Pelican Auto Finance LLC, a deep-subprime lender, stopped originating loans and transferred 95% of its portfolio to Westlake Financial Services‘ new venture Westlake Portfolio Management LLC on March 15, Auto Finance News has learned.
Pelican halted originations as of Dec. 1, 2017, but began to taper off originations months before that time, co-founder and Chief Executive Troy Cavallaro told AFN.
“We started to wind down in late summer, so by December when we completely shut off the faucet, [originations were] at a trickle,” he said. “We were thinking about shutting it down really in the fall, and that’s when we started to pull back.”
Westlake launched a wholly owned subsidiary called Westlake Portfolio Management around February, Todd Laruffa, vice president of Westlake Advance Lending & Portfolio Services and the head of the new venture, told AFN.
“We realized that one of our greatest assets is our servicing platform and the technology Westlake has to service our loans, especially being in our asset class and given our customer base,” Laruffa said. “[Our servicing and technology is] one of our biggest competitive advantages, and we wanted to leverage this into the market. We realized over the last 18 months and going forward that there are opportunities to service portfolios — whether it is for our own portfolio and supporting our growth, or acquiring other loans or portfolios.”
Westlake Portfolio Management will service about 70,000 loans that were transferred over from Pelican Auto Finance, Laruffa said. The new venture will be managed by the Westlake Financial Services team, including President Ian Anderson and Chief Financial Officer Paul Kerwin.
Pelican, which had 80 staff members, is down to a handful of employees. Several team members have already moved on to new roles including Christopher Mitcham, the company’s former senior vice president of servicing and analytics, who is now the vice president of servicing at Security National Automotive Acceptance Co.
“We have a very small number of folks in California that are handling accounting and handling some of the loans that we are still responsible for,” Cavallaro said. “There’s probably about 5% of the loans that when you do a servicing transfer like that, there’s always a leftover piece that maybe have insurance claims, maybe have an impound, or maybe are dealing with bankruptcy — those types of loans we will continue to service out. However, we transferred about 95% of the portfolio to [Westlake].”
Pelican had a $100 million portfolio as of July 2017, according to a previous company press release.
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