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Fri Sep 6, 2019, 12:54 PM

Subprime Auto Lender Checked Income on Just 3% of Loans in Bond

By Adam Tempkin
BloombergSeptember 6, 2019

(Bloomberg) -- Santander Consumer USA Holdings Inc., one of the biggest U.S. subprime auto finance companies, verified income on less than 3% of borrowers whose loans it bundled into more than $1 billion of bonds it sold this year, according to Moody’s Investors Service.

That’s down from as high as 17% of loans verified for some asset-backed securities Santander issued in 2017, Moody’s analysts including Gary Lampert said in a Sept. 4 report. By comparison, GM Financial’s AmeriCredit, also a major subprime auto ABS issuer, verified income on about 68% of loans for a subprime auto ABS it priced this past June and 66% for a March deal.

A Santander deep-subprime ABS that priced in June had 2.6% of loans verified for income, while the transaction before that had 3.2% checked, the Moody’s analysts said in an interview. A transaction currently marketed by Santander will likely be in the 3% range as well, or possibly lower, though that data won’t be released until the transaction closes, they said.

This steady decline in Santander’s income verification levels in recent pools of loans means “that there is a higher chance of borrowers having weaker credit profiles than they have stated,” the Moody’s team wrote in their presale report, which rates certain tranches of the deal as high as Aaa, the highest investment-grade level.

more...

https://finance.yahoo.com/news/subprime-auto-lender-checked-income-153059528.html

A lot of pre 'Great Recession" similarities appearing on the horizon, indeed...

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Reply Subprime Auto Lender Checked Income on Just 3% of Loans in Bond (Original post)
RCW2014 Sep 6 OP
fools_gold Sep 6 #1
Badsamm Sep 6 #2

Response to RCW2014 (Original post)

Fri Sep 6, 2019, 01:40 PM

1. Funny, the article never even mentions

the yields on those bonds.

"This steady decline in Santander’s income verification levels in recent pools of loans means “that there is a higher chance of borrowers having weaker credit profiles than they have stated,” the Moody’s team wrote in their presale report, which rates certain tranches of the deal as high as Aaa, the highest investment-grade level."

I'd like to see the yield versus rating for some of those tranches.

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Response to fools_gold (Reply #1)

Fri Sep 6, 2019, 04:40 PM

2. I just want to see it all come crashing down

Buy gold, bitcoin, lead, food and store water

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