First Union Capital Markets, in line with an innovative "eConduit" program the bank has developed, has been actively purchasing auto loans from online originator, and will soon prep the first "exit" - as the company dubs it - which could take the form of a public-term securitization.

"With regards to the exit strategy, we're very open and flexible, and we'll do that which makes the most sense in terms of market timing," said Sal Mirran, managing director of the conduit program at First Union.

As alternatives to a public-term deal, Mirran said First Union would consider issuing asset-backed commercial paper or selling the loans in a bulk sale.

Though Driveoff and First Union have been partners in this venture for months, origination levels are just now set to explode.

"The truth is the Driveoff effort isn't nationwide yet," Mirran said. "It's about to go national. We've been sort of waiting for that to happen."

In addition to Driveoff, the eConduit purchases on a flow basis from various other online sources. First Union is continually adding more originators to the pool.

"Volume projections for and other online sources change regularly so we need to be flexible, but the channel is clearly gaining traction," Mirran said. "We expect to complete two deals in 2000, with the first sale as early as the second quarter."

Reminiscent of, Driveoff originates its loans with a level of efficiency unheard of just a few years back. It takes between 20 seconds and 40 seconds for a loan to be approved, and the average customer has his/her car in just three to five days.

Between Driveoff and First Union, there's Westar Financial Services, the actual underwriter behind Driveoff's automated retailing.

Westar, no stranger to the securitization marketplace, has completed more auto lease-backed transactions than any other company in the U.S., said R.W. Christensen, Jr., chief executive officer of Westar.

"We do all the origination, we do all the approving, we do all the committing, we do all the documentation, and we do all the quality checking," Christensen said. "First Union's role is the investor in the loans we originate and sell to them."

Through the partnership with First Union, the same type of efficiency used in originating the loans is used to remove the loans into a conduit.

"When we were approached to look at Driveoff, we said, you need a very clean process, technology driven, and capital-markets driven, by which to get your paper moved into the capital markets,'" Mirran explained.

Effectively, the eConduit structure purchases the loans from the Web site, and places them into a conduit in a multi-step process, involving all three companies; however, the process moves much faster than trying explain it in words, Mirran noted, with the effect of resembling a single transaction.

"It's a relatively automated process, from pricing to documentation, closing, delivery and into capital market execution," Mirran said.

From Driveoff's perspective, the fluent access to the capital markets allows the lender to offer more competitive pricing to its consumers.

"That pricing is based upon a clean, efficient back-end, through the capital markets," Mirran added.

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