Fitch Publishes First-Ever U.S. Auto Loan ABS Seller/Servicer Criteria.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has published the first-ever rating methodology specifically for U.S. auto loan ABS seller/servicers, focusing on three principal areas - corporate background, origination and underwriting, and servicing - each with various subcategories. As Fitch has indicated in recent commentary, the auto industry is in a state of flux Noun 1. state of flux - a state of uncertainty about what should be done (usually following some important event) preceding the establishment of a new direction of action; "the flux following the death of the emperor" flux with certain US manufacturers struggling, wholesale prices under pressure and the US consumer increasingly challenged. Further changes in manufacturer and consumer health could put additional stress on the origination and servicing operations of ABS auto loan seller/servicers. 'While Fitch's auto loan ABS ratings have always included a seller/servicer evaluation, the new criteria formalizes and standardizes this information at a critical time,' said Managing Director Stephanie Petosa. Corporate background analysis centers on the quality of the company's management, its financial strength, and its ability to manage operational risk at a corporate level. Evaluation of origination and underwriting activities covers origination channels, marketing, dealer relationship management, credit approval process, underwriting criteria, and internal scoring systems Noun 1. scoring system - a system of classifying according to quality or merit or amount rating system classification system - a system for classifying things . The servicing review focuses on account maintenance, customer service, billing and payment processing, collections, repossession The taking back of an item that has been sold on credit and delivered to the purchaser because the payments have not been made on it. For example, if an individual fails to render prompt payments on a new car, the car might be subject to repossession by the finance company, and disposition, investor reporting, staffing and training, and technology. Fitch expects to apply ratings to captive finance companies Captive Finance Company A subsidiary whose purpose is to provide financing to customers buying the parent company's product. Notes: The captive finance company is usually wholly owned by the parent company. , banks, independent finance companies and third-party servicers. Asset types will include both prime and sub-prime auto loans. 'The seller/servicer ratings will be used to augment Fitch's collateral and structural analysis when determining credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing levels,' said Senior Director Jennifer San Cartier. Fitch supplements its annual seller\servicer reviews with on-going deal surveillance and periodic portfolio reviews of all auto loan ABS issuers. Fitch rates ABS seller/servicers on a scale of 1 to 5, with 1 being the highest rating. Within rating levels 2 and 3, Fitch further differentiates ratings by plus (+), and a minus (-) between flat ratings 1 through 3. Since 2004, Fitch has published the ratings on a series of credit card and student loan seller/servicers, with several reviews currently in progress. The report, titled 'Rating U.S. Auto Loan ABS Seller/Servicers', is a product-specific addenda to 'Rating ABS Seller/Servicers: Credit Where Credit is Due' which established general ABS seller/servicer rating methodology. Both reports are available on the Fitch Ratings web site at www.fitchratings.com. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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