Consumer lending

More than $2.5 billion in new subprime auto securitization deals hit the market this week, including a portfolio of indirect loans pooled by first-time issuer First Help Financial.

If it’s approved, the charter is expected to lower the fintech’s cost of funds and allow for more product offerings. It comes nearly three years after SoFi pulled the plug on an earlier effort to open an industrial bank.

The agency sought to provide certainty that most actions from the past eight years remain in effect despite the ruling that the bureau's leadership structure is unconstitutional.

Tom Pahl, a former longtime regulator at the Federal Trade Commission, has led key rulemaking efforts for the consumer bureau.

For banks with assets between $10 billion and $100 billion, the average exposure is 165% of capital.

Subprime auto ABS market participants do not see its outlook worsening significantly as a result of the pandemic, but most anticipate losses.

Compared with the week prior, approximately 57,000 fewer loans from all investor types were forborne.

Other challenger banks focused on personal loans have struggled since the onset of the coronavirus pandemic.

Westlake Automobile Receivables Trust 2020-2 pools a portfolio of loans for mostly high-mileage used-vehicles financed by the privately held Westlake through independent and franchise dealers. The deal includes a $370.9 million triple-A tranche (as preliminarily rated by S&P Global Ratings and DBRS Morningstar) that benefits from 42.75% initial credit enhancement.

A budget item establishing a new agency to protect consumers from predatory lenders has been put on hold as state officials deal with the coronavirus response and other priorities. But it could be revived in legislative talks later this summer.

If delinquency rates rise, all four stand-alone firms would have a capital shortfall.

Potential COVID-19 stresses include a rising tide of unemployed borrowers missing payments and seeking extensions, as well as falling used-car values.

About 9% of government-insured loans in forbearance have low equity, which could hamper post-forbearance servicing.

But there was an increase in private-label mortgages in forbearance.

Global Lending Services, a subprime auto lender that has ramped down its expansion plans for 2020 amid the coronavirus outbreak, is proceeding with its second auto-loan securitization of the year.

The fixed-rate loans from Earnest involve refinancings to advanced degree professionals who have greater financial means to make payments despite the economic disruption caused by the COVID-19 pandemic.

Exeter, DriveTime and CPS last week joined a small club of subprime auto lenders sponsoring ABS deals since their TALF eligibility was announced.

Since March, issuers have tightened their criteria for opening new accounts and closed millions of existing ones in hopes of avoiding waves of defaults.

The congressional showdown over the pace of rulemaking during the pandemic is a hardening of older positions on banking policy ahead of the 2020 elections, observers said.

Forecasts about the pandemic's impact on the mortgage market have grown less dire after forbearance requests by homeowners nearly leveled off in the first half of May.