Related Party Transactions
|3 Months Ended|
Mar. 31, 2022
|Related Party Transactions [Abstract]|
|Related Party Transactions||
The Company had two Revolving Working Capital Promissory Note Agreements (the “2021 Promissory Notes”) outstanding with BTO Urban Holdings
and Libman Family Holdings, LLC, which are deemed affiliates of the Company. Amounts under the 2021 Promissory Notes may be
repaid from time to time until the related maturity date. The 2021 Promissory Notes accrue interest monthly at a rate of 6.5%
per annum mature in
January 2023. There
t amounts outstanding and no interest on these notes paid during the Successor three months ended March 31, 2022 or for
the Predecessor period from January 1, 2021 to March 31, 2021.
In 2019, the Company entered into an Amended and Restated Limited Liability Company Agreement with FarmOp Capital Holdings, LLC (“FarmOps”) in which the Company acquired an equity investment in FarmOps. Subsequent to this agreement, the Company agreed to purchase originated agricultural loans from FarmOps. The Company purchased agricultural loans and had total funded draw amounts of $73.3 million and $88.7 million, respectively, for the Successor three months ended March 31, 2022, and $83.0 million and $82.1 million, respectively, for the Predecessor period from January 1, 2021 to March 31, 2021.
The Company had promissory notes outstanding with FarmOps of $4.2 million and $4.1 million, including accrued interest, as of March 31, 2022 and December 31, 2021, respectively.
In July 2021, upon meeting the contractual exercise condition, the Company exercised its warrant for the purchase of 6,426,015 Series
A-2Convertible Preferred Units of FarmOps at the contractual cash exercise price of $0.0001 per unit. Following this exercise, FoA’s percentage of fully-diluted equity ownership of FarmOps is 36.4%.
In 2017 and 2019, the Company purchased preferred and common stock investments in Cloudvirga, Inc. (“Cloudvirga”). Subsequent to its investment, the Company entered into a software development arrangement in which Cloudvirga agreed to develop software in addition to providing certain technology services for the Company. In May 2021, Cloudvirga merged with an unaffiliated third party, causing the liquidation of all shares held by the Company. As such, the fair value assumptions used to determine the holding value of such preferred equity were updated by the Company and resulted in an impairment of the equity investment of $9.3
million in the Predecessor period from January 1, 2021 to March 31, 2021. As a result of this liquidation
of all shares held by the Company, the related party relationship was terminated.
For the Predecessor period from January 1, 2021 to March 31, 2021, $1.7 million was capitalized related to the development of the software and will be amortized over a 12 month period from the date placed in service. Professional fees paid to Cloudvirga, in exchange for the technology services, were $0.6 million for the Predecessor period from January 1, 2021 to March 31, 2021.
Nonrecourse MSR Financing Liability, at Fair Value
In 2020, the Company entered into a nonrevolving facility commitment with various related parties, to sell beneficial interests in the servicing fees generated from its originated or acquired MSRs. Under these agreements, the Company has agreed to sell excess servicing income or pay an amount equal to excess servicing income to third parties, in each case, taking into account cost of servicing and ancillary income related to the identified MSRs in exchange for an upfront payment equal to the purchase price or fair value of the identified MSRs. These transactions are accounted for as financings.
As of March 31, 2022 and December 31, 2021, the Company had an outstanding advance of $160.1 million and $115.4
million, respectively, against this commitment for the purchase of beneficial interests in servicing fees associated with MSRs with a fair value of$176.1 million and $155.1 million, respectively.
The Company has also entered into Investment Management Agreements with these third parties to serve as the investment manager, in which the Company performs various advisory services to the investors in exchange for a management fees. Management fees amounted to $0.1 million for the Successor three months ended March 31, 2022 and $0.1 million for the Predecessor period from January 1, 2021 to March 31, 2021.
Related parties of FoA purchased notes in the high-yield debt offering in November 2020 in an aggregate principal amount of $135.0 million.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef