LendingPoint’s first securitization of unsecured consumer installment loans in 2021
LendingPoint is issuing four classes of notes worth approximately $516.5 million, its first securitization this year backed by unsecured consumer installment loans. Rating agency Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings to the four categories of bonds in the transaction. This is the company’s fifth KBRA-rated securitization for unsecured consumer unsecured installment loans.
According to the rating agency, LendingPoint now uses a hybrid origination model for its direct consumer lending (DTC), 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 Bank (FEB) for all other states.
A key point KBRA made during its pre-sale of the deal relates to the regulatory considerations surrounding the lending industry in the marketplace, which always attracts 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 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 true lender in a partnership between a bank and a third party.
One issue specific to LendingPoint is that the company now uses FinWise and FEB — both of which are third-party banks originally from Utah — to originate a portion of DTC loans to borrowers who live in states other than Utah. Utah, according to KBRA.
Founded in July 2014, the company issued its first DTC loan in the first quarter of 2015. Through June 30, 2021, it has issued over $3 billion in DTC loans with current principal outstanding of $1.2 billion. dollars.