LendingPoint is issuing four classes of notes valued at approximately $ 516.5 million, its first securitization this year backed by unsecured consumer installment loans. Kroll Bond Rating Agency (KBRA) assigned preliminary ratings to the four ticket categories in the transaction. This is the KBRA-rated company’s fifth securitization of unsecured and unsecured consumer installment loans.
According to the rating agency, LendingPoint now uses a hybrid origination model for its direct consumer loans (DTC), using its state licenses in Georgia, Utah, South Dakota and Colorado as well as relationships with its banks. of third-party origin 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 of the issues that market lenders face. 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 selling, assigning or transferring the rate of valid interest on a loan.
There was also an OCC rule that came into effect last December that set out the standards for determining who is the real lender 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 Utah third-party banks – 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. .