Finance of America in the third quarter staged a turnaround from its loss in the previous period, as it leaned heavily on diversified loan channels outside the traditional mortgage market.
The company, which went public through
“Every segment of our business grew revenue and increased profitability compared to last quarter,” CEO Patricia Cook said in a company earnings call, noting that this is remarkable given that the mortgage industry has a tough act to follow in the wake of its banner year in 2020.
Mortgage gain-on-sale margins were stable in the retail channel during the third quarter, according to Chief Financial Officer Johan Gericke, However, he said they decreased slightly overall because the company’s acquisition of
Despite this, the company was able to boost its profit in part because nearly half of its $457 million in revenue — and 80% of its $55 million pre-tax income — were generated by segments other than traditional mortgage originations, said Cook, noting that she expected that ratio would grow and compete going forward. In comparison, Finance of America took a pre-tax loss of $14 million and generated $389 million in revenue during the second quarter.
“No other consumer lending platform can offer a student loan all the way through a reverse mortgage at the scale that Finance of America can,” Cook said. The company plans to “unlock multi-generational value from our customers as they migrate from student loans, to personal loans, to mortgage, to
Other notable line items in Finance of America’s earnings included an increase in its mortgage servicing rights balances by $50 million. The company also increased its cash resources by $35 million, primarily due to the execution of four securitizations.
