Finance of America Mortgage LLC -- Moody's affirms Finance of America Mortgage LLC's assessment at Average, as an originator of conventional, conforming residential mortgage loans

Announcement: Moody's affirms Finance of America Mortgage LLC's assessment at Average, as an originator of conventional, conforming residential mortgage loans

Global Credit Research - 04 Dec 2020

New York, December 04, 2020 -- Moody's Investors Service (Moody's) has assessed Finance of America Mortgage LLC (FAM) as an Average originator of conventional, conforming residential mortgage loans.

Headquartered in Horsham, PA, FAM is a wholly-owned subsidiary of Finance of America Holdings LLC (FAH). FAM began originating under its current name in 2015, following FAH's acquisition of a regional mortgage company. As of 30 June 2020, FAM had 2,658 employees 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 Average. FAM's conforming, conventional underwriting guidelines include overlays to Fannie Mae and Freddie Mac guidelines. Examples of these overlays include higher investment property reserves and a shorter employment verification window for self-employed borrowers. Since our last review, FAH hired a Chief Appraiser to monitor the appraisal process at all subsidiaries as well as appraisal management companies (AMCs). About a quarter of appraisals are sent to an affiliate of FAM that is a licensed AMC. We view FAM's affiliation with an AMC as negative due to the potential for conflict of interest. FAM management has stated that this risk is mitigated by a combination of oversight and electronic documentation of all communication between the two companies.

Our assessment of FAM's early loan performance is affirmed at Average as the performance is comparable to overall conforming, conventional Fannie Mae and Freddie Mac published performance.

We continue to assess FAM's credit risk management as Average. FAM purchases closed loans from their non-delegated 

correspondents on a flow basis after a full review of each loan file. During the review period, FAM moved away from their originate-to-sell model and began to retain the mortgage servicing rights of the loans they originate.

Source - https://finance.yahoo.com/news/finance-america-mortgage-llc-moodys-184606069.html