Company: FOACW
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001828937-25-000009
Chunk: 209

Company: Finance of America Companies Inc.
Filing Date: 2025-03-14
Form: 10-K
Item: Item 3
Chunk 209
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 economic performance of the VIE. When it is determined that the Company has both the power to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE, the assets and liabilities of these VIEs are included in the consolidated financial statements of the Company. The Company reassesses its evaluation of an entity as a VIE upon the occurrence of certain reconsideration events as the primary beneficiary determination may change over time as interest in the VIE changes.The Company elected the fair value option provided for by ASC 825, Financial Instruments. This option was applied for the nonrecourse debt issued by the consolidated VIE.Refer to Note 5 - Variable Interest Entities and Securitizations for additional information. 

110

Finance of America Companies Inc.Notes to Consolidated Financial Statements

Cash and Cash EquivalentsThe Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. These investments are with high quality financial, governmental, or corporate institutions and potentially subject the Company to concentrations of credit risk.Restricted CashRestricted cash includes amounts specifically designated to repay debt and provide over-collateralization within lines of credit and securitized nonrecourse debt obligations, custodial accounts related to the Company’s portfolio of mortgage loans serviced for investors, and funds deposited from prospective borrowers to cover out-of-pocket expenses incurred by the Company in connection with due diligence activities performed during the loan approval process. Certain funds deposited with the Company may be returned to the borrower at the time the loan funds or if the loan does not close. The Company records a liability for these amounts until the loan has closed or a cost has been incurred.Loans Held for Investment, Subject to HMBS Related Obligations, at Fair ValueThe Company elected the fair value option for all loans held for investment, subject to HMBS obligations. A HECM is a reverse mortgage loan available to homeowners aged 62 and over that allows conversion of a portion of the home’s equity into cash. The HECM loan terms do not have a defined maturity date or a scheduled repayment of principal and interest. Variable interest rates are tied to an index plus a margin that typically ranges up to three percentage points. Interest compounds over the life of the loan and is not paid by the borrower until the loan is repaid. HECM loans include a monthly mortgage insurance premium (“MIP”) that is payable to the FHA. The MIP amount