DriveTime has prepped its first securitization for 2015, a $265.1 million transaction, according to a presale report from Standard & Poor’s.
The transaction pool is backed by subprime auto loans with a weighted average credit score of 547, according to the report. By comparison, DriveTime’s last securitization of 2014 contained loans with a weighted average credit score of 548. The securities underlying both transactions had three months of seasoning.
DriveTime’s serviced portfolio grew 31%, to $2.5 billion, last year, while 31-plus-day delinquencies decreased to 15.2% from 16.3%, according to S&P.
“We believe that the increase is largely due to DT lending to its more traditional customer base than during the credit crisis and shortly thereafter, when subprime auto lending options were more scarce,” S&P wrote in the report. “In addition, we believe the company’s change in its charge-off policy in December 2011 may have also contributed to higher overall delinquencies than in 2011 and earlier years.”
The securitization marks DriveTime’s first foray back into the ABS market since it agreed to an $8 million settlement with the Consumer Financial Protection Bureau in November 2014. In addition to the fine, the settlement requires the buy-here, pay-here company to implement specified changes in servicing practices and to permit oversight by the CFPB to monitor compliance with the consent order for five years. In the report, S&P noted that it “believe[s] the company will be able to continue to effectively service the loans.”
