Photo: Derek Jensen (housing archive, 2005)
Finance of America reported a $110 million third-quarter net loss on November 3, largely driven by noncash changes in portfolio values, even as the home equity lender increased funded loan volume by 24% from a year earlier.
The company funded $748 million of loans in the quarter ended September 30, up from $603 million a year earlier. But growth in lending did not offset pressure from higher benchmark interest rates on origination margins and the value of assets retained in its financing business.
In its earnings release, the Plano, Texas-based company said $125 million in noncash fair-value adjustments was the main driver of the reported loss. The basic loss was $5.24 per share.
Adjusted profit tells a different, but weaker, story
Finance of America reported adjusted net income of $6 million, or 28 cents per share, and adjusted EBITDA of $17 million for the quarter. Those are company-defined non-GAAP measures, which exclude certain items and do not replace the reported net loss.
The adjusted results also weakened from a year earlier. HousingWire reported that adjusted net income was $33 million and adjusted EBITDA was $55 million in the third quarter of 2025.
The difference between the reported loss and adjusted profit reflects the importance of portfolio valuation changes to the company’s results. A noncash mark is not the same as cash leaving the company during the quarter, but it still affects reported earnings and the value assigned to its assets and liabilities.
More lending, tighter margins
The retirement solutions business, which includes reverse mortgages and other home equity-based financing, generated $67 million of revenue in the quarter. Funded volume grew, but higher benchmark rates put pressure on the revenue earned from that production, the company said.
The segment’s pretax income fell to $3 million from $10 million in the second quarter. Adjusted net income declined to $9 million from $15 million over the same period, according to the release.
For the first nine months of 2026, funded volume reached $2.074 billion, up 17% from a year earlier. Retirement solutions revenue for that period rose 14% to $208 million.
CEO Graham Fleming said the company believes the rate-driven earnings pressure is temporary and has already changed product pricing to improve margins. The company expects margins to return to historical levels. That is management’s outlook, not an assured recovery.
Portfolio marks weigh on results
The portfolio management business reported a pretax loss of $138 million. Finance of America attributed that result to negative noncash fair-value adjustments on retained interests in securitizations.
Assets under management reached $37.4 billion, up 23% year over year, HousingWire reported. The increase included new originations and the July 1 acquisition of Onity Mortgage’s HECM servicing portfolio.
Finance of America ended September with $118 million in cash and cash equivalents, an increase of $33 million during the quarter. It said cash generation from originations and capital markets activity supported that rise.
The company expects to pay down $60 million of senior secured notes in November. Its results leave investors with two distinct measures to weigh: growing demand for its home equity products, and lower profitability in a more difficult interest-rate environment.
The archive photograph shows housing near Union, Kentucky, in June 2005, not an identified Finance of America loan portfolio. Photo by Derek Jensen (Tysto), public domain, cropped.
JBizNews Desk | New York
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