KBRA Affirms and Upgrades Ratings from Foundation Finance Trusts

KBRA affirms its ratings on 26 classes of notes and upgrades its ratings on four classes of notes issued from eight Foundation Finance Trusts (“FFT”) transactions. KBRA’s analysis indicated that existing credit enhancement for the notes is sufficient to support the revised and affirmed ratings. All of the securities with upgraded ratings experienced increased credit enhancement, and, in the case of the ratings associated with FFT 2019-1, FFT 2020-1, and FFT 2021-1, a decrease in expected lifetime (“Cumulative Net Loss”) CNL relative to expectations at issuance. The data used for this review is as of the March 2025 distribution date (February 2025 collection period). To date, the securities have received timely interest payments.

In performing its rating review, KBRA utilized its Consumer Loan ABS Global Rating Methodology, as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology. In determining these rating actions, KBRA reviewed the collateral performance to date and projected the remaining loss for the transactions based on current assumptions. The rating actions, along with related deal and tranche performance information, are available in spreadsheet form in the accompanying Foundation Finance Trust Comprehensive Surveillance Dashboard. FFT 2025-1 closed on March 14, 2025 and was not included in this review.

Foundation was founded in 2012 through the partnership of an experienced management team and Garrison Investment Group. In September 2022, Foundation was acquired by InterVest Capital Partners (“InterVest”), a New York-based investment management firm. Since 1999, InterVest manages or advises funds and accounts that invest in specialty finance and real estate. InterVest owns 76.50% of the business and the balance is owned by the Foundation management team.

Foundation acquires contracts from dealers who originate contracts by providing point-of-sale financing to consumers that are typically creditworthy homeowners making a discretionary purchase to make a repair or improve the value of their home. Dealers are contractors or retailers that sell home improvement products and services that include windows, roof replacements, heating, ventilation, air conditioning systems, siding, and water treatment products. Foundation, in the majority of cases, funds the dealer directly after project completion to ensure the proceeds are used for the contracted home improvement. Foundation currently offers financing in all 50 states and Washington DC, either through state licenses or in states where there is no licensing requirement for that specific state. As of December 31, 2024, Foundation has originated approximately $4.30 billion of contracts since inception and services a portfolio of approximately $1.9 billion.

Foundation has been profitable since 2013 and has positive net earnings for the year ended December 31, 2024. Net financed receivables have increased from $1.6 billion as of December 31, 2023, to $1.9 billion as of December 31, 2024.

Foundation has three revolving warehouse facilities with a total commitment amount of $850.0 million. As of December 31, 2024, the warehouses’ outstanding balance was $305.0 million. The Company has demonstrated profitability and the ability to secure liquidity from the capital markets.

The related transactions are listed further below with links to the appropriate page on kbra.com which show the applicable resulting ratings.

Click here to view the report.

For additional information regarding a specific transaction, see the list below to access ratings, reports, and disclosures:

Methodologies