Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 1734

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 9C
Chunk 1734
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 term securitization structure has generally
been as follows:

We sell contracts we acquire
to a wholly-owned SPS, which has been established for the limited purpose of buying and reselling our contracts. The SPS then transfers
the same contracts to another entity, typically a statutory trust ("Trust").
The Trust issues interest-bearing asset-backed securities (“Notes”),
in a principal amount equal to or less than the aggregate principal balance of the contracts. We typically sell these contracts to the
Trust at face value and without recourse, except representations and warranties that we make to the Trust that are similar to those provided
to us by the Dealer. One or more investors (the “Noteholders”) purchase
the Notes issued by the Trust; the proceeds from the sale of the Notes are then used to purchase the contracts from us. We may retain
or sell subordinated Notes issued by the Trust. In addition, we have provided "Credit Enhancement" for the benefit of the Noteholders
in three forms: (1) 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