LendingPoint is issuing four classes of notes worth roughly $516.5 million, its first securitization this year backed by unsecured consumer installment loans. Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings to the transaction's four classes of notes. This is the firm's fifth securitization rated by KBRA of non-prime unsecured consumer installment loans.
According to the rating agency, LendingPoint now utilizes a hybrid origination model for its direct to consumer (DTC) loans, using its state licenses in Georgia, Utah, South Dakota and Colorado as well as relationships with its third-party originating banks called FinWise and First Electronic Bank (FEB) for all the other states.
A key point that KBRA made on it's presale about the deal are the regulatory considerations surrounding the marketplace lending sector, which is still attracting some scrutiny from regulators and consumer advocates alike.
On the Federal level, some regulators have tried to make clearer some issues that marketplace lenders face. For instance, last year, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued final rules that clarified issues such as the effect of sale, assignment or transfer of a loan's valid interest rate.
There was also an OCC rule that became effective last December that set forth the standards for determining who is the true lender in the context of a partnership between a bank and a third party.
One issue specific to LendingPoint has to do with the firm now utilizing FinWise and FEB — which are both Utah third-party originating banks — to originate a part of the DTC loans to borrowers who live in states other than Utah, according to KBRA.
Founded in July 2014, the firm issued its first DTC loan in the first quarter of 2015. Through June 30, 2021, it has originated more than $3 billion DTC loans with a current principal outstanding amount of $1.2 billion
