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Meet Skopos Financial, The New King Of Deep Subprime
When last we checked in on the subprime auto ABS market Santander Consumer was busy paying the US government $9 million to settle charges that the subprime auto lender had illegally repossessed some 800 vehicles from active duty service members and had attempted to extract fees from another 350 soldiers in connection with repossessions the bank didn’t even execute. As we noted at the time, Santander wasn’t about to let a few disgruntled soldiers and a measly $9.35 million fine slow down the securitization machine which is why the lender was launching the DRIVE-2015 A deal, a $700 million securitization backed by car loans to borrowers with an average FICO of 552 although, as we pointed out, 13% of those whose loans wound up in the collateral pool had no FICO at all. That is what is known as “deep subprime.”
Well, things just got a lot “deeper,” because as Bloomberg reports, Texas-based Skopos Financial has both raised and lowered the bar at the same time by setting a new standard for what counts as questionable collateral while simultaneously proving that in a NIRP world, investors are willing to plumb the FICO depths for yield:
Skopos Financial, a four-year-old auto finance company based in Irving, Tex., sold a $149 million bond deal consisting of car loans made to borrowers considered so subprime you might call them—we dunno—sub-subprime?
Details from the prospectus show a whopping 20 percent of the loans bundled into the bond deal were made to borrowers with a credit score ranging from 351 to 500—the bottom 6 percent of U.S. borrowers, according to FICO. As a reminder, the cut-off for "prime" borrowers is generally considered to be a credit score of around 620. More than 14 percent of the loans in the Skopos deal were made to borrowers with no score at all. That means the Skopos deal has a slightly higher percentage of no-score borrowers than the recent subprime auto securitization recently sold by Santander Consumer, which garnered plenty of attentionfor its dive into "deep subprime" territory.
Who is Skopos Financial you ask? We’ll let them tell the story in their own words:
In 2011, Skopos Financial opened its doors with one goal in mind making tough, deep subprime auto loans easier to finance for dealers.
Leveraging our sophisticated, patented iLender technology and visionary management team, Skopos provides a streamlined process for franchise dealers to finance customers with low credit scores.
As an indirect auto lender, Skopos offers solutions for car buyers with no credit, low FICO scores, or a previous bankruptcy, repossession or foreclosure. And the best part is the speed. Skopos' dealers enjoy fast underwriting, fast approvals and fast funding.
Yes, the “best part is speed.” We suppose the process is quite efficient considering there appear to be no underwriting standards whatsoever.
As for the “visionary” management team, have a look at the following profiles which seem to indicate that at least for some industry veterans, Santander Consumer isn’t quite subprime-y enough (note that there’s a Countrywide link in there as well for good measure):
* * *
We suspect we'll be talking more about Skopos in the not-so-distanct future, but for now, just note that the amount of paper floating around out there backed by the worst of the worst in terms of auto loans to underqualified borrowers just went up by another $150 million. With the market's biggest subprime issuer (Santander Consumer) increasingly at home in the deep subprime space, just about the last thing anyone needs is more supply from an entity run by former Santander Consumer execs.
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Can I package my personal debt as a CDO, have it stamped AAA and sell it off to assholes also?
If not, why not?
Prosper.com already beat you to it....
Actually because he is not Honkeyshogunberg...
These are 'specially packaged' for collaborators/pension planadministrators where the fund manager [may] get a steep ... commission [aka, kickback]. After all, he's gottsta show the plan is earning more then Ben's/Yellen's NIRP return. Plus in a year or two after he/s sucked out those commissions] he'll move on to some other financial with his pockets full before the plan shows huge losses on those AAA+ sub-subprime loan packages.
HAHA this isn't 'Deep' Subprime - i bet the coupons are only 15-20% and the loan terms are 72+ months. There is a whole 'nother industry where the the credit is so bad that terms can't be longer than 36. These people sometimes get credit within 12 months of multiple bankruptcies!
It's almost a genius concept. Agree to secure loans on autos that guarantee a loan amount of $10k for ANYTHING THEY WANT, as long as it's not over 10k which means used with a mark up of 40% from the dealership. They agree with the 20%/60month rate automatic bank/work check deduction and if they are only a month late, the car gets towed back to the dealer to sell again whilst they get hammered for all the costs involved + interest + late fees.
Interesting Trivia:
In the mid-2000s I consulted at a Denver company called Centix Financial who was in the business of subprime auto loans. Their business was unremarkable until they started partnering with credit unions all over the US. The credit unions started sending all of their clients who couldn't qualify for a loan under the credit union underwriting standards. As a result, Centrix quickly became the fastest company to ever reach $1bil in sales. Just about a year later they became the fastest company to ever reach $2bil in sales. Six months later they became the fastest company ever to reach $3bil in sales. Around that time, the NCUA started advising their members that is was risky business to be partnering with Centrix, and shortly thereafter, Centrix's pipeline dried up. They then became the fastest company ever to go from $3bil+ in sales to utter failure and bankruptcy.
Did you notice the "...patented iLender technology..."?
Well, if it has a lower case "i" before whatever it is doing, it's good!
CALPERS, Detroit, Chicago, and other pensions gobbling it up no doubt.
Hahaha. See what you did there.
+1 ORI!
rofl!
There has to be an EBT angle to this. I mean, really? Do they draft from the same account that EBT is deposited into?
No, it sounds like free car handouts, but there really is a business model here. If a loan pays 25% interest, and you have a 20% loan discount, thats a 35% annualized gross yield. That same paper might have, say 30% lifetime net losses. That annualizes out to about 15%, which is, believe it or not, not that much more than the rest of corporate overhead / origination spend. That leaves a lot of spread.
<edit> - till the credit cycle turns south
gasoline (think ethanol) & oil are now considered food.
ebt qualified.
Um, no.
Because it has already been packaged and sold FOR YOU.
Selling things once is a cinch.
Selling the same thing to multiple buyers at the same time is a little trickier.
It's only a matter of time before some clever financial innovator invents MERS for autos.
I think you're right.
But I want to get ahead of the curve, so I'm starting a program for MOTOR SCOOTERS right now.
I'm beginning to Want to Go Home with the Armadillos too...
I'm sorry Austin, Texas---you are suffering from Necrosis of certain zip codes. I'd suggest amputation and cauterization afterwards to ensure cleanliness.
My hometown (nation) was sold while I was graduating high school.
Student debt? Move to Austin and tutor high school students; the city will negotiate the rest for you.
http://austin.craigslist.org/edu/4994030092.html
Austin has turned into a dump -- polluted, crime-ridden and severely congested. I read the downtown condo people actually demonstrated that it was "too dangerous to walk downtown at night." The funny thing is most of those condo owners are from LA!
Gone are the days when it was a pleasant and safe college town.
+1
Yes, L.A. or international (especially Mexico, Central and South America(s)).
The business that I run has delivery service of spirits, cigars, wines and beers to several of these new denizens of downtown Austin--several of these newcomers and (luxury, duh) condo dwellers have discouraged me from believing that 78701 can be defibrillated. It is in a coma and dying.
See you when you get there.
#1 for the London Homesick Blues reference.
Texas isn't nearly as financially sound as Gov. Perry likes/liked to pretend.
That sir is a brilliant idea.
I am wondering what the interest rate would be for someone with subprime credit on a slightly used Ford, Pinto. Preferabley an Orange one.
Dude - I can totally answer that. I'm gunna rock on over to the Daddy's RV where my repo notices go and has the interest rate in it ( Dad lost the house after doing an equity loan to finance my college degree in pre history which didn't pan out. That was supposed to get me into pre med but that just didn't happen.) anyway, the Pinto passenger seat folds down like a single bed - better than the college pad - and is so worth it since the pad in the parents' basement cratered. Anyway, as long as R19's PoPo buddies don't crack down here in the mall parking lot, I should be able to get online from the starbuck's signal and get you the answer. A little sweetener via PayPal for the Info?
the banksters call that 'concentration' risk.
Yeh too doversify the risk... you 'll have to bring your whole family... that'll get the ball rollin'
The speed?
So the cars come already stocked with amphetamines? Or did they just mean the lab supplies in the trunk?
"considered so subprime you might call them—we dunno—sub-subprime?"
Most people call those folks "broke".
'sall good, ma nigga
Cheating military soldiers is pretty common. Most base towns have endless businesses who will scam soldiers. I guess if they signed up to fight and die for the banksters then they might as well let the banksters rip them off before they kill them.
varoufakis is out
http://www.bloomberg.com/news/articles/2015-04-27/greece-clips-varoufaki...
motherfuckers... they've run up the 'white flag'
I expect they are looking for a railcar and some Rockefeller lawyers to do the deal in.
No, he is not. Prime minister Tsipras was on tv defending him.
$1200 transaction fee up front and 21% APR
Pick your dream zip codes. Wait 2-4 years. Analyze targets at 40%+ below today's list prices. Get a mortgage at -4%. Refi it until the principal pays itself off.
I am sending ghostzapper the medical bills for treating my hysteria related siezure.
"iLender technology"? So it's an Apple product? That totally figures.
Is there a Fannie Mae for auto mortgage loans?
Where are the donor investors coming from GM pensions?
Phew, it's a good thing we spent trillions to save the system. If we hadn't, we wouldn't be ablle to screw the disadvantaged like this. We should all be grateful to our banker overlords.
If the borrower has trouble making the car payment they can always get a payday loan. :-O
sub-subprime?
Shatprime.
sko = "lets go" pos = "piece of shit"
rough translation: let's go you piece of shit
I used to work for a company that was the behind the curtain "bank" for dealerships.
I ran the document prep, funding and also supervised 20 people doing collections.
The longest 3 years of my life - I hated it.
The really sad part - if it can get any worse -
The sub sub prime borrower is not all that smart - I know real shocker.
They will agree to buy a vehicle for $22,000 that most dealerships would gladly sell for $18,000.
I had to put a limit on how much over MSRP we would fund - because some would agree to pay over sticker price + would add an after market warranty + paint sealant & interior protection package + scratch and dent removal + life time oil changes & tires + after market wheel package.
This was back in the 80's and interest rates on some of the loans were 22%.
If the loan went bad in the first 3 months the dealer had to eat most the loss - but they didn't care - since they could turn around and resell the car to some other fool and recover most of the cost.
I can still make the numbers work if interest rates are 20+% - but I don't understand how anyone can do it at 7 or 8% -- even if your cost of capital is almost free.
Isn't this the same group that owns Tippy-Toe Reposession Services, LLC?
i'm looking for a nothing down, no pmi, no closing cost mortgage. Does this place do mortgages? /sarc/
351 Credit Score. Was that guy dead?
they put a GPS and a Kill switch in them babys, miss one payment and your car dies 15 minutes before the tow truck shows up and any personal property inside the car.. poof belongs to the tow driver.
The verbage says co is hq'd in Irving (as in Dallas Cowboys), while the lead-in says Austin. In the 80's crash one was fire the other ice and either would suffice. Let's see what happens this time around. Oh yeah, I looked on zillow and the old bungalow I lived in in Austin during collage is valued at ten times what we paid. The sleazy apartment next block over is being condo'ed into $150K units and there's a trendy restaurant going into the nearby shopping center which has a mexican used tire and wheel business in the outparcel. They should call it the market top cafe.
How many shell companies the FEDs going to open up?
Don't think this auto subprime process isn't part of the big political scheme. I'd lay money down that says a large percentage of these subprime auto loans will be forgiven in one form or another. A similar countdown has begun to forgive the recently federalized student loans. The list will grow.
And the regulators sit back and watch and allow (and in doing so "urge") this stuff to happen. Regulators, et.al., wait for the day of implosion and are ready to blame "banks and reckless institutions" when, after all, its all part of the redistribution plan.
Its not 'What's in your wallet?' Its 'Where is your wallet.'
In toooooooooooooooooooooooo deeeeeeeeeeeeeeeeeeeeeeeeep!
Whether it's packing you off to a hostile environment or shining a torch up your ass looking for that last nickle the bankers always appear to have an endless supply of fodder.
For most there's a price on your head the moment you're born and despite next to free access of information the majority work all their lives to keep a small minority in comfort.
There are Think Tanks out there subsidised by .gov ( tax-payer ) whose purpose is to find 1001 ways to squeeze said tax-payer and some.
For the Sociopath Elites it must feel like winning the lottery every year without any downside risk.
Comfortably Numb