Finance of America Acquires Onity Reverse Mortgage Assets

Finance of America (FOA) completed an all-cash acquisition of reverse mortgage servicing rights from Onity Mortgage Corp. on Wednesday, adding approximately 20,000 Home Equity Conversion Mortgages (HECMs) with a combined $5.2 billion in unpaid principal balance (UPB) to its portfolio. This transaction, disclosed in an 8-K filing with the Securities and Exchange Commission (SEC), transfers Ginnie Mae servicing rights from Onity to FOA. The acquisition significantly expands FOA's servicing footprint and its customer base of homeowners aged 55 and older who utilize home equity for retirement planning.

Approval for the deal from Ginnie Mae was secured in early June. An initial proposal involved around 40,000 loans valued at $9.6 billion in UPB, but Ginnie Mae did not approve those terms. As part of the agreement, FOA will also acquire Onity's pipeline of reverse mortgage loans, leading to Onity's exit from the reverse mortgage originations business. Onity anticipates total proceeds ranging from $70 million to $80 million from the transaction, based on the book value of the assets as of April 30, with plans to allocate these funds towards growth, debt reduction, and other corporate initiatives.

Finance of America has entered into a three-year subservicing agreement with Onity Mortgage as part of the transaction. This arrangement is intended to ensure borrower continuity during FOA's integration of the acquired portfolio and diversification of its servicing operations through an external partner. Graham Fleming, CEO of Finance of America, stated that the transaction is a significant milestone in their growth strategy, welcoming new customers and establishing a valuable servicing relationship with Onity. He further emphasized that the acquisition reinforces FOA's market leadership and its capacity to offer innovative reverse mortgage solutions to a broader range of American homeowners.