Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 1304

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 7A
Chunk 1304
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 of the amounts required to pay principal and interest on the Notes, the base servicing fees, and
certain other fees (such as trustee and custodial fees). Required principal payments on the Notes are generally defined as the payments
sufficient to keep the principal balance of the Notes equal to the aggregate principal balance of the related contracts (excluding those
contracts that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related
Securitization Agreements require accelerated payment of principal until the principal balance of the Notes is reduced to the specified
percentage. Such accelerated principal payment is said to create "overcollateralization"
of the Notes.

If the amount of cash required
for payment of fees, interest and principal on the senior Notes exceeds the amount collected during the collection period, the shortfall
is generally withdrawn from the Spread Account, if any. If the cash collected during the period exceeds the amount necessary for the above
allocations plus required principal payments on the subordinated Notes, if any, and there is no shortfall in the related Spread Account
or other form of Credit Enhancement, the excess is released to us. If the total Credit Enhancement amount is not at the required level,
then the excess cash collected is retained in the Trust until the specified level is achieved. Cash in the Spread Accounts is restricted
from our use. Cash held in the various Spread Accounts is invested in high quality, liquid investment securities, as specified in the
Securitization Agreements. In all of our term securitizations we have transferred the receivables (through a subsidiary) to the securitization
Trust. We report the assets and liabilities of the securitization Trust on our Consolidated Balance Sheet. The Noteholders’ and
the related securitization Trusts’ recourse against us for failure of the contract obligors to make payments on a timely basis is
limited, in general, to our Finance Receivables, and Spread Accounts.

Servicing

We consider the contractual
servicing fee received on our managed portfolio held by non-consolidated subsidiaries to be equal to adequate compensation. Additionally,
we consider that these fees would fairly compensate a substitute servicer, should one be required. As a result, no servicing asset or
liability has been recognized. Servicing fees received on the managed portfolio held by non-consolidated subsidiaries are reported as
income when earned. Servicing fees received on the managed portfolio held by consolidated subsidiaries are