Foundation Finance Trust 2025-2 (FFIN 2025-2) has issued five classes of notes totaling $329.23 million, collateralized by $332.55 million receivables.
The RMBS notes are backed by home improvement installment loans originated by approved dealers in Foundation Finance Company's network of 13,240 dealers located in most of the 50 states. The dealers provide point-of-sale financing for home improvement products and services such as water treatment products, water heaters, home improvements, HVAC, and roof replacements.
Foundation Finance Company acts as the loans' servicer. BNP Paribas, Goldman Sachs and Guggenheim Securities are the managers, and Wilmington Trust Company is the trustee and backup servicer.
Foundation was founded in 2012 by an experienced management team and Garrison Investment Group, KBRA said. In September 2022, Foundation was acquired by InterVest Capital Partners, a New York-based investment management firm which manages funds and accounts specializing in specialty finance and real estate investment. InterVest owns 76.50% of the business and the balance is owned by Foundation's management team.
KBRA said that, as of the May 31, 2025 statistical cutoff date, the FFIN 2025-2 collateral pool had a weighted-average FICO score of 736; a WA original and remaining payment terms of 135 and 133 months, respectively; an average outstanding balance of $19,993; and a WA contract rate of 12.56%.
As of the statistical cutoff date, FFIN 2025-2's largest geographic concentration is in Texas at 16.6% of the outstanding principal balance, KBRA said. The next largest state concentrations are California (8.3%), Florida (6.9%), Illinois (5.2%), and Ohio (4.1%). The top five states represent 41.1% of the outstanding principal balance as of the statistical cutoff date.
Moody's Ratings said that its median cumulative gross and net loss expectation for the 2025-2 pool are 14% (2.5% lower than Foundation Finance Trust's previous transaction FFIN 2025-1) and 9.8%, respectively. It based its cumulative gross and net loss expectations on an analysis of the underlying collateral's credit quality; Foundation's ability to perform the servicing functions and Wilmington Trust's ability to perform the backup servicing functions; and current expectations for the macroeconomic environment during the transaction's life.
At closing, the Class A notes benefit from 34.6% of hard credit enhancement, Moody's said. Hard credit enhancement for the Class A notes comprises a combination of over-collateralization, a non-declining reserve account and subordination. The notes also benefit from excess spread.
Moody's assigned a definitive AAA rating to the Class A notes worth $291.15 million but didn't rate the other notes.
KBRA assigned AAA to the Class A notes, AA- to the Class B notes ($43.23 million and initial credit enhancement of 21.6%), A- to the Class C notes ($19.62 million and 15.7%), BBB- to the Class D notes ($25.61 million and 8%), and BB- to the Class E notes ($21.62 million and 1.5%).
Neither company rated the over-collateralization notes worth $3.32 million.
