Finance of America Enhances Popular Reverse Home Equity Product, HomeSafe Second Gives More Homeowners 55+ a Flexible Alternative to Finance Retirement

Rhea-AI Summary

Finance of America has enhanced its HomeSafe Second reverse mortgage product by reducing the interest rate from 9.99% to 9.49% and expanding availability to four new states: Arizona, Nevada, Oregon, and Utah. The second-lien loan, designed for homeowners aged 55+, allows borrowing up to $1 million without monthly payments while keeping existing primary mortgages intact. Loan qualification is primarily based on age and home equity rather than annual income. The product is currently available in ten states, with plans for further expansion.

Positive

• Interest rate reduction from 9.99% to 9.49% on HomeSafe Second product
• Geographic expansion to four additional states
• Product allows borrowing up to $1 million while maintaining existing mortgage rates
• Growing market demand indicated by increasing home equity lending in 2024
• Flexible qualification criteria based on home equity rather than income

Negative

• availability (only 10 states currently)
• High interest rate compared to traditional mortgage products

Insights

Financial Analyst

The expansion of HomeSafe Second with a reduced interest rate from 9.99% to 9.49% and broader market coverage represents a strategic move in the growing home equity market. The product's unique positioning as a no-payment reverse second-lien loan targeting homeowners 55+ with significant home equity creates a competitive advantage in the $1 million maximum loan segment.

The timing aligns with market conditions where many homeowners are reluctant to refinance their primary mortgages due to previously secured lower rates. This product effectively addresses the "rate lock-in" effect while allowing FOA to capture market share in the expanding senior demographic. The addition of four new states significantly expands the addressable market, potentially driving meaningful revenue growth.

Market Research Analyst

The product enhancement comes at an opportune time, with data showing increasing HELOC demand among the 55+ demographic, who opened nearly 750,000 HELOCs in 2023. The strategic expansion into Arizona, Nevada, Oregon and Utah targets markets with substantial retiree populations and strong housing appreciation, positioning FOA to capture growing demand for alternative financing solutions.

The wholesale channel strategy particularly stands out, as it leverages existing lender relationships to tap into dormant customer segments, creating a multiplier effect for market penetration. This B2B approach could accelerate adoption rates while keeping customer acquisition costs manageable.

No-Payment Reverse Second-Lien Loan Now Features Lower Interest Rate, Availability in Additional Markets

PLANO, Texas--(BUSINESS WIRE)-- Finance of America Reverse LLC (“Finance of America” or the “Company”), a leading provider of home equity-based financing solutions for a modern retirement, today announced it has lowered the interest rate for its proprietary reverse HomeSafe Second loan from 9.99% to 9.49%, and broadened its availability in four additional states: Arizona, Nevada, Oregon, and Utah.

HomeSafe Second is a second-lien loan exclusively offered by Finance of America, and specifically designed for 55+ homeowners seeking a better and more flexible way to tap their home’s growing equity. It allows homeowners to borrow against their home but leave their primary mortgage intact maintaining any favorable rate secured in years past.

Demand for home equity tools is on the rise, notably for older homeowners. The mortgage industry overall has seen home equity lending grow quarter over quarter in 2024.¹ In 2023, nearly 750,000 HELOCs were opened by borrowers aged 55+,² but HomeSafe Second offers a superior solution for those who want flexibility on payments. Unlike other home equity loans, HomeSafe Second allows eligible homeowners to access up to $1 million, depending on their home’s value and outstanding mortgages, without the need to make monthly payments. Loan qualification is based primarily on the homeowner’s age and home equity rather than annual income, and the loan balance is only due when the homeowner no longer uses the property as their primary residence or otherwise defaults on other terms and conditions.

Interest in the product is increasing from forward lenders, reverse mortgage originators, and consumers alike. “Our wholesale partners are eager to find opportunities for growth after a few challenging years. We’re speaking with a number of large lenders who are attracted to HomeSafe Second because it’s a way to reengage their servicing book and create a revenue stream from a dormant customer segment,” said Jonathan Scarpati, SVP of Wholesale Lending at Finance of America. “Similarly, originators on the ground love having this tool available for homeowners who don’t want to lose the low rate they have on their first mortgage.”

“HomeSafe Second transforms how homeowners 55 and older unlock the equity in their homes without the cash flow strain of additional monthly payments,” said Kristen Sieffert, President of Finance of America. “We actively look for areas where homeowners are underserved and by addressing the gaps left by HELOCS and traditional home equity loans, this innovative solution empowers financially secure homeowners to tap into their home equity for meaningful pursuits - be it renovating their living space, funding a child's education, or buying a second home. Our commitment to redefining home equity access in a safe and sustainable way, ensures that our customers have the tools they need to thrive now and in the future.”

HomeSafe Second is currently available in Arizona, California, Colorado, Connecticut, Florida, Nevada, Oregon, South Carolina, Texas, and Utah. Finance of America plans to expand HomeSafe Second to additional states over the next year.

About Finance of America

Finance of America Reverse LLC dba Finance of America (NMLS 2285) is a modern retirement solutions platform that provides customers with access to an innovative range of retirement offerings centered on the home and is the consumer brand and reverse mortgage operating subsidiary of its parent company, Finance of America Companies Inc. (NYSE: FOA). In addition to the reverse mortgage business, Finance of America Companies offers capital markets and portfolio management capabilities primarily to optimize the distribution of its originated loans to investors. Finance of America Companies is headquartered in Plano, Texas.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts or statements of current conditions, but instead represent only beliefs of Finance of America Companies Inc. and its subsidiaries (collectively, “FOA”) regarding future events, many of which, by their nature, are inherently uncertain and outside of FOA’s control. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “budgets,” “forecasts,” “anticipates,” or the negative version of these words or other comparable words. FOA cautions readers not to place undue reliance upon any forward-looking statements, which are current only as of the date of this release. FOA does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. All subsequent written and oral forward-looking statements concerning FOA or other matters and attributable to FOA or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements set forth in this paragraph. A number of important factors exist that could cause future results to differ materially from historical performance and these forward-looking statements. New factors emerge from time to time, and it is not possible for FOA’s management to predict all such factors or to assess the effect of each such new factor on its business. Although FOA believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and any of these statements included herein may prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by FOA or any other person that the results or conditions described in such statements, or FOA’s objectives and plans will be achieved. Please refer to “Risk Factors” included in FOA’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2024, for further information on these and other risk factors affecting FOA, as such factors may be amended and updated from time to time in FOA’s subsequent periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

¹ https://www.hel.news/second-mortgage-study/q2-2024/
² https://www.hel.news/articles/bank-home-equity-news/heloc-originations-080724/

View source version on businesswire.com: https://www.businesswire.com/news/home/20241031045136/en/

For Finance of America Media: pr@financeofamerica.com

For Finance of America Investor Relations: ir@financeofamerica.com

Source: Finance of America Companies Inc.

FAQ

What is the new interest rate for Finance of America's HomeSafe Second loan?

Finance of America (FOA) has reduced the interest rate for HomeSafe Second loan from 9.99% to 9.49%.

Which new states now offer Finance of America's HomeSafe Second loan?

Finance of America (FOA) has expanded HomeSafe Second to Arizona, Nevada, Oregon, and Utah.

What is the maximum borrowing amount for Finance of America's HomeSafe Second loan?

Finance of America's (FOA) HomeSafe Second loan allows eligible homeowners to access up to $1 million, depending on their home's value and outstanding mortgages.

What are the qualification requirements for Finance of America's HomeSafe Second loan?

Finance of America's (FOA) HomeSafe Second loan primarily bases qualification on the homeowner's age (55+) and home equity rather than annual income.