DBRS Finalizes Provisional Ratings on FREED ABS Trust 2018-2

DBRS, Inc. (DBRS) finalized its provisional ratings on the following classes of notes (the Notes) issued by FREED ABS Trust 2018-2 (FREED 2018-2):

-- $311,220,000 Class A Notes at A (sf)
-- $43,830,000 Class B Notes at BBB (sf)
-- $28,450,000 Class C Notes at BB (high) (sf)

The ratings are based on a review by DBRS of the following analytical considerations:

(1) The transaction’s form and sufficiency of available credit enhancement.
-- Subordination, overcollateralization, amounts held in the Reserve Fund and excess spread create credit enhancement levels that are commensurate with the proposed ratings.
-- Transaction cash flows are sufficient to repay investors under all A (sf), BBB (sf) and BB (high) (sf) stress scenarios in accordance with the terms of the FREED 2018-2 transaction documents.
(2) Structural features of the transaction that require the Notes to enter into full turbo principal amortization if certain triggers are breached or if credit enhancement deteriorates.
(3) The experience, underwriting and servicing capabilities of Freedom Financial Asset Management, LLC (FFAM).
(4) The experience, underwriting and origination capabilities of Cross River Bank.
(5) The ability of Wilmington Trust, National Association to perform duties as a Backup Servicer, and the ability of Portfolio Financial Servicing Company to perform duties as a Backup Servicer Subcontractor.
(6) All of the loans in FREED 2018-2 are originated by Cross River Bank, a New Jersey chartered bank. Loans originated by Cross River Bank are all within the New Jersey state usury limit of 30%. The weighted average APR is 25.44% for the C+ Loans in the pool and 18.77% for the F+ Loans in the pool, which may be in excess of individual state usury laws. As a result, it is not possible to accurately forecast if litigation and enforcement actions will be introduced in states where loans exceed state usury laws. Under the Bank Purchase Agreement and this Grantor Trust, FFAM is obligated to repurchase any loan if there is a breach of representation and warranty that materially and adversely affects the interests of the Purchaser.
(7) The legal structure and legal opinions that address the true sale of the personal loans, the non-consolidation of the trust and that the trust has a valid first-priority security interest in the assets, and consistency with the DBRS “Legal Criteria for U.S. Structured Finance.”

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Structured Finance Transactions, which can be found on dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrs.com.