DriveTime seems to be delivering on its paperless promise, judging from the company’s latest auto asset-backed securitization in 2016.
The $340 million transaction, called DT Auto Owner Trust (DTAOT) 2016-1, is backed by subprime auto loans, of which 74% were originated through e-contracting, according to a presale report this morning by Kroll Bond Rating Agency.
That volume is up significantly from the buy-here, pay-here lender’s previous auto ABS transaction – DTAOT 2015-3 – where 44% of the total loans were paperless. To compare, DriveTime’s second transaction in 2015, DTAOT 2015-2, had only 1% of the overall loans originated electronically.
The company told Auto Finance News previously, that, as the next step towards paperless, the lender is prepping a new electronic loan modification system, with a scheduled launch in the first quarter of 2016.
“We switched to go nationwide with 100% electronic contracting offered at our dealerships, for customers that elect that process,” Chief Financial Officer Kurt Wood told AFN. Wood added that “north of 85%” of customers have elected to use electronic documentation so far.
The Consumer Financial Protection Bureau previously ordered DriveTime to pay an $8 million civil penalty in November 2014, after it allegedly made what the agency called “harassing debt collection calls” and provided inaccurate credit information to credit reporting agencies.
In response, the company is in the process of removing phones from loan officers’ desks, Wood said during a panel discussion at Used Car Week in November.
“If you take all the phones away, you can only call through the computer, and you just have tighter control,” he said. As part of the company’s ongoing preparation to possible CFPB visits, DriveTime has done mock examinations with third-party consultants.
