GoodLeap Sustainable Home Solutions is preparing to raise $314.6 million in asset-backed securities with consumer solar and home improvement loans making up the collateral pool, its third transaction of the year.
GOOD 2023-3, as the transaction is known, is a term securitization that will issue notes through three classes of notes. Just one of the classes, the $265.1 million class A notes, carries a preliminary credit rating, 'A', according to the Kroll Bond Rating Agency. The two loan types together are known as sustainable home improvement loans, and for the most part the loans in this particular pool are of prime quality.
GOOD 2023-3 benefits from credit enhancement in the form of yield supplement overcollateralization, overcollateralization, subordination—particularly for classes A and B—and amounts on deposit in the reserve account, according to KBRA. The deal uses a vertical risk retention structure. In that situation all available funds will be deposited into the deal's collection account and will be segregated into a 95.0% noteholder available fund, and a 5.0% retained interest available fund. As a percentage of 95% of the adjusted pool balance, the class A notes have an initial hard credit enhancement level of 26.95%.
In addition to originating the loans, GoodLeap is acting as servicer, with Vervent in place as a backup servicer, and KBRA views the latter as a credit positive. Prepayments rates across GoodLeap's business sector had declined over the past year, due largely to inflation pressures, a slower housing market and the low interest rates of solar loans relative to other consumer debt.
The current transaction features a number of changes from GOOD 2023-2, including a 5.3% ratio of new products. Solar-deferred loan products comprise most of that, accounting for 4.57%, according to KBRA. Solar-principal only and home efficiency-deferred account for 0.52% and 0.18%, respectively.
Another shift happened in the pool, with 11.3% fewer 25-year loans, compared with the GOOD 2023-2 deal. Some of that shift went to 30-year loans, which gained 0.02% in the pool.
In another change, borrowers with 700-749 credit ratings account for the biggest FICO bucket, at 29.5%.
