Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 1735

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 9C
Chunk 1735
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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
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is generally withdrawn from the Spread Account, if any.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 rece