Finance of America Companies Inc

Previous wording

•We are focused on growing our core retirement solutions businesses, which benefit from a shared set of demographic and economic tailwinds. We believe we can more effectively dispatch our innovative suite of solutions to help senior homeowners achieve their retirement goals through the use of home equity.

Current wording

•We are focused on growing our core retirement solutions business, which benefits from a shared set of demographic and economic tailwinds. We believe we can more effectively dispatch our innovative suite of solutions to help senior homeowners achieve their retirement goals through the use of home equity.

Previous wording

Our Portfolio Management segment provides structuring and product development expertise as well as broker/dealer and institutional asset management capabilities, which facilitates innovation and the successful monetization of our loans. We securitize HECM into Home Equity Conversion Mortgage-Backed Securities (“HMBS”), which the Government National Mortgage Association (“Ginnie Mae”) guarantees, and sell the HMBS in the secondary market while retaining the rights to service the HECM. When HECM are not eligible for securitization into HMBS or are required to be bought out of a pool of HECM previously securitized into an HMBS, we securitize them into privately placed mortgage-backed securities or hold them for investment. We both securitize non-agency reverse mortgage loans into mortgage-backed securities sold to investors and sell them as whole loans to investors. We may also decide to strategically hold certain non-agency reverse mortgage loans for investment. The capabilities provided by the Portfolio Management segment allowed us to complete several issuances and sales of mortgage-backed securities backed by our loan products in 2023 and the first half of 2024, demonstrating the high quality and liquidity of the loan products we originate, the deep relationships we have with our investors, and the resilience of our business model in many economic environments.

Current wording

Our Portfolio Management segment provides structuring and product development expertise as well as broker/dealer and institutional asset management capabilities, which facilitates innovation and the successful monetization of our loans. We securitize HECM into Home Equity Conversion Mortgage-Backed Securities (“HMBS”), which the Government National Mortgage Association (“Ginnie Mae”) guarantees, and sell the HMBS in the secondary market while retaining the rights to service the HECM. When HECM are not eligible for securitization into HMBS or are required to be bought out of a pool of HECM previously securitized into an HMBS, we securitize them into privately placed mortgage-backed securities or hold them for investment. We both securitize non-agency reverse mortgage loans into mortgage-backed securities sold to investors and sell them as whole loans to investors. We may also decide to strategically hold certain non-agency reverse mortgage loans for investment. The capabilities provided by the Portfolio Management segment allowed us to complete several issuances and sales of mortgage-backed securities backed by our loan products in 2023 and through three quarters of 2024, demonstrating the high quality and liquidity of the loan products we originate, the deep relationships we have with our investors, and the resilience of our business model in many economic environments.

Previous wording

The mission of our Retirement Solutions segment is to help senior homeowners achieve their financial goals in retirement. This segment includes all loan origination activity for the Company, including the origination of HECM and non-agency reverse mortgage loans through both the retail and wholesale/TPO channels. The Retirement Solutions segment generates revenue from fees earned at the time of loan origination as well as from the initial estimate of net origination gains, with all originated loans accounted for at fair value. Once originated, the loans are transferred to our Portfolio Management segment, and any future fair value adjustments, including interest earned, on these originated loans are reflected in the revenues of our Portfolio Management segment until final disposition.

Current wording

The mission of our Retirement Solutions segment is to help senior homeowners achieve their financial goals in retirement. This segment includes all loan origination activity for the Company, including the origination of HECM and non-agency reverse mortgage loans through both the retail and TPO channels. The Retirement Solutions segment generates revenue from fees earned at the time of loan origination as well as from the initial estimate of net origination gains, with all originated loans accounted for at fair value. Once originated, the loans are transferred to our Portfolio Management segment, and any future fair value adjustments, including interest earned, on these originated loans are reflected in the revenues of our Portfolio Management segment until final disposition.

Previous wording

•our ability to successfully operate the newly integrated lending platform that we acquired from American Advisors Group in March 2023;

Current wording

•our ability to successfully operate the newly integrated lending platform that we acquired from AAG/Bloom in March 2023;

Previous wording

Due to significant inflationary pressures, the U.S. Federal Reserve raised the federal funds rate during the first three quarters of 2023 and during the same period, reduced its overall purchases and holdings of government and mortgage-related bonds. Higher interest rates generally led to lower mortgage transaction volumes, increased competition, and lower profit margins. Volatility in market conditions resulting from the foregoing events have caused and may continue to cause credit spreads to widen, which reduces, among other things, availability of credit to our Company on favorable terms, liquidity in the market, the fair market value of the assets on our balance sheet, and price transparency of real estate related or asset-backed assets.

Current wording

Due to significant inflationary pressures, the U.S. Federal Reserve raised the federal funds rate during the first three quarters of 2023 and during the same period, reduced its overall purchases and holdings of government and mortgage-related bonds. Higher interest rates generally led to lower mortgage transaction volumes, increased competition, and lower profit margins. Volatility in market conditions resulting from the foregoing events have caused and may continue to cause credit spreads to widen, which reduces, among other things, availability of credit to our Company on favorable terms, liquidity in the market, the fair market value of the assets on our balance sheet, and price transparency of real estate related or asset-backed assets. More recently, inflationary pressures have eased and, based on weakening inflation pressures, the U.S. Federal Reserve decreased the federal funds rate by 50 basis points in September 2024 and 25 basis points in November 2024.

Previous wording

On March 31, 2023, the Company completed the acquisition of the assets and liabilities associated with the AAG Transaction. Refer to Note 1 - Organization and Description of Business and Note 3 - Acquisitions in the Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

On March 31, 2023, the Company completed the acquisition of the assets, including the retail loan originations platform, and liabilities associated with the AAG Transaction. Refer to Note 1 - Organization and Description of Business and Note 3 - Acquisitions in the Notes to Condensed Consolidated Financial Statements for additional information.

Previous wording

On July 25, 2024, the Company completed a 1-for-10 reverse stock split (the “Reverse Stock Split”) of its shares of Class A Common Stock. FoA Equity completed a corresponding 1-for-10 reverse split of its units (“Class A LLC Units”) to maintain the 1-for-1 parity of its Class A LLC Units with the Company’s adjusted number of Class A Common Stock shares. All references in this Quarterly Report on Form 10-Q to numbers of Class A Common Stock shares, weighted average shares outstanding, loss per share, FoA Class A Common Stock share price, and number of Class A LLC Units have been adjusted to reflect the Reverse Stock Split on a retroactive basis. As a result of the Reverse Stock Split, an immaterial amount was reclassified from Class A Common Stock to additional paid-in capital in the Condensed Consolidated Statements of Financial Condition. Refer to Note 21 - Subsequent Events in the Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

On July 25, 2024, the Company completed a 1-for-10 reverse stock split (the “Reverse Stock Split”) of its shares of Class A Common Stock. FoA Equity completed a corresponding 1-for-10 reverse split of its units (“Class A LLC Units”) to maintain the 1-for-1 parity of its Class A LLC Units with the Company’s adjusted number of Class A Common Stock shares. All references in this Quarterly Report on Form 10-Q to numbers of Class A Common Stock shares, weighted average shares outstanding, earnings (loss) per share, FoA Class A Common Stock share price, and number of Class A LLC Units have been adjusted to reflect the Reverse Stock Split on a retroactive basis. As a result of the Reverse Stock Split, an immaterial amount was reclassified from Class A Common Stock to additional paid-in capital in the Condensed Consolidated Statements of Financial Condition.

Previous wording

In the Company’s current Form 10-Q, the Condensed Consolidated Statements of Operations presentation has been changed to provide additional detail regarding the Company’s activities. The change primarily consists of disaggregating the Company’s previously reported net fair value gains (losses) on loans and related obligations caption into the currently presented captions of interest income, interest expense, net origination gains, gain on securitization of HECM tails, net, fair value changes from model amortization, and fair value changes from market inputs or model assumptions. Additionally, previously reported interest income and interest expense, which primarily represented the Company’s interest income on mortgage loans held for sale and other interest income and the Company’s interest expense associated with the Company’s other financing lines of credit, was combined with the interest income and interest expense that was previously reported within net fair value gains (losses) on loans and related obligations, excluding non-portfolio interest income and the interest expense associated with the Company’s non-funding debt, which is now reported separately as non-funding interest expense, net. As a result of the change, the Company’s previously reported revenues have been recast to reflect the updated presentation. Refer to Note 2 - Summary of Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

Beginning with the Company’s second quarter 2024 Form 10-Q, the Condensed Consolidated Statements of Operations presentation was changed to provide additional detail regarding the Company’s activities. The change primarily consists of disaggregating the Company’s previously reported net fair value gains (losses) on loans and related obligations caption into the currently presented captions of interest income, interest expense, net origination gains, gain on securitization of HECM tails, net, fair value changes from model amortization, and fair value changes from market inputs or model assumptions. Additionally, previously reported interest income and interest expense, which primarily represented the Company’s interest income on mortgage loans held for sale and other interest income and the Company’s interest expense associated with the Company’s other financing lines of credit, was combined with the interest income and interest expense that was previously reported within net fair value gains (losses) on loans and related obligations, excluding non-portfolio interest income and the interest expense associated with the Company’s non-funding debt, which is now reported separately as non-funding interest expense, net. As a result of the change, the Company’s previously reported revenues have been recast to reflect the updated presentation. Refer to Note 2 - Summary of Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements for additional information.

Previous wording

We earn interest income on all loans held for investment, subject to HMBS related obligations, loans held for investment, subject to nonrecourse debt, and loans held for investment. Refer to Note 16 - Interest Income and Interest Expense in the Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

We earn interest income on all loans held for investment, subject to HMBS related obligations, loans held for investment, subject to nonrecourse debt, and other loans held for investment. Refer to Note 16 - Interest Income and Interest Expense in the Notes to Condensed Consolidated Financial Statements for additional information.

Previous wording

Net origination gains is the difference between the cost basis of newly originated or acquired loans and their estimated fair value.

Current wording

Net origination gains is the difference between the cost basis of newly originated or acquired loans and their initial estimated fair value at the time of origination.

Previous wording

The majority of our outstanding financial instruments are carried at fair value. Refer to Note 6 - Fair Value in the Notes to Condensed Consolidated Financial Statements for additional information regarding the key inputs, assumptions, and valuation techniques utilized to measure fair value.

Current wording

Fair value changes from market inputs or model assumptions represent other changes to fair value of portfolio-related assets and liabilities not related to new originations, portfolio runoff, or realization of modeled income and expenses. These changes are driven primarily by updates to market inputs or model changes. Refer to Note 6 - Fair Value in the Notes to Condensed Consolidated Financial Statements for additional information regarding the key inputs, assumptions, and valuation techniques utilized to measure fair value.

Previous wording

Depreciation and amortization expenses include depreciation and amortization of fixed assets and leasehold improvements and definite-lived intangible assets.

Current wording

Depreciation and amortization expenses include depreciation and amortization of fixed assets, leasehold improvements, and definite-lived intangible assets.

Previous wording

The following tables present selected financial data for the three and six months ended June 30, 2024 and 2023.

Current wording

The following tables present selected financial data for the three and nine months ended September 30, 2024 and 2023.

Previous wording

(1) Amounts include interest income and expense on all loans held for investment, subject to HMBS related obligations, loans held for investment, subject to nonrecourse debt, loans held for investment, HMBS related obligations, and nonrecourse debt.

Current wording

(1) Amounts include interest income and expense on all loans held for investment, subject to HMBS related obligations, loans held for investment, subject to nonrecourse debt, other loans held for investment, HMBS related obligations, and nonrecourse debt.

Previous wording

Net loss from continuing operations before income taxes decreased $220.1 million or 98.3% primarily as a result of the following:

Current wording

Net income (loss) from continuing operations before income taxes improved $380.7 million primarily as a result of the following:

Previous wording

•Net fair value changes on loans and related obligations improved $193.9 million primarily as a result of improved fair value changes from market inputs or model assumptions compared to the 2023 period. The improvement in fair value changes from market inputs or model assumptions was primarily related to market interest rate and yield volatility, which generated net fair value gains during the three months ended June 30, 2024 compared to losses in the 2023 period. See Note 6 - Fair Value within the Notes to Condensed Consolidated Financial Statements for additional information on assumptions impacting the value of our loans held for investment. The $5.4 million increase in gain on securitization of HECM tails, net, during the three months ended June 30, 2024 compared to the 2023 period was due to higher marks from our tail securitizations. Fair value changes from model amortization improved $7.4 million due to higher residual yield leading to lower modeled amortization in the three months ended June 30, 2024 compared to the 2023 period.

Current wording

•Net fair value changes on loans and related obligations improved $369.0 million primarily as a result of improved fair value changes from market inputs or model assumptions compared to the 2023 period. The improvement in fair value changes from market inputs or model assumptions was primarily related to market interest rate and yield volatility, which generated net fair value gains during the three months ended September 30, 2024 compared to losses in the 2023 period. See Note 6 - Fair Value within the Notes to Condensed Consolidated Financial Statements for additional information on assumptions impacting the value of our loans held for investment.

Previous wording

The Retirement Solutions segment recognized $40.3 million in net origination gains on loan originations of $446.6 million for the three months ended June 30, 2024 compared to $32.9 million in net origination gains on loan originations of $397.6 million for the comparable 2023 period. The increase in net origination gains in the Retirement Solutions segment was due both to higher loan origination volumes and higher margins.

Current wording

The Retirement Solutions segment recognized $57.2 million in net origination gains on loan originations of $513.4 million for the three months ended September 30, 2024 compared to $31.4 million in net origination gains on loan originations of $470.0 million for the comparable 2023 period. The increase in net origination gains in the Retirement Solutions segment was due to both higher loan origination volumes and higher margins.

Previous wording

•Total expenses decreased $17.4 million or 9.0% primarily due to decreases in salaries, benefits, and related expenses as well as decreases in general and administrative expenses due to a reduction in average headcount and continued cost-cutting measures associated with the restructuring of the business. This was partially offset by an increase in marketing and advertising expenses within our retail loan originations platform acquired from AAG/Bloom.

Current wording

•Total expenses decreased $25.1 million or 23.8% primarily due to decreases in salaries, benefits, and related expenses as well as decreases in general and administrative expenses due to a reduction in average headcount and continued cost-cutting measures associated with the restructuring of the business.

Previous wording

Net loss from continuing operations before taxes decreased $146.3 million or 88.2% primarily as a result of the following:

Current wording

Net income (loss) from continuing operations before taxes improved $527.0 million primarily as a result of the following:

Previous wording

The Retirement Solutions segment recognized $79.9 million in net origination gains on loan originations of $870.0 million for the six months ended June 30, 2024 compared to $57.4 million in net origination gains on loan originations of $709.1 million for the comparable 2023 period. The increase in net origination gains in the Retirement Solutions segment was due both to higher loan origination volumes and higher margins associated with the increase in volumes from our retail platform acquired from AAG/Bloom.

Current wording

The Retirement Solutions segment recognized $137.1 million in net origination gains on loan originations of $1.4 billion for the nine months ended September 30, 2024 compared to $88.8 million in net origination gains on loan originations of $1.2 billion for the comparable 2023 period. The increase in net origination gains in the Retirement Solutions segment was due to both higher loan origination volumes and higher margins associated with the increase in volumes from our retail platform acquired from AAG/Bloom.

Previous wording

•Fee income decreased $5.9 million due to fees associated with the previous operations of the home improvement lending business, as well as lower mortgage servicing rights (“MSR”) servicing fee income due to a much lower MSR portfolio balance for the three months ended June 30, 2024 compared to the 2023 period.

Current wording

•Fee income decreased $11.2 million primarily related to lower mortgage servicing rights (“MSR”) servicing fee income due to a much lower MSR portfolio balance for the nine months ended September 30, 2024 compared to the 2023 period, as well as lower fees associated with the previous operations of the home improvement lending business, and a decline in services provided by the Company’s operational fulfillment services team. These reductions were partially offset by higher reverse loan origination fees generated through our retail platform acquired from AAG/Bloom.

Previous wording

•Total expenses decreased $25.0 million or 22.7% primarily due to decreases in salaries, benefits, and related expenses as well as decreases in general and administrative expenses due to a reduction in average headcount and continued cost-cutting measures associated with the restructuring of the business. This was partially offset by an increase in marketing and advertising expenses within our retail loan originations platform acquired from AAG/Bloom.

Current wording

•Total expenses decreased $42.5 million or 14.2% primarily due to decreases in salaries, benefits, and related expenses as well as decreases in general and administrative expenses due to a reduction in average headcount and continued cost-cutting measures associated with the restructuring of the business. This was partially offset by an increase in marketing and advertising expenses within our retail loan originations platform acquired from AAG/Bloom.

Previous wording

Revenues and fees are directly attributed to their respective segments at the time services are performed. Revenues generated on inter-segment services performed are valued based on estimated market value. Expenses directly attributable to the operating segments are expensed as incurred. Other expenses are allocated to individual segments based on the estimated value of services performed, total revenue contributions, personnel headcount, or the equity invested in each segment based on the type of expense allocated. The allocation methodology is reviewed annually. There were no changes to methodology during the three and six months ended June 30, 2024 and 2023. Expenses for enterprise-level general overhead, such as executive administration, are not allocated to the business segments.

Current wording

Revenues and fees are directly attributed to their respective segments at the time services are performed. Revenues generated on inter-segment services performed are valued based on estimated market value. Expenses directly attributable to the operating segments are expensed as incurred. Other expenses are allocated to individual segments based on the estimated value of services performed, total revenue contributions, personnel headcount, or the equity invested in each segment based on the type of expense allocated. The allocation methodology is reviewed annually. There were no changes to methodology during the three and nine months ended September 30, 2024 and 2023.

Previous wording

Our Retirement Solutions segment generates its revenues primarily from the origination of reverse mortgage loans, including HECM insured by FHA and non-agency reverse mortgage loans. Revenues from our Retirement Solutions segment include both our initial estimate of net origination gains from originated loans, which is determined by utilizing quoted prices on similar securities or internally-developed models utilizing observable market inputs, in addition to fees earned at the time of origination of the associated loans. We elect to account for all originated loans at fair value. The loans are immediately transferred to our Portfolio Management segment, and any future fair value adjustments, including interest earned, on these originated loans are reflected in revenues of our Portfolio Management segment until final disposition.

Current wording

Our Retirement Solutions segment generates its revenues primarily from the origination of reverse mortgage loans, including HECM insured by the FHA and non-agency reverse mortgage loans. Revenues from our Retirement Solutions segment include both our initial estimate of net origination gains from originated loans, which is determined by utilizing quoted prices on similar securities or internally-developed models utilizing observable market inputs, in addition to fees earned at the time of origination of the associated loans. We elect to account for all originated loans at fair value. The loans are immediately transferred to our Portfolio Management segment, and any future fair value adjustments, including interest earned, on these originated loans are reflected in revenues of our Portfolio Management segment until final disposition.

Previous wording

•Net origination gains increased $7.3 million or 22.3% as a result of higher reverse mortgage loan origination volumes, as well as higher margins. We originated $446.6 million of reverse mortgage loans for the three months ended June 30, 2024, an increase of 12.3%, compared to $397.6 million for the comparable 2023 period. During the three months ended June 30, 2024, the weighted average margin on reverse mortgage loan production was 9.02% compared to 8.28% in 2023, an increase of 0.74%.

Current wording

•Net origination gains increased $25.8 million or 82.4% as a result of higher reverse mortgage loan origination volumes and higher margins. We originated $513.4 million of reverse mortgage loans for the three months ended September 30, 2024, an increase of 9.2%, compared to $470.0 million for the comparable 2023 period. During the three months ended September 30, 2024, the weighted average margin on reverse mortgage loan production was 11.15% compared to 6.68% in 2023, an increase of 4.47%.

Previous wording

Total revenues decreased $3.7 million primarily as a result of the following:

Current wording

•Fee income decreased $3.7 million primarily due to fees associated with the previous operations of the home improvement lending business.

Previous wording

•Loss on sale and other income from loans held for sale, net, improved $2.3 million due to the absence of losses related to the previous operations of the home improvement lending business.

Current wording

•Loss on sale and other income from loans held for sale, net, improved $2.2 million due to the absence of losses related to the previous operations of the home improvement lending business.

Previous wording

•Net origination gains increased $22.5 million or 39.2% as a result of higher reverse mortgage loan origination volumes, as well as higher margins associated with the increase in volumes from our retail platform acquired from AAG/Bloom. We originated $870.0 million of reverse mortgage loans for the six months ended June 30, 2024, an increase of 22.7%, compared to $709.1 million for the comparable 2023 period. During the six months ended June 30, 2024, the weighted average margin on reverse mortgage loan production was 9.19% compared to 8.10% in 2023, an increase of 1.09% due primarily to the increase in retail production mix associated with the onboarding of our retail platform acquired from AAG/Bloom.

Current wording

•Net origination gains increased $48.4 million or 54.5% as a result of higher reverse mortgage loan origination volumes and higher margins associated with the increase in volumes from our retail platform acquired from AAG/Bloom. We originated $1.4 billion of reverse mortgage loans for the nine months ended September 30, 2024, an increase of 17.3%, compared to $1.2 billion for the comparable 2023 period. During the nine months ended September 30, 2024, the weighted average margin on reverse mortgage loan production was 9.91% compared to 7.53% in 2023, an increase of 2.38% primarily due to the increase in retail production mix associated with the onboarding of our retail platform acquired from AAG/Bloom.

Previous wording

•Fee income decreased $0.2 million primarily due to fees associated with the previous operations of the home improvement lending business, partially offset by higher reverse loan origination fees generated through our retail platform acquired from AAG/Bloom.

Current wording

•Fee income decreased $4.0 million primarily due to fees associated with the previous operations of the home improvement lending business, partially offset by higher reverse loan origination fees generated through our retail platform acquired from AAG/Bloom.

Previous wording

•Loss on sale and other income from loans held for sale, net, improved $3.5 million due to lower losses related to the previous operations of the home improvement lending business.

Current wording

•Loss on sale and other income from loans held for sale, net, improved $5.7 million due to lower losses related to the previous operations of the home improvement lending business.

Previous wording

•Total salaries, benefits, and related expenses decreased $5.4 million or 20.4% primarily due to a decrease in average headcount for the three months ended June 30, 2024 at 495 compared to 683 for the 2023 period related to continued cost-cutting measures associated with the restructuring of the business.

Current wording

•Total salaries, benefits, and related expenses decreased $8.1 million or 28.5% primarily due to a decrease in average headcount for the three months ended September 30, 2024 at 446 compared to 670 for the 2023 period related to continued cost-cutting measures associated with the restructuring of the business, as well as lower commissions and bonuses due to channel mix and the lack of compensation cost associated with the Replacement Restricted Stock Units (“RSUs”) and Earnout Right RSUs for the three months ended September 30, 2024 when compared to the 2023 period.

Previous wording

•General and administrative expenses decreased $2.7 million or 28.4% primarily due to continued cost-cutting measures associated with the restructuring of the business for the three months ended June 30, 2024 when compared to the 2023 period.

Current wording

•General and administrative expenses decreased $2.1 million or 25.1% primarily due to continued cost-cutting measures associated with the restructuring of the business for the three months ended September 30, 2024 when compared to the 2023 period.

Previous wording

•Total salaries, benefits, and related expenses decreased $2.0 million or 4.4% primarily due to a decrease in average headcount for the six months ended June 30, 2024 at 515 compared to 524 for the 2023 period related to continued cost-cutting measures associated with the restructuring of the business, partially offset by increased expenses associated with the onboarding of our retail loan originations platform acquired from AAG/Bloom in the 2023 period.

Current wording

•Total salaries, benefits, and related expenses decreased $10.0 million or 13.8% primarily due to a decrease in average headcount for the nine months ended September 30, 2024 at 492 compared to 573 for the 2023 period related to continued cost-cutting measures associated with the restructuring of the business, as well as lower compensation cost associated with the Replacement RSUs and Earnout Right RSUs, partially offset by increased expenses associated with the onboarding of our retail loan originations platform acquired from AAG/Bloom in the 2023 period.

Previous wording

•Marketing and advertising expenses increased $2.0 million or 23.0% primarily within our retail loan originations platform acquired from AAG/Bloom.

Current wording

•Marketing and advertising expenses increased $7.5 million or 34.1% primarily within our retail loan originations platform acquired from AAG/Bloom.

Previous wording

•General and administrative expenses decreased $0.4 million or 3.1% primarily due to continued cost-cutting measures associated with the restructuring of the business, partially offset by an increase in communications and data processing expenses and other general and administrative expenses from the onboarded infrastructure of our retail loan originations platform acquired from AAG/Bloom for the six months ended June 30, 2024 when compared to the 2023 period.

Current wording

•General and administrative expenses decreased $2.6 million or 11.3% primarily due to continued cost-cutting measures associated with the restructuring of the business, partially offset by increases in various expenses from the onboarded infrastructure of our retail loan originations platform acquired from AAG/Bloom for the nine months ended September 30, 2024 when compared to the 2023 period.

Previous wording

Certain of our financial instruments are valued utilizing a process that combines the use of a discounted cash flow (“DCF”) model and analysis of current market data to arrive at an estimate of fair value. The cash flow assumptions and prepayment and repayment assumptions used in the model are based on various factors, with the key assumptions being prepayment and repayment speeds, credit loss frequencies and severity, and discount rate assumptions. Any changes in fair value on these financial instruments are recorded in net fair value changes on loans and related obligations, with changes in fair value due to portfolio runoff and realization of modeled income and expenses being recorded in fair value changes from model amortization in the Condensed Consolidated Statements of Operations, and other fair value changes being recorded in fair value changes from market inputs or model assumptions in the Condensed Consolidated Statements of Operations. The interest recognized on these financial instruments are recorded in interest income or interest expense in the Condensed Consolidated Statements of Operations.

Current wording

Certain of our financial instruments are valued utilizing a process that combines the use of a discounted cash flow (“DCF”) model and analysis of current market data to arrive at an estimate of fair value. The cash flow assumptions and prepayment and repayment assumptions used in the model are based on various factors, with the key assumptions being prepayment and repayment speeds, credit loss frequencies and severity, and discount rate assumptions. Any changes in fair value on these financial instruments are recorded in net fair value changes on loans and related obligations, with changes in fair value due to portfolio runoff and realization of modeled income and expenses being recorded in fair value changes from model amortization in the Condensed Consolidated Statements of Operations, and other fair value changes being recorded in fair value changes from market inputs or model assumptions in the Condensed Consolidated Statements of Operations. The interest recognized on these financial instruments is recorded in interest income or interest expense in the Condensed Consolidated Statements of Operations.

Previous wording

(1) Amounts include interest income and expense on all loans held for investment, subject to HMBS related obligations, loans held for investment, subject to nonrecourse debt, loans held for investment, HMBS related obligations, and nonrecourse debt.

Current wording

(1) Amounts include interest income and expense on all loans held for investment, subject to HMBS related obligations, loans held for investment, subject to nonrecourse debt, other loans held for investment, HMBS related obligations, and nonrecourse debt.

Previous wording

•Salaries, benefits, and related expenses decreased $1.6 million or 29.0%primarily due to adecrease in average headcount and continued cost-cutting measures associated with the restructuring of the business during the three months ended June 30, 2024 compared to the 2023 period. Average headcount was 66 for the three months ended June 30, 2024 compared to 73 for the 2023 period.

Current wording

•Salaries, benefits, and related expenses decreased $2.1 million or 41.0%primarily due to adecrease in average headcount and continued cost-cutting measures associated with the restructuring of the business during the three months ended September 30, 2024 compared to the 2023 period. Average headcount was 57 for the three months ended September 30, 2024 compared to 71 for the 2023 period.

Previous wording

•Salaries, benefits, and related expenses decreased $4.7 million primarily due to a decrease in average headcountand continued cost-cutting measures associated with the restructuring of the business during the six months ended June 30, 2024 compared to the 2023 period. Average headcount was 68 for the six months ended June 30, 2024 compared to 76 for the 2023 period.

Current wording

•Salaries, benefits, and related expenses decreased $6.8 million primarily due to a decrease in average headcountand continued cost-cutting measures associated with the restructuring of the business during the nine months ended September 30, 2024 compared to the 2023 period. Average headcount was 64 for the nine months ended September 30, 2024 compared to 74 for the 2023 period.

Previous wording

•Fee income decreased $3.2 million primarily due to fees associated with the previous operations of the home improvement lending business.

Current wording

Total revenues decreased $3.2 million primarily as a result of the following: