Reverse mortgage leader Finance of America (FOA) recorded a quarter-over-quarter loss in the fourth quarter of 2024, but still notched a full-year profit.
In a Wednesday earnings call, company leaders outlined their assessment of the reverse mortgage market moving forward, describing 2024 as a year of “momentum” for the company owing to the achievement of “strategic objectives.” The company also recently appointed two new executives charged with leading the creation of new digital tools for the organization.
But the news of a quarterly loss temporarily rattled the company’s stock price. At the time the earnings call began, the share price fell from $21.19 at the close of the market on March 11 to $17.89 at the opening bell on March 12. But by the market’s close that evening, the share price rose to $21.75.
“We integrated our retail platform, finalized our corporate bond exchange, completed our reverse stock split, rationalized corporate overhead and increased our funding facilities,” CEO Graham Fleming said on the earnings call. “We believe these actions have positioned us well to execute our 2025 strategic objectives.”
Year-over-year, the company increased its funding volume by 19% to $1.9 billion. The company’s dedication to expanding the availability of its proprietary closed-end second-lien reverse mortgage, “HomeSafe Second,” also saw a sharp increase to its distribution. The company reported a 77% increase in growth between the first and second halves of 2024.
In 2024, the company also expanded HomeSafe Second’s availability to additional states while revising some terms.
Company leaders remain particularly bullish about this product’s potential, with company President Kristen Sieffert saying “the market opportunity is staggering relative to our current penetration.”
Fleming said the overall company performance is proof-positive of the long-term potential of its products.
“I’m pleased with our performance, which is a testament to the hard work and dedication of our team,” he said. “Finance of America is making home equity a mainstream component of retirement planning and we remain confident in our strategic direction and the long-term value of the business.”
The full year 2024 saw GAAP net income of $40 million, while adjusted net income totaled $14 million. But the company endured a quarterly loss.
“For the fourth quarter, the company reported a net loss of $143 million, or $5.95 per share,” said Matt Engel, FOA CFO. “However, our adjusted net income of $5 million or $0.21 per share reflects our continued strong performance for 2024.”
Margins were compressed, Engel said, which he attributed to “broader market conditions.” But the company also maintained its leading position on the leaderboard of Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) issuers, and said its non-agency reverse mortgage volume rose by 73% year-over-year.
Engel added that despite volatility, revenue margins did improve year-over-year. He also credited a streamlined corporate cost structure with $90 million in expense reductions, and a $48 million reduction in cost base expenses.
Engel added that FOA executed what it called “the largest securitization from a non-agency proprietary product in the company’s history,” saying the transaction included “a mix of new and seasoned collateral, demonstrating our ability to execute complex capital markets transactions at scale.”
But like much of the broader mortgage industry, rates remain a challenge to navigate.
“I think it’s fair to say rates have been a little volatile,” Engel said in a Q&A at the end of the call. “There was a little bit of headwind in the Q4 as rates kind of increased. We’ve seen a lot of that start to decrease here in the first quarter, and we’re almost through the first quarter, so we have a pretty good sense of how [it’s] shaping up.”
