5 Classes of Notes Get New Ratings.

KBRA Assigns Preliminary Ratings to Notes Issued by Flagship Credit Auto Trust 2017-4

November 09 2017 | Chadds Ford, PA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by Flagship Credit Auto Trust 2017-4 (FCAT 2017-4), an auto loan ABS transaction.

FCAT 2017-4 is collateralized by approximately $218.1 million of subprime auto loan receivables as of October 31, 2017 out of an expected collateral balance of approximately $272.6 million after completion of the prefunding period. The transaction includes a prefunding feature that allows up to 20% of the collateral pool to be funded after closing. The prefunding period is two months but the prefunding is expected to be completed by the end of 2017 based on current origination volume. The preliminary ratings reflect the initial credit enhancement levels of 42.00% for the Class A notes, 31.75% for the Class B notes, 20.25% for the Class C notes, 11.00% for the Class D notes, and 5.50% for the Class E notes. Credit enhancement consists of overcollateralization, subordination of junior notes, cash reserves and excess spread. This transaction is Flagship’s fourth securitization in 2017 and its twenty first securitization overall.

This transaction includes loans originated from both the Flagship Credit Acceptance (FCA) and CarFinance Capital LLC (CarFinance) branded origination channels. On January 1, 2015, Perella Weinberg Partners’ Asset Based Value Strategy (PWP) closed a merger of its two auto loan platforms, FCA and CarFinance. FCA’s management team, led by Mike Ritter, has combined the FCA and CarFinance operations over the past two years following the merger.

KBRA applied its Auto Loan ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Flagship’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, Flagship Credit Auto Trust 2017-4 Pre-Sale Report, which was published today at www.kbra.com.

Preliminary Ratings Assigned: Flagship Credit Auto Trust 2017-4
ClassPreliminary RatingExpected Initial Principal Balance
AAAA (sf)$163,570,000
BAA (sf)$27,940,000
CA (sf)$31,360,000
DBBB (sf)$25,210,000
EBB (sf)$15,000,000

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Flagship Credit Auto Trust 2017-4 Representations and Warranties Disclosure

Related Publications:(available at www.kbra.com)

About Flagship Credit Acceptance

Flagship Credit Acceptance LLC ("Flagship"), headquartered in Chadds Ford, Pennsylvania with offices in Irving, Texas, Phoenix, Arizona, Irvine, California and Indianapolis, Indiana, helps credit-challenged auto shoppers secure financing through partnerships with primarily franchised auto dealers and through its direct lending site, CarFinance.com. Flagship Credit has successfully grown its portfolio to $2.9 billion in managed receivables. The Company currently purchases indirect auto contracts from a nationwide network of over 9,400 dealers and originates direct to consumers in 46 states.

Fair Lending Policy

Flagship Credit Acceptance, LLC ("Flagship") is committed to maintaining a culture of fair credit throughout the organization. In this regard, Flagship has developed a Fair Credit Program ("Program") that complies with all applicable fair credit laws and regulations ("FC Laws") and reflects industry best practices. Flagship is committed to comply with the letter and spirit of FC Laws. The goal of the Program is to carry out Flagship's commitment and be recognized internally and externally (e.g., by management, associates, customers, service providers, and the public) as dedicated to fair credit principles and demanding of compliance. The Program applies to all aspects of Flagship's operations (including reviewing, purchasing and servicing retail installment sale contracts whether for itself or others) and all services offered by Flagship, and across all of Flagship's credit operations, including marketing, underwriting, origination, processing, servicing, collection, loss mitigation, and payoff activities, and to all personnel who work for or on behalf of Flagship, whether as associates, officers, members of the Board of Directors, agents, representatives or service providers.

Should you have any questions about the details of any of Flagship's policies, please contact us at 1.800.900.5150 M-F, between 9:00 a.m. and 5:00 p.m. EST.

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Our Lending Philosophy

A borrower is more than just a credit score. At Flagship, we focus on the story behind the customer …and look beyond the number.

Life happens. Whether low credit scores are a result of past circumstances, one-time events or just bad luck, Flagship offers multi-tiered pricing structures to finance borrowers across the credit spectrum.

At Flagship we believe a borrower’s credit past shouldn’t dictate their future.

Many borrowers need a second chance. We recognize the vast majority of persons with credit challenges are working hard to re-establish their credit rating. Each of our Credit Analysts are trained in "common sense" lending, a philosophy of reviewing all the circumstances and determining the appropriate deal structure for the specific borrower situation. Flagship maintains a very high standard regarding  Fair Lending compliance, ensuring our customers are always treated professionally and consistently.

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