From the Desk of Douville: Rising Above

by Julia Guardione Updated on: June 10, 2019

Rising above when market conditions get tough

There is no shortage of data documenting rising delinquency rates, losses trending upward, and dropping collateral values. The near prime to subprime market has seen the worst performance and has been grabbing the headlines as of late. We have also seen reaction to current market conditions with some lenders tightening credit standards and LTV advances across the board, in all credit score bands.

I’ve had numerous conversations in recent weeks regarding best practices for the current lending climate. My response is always the same: The only way out of a volatile lending environment is to earn your way out of it. Stick to what you know, focus on the borrower NOT the collateral, and pick winners. Always remind yourself that you’re not a collateral lender.

Remember when truck values were dropping and high MPG autos were bringing premium prices at auction? It never makes sense to change your buying habits to tighten volume, or to chase it for that matter. Provide a stable policy environment that allows your loan officers to identify golden opportunities. Create a loan department where your underwriters feel safe to make sound credit decisions based on the merits of the borrower, and support those decisions. Providing common sense underwriting on a consistent basis will pay dividends in the future. Ability, stability, and willingness to pay still win the day.

Changing your “underwriting stripes” to predict the return on collateral is akin to trying to time the stock market to improve your portfolio. The decisions your staff made a year ago may be affecting you now, but the opportunities lost have affected your institution more. We don’t know what sedans or crossovers are going to bring at auction a year from now, so allow your loan policies to guide you to sound decisions. By the same token; don’t make decisions you know are bad just because your policy says you can. I understand. The “shine” of larger yields always wears off when the repos start coming in. But, stay the course. This is not the time to be timid about how you buy paper. The demand for prime paper/near prime paper has pushed all lenders into a very crowded space. There are now more lenders competing for fewer deals.

The bottom line is that there is significant pressure to increase loan volume and meet your budget demands. Buy smart. Look for opportunities. Look into your deals and not at them. Never chase volume. Stick to your underwriting intuition and buy the customer, not the collateral (within reason, of course).

All the best,

Roger Douville
VP of Lending Services

Read more from Roger

My Management Philosophy

Delinquency and Decisioning

Responding to Risk

About The Author


Julia Guardione

Julia Guardione is RateGenius’ auto refinance expert. She is a graduate of Texas State University and a lover of all things outdoors. She lives in Austin, Texas with her dog and cat. She’s always open to new ideas, so if you have any suggestions or questions, email her at pr@rategenius.com.


Read More

by Chonce Maddox

Not all Credit Scores are Created Equal — Just Look at UltraFICO

Did you know you have more than one credit score? Which one is the best or the right one? Your score matters. Your credit score is one of the most important numbers influencing your financial health. For lenders, it is a major factor for determining your trustworthiness as a…

by Julia Guardione

How to fix errors on your credit report

The credit report — it is a reflection of you and your credit history. How does it affect your financial future, what does it all mean, and how long ago have you reviewed it? The task of reviewing your credit report is necessary for your financial fitness and your…

by Stephanie Colestock

Auto Loans Contribute to Continued Climb of Household Debt

Whether through credit cards or student loans, “debt” is a four-letter word that can wreck the financial future of many. But how big of a role do auto loans have in that equation? It’s no secret that Americans are in more debt than ever before. Between rising home prices,…

review review

Customer Reviews

Read our 11082 Certified Reviews

4.9

READ OUR REVIEWS
apply now apply now

Apply Now

Lower your interest rate and drop monthly payments by an average of $76*/month!


GET STARTED