Finance of America Companies Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Other Financing Lines of Credit

Other Financing Lines of Credit

3 Months Ended

Mar. 31, 2023

17. Other Financing Lines of Credit

The following summarizes the components of other financing lines of credit relating to continuing operations (in thousands):


					Outstanding borrowings at
Maturity Date	Interest Rate	Collateral Pledged	Total Capacity(1)		March 31, 2023		December 31, 2022
Mortgage Lines:
October 2023	Bloomberg short-term bank yield ("BSBY") index + applicable margin	First Lien Mortgages	$	50,000	$	6,270	$	83,814
November 2023	Secured Overnight Financing Rate ("SOFR") + applicable margin	Home Improvement Consumer Loans	50,000		37,660		7,495
N/A	N/A	MSR	—		—		10,312
N/A	Bond accrual rate + applicable margin	Mortgage Related Assets	38,274		38,274		37,604
Subtotal mortgage lines of credit			$	138,274	$	82,204	$	139,225
Reverse Lines:
April 2023 - November 2023	LIBOR/SOFR/BSBY + applicable margin	First Lien Mortgages	$	1,450,000	$	520,794	$	584,658
N/A	LIBOR/Bond accrual rate + applicable margin	Mortgage Related Assets	372,840		362,529		320,715
October 2027	SOFR + applicable margin	MSR	70,000		61,475		33,036
May 2023	Prime + .50%; 6% floor	Unsecuritized Tails	50,000		50,000		45,001
Subtotal reverse lines of credit			$	1,942,840	$	994,798	$	983,410
Commercial Lines:
N/A	N/A	Encumbered Agricultural Loans	$	—	$	—	$	7,561
October 2023 - November 2023	SOFR/BSBY + applicable margin	First Lien Mortgages	100,000		23,865		159,938
N/A	N/A	Second Lien Mortgages	—		—		25,000
January 2024	SOFR + applicable margin	Mortgage Related Assets	12,500		12,500		12,500
Subtotal commercial lines of credit			$	112,500	$	36,365	$	204,999
Total other financing lines of credit			$	2,193,614	$	1,113,367	$	1,327,634

(1)Capacity is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions, and covenants of the respective agreements, including asset-eligibility requirements. Capacity amounts presented are as of March 31, 2023. The lines of credit with no capacity are terminated as of March 31, 2023.

As of March 31, 2023 and December 31, 2022, the weighted average outstanding interest rates on outstanding financing lines of credit of the Company were 7.25% and 7.35%, respectively.

The Company's financing arrangements and credit facilities contain various financial covenants, which primarily relate to required tangible net worth amounts, liquidity reserves, leverage ratios, and profitability.

As of March 31, 2023, the Company was in compliance with its financial covenants related to required liquidity reserves, debt service coverage ratio, and tangible net worth amounts. With respect to certain financial covenants related to required profitability, the Company obtained financial covenant waivers, amendments to such financial covenants effective as of March 31, 2023, or paid off the line of credit, in order to avoid breaching such financial covenants.

The terms of the Company's financing arrangements and credit facilities contain covenants, and the terms of the Company's government sponsored entities ("GSE")/seller servicer contracts contain requirements that may restrict the Company and its subsidiaries from paying distributions to its members. These restrictions include restrictions on paying distributions whenever the payment of such distributions would cause FoA or its subsidiaries to no longer be

in compliance with any of its financial covenants or GSE requirements. Further, the Company is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the Company (with certain exceptions) exceed the fair value of its assets. Subsidiaries of the Company are generally subject to similar legal limitations on their ability to make distributions to FoA.

As of March 31, 2023, the maximum allowable distributions available to the Company based on the most restrictive of such financial covenant ratios is presented in the table below (in thousands, except for ratios):


Financial Covenants	Requirement		March 31, 2023		Maximum Allowable Distribution(1)
FAM
Adjusted Tangible Net Worth(2)	$	75,000	$	77,851	$	2,851
Liquidity	20,000		22,191		2,191
Leverage Ratio	13:1		6.8:1		37,318







FAR
Adjusted Tangible Net Worth(2)	$	250,000	$	452,738	$	202,738
Liquidity	36,086		38,210		2,124
Leverage Ratio	6:1		3.4:1		197,508
FAH
Adjusted Tangible Net Worth(2)	$	300,000	$	487,938	$	187,938
Liquidity	45,000		63,819		18,819
Leverage Ratio	10:1		3.7:1		309,682

(1) The Maximum Allowable Distribution for any of the originations subsidiaries is the lowest of the amounts shown for the particular originations subsidiary.

(2) This amount is based on the most restrictive financing line of credit covenant.

As of December 31, 2022, the maximum allowable distributions available to the Company based on the most restrictive of such financial covenant ratios is presented in the table below (in thousands, except for ratios):


Financial Covenants	Requirement		December 31, 2022		Maximum Allowable Distribution(1)
FAM
Adjusted Tangible Net Worth(2)	$	100,000	$	100,907	$	907
Liquidity	20,000		23,368		3,368
Leverage Ratio	13:1		9.3:1		28,732



FAR
Adjusted Tangible Net Worth(2)	$	250,000	$	267,067	$	17,067
Liquidity	24,724		28,718		3,994
Leverage Ratio	6:1		5.29:1		31,808
FAH
Adjusted Tangible Net Worth(2)	$	300,000	$	310,850	$	10,850
Liquidity	45,000		52,270		7,270
Leverage Ratio	10:1		6.55:1		107,292

(1) The Maximum Allowable Distribution for any of the originations subsidiaries is the lowest of the amounts shown for the particular originations subsidiary.

(2) This amount is based on the most restrictive financing line of credit covenant.