20of%20Credit) Total other financing lines of credit increased to $1.08 billion at June 30, 2025, from $918.25 million at December 31, 2024. The weighted average interest rate on these outstanding lines increased slightly to 7.23% from 7.14%. The company was in compliance with all financial covenants, including adjusted tangible net worth, liquidity, and leverage ratios, for both FAR and FAH Other Financing Lines of Credit (in thousands) | Maturity Date | Interest Rate | Collateral Pledged | Total Capacity | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :----------------- | :------------- | :------------ | :------------------ | | Reverse Lines: | | | | | | | September 2025 - October 2026 | SOFR + applicable margin | First and Second Lien Mortgages | $ 1,165,000 | $ 572,470 | $ 438,328 | | Various | Bond accrual rate/SOFR + applicable margin | Mortgage Related Assets | 398,097 | 379,726 | 356,915 | | October 2027 | SOFR + applicable margin | HECM MSR | 70,000 | 69,231 | 69,231 | | October 2025 | SOFR + applicable margin | Unsecuritized Tails | 40,000 | 22,596 | 19,947 | | Mortgage Line: | | | | | | | Various | Bond accrual rate + applicable margin | Mortgage Related Assets | 32,411 | 32,411 | 33,826 | | **Total other financing lines of credit** | | | **$ 1,705,508** | **$ 1,076,434** | **$ 918,247** | - The weighted average interest rate on outstanding financing lines of credit increased from **7.14%** at December 31, 2024, to **7.23%** at June 30, 2025[75](index=75&type=chunk) Financial Covenants and Maximum Allowable Distribution (in thousands, except for ratios) | Financial Covenants | Requirement | June 30, 2025 | Maximum Allowable Distribution | | :------------------ | :---------- | :------------ | :----------------------------- | | FAR: Adjusted Tangible Net Worth | $ 250,000 | $ 697,057 | $ 447,057 | | FAR: Liquidity | 40,815 | 44,259 | 3,444 | | FAR: Leverage Ratio | 6:1 | 2.1:1 | 457,753 | | FAH: Adjusted Tangible Net Worth | $ 200,000 | $ 684,705 | $ 484,705 | | FAH: Liquidity | 40,000 | 46,595 | 6,595 | | FAH: Leverage Ratio | 10:1 | 2.4:1 | 522,301 | [Note 10. Litigation](index=32&type=section&id=Note%2010.%20Litigation) The company is subject to various legal proceedings, examinations, and investigations. While the outcome of these matters is unpredictable, management does not believe any, individually or in aggregate, will have a material adverse effect on its financial position, results of operations, or cash flows. Legal expenses decreased to $0.8 million for Q2 2025 from $1.8 million in Q2 2024 - The Company is subject to legal proceedings, examinations, investigations, and lawsuits, including **PAGA claims in California**[80](index=80&type=chunk)[83](index=83&type=chunk) - Management believes that current legal matters will **not have a material adverse effect** on the company's financial position, results of operations, or cash flows[82](index=82&type=chunk) Legal Expenses (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Legal expenses | $ 800 | $ 1,800 | $ 1,100 | $ 2,100 | [Note 11. Commitments and Contingencies](index=33&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) The company has unfunded commitments of $4.5 billion for borrower advances on reverse mortgage loans as of June 30, 2025, consistent with December 31, 2024. It also has mandatory repurchase obligations for HECM loans from Ginnie Mae securitization pools once they reach 98% of their maximum claim amount, and is subject to representations and warranties on sold loans - The Company has unfunded commitments of **$4.5 billion** for borrower advances on agency and non-agency reverse mortgage loans as of June 30, 2025 and December 31, 2024[89](index=89&type=chunk) - The Company is required to repurchase reverse mortgage loans from Ginnie Mae securitization pools once the outstanding principal balance reaches **98% of the Maximum Claim Amount (MCA)**[90](index=90&type=chunk) - The Company provides covenants and warranties to Ginnie Mae and third-party purchasers, which, if breached, may require **loan repurchases or indemnification for losses**[92](index=92&type=chunk) [Note 12. Income Taxes](index=34&type=section&id=Note%2012.%20Income%20Taxes) The company's effective tax rate differs from the U.S. federal statutory rate due to the mix of earnings/loss attributable to noncontrolling interest, state tax rates, and discrete tax items. A valuation allowance for deferred tax assets has been maintained due to the assessment that sufficient taxable income may not be generated to utilize current attributes. The recently signed One Big Beautiful Bill Act is not anticipated to have a significant impact on overall tax expense - The Company's effective tax rate differs from the U.S. federal statutory rate due to **noncontrolling interest, state tax rates, and discrete tax items**[93](index=93&type=chunk) - A valuation allowance for deferred tax assets has been maintained as it is **not more likely than not** that a portion or all of the deferred tax asset will be realized[96](index=96&type=chunk)[97](index=97&type=chunk) - The **One Big Beautiful Bill Act**, signed on **July 4, 2025**, is not anticipated to have a significant impact on overall tax expense, with changes to be implemented in Q3 2025[99](index=99&type=chunk) [Note 13. Business Segment Reporting](index=36&type=section&id=Note%2013.%20Business%20Segment%20Reporting) The company operates through two reportable segments: Retirement Solutions and Portfolio Management. For the three months ended June 30, 2025, Retirement Solutions reported $10.37 million in net income before taxes, while Portfolio Management reported $108.10 million. For the six months ended June 30, 2025, Retirement Solutions had $13.63 million and Portfolio Management had $213.38 million in net income before taxes, demonstrating strong performance in both segments Net Income (Loss) Before Taxes by Segment (in thousands) | Segment | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Retirement Solutions | $ 10,373 | $ (1,681) | $ 13,632 | $ (5,556) | | Portfolio Management | 108,104 | 21,514 | 213,382 | 36,009 | | Corporate and Other | (36,522) | (23,601) | (63,366) | (50,001) | | **Total** | **$ 81,955** | **$ (3,768)** | **$ 163,648** | **$ (19,548)** | - Retirement Solutions segment's net income before taxes improved significantly from a loss of **$1.68 million** in Q2 2024 to an income of **$10.37 million** in Q2 2025[101](index=101&type=chunk) - Portfolio Management segment's net income before taxes increased substantially from **$21.51 million** in Q2 2024 to **$108.10 million** in Q2 2025[101](index=101&type=chunk) [Note 14. Liquidity and Capital Requirements](index=39&type=section&id=Note%2014.%20Liquidity%20and%20Capital%20Requirements) Finance of America Reverse LLC (FAR) was in compliance with all Ginnie Mae minimum net worth, liquidity, capitalization, and insurance requirements as of June 30, 2025. FAR's actual net worth was $691.2 million against a required $185.5 million, and actual cash and cash equivalents were $44.3 million against a required $37.1 million. A waiver was obtained for the minimum outstanding capital requirements due to accounting treatment of HECM loans - FAR is subject to minimum **net worth, liquidity, and leverage requirements**, as well as minimum insurance coverage established by Ginnie Mae[105](index=105&type=chunk)[106](index=106&type=chunk) FAR Ginnie Mae Compliance (as of June 30, 2025, in millions) | Requirement | Minimum | Actual | | :-------------------- | :------ | :----- | | Net Worth | $185.5 | $691.2 | | Liquidity | $37.1 | $44.3 | - FAR obtained a waiver for the minimum outstanding capital requirements from Ginnie Mae due to the accounting treatment of **HECM loans as secured borrowings**[108](index=108&type=chunk) [Note 15. Related Party Transactions](index=40&type=section&id=Note%2015.%20Related%20Party%20Transactions) The company had $85.0 million outstanding on Working Capital Promissory Notes with BTO Urban Holdings L.L.C. and Libman Family Holdings, LLC (LFH) as of June 30, 2025, which were repaid and terminated subsequent to the quarter end. Additionally, $77.3 million of Secured Notes were due to LFH as of June 30, 2025. Interest paid on these related party notes totaled $5.5 million for Q2 2025 - Working Capital Promissory Notes with BTO Urban Holdings L.L.C. and LFH had **$85.0 million** outstanding as of June 30, 2025, and were **repaid and terminated** subsequent to the quarter end[112](index=112&type=chunk)[113](index=113&type=chunk) - The Company had **$77.3 million** of Secured Notes due to LFH as of June 30, 2025[115](index=115&type=chunk) Interest Paid on Related Party Notes (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Working Capital Promissory Notes interest | $ 2,100 | $ 1,600 | $ 4,500 | $ 2,800 | | Secured Notes / 2025 Unsecured Notes interest | 3,400 | 3,000 | 3,400 | 3,000 | | **Total Interest Paid** | **$ 5,500** | **$ 4,600** | **$ 7,900** | **$ 5,800** | [Note 16. Earnings (Loss) Per Share](index=41&type=section&id=Note%2016.%20Earnings%20(Loss)%20Per%20Share) Basic earnings per share from continuing operations for Q2 2025 was $3.16, a significant improvement from a loss of $0.20 in Q2 2024. Diluted EPS from continuing operations also improved to $2.13 from a loss of $0.29. The calculations include adjustments for noncontrolling interest and assumed exchanges of Class A LLC Units and Exchangeable Secured Notes Basic and Diluted Earnings (Loss) Per Share (EPS) (in thousands, except share data) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Basic earnings (loss) per share from continuing operations | $ 3.16 | $ (0.20) | $ 6.33 | $ (0.78) | | Basic earnings (loss) per share | $ 3.16 | $ (0.21) | $ 6.14 | $ (0.99) | | Diluted earnings (loss) per share from continuing operations | $ 2.13 | $ (0.29) | $ 4.69 | $ (0.88) | | Diluted earnings (loss) per share | $ 2.13 | $ (0.30) | $ 4.56 | $ (1.06) | - Basic EPS from continuing operations for Q2 2025 was **$3.16**, a substantial increase from a loss of **$0.20** in Q2 2024[116](index=116&type=chunk) - Diluted weighted average shares outstanding for Q2 2025 were **30,137,247**, up from **23,084,189** in Q2 2024, reflecting the effect of dilutive securities[118](index=118&type=chunk) [Note 17. Subsequent Events](index=43&type=section&id=Note%2017.%20Subsequent%20Events) Subsequent to June 30, 2025, the company entered into a Repurchase Agreement on August 4, 2025, to buy back all of Blackstone Investor's equity stake for $80.3 million, with the TRA terminated. Concurrently, $40.0 million in new unsecured convertible promissory notes were issued to institutional investors, and amendments were made to the Senior Secured Notes and Exchangeable Secured Notes to provide additional collateral and adjust maturity terms - On **August 4, 2025**, the Company entered into a Repurchase Agreement to purchase all of Blackstone Investor's equity stake for **$80.3 million**, and the TRA will be terminated[123](index=123&type=chunk) - The Company issued **$40.0 million** of new unsecured convertible promissory notes to certain existing institutional investors, maturing on **August 4, 2028**, with a **0% coupon rate**[125](index=125&type=chunk) - Amendments were made to the Senior Secured Notes and Exchangeable Secured Notes, including providing liens on additional collateral and adjusting the maturity of **$60 million** of Senior Secured Notes to **November 30, 2026**[126](index=126&type=chunk)[127](index=127&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and key business trends, including an overview of its strategy and segment performance [Overview](index=45&type=section&id=Overview) Finance of America Companies Inc. is a financial services holding company focused on home equity-based financing solutions for retirement, primarily through its subsidiary Finance of America Reverse LLC (FAR), with a strategy emphasizing core business growth, multi-channel distribution, and efficient loan monetization - FOA is a financial services holding company specializing in home equity-based financing solutions for modern retirement, with **capital markets and portfolio management capabilities**[131](index=131&type=chunk) - The company's strategy focuses on growing its core retirement solutions business, utilizing flexible technology platforms for efficient distribution, and programmatically monetizing loans through sale or securitization while retaining **future performance-based participation**[134](index=134&type=chunk) - Recent initiatives include streamlining marketing and originations, unifying under the **'Finance of America' brand**, and launching a **digital borrower experience** for non-agency second lien reverse mortgage loans[135](index=135&type=chunk) [Business Trends and Conditions](index=46&type=section&id=Business%20Trends%20and%20Conditions) Key factors influencing the company's results include prevailing interest rates, housing market trends, demographic shifts, and investor yield requirements, with higher interest rates generally leading to lower mortgage transaction volumes and increased competition - Key factors impacting revenues include **prevailing interest rates, housing market trends, demographic and housing stock trends, and investor yield requirements**[137](index=137&type=chunk) - Higher interest rates generally lead to **lower mortgage transaction volumes, increased competition, and lower profit margins**[139](index=139&type=chunk) - The company is actively monitoring economic impacts from **Federal Reserve policies and tariffs**, which may cause additional volatility and adversely affect future results[140](index=140&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) The company's net income before income taxes from continuing operations significantly improved to $82.0 million for Q2 2025, from a loss of $3.8 million in Q2 2024, primarily driven by increased net origination gains and fair value changes Consolidated Operating Results from Continuing Operations (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net portfolio interest income | $ 59,464 | $ 65,473 | $ 129,899 | $ 135,648 | | Net other income (expense) | 117,912 | 13,566 | 213,172 | 18,073 | | **Total revenues** | **177,376** | **79,039** | **343,071** | **153,721** | | Total expenses | 89,060 | 85,047 | 175,429 | 176,362 | | NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | $ 81,955 | $ (3,768) | $ 163,648 | $ (19,548) | - Net income (loss) from continuing operations before income taxes improved by **$85.7 million** for the three months ended June 30, 2025, compared to the prior year[147](index=147&type=chunk) - This improvement was primarily driven by a **$15.8 million** increase in net origination gains and an **$83.7 million** increase in fair value changes from market inputs or model assumptions[147](index=147&type=chunk) [Net interest income](index=48&type=section&id=Net%20interest%20income) Net portfolio interest income decreased by $6.0 million for Q2 2025 compared to Q2 2024, primarily due to higher cost of funds within the securitized financing portfolio, partially offset by gains on debt extinguishment. Non-funding interest expense, net, increased by $6.0 million, leading to an overall decrease in net interest income Net Interest Income Components (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Interest income on mortgage loans | $ 478,321 | $ 474,251 | $ 955,923 | $ 934,285 | | Total portfolio interest income | 481,800 | 478,091 | 962,402 | 942,070 | | Interest expense on HMBS and nonrecourse obligations | (400,468) | (393,504) | (793,371) | (767,240) | | Total portfolio interest expense | (422,336) | (412,618) | (832,503) | (806,422) | | Net portfolio interest income | 59,464 | 65,473 | 129,899 | 135,648 | | Non-funding interest expense, net | (15,223) | (9,268) | (30,135) | (17,420) | | **Net interest income** | **$ 44,241** | **$ 56,205** | **$ 99,764** | **$ 118,228** | - Net portfolio interest income decreased by **$6.0 million** for the three months ended June 30, 2025, compared to the 2024 period, due to higher cost of funds[147](index=147&type=chunk) - Non-funding interest expense, net, increased by **$6.0 million** in Q2 2025, primarily due to discount amortization expense from senior notes exchange and increased cost of funds on working capital promissory notes[147](index=147&type=chunk) [Our Segments](index=50&type=section&id=Our%20Segments) The company's two reportable segments, Retirement Solutions and Portfolio Management, both showed improved profitability, with Retirement Solutions seeing a 32.2% revenue increase and Portfolio Management's revenues surging by 216% in Q2 2025 - The Retirement Solutions segment conducts all loan origination activity, generating revenue from **fees and net origination gains**[149](index=149&type=chunk) - The Portfolio Management segment provides product development, securitization, sales, risk management, and asset management, generating revenue from **net interest income and fair value changes on portfolio assets**[150](index=150&type=chunk)[152](index=152&type=chunk) - Corporate and Other consists of corporate services groups, with **enterprise-focused expenses** kept unallocated[170](index=170&type=chunk) [Retirement Solutions Segment](index=50&type=section&id=Retirement%20Solutions%20Segment) The Retirement Solutions segment's total revenues increased by 32.2% to $62.3 million in Q2 2025, driven by a 39.2% increase in net origination gains due to higher reverse mortgage loan origination volumes ($602.3 million, up 34.9%) and improved margins (9.31%). Total expenses increased by 6.4% due to higher variable compensation and marketing, partially offset by cost-cutting in general and administrative expenses Retirement Solutions Segment Results (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net origination gains | $ 56,058 | $ 40,260 | $ 102,096 | $ 79,917 | | Fee income | 6,289 | 6,894 | 11,972 | 12,946 | | **Total revenues** | **62,347** | **47,154** | **114,068** | **92,863** | | Total expenses | 51,974 | 48,835 | 100,436 | 98,245 | | NET INCOME (LOSS) BEFORE INCOME TAXES | $ 10,373 | $ (1,681) | $ 13,632 | $ (5,556) | - Reverse mortgage loan origination volume increased by **34.9%** to **$602.3 million** for Q2 2025, compared to **$446.6 million** in Q2 2024[157](index=157&type=chunk) - Weighted average margin on reverse mortgage loan production increased to **9.31%** in Q2 2025 from **9.02%** in Q2 2024[157](index=157&type=chunk) [Portfolio Management Segment](index=53&type=section&id=Portfolio%20Management%20Segment) The Portfolio Management segment's total revenues increased by $89.1 million (216%) to $130.4 million in Q2 2025, primarily due to an $83.7 million increase in fair value changes from market inputs or model assumptions. Net income before taxes for the segment was $108.1 million in Q2 2025, up from $21.5 million in Q2 2024. Total expenses increased by 12.7% due to higher securitization expenses, partially offset by reduced general and administrative costs Portfolio Management Segment Results (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net portfolio interest income | $ 59,464 | $ 65,473 | $ 129,899 | $ 135,648 | | Net fair value changes on loans and related obligations | 70,338 | (25,522) | 128,126 | (58,842) | | **Total revenues** | **130,375** | **41,276** | **259,384** | **78,524** | | Total expenses | 22,271 | 19,762 | 46,002 | 42,515 | | NET INCOME BEFORE INCOME TAXES | $ 108,104 | $ 21,514 | $ 213,382 | $ 36,009 | - Fair value changes from market inputs or model assumptions increased by **$83.7 million** in Q2 2025, primarily due to **lower market interest rates and yield volatility**[168](index=168&type=chunk) - Loan portfolio related expenses increased by **$3.6 million** in Q2 2025 due to increased securitization expenses[167](index=167&type=chunk) [Corporate and Other](index=57&type=section&id=Corporate%20and%20Other) The Corporate and Other segment reported a net loss before income taxes of $36.5 million in Q2 2025, worsening from a loss of $23.6 million in Q2 2024. This was primarily due to a $6.0 million increase in non-funding interest expense, net, and a $8.6 million change in other, net, partially offset by a $1.6 million decrease in total expenses driven by cost-cutting initiatives Corporate and Other Results (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Non-funding interest expense, net | $ (15,223) | $ (9,268) | $ (30,135) | $ (17,420) | | **Total revenues** | **(15,223)** | **(9,268)** | **(30,135)** | **(17,420)** | | Total expenses | 14,938 | 16,573 | 29,237 | 35,848 | | Other, net | (6,361) | 2,240 | (3,994) | 3,867 | | NET LOSS BEFORE INCOME TAXES | $ (36,522) | $ (23,601) | $ (63,366) | $ (50,001) | - Non-funding interest expense, net, increased by **$6.0 million** in Q2 2025, primarily due to discount amortization from senior notes exchange and increased cost of funds on working capital promissory notes[174](index=174&type=chunk) - Total expenses decreased by **$1.6 million (9.9%)** in Q2 2025, mainly due to a **$1.4 million** decrease in general and administrative expenses from cost-cutting initiatives[174](index=174&type=chunk) [Non-GAAP Financial Measures](index=59&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP financial measures, including adjusted net income (loss), adjusted EBITDA, adjusted earnings (loss) per share, and tangible equity, to provide additional insight into its financial performance and capital strength, with definitions revised in Q3 2024 - Management uses non-GAAP measures like **adjusted net income (loss), adjusted EBITDA, adjusted EPS, and tangible equity** to evaluate performance and capital strength[177](index=177&type=chunk)[178](index=178&type=chunk) - These non-GAAP measures exclude items such as **fair value changes from market inputs, amortization of intangibles, equity-based compensation, and certain non-recurring costs**[183](index=183&type=chunk)[186](index=186&type=chunk) - The definitions of adjusted net income (loss), adjusted EBITDA, and adjusted EPS were revised in **Q3 2024** to adjust for all equity-based compensation[181](index=181&type=chunk) [Reconciliation to GAAP](index=62&type=section&id=Reconciliation%20to%20GAAP) For Q2 2025, adjusted net income was $14.0 million, a significant improvement from $0.07 million in Q2 2024, with adjusted EBITDA at $30.3 million and adjusted earnings per share at $0.55, while tangible equity increased to $275.2 million Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Adjusted EBITDA (in thousands) | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net income (loss) from continuing operations | $ 79,823 | $ (4,921) | $ 159,573 | $ (20,701) | | Adjusted net income (loss) | 14,036 | 73 | 26,966 | (6,634) | | Adjusted EBITDA | $ 30,337 | $ 10,276 | $ 59,304 | $ 10,285 | | Adjusted earnings (loss) per share | $ 0.55 | $ — | $ 1.07 | $ (0.29) | | Tangible equity | $ 275,216 | $ 99,322 | $ 275,216 | $ 99,322 | - Adjusted net income for Q2 2025 was **$14.0 million**, a significant improvement from **$0.07 million** in Q2 2024[194](index=194&type=chunk) - Tangible equity increased by **$175.9 million** from December 31, 2024, to June 30, 2025, reaching **$275.2 million**[194](index=194&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily sourced from loan sales/securitizations, payments on participating interests, and advances on financing facilities. Cash flows from operating activities improved by $47.7 million for the six months ended June 30, 2025. Total debt obligations were $29.5 billion as of June 30, 2025, including $18.6 billion in HMBS related obligations and $9.4 billion in nonrecourse debt. The company was in compliance with all financial covenants and Ginnie Mae requirements - Primary liquidity sources include payments from **loan sales/securitizations, proceeds from participating interests, and advances on warehouse facilities and other borrowings**[205](index=205&type=chunk) - Cash flows from operating activities improved by **$47.7 million** for the six months ended June 30, 2025, compared to the prior year[209](index=209&type=chunk) - Total debt obligations were **$29.5 billion** as of June 30, 2025, comprising **$18.6 billion** in HMBS related obligations and **$9.4 billion** in nonrecourse debt[217](index=217&type=chunk)[220](index=220&type=chunk)[222](index=222&type=chunk) [Summary of Certain Indebtedness](index=66&type=section&id=Summary%20of%20Certain%20Indebtedness) As of June 30, 2025, the company had $18.6 billion in HMBS related obligations and $9.4 billion in nonrecourse debt, both carried at fair value. Other financing lines of credit totaled $1.08 billion, including $572.5 million in reverse mortgage warehouse facilities and $504.0 million in other secured lines. Notes payable, net, were $383.9 million, including Senior Secured Notes and Exchangeable Secured Notes - HMBS related obligations were **$18.6 billion**, with HECM loans pledged as collateral of **$18.9 billion**, both at fair value, as of June 30, 2025[220](index=220&type=chunk) - Nonrecourse debt-related borrowings were **$9.4 billion**, with loans pledged as collateral of **$10.0 billion**, both at fair value, as of June 30, 2025[222](index=222&type=chunk) Contractual Obligations as of June 30, 2025 (in thousands) | | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | | :-------------------------- | :---------- | :--------------- | :---------- | :---------- | :---------------- | | Nonrecourse debt | $ 9,738,998 | $ 3,216,018 | $ 4,194,520 | $ 1,100,446 | $ 1,228,014 | | Warehouse lines of credit | 572,470 | 261,184 | 311,286 | — | — | | Other secured lines of credit | 503,964 | 25,996 | 77,460 | — | 400,508 | | Notes payable | 434,955 | 137,408 | 150,754 | 146,793 | — | | Operating leases | 34,718 | 5,381 | 9,401 | 6,753 | 13,183 | | **Total** | **$ 11,285,105** | **$ 3,645,987** | **$ 4,743,421** | **$ 1,253,992** | **$ 1,641,705** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate risk, and provides a sensitivity analysis of its financial instruments to hypothetical changes in interest rates [Interest Rate Risk](index=71&type=section&id=Interest%20Rate%20Risk) The company's primary market risk is interest rate risk, affecting both its Retirement Solutions and Portfolio Management segments, where an increase in rates could negatively impact loan origination, increase costs, and reduce asset fair value, while a decrease may increase prepayment speeds - The principal market risk is **interest rate risk**, primarily from changes in long-term U.S. Treasury rates and mortgage interest rates[249](index=249&type=chunk) - An increase in interest rates could adversely affect **loan origination volume**, increase **delinquency/default rates**, raise **servicing costs and interest expense**, and reduce the **fair value of long-term assets**[250](index=250&type=chunk)[256](index=256&type=chunk) - A decrease in interest rates may increase **prepayment speeds** of long-term assets, potentially leading to a reduction in their fair value[256](index=256&type=chunk) [Sensitivity Analysis](index=71&type=section&id=Sensitivity%20Analysis) A sensitivity analysis indicates that a hypothetical 25 basis point decrease in interest rates would increase the fair value of total assets by $177.16 million and total liabilities by $89.41 million. Conversely, a 25 basis point increase would decrease total assets by $173.71 million and total liabilities by $88.33 million. These analyses are hypothetical and have limitations, as changes in one factor may affect others non-linearly - The company uses **sensitivity analysis** to assess market risk from hypothetical changes in interest rates, estimating fair value of mortgage loans and related liabilities using a **DCF model**[252](index=252&type=chunk)[253](index=253&type=chunk) Estimated Change in Fair Value (in thousands) as of June 30, 2025 | | Down 25 bps | Up 25 bps | | :-------------------------------------------------------------------------------- | :---------- | :-------- | | Increase (decrease) in assets: | | | | Loans held for investment, subject to HMBS related obligations | $ 30,375 | $ (30,494) | | Loans held for investment, subject to nonrecourse debt | 141,113 | (137,641) | | Loans held for investment | 5,676 | (5,571) | | **Total assets** | **$ 177,164** | **$ (173,706)** | | Increase (decrease) in liabilities: | | | | HMBS related obligations | $ 26,109 | $ (26,074) | | Nonrecourse debt | 63,304 | (62,258) | | **Total liabilities** | **$ 89,413** | **$ (88,332)** | - The sensitivity analysis has limitations, as the relationship between assumption changes and fair value may not be linear, and changes in one factor can impact others[255](index=255&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls and internal control over financial reporting, including the identification and remediation plan for a material weakness [Evaluation of Disclosure Controls and Procedures](index=72&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of June 30, 2025, the company's disclosure controls and procedures were deemed not effective due to a material weakness in internal control over financial reporting. Disclosure controls are designed to ensure timely and accurate reporting but cannot prevent all errors or fraud - As of **June 30, 2025**, the company's disclosure controls and procedures were **not effective** due to a material weakness in internal control over financial reporting[260](index=260&type=chunk) - Disclosure controls and procedures, no matter how well conceived, can only provide **reasonable, not absolute, assurance** that objectives are met[259](index=259&type=chunk) [Material Weakness in Internal Control Over Financial Reporting](index=72&type=section&id=Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) A material weakness in internal control over financial reporting continued to exist as of June 30, 2025. This weakness stems from errors identified in May 2025 regarding the classification and presentation of nonrecourse securitization transactions in the Consolidated Statements of Cash Flows. Despite this, management believes the interim financial statements are fairly presented in conformity with GAAP - A **material weakness** in internal control over financial reporting existed as of December 31, 2024, and continued as of June 30, 2025[262](index=262&type=chunk)[263](index=263&type=chunk) - The material weakness was due to errors in the **classification and presentation of nonrecourse securitization transactions** in the Consolidated Statements of Cash Flows[262](index=262&type=chunk)[263](index=263&type=chunk) - Notwithstanding the material weakness, management believes the interim unaudited condensed consolidated financial statements are **fairly presented in conformity with GAAP**[264](index=264&type=chunk) [Plan of Remediation of Material Weakness in Internal Control Over Financial Reporting](index=73&type=section&id=Plan%20of%20Remediation%20of%20Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) The company is actively remediating the material weakness by enhancing control documentation for cash flow statement presentation related to nonrecourse debt securitization and providing additional training to accounting and financial reporting personnel. Management believes substantial progress has been made, but a period of sustained operating effectiveness is needed to demonstrate full remediation - The remediation plan includes enhancing control documentation for **cash flow statement presentation** related to nonrecourse debt securitization transactions[265](index=265&type=chunk) - Additional training for accounting and financial reporting personnel on **ASC 230, Cash Flows**, is part of the remediation efforts[265](index=265&type=chunk) - Management believes substantial progress has been made, but a period of **continued operating effectiveness** is required to demonstrate remediation[265](index=265&type=chunk) [Changes in Internal Control Over Financial Reporting](index=73&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) Other than the ongoing remediation efforts for the identified material weakness, there have been no other changes in the company's internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected or are reasonably likely to materially affect it - No other changes in internal control over financial reporting materially affected or are reasonably likely to materially affect the company's controls during **Q2 2025**, apart from the remediation efforts[266](index=266&type=chunk) [Part II - Other Information](index=74&type=section&id=Part%20II%20-%20Other%20Information) This section covers additional disclosures not included in the financial statements, such as legal proceedings, risk factors, equity sales,

Financial Data and Key Metrics Changes - The company funded $602 million in volume, representing a 35% increase from 2024 and a 7% increase from the prior quarter, marking the fifth consecutive quarter of volume growth [6][16] - GAAP net income was reported at $80 million or $3.16 basic earnings per share, compared to a loss of $5 million in the same period last year [16] - Adjusted net income was $14 million or $0.55 in adjusted earnings per share, with adjusted EBITDA of $30 million [6][17] - Year-to-date adjusted net income totals $27 million compared to a loss of $7 million in the first half of last year [7] Business Line Data and Key Metrics Changes - Q2 originations topped $600 million, with submissions rising nearly 11% overall and HomeSafe second submissions growing by almost 23% [10] - Wholesale volume grew nearly 55% in Q2 relative to 2024 [10] - The average market share for HMBS issuance in Q2 was 28%, reflecting a 4% improvement over the average of the prior three quarters [11] Market Data and Key Metrics Changes - Subordinate lien loans for senior borrowers grew 20% year over year, reaching $49 billion in volume [14] - The company increased its HMBS issuance market share in June to over 29%, the highest monthly share since January 2024 [11] Company Strategy and Development Direction - The company aims to drive greater awareness and education around accessing home equity through retirement, focusing on expanding scalable digital tools and enhancing customer experience [8][9] - The company is committed to becoming the most trusted brand for homeowners entering the next chapter of life, building a smarter, scalable, and service-led retirement solutions platform [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term opportunity for reverse mortgages, anticipating continued market leadership as more homeowners seek to utilize housing wealth for retirement [10] - The company reaffirmed its full-year guidance of $2.4 billion to $2.7 billion in originations and $2.6 to $3 in adjusted EPS [20] Other Important Information - The company completed its first-ever $1 billion plus HomeSafe securitization in July, highlighting strong investor demand for its assets [8] - The company paid off its higher-cost working capital facility and entered into an agreement with Blackstone to acquire the remaining equity stake in Finance of America [21] Q&A Session Summary Question: Clarity on reiterated guidance and impact of working capital line pay-off - Management indicated that the guidance was on track to meet targets even without the working capital line pay-off, but the transaction will reduce annualized interest expense by about $10 million [25][26] Question: Sources and uses to pay off the working capital line and fund buyback - Management confirmed that the convertible deal closed and the working capital was paid off, with a series of transactions planned to fund both the equity repurchase and bondholder payments [28] Question: Long-term capital structure and leverage levels - Management discussed the importance of retiring existing debt and indicated that the remaining convertible note will likely convert to equity, with future thoughts on capital structure to be considered after achieving certain milestones [29][30]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides an overview of the company's strong Q2 2025 performance, highlighting significant growth and strategic initiatives [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Finance of America reported strong Q2 2025 results, achieving its fifth consecutive quarter of growth with significant improvements in profitability and funded volume. Key financial metrics like basic EPS, adjusted EPS, and adjusted net income showed substantial year-over-year growth, reflecting enhanced operational performance and strategic initiatives - Finance of America delivered its fifth consecutive quarter of growth, funding **$602 million** in loans[3](index=3&type=chunk) Key Financial Highlights (Q2 2025) | Metric | Q2 2025 | Change vs Q2 2024 | | :-------------------------------- | :------ | :------------------ | | Basic Earnings Per Share (EPS) | $3.16 | N/A (was -$0.20) | | Adjusted Earnings Per Share (EPS) | $0.55 | N/A (was $0.00) | | Net Income from Continuing Operations | $80 million | N/A (was -$5 million) | | Adjusted Net Income | $14 million | N/A (was $0 million) | | Adjusted EBITDA | $30 million | +200% | | Funded Volume | $602 million | +35% | | Total Equity (as of June 30, 2025) | $473 million | N/A | | Adjusted Net Income (YTD) | $27 million | N/A (was -$7 million loss) | - The company entered into an agreement to repurchase Blackstone's entire equity stake, aiming to reduce interest expense and enhance financial flexibility[1](index=1&type=chunk)[4](index=4&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Graham A. Fleming highlighted the company's consistent execution, rising profitability, and the increasing relevance of home equity solutions for retirement. He noted encouraging signals from new brand campaigns and digital initiatives, expecting continued market leadership and long-term value delivery - CEO Graham A. Fleming emphasized consistent execution, rising profitability, and the growing relevance of home equity solutions for retirement[3](index=3&type=chunk) - New brand campaigns and digital initiatives are expanding reach and deepening engagement with the next generation of borrowers[4](index=4&type=chunk) - The company anticipates continued market leadership and long-term value delivery as demand builds among a rapidly growing demographic[4](index=4&type=chunk) [Financial Performance Overview](index=2&type=section&id=Financial%20Performance%20Overview) This section presents a comprehensive overview of the company's financial results for Q2 2025 and key balance sheet metrics [Second Quarter Financial Summary of Continuing Operations](index=2&type=section&id=Second%20Quarter%20Financial%20Summary%20of%20Continuing%20Operations) The company demonstrated robust financial growth in Q2 2025, with significant increases in funded volume, total revenues, and net income from continuing operations compared to both the previous quarter and the prior year. Adjusted net income and EBITDA also saw substantial improvements, reflecting strong operational leverage Second Quarter Financial Summary of Continuing Operations (in millions) | Metric | Q2'25 | Q1'25 | Variance Q2'25 vs Q1'25 (%) | Q2'24 | Variance Q2'25 vs Q2'24 (%) | YTD 2025 | YTD 2024 | Variance YTD 2025 vs YTD 2024 (%) | | :---------------------------------- | :---- | :---- | :-------------------------- | :---- | :-------------------------- | :------- | :------- | :-------------------------------- | | Funded volume | $602 | $561 | 7 % | $447 | 35 % | $1,163 | $871 | 34 % | | Total revenues | 177 | 166 | 7 % | 79 | 124 % | 343 | 154 | 123 % | | Total expenses and other, net | 95 | 84 | 13 % | 83 | 14 % | 179 | 173 | 3 % | | Pre-tax income (loss) from continuing operations | 82 | 82 | — % | (4) | 2,150 % | 164 | (20) | 920 % | | Net income (loss) from continuing operations | 80 | 80 | — % | (5) | 1,700 % | 160 | (21) | 862 % | | Adjusted net income (loss) | 14 | 13 | 8 % | — | N/A | 27 | (7) | 486 % | | Adjusted EBITDA | 30 | 29 | 3 % | 10 | 200 % | 59 | 10 | 490 % | | Basic earnings (loss) per share | $3.16 | $3.17 | — % | $(0.20) | 1,680 % | $6.33 | $(0.78) | 912 % | | Diluted earnings (loss) per share | $2.13 | $2.56 | (17)% | $(0.29) | 834 % | $4.69 | $(0.88) | 633 % | | Adjusted earnings (loss) per share | $0.55 | $0.52 | 6 % | — | N/A | $1.07 | $(0.29) | 469 % | [Balance Sheet Highlights](index=2&type=section&id=Balance%20Sheet%20Highlights) The balance sheet as of June 30, 2025, shows a healthy increase in total equity and tangible equity, driven by improved operational performance and positive fair value adjustments. Total assets also grew modestly quarter-over-quarter Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | March 31, 2025 | Variance Q2'25 vs Q1'25 (%) | | :------------------------------------------ | :------------ | :------------- | :-------------------------- | | Cash and cash equivalents | $46 | $52 | (12)% | | Securitized loans held for investment | 28,747 | 28,439 | 1 % | | Total assets | 30,147 | 29,689 | 2 % | | Total liabilities | 29,674 | 29,294 | 1 % | | Total equity | 473 | 395 | 20 % | - Total equity increased by **20% to $473 million** as of June 30, 2025, from $395 million as of March 31, 2025[4](index=4&type=chunk)[8](index=8&type=chunk) - Tangible equity significantly improved by **47% to $275 million** as of June 30, 2025, from $187 million as of March 31, 2025[8](index=8&type=chunk) [Segment Results](index=3&type=section&id=Segment%20Results) This section provides a detailed analysis of the financial performance for the Retirement Solutions and Portfolio Management segments [Retirement Solutions](index=3&type=section&id=Retirement%20Solutions) The Retirement Solutions segment, primarily generating revenue from reverse mortgage loan originations, experienced substantial growth in Q2 2025. Increased volumes and improved margins led to significant year-over-year and quarter-over-quarter increases in pre-tax income and adjusted net income Retirement Solutions Segment Performance (in millions) | Metric | Q2'25 | Q1'25 | Variance Q2'25 vs Q1'25 (%) | Q2'24 | Variance Q2'25 vs Q2'24 (%) | YTD 2025 | YTD 2024 | Variance YTD 2025 vs YTD 2024 (%) | | :-------------------- | :---- | :---- | :-------------------------- | :---- | :-------------------------- | :------- | :------- | :-------------------------------- | | Funded volume | $602 | $561 | 7 % | $447 | 35 % | $1,163 | $871 | 34 % | | Total revenue | 62 | 52 | 19 % | 47 | 32 % | 114 | 93 | 23 % | | Pre-tax income (loss) | 10 | 3 | 233 % | (2) | 600 % | 14 | (6) | 333 % | | Adjusted net income | 15 | 9 | 67 % | 7 | 114 % | 24 | 11 | 118 % | - The segment recognized pre-tax income of **$10 million** and adjusted net income of **$15 million** in Q2 2025, driven by increased volumes and improved margins[10](index=10&type=chunk) - Year-to-date pre-tax income improved by **333% to $14 million**, compared to a **$6 million loss** in the first half of 2024, primarily due to a **34% increase** in funded volumes[13](index=13&type=chunk) [Portfolio Management](index=3&type=section&id=Portfolio%20Management) The Portfolio Management segment, which generates revenue from net interest income and fair value changes on portfolio assets, saw significant revenue and pre-tax income growth in Q2 2025. This was primarily due to positive fair value adjustments on retained interests in securitizations and increased accreted yield Portfolio Management Segment Performance (in millions) | Metric | Q2'25 | Q1'25 | Variance Q2'25 vs Q1'25 (%) | Q2'24 | Variance Q2'25 vs Q2'24 (%) | YTD 2025 | YTD 2024 | Variance YTD 2025 vs YTD 2024 (%) | | :---------------------------------- | :---- | :---- | :-------------------------- | :---- | :-------------------------- | :------- | :------- | :-------------------------------- | | Assets under management | $29,907 | $29,418 | 2 % | $27,655 | 8 % | $29,907 | $27,655 | 8 % | | Assets excluding HMBS and nonrecourse obligations | 1,838 | 1,664 | 10 % | 1,624 | 13 % | 1,838 | 1,624 | 13 % | | Total revenue | 130 | 129 | 1 % | 41 | 217 % | 259 | 79 | 228 % | | Pre-tax income | 108 | 105 | 3 % | 22 | 391 % | 213 | 36 | 492 % | | Adjusted net income | 16 | 20 | (20)% | 12 | 33 % | 37 | 17 | 118 % | - The segment's pre-tax income reached **$108 million** in Q2 2025, an improvement over both the prior quarter and Q2 2024, driven by positive fair value adjustments and increased accreted yield[14](index=14&type=chunk) - Year-to-date adjusted net income for the segment increased by **118% to $37 million**, up from **$17 million** in the same period of 2024[14](index=14&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) This section presents the complete condensed consolidated statements of financial condition and operations for the reported periods [Condensed Consolidated Statements of Financial Condition (Balance Sheet)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) The condensed consolidated statements of financial condition provide a detailed breakdown of the company's assets, liabilities, and equity as of June 30, 2025, and March 31, 2025, showing overall growth in total assets and a significant increase in total equity Condensed Consolidated Statements of Financial Condition (in thousands) | ASSETS | June 30, 2025 | March 31, 2025 | | :---------------------------------------------------------------- | :------------ | :------------- | | Cash and cash equivalents | $46,476 | $52,016 | | Restricted cash | 190,176 | 199,836 | | Loans held for investment, subject to HMBS related obligations, at fair value | 18,858,220 | 18,809,023 | | Loans held for investment, subject to nonrecourse debt, at fair value | 9,888,492 | 9,630,150 | | Loans held for investment, at fair value | 634,935 | 634,104 | | Intangible assets, net | 198,209 | 207,506 | | Other assets, net | 329,677 | 154,285 | | Assets of discontinued operations | 1,264 | 1,936 | | **TOTAL ASSETS** | **$30,147,449** | **$29,688,856** | | **LIABILITIES AND EQUITY** | | | | HMBS related obligations, at fair value | $18,643,094 | $18,590,357 | | Nonrecourse debt, at fair value | 9,426,194 | 9,163,399 | | Other financing lines of credit | 1,076,434 | 1,008,894 | | Notes payable, net | 383,941 | 379,159 | | Payables and other liabilities | 139,350 | 140,709 | | Liabilities of discontinued operations | 5,011 | 11,452 | | **TOTAL LIABILITIES** | **29,674,024** | **29,293,970** | | **EQUITY** | | | | Class A Common Stock | 1 | 1 | | Class B Common Stock | — | — | | Additional paid-in capital | 959,306 | 961,044 | | Accumulated deficit | (633,763) | (668,686) | | Accumulated other comprehensive loss | (283) | (285) | | Noncontrolling interest | 148,164 | 102,812 | | **TOTAL EQUITY** | **473,425** | **394,886** | | **TOTAL LIABILITIES AND EQUITY** | **$30,147,449** | **$29,688,856** | [Condensed Consolidated Statements of Operations (Income Statement)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations detail the company's revenues, expenses, and net income (loss) for Q2 2025, Q1 2025, Q2 2024, and year-to-date periods. The statements highlight significant improvements in net income from continuing operations and earnings per share compared to the prior year Condensed Consolidated Statements of Operations (in thousands, except share data) | Metric | Q2'25 | Q1'25 | Q2'24 | YTD 2025 | YTD 2024 | | :------------------------------------------------ | :------ | :------ | :------ | :------- | :------- | | NET PORTFOLIO INTEREST INCOME | $59,464 | $70,435 | $65,473 | $129,899 | $135,648 | | NET OTHER INCOME (EXPENSE) | 117,912 | 95,260 | 13,566 | 213,172 | 18,073 | | **TOTAL REVENUES** | **177,376** | **165,695** | **79,039** | **343,071** | **153,721** | | TOTAL EXPENSES | 89,060 | 86,369 | 85,047 | 175,429 | 176,362 | | NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 81,955 | 81,693 | (3,768) | 163,648 | (19,548) | | Provision for income taxes from continuing operations | 2,132 | 1,943 | 1,153 | 4,075 | 1,153 | | **NET INCOME (LOSS) FROM CONTINUING OPERATIONS** | **79,823** | **79,750** | **(4,921)** | **159,573** | **(20,701)** | | NET LOSS FROM DISCONTINUED OPERATIONS | — | (4,750) | (203) | (4,750) | (4,727) | | **NET INCOME (LOSS)** | **79,823** | **75,000** | **(5,124)** | **154,823** | **(25,428)** | | Noncontrolling interest | 44,900 | 44,791 | (3,035) | 89,691 | (15,801) | | **NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST** | **$34,923** | **$30,209** | **$(2,089)** | **$65,132** | **$(9,627)** | | **EARNINGS (LOSS) PER SHARE** | | | | | | | Basic earnings (loss) per share from continuing operations | $3.16 | $3.17 | $(0.20) | $6.33 | $(0.78) | | Basic earnings (loss) per share | $3.16 | $2.97 | $(0.21) | $6.14 | $(0.99) | | Diluted earnings (loss) per share from continuing operations | $2.13 | $2.56 | $(0.29) | $4.69 | $(0.88) | | Diluted earnings (loss) per share | $2.13 | $2.43 | $(0.30) | $4.56 | $(1.06) | [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section details the company's non-GAAP financial measures, including their definitions and reconciliations to comparable GAAP metrics - Management uses non-GAAP measures like adjusted net income (loss), adjusted EBITDA, adjusted EPS, and tangible equity to evaluate performance and enhance investors' understanding of financial performance, though they are not substitutes for GAAP measures[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) [Reconciliation to GAAP](index=7&type=section&id=Reconciliation%20to%20GAAP) The company provides reconciliations of non-GAAP financial measures such as adjusted net income (loss), adjusted EBITDA, adjusted earnings (loss) per share, and tangible equity to their most directly comparable GAAP measures. These adjustments aim to offer a clearer view of core operational performance by excluding certain non-recurring or non-cash items Reconciliation of Net Income (Loss) from Continuing Operations to Adjusted Net Income (Loss) and Adjusted EBITDA (in millions) | Metric | Q2'25 | Q1'25 | Q2'24 | YTD 2025 | YTD 2024 | | :---------------------------------------------------------------- | :---- | :---- | :---- | :------- | :------- | | Net income (loss) from continuing operations | $80 | $80 | $(5) | $160 | $(21) | | Add back: Provision for income taxes | (2) | (2) | (1) | (4) | (1) | | Net income (loss) from continuing operations before taxes | 82 | 82 | (4) | 164 | (20) | | Adjustments for: | | | | | | | Changes in fair value | (76) | (76) | (8) | (151) | (18) | | Amortization or impairment of intangibles and impairment of other assets | 9 | 9 | 9 | 19 | 20 | | Equity-based compensation | 3 | 2 | 1 | 5 | 6 | | Certain non-recurring costs | 1 | — | 2 | 1 | 3 | | Adjusted net income (loss) before taxes | 19 | 18 | — | 37 | (9) | | Benefit (provision) for income taxes | (5) | (5) | — | (10) | 2 | | **Adjusted net income (loss)** | **14** | **13** | **—** | **27** | **(7)** | | Provision (benefit) for income taxes | 5 | 5 | — | 10 | (2) | | Depreciation | — | — | — | 1 | 1 | | Interest expense on non-funding debt | 11 | 11 | 10 | 22 | 18 | | **Adjusted EBITDA** | **$30** | **$29** | **$10** | **$59** | **$10** | GAAP and Non-GAAP Per Share Measures (in millions except shares and $ per share) | Metric | Q2'25 | Q1'25 | Q2'24 | YTD 2025 | YTD 2024 | | :---------------------------------------------------------------- | :---- | :---- | :---- | :------- | :------- | | **GAAP PER SHARE MEASURES** | | | | | | | Net income (loss) from continuing operations attributable to controlling interest | $35 | $32 | $(2) | $67 | $(8) | | Weighted average outstanding share count | 11,041,337 | 10,177,266 | 9,898,182 | 10,611,689 | 9,773,370 | | Basic earnings (loss) per share from continuing operations | $3.16 | $3.17 | $(0.20) | $6.33 | $(0.78) | | If-converted method net income (loss) from continuing operations | $64 | $77 | $(7) | $141 | $(20) | | Weighted average diluted share count | 30,137,247 | 30,167,024 | 23,084,189 | 30,152,054 | 23,013,742 | | Diluted earnings (loss) per share from continuing operations | $2.13 | $2.56 | $(0.29) | $4.69 | $(0.88) | | **NON-GAAP PER SHARE MEASURES** | | | | | | | Adjusted net income (loss) | $14 | $13 | $— | $27 | $(7) | | Exchangeable senior secured notes interest expense | 3 | 3 | — | 5 | — | | Total | $17 | $16 | $— | $32 | $(7) | | Weighted average share count | 30,137,247 | 30,167,024 | 23,084,189 | 30,152,054 | 23,013,742 | | Adjusted earnings (loss) per share | $0.55 | $0.52 | $— | $1.07 | $(0.29) | Tangible Equity Calculation (in millions) | Metric | June 30, 2025 | March 31, 2025 | | :---------------------- | :------------ | :------------- | | Total equity | $473 | $395 | | Less: Intangible assets, net | 198 | 208 | | **Tangible equity** | **$275** | **$187** | [Adjusted Net Income by Segment (Continuing Operations)](index=9&type=section&id=Adjusted%20Net%20Income%20by%20Segment) The adjusted net income by segment provides a granular view of profitability for Retirement Solutions, Portfolio Management, and Corporate & Other, after applying non-GAAP adjustments. This breakdown reveals the individual contributions and performance trends of each business unit over various periods [Three Months Ended June 30, 2025](index=9&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) This section presents the adjusted net income by segment for the second quarter of 2025 Adjusted Net Income by Segment (Q2 2025, in millions) | Metric | Retirement Solutions | Portfolio Management | Corporate & Other | FOA | | :---------------------------------------------------------------- | :------------------- | :------------------- | :---------------- | :-- | | Pre-tax income (loss) | $10 | $108 | $(37) | $82 | | Adjustments for: | | | | | | Changes in fair value | — | (86) | 11 | (76) | | Amortization or impairment of intangibles and impairment of other assets | 9 | — | — | 9 | | Equity-based compensation | — | — | 2 | 3 | | Certain non-recurring costs | — | — | 1 | 1 | | Adjusted net income (loss) before taxes | $20 | $22 | $(23) | $19 | | Provision (benefit) for income taxes | 5 | 6 | (6) | 5 | | **Adjusted net income (loss)** | **$15** | **$16** | **$(17)** | **$14** | | Exchangeable senior secured notes interest expense | — | — | 3 | 3 | | Total | $15 | $16 | $(14) | $17 | | Weighted average share count | 30,137,247 | 30,137,247 | 30,137,247 | 30,137,247 | | Adjusted earnings (loss) per share | $0.49 | $0.54 | $(0.47) | $0.55 | [Three Months Ended March 31, 2025](index=9&type=section&id=Three%20Months%20Ended%20March%2031%2C%202025) This section presents the adjusted net income by segment for the first quarter of 2025 Adjusted Net Income by Segment (Q1 2025, in millions) | Metric | Retirement Solutions | Portfolio Management | Corporate & Other | FOA | | :---------------------------------------------------------------- | :------------------- | :------------------- | :---------------- | :-- | | Pre-tax income (loss) | $3 | $105 | $(27) | $82 | | Adjustments for: | | | | | | Changes in fair value | — | (78) | 2 | (76) | | Amortization or impairment of intangibles and impairment of other assets | 9 | — | — | 9 | | Equity-based compensation | — | — | 2 | 2 | | Adjusted net income (loss) before taxes | $13 | $28 | $(23) | $18 | | Provision (benefit) for income taxes | 4 | 7 | (6) | 5 | | **Adjusted net income (loss)** | **$9** | **$20** | **$(17)** | **$13** | | Exchangeable senior secured notes interest expense | — | — | 3 | 3 | | Total | $9 | $20 | $(14) | $16 | | Weighted average share count | 30,167,024 | 30,167,024 | 30,167,024 | 30,167,024 | | Adjusted earnings (loss) per share | $0.31 | $0.68 | $(0.47) | $0.52 | [Three Months Ended June 30, 2024](index=10&type=section&id=Three%20Months%20Ended%20June%2030%2C%202024) This section presents the adjusted net income by segment for the second quarter of 2024 Adjusted Net Income by Segment (Q2 2024, in millions) | Metric | Retirement Solutions | Portfolio Management | Corporate & Other | FOA | | :---------------------------------------------------------------- | :------------------- | :------------------- | :---------------- | :-- | | Pre-tax income (loss) | $(2) | $22 | $(24) | $(4) | | Adjustments for: | | | | | | Changes in fair value | — | (6) | (2) | (8) | | Amortization or impairment of intangibles and impairment of other assets | 9 | — | — | 9 | | Equity-based compensation | — | — | 1 | 1 | | Certain non-recurring costs | 1 | — | 1 | 2 | | Adjusted net income (loss) before taxes | $9 | $16 | $(24) | $— | | Provision (benefit) for income taxes | 2 | 4 | (6) | — | | **Adjusted net income (loss)** | **$7** | **$12** | **$(18)** | **$—** | | Weighted average share count | 23,084,189 | 23,084,189 | 23,084,189 | 23,084,189 | | Adjusted earnings (loss) per share | $0.27 | $0.52 | $(0.77) | $— | [Six Months Ended June 30, 2025](index=10&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) This section presents the adjusted net income by segment for the first half of 2025 Adjusted Net Income by Segment (YTD 2025, in millions) | Metric | Retirement Solutions | Portfolio Management | Corporate & Other | FOA | | :---------------------------------------------------------------- | :------------------- | :------------------- | :---------------- | :-- | | Pre-tax income (loss) | $14 | $213 | $(63) | $164 | | Adjustments for: | | | | | | Changes in fair value | — | (164) | 13 | (151) | | Amortization or impairment of intangibles and impairment of other assets | 19 | — | — | 19 | | Equity-based compensation | — | — | 4 | 5 | | Certain non-recurring costs | — | — | 1 | 1 | | Adjusted net income (loss) before taxes | $33 | $50 | $(46) | $37 | | Provision (benefit) for income taxes | 9 | 13 | (12) | 10 | | **Adjusted net income (loss)** | **$24** | **$37** | **$(34)** | **$27** | | Exchangeable senior secured notes interest expense | — | — | 5 | 5 | | Total | $24 | $37 | $(29) | $32 | | Weighted average share count | 30,152,054 | 30,152,054 | 30,152,054 | 30,152,054 | | Adjusted earnings (loss) per share | $0.80 | $1.21 | $(0.95) | $1.07 | [Six Months Ended June 30, 2024](index=11&type=section&id=Six%20Months%20Ended%20June%2030%2C%202024) This section presents the adjusted net income by segment for the first half of 2024 Adjusted Net Income by Segment (YTD 2024, in millions) | Metric | Retirement Solutions | Portfolio Management | Corporate & Other | FOA | | :---------------------------------------------------------------- | :------------------- | :------------------- | :---------------- | :---- | | Pre-tax income (loss) | $(6) | $36 | $(50) | $(20) | | Adjustments for: | | | | | | Changes in fair value | — | (14) | (4) | (18) | | Amortization or impairment of intangibles and impairment of other assets | 19 | — | 1 | 20 | | Equity-based compensation | 1 | — | 4 | 6 | | Certain non-recurring costs | 1 | — | 2 | 3 | | Adjusted net income (loss) before taxes | $15 | $23 | $(47) | $(9) | | Provision (benefit) for income taxes | 4 | 6 | (12) | (2) | | **Adjusted net income (loss)** | **$11** | **$17** | **$(35)** | **$(7)** | | Weighted average share count | 23,013,742 | 23,013,742 | 23,013,742 | 23,013,742 | | Adjusted earnings (loss) per share | $0.48 | $0.74 | $(1.52) | $(0.29) | [Non-GAAP Measures Definitions](index=13&type=section&id=Non-GAAP%20Measures%20Definitions) This section defines the non-GAAP financial measures used by Finance of America, including adjusted net income (loss), adjusted EBITDA, adjusted earnings (loss) per share, and tangible equity. It also explains the rationale for their use, their limitations, and recent changes in their calculation methodology [Change in Non-GAAP Measures](index=14&type=section&id=Change%20in%20Non-GAAP%20Measures) This section outlines the recent revisions to the company's non-GAAP financial measure definitions - Beginning Q3 2024, the company revised its definitions of adjusted net income (loss), adjusted EBITDA, and adjusted EPS to include adjustments for all equity-based compensation, rather than just Replacement RSUs and Earnout Right RSUs[42](index=42&type=chunk) - This change aims to provide a more comprehensive view of operating performance and comparability to peers, as equity-based awards are non-cash expenses not directly correlated with operating results[43](index=43&type=chunk) [Adjusted Net Income (Loss) Definition](index=14&type=section&id=Adjusted%20Net%20Income%20(Loss)%20Definition) This section provides the detailed definition and purpose of adjusted net income (loss) - Adjusted net income (loss) is defined as net income (loss) from continuing operations, adjusted for income taxes, changes in fair value, amortization/impairment of intangibles, equity-based compensation, and certain non-recurring costs[44](index=44&type=chunk)[46](index=46&type=chunk) - This metric is used by management to assess underlying key drivers and operational performance by excluding items not representative of core earnings[44](index=44&type=chunk)[45](index=45&type=chunk) [Adjusted EBITDA Definition](index=15&type=section&id=Adjusted%20EBITDA%20Definition) This section provides the detailed definition and purpose of adjusted EBITDA - Adjusted EBITDA is defined as net income (loss) from continuing operations, adjusted for income taxes, changes in fair value, amortization/impairment of intangibles, equity-based compensation, certain non-recurring costs, depreciation, and interest expense on non-funding debt[47](index=47&type=chunk)[52](index=52&type=chunk) - It provides visibility into underlying operating performance by excluding impacts not representative of core earnings[48](index=48&type=chunk) [Adjusted Earnings (Loss) Per Share Definition](index=15&type=section&id=Adjusted%20Earnings%20(Loss)%20Per%20Share%20Definition) This section provides the detailed definition and purpose of adjusted earnings (loss) per share - Adjusted earnings (loss) per share is calculated as adjusted net income (loss) plus interest expense on exchangeable senior secured notes (net of tax effect, if dilutive), divided by weighted average shares outstanding (including Class A Units and if-converted notes)[49](index=49&type=chunk) - This metric helps management, analysts, investors, and creditors assess operational performance and comparability to peers[50](index=50&type=chunk) [Tangible Equity Definition](index=15&type=section&id=Tangible%20Equity%20Definition) This section provides the detailed definition and purpose of tangible equity - Tangible equity is defined as total equity less intangible assets, net[51](index=51&type=chunk) - Management uses this metric to evaluate the company's capital strength exclusive of intangible assets, providing additional insight into the underlying equity position[51](index=51&type=chunk)[54](index=54&type=chunk) [Company Information & Disclosures](index=12&type=section&id=Company%20Information%20%26%20Disclosures) This section provides essential company information, including contact details, webcast information, and forward-looking statements [Webcast and Conference Call](index=12&type=section&id=Webcast%20and%20Conference%20Call) Finance of America hosted a webcast and conference call on August 5, 2025, to discuss its Q2 2025 results. Replay information was also provided for those unable to attend the live event - A webcast and conference call were held on August 5, 2025, at 5:00 pm Eastern Time to discuss Q2 2025 results[30](index=30&type=chunk) - A replay of the call is available on the company's investor relations website and via dial-in until August 12, 2025[31](index=31&type=chunk) [About Finance of America](index=12&type=section&id=About%20Finance%20of%20America) Finance of America Companies Inc. (NYSE: FOA) is a leading provider of home equity-based financing solutions tailored for modern retirement, headquartered in Plano, Texas. The company also offers capital markets and portfolio management capabilities to optimize loan distribution to investors - Finance of America (NYSE: FOA) is a leading provider of home equity-based financing solutions for a modern retirement[32](index=32&type=chunk) - The company also provides capital markets and portfolio management capabilities to optimize the distribution of originated loans to investors[32](index=32&type=chunk) - Finance of America is headquartered in Plano, Texas[32](index=32&type=chunk) [Forward-Looking Statements](index=12&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these statements, which are current only as of the release date, and are directed to SEC filings for a comprehensive list of risk factors - The release includes forward-looking statements regarding future events, business performance, financial results, liquidity, and capital resources[34](index=34&type=chunk) - These statements are subject to inherent uncertainties and risks that could cause actual outcomes to differ materially, including factors detailed in the company's SEC filings[34](index=34&type=chunk)[36](index=36&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, which are current only as of the release date, and the company does not undertake to update them[34](index=34&type=chunk)[36](index=36&type=chunk) [Contacts](index=16&type=section&id=Contacts) Contact information for Finance of America's media and investor relations departments is provided - Media inquiries can be directed to pr@financeofamerica.com[55](index=55&type=chunk) - Investor Relations inquiries can be directed to ir@financeofamerica.com[55](index=55&type=chunk)

Financial Performance - Finance of America (NYSE: FOA) has shown a solid financial turnaround over the last 2 years, leading to profitability [1] - The stock price has reflected this positive change, rewarding shareholders [1] Investment Focus - The company is positioned in sectors such as chemicals, homebuilders, building materials, industrials, and metals & mining [1] - The investment strategy focuses on undervalued stocks with near-term catalysts, with an investment horizon ranging from a quarter to two years [1]

PART I - Financial Information [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The company reported a **$75.0 million** net income in Q1 2025, reversing a **$20.3 million** net loss in Q1 2024, with total assets and equity increasing Condensed Consolidated Statements of Financial Condition (in thousands) | | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$29,688,856** | **$29,156,490** | | Cash and cash equivalents | $52,016 | $47,383 | | Loans held for investment, subject to HMBS related obligations | $18,809,023 | $18,669,962 | | Loans held for investment, subject to nonrecourse debt | $9,630,150 | $9,288,403 | | **Total Liabilities** | **$29,293,970** | **$28,840,826** | | HMBS related obligations | $18,590,357 | $18,444,370 | | Nonrecourse debt | $9,163,399 | $8,954,068 | | **Total Equity** | **$394,886** | **$315,664** | Condensed Consolidated Statements of Operations (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | **Total Revenues** | **$165,695** | **$74,682** | | Net Portfolio Interest Income | $70,435 | $70,175 | | Net Other Income (Expense) | $95,260 | $4,507 | | **Total Expenses** | **$86,369** | **$91,315** | | **Net Income (Loss) from Continuing Operations** | **$79,750** | **($15,780)** | | Net Loss from Discontinued Operations | ($4,750) | ($4,524) | | **Net Income (Loss)** | **$75,000** | **($20,304)** | | **Diluted Earnings (Loss) Per Share** | **$2.43** | **($0.78)** | - The financial statements for the three months ended March 31, 2024, were restated due to errors in the classification and presentation of cash flows from certain nonrecourse securitization transactions, which were incorrectly reported on a net basis instead of a gross basis[27](index=27&type=chunk)[29](index=29&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's home equity financing focus, a **1-for-10 reverse stock split**, and remediation of a material weakness in cash flow reporting - The company is a financial services holding company focused on providing home equity-based financing solutions for modern retirement, operating through its main lending subsidiary, **Finance of America Reverse LLC (FAR)**[24](index=24&type=chunk)[26](index=26&type=chunk) - On July 25, 2024, the company completed a **1-for-10 reverse stock split** of its Class A Common Stock. All share and per-share amounts in the report have been retroactively adjusted[37](index=37&type=chunk) - The company has outstanding unfunded commitments available to borrowers related to reverse mortgage loans totaling **$4.4 billion** as of March 31, 2025[95](index=95&type=chunk) - As an issuer of HMBS, subsidiary FAR is subject to minimum net worth, liquidity, and leverage requirements by Ginnie Mae. As of March 31, 2025, FAR was in compliance with these requirements, having received a waiver for the minimum outstanding capital requirements related to its accounting treatment of securitizations[106](index=106&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2025's improved results to higher net origination gains and favorable fair value changes, driving pre-tax income from continuing operations to **$81.7 million** - The company's strategy focuses on growing its core retirement solutions business, utilizing multiple distribution channels, and connecting borrowers with investors through its Portfolio Management segment to efficiently monetize loans[136](index=136&type=chunk) Consolidated Results from Continuing Operations (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | **Total Revenues** | **$165,695** | **$74,682** | | Net portfolio interest income | $70,435 | $70,175 | | Net fair value changes on loans and related obligations | $103,826 | $6,337 | | **Total Expenses** | **$86,369** | **$91,315** | | **Net Income (Loss) from Continuing Operations Before Income Taxes** | **$81,693** | **($15,780)** | - The **$97.5 million** improvement in pre-tax income from continuing operations was primarily driven by a **$74.7 million** increase in fair value changes from market inputs/model assumptions and a **$6.4 million** increase in net origination gains from higher loan volumes[156](index=156&type=chunk) Non-GAAP Reconciliation Summary (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) from continuing operations | $79,750 | ($15,780) | | **Adjusted net income (loss)** | **$12,930** | **($6,707)** | | **Adjusted EBITDA** | **$28,967** | **$7** | | **Adjusted earnings (loss) per share** | **$0.52** | **($0.29)** | [Segment Results](index=51&type=section&id=MD%26A%20-%20Segment%20Results) Retirement Solutions revenues increased to **$51.7 million** with higher loan origination, and Portfolio Management pre-tax income surged to **$105.3 million** due to fair value changes Retirement Solutions Segment Results (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $51,721 | $45,708 | | Total expenses | $48,462 | $49,410 | | **Net Income (Loss) Before Income Taxes** | **$3,259** | **($3,876)** | | Loan origination volume | $560,678 | $423,453 | Portfolio Management Segment Results (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $129,009 | $37,249 | | Total expenses | $23,731 | $22,753 | | **Net Income Before Income Taxes** | **$105,278** | **$14,496** | | Net carrying value of earning assets | $597,594 | N/A | [Liquidity and Capital Resources](index=62&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) Primary liquidity sources include loan sales and borrowings; cash decreased by **$50.1 million** in Q1 2025, with **$29.1 billion** in total debt obligations - Primary sources of liquidity include payments from the sale or securitization of loans, proceeds from participating interests in loans, and advances on various credit facilities[202](index=202&type=chunk) Cash Flow Summary (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 (As Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | ($92,082) | ($132,243) | | Net cash provided by investing activities | $45,475 | $85,153 | | Net cash provided by (used in) financing activities | ($3,500) | $65,884 | | **Net (decrease) increase in cash and cash equivalents and restricted cash** | **($50,116)** | **$18,777** | Contractual Cash Obligations as of March 31, 2025 (in thousands) | Contractual cash obligations: | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Nonrecourse debt | $9,548,811 | $2,567,083 | $4,710,853 | $874,476 | $1,396,399 | | Warehouse lines of credit | $513,357 | $482,412 | $30,945 | — | — | | Other secured lines of credit | $495,537 | $37,036 | $69,231 | — | $389,270 | | Notes payable | $434,955 | $137,408 | $150,754 | $146,793 | — | | **Total** | **$11,028,332** | **$3,229,283** | **$4,971,341** | **$1,028,016** | **$1,799,692** | [Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations; a **25 basis point** rate increase could result in a **$70 million** net decrease in fair value - The company's primary market risk is interest rate risk. An increase in rates could adversely affect loan origination volume, increase servicing costs, and reduce the fair value of long-term assets. A decrease in rates could increase prepayment speeds, also reducing the fair value of long-term assets[248](index=248&type=chunk)[249](index=249&type=chunk)[253](index=253&type=chunk) Interest Rate Sensitivity Analysis as of March 31, 2025 (in thousands) | | Down 25 bps | Up 25 bps | | :--- | :--- | :--- | | **Increase (decrease) in assets** | | | | Loans held for investment, subject to HMBS related obligations | $31,369 | ($31,197) | | Loans held for investment, subject to nonrecourse debt | $123,475 | ($120,653) | | Loans held for investment | $5,965 | ($5,842) | | **Total assets** | **$160,809** | **($157,692)** | | **Increase (decrease) in liabilities** | | | | HMBS related obligations | $27,120 | ($26,887) | | Nonrecourse debt | $59,651 | ($60,980) | | **Total liabilities** | **$86,771** | **($87,867)** | [Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in cash flow statement preparation, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to a material weakness in internal control over financial reporting[259](index=259&type=chunk) - The material weakness relates to ineffective controls over the preparation and review of the consolidated cash flow statements, specifically regarding the classification of cash flows from nonrecourse securitization transactions[261](index=261&type=chunk)[262](index=262&type=chunk) - A remediation plan is in place, focusing on enhancing control documentation for cash flow statement presentation and providing additional training to accounting and financial reporting personnel on **ASC 230, Cash Flows**[264](index=264&type=chunk)[266](index=266&type=chunk) PART II - Other Information [Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending three coordinated representative lawsuits under **PAGA** for alleged labor code violations, with individual claims settled and representative claims pending - The company is defending three coordinated representative lawsuits under the California Private Attorneys General Act (PAGA) for alleged labor code violations. Individual claims have been settled, but the representative claims remain pending[88](index=88&type=chunk)[89](index=89&type=chunk) [Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) The company is not aware of any material changes from the risk factors previously disclosed in its Form 10-K/A filed with the SEC on May 20, 2025 - There are no material changes from the risk factors previously disclosed in the company's Annual Report on **Form 10-K/A**[269](index=269&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None - There were no unregistered sales of equity securities during the period[271](index=271&type=chunk) [Defaults Upon Senior Securities](index=72&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - There were no defaults upon senior securities during the period[272](index=272&type=chunk) [Other Information](index=72&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 officers adopted, modified, or terminated **Rule 10b5-1** or non-Rule 10b5-1 trading arrangements during the quarter - No directors or Section 16 officers reported any new, modified, or terminated Rule 10b5-1 trading plans during the quarter[274](index=274&type=chunk) [Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including transaction agreements, corporate governance documents, and CEO/CFO certifications

Financial Data and Key Metrics Changes - The company reported funded volume of $561 million in Q1 2025, exceeding guidance and marking a 32% increase from Q1 2024 [5][15] - GAAP net income for Q1 2025 was $80 million, or $3.17 per share, compared to a net loss of $16 million, or $0.58 per share in Q1 2024 [6][16] - Adjusted net income improved to $13 million, or $0.52 per share, a $20 million improvement year-over-year [7][17] - Adjusted EBITDA totaled $29 million, representing a significant increase from breakeven in Q1 2024 [17] Business Line Data and Key Metrics Changes - The wholesale channel exceeded volume expectations, contributing to overall guidance being surpassed, although it carries lower margins [18] - The company saw a 40% increase in initial thirty-day sales conversion rates and a 12% reduction in cost per opportunity [12][19] Market Data and Key Metrics Changes - The company benefited from a lower rate environment, with the ten-year treasury falling approximately 35 basis points [6] - April 2025 was noted as the best month for submission and funded volume in the last two years, indicating strong market performance [26] Company Strategy and Development Direction - The company launched the "A Better Way with FOA" campaign to reposition reverse mortgages as a mainstream financial planning tool for homeowners aged 55 and up [8][10] - The strategic focus is on enhancing customer engagement and optimizing the customer journey, with a goal of improving lead conversion metrics [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategy, highlighting the increasing awareness among older homeowners regarding home equity [22] - The company reaffirmed its full-year guidance for funded volume between $2.4 billion and $2.7 billion and adjusted EPS between $2.6 and $3 [20] Other Important Information - The company has seen a 25% year-over-year reduction in general and administrative expenses, with a notable 35% decrease in communication and data processing expenses [19] - The leadership change with John Scarpatti being promoted to Chief Production Officer is expected to unlock growth potential [13] Q&A Session Summary Question: How did rate volatility in April impact volumes? - Management noted that April was the best month for submission and funded volume in the last two years, indicating strong performance despite rate volatility [26][27] Question: What is the outlook for expenses going forward? - Management indicated that the fixed cost base is relatively stable, with opportunities for cost reductions as contracts renew, while variable expenses may increase with production [28][29]

Financial Data and Key Metrics Changes - The company reported $561 million in funded volume for Q1 2025, exceeding guidance and marking a 32% increase compared to Q1 2024 [5][6][15] - GAAP net income was $80 million or $3.17 per basic share, a significant turnaround from a net loss of $16 million or $0.58 per share in Q1 2024 [6][16] - Adjusted net income improved to $13 million or $0.52 per share, up $20 million year-over-year from an adjusted net loss of $7 million in Q1 2024 [6][17] - Adjusted EBITDA totaled $29 million, reflecting an increase from breakeven in Q1 2024 and an $11 million improvement from Q4 2024 [17] Business Line Data and Key Metrics Changes - The company experienced a 5% increase in funded volume from Q4 2024, indicating consistent growth across its operations [15] - Product level margins improved quarter-over-quarter, although total Retirement Solutions revenue margin remained flat due to a shift in channel mix [18] Market Data and Key Metrics Changes - The company benefited from a lower rate environment, with the ten-year treasury falling approximately 35 basis points, contributing to a positive fair value environment [6] - The wholesale channel exceeded volume expectations, although it carries lower margins, impacting overall revenue margin [18] Company Strategy and Development Direction - The company launched the "A Better Way with FOA" campaign to reposition reverse mortgages as a mainstream financial planning tool for homeowners aged 55 and up [7][10] - The strategic focus is on enhancing customer engagement and optimizing the customer journey, with early results showing a 16% improvement in inquiry to lead conversion [11][12] - The company aims to introduce new solutions to address emerging customer needs amid economic uncertainties [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet its full-year guidance of $2.4 billion to $2.7 billion in funded volume and $2.6 to $3 in adjusted earnings per share [6][20] - The company noted that April was the best month for submission and funded volume in the last two years, indicating strong market performance [24] - Management acknowledged ongoing rate volatility but indicated it has not significantly impacted volumes thus far [25] Other Important Information - The company has seen a 25% year-over-year reduction in general and administrative expenses, highlighting ongoing cost management efforts [19] - Operational productivity improved, with a 33% increase in loans per employee compared to Q1 2024 [20] Q&A Session Summary Question: How did rate volatility in April impact volumes? - Management noted that April was the best month for submission and funded volume in the last two years, indicating strong performance despite rate volatility [24] Question: What is the outlook for expenses going forward? - Management indicated that the fixed cost base is relatively stable, with opportunities for cost reductions as contracts renew, while variable expenses may increase with production [26][27]