LendingPoint is preparing to sponsor its latest securitization of revenue streams from its pool of unsecured consumer installment loans. The LendingPoint 2002-C Asset Securitization Trust is slated to issue $311.8 million in notes, in a deal due to close later this month.
In a first for the LendingPoint Asset Securitization program, the LP 2022-C transaction contains with 72-month terms in its A1 and A2 loan grades, according to Kroll Bond Rating Agencies.
As for other key differences from previous deals, the loans in 2022-C contain an average current loan balance of $10,730, lower than the average balance of $12,160 in the 2022-B deal. Renewal loans, extended to borrowers with a more solid payment track record, comprised 25.9% of the underlying pool, compared with 28.7% in the 2022-B deal.
LendingPoint 2022-C, will issue the notes from a senior-subordinate, sequential pay capital structure. Class A notes will receive principal payments before all other subordinate notes. Once the class A is paid in full, payments will move to class B, and follow the same sequential pay rules until, finally, the outstanding class E notes are repaid in full.
Subordination is just one of LendingPoint 2022-C’s credit enhancement strategies, according to KBRA. Others include overcollateralization—which is 5.50%, initially, and will build to a target of 12.85% of the current pool balance. KBRA also noted that overcollateralization will be subject to a floor of 2.0% of the initial pool balance.
The transaction’s outstanding notes will also benefit from a non-declining cash reserve account and excess spread. The cash account will be funded at closing to hold about 0.50% of the initial pool balance, while gross excess spread before losses is about 10.87%. The excess spread is derived from a weighted average (WA) contract rate of 20.83%—minus a 1.00% servicing fee—and a (WA) life-adjusted note coupon of 8.97%.
KBRA expects to assign ratings of ‘AA-‘ on the class A notes to ‘B’ on the class E notes.
LendingPoint provides two types of loans, primarily, direct-to-consumer and point of need, according to KBRA, but only the latter are included in the current securitization pool, and they are fixed-rate. These types of loans are categorized as either newly originated loans or renewal loans, and the latter type is extended to existing customers in good standing. Proceeds from renewal loans are used to pay off the initial loan, KBRA noted, and after that any excess is distributed to the borrower.
As of August 31, LendingPoint 2022-C’s statistical cutoff date, the pool was divided on a 74.1% and 25.9% split between new and renewal loans, respectively. The loans, fixed-rate, are fully amortizing with original balances that can range from $250 to $50,000 and original terms of 12 to 72 months. In another borrower feature, the loans have a weighted average FICO score of 672 and an interest rate of 20.83%, respectively.