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Finance of America Mortgage LLC — Moody’s affirms Finance of America Mortgage LLC’s evaluation at Common, as an originator of typical, conforming residential mortgage loans

Announcement: Moody’s affirms Finance of America Mortgage LLC’s evaluation at Common, as an originator of typical, conforming residential mortgage loans

International Credit score Analysis – 04 Dec 2020

New York, December 04, 2020 — Moody’s Traders Service (Moody’s) has assessed Finance of America Mortgage LLC (FAM) as an Common originator of typical, conforming residential mortgage loans.

Headquartered in Horsham, PA, FAM is a wholly-owned subsidiary of Finance of America Holdings LLC (FAH). FAM started originating below its present identify in 2015, following FAH’s acquisition of a regional mortgage firm. As of 30 June 2020, FAM had 2,658 workers and 280 branches. FAM is licensed in all 50 states plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands

ASSESSMENT RATIONALE

We assess FAM’s underwriting and valuation practices as Common. FAM’s conforming, typical underwriting tips contains overlays to Fannie Mae and Freddie Mac tips. Examples of those overlays embrace larger funding property reserves and a shorter employment verification window for self-employed debtors. Since our final assessment, FAH employed a Chief Appraiser to observe the appraisal course of in any respect subsidiaries in addition to appraisal administration firms (AMCs). A few quarter of value determinations are despatched to an affiliate of FAM that may be a licensed AMC. We view FAM’s affiliation with an AMC as destructive as a result of potential for battle of curiosity. FAM administration has said that this threat is mitigated by a mix of oversight and digital documentation of all communication between the 2 firms.

Our evaluation of FAM’s early loan efficiency is affirmed at Common because the efficiency is akin to general conforming, typical Fannie Mae and Freddie Mac revealed efficiency.

We proceed to evaluate FAM’s credit score threat administration as Common. FAM purchases closed loans from their non-delegated correspondents on a stream foundation after a full assessment of every loan file. Throughout the assessment interval, FAM moved away from their originate-to-sell mannequin and commenced to retain the mortgage servicing rights of the loans they originate.

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We affirm FAM’s gross sales and advertising at Common. FAM has an appropriate third social gathering originator monitoring course of and all advertising supplies produced by loan officers are reviewed by FAM.

FAM’s closing practices proceed to be assessed at Common as a result of firm’s trailing doc procurement course of and ample approval course of for title firms and shutting attorneys. FAM skilled minimal closing delays throughout COVID-19 as hybrid e-closings had been tailored.

Our evaluation for FAM’s monetary power continues to be Beneath Common. FAM’s monetary flexibility is restricted by its short-term warehouse traces of credit score. FAM additionally skilled elevated earnings volatility. FAM’s oblique mother or father firm, Finance of America Fairness Capital LLC has agreed to a enterprise mixture with a publicly-traded particular objective acquisition firm (SPAC) that can lead to Finance of America changing into a publicly listed firm. It’s anticipated that the transaction will shut within the first half of 2021.

FAM’s administration and staffing continues to be assessed as Common. Throughout the assessment interval, FAM continued to expertise an elevated stage of worker turnover. That is offset by the corporate’s formal coaching program which contains correction actions.

We proceed to evaluate FAM’s oversight processes as Common. FAM has a number of ranges of high quality management (QC) assessment, actions plans for recognized tendencies and underwriter compensation that are tied to QC outcomes.

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Our evaluation for FAM’s authorized and compliance features is Above Common. FAM has a centralized in-house compliance and authorized workforce and strong controls in place to assessment TPO generated disclosures.

We assess FAM’s expertise as Common attributable to its acceptable loan origination system (LOS). Some processes inside the LOS are nonetheless guide and require human intervention. A documented and examined catastrophe restoration plan is in place.

The framework used on this evaluation was “Originator Assessments for Residential Mortgage Loans” revealed in December 2019 and out there at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1122178. Alternatively, please see the Framework checklist at https://www.moodys.com/analysis/Listof-NCRA-Frameworks–PBC_1178235 for a duplicate of this framework.

Please see www.moodys.com for any updates on modifications to the lead analyst and to the Moody’s authorized entity that has issued the evaluation.

This publication doesn’t announce a credit standing motion. For any credit score rankings referenced on this publication, please see the rankings tab on the issuer/entity web page on www.moodys.com for probably the most up to date credit standing motion data and score historical past.

Cinthia Chung-Yip Affiliate Lead Analyst Structured Finance Group Moody's Traders Service, Inc. 250 Greenwich Avenue New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653 William Fricke VP - Senior Credit score Officer Structured Finance Group JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653 Releasing Workplace: Moody's Traders Service, Inc. 250 Greenwich Avenue New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653

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