Finance of America Companies Inc.

Previous wording

Through FAR, the Company originates, purchases, sells, securitizes, and services (in partnership with third-party subservicers) home equity conversion mortgages (“HECM”), which are originated pursuant to the Federal Housing Administration (the “FHA”) HECM program and are insured by the FHA, and non-agency reverse mortgage loans, which are not insured by the FHA. We have launched several non-agency reverse mortgage loan products to serve the United States of America (the “U.S.”) senior population and have plans for additional innovative products to satisfy this vast and largely underserved market. For example, we launched a non-agency second lien reverse mortgage loan product, second in priority behind the first lien of an existing traditional forward mortgage loan or home equity line of credit collateralized by the same mortgaged property. In 2024 and continuing in 2025, we invested more capital and resources into the second lien product, including marketing and digital efforts, in order to expand its reach through a leading broker-facing platform and expansion of the product to additional states. The launch and expansion of the second lien product has enabled us to serve borrowers who already have and desire to maintain a low-rate primary mortgage but want the convenience of a flexible second lien with no required monthly principal and interest payments, exemplifying our commitment to meet and serve new kinds of borrowers whose needs are not satisfied by existing available products. We are a leader in this market and we are focused on developing and offering products for borrowers with interest in using a reverse mortgage loan as a retirement planning tool, which we believe will continue to increase our addressable customer base and ultimately raise our origination volumes.

Current wording

Through FAR, the Company originates, purchases, sells, securitizes, and services (in partnership with third-party subservicers) home equity conversion mortgage (“HECM”) loans, which are originated pursuant to the Federal Housing Administration (the “FHA”) HECM program and are insured by the FHA, and non-agency reverse mortgage loans, which are not insured by the FHA. We have launched several non-agency reverse mortgage loan products to serve the United States of America (the “U.S.”) senior population and have plans for additional innovative products to satisfy this vast and largely underserved market. For example, we launched a non-agency second lien reverse mortgage loan product, second in priority behind the first lien of an existing traditional forward mortgage loan or home equity line of credit collateralized by the same mortgaged property. In 2024 and continuing in 2025, we invested more capital and resources into the second lien product, including marketing and digital efforts, in order to expand its reach through a leading broker-facing platform and expansion of the product to additional states. The launch and expansion of the second lien product has enabled us to serve borrowers who already have and desire to maintain a low-rate primary mortgage but want the convenience of a flexible second lien with no required monthly principal and interest payments, exemplifying our commitment to meet and serve new kinds of borrowers whose needs are not satisfied by existing available products. We are a leader in this market and we are focused on developing and offering products for borrowers with interest in using a reverse mortgage loan as a retirement planning tool, which we believe will continue to increase our addressable customer base and ultimately raise our origination volumes.

Previous wording

We originate loans through a retail channel (consisting primarily of a centralized retail platform) and a third-party originator (“TPO”) channel (consisting primarily of a network of mortgage-brokers). In 2024 and continuing in 2025, we took steps to streamline and enhance our marketing and originations operations and digital capabilities. We transitioned our sales teams onto one loan origination system, making our origination operations more efficient, and unified under the single brand name “Finance of America,” creating a recognizable identity that clarifies the Company’s offerings in the market. This unification also included our recently launched new brand platform, ‘A Better Way with FOA,’ along with a national advertising campaign. Further, in the second quarter of 2024, we modified our go-to-market strategy within our retail channel to focus on our most efficient business lines and stepped away from business lines and campaigns that had been less effective. Additionally, efforts are underway to develop our digital capabilities. Our digital innovation strategy is designed to deliver financial services to seniors in a way that is both modern and user friendly. We are working to build a digital channel that will supplement our existing lines of business and leverage automated digital tools to improve efficiency and the overall ease of transacting. We are similarly engaging in efforts to refine the systems used by our mortgage-broker partners to improve the efficiency and ease of originations via our TPO channel. We believe these efforts will increase brand and product recognition and awareness within the addressable market of U.S. seniors and among mortgage-brokers, make our marketing efforts and originations processes more efficient and less costly, improve the originations experience for borrowers and mortgage-broker partners, expand the number and depth of our relationships with borrowers and mortgage-broker partners, and ultimately raise our origination volumes.

Current wording

We originate loans through a retail channel (consisting primarily of a centralized retail platform) and a third-party originator (“TPO”) channel (consisting primarily of a network of mortgage-brokers). In 2024 and continuing in 2025, we took steps to streamline and enhance our marketing and originations operations and digital capabilities. We transitioned our sales teams onto one loan origination system, making our origination operations more efficient, and unified under the single brand name “Finance of America,” creating a recognizable identity that clarifies the Company’s offerings in the market. This unification also included our recently introduced new brand platform, “A Better Way with FOA,” along with a national advertising campaign. Additionally, we recently launched our digital borrower experience for our non-agency second lien reverse mortgage loan product that empowers customers with the ability to obtain credit pre-qualification on their own terms and at their own pace. Our digital innovation strategy is designed to deliver financial services to seniors in a way that is both modern and user friendly. We will continue building a digital channel that supplements our existing lines of business and leverages automated digital tools to improve efficiency and the overall ease of transacting. We are similarly engaging in efforts to refine the systems used by our mortgage-broker partners to improve the efficiency and ease of originations via our TPO channel. We believe these efforts will increase brand and product recognition and awareness within the addressable market of U.S. seniors and among mortgage-brokers, make our marketing efforts and originations processes more efficient and less costly, improve the originations experience for borrowers and mortgage-broker partners, expand the number and depth of our relationships with borrowers and mortgage-broker partners, and ultimately raise our origination volumes.

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 convey the HECM to the United States Department of Housing and Urban Development (“HUD”) or liquidate them in accordance with program requirements, securitize them into privately placed mortgage-backed securities, or hold them for investment. In November 2024, Ginnie Mae announced the finalized term sheet for its HMBS 2.0 program expected to be implemented in 2025. Once implemented, the HMBS 2.0 program will enable us to securitize into HMBS additional HECM that are required to be bought out of pools of HECM securitized pursuant to Ginnie Mae’s existing HMBS program or otherwise not eligible for securitization pursuant to Ginnie Mae’s existing HMBS program (subject to expanded eligibility parameters applicable to the HMBS 2.0 program), increasing the HECM that we are able to securitize into HMBS. 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 2024 and the first quarter of 2025, including our first issuance and sale of mortgage-backed securities backed exclusively by our non-agency second lien reverse mortgage loan product, 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 loans 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 loans. When HECM loans are not eligible for securitization into HMBS or are required to be bought out of a pool of HECM loans previously securitized into an HMBS, we convey the HECM loan to the United States Department of Housing and Urban Development (“HUD”) or liquidate them in accordance with program requirements, securitize them into privately placed mortgage-backed securities, or hold them for investment. In November 2024, Ginnie Mae announced the finalized term sheet for its HMBS 2.0 program expected to be implemented later in 2025. Once implemented, the HMBS 2.0 program will enable us to securitize into HMBS additional HECM loans that are required to be bought out of pools of HECM loans securitized pursuant to Ginnie Mae’s existing HMBS program or otherwise not eligible for securitization pursuant to Ginnie Mae’s existing HMBS program (subject to expanded eligibility parameters applicable to the HMBS 2.0 program), increasing the HECM loans that we are able to securitize into HMBS. 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 2024 and the first half of 2025, including our first issuance and sale of mortgage-backed securities backed exclusively by our non-agency second lien reverse mortgage loan product, 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

•broad economic factors such as the strength and stability of the overall economy, including sustained higher or lower interest rates and inflation, the unemployment level, and real estate values.

Current wording

•broad economic factors such as the strength and stability of the overall economy, including sustained higher or lower interest rates, inflation, the unemployment level, real estate values, and trade and tax policies.

Previous wording

Due to weakening inflationary pressures, the U.S. Federal Reserve decreased the federal funds rate by 100 basis points during the second half of 2024, back to December 2022 levels. The federal government has recently imposed tariffs on certain foreign goods, and the current administration has indicated its intention to impose additional tariffs on imports of certain products into the U.S. Such policies have triggered reciprocal tariffs against the U.S. These policies may have an impact on economic conditions relevant to our business, including real estate values and prevailing mortgage rates, however, the extent of the impact remains uncertain. Higher interest rates generally lead to lower mortgage transaction volumes, increased competition, and lower profit margins. Volatility in market conditions resulting from the foregoing events may 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 value of the assets on our balance sheet, and price transparency of real estate-related or asset-backed assets.

Current wording

The U.S. Federal Reserve’s monetary policies and the federal government’s recent tariff policies may have an impact on economic conditions relevant to our business, including real estate values and prevailing mortgage rates, however, the extent of the impact remains uncertain. Higher interest rates generally lead to lower mortgage transaction volumes, increased competition, and lower profit margins. Volatility in market conditions resulting from the foregoing policies may 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 value of the assets on our balance sheet, and price transparency of real estate-related or asset-backed assets.

Previous wording

The following tables present selected financial data for the three months ended March 31, 2025 and 2024.

Current wording

The following tables present selected financial data for the three and six months ended June 30, 2025 and 2024.

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, other loans held for investment, HMBS related obligations, and nonrecourse debt. Interest expense on HMBS and nonrecourse obligations also includes gains or losses on extinguishment of debt related to the purchase of securities that were previously issued by a consolidated trust.

Current wording

(1) Interest expense on HMBS and nonrecourse obligations also includes gains or losses on extinguishment of debt related to the purchase of securities that were previously issued by consolidated trusts.

Previous wording

Net income (loss) from continuing operations before income taxes improved $97.5 million primarily as a result of the following:

Current wording

Net income (loss) from continuing operations before income taxes improved $85.7 million primarily as a result of the following:

Previous wording

•Fair value changes from model amortization improved $16.7 million primarily due to a higher modeled yield on a larger portfolio during the three months ended March 31, 2025 compared to the 2024 period. Net portfolio interest income increased $0.3 million, as higher average cost of funds within our securitized financing portfolio was more than offset by a gain on extinguishment of debt related to the purchase of securities that were previously issued by a consolidated trust.

Current wording

•Fair value changes from model amortization improved $12.4 million primarily due to a higher modeled yield on a larger portfolio during the three months ended June 30, 2025 compared to the 2024 period. Net portfolio interest income decreased $6.0 million due to higher cost of funds within our securitized financing portfolio, which was partially offset by a gain on extinguishment of debt related to the purchase of securities that were previously issued by consolidated trusts.

Previous wording

•Net origination gains increased $6.4 million as a result of higher reverse mortgage loan origination volumes, partially offset by lower margins due to changes in channel mix. We recognized $46.0 million in net origination gains on loan originations of $560.7 million for the three months ended March 31, 2025 compared to $39.7 million in net origination gains on loan originations of $423.5 million for the comparable 2024 period.

Current wording

•Net origination gains increased $22.2 million as a result of higher reverse mortgage loan origination volumes, partially offset by lower margins due to changes in channel mix. We recognized $102.1 million in net origination gains on loan originations of $1.2 billion for the six months ended June 30, 2025 compared to $79.9 million in net origination gains on loan originations of $870.0 million for the comparable 2024 period.

Previous wording

•Total expenses decreased $4.9 million or 5.4% due to decreases in salaries, benefits, and related expenses related to a reduction in average headcount, as well as decreases in general and administrative expenses due to continued cost-cutting measures associated with thewind-down of business lines that are not part of our unified modern retirement solutions platform. This was partially offset by an increase in loan portfolio related expenses due to increased securitization expenses related to nonrecourse securitizations during the three months ended March 31, 2025 compared to the 2024 period, as well as an increase in marketing and advertising expenses related to brand marketing and our digital innovation strategy.

Current wording

•Total expenses decreased $0.9 million primarily due to decreases in general and administrative expenses due to continued cost-cutting initiatives that align expenses with ourunified modern retirement solutions platform, as well asdecreases in salaries, benefits, and related expenses related to a reduction in average headcount during the six months ended June 30, 2025 compared to the 2024 period. This was partially offset by an increase in loan portfolio related expenses due to increased securitization expenses, an increase in marketing and advertising expenses related to brand marketing and our digital innovation strategy, and an increase in variable compensation as a result of higher loan production.

Previous wording

Our Portfolio Management segment provides product development, loan securitization, loan sales, risk management, servicing oversight, and asset management services to the Company. Our Portfolio Management team acts as the connector between borrowers and investors. The direct connections to investors, provided by our Financial Industry Regulatory Authority registered broker-dealer, allows us to innovate and manage risk through better price and product discovery. Given our scale, we are able to work directly with investors and, where appropriate, retain assets on the balance sheet for attractive return opportunities. These retained investments are a source of growing and recurring interest and other servicing-related income. The Portfolio Management segment primarily generates revenue from the net interest income and fair value changes on portfolio assets, monetized through securitization, sale, or other financing of those assets.

Current wording

Our Portfolio Management segment provides product development, loan securitization, loan sales, risk management, servicing oversight, and asset management services to the Company. Our Portfolio Management team acts as the connector between borrowers and investors. The direct connections to investors, provided by our Financial Industry Regulatory Authority registered broker-dealer, allow us to innovate and manage risk through better price and product discovery. Given our scale, we are able to work directly with investors and, where appropriate, retain assets on the balance sheet for attractive return opportunities. These retained investments are a source of growing and recurring interest and other servicing-related income. The Portfolio Management segment primarily generates revenue from the net interest income and fair value changes on portfolio assets, monetized through securitization, sale, or other financing of those assets.

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 months ended March 31, 2025 and 2024. 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 six months ended June 30, 2025 and 2024. Expenses for enterprise-level general overhead, such as executive administration, are not allocated to the business segments.

Previous wording

•Net origination gains increased $6.4 million or 16.1% as a result of higher reverse mortgage loan origination volumes, partially offset by lower margins due to changes in channel mix. We originated $560.7 million of reverse mortgage loans for the three months ended March 31, 2025, an increase of 32.4%, compared to $423.5 million for the comparable 2024 period. During the three months ended March 31, 2025, the weighted average margin on reverse mortgage loan production was 8.21% compared to 9.37% in 2024, a decrease of 1.16%.

Current wording

•Net origination gains increased $22.2 million or 27.8% as a result of higher reverse mortgage loan origination volumes, partially offset by lower margins due to changes in channel mix. We originated $1.2 billion of reverse mortgage loans for the six months ended June 30, 2025, an increase of 33.7%, compared to $870.0 million for the comparable 2024 period. During the six months ended June 30, 2025, the weighted average margin on reverse mortgage loan production was 8.78% compared to 9.19% in 2024, a decrease of 0.41%.

Previous wording

•Total salaries, benefits, and related expenses increased $0.7 million or 3.4% primarily due to increases in variable compensation as a result of higher loan production and increased shared services allocations, partially offset by a decrease in average headcount. In addition, there was a reduction in compensation cost associated with the Replacement Restricted Stock Units (“RSUs”) and Earnout Right RSUs which expired in 2024.

Current wording

•Total salaries, benefits, and related expenses increased $2.4 million or 11.5% primarily due to increases in variable compensation as a result of higher loan production and increases in technology resources, partially offset by a decrease in average headcount during the three months ended June 30, 2025 when compared to the 2024 period.

Previous wording

•General and administrative expenses and loan production expenses decreased $3.7 million or 36.4% primarily due to continued cost-cutting measures during the three months ended March 31, 2025 when compared to the 2024 period. These reductions were partially offset by a $2.2 million increase in marketing and advertising expenses related to brand marketing and our digital innovation strategy.

Current wording

•Marketing and advertising expenses increased $1.6 million related to brand marketing and our digital innovation strategy, which was partially offset by a decrease in General and administrative expenses of $0.9 million primarily due to continued cost-cutting measures during the three months ended June 30, 2025 when compared to the 2024 period.

Previous wording

The following table provides a summary of the assets and liabilities under management by our Portfolio Management segment(in thousands):

Current wording

The following table provides a summary of the assets and liabilities in our Portfolio Management segment(in thousands):

Previous wording

•Fair value changes from model amortization improved $16.7 million primarily due to a higher modeled yield on a larger portfolio during the three months ended March 31, 2025 compared to the 2024 period. Net portfolio interest income increased $0.3 million, as higher average cost of funds within our securitized financing portfolio was more than offset by a gain on extinguishment of debt related to the purchase of securities that were previously issued by a consolidated trust.

Current wording

•Fair value changes from model amortization improved $12.4 million primarily due to a higher modeled yield on a larger portfolio during the three months ended June 30, 2025 compared to the 2024 period. Net portfolio interest income decreased $6.0 million due to higher cost of funds within our securitized financing portfolio, which was partially offset by a gain on extinguishment of debt related to the purchase of securities that were previously issued by consolidated trusts.

Previous wording

•Fair value changes from market inputs or model assumptions increased $74.7 million primarily due to market interest rate and yield volatility, which generated higher net fair value gains during the three months ended March 31, 2025 compared to the 2024 period. Refer to Note 5 - Fair Value in the Notes to Condensed Consolidated Financial Statements for additional information regarding the key inputs, assumptions, and valuation techniques impacting the value of our loans held for investment and related obligations.

Current wording

•Fair value changes from market inputs or model assumptions increased $83.7 million primarily due to lower market interest rates and yield volatility, which generated higher net fair value gains during the three months ended June 30, 2025 compared to the 2024 period. Refer to Note 5 - Fair Value in the Notes to Condensed Consolidated Financial Statements for additional information regarding the key inputs, assumptions, and valuation techniques impacting the value of our loans and related obligations.

Previous wording

•Salaries, benefits, and related expenses decreased $1.4 million or 28.3% primarily due to a decrease in average headcountand continued cost-cutting measures associated with the wind-down of business lines that are not part of our unified modern retirement solutions platform during the three months ended March 31, 2025 when compared to the 2024 period, as well as a reduction in compensation cost associated with the Replacement RSUs and Earnout Right RSUs which expired in 2024. Average headcount was 61 for the three months ended March 31, 2025 compared to 69 for the 2024 period.

Current wording

•Salaries, benefits, and related expenses decreased $1.6 million or 18.2% primarily due to a decrease in average headcountand continued cost-cutting initiatives that align expenses with ourunified modern retirement solutions platform during the six months ended June 30, 2025 when compared to the 2024 period. Average headcount was 60 for the six months ended June 30, 2025 compared to 68 for the 2024 period.

Previous wording

Total revenues worsened by $6.8 million primarily as a result of the following:

Current wording

Total revenues worsened by $6.0 million as a result of the following:

Previous wording

•General and administrative expenses decreased $1.4 million or 35.2% primarily due to continued cost-cutting measures associated with thewind-down of business lines that are not part of our unified modern retirement solutions platform during the three months ended March 31, 2025 when compared to the 2024 period.

Current wording

•General and administrative expenses, net of shared services allocations, decreased $1.4 million or 22.3% primarily due to continued cost-cutting initiatives that align expenses with ourunified modern retirement solutions platform during the three months ended June 30, 2025 when compared to the 2024 period.

Previous wording

Prior to the third quarter of 2024, the Company’s adjusted net income (loss), adjusted EBITDA, and adjusted earnings (loss) per share were adjusted for equity-based compensation for only the Replacement RSUs and Earnout Right RSUs. Beginning with the third quarter of 2024, the Company revised our definitions of adjusted net income (loss), adjusted EBITDA, and adjusted earnings (loss) per share to now adjust for all equity-based compensation in the aforementioned non-GAAP measures. As a result of the change, prior period amounts have been recast to reflect the updated presentation.

Current wording

Prior to the third quarter of 2024, the Company’s adjusted net income (loss), adjusted EBITDA, and adjusted earnings (loss) per share were adjusted for equity-based compensation for only the Replacement Restricted Stock Units (“RSUs”) and Earnout Right RSUs. Beginning with the third quarter of 2024, the Company revised our definitions of adjusted net income (loss), adjusted EBITDA, and adjusted earnings (loss) per share to now adjust for all equity-based compensation in the aforementioned non-GAAP measures. As a result of the change, prior period amounts have been recast to reflect the updated presentation.

Previous wording

Subsequent to granting the Replacement RSUs and Earnout Right RSUs, the Company has granted other equity-based awards. As these awards are non-cash expenses that are not directly correlated with operating results, the Company believes that analysts, investors, and other users of the financial statements may find this change beneficial when analyzing our operating performance and comparability to peers. As a result of the change, adjusted net loss decreased $0.8 million for the three months ended March 31, 2024 from what was previously reported. The change also resulted in a decrease to adjusted loss per share of $0.04 for the three months ended March 31, 2024 from what was previously reported.

Current wording

Subsequent to granting the Replacement RSUs and Earnout Right RSUs, the Company has granted other equity-based awards. As these awards are non-cash expenses that are not directly correlated with operating results, the Company believes that analysts, investors, and other users of the financial statements may find this change beneficial when analyzing our operating performance and comparability to peers. As a result of the change, adjusted net loss decreased $1.2 million and $1.9 million for the three and six months ended June 30, 2024, respectively, from what was previously reported. The change also resulted in a decrease to adjusted loss per share of $0.05 and $0.08 for the three and six months ended June 30, 2024, respectively, from what was previously reported.

Previous wording

We define adjusted earnings (loss) per share as adjusted net income (loss) (defined above) plus interest expense on the exchangeable senior secured notes, net of a tax effect, if dilutive, divided by the weighted average shares outstanding, which includes outstanding Class A Common Stock plus the Class A LLC Units owned by the noncontrolling interest on an if-converted basis, the exchange of the exchangeable senior secured notes on an if-converted basis if they are dilutive, and any shares under the treasury stock method.

Current wording

We define adjusted earnings (loss) per share as adjusted net income (loss) (defined above) plus interest expense on the exchangeable senior secured notes, net of a tax effect, if dilutive, divided by the weighted average shares outstanding, which includes outstanding Class A Common Stock plus the units of FOA Equity (“Class A LLC Units”) owned by the noncontrolling interest on an if-converted basis, the exchange of the exchangeable senior secured notes on an if-converted basis if they are dilutive, and any shares under the treasury stock method.

Previous wording

The following table provides a reconciliation of net income (loss) from continuing operations to adjusted net income (loss) and adjusted EBITDA (in thousands, except for share data):

Current wording

The following table provides a reconciliation of net income (loss) from continuing operations to adjusted net income (loss) and adjusted EBITDA, as well as adjusted earnings (loss) per share and tangible equity (in thousands, except for share data):

Previous wording

Changes in fair value of loans and securities held for investment and related obligations due to market inputs or model assumptions -This adjustment relates to changes in the significant market or model input components of the fair value for loans and securities and related obligations, which are held for investment. We include an adjustment for the significant market or model input components of the change in fair value because, while based on real observable and/or predicted changes in drivers of the valuation of assets, they may be mismatched in any given period with the actual change in the underlying economics or when they will be realized in actual cash flows. Changes in fair value of loans and securities held for investment and related obligations include changes in fair value and related hedge gains and losses for the following:

Current wording

Changes in fair value of loans and securities held for investment and related obligations due to market inputs or model assumptions -This adjustment relates to changes in the significant market or model input components of the fair value for loans and securities held for investment and related obligations. We include an adjustment for the significant market or model input components of the change in fair value because, while based on real observable and/or predicted changes in drivers of the valuation of assets, they may be mismatched in any given period with the actual change in the underlying economics or when they will be realized in actual cash flows. Changes in fair value of loans and securities held for investment and related obligations include changes in fair value and related hedge gains and losses for the following:

Previous wording

FOA is a holding company and has no material assets other than its direct and indirect ownership of Class A LLC Units. FOA has no independent means of generating revenue. FOA Equity may make distributions to its holders of Class A LLC Units, including FOA, in an amount sufficient to cover all applicable taxes at assumed tax rates, payments under the TRA, and dividends, if any, declared by FOA. Deterioration in the financial condition, earnings, or cash flow of FOA Equity and its subsidiaries for any reason could limit or impair FOA Equity’s ability to make such distributions. In addition, FOA Equity 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 FOA Equity (with certain exceptions) exceed the fair value of its assets. Subsidiaries of FOA Equity are generally subject to similar legal limitations on their ability to make distributions to FOA Equity. Further, our existing financing arrangements include, and any financing arrangement that we enter into in the future may include, restrictions that impact FOA Equity’s ability to make distributions to FOA.

Current wording

FOA is a holding company and has no material assets other than its direct and indirect ownership of Class A LLC Units. FOA has no independent means of generating revenue. FOA Equity may make distributions to its holders of Class A LLC Units, including FOA, in an amount sufficient to cover all applicable taxes at assumed tax rates, payments under the TRA obligation, and dividends, if any, declared by FOA. Deterioration in the financial condition, earnings, or cash flow of FOA Equity and its subsidiaries for any reason could limit or impair FOA Equity’s ability to make such distributions. In addition, FOA Equity 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 FOA Equity (with certain exceptions) exceed the fair value of its assets. Subsidiaries of FOA Equity are generally subject to similar legal limitations on their ability to make distributions to FOA Equity. Further, our existing financing arrangements include, and any financing arrangement that we enter into in the future may include, restrictions that impact FOA Equity’s ability to make distributions to FOA.

Previous wording

Our cash and cash equivalents and restricted cash decreased by $50.1 million for the three months ended March 31, 2025 compared to an increase of $18.8 million during the comparable period in 2024. Our cash and cash equivalents, excluding restricted cash, increased $4.6 million for the three months ended March 31, 2025 compared to an increase of $1.7 million during the comparable period in 2024.

Current wording

Our cash and cash equivalents and restricted cash decreased by $65.3 million for the six months ended June 30, 2025 compared to an increase of $21.8 million during the comparable period in 2024. Our cash and cash equivalents, excluding restricted cash, decreased $0.9 million for the six months ended June 30, 2025 and stayed relatively consistent during the comparable period in 2024.

Previous wording

Cash flows from operating activities improved by $40.2 million for the three months ended March 31, 2025 compared to the corresponding 2024 period. The improvement was primarily attributable to changes in payables and other liabilities.

Current wording

Cash flows from operating activities improved by $47.7 million for the six months ended June 30, 2025 compared to the corresponding 2024 period. The improvement was primarily attributable to changes in payables and other liabilities.

Previous wording

The decrease of $39.7 million in cash flows from our investing activities during the three months ended March 31, 2025 compared to the 2024 period was primarily attributable to a $56.9 million increase in cash used for purchases and originations of loans held for investment, net of proceeds/payments, and a decrease of $4.7 million in proceeds on the sale of mortgage servicing rights (“MSR”). This was partially offset by an increase of $22.3 million in proceeds/payments on loans held for investment, subject to nonrecourse debt, net of cash used for purchases and originations.

Current wording

The decrease of $68.3 million in cash flows from our investing activities during the six months ended June 30, 2025 compared to the 2024 period was primarily attributable to a $57.7 million increase in cash used for purchases and originations of loans held for investment, net of proceeds/payments, and a decrease of $5.5 million in proceeds on the sale of mortgage servicing rights (“MSR”).

Previous wording

The decrease of $69.4 million in cash flows from our financing activities during the three months ended March 31, 2025 compared to the 2024 period was primarily driven by a $135.5 million increase in payments on HMBS related obligations, net of proceeds, a $52.1 million decrease in proceeds from other financing lines of credit, net of payments, and a $26.3 million decrease in proceeds related to our notes payable. This was partially offset by a $145.0 million increase in proceeds from issuance of nonrecourse debt, net of payments.

Current wording

The decrease of $66.5 million in cash flows from our financing activities during the six months ended June 30, 2025 compared to the 2024 period was primarily driven by a $270.6 million increase in payments on HMBS related obligations, net of proceeds, and a $27.0 million decrease in proceeds related to our notes payable. This was partially offset by a $224.8 million increase in proceeds from issuance of nonrecourse debt, net of payments, and a $5.8 million increase in proceeds from other financing lines of credit, net of payments.

Previous wording

As of March 31, 2025, FAR was in compliance with the minimum net worth, liquidity, capitalization levels, and insurance requirements of Ginnie Mae. FAR’s actual ratio of adjusted net worth to total assets was below the Ginnie Mae requirement due to the Company’s determination that HECM loans transferred into HMBS securitizations as well as its HECM buyout and non-agency reverse mortgage securitizations do not meet the requirements of sale accounting and are not derecognized upon date of transfer. As a result, the Company accounts for HECM loans transferred into HMBS securitizations as well as its HECM buyout and non-agency reverse mortgage securitizations as secured borrowings and continues to recognize the loans as held for investment, subject to HMBS related obligations or nonrecourse debt, along with the corresponding liability for the HMBS related obligations or nonrecourse debt. Based on this, FAR requested and received a waiver for the minimum outstanding capital requirements from Ginnie Mae. Therefore, FAR was in compliance with all Ginnie Mae requirements.

Current wording

As of June 30, 2025, FAR was in compliance with the minimum net worth, liquidity, capitalization levels, and insurance requirements of Ginnie Mae. FAR’s actual ratio of adjusted net worth to total assets was below the Ginnie Mae requirement due to the Company’s determination that HECM loans transferred into HMBS as well as its HECM buyout and non-agency reverse mortgage loan securitizations do not meet the requirements of sale accounting and are not derecognized upon date of transfer. As a result, the Company accounts for HECM loans transferred into HMBS as well as its HECM buyout and non-agency reverse mortgage loan securitizations as secured borrowings and continues to recognize the loans as held for investment, subject to HMBS related obligations or nonrecourse debt, along with the corresponding liability for the HMBS related obligations or nonrecourse debt. Based on this, FAR requested and received a waiver for the minimum outstanding capital requirements from Ginnie Mae. Therefore, FAR was in compliance with all Ginnie Mae requirements.

Previous wording

The following description is a summary of certain material provisions of our outstanding indebtedness. As of March 31, 2025, our debt obligations were $29.1 billion. This summary does not restate the terms of our outstanding indebtedness in its entirety, nor does it describe all of the material terms of our indebtedness.

Current wording

The following description is a summary of certain material provisions of our outstanding indebtedness. As of June 30, 2025, our debt obligations were $29.5 billion. This summary does not restate the terms of our outstanding indebtedness in its entirety, nor does it describe all of the material terms of our indebtedness.

Previous wording

FAR is an approved issuer of HMBS securities that are guaranteed by Ginnie Mae and collateralized by participation interests in HECM insured by the FHA. We originate HECM insured by the FHA. Participations in the HECM are pooled into HMBS securities, which are sold into the secondary market with servicing rights retained. We have determined that loan transfers in the HMBS program do not meet the participating interest requirements because of the servicing requirements in the product that require the issuer/servicer to absorb some level of interest rate risk, cash flow timing risk, and incidental credit risk due to the buyout of HECM assets as discussed below. As a result, the transfers of the HECM do not qualify for sale accounting, and we, therefore, account for these transfers as secured financings. Holders of participating interests in the HMBS have no recourse against assets other than the underlying HECM loans, remittances, or collateral on those loans while they are in the securitization pools, except for standard representations and warranties and our contractual obligation to service the HECM and the HMBS.

Current wording

FAR is an approved issuer of HMBS that are guaranteed by Ginnie Mae and collateralized by participation interests in HECM loans insured by the FHA. We originate HECM loans insured by the FHA. Participations in the HECM loans are pooled into HMBS, which are sold into the secondary market with servicing rights retained. We have determined that loan transfers in the HMBS program do not meet the participating interest requirements because of the servicing requirements in the product that require the issuer/servicer to absorb some level of interest rate risk, cash flow timing risk, and incidental credit risk due to the buyout of HECM assets as discussed below. As a result, the transfers of the HECM loans do not qualify for sale accounting, and we, therefore, account for these transfers as secured financings. Holders of participating interests in the HMBS have no recourse against assets other than the underlying HECM loans, remittances, or collateral on those loans while they are in the securitization pools, except for standard representations and warranties and our contractual obligation to service the HECM loans and the HMBS.

Previous wording

Remittances received on the reverse loans, proceeds received from the sale of real estate owned, and our funds used to repurchase reverse loans are used to reduce the HMBS related obligations by making payments to the securitization pools, which then remit the payments to the beneficial interest holders of the HMBS. The maturity of the HMBS related obligations is directly affected by the liquidation of the reverse loans or liquidation of real estate owned properties and events of default as stipulated in the reverse loan agreements with borrowers. As an HMBS issuer, FAR assumes certain obligations related to each security it issues. The most significant obligation is the requirement to purchase loans out of the Ginnie Mae securitization pools once they reach certain limits set at loan origination for the maximum UPB allowed. Performing repurchased loans are generally conveyed to HUD, and nonperforming repurchased loans are generally liquidated in accordance with program requirements.

Current wording

Remittances received on the reverse mortgage loans, proceeds received from the sale of real estate owned, and our funds used to repurchase reverse mortgage loans are used to reduce the HMBS related obligations by making payments to the securitization pools, which then remit the payments to the beneficial interest holders of the HMBS. The maturity of the HMBS related obligations is directly affected by the liquidation of the reverse mortgage loans or liquidation of real estate owned properties and events of default as stipulated in the reverse mortgage loan agreements with borrowers. As an HMBS issuer, FAR assumes certain obligations related to each security it issues. The most significant obligation is the requirement to purchase loans out of the Ginnie Mae securitization pools once they reach certain limits set at loan origination for the maximum UPB allowed. Performing repurchased loans are generally conveyed to HUD, and nonperforming repurchased loans are generally liquidated in accordance with program requirements.

Previous wording

As of March 31, 2025, we had HMBS related obligations of $18.6 billion and HECM pledged as collateral to the pools of $18.8 billion, both carried at fair value.

Current wording

As of June 30, 2025, we had HMBS related obligations of $18.6 billion and HECM loans pledged as collateral to the pools of $18.9 billion, both carried at fair value.

Previous wording

We securitize and issue interests in pools of loans that are not eligible for the Ginnie Mae securitization program. These include non-agency reverse mortgages, reverse mortgage loans that were previously repurchased out of a HMBS pool, which are referred to as HECM buyouts, and commercial mortgage loans. The transactions provide investors with the ability to invest in these pools of assets. The transactions provide us with access to liquidity for these assets, ongoing servicing fees, and potential residual returns for the residual securities we retain at the time of securitization. The transactions are structured as secured borrowings with the loan assets and liabilities, respectively, included in the Condensed Consolidated Statements of Financial Condition as Loans held for investment, subject to nonrecourse debt, at fair value, and Nonrecourse debt, at fair value. As of March 31, 2025, we had nonrecourse debt-related borrowings of $9.2 billion and loans held for investment pledged as collateral for the nonrecourse debt of $9.6 billion, both carried at fair value.

Current wording

We securitize and issue interests in pools of loans that are not eligible for the Ginnie Mae securitization program, which include non-agency reverse mortgage loans and HECM buyouts. The transactions provide investors with the ability to invest in these pools of assets. The transactions provide us with access to liquidity for these assets, ongoing servicing fees, and potential residual returns for the residual securities we retain at the time of securitization. The transactions are structured as secured borrowings with the loan assets and liabilities, respectively, typically included in the Condensed Consolidated Statements of Financial Condition as Loans held for investment, subject to nonrecourse debt, at fair value, and Nonrecourse debt, at fair value. As of June 30, 2025, we had nonrecourse debt-related borrowings of $9.4 billion and loans pledged as collateral for the nonrecourse debt of $10.0 billion, both carried at fair value.

Previous wording

As of March 31, 2025, we had $1.1 billion in warehouse lines of credit capacity collateralized by first and second lien mortgages with a $513.4 million aggregate principal amount drawn through eight funding facility arrangements with seven active lenders. These facilities are generally structured as master repurchase agreements under which ownership of the related eligible loans is temporarily transferred to a lender, as participation arrangements pursuant to which the lender acquires a participation interest in the related eligible loans, or as loan and security agreements under which eligible loans are pledged to the lender as collateral. The funds advanced to us are generally repaid using the proceeds from the sale or securitization of the loans to, or pursuant to, programs sponsored by Ginnie Mae or private secondary market investors, although prior payment may be required based on, among other things, certain breaches of representations and warranties or other events of default.

Current wording

As of June 30, 2025, we had $1.2 billion in warehouse lines of credit capacity collateralized by first and second lien mortgages with a $572.5 million aggregate principal amount drawn through nine funding facility arrangements with eight active lenders. These facilities are generally structured as master repurchase agreements under which ownership of the related eligible loans is temporarily transferred to a lender, as participation arrangements pursuant to which the lender acquires a participation interest in the related eligible loans, or as loan and security agreements under which eligible loans are pledged to the lender as collateral. The funds advanced to us are generally repaid using the proceeds from the sale or securitization of the loans to, or pursuant to, programs sponsored by Ginnie Mae or private secondary market investors, although prior payment may be required based on, among other things, certain breaches of representations and warranties or other events of default.

Previous wording

As of March 31, 2025, we collectively had $534.3 million in additional secured facilities with $495.5 million aggregate principal amount drawn through credit agreements or master repurchase agreements with six funding facility arrangements and five active lenders. These facilities are secured by, among other things, eligible asset-backed securities, HECM MSR, and unsecuritized tails. In certain instances, these assets are subject to existing first lien warehouse financing, in which case these facilities (i.e., mezzanine facilities) are secured by the equity in these assets exceeding first lien warehouse financing. These facilities are generally structured as master repurchase agreements under which ownership of the related eligible assets is temporarily transferred to a lender. The funds advanced to us are generally repaid using the proceeds from the sale or securitization of the underlying assets or distribution from underlying securities, although prior payment may be required based on, among other things, certain breaches of representations and warranties or other events of default.

Current wording

As of June 30, 2025, we collectively had $540.5 million in additional secured facilities with $504.0 million aggregate principal amount drawn through credit agreements or master repurchase agreements with six funding facility arrangements and five active lenders. These facilities are secured by, among other things, eligible asset-backed securities, HECM MSR, and unsecuritized tails. In certain instances, these assets are subject to existing first lien warehouse financing, in which case these facilities (i.e., mezzanine facilities) are secured by the equity in these assets exceeding first lien warehouse financing. These facilities are generally structured as master repurchase agreements under which ownership of the related eligible assets is temporarily transferred to a lender. The funds advanced to us are generally repaid using the proceeds from the sale or securitization of the underlying assets or distribution from underlying securities, although prior payment may be required based on, among other things, certain breaches of representations and warranties or other events of default.