The home improvement finance sector is getting another boost this week, as GoodLeap prepares to sponsor a $522.9 million securitization, backed by contracts to mainly prime credit quality homeowners.
The transaction, GoodLeap Home Improvement Solutions 2025-3, will raise funds through three tranches of class A, B and C notes, all of which have an Oct. 20, 2049 legal final maturity date, according to Kroll Bond Rating Agency analysts. Classes A, B and C benefit from initial credit enhancement levels of 20.6%, 13.4% and 4.13%, respectively.
KBRA assigns ratings of A-, BBB and BB- to classes A, B and C, respectively.
Contracts in the collateral pool, which total 45,062, have original balances ranging from $1,000 to $100,000, with original terms from two to 20 years and interest rates ranging from 0.00% to 18.49%, the rating agency said. Borrowers have a current balance of $12,678, with a weighted average (WA) FICO score of 755, and a remaining term of 147 months.
GoodLeap, founded in 2003, started offering financings for residential solar systems, then expanded to sustainability-oriented home improvement loans in the second quarter of 2025, according to KBRA.
The rating agency notes that the deal, GDLP 2025-3 will use a so-called vertical risk retention structure, where 95% of the collateral balance is allocated to the noteholders, while retained interest noteholders will hold the rest.
Class A notes will receive principal to reach its specified class A overcollateralization level representing a 22.95% portion of 95% of the outstanding pool balance. If the class A notes maintain the required overcollateralization level, classes B and C can receive principal.
The deal has a target overcollateralization amount representing 4.15% of 95% of the current pool balance. The notes also benefit from excess spread of about 6.32%, KBRA said.
A cumulative default trigger is also in place to help boost credit to the notes. During such a trigger event, interest on classes B and C will be subordinated to the principal payment of the class A notes, KBRA said. If the outstanding pool balance is less than or equal to the initial pool balance, the transaction will switch to a sequential repayment order until the notes are repaid in full, KBRA said.
