Here’s a new home improvement ~$195M securitization by Stream Financial LLC.
Company Overview:
• Stream Innovations is a leading point-of-sale home improvement financing provider
• Founded in 2020
• Originated $770M+ in loans since inception
• Exclusive partnership with Power Home Remodeling
• 100% of loans finance energy-efficient upgrades (windows, doors, roofing, etc.)
• Profitable since 2022.
Warehouse facilities:
• $500M in committed warehouse facility
• $100M in uncommitted facilities
Product:
• Fully amortizing consumer loans
• Loan amount range: $1,000 to $100,000
• 90 to 180 months in term
• 9.99% (for customers choosing an upsized service called Power Bundle) or 10.99% APR (for other customers)
• 61% of the loans are used for windows and doors, 21% for siding and trim, 11% for roofing, and 5% for other services
Borrower Profile:
• Average customer:
◦ 765 FICO score
◦ $150K annual income
◦ 20-year credit history
• 85%+ have 700+ FICO
• No subprime borrowers
Portfolio Characteristics:
• ABS backed by a seasoned pool of consumer installment loans of $212M
◦ Avg balance: $22K original balance
◦ WA term: 157-month term
◦ WA APR: 10.36%
◦ 85%+ of the borrowers had 700+ FICO at the time of origination (32% have 800+ FICO)
◦ 76% of the portfolio has 168+ months loan term
• 61% of pool for energy efficient windows/doors
• Geographic diversity (top 5 states are 66.1% of the balance):
◦ 18% NY
◦ 18% TX
◦ 11% GA
Servicing and Collections:
• Stream services all the originated loans and charges a 1% fee
• Systems & Services Technologies, Inc. (SST) is the backup servicer
• Charge off after 180 days past due
Structural Highlights:
• Initial overcollateralization: $17M
• A-C note tranches with 21-9% credit enhancement
• Cumulative Net Loss triggers
• 0.50% Reserve fund
• 2.19% annual excess spread
Opportunity:
• Stream poised for growth in booming home improvement & energy efficiency market
• Securitization provides attractive risk-adjusted ABS paper for investors
• Diversified funding source for Stream to continue origination expansion
• Innovative company to watch in the point-of-sale financing space