FOA introduces second-lien reverse mortgage LOC in California

Finance of America (FOA) on Thursday introduced HomeSafe Second Line of Credit, a second-lien reverse mortgage line of credit now available in California that lets homeowners 55 and older tap home equity over time without refinancing or taking on a new required monthly mortgage payment.

The product, which became available April 1, is designed to operate alongside a borrower’s existing first mortgage. It targets equity-rich senior homeowners who secured low fixed rates during the COVID-19 pandemic and are reluctant to refinance into a higher-rate loan or add a traditional home equity line of credit (HELOC), according to the company announcement.

HomeSafe Second Line of Credit is structured as a nonrevolving, second-lien reverse mortgage. Eligible borrowers must take an initial draw of at least 25% of the available funds at closing, with the remaining line accessible over a 10-year draw period. No new monthly mortgage payment is required, though borrowers must continue paying the existing first mortgage and all property-related charges such as taxes, insurance and fees.

“HomeSafe Second Line of Credit could solve a real market need in California,” FOA President Kristen Sieffert said in a statement. “This product gives borrowers the ability to access their home equity on their terms – when they need it – without adding a new monthly mortgage payment.”

The launch comes as more homeowners turn to second-lien products rather than refinancing. Second-lien equity withdrawals rose 22% year over year in the first quarter of 2025 to the highest level in 17 years, according to ICE Mortgage Technology data cited in FOA’s press release.

For lenders and originators focused on retirees and near-retirees, the move underscores growing demand for nontraditional ways to unlock housing wealth while preserving below-market first-lien rates.

HomeSafe Second Line of Credit offers a maximum loan amount of up to $1 million with a minimum credit score of 640, Finance of America said. The rate is adjustable, tied to the one-year Constant Maturity Treasury (CMT) plus a margin. Unused portions of the line can grow at 1.5% annually for the first seven years, giving borrowers additional capacity over time.

Unlike a traditional HELOC, the FOA product is nonrevolving: Once funds are repaid, they do not become available again for future draws. By contrast, standard HELOCs typically revolve and require monthly principal and interest payments during and after the draw period.

FOA is positioning the new line of credit as a complement to its existing proprietary HomeSafe Second lump-sum reverse mortgage and as a potential HELOC alternative for older borrowers seeking flexibility without a new installment-payment obligation.

In California, mid-tier home values are about $775,000, among the highest in the country, and nearly three-quarters of residents 65 and older own their homes, according to Zillow data and other sources cited by FOA. Many of these homeowners built substantial equity during the pandemic-era price run-up and are now “equity rich but cash constrained,” especially as inflation and volatility raise the costs of living in retirement.

For financial planners, loan officers and brokers serving senior homeowners, the product offers another tool for bridging retirement income gaps, funding large expenses or backing up emergency reserves. Example uses highlighted by FOA include home improvements, helping children or grandchildren with tuition or down payments, managing short-term cash needs, or covering unexpected medical and household costs.

Like other reverse mortgage products, the loan must be repaid when the borrower no longer meets the loan obligations, including living in the home as a principal residence, paying property charges or maintaining the property. Mortgage professionals will need to weigh these risks, as well as nonrevolving LOC terms and adjustable rates, against other forward and reverse lending options.

Finance of America said it plans to roll out HomeSafe Second Line of Credit beyond California to additional states throughout 2026.

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication. The system helps convert company announcements and industry data into HousingWire-style news coverage.