LendingPoint LLC, a provider of non-prime unsecured consumer installment loans, is preparing to securitize about $52.5 million in its financial products. The notes will be the first series issued from the LendingPoint Pass-Through Trust, Series 2022-ST1.
The transaction, known as LPPT 2022-ST1, will issue one class of notes, which will likely receive a ‘BBB-’ rating from the Kroll Bond Rating Agency. Citibank takes on several roles on the deal, including that of certificate registrar, paying agent, and certificate paying agent.
LendingPoint, which uses a hybrid origination model for its direct-to-consumer loans, and FinWise Bank are expected to originate the loans in LPPT 2022-ST1. As of the December 27, 2021 statistical cutoff date, however, FinWise had originated all of the loans in the transaction, according to KBRA.
LendingPoint will service the notes, while Vervent is the backup servicer. The notes in LPPT 2022-ST1 benefit from a couple of forms of credit enhancement – overcollateralization and excess spread. KBRA notes that the required overcollateralization amount is fully funded at closing, and is equal to the greater of several conditions:
• either 30% of the current outstanding series pool balance
• 3% of the series cutoff date pool balance
• if an amortization event is cured, then the overcollateralization will be equal to the product of the percentage immediately preceding the cure of the breach and
• the series pool balance as of the last day of the related collection period
The LPPT 2022-ST1 has a gross excess spread, before losses, of about 18.2%. This is based on an average contract rate of 21.7%, minus 1% servicing fee, and an assumed weighted average coupon note of 2.5%, KBRA said.
KBRA notes that LendingPoint has a long charge-off policy on its loans, in which contracts are charged off after 181 days past due, which it changed on June 1, 2019. While the company-level adheres to a charge-off policy of 181 days, the loans in the LPPT 2022-ST1 transaction uses a 121-day threshold to set overcollateralization requirements.
