LendingPoint is preparing to sponsor its latest securitization of income streams from its consumer unsecured installment loan pool. Asset securitization trust LendingPoint 2002-C is set to issue $311.8 million worth of notes, in a deal expected to close later this month.
In a first for LendingPoint’s asset securitization program, the LP 2022-C transaction contains 72-month tenors in its A1 and A2 loan ratings, according to ratings agencies Kroll Bond.
In terms of other key differences from previous agreements, 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 agreement. Renewal loans, issued to borrowers with a stronger payment history, 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-subordinated sequential compensation capital structure. Class A Notes will receive principal payments before all other subordinated Notes. Once Class A is fully paid out, payments will transition to Class B and follow the same sequential payment rules until finally outstanding Class E tickets are fully redeemed.
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 reach 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 outstanding notes of the transaction will also benefit from a non-declining cash reserve account and excess spread. The cash account will be funded at closing to hold approximately 0.50% of the initial pool balance, while the gross excess spread before losses is approximately 10.87%. The excess spread is derived from a weighted average contractual rate (WA) of 20.83% – less a service charge of 1.00% – and a lifetime adjusted note coupon (WA) of 8.97%.
KBRA plans to assign ratings from “AA-” on Class A tickets to “B” on Class E tickets.
LendingPoint offers two types of loans, mainly direct-to-consumer loans and point-of-need loans, 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 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 repay the original loan, KBRA noted, and after that any excess is distributed to the borrower.
As of August 31, the LendingPoint 2022-C statistical deadline, the pool was split on a 74.1% and 25.9% split between new loans and renewals, respectively. The fixed rate loans are fully amortized with initial balances ranging from $250 to $50,000 and initial terms of 12 to 72 months. In another borrower characteristic, the loans have a weighted average FICO score of 672 and an interest rate of 20.83%, respectively.