LendingPoint Returns With $ 52.5 Million Consumer Loan ABS
LendingPoint LLC, a leading unsecured consumer installment loan provider, is preparing to securitize approximately $ 52.5 million in its financial products. The Notes will be the first series issued by the LendingPoint Pass-Through Trust, Series 2022-ST1.
The transaction, known as LPPT 2022-ST1, will issue a class of notes, which will likely receive a “BBB-” rating from the Kroll Bond Rating Agency. Citibank has several roles in the transaction, including that of certificate registrar, paying agent and certificate paying agent.
LendingPoint, which uses a hybrid origination model for its direct lending to consumers, and FinWise Bank are expected to initiate lending in LPPT 2022-ST1. However, by the statistical deadline of December 27, 2021, FinWise had initiated all loans in the transaction, according to KBRA.
LendingPoint will take care of the notes, while Vervent will be the backup agent. The LPPT 2022-ST1 notes benefit from two forms of credit enhancement – over-collateralization and excess margin. KBRA notes that the required overcollateralisation amount is fully funded at closing and is equal to the greater of several conditions:
• or 30% of the current outstanding balance of the pool of the series
• 3% of the pool balance at the end of the series
• if a depreciation event is corrected, then the overcollateralisation will be equal to the product of the percentage immediately preceding the repair of the violation and
• the balance of the series pool on the last day of the collection period concerned
The LPPT 2022-ST1 has a gross excess spread, before losses, of approximately 18.2%. This is based on an average contract rate of 21.7%, less a management fee of 1%, and an assumed weighted average coupon of 2.5%, KBRA said.
KBRA notes that LendingPoint has a long write-off policy on its loans, in which contracts are billed after 181 days late, which it changed on June 1, 2019. While the corporate level adheres to a write-off policy of 181 days, the loans in the LPPT 2022-ST1 transaction use a threshold of 121 days to define overcollateralisation requirements.