Company: FOACW
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001628280-25-052025
Chunk: 55

Company: Finance of America Companies Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Item 1
Chunk 55
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4.  

4.    Variable Interest Entities and SecuritizationsThe Company determined that the special purpose entities created in connection with its securitizations are VIEs. A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary, which is the entity that, through its variable interests, has both the power to direct the activities that significantly impact the VIE’s economic performance and the obligations to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. From time to time, the Company may purchase securities that were previously issued by consolidated trusts. Under these circumstances, we extinguish the outstanding debt and recognize gains or losses for the difference between the consideration paid and the carrying value of the debt. For the three and nine months ended September 30, 2025, the Company recognized gains of $21.8 million and $38.8 million, respectively, on extinguishment of debt related to these purchases. There were no such gains or losses recognized for the three and nine months ended September 30, 2024. The gains or losses are recorded in Interest expense in the Condensed Consolidated Statements of Operations. Consolidated VIEsThe Company securitizes certain of its interests in non-agency reverse mortgage loans and HECM buyouts. The transactions provide investors with the ability to invest in a pool of reverse mortgage loans secured by residential properties. The transactions provide the Company with access to liquidity for these assets, ongoing servicing fees, and potential residual returns. The principal and interest on the outstanding certificates are paid using the cash flows from the underlying reverse mortgage loans, which serve as collateral for the debt. The securitizations are callable at or following the optional redemption date as defined in the respective indenture agreements. The Company has a financing agreement which is structured as a securitization. The special purpose entity created for the purposes of the financing is a VIE which the Company has consolidated, as the Company is the primary beneficiary. The non-agency reverse mortgage loans included in this securitization are recorded in Loans held for investment, at fair value, or in loans held for sale, at fair value, which is included in Other assets, net, in the Condensed Consolidated Statements