News
Finance of America conducts new round of layoffs
Reverse mortgage lender Finance of America distributed pink slips this week in an ongoing effort to shore up finances and resize to meet the demands of its current business model.
The number of positions eliminated was not disclosed, but the cuts were distributed across departments, the company confirmed.
“Finance of America continually evaluates all aspects of our business to improve operational performance and execute our long-term strategic growth plan,” Finance of America Cos. President Kristen Sieffert said in a statement sent to National Mortgage News.
“As such, we are refining our expenses and eliminating some functions in our corporate and retail divisions as our business streamlines.”
Once active across multiple origination channels, the company got out of term mortgage loan completely in 2022 and divested several units as businesses across the industry dealt with significantly reduced volumes. Following this decision, Finance of America conducted multiple rounds of layoffs in 2022 and 2023turning your focus exclusively to home equity related products in the reverse market.
At the end of 2023, the company employed 922 people in the US, according to its annual report filed with the Securities and Exchange Commission. The number reflected a 53% reduction from a headcount of 1,943 at the end of 2022.
“Our primary focus is creating a modern retirement centered on home equity, and we will continue to make decisions that strengthen our platform and our ability to serve our clients, teammates and investors,” noted Sieffert.
In the first quarter, Finance of America reported that employee wages, benefits and related costs totaled approximately $39 million in expenses. Meanwhile, the company’s unrestricted cash balance at the end of March was $48 million. In its earnings call, officials also said they were analyzing options to address high-yield debt due in the fourth quarter of 2025.
The layoffs come after Finance of America successfully completed the integration of the assets of fellow reverse mortgage lender American Advisors Group, which it acquired at the end of 2022, for its own operations earlier this year. After the consolidation, company leadership said it would retire the AAG brand and develop a new unified marketing strategy to reach its older customer base of reverse mortgage owners, who have seen property values grow this decade.
Finance of America recently set a goal for the year to eventually originating $300 million in reverse mortgages a month. The value of usable housing in the US has reached a record $11 trillion this year, according to a recent report from ICE Mortgage Technology.
In recent months, the Plano, Texas-based company has also faced scrutiny and warnings from possible delisting from the New York Stock Exchange due to low asset value. As specified by the NYSE, the average closing share price of listed companies must remain above US$1.00 for 30 consecutive days.
At the time of the first alert issued to Finance of America on December 12, its shares closed trading at 86 cents. Approximately two months later, the company received a second notice, valued at 98 cents. After each notice, the company said it would notify the NYSE of the actions it planned to take to achieve compliance within a six-month cure window.
At the close of trading Tuesday, Finance of America shares were trading at 60 cents, finishing above the $1.00 threshold in just 10 days this year.