Multi-channel lenders amid the toughest mortgage market in decades Finance of America (FoA) plans to sell its retail mortgage business and close its wholesale channel, multiple sources told Housingwire.
FoA has signed a letter of intent to sell its forward mortgage retail business to a competitor, according to former management and business partners Guaranteed ratebut negotiations are still ongoing and remain fluid.
FoA originated $6 billion through retail mortgage channels from January to June, down 50.7% year-on-year, according to the company. Inside Mortgage FinanceThe company was ranked No. 33 among the top US retail mortgage lenders for the period. Meanwhile, Chicago-based Guaranteed Rate is the fourth-largest mortgage lender in the retail industry, with sales of $32.8 billion, down 43% year over year.
According to sources, FoA plans to close its wholesale channel by the end of the year. Future brokerage partners have yet to be announced, sources told HousingWire.Between January and June, the company raised $3 billion through its wholesale division, according to documents. submitted with Securities and Exchange Commission (SEC).
A spokeswoman for FoA said, “It is company policy not to comment on market rumors or speculation. A spokeswoman for Guaranteed Rates said the company had no comment.
FoA, which has struggled very much this year, appears to be exiting the futures mortgage origination space due to a planned restructuring.If the deal closes, focus on other things instead Business contentreverse mortgages, commercial loans, home improvement, etc. Inncentre Mortgage AdvisorIt will provide advisory services for MSR and whole loan transactions, according to sources.
At FoA, reverse mortgages were the bright spot on a deficit-stained balance sheet. Second quarter reverse volume reached $1.58 billion, a 7% increase compared to the first quarter and a 56% increase compared to the second quarter of 2021. This is the fifth consecutive quarter of volume records.
Meanwhile, the lender’s forward mortgage business recorded $4.23 billion in funding volume in the second quarter, down 17% quarter-on-quarter and 39% year-over-year.Company reduced labor forcesaving about 35% on an execution rate basis, worth more than $100 million annually.
Overall, FoA reported a loss of $168 million in the second quarter.
Finance of America CFO Johan Gericke told analysts on the second quarter earnings call: “This sharp rise in interest rates and credit spreads is putting tremendous pressure on our origination business.”