KBRA Takes Rating Actions on LendingPoint Asset Securitization Trusts
14 May 2025 | New York
KBRA affirmed its ratings on nine classes of notes and downgraded its ratings on five class of notes issued by six LendingPoint Asset Securitization Trust (“LP”) ABS transactions collateralized by unsecured consumer loans through LendingPoint’s direct to consumer (“DTC”) product. Five of the nine affirmations reflect credit support that is adequate to support the outstanding ratings. Two of the affirmations were previously lowered to CCC (sf) as they are susceptible to loss over the remaining term of the transaction, and two were previously lowered to C (sf) as they continue to miss interest payments and remain at an increased risk of principal loss. The remaining five actions are downgrades, which are reflective of continued credit support erosion and the performance of the underlying collateral. Of the downgrades, LP 2022-C Class C was lowered to CCC (sf) as the notes are at an increased risk of principal loss since the last review. LP 2020-REV1 Class D, LP 2021-B Class D, LP 2022-B Class C were lowered to CC (sf) as the notes are at increased risk of principal loss since the time of our last review and are susceptible to future interest shortfalls. Additionally, LP 2022-C Class D was lowered to C (sf) as KBRA anticipates low recovery expectations and upcoming missed interest payments. At this time, all of the classes rated CCC (sf) and below are not expected to maintain timely interest payments. The data used for this review is as of the April 2025 distribution date (March 2025 collection period).
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 LendingPoint Asset Securitization Trust Comprehensive Surveillance Dashboard.
Four LendingPoint Pass-Through Trusts DTC transactions and one LP LMS 2023-1 transaction collateralized by LendingPoint’s point of need (“PON”) product are not included in this review. Please see LendingPoint Pass-Through Trust Comprehensive Surveillance and LP LMS 2023-1 Asset Securitization Trust Surveillance Report for additional information on those transactions.
LendingPoint was founded in July 2014 and is a wholly owned subsidiary of LendingPoint Holdings LLC, which is a wholly owned subsidiary of LendingPoint Consolidated, Inc. KBRA has reviewed the financials of LendingPoint Consolidated, Inc. As noted in prior KBRA reports, the Company underwent a servicing platform transfer in August 2023, which caused an increase in delinquencies followed by a higher rate of charge-offs. In addition, the Company reduced the number of modifications during the system transfer. Since that time, modifications have returned to historical levels as outlined in the prior report. In September 2023, Warburg Pincus, a prior investor in LendingPoint, injected additional funds, gained a seat on the board of directors, and obtained majority control.
Since 2023, the Company has experienced management turnover, including the replacement of the CTO, CRO, CEO and CFO. More recently, in Q2 2025 the General Counsel and Secretary left the Company. The Company also reduced staff by 27% since January 2024. The Company went through a restructuring that led to additional warehouse capacity, additional subordinated debt, and other liquidity from its lenders.
As noted in prior KBRA reports, the Company released a Settlement Modification Memo to its ABS Bondholders and Trustees discussing a change in the treatment of loans subject to debt settlement agreements due to the rising number of obligors utilizing the services of debt management companies. While the change in the treatment of loans subject to debt settlement agreements resulted in decreases in overcollateralization, outstanding modifications, and remaining pool factor, defaults or loss measures were not impacted. KBRA also notes that additional Obligors entering into debt settlements could continue to reduce pool balances.
LendingPoint uses its proprietary credit scoring models to assess the credit risk of applicants. The Company has offered two different loan products: DTC and PON; however, only DTC loans are included in the LP transactions. The Company exited the PON business line at the end of 2023 to focus on the DTC business. DTC loans are unsecured consumer loans typically used by the borrowers for either debt consolidation or credit card refinancing, to pay for a home improvement or to make a major purchase, while PON loans are used to finance a purchase at one of the Company’s approved merchants.
LendingPoint is the servicer for the transactions. Should LendingPoint be terminated as servicer, servicing responsibilities will be transferred to the backup servicer, Vervent Inc (“Vervent”). Vervent is an established backup servicer in the consumer ABS sector. As a backup servicer, Vervent conducts periodic on-site visits, receives monthly pool data, and confirms certain data on the monthly servicer reports. While change in servicer may result in a disruption in collections and modifications in how loans are serviced and payments are processed, Vervent’s ongoing involvement and preparedness as the backup servicer could limit the impact of a servicing disruption in the event of a servicing transfer.
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