LendingPoint’s first securitization of unsecured consumer installment loans in 2021
LendingPoint is issuing four classes of notes valued at approximately $ 516.5 million, its first securitization this year backed by unsecured consumer installment loans. The Kroll Bond (KBRA) rating agency assigned preliminary ratings to the transaction’s four categories of notes. This is the company’s fifth securitization rated by KBRA for unsecured and unsecured consumer installment loans.
According to the rating agency, LendingPoint now uses 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 home banks called FinWise and First Electronic Banking (FEB) for all other states.
A key point that KBRA made during its presale about the deal is the regulatory considerations surrounding the lending sector in the market, which always attracts some scrutiny from regulators and consumer advocates.
At the federal level, some regulators have attempted to clarify some issues facing market lenders. For example, 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 the sale, assignment or transfer of the rate. valid interest on a loan.
There was also an OCC rule that came into effect last December that sets the standards for determining who the real lender is in the context of a partnership between a bank and a third party.
One issue specific to LendingPoint is that the company is now using FinWise and FEB – both of which are third-party banks originally from Utah – to provide a portion of DTC loans to borrowers who live in states other than Utah, according to KBRA.
Founded in July 2014, the company issued its first DTC loan in the first quarter of 2015. Until June 30, 2021, it has issued over $ 3 billion in DTC loans with a current principal amount outstanding of $ 1.2 billion. .