Subprime lending

The two companies are placing two deep-subprime securitizations of consumer loan and lease contracts issued prior to the coronavirus impact on originations.

Following four prior securitizations of prime auto-loan originations through its Carvana Auto Receivables Trust (CRVNA), the firm will sponsor its first pool of non-prime retail used auto loans underwritten via its e-commerce platform.

Veros Credit received an AA rating in its 2018-1 transaction, which featured lower loan-to-value ratios and average account balances in the pool.

Investors are reacting skeptically to the auto lender's deal to acquire CardWorks for $2.65 billion.

According to presale reports on Flagship’s $355 million auto-loan securitization, the subprime auto lender is removing the 2% collateral pool limit on loans over six years (72 months) that can be added during a three-month prefunding period for Flagship Auto Credit Trust 2020-1.

The Justice Department had issued subpoenas in 2014 and 2015 to GLS and other subprime lenders regarding underwriting criteria for lending as well as representations and warranties for loans being securitized, according to Kroll.

The older loans have boosted the $260M CPS 2020-A pool seasoning to nine months, compared to CPS’ standard vintage of loans under one month that usually collateralize CPS ABS platform issues.

Moody's and Kroll have lower loss expectations for the online platform's next $380M securitization.

The ratings agency's monthly auto loan ABS index tracker shows losses and 60-plus-day delinquencies decreased both month-over-month and year-over-year.

Santander Revolving Auto Loan Trust 2019-A is the debut deal on Santander’s revolving platform (or SREV, according to presale reports), and will have a five-year period in which the lender can add additional loans to the collateral