Following last week’s Honor Finance ABS portfolio downgrade, Wells Fargo Bank — the trustee of the securitization — is requesting that Westlake Financial Services take over as the successor servicer to the portfolio, according to a report issued by Kroll Bond Rating Agency Inc.
Honor Finance provided Wells Fargo with notice that it seeks to resign as servicer by September, the report notes. The trustee is recommending that class A noteholders appoint Westlake as the new servicer of the portfolio. However, the appointment of Westlake is contingent upon Honor Finance’s resignation and the noteholders’ approval of Westlake as successor servicer, according to Kroll Bond.
Westlake is no stranger to this space as it runs a portfolio purchase company called Westlake ALPS, as well as third-party servicing company Westlake Portfolio Management. “There are a handful of portfolios that we are currently looking at,” Chief Financial Officer Paul Kerwin told Auto Finance News.
Westlake’s most recent acquisition was in March when it took over deep-subprime lender Pelican Auto Finance LLC’s $100 million portfolio. Honor Finance’s collateral has been successfully paid down to $37 million from an initial pool balance of $112 million, according to Kroll. Less than 33% of the pool remains to be collected. Collateral net losses are currently 20% of total balances — 7 percentage points higher than original expectations.