LendingPoint is preparing to sponsor its recent securitization of revenue streams from its pool of unsecured consumer installment loans. The LendingPoint 2002-C Asset Securitization Trust is scheduled to issue $311.8 million in debentures, which are expected to close later this month.
A first for the LendingPoint Asset Securitization program, the LP 2022-C transaction includes 72-month maturities in credit grades A1 and A2, according to Kroll Bond Rating Agencies.
As for other key differences from previous deals, the 2022-C loans include an average current loan balance of $10,730, down from the average balance of $12,160 in the 2022-B deal. Extension loans, made to borrowers with a stronger balance of payments, make up 25.9% of the underlying pool, compared to 28.7% in the 2022-B deal.
LendingPoint 2022-C will issue the Notes from a senior-subordinate, sequential wage capital structure. Class A Notes receive principal payments before all other subordinated Notes. Once Class A is fully paid, payments will move to Class B and follow the same sequential payment rules until finally the outstanding Class E Notes are fully repaid.
According to KBRA, subordination is just one of LendingPoint 2022-C’s credit enhancement strategies. Others include over-collateralization – which is initially 5.50% and will build to a target of 12.85% of the current pool balance. KBRA also noted that overcollateralization is subject to a floor of 2.0% of the initial pool balance.
The outstanding debentures of the transaction will also benefit from a non-declining cash reserve account and excess spread. The cash account is funded at close with approximately 0.50% of the initial pool balance while the gross excess spread before losses is approximately 10.87%. The excess spread is calculated using a weighted average (WA) contract rate of 20.83% – less a service fee of 1.00% – and a (WA) life-adjusted notes coupon of 8.97%.
KBRA expects to issue ratings from “AA-” for Class A grades to “B” for Class E grades.
According to KBRA, LendingPoint offers two types of loans, primarily direct-to-consumer and point-of-need, but only the latter are included in the current securitization pool and have a fixed rate. These types of loans are categorized as either newly originated loans or renewal loans, and the latter type is given to existing customers with a good reputation. According to KBRA, proceeds from extension loans are used to repay the original loan, after which any excess is distributed to the borrower.
As of August 31, the LendingPoint 2022-C statistical cut-off date, the pool was split 74.1% and 25.9% between new and renewed loans, respectively. The fixed rate loans are fully amortized, with original balances ranging from $250 to $50,000 and original terms ranging from 12 to 72 months. In another characteristic of the borrower, the loans have a weighted average FICO score of 672, or an interest rate of 20.83%.