Consumer loans that finance home improvement projects—including windows, will secure $399.3 million in asset-backed securities (ABS) that Foundation Finance acquired from dealers who originated the contracts.
Notes will be sold through five classes of A, B, C, D and E notes, and they all have a legal final maturity date of Feb. 17, 2053, according to analysts at Kroll Bond Rating Agency.
The deal comes to market with higher initial credit enhancement levels across all classes of notes, KBRA said. The A, B, C, D and E notes benefit from initial credit enhancements of 41.32%, 27.62%, 20.26%, 10.92% and 4.21%, respectively, according to KBRA.
Total gross excess spread has also increased, landing at 6.71% for the Foundation Finance Trust 2026-1 transaction, an increase of 0.62%, according to the rating agency.
FFIN, series 2026-1's collateral has seen some changes, too, including an average current loan balance of $18,863, which is higher than the $16,366 seen on the FFIN 2025-3.
In terms of its origination business, Foundation introduced Version 3 of its credit risk model, using the most recent delinquency data, to improve loan performance predictions in June 2024. For the current securitization pool, KBRA's base case cumulative net loss rate is 8.60%, after it increased its gross loss assumptions for certain segments, the rating agency said.
Previously, the base CNL was 7.72%, the rating agency said.
On a weighted average (WA) basis, the interest rate is also higher, at 13.59% and shorter seasoning, at four months.
KBRA also notes that the current deal also has a lower concentration of called collateral, 1.4%, down significantly from the 9.6% seen on the FFIN 2025-3.
The rating agency assigns AAA, AA-, A- BBB- and BB- to the A, B, C, D and E notes, respectively.
