Finance of America to acquire Cali mortgage lender

A Plano-based finance and solutions platform is acquiring the assets of a reverse mortgage lender from California.

Finance of America Companies is buying American Advisors Group, a direct-to-consumer reverse mortgage lender. Under the terms of the deal, the subsidiary Finance of America Reverse LLC, will operate a separate direct-to-consumer retail company under American Advisors Group’s brand name, according to the Dallas Business Journal.

Finance of America said it entered a stock purchase agreement for the acquisition, in an SEC filing released Wednesday. American Advisors Group founder Reza Jahangiri committed to selling over 10 million shares for $15 million. Jahangiri will receive about $10 million in cash and the rest in select Finance of America shares, under the agreement.

Finance of America stockholders, including its chairman Brian Libman, will invest an additional $30 million of capital into the company through a private placement of FOA’s common stock, according to the terms of the deal. While still subject to customary closing conditions and regulatory approvals, the transaction is expected to close in the first half of 2023.

The completion of this deal is expected to help grow “both the tangible book value and earnings per share for FOA,” the Dallas Morning News reported.

“We believe home equity will be an increasingly important asset for Americans to consider in order to supplement their incomes, especially in retirement,” FOA CEO Graham A. Fleming said in a media release announcing the acquisition. “We are confident that our expansion into this direct-to-consumer retail channel will position us to further educate, grow and service this market while driving enhanced value and opportunities for our customers, employees, partners and investors.”

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