Foundation Finance Trust is preparing to sell $441.1 million in asset-backed bonds to investors, from a pool of retail installment contracts that fund home improvements.
All the notes, issued through five tranches of class A, B, C, D and E notes, have a legal final maturity of Aug. 15, 2052, according to a breakdown of the capital structure from Moody's Ratings and Kroll Bond Rating Agency.
Initial hard credit enhancement ranges from 34.9% on the AAA-rated class A notes—which issues the bulk of the securities, with $289.8 million—to 1.50% on the class E notes. Moody's only rated the class A notes.
BNP Paribas,
FFIN 2025-3's securitized notes benefit from lower levels of credit enhancement in all tranches, except class E, which maintained a CE level equal to 1.50% of the tranche's outstanding note balance.
Credit enhancement levels weren't the only element that shifted down since the 2025-2 series, according to KBRA. On a weighted average (WA) basis, the FCO score was 728, down from 736. The loan balance, $16,366 was also lower compared with the 2025-2 deal, when it was $19,993. Loans' WA interest rate on the current deal is 12.15%, own from 12.56%, according to KBRA.
Estimated annul gross excess spread on the deal is 5.98%, down from 6.42%.
Aside from excess spread, FFIN's notes get credit protection from a reserve account funded at an amount equaling 0.50% of the initial pool balance.
Notes will repay investors sequentially until the class A overcollateralization reaches 40.0%, KBRA said. At that point, the order of principal payment will switch from sequential to pro rata, if the cumulative default trigger event is not in effect, and the pool factor is below 10%, KBRA said.
Foundation Finance funds the loans by buying them from dealers that originate the point-of-sale contracts with homeowners, says Kroll Bond Rating Agency.
KBRA assigned AAA to the class A notes; AA- to the class B notes; A- to the class C notes; BBB- to the class D notes and BB- to the class E notes.
