NEW YORK - At its Auto Securitization Briefing held here last week, Moody's Investors Service discussed servicer risk as it relates to different types of auto securitizations. Annika Sandback, vice president in the asset finance group, isolated the risk to each asset type, covering retail loans, wholesale floorplan loans and rental deals. Moody's also gave a brief rundown of how it ranks auto-loan servicers.
For retail loan deals, Sanback said the key link to the servicer is the actual health of its servicing operations, not necessarily its financial position, meaning that a downgrade of a servicer's debt rating may not translate into weakened servicing. The size of a servicer's operations is also an important consideration in terms of retail loans, because it is more difficult to transfer servicing from a large-scale to a small-scale servicer, if that becomes necessary. Another important consideration is whether the servicers are centralized or decentralized, said Sandback, pointing to Ford Motor Credit and General Motors Acceptance Corp. as companies with regionalized servicing.