Morningstar DBRS Finalizes Methodologies for the U.S. Home Improvement Loan Asset Class

Morningstar DBRS finalized its proposed new methodologies (the Finalized Methodologies) that will be used to determine credit ratings in the home improvement loan asset class. The following Finalized Methodologies present the criteria for which home improvement loan asset-backed securities (ABS) ratings are assigned and/or monitored:

-- "Rating Solar ABS Transactions" - Appendix I: U.S. Home Improvement Loans (Home Improvement Loan New Issue Appendix); published September 18, 2024
-- "Operational Risk Assessment for U.S. ABS Originators and Servicers" (Exhibit 38: Sample Operational Risk Questions for U.S. Home Improvement Originators); published August 6, 2024
-- "Operational Risk Assessment for U.S. ABS Originators and Servicers" (Exhibit 39: Sample Operational Risk Questions for U.S. Home Improvement Servicers); published August 6, 2024
-- "Morningstar DBRS Master U.S. ABS Surveillance" (Appendix XXXVII: U.S. Home Improvement Loans); published November 22, 2024

The publication of the Finalized Methodologies follows the conclusion of the request for comment (RFC) period that ended on November 4, 2024. Morningstar DBRS received nonmaterial comments during the RFC period. All comments received during the RFC period have been published to the Morningstar DBRS website, except in cases where confidentiality is requested by the respondent. The Finalized Methodologies are effective as of December 5, 2024, and supersede the versions mentioned above.

U.S. HOME IMPROVEMENT LOAN NEW ISSUE APPENDIX
Please refer to the Home Improvement Loan New Issue Appendix to the "Rating Solar ABS Transactions" methodology that Morningstar DBRS applies when assigning credit ratings in the home improvement loan asset class. The Home Improvement New Issue Appendix provides a discussion of the key analytical and credit considerations, collateral quality and metrics, and cash flow analysis applicable to Morningstar DBRS' analysis of home improvement loan asset class transactions.

HOME IMPROVEMENT LOAN ORIGINATORS EXHIBIT AND HOME IMPROVEMENT LOAN SERVICERS EXHIBIT
Please refer to Exhibit 38: Sample Operational Risk Questions for U.S. Home Improvement Loan Originators in the "Operational Risk Assessment for U.S. ABS Originators and Servicers" methodology and Exhibit 39: Sample Operational Risk Questions for U.S. Home Improvement Loan Servicers in the "Operational Risk Assessment for U.S. ABS Originators and Servicers" methodology, which formalize the sample list of questions Morningstar DBRS uses in the applicable operational risk reviews of originators and servicers operating in the home improvement loan asset class.

HOME IMPROVEMENT LOAN SURVEILLANCE APPENDIX
Please refer to Appendix XXXVII: U.S. Home Improvement Loans in the "Morningstar DBRS Master U.S. ABS Surveillance" methodology, which presents the criteria that Morningstar DBRS applies in connection with the surveillance of new Morningstar DBRS credit ratings.

Notes:
Morningstar DBRS methodologies are publicly available on its website https://dbrs.morningstar.com under Methodologies & Criteria.

For more information on this methodology or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.