FOA maps next steps after PHH reverse asset acquisition

Onity Group, the parent company of PHH Mortgage Corp. and its reverse mortgage arm, Liberty Reverse Mortgage, announced this week that it has chosen to stop originating reverse mortgages. Instead, Onity said it’s selling almost all of its reverse mortgage business to Finance of America (FOA).

PHH is selling reverse mortgage servicing rights (MSRs) for about 40,000 Ginnie Mae-backed Home Equity Conversion Mortgages (HECMs) with a total balance of $9.6 billion at the end of September. As part of the deal, PHH will become the subservicer for these loans under a three-year agreement with FOA.

Onity said it wants to focus on other business channels, including conventional forward mortgages, non-QM loans, commercial loans and its servicing portfolios rather than reverse mortgage originations.

FOA is doing quite the opposite — it wants to grow in the reverse mortgage space and sees value in adding PHH’s portfolio and team.

As a result, FOA will take over PHH’s pipeline of reverse mortgages and said it will hire some of PHH’s employees working in that line of business. The exact number of impacted employees is not available yet, a spokesperson for Onity Group told HousingWire‘s Reverse Mortgage Daily (RMD).

CEO Graham Fleming said in an interview with RMD that Finance of America is “working on a plan to integrate those employees,” and that its “current plan is to onboard the employees into our current technology stack and current workflow processes.”

“Over the last probably four to six months, we’ve undertaken a series of strategic initiatives that involve delivering the balance sheet,” Fleming said. “The next strategic step for us was to look in the market, see how we could increase the size of our portfolio and form a partnership, which is what we did with PHH.”

Onity’s spokesperson said that the decision on their end stemmed in part from the company’s third-quarter 2025 earnings performance.

“Our origination platform is growing faster than the total originations market, and our recapture platform is delivering top-tier performance,” the spokesperson said. Historically, reverse has been a profitable niche business that served as an effective hedge to our forward MSRs, which was critical as we were building our forward originations and recapture capabilities.

“This transaction enables us to concentrate our resources on maximizing the growth and earnings potential of forward originations. … As such, our desire [is] to reposition our participation in reverse from an end-to-end provider to an industry-leading reverse subservicer and asset manager.” 

Until the transaction closes, which is expected to happen in Q1 2026, Onity is operating under “business as usual” and will continue to originate reverse mortgages until the deal reaches the finish line. 

Fleming said there will be no disruption for servicing, and that PHH’s current borrowers will continue to interact with them via the PHH technology platform. 

He described the transaction as a “threefold” opportunity, saying that the company is diversifying its subservicing, increasing the size of its portfolio and onboarding new talent.

“We also look forward to PHH offering our HomeSafe Second (product), which we think will gain a lot of traction headed into 2026,” Fleming said.

Fleming shared an update on FOA’s profitability status, which will be boosted by the deal. While FOA recorded a $29 million loss in Q3 2025, adjusted net income was $33 million during the same period, a 136% improvement from the second quarter and up 120% year over year.

An FOA spokesperson confirmed that for the first nine months of 2025, it posted $131 million in net income and $60 million in adjusted net income — a fivefold increase from last year.