Operational & Loan Level Due Diligence & Monitoring of Subprime Auto Loan Servicer


  • BPA was engaged to provide operational and loan level due diligence as well as ongoing monitoring of a sub-prime auto loan servicer on behalf of a large pension fund to evaluate and monitor quarterly pool purchases.

Our Role

  • Developed information needs and reviewed servicer historic reports, raw data files and policies and procedures
  • Met with functional departments at the servicer and reviewed the servicing operation focusing on origination, underwriting and early state delinquency management, summarizing the key operational aspects of the servicing operation
  • Conducted historic sub-prime loan performance, evaluation and:
    • Created static pools
    • Analyzed cumulative defaults, recoveries and timing of defaults
    • Assessed inflection points of portfolio risk with changing servicing processes and procedures and determined metrics for continued monitoring

  • Prepared an initial due diligence report summarizing findings and analysis results including stratifications, trend lines and static pools to assess prepayment, delinquency, default and recovery as well as an initial loan level review of servicing and origination activities
  • Conducted quarterly loan level due diligence reviews on loans judgmentally selected for specific topics or activities that demonstrate servicer performance and/or underwriting compliance
  • On an ongoing basis, BPA conducted quarterly loan pool analysis including a comparison of previous pool purchases, analysis of selected risk factors (DTI, PTI, LTV, FICO), and analysis of ineligible loans
  • Developed loan performance migration matrix to illustrate


  • Identified risk factors to support pricing strategies
  • Identified areas of concern and layered risk factors
  • Provided on going monitoring of loan portfolios
  • Provided valuable analysis to enable the client to understand the probability of loan default and utilize tools to mitigate the risk

For additional information, please contact:

Desiree Daly
at 954-832-3558