Global credit rating agency Morningstar DBRS last week assigned a “good” rating to reverse mortgage industry leader Finance of America (FOA), confirming the ranking the company was assigned this past summer ahead of its earnings call this week.
The rating is officially classified as “MOR RVO2” by Morningstar. The agency once more noted the recent business history of FOA — including the abandonment of its forward mortgage business and its acquisition of American Advisors Group (AAG). In its previous assessment, Morningstar mentioned the relative stability of FOA’s senior leadership team as a partial justification for the rating.
“Morningstar DBRS previously confirmed its MOR RVO2 residential reverse mortgage originator ranking for FAR,” the company said. “The trend on the ranking remains stable.”
The company also mentioned the distribution channels for its reverse mortgage products, including Home Equity Conversion Mortgages (HECMs) as well as its proprietary HomeSafe loans.
“FAR is licensed to operate in all 50 states, Washington, D.C., and Puerto Rico,” the analysis said. “In 2023, the company originated more than 8,700 reverse mortgages totaling more than $1.6 billion, and, as of March 31, 2024, FAR originated approximately 1,600 reverse mortgages, totaling more than $348 million.”
Prior to the August 2024 ranking, FOA last received the MOR RVO2 ranking from DBRS Morningstar in mid-August 2023.
FOA is preparing to reveal its Q3 2024 earnings to investors in a conference call on Wednesday with its executive leadership team. In the company’s second-quarter earnings report, FOA remained in the red but with reduced losses alongside growth in loan volume.
The company is preparing for Q3 earnings following an announcement last week of changes to the HomeSafe Second product, which is now available in four additional states (for a total of 10) to borrowers ages 55 and older.
The company also reduced the interest rate on the product from 9.99% to 9.49%. Interest rates on second-lien loans tend to be higher when compared to first liens, reflecting the higher amount of risk to the lender.
