FoA plans to sell guaranteed rate retail division, close wholesale channel: sources

Amid the toughest mortgage market in decades, the multi-channel lender finance of america (FoA) plans to sell its retail division and shut down its wholesale channel, multiple sources have told HousingWire.

According to former senior executives and business partners, FoA has signed a letter of intent to sell its retail business to a competitor Guaranteed ratebut the negotiations are still ongoing and remain fluid.

FoA generated $6 billion through the retail channel from January to June, down 50.7% year-over-year, according to Inside Mortgage Financing. The company was ranked no. 33 among the top US retail mortgage lenders during the period. Meanwhile, Secured Rate was the fourth-largest mortgage lender in retail, with production of $32.8 billion, down 43% year-over-year.

As for the wholesale channel, FoA is expected to close by the end of the year, sources said. However, the partner brokers have not yet received any communication. From January to June, the company generated $3 billion through the wholesale division, according to documents filed with the Security and Exchange Commission (SECOND).

“It is company policy not to comment on market rumors or speculation,” a FoA spokesperson said. A Guaranteed Rate spokesperson said the company had no comment.

FoA, which has struggled mightily this year, appears to be exiting the mortgage origination space eventually with the planned restructuring. If the deal goes through, it will instead focus on other lines of business, such as reverse mortgages, commercial lending and home improvement. Incenter Mortgage Advisorswhich provides advisory services for MSR and the negotiation of full loans, would remain part of FoA, sources said.

At FoA, reverse mortgages were a bright spot on an otherwise red-tinged balance sheet. Reverse volume reached $1.58 billion in the second quarter, an increase of 7% from the first quarter and 56% from the second quarter of 2021. This is the fifth consecutive quarterly volume record.

Meanwhile, the lender’s term mortgage business saw funded volume of $4.23 billion in the second quarter, down 17% quarter-on-quarter and 39% year-on-year. to the other. The company has reduced its workforce, cutting approximately 35% of costs on a run-rate basis, which equates to more than $100 million annualized.

In total, FoA recorded a loss of $168 million in the second quarter.

“Spreads on agency and non-agency mortgages have reached new highs in a matter of weeks,” Finance of America chief financial officer Johan Gericke told analysts on the second-quarter earnings call. “This dramatic rise in credit rates and spreads has put tremendous pressure on our origination business.”

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