LendingPoint is issuing four classes of bonds valued at approximately $ 516.5 million, its first securitization this year backed by consumer unsecured consumer loans. The Kroll Bond Rating Agency (KBRA) has given preliminary ratings to the four bond classes in the transaction. This is the company’s fifth non-Prime non-Prime unsecured consumer installment loan securitization from KBRA.

According to the rating agency, LendingPoint is now using a hybrid lending model for its direct-to-consumer loans (DTC), leveraging its state licenses in Georgia, Utah, South Dakota and Colorado, as well as relationships with its third-party banks, FinWise and Erste Electronic Bank ( FEB) for all other countries.

A key point KBRA highlighted in its pre-sale on the deal is the regulatory considerations related to the market credit sector, which is still under scrutiny by regulators and consumer advocates alike.

At the federal level, some regulators have tried 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 enacted final regulations that clarified issues such as the implications of selling, assigning, or transferring the applicable interest rate on a loan.

An OCC rule also went into effect last December, setting the standards for determining the true lender in a partnership between a bank and a third party.

One specific problem for LendingPoint has to do with the company now using FinWise and FEB – both third-party Utah banks – to extend some of the DTC loans to borrowers living in states other than Utah, according to KBRA.

The company, which was founded in July 2014, issued its first DTC loan in the first quarter of 2015. As of June 30, 2021, it has originate more than $ 3 billion in DTC loans with a current outstanding principal amount of $ 1.2 billion

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