How Finance of America plans to adjust its loan mix as rates rise
Rising rates and tighter margins in the mortgage industry will test Finance of America in a particular way because it has a diversified model built with such stressors in mind.
While the conditions created by the global pandemic have been unprecedented for everyone, cyclical change is a familiar scenario to CEO Patti Cook and her team, who have been through difficult housing cycles before.
Finance of America relies heavily on traditional mortgage income, but not exclusively. While the third trimester, nearly half came from other sources within its specialty finance business, which includes a range of alternative consumer finance and fee-for-service businesses, such as reverse mortgages and investor lending . Early estimates suggest the company ended 2021 with $953 million in revenue from its mortgage operations and $825 million from finance and specialty services.
The question for 2022 is how effective this diversity of business will continue to be in generating profits as the company competes with other monoline non-bank mortgage competitors emerging from an extraordinary refinancing boom.
In an extensive interview with National Mortgage News, Cook shared his perspective on how the variety of lending channels and products at Finance of America is likely to help the company offset the cyclical shift in traditional mortgage lending. , and how his team could help optimize his results.
The following are excerpts from that conversation, edited for clarity and length.