First Investors Targets New LOS for 2018 After Delay

First Investors Financial Services will introduce a new loan origination system early next year, after an apparent delay in the system’s implementation, according to a recent presale report from Kroll Bond Rating Agency.

The company plans to implement a new loan origination system in January 2018, and the introduction of this system is expected to expedite loan approval process by minimizing loan officer discretion in the decision-making process, the report stated. While the LOS could have launched in pilot mode in July, as Auto Finance News previously reported, it appears now the implementation has been delayed.

First Investors did not respond to a request for comment by presstime.

“[The] implementation of enhanced automated underwriting tools [are] designed to replicate loan officer decisions, compliment the company’s custom credit scorecards, and minimize loan officer discretion in the decision-making process,” the latest report said.

The new underwriting tool was developed in conjunction with one of the big three credit reporting agencies — TransUnion, Equifax, and Experian — and “will serve as the decision engine for the new loan application system.” The report did not specify which of the three credit agencies First Investors worked with for the LOS.

The $167.4 million ABS is backed by subprime and near-prime loans, and is the lender’s third ABS in 2017. The weighted average Fico for the pool is 586, a one-point decrease compared to 2017-2 and 2017-1 pools. The pool consists of 31.1% new cars, and 68.9% used cars, which marks the highest percentage of new cars compared to all 2017 and 2016 pools. Additionally, the average loan term is 70 months, on par with previous 2017 and 2016 pools, with an average loan balance of $20,870.

First Investors managed portfolio is $1.4 billion as of Sept. 30, a 14% year-over-year increase from $1.2 billion. The growth is driven primarily by an increase in alliance (direct) and indirect program originations, according to the report. “The company’s acquisition of an $128 million auto loan portfolio consisting of performing and non-performing receivables from an independent third party in May 2017 also contributed to the increase,” the report said, although it did not specify the third-party company.

This year alone, Houston, Texas-based First Investors originated $557 million for the 12-month period ending Sept. 30, a 6% year-over-year rise. The company’s direct loan originations declined over the same period, according to the report.