FOA agrees to sell commercial lending business to Roc Capital

Roc Capital is expected to pay FOA as much as $30 million over a three-year period under the terms of the deal

Finance of America Companies (FOA) has entered into an agreement to sell the operational assets of its Finance of America Commercial vertical to Roc Capital Holdings LLC. The deal will offload an FoA subsidiary division that offers residential real estate investment loans.

Roc Capital is expected to pay FOA an “aggregate purchase price” over a three-year period, which will be based on the purchased asset performance and will not exceed $30 million, according to an 8K form reviewed by HousingWire.

“Today’s announcement is another step taken by the company as it executes on its long-term strategy,” Graham Fleming, interim CEO of FOA, said in a statement. “By streamlining our focus and growing our core businesses, which benefit from a shared set of demographic and economic tailwinds, FOA can more effectively dispatch our innovative suite of solutions to help Americans achieve their retirement goals through the use of home equity.”

The terms of the deal do not include the FOA commercial vertical’s financial assets, which are comprised of loans and securitizations, according to the 8K filing.

“[Those assets] will continue to be sold or otherwise paid in full or liquidated in the ordinary course of business,” the company said in the filing. “Following the closing of the [deal], FAM will no longer operate in the business of originating business purpose loans to residential real estate investors. Upon closing of the [deal], the company will no longer have a reportable commercial originations segment.”

Credit Suisse Securities LLC acted as FOA’s financial advisor on the terms of the deal, according to the company.

FOA announced its intention to exit the forward mortgage originations business in late 2022 by winding down the operations of Finance of America Mortgage. The company’s primary focus will be on its specialty finance and services (SF&S) businesses, including its Finance of America Reverse (FAR) vertical, which offers government-sponsored and private-label reverse mortgages to older homeowners.

Earlier this month, FOA announced its subsidiary, Incenter, had entered into an agreement with a subsidiary of Essent Group Ltd. to sell the issued and outstanding shares of Agents National Title Holding Company, along with the issued and outstanding membership interest of Boston National Holding LLC and their direct subsidiaries, for $100 million.

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