Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 1821

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 8
Chunk 1821
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 an initial cash deposit to a bank account (a "Spread Account") held by the Trust, (2) overcollateralization
of the Notes, where the principal balance of the Notes issued is less than the principal balance of the contracts, and (3) in the form
of subordinated Notes. The agreements governing the securitization transactions (collectively referred to as the "Securitization
Agreements") require that the initial level of Credit Enhancement be supplemented by a portion of collections from the contracts
until the level of Credit Enhancement reaches specified levels, which are then maintained. The specified levels are generally computed
as a percentage of the principal amount remaining unpaid under the related contracts. The specified levels at which the Credit Enhancement
is to be maintained will vary depending on the performance of the portfolios of contracts held by the Trusts and on other conditions.
Such levels have increased and decreased from time to time based on performance of the various portfolios, and have also varied from
one Trust to another.

     F-11 

CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our warehouse securitization
structures are similar to the above, except that (i) the SPS that purchases the contracts pledges the contracts to secure promissory notes
or loans that it issues, and (ii) no increase in the required amount of Credit Enhancement is contemplated. Upon each sale of contracts
in a securitization structured as a secured financing, we retain as assets on our Consolidated Balance Sheet the securitized contracts
and record as indebtedness the Notes issued in the transaction.

We have the power to direct
the most significant activities of the SPS. In addition, we have the obligation to absorb losses and the rights to receive benefits from
the SPS, both of which could be potentially significant to the SPS. These types of securitization structures are treated as secured
financings, in which the receivables remain on our Consolidated Balance Sheet, and the debt issued by the SPS is shown as a securitization
trust debt on our Consolidated Balance Sheet.

We receive periodic base servicing
fees for the servicing and collection of the contracts. In addition, we are entitled to the cash flows from the Trusts that represent
collections on the contracts in excess of the amounts required to pay principal and interest on the Notes, the base servicing fees, and