solar loans for smart homes | Asset securitization report
Consumer solar loans and home efficiency loans made primarily to prime homeowners secure a $ 361 million transaction called the GoodLeap Sustainable Home Solutions Trust 2021-3, or GOOD 2021-3.
GoodLeap, a company launched in 2017 to fund a solar loan origination platform, and in 2021 GoodLeap expanded its product offering to include home efficiency loans, including batteries, LED lighting, air conditioning and cooling. smart home technology. The company finances the arrangements through warehouse credit lines and forward flow arrangements from stable sources of liquidity.
The pool’s solar loans have balances between $ 5,000 and $ 100,000, with initial terms of seven to 25 years and interest rates between 1.48% and 7.99%. On average, GoodLeap borrowers had a weighted average FICO score of 741 when their loans were issued, according to an assessment by rating agency Kroll Bond.
The collateral pool consists of approximately $ 417.3 million in sustainable home improvement loans. As of the deadline, May 6, 2021, solar loans and residential efficiency loans make up 99.7% of the collateral pool, according to KBRA.
The liquidity and structure of the transaction are two of the clear positive aspects of the transaction. Credit enhancement consisting of overcollateralisation, subordination in the case of class A and class B notes, cash reserve account and excess margin, overcollateralisation of the yield supplement (YSOC), a cash reserve account and excess margin, according to KBRA.
To achieve a YSOC, the parties entering into the agreement identify the present value of all scheduled payments on sustainable home improvement loans discounted at their stated interest rate and the present value of all future payments on the discounted loans. at a specified discount rate. In this case, the latter is 3.5 percent. Finally, the YSOC amount is subtracted from the pool balance each month to determine an adjusted pool balance, KBRA explains.
Another benefit is that GoodLeap is a profitable business, has no outstanding corporate debt, and generates excess cash. The management team is also very experienced, says KBRA, bringing together expertise in the areas of clean energy, consumer lending, financial regulation and financial technology, among others.
KBRA plans to assign an “A” to the $ 304.6 million Class A Notes; a “BBB” on the Class B Notes of $ 29.2 million; and “BB” on the $ 27.1 million Class C Notes.