New York banker Liberty Lending is preparing to issue a $161.61 million asset-backed security (ABS) that uses unsecured consumer loans in the transaction, according to a pre-sale report from Kroll Bond Rating Agency released Wednesday.
Rahel Avigdor of KBRA, Senior Director; Eric Neglia, Senior Managing Director; and Brendan Buckley, analyst, wrote the report.
LL ABS Trust 2022-1 has a tranche of $116.1 million with an initial credit enhancement of 32.25% and is rated “AA” by KBRA; a tranche of $20.42 million with an initial credit enhancement of 20.25% and an “A-” rating; a tranche of $11.9 million with an initial credit enhancement of 13.25% and a “BBB-” rating and a tranche of $13.19 million with an initial credit enhancement of 5.5% and a “BB” rating.
The Notes will be secured by a certificate of trust backing the unsecured loans. May 4 is the trade date.
Founded seven years ago, Liberty Lending is an independent company that shares “common ownership with National Debt Relief,” KBRA said. This latest transaction is the company’s fourth rated securitization. Its managed portfolio has $451 million in outstanding loans.
LL ABS Trust 2022-1 has Wilmington Savings Fund Society, FSB as Owner Trustee, Grantor Trust Trustee and Registrar of Grantor Trust Certificate. The funding banks and originators are FinWise Bank and MetaBank, NA Wilmington Trust, NA is the Deed Trustee, Notes Paying Agent, Certificates Calculation Agent and Collateral Agent.
The average loan balance in LL ABS Trust 2022-1 is $15,368 and the weighted collateral interest rate is 21.21%. The initial weighted average FICO score is 577. The majority of loans – 88.66% – are “electronic loans” or “express settlement loans” to consumers enrolled in National Debt Relief’s debt settlement program. “The main purpose of e-lending is to speed up the debt settlement process,” KBRA wrote. They are fixed rate with an initial balance ranging from $3,500 to $75,000, KBRA said in the report.
The remaining 13.34% of loans are “C loans” or consolidation loans for borrowers with FICO scores of 600 and above. C loans are used for debt consolidation and balances range from $3,500 to $40,000 and have fixed interest rates of 5.6% to 31.79%.
No state represents more than 11% of the pool balance, but California (10.6%), Illinois (9.0%), Texas (8.4%), New York (8.4%) and Florida (7.2%) are the top five states represented, according to the report.