How “Clean” is that Portfolio?
An industry trend of the steadily increasing pace of regulation and the resulting volume of requirements is placing a great deal of pressure on an already stressed “creditor” compliance management systems. Since the Consumer Financial Protection Bureau does not have direct jurisdiction over auto dealers, the CFPB have aggressively pursued and scrutinized indirect auto lenders and creditors in a number of calculational and compliance capacities.
This increased scrutiny on the indirect lending institutions intensifies the need for ensuring that assigned portfolios of motor vehicle sales transactions are “squeaky clean” from a compliant calculational and disclosure perspective. This presents a unique challenge for many creditors that inherit/purchase bulk transactions that have been originated on a wide spectrum of systems with varying degrees of complexity and sophistication. As a result, at Carleton, have noticed that many major purchasing decisions for bulk portfolio purchases have in part depended on the “cleanliness” of the loans.
As the indirect lending industry itself adapts to meet consumer needs, the industry has drifted from the traditional equal payment “regular” transactions to more “exotic” transactional features being offered. Consequently, the validation of the accuracy of the Truth in Lending Act APR disclosures as well as state specific usury maximums for many lending institutions for bulk purchases is a very complicated, tedious AND manual process. Validating one, no problem. Validating thousands of loans is a different dynamic altogether.
At Carleton, we have the ability to take electronic data from a proposed bulk portfolio purchase and streamline the validation process. No, every detail and potential risk factor cannot be easily identified and vetted. However, a creditor can confidently move forward with a portfolio purchase with less anxiety having assurance that for the potential portfolio purchase of bulk loans has an accurate TILA APR disclosures with none exceeding state specific usury cap.
Bottom line… Making compliant buying decision has never been easier with a little help from Carleton.
Posted on Apr 25, 2016