ConsumerFi Podcast: Credit Chronometer Update with Joe Cioffi of Davis + Gilbert

April 1, 2021

Episode 22


Joel sits down with Joe Cioffi, Chair of the Insolvency, Creditors’ Rights + Financial Products Practice Group at Davis + Gilbert, to chat about the rising regulatory focus on disparate impact lending practices, why we may be headed for a big surge in repossessions, and what to look forward to learning from the upcoming Credit Chronometer survey.

Participate in the new Credit Chronometer survey.

ConsumerFi is presented by Nortridge Software: Loan Software That Accelerates Change.

And special thanks to The National Automotive Finance Association: The only trade association exclusively serving the nonprime auto finance industry.


[00:00:00] Joel Kennedy: [00:00:00] You’re listening to the ConsumerFi podcast powered by Nortridge loan software that accelerates change.

[00:00:19] Welcome everybody to the ConsumerFi podcast. I’m super pleased to have with us again today, a repeat offender with Joe Cioffi of Davis + Gilbert. Joe, welcome to the podcast, again.

[00:00:32] Joe Cioffi: [00:00:32] thanks so much. I’m happy to be a repeat offender in this case. I’m glad to be here.

[00:00:36] Joel Kennedy: [00:00:36] So, for the folks that don’t know, you need to know, credit chronometer, is a fantastic resource that’s.

[00:00:44] Joe is basically the, the driver of that. It’s supported by Davis and Gilbert as well. And, uh, Um, that is a survey. You run well, you used to run it annually. Now COVID kinda mess stuff up. Um, by the, by the time you [00:01:00] guys are hearing this podcast, uh, the survey, uh, is actually going to be open and available and we encourage anyone and everyone that matches one of the profiles of the market participants to.

[00:01:11] To actually participate and we think that’s going to make it a better, uh, you know, more robust, uh, more, more grand kind of coverage, uh, survey. Joe, do you want to give a little detail on that? About the timing of it and, uh, where people go and how they participate.

[00:01:27] Joe Cioffi: [00:01:27] Yeah, sure. I appreciate that opportunity.

[00:01:29] Joel it’s um, so it’s our third annual survey, as Joel mentioned, we’ve done these in the past. Now COVID threw a little wrench into things last year where we did, we thought it was important to do more than just one survey. So it became an annual survey survey with a, with an update, um, later in the year, um, this year we’ll see how many we need to do, and hopefully we’re coming out of the pandemic and this might be, you know, this might be the only one since it’ll drop, uh, around may.

[00:01:55] And we hope to give those, uh, presentation of the results with a panel [00:02:00] at the NAF, um, later in the year and then in the fall timeframe. Um, and so, uh, I’d appreciate if anybody, whether you’re, um, it’s not hard to meet the qualifications to, to, to take the survey. It’s, you’re either an originator. You’re an investor, you’re a trustee, you’re a servicer.

[00:02:16] You’re or you’re an advisor to any of those. Uh, and you’re in the, if you’re in the market, we’d like to hear from you, what you think in terms of the questions that we ask, go to the performance outlook for loans and securitizations that statistics see of credit enhancements, where we think credit ratings are going.

[00:02:34] Uh, and, um, specific things this time around like the regulatory environment and what folks are hearing about thinking about, concerned about in a change of the administration and maybe a new aggressive CFPB. That’s something we’re hearing a lot about from folks. So we want to go to the market and ask people in particular, you know, what they’re thinking in terms of their concerns are, and the regulatory environment

[00:03:01] [00:03:00] Joel Kennedy: [00:03:01] that, that voice of the.

[00:03:03] Of these market participants has been a really nice add to the picture. Um, as you know, uh, you, you did mention I’ll, I’ll give a plug for the NAF. The national automotive finance association is going to have their annual conference live in Plano. At the end of August, you can check it out at the checkout, just Google national automotive finance association.

[00:03:23] You’ll get to our website and we would love to have folks there. Auto lenders, uh, auto dealers. Uh, anybody in a supporting industry, power sports, uh, you know, we, we kind of count them all under the umbrella. So please, uh, uh, consider joining us. And, um, we’ve had Joe, uh, as a presenter in the past as well.

[00:03:43] And, uh, you’ve been tied in with fraud Friday, as well as the regular tracks. And so, you know, that’s, that’s not to be missed. Joe. You mentioned something, um, a minute ago about, um, About the, the, the, the regulatory change in the regulatory [00:04:00] environment. So obviously with subprime, there’s a lot of concerns we’ve been, uh, concerned.

[00:04:05] I’m concerned with a couple of things, right? So I’m concerned about state-based, uh, regulatory stuff, but kind of building their own CF mini CFPB. We call them, uh, there are, there’s the rate caps that we’ve seen that went in or are threatening to go in. I, I. I apologize. I don’t know if they’ve passed, but I know that there’s some brake cap issues in Illinois, I think.

[00:04:26] Um, but at the, in terms of like, you know, the, uh, the subprime autoregulatory outlook, you know, what are the types of things that you’re expecting to see folks chiming in about, or what are the types of things you’ve been hearing? Because I think it’s an area of concern.

[00:04:44] Joe Cioffi: [00:04:44] Yeah. Yeah, Joel, it really is. I mean, I’ve had an investor’s call in particular more so than the, uh, than the lenders, but investors asking, you know, how is the regulatory environment and the new administration?

[00:04:56] Is it really going to shake up lending and the quality of [00:05:00] loans and add costs to the whole structure? Um, and there’s so much uncertainty out there because not only do you have a new administration, but you have a new administration taking hold in the middle. Or hopefully tail end of a pandemic. And so it’s hard to get a read on what is the underlying performance based performance of the market in the first instance, how much has been propped up by, by stimulus?

[00:05:25] How much does that stimulus going to be needed going forward? And then what happens if you have an aggressive CFPB or state AGS who now put a bit of a chill on. On a freer lending market. Right. And on, on think of credited credit standards, because of some concerns about, uh, the CFPs enforcement and it give you some examples of things where I know there has been some concern, is that.

[00:05:52] You know, so the CFPB has really come out of the gate quite strong, not in subprime auto lending, yet Bowie getting a sense already [00:06:00] of the kind of activist stance that they’re going to take. Um, and folks might be familiar now what they, um, a case brought against a, um, an immigrant bond company, this nexus, uh, financial services, uh, case out in Virginia, where even though the bond services, not necessarily a lender.

[00:06:19] The CFPB is taking their position, that they are offering financial accommodations and they’re under their regulatory scheme. Um, the bond company in return says, no, I’m regulated by insurance regulators. So you can’t regulate me besides that. I’m actually just a life coach. I’m helping folks with their debts.

[00:06:39] So CFPB get out of my business. You know, we don’t know where that’s going to go. And those arguments probably are a bit of a stretch. Um, but the CFPB, right. Sort of CFPB let’s look at it on our higher level. What does this case really mean? It means that the CFP P maybe is not. That’s worried about expanding what its definition of what a [00:07:00] lender is like, who, who is a lender and that relates to, um, auto dealers.

[00:07:05] Right? So right now a lot of dealers are, are not under the CFPB purview, but they can become so right and be pulled into, um, the concerns that the CFPB has, even if they’re not. Particularly, no specified to be under the regulation. So who who’s subject to the CFPB concerns. And then what is it, what is that kind of conduct that they’re going to find objectionable?

[00:07:29] And they took a very aggressive stance as to what was objectionable by that the nexus company and saying basically under unfair and deceptive trade practices act. Um, basically just because the, as a primary concern is that the contracts were not in English. So if you had non-speaking, uh, borrowers or entities doing business under, um, English contracts, that’s abusive.

[00:07:58] Right. Um, [00:08:00] so we don’t know where this is going to go, but it does signal a very strong stance by them. And, and it makes you wonder in the other areas that we could see a be in potential concern, what they might do. You know, one other area is. Um, disparate impact. You know, we’ve known for a very long time that says this is a concern and an auto lending and subprime model lending.

[00:08:21] It doesn’t matter what your intent is. If, if in actuality you have discriminated or even the dealers, you know, discriminated in terms of their markups against the disadvantage and minority, uh, borrowers that could be concerned for disparate impact, then. I think it’s always been on everyone’s radar, but the prior administration was a bit asleep, asleep at the switch on this.

[00:08:44] Right. So now it’s just a matter of being cognizant that that can come into the forefront. Now as a, it could be a real concern. Um, and so that’s, that’s one area we want to look at pretty closely what becomes an abusive practice, you know, uh, what is [00:09:00] potentially a, um, creates a disparate impact. Um, and, you know, I mean, throw out one more thing on disparate impact, you know, the importance of.

[00:09:09] Uh, AI, right? So artificial intelligence, you know, machines can, um, can discriminate just as well as the rest of us. They can discriminate just as well as, as humans scat, uh, on unknowingly of course, you know, without any purpose. Uh, uh, but that’s exactly what the problem would be with artificial intelligence is it’s the effect.

[00:09:30] And so we need to keep an eye on those programs and constantly adjust and monitor those programs. So they are not having a discriminatory effect on any one segment of the market. And those are some areas that we’re seeing. Uh, and now what I’d really like to know in terms of the. Um, the survey is, are folks concerned about those same areas?

[00:09:54] You know, and, and so how does that impact their, um, their fear of what [00:10:00] the unknown it’s kind of what I’m, I’m expecting this survey to be a bit of, um, you know, uh, the broad brush approach to this. I think it’s really that fear of the unknown is probably going to drive market behavior. Going forward. Um, how much did that fear comes from the unknown quantity of the CFPB and their regulatory environment under the Biden administration?

[00:10:23] Joel Kennedy: [00:10:23] Yeah, I mean, we call it, uh, people who trade call it FID fear. Uh, was it fear, uncertainty and doubt. And I, I get that. I totally get that. Um, Joe, I think this time around though, like when you look at regulation through enforcement, through Cordray, after the Dodd-Frank was, was written and the organization was created, uh, you know, dealers were carved out and it was kind of like a no looking back equation, but now you have people questioning, you know, whether they’re going to be re included.

[00:10:56] I don’t even know what it would take. Is that a legislative issue? Is it a regulatory? [00:11:00] Like how would they even go about doing that? And could they. So somebody may be able to answer that question really quickly, but in my mind that that just indicates the level of fear, uncertainty and doubt. It’s like, they’re hitting us from all these angles.

[00:11:13] They’re hitting people who say that they’re not even under their supervision. And yet, you know, this is the environment that we’re in purchased in an absence of information.

[00:11:22] Joe Cioffi: [00:11:22] Yeah. You know, and, and I think it, um, it takes a long time to get a bill passed, right. And get through the political environment.

[00:11:30] And also, so how, how can a CFPB enact this much more quickly? Uh, you know, normally I would say going through the courts is not going to be easy, but in this case, you know, what they can do is really just take an expansive view. Of the existing regulations and, and you Def the, the unfair deceptive trade act is quite broad.

[00:11:51] And that’s, I think that’s what we’re seeing right off the bat. Is there going to be a willing to use that in a much more expansive way at the federal [00:12:00] level? And you, you touched on, you know, and you touched on very early too. You start at the state level. I mean, in that, in that bond case, Uh, they were joined by state AGS.

[00:12:09] We know how aggressive the Massachusetts state ag is, but they were joined by, by several others in that case, by the Virginia and the New York state AGS as well. And I think you’re going to see more of a coordinated effort at the federal and the state level going forward. Um, and I, and I think when it comes to dealers, you know, there, there there’s, there are going to be hooks for the CFPB to bring them in, in terms of their.

[00:12:36] Participation and an overall, you know, at the point of sale, I think that they’re going to become very interested in everything that surrounds that point of sale in particular, in particular, you know, on how is the dealer working with the lender? We saw it with Santander and the Massachusetts ag and what they were.

[00:12:53] They, um, No, it all came back to Santa and Dara at that point, not the dealers, but how much did [00:13:00] Santander know about what the dealers were doing? And when it did find out what they were doing, what did it do to, to protect its its borrowers? Right. Um, so I think that the dealer conduct has always been a concern for, for.

[00:13:14] The CFPB, but through the lender’s eyes and I, there were through the, going through the lender to get to the dealer conduct, um, to regulate the Joel conduct, but, but stopping at the, at the lenders going forward, I think they’re going to look for ways to pull the dealers in, in a sense of whatever their conduct is that related back to your maybe disparate impact and how it impacted the lenders.

[00:13:37] And, and, um, while I’m saying this, I can just see how. There is a, um, uh, a cycle and effect of an impact that, that the CFP, but a CFPB would want to promote here is that, you know, lenders, knowing that they have responsibility and obligations for the conduct of their dealers, then become a self-regulation within the market of dealer conduct, as the [00:14:00] lenders get savvy to that, that they’re potentially illegally exposed.

[00:14:03] Um, and so there’ll be some leaning on the market forces to regulate the.

[00:14:10] Joel Kennedy: [00:14:10] Yeah, we’ve seen that. And I mean, the holder role is a great example of that type of thing. Kind of rolling back uphill. Um, You mentioned Santander as well. I mean, I forget it was Santander. Uh, basically came out a couple of years ago that they were only verifying a certain portion of their borrower, submitted information like income and employment and things of that.

[00:14:35] So now we get into this whole ability to pay thing. Yeah. And so, you know, Joe, I don’t know what you make. I don’t know what your house costs like, who am I to say, Hey, if you’re out of whack, right? Like you kind of run your own game. I know people who leveraged. Their life significantly, but they sleep at night and they don’t default.

[00:14:55] So I’m kind of like, okay, well, I can’t really criticize you for it. Uh, I mean, I think that’s what a [00:15:00] lot of people’s responses, but we have to put on our, our big boy pants and say, we’re going to have to figure this out.

[00:15:07] Joe Cioffi: [00:15:07] Yeah. You know, and I’m apologizing for some of the noise in the background. I have a windows being replaced and apparently they can’t do that.

[00:15:13] Great quietly. Um,

[00:15:19] no worries. Hopefully that it doesn’t get any worse, but, uh, you know, this is really troubling. Joel, you hit on a really. Really interesting point and a very difficult area, I think, to predict where we’re going, uh, in, in the future with this. Um, well just what you said, we’re all big boys here. I think, uh, business people make decisions all the time and just make all the time and, and risk is just.

[00:15:41] Something that’s factored in, in terms of pricing, right. We can all, we can all assess our own risk and our tolerance for risk and, and factor in, uh, uh, pricing and decide whether or not we want to enter into a transaction or not. Um, and now you have the prospect really of the government coming in and saying, Oh no, you don’t.

[00:15:58] And it’s really not up to your [00:16:00] business judgment. We’re going to replace your business judgment with some objective standard of what we think. The ability to pay would be of the borrower that you just did business with. Like you should, you knew, or you should have known that they didn’t have the ability to pay and in doing so they’re really creates a new dynamic.

[00:16:19] I think that creates a duty. Right. And, you know, on a legal basis, it’s, it’s saying that lenders now have a duty to their borrowers to make sure that they are able to satisfy their obligations. And this has come in not only with Santander with the Massachusetts Agee, but now we have another case against the Massachusetts, you against credit acceptance, you know, more recently, um, where credit acceptance costs.

[00:16:45] I think it’s 50% of their loans would go into default. Now, again, Very high default rate. But as we know from the securitizations there’s credit enhancements there, and you don’t like. They’re expected high default rates are expected. Um, but the, but the [00:17:00] Massachusetts ag says, I don’t care if they’re expected or not.

[00:17:02] What’s the impact on these individual bars? You credit acceptance didn’t care that half of the borrowers were going to default because you have a structure in place. Your business model is made so that you hold back from the dealers and you are actually, you stand to profit, no matter what the performance of that, of that loan is.

[00:17:22] Right. Um, and that’s just not. We know that’s not that’s against public policy, you know, basically. Um, and so I’ve had, I’ve had more than one investor, uh, call me up, you know, concerned about this. And I, and I love the question because it was like worthy of an article title to gain. Lots of hits real clickbait was, um, can, can subprime auto lending become illegal.

[00:17:46] Oh, my God. That is, that is a, that is a great way to get everyone’s attention. And he wasn’t trying to, he’s actually concerned about it, you know, we’re far away from, from getting there, [00:18:00] but. You know, on a, on a case by case basis, if lenders have to be concerned about this specialized duty that they now hold against, uh, to borrowers against some objective standards.

[00:18:12] Now they’re, uh, you know, the government’s objective standards being where the state of federal level replacing. Their underwriting guidelines. Uh, you know, this is where, you know, you can, the courts can be used to affect this change over time. It’ll, it’ll take a while, but if, if the trend is going in that direction, that is going to impact.

[00:18:33] Subprime lending. And if you, and if anyone thinks that’s well, that’s a progressive policy and you’re really helping to disadvantage. Well, I would say let’s take that to the logical conclusion and what happens to the availability to credit for the subprime borrower, if lenders have to worry about it. So, you know, a what seems like a progressive policy.

[00:18:53] Is not necessarily progressive at all when you follow it through to its logical conclusion. Well, look, there was, there

[00:18:59] Joel Kennedy: [00:18:59] were, there were [00:19:00] bigger banks that were involved in subprime lending that exited once the great recession hit and they have not returned Joe, and I don’t think they’re going to return.

[00:19:11] And so when we look at FinTech and the rest of these things that have really taken off, it causes me to pause and say, Are these people just looking for a home to park their money. They want to be banked. And the banks have said, that’s fine. We’re not going to offer you financial products. You can bank with us.

[00:19:28] But I mean, why would I put all my money in your bank if I can’t get access to these other products? I think about, you know, the wallet share concept, you know? So I think there’s a, I think there’s a real risk. Because who’s going to carry that mantle. Who’s going to provide credit to these individuals.

[00:19:46] You know, we don’t have a Fannie Mae Freddie Mac for subprime auto loans, but we do for mortgages. And you know, the government involvement in this is, is, is interesting. I understand has got, gotta. A scruple for a student lending as [00:20:00] well, which I actually hope he, he can kind of navigate. I hope he can figure that out if he gets, um, appointed by the way.

[00:20:07] Have you been tracking that at all? Joe, do you know where he stands in his, uh, potential appointment?

[00:20:13] Joe Cioffi: [00:20:13] Um, have not heard, you know, still in progress.

[00:20:19] Joel Kennedy: [00:20:19] Okay. Yeah. Somebody who is that somebody who’s asked me, they’re like, are you through the NAF? Are you going to try to meet with this guy? And I said, well, hold on.

[00:20:25] We gotta, he’s not official yet. Yeah. So, okay. So what we normally talk about in your, in your survey or we, what you normally talk about in your survey is a subprime auto performance, right? So, um, Obviously going to be some questions about that to the participants in terms of what are they seeing today and what has largely been the impact of COVID and all the market disruption.

[00:20:52] And now we’ve got an oil tanker stuck in the Suez canal. I mean, you name it. You can’t possibly throw another thing at us, [00:21:00] Joe,

[00:21:01] Joe Cioffi: [00:21:01] 21. Yeah, we said 2020. Thank God. It’s over. It’d be careful what you wish for. And it was what’s coming out of it.

[00:21:10] Joel Kennedy: [00:21:10] Maybe you live in interesting times.

[00:21:12] Joe Cioffi: [00:21:12] That, that we got, that we have going for us.

[00:21:14] Right. We have opportunity, nothing but opportunity. Uh, yeah. You know, you’re right. I, I typically, you know, focus in these, in these surveys on, you know, performance outlook, what are folks expecting to see, um, in terms of delinquencies and losses and you know, how that relates to the securitizations and credit ratings and all.

[00:21:34] So then, and this time will be no different in that regard. We do want to hear what people are thinking. I can tell you what we’re seeing. So. As far it’s that it, you know, it’s kind of a mixed bag. Things are not that bad. You know, it’s not that bad. And just as I started this conversation, it’s like, do we know why.

[00:21:51] You know, what would, where would we be without all this stimulus? Right. I mean, we’d be in, we’d be in bad shape. Um, and what happens as we come out of [00:22:00] this, uh, hopefully coming out of the pandemic by the second half of the year, uh, at least we know right now that, you know, originations are down. I think there’s been some tightening, right.

[00:22:11] So originations are down. Right. And we’ve got, we’ve got delinquencies are the indices are all trending down. And I think that’s also because of the stimulus that

[00:22:21] Joel Kennedy: [00:22:21] stimulus, I think, I think lenders assist you with some deferrals as well.

[00:22:25] Joe Cioffi: [00:22:25] For sure. Then I was going to say, you know, extensions are not as high as they were expecting as we would expect.

[00:22:32] They’re not as high at the beginning, but they’re they’re um, they’re coming back up again. They came down. And, and they’re, and they’re on the way back up. So that’s something we wanna, we want to look at is what do we, you know, we have a lot of folks, I think who were in, in deferrals now who are going to look for more,

[00:22:48] Joel Kennedy: [00:22:48] but we, we just, we just got that second shot.

[00:22:50] Right? We got that second government stimulus. So now we’re now we’re pushing, but unfortunately it’s not going to cure anything. It’s just going to push things [00:23:00] out a little bit

[00:23:01] Joe Cioffi: [00:23:01] more. Yeah, that’s right. And so the question now is like the seasonal trends where we see like the requests for extensions. Is that, is that all we have right now, or is it much more, you know, uh, darker than that, right?

[00:23:15] Is it really, you know, how much of this is this gonna work? How much is the stimulus going to work this time around? And that’s what we need to, that’s what we needed to see, but I, I really want to hear the, the level of optimism from the market. I’ve always been surprised from the very beginning of the goal.

[00:23:32] I always say it’s like cautious optimism that surrounds a subprime auto market. I mean, I think it’s, you know, a Testament to the, to the participants, even when things look bad, no one was panicking. Even at the beginning, you know, we actually even did a survey, which we intended to be, you know, our annual survey last year, early.

[00:23:51] You know, before March and, and, you know, people were starting to feel a little nervous before the pandemic in terms of underwriting standards [00:24:00] and, um, consumers, debt burdens, and all, um, and some unemployment and macroeconomic changes. So I expected when we went back in right after the pandemic started now, the, the mother of all economic issues, uh, just happened.

[00:24:13] So of course there’s going to be panic and you know, they’re going to folks’ credit. You know, it was very temper and, and here we are. No a year later. And it seems like, you know, that was, that was the right tack to take. That was the right outlook. Let’s sit tight, let’s see trust in the fact that they were going to be relief programs, you know, government programs, a stimulus that weren’t going to let this all go, go to heck.

[00:24:36] Um, and, and now it’s a matter of, you know, how strong are the fundamentals, I guess when we come out of this and the. Second half of the year. I mean, along the way, Joel, I guess, you know, what I got concerned about too was, um, the fact that there was, you know, the way the auto market is tied into the lending here was like the, the, there was a shortage of autos.

[00:24:57] Joel Kennedy: [00:24:57] There’s still, there’s still a huge supply side issue for [00:25:00] new and used. And the pricing for wholesale is through the

[00:25:04] Joe Cioffi: [00:25:04] roof. Exactly. And so what happened then was that you had, um, the collateral values being higher than anyone would have expected. Right. And so w you know, what happens when a borrower asks for an extension and there’s also, the collateral value is, you know, is higher than it’s been in the past or higher than expected.

[00:25:25] Maybe the decision then is, you know what, I’m not going to grant another extension. I’m going to take the I’m going to repossess. Right. I mean, so there was a little bit more waiting in favor of potential repossessions when you have a strong use vehicle market. Right. Um, and I th there was something in, um, the asset securitization report.

[00:25:43] I contributed to her, uh, to an article. There was real concern about a, uh, a very disadvantaged community where. The families all worked in a chicken processing plant, uh, and then one would go down with COVID and the other would take over their job and they [00:26:00] would take over their car payments. And usually the lender would say fine, as long as I’m getting paid, I don’t care.

[00:26:07] But in this case, the lender said, I don’t, I don’t, I don’t, I don’t have to listen. I don’t need to take you on as a new borrower. I can just repossess the vehicle. Um, you know, it was a real hardship story, but those are the things that those anecdotal things were coming out during the early stages of the pandemic.

[00:26:24] Um, now I think things have settled down a bit, but as you said, they’re still high. We’re still looking at very strong residual values. Um, And so that I think, you know, I want to see what folks are saying in terms of how does that impact their decisions going forward as well in terms of what’s the outlook for further extensions.

[00:26:42] Joel Kennedy: [00:26:42] Yeah. I think another big issue, you know, related to that, I can see how that would work. So I underwrote this individual, just talking about this, a community where they work in this chicken plants or whatever, you know, so I get COVID um, um, I have to throw the car over to [00:27:00] you and my job over to you. And, uh, so as a lender, I don’t have a chance to underwrite this new individual who’s taking over the loan.

[00:27:08] Right. If I, if I decide to allow it, um, the issue for me there as a lender is okay, we need to evaluate the risk associated with this borrower, actually paying and keeping, keeping the money coming in versus them. Run me through kind of like a web of traps, which I’ve run into before you have a, a co-borrower.

[00:27:32] Who is a spouse and the, you know, I want him off alone. I don’t like him anymore. They call and this and that. And if you don’t get them off, then I’m not going to pay any more. Cause he’s the one driving, it’s a whole nightmare. Right. So I can see how, from an aggravation standpoint, it may be a better option to just kill the account repossessed it’s fully within your right.

[00:27:53] But I think a lot of companies, I, this is the one thing that I’m curious about, and I wonder, I wonder if. [00:28:00] Folks would chime in, but it was, it would be about, so if you normally turn over your portfolio, right, let’s say you start with a hundred loans in a month at the beginning of the year. And in order to keep your operations steady, you need a hundred loans to, to spit off enough yield.

[00:28:14] So you can cover your operational costs. And let’s say it’s subprime. So like you have to replenish 50% of your portfolio every year, which is not a crazy, uh, expectation, Joe. But now I’m looking at okay. You know, I take a flyer on this person and run the risk of missing that yield. Or do I just repo the car, knowing that deal, that the wholesales are higher, I’m going to benefit the consumer is going to benefit because it’s a lesser deficiency balance, but I get that money straight to the gut so I can keep my operations going.

[00:28:44] Because I don’t think I can replenish back to a hundred. So I think that these portfolio sizes of companies I believe is going to be a concern. That’s that’s my 2 cents, but Joe, you’re running the survey. You’re obviously going to be asking for, um, the participants [00:29:00] expectations, right? About what, what do they think about subprime and where it’s going?

[00:29:05] What do you explore? Do you think we’re going to hear from them?

[00:29:09] Joe Cioffi: [00:29:09] Yeah. Uh, I think, um, I go back to that, you know, the, the fear of the unknown, I think, and it’s like the question of whether folks are taking a short-term view and it’s, uh, you know, taking the, um, liquidating collateral and taking as much cash liquidity crisis.

[00:29:24] So you take as much cash as you can now, are you, or are you able. To play this out and survive and maintain, you know, your level of extensions and maintain the level of your, your, uh, modification programs ed, as you have in the past. I mean, that’s what we’re going to, we’re going to find. And I think you just raised a really interesting point.

[00:29:45] For our panel discussion, it was like to really ask the folks, uh, you know, the, the services that we get, you know, services originators on the, on the panel, you know, how do they expect, you know, this, um, the change in the collateral value or increases in a strong collateral market [00:30:00] to affect the smaller.

[00:30:02] The smaller players. And how does it, how has it impacted by the liquidity needs, you know, going forward? Because I think we could say that, you know, at least in over the last year, there was concerned about whether or not there was going to be some consolidation in the market among the smaller players for that very reason of, of liquid of liquidity concerns just don’t know going forward.

[00:30:23] If we’re going to see that, given that. It’s spring time, although it’s always sunny in San Diego right now, but in the rest of the country, people are feeling optimistic because you know, it’s sunny and folks are about to get their first or second shot. And, uh, everything’s looking really looking good. So you can take a longer term view and, you know, the, uh, the release of the purse strings from the warehouse, lenders and finance financing sources.

[00:30:46] And, you know, it seems like it’s, we’re coming into better times where folks can take a longer-term view. We’ll find out. Um, but you know, I think we’re going to have to, we’re going to have to explore this in, um, in a [00:31:00] panel discussion because I don’t think we’re going to get enough of the, you know, the color we were, of course limited the number of questions we ask, um, and limited in categories of responses would a few open questions where people can expand and it, you know, explain themselves.

[00:31:13] But this is certainly, you know, worthy of, um, you know, the panel. Here are a few minutes discussion on this, right? Yeah. Yeah.

[00:31:21] Joel Kennedy: [00:31:21] So, Joe, um, can you, can you, again, uh, for folks that, uh, are, I’m sure are very, very interested in participating, uh, for folks that have participated in the past, obviously we rely on you.

[00:31:34] For folks that haven’t, you know, we want to bring in, we want to get your voice captured. Uh, how do people go about, um, connecting and participating in the survey? Like I said, this is going to be out on what Thursday what’s what’s next Thursday, Joe. Thursday, April 1st, April fool’s day. Okay, great. So what can people do to participate?

[00:31:58] Can you give them the [00:32:00] website? Any other details?

[00:32:02] Joe Cioffi: [00:32:02] Yeah. Yeah. That’s an extent. Yeah. To the extent any, um, viewers here have not received an email from me of credit chronometer if you’re not already a subscriber and on our mailing list, you can go to credit And you’ll see a place on there for you to register, to take the survey and then by registering for the survey and completing it, um, then you’ll just get a complimentary copy of the report when it becomes available.

[00:32:28] Uh, and then, uh, you’ll also get an invitation, you know, to let you know where it’s also going to be, you know, Uh, be posted as well or any summaries of it as well. Um, and then I’m always, I’m always happy, Joel, um, to talk to folks, you know, if they want to hear more and get into it, I, you know, whether you’re a lender or an investor, you know, this is all about helping the market and sharing information.

[00:32:51] Um, and so it goes beyond just our clients. And so if anybody wants to talk, you know, after they complete the survey, before they see it, they want to get some [00:33:00] input feedback on what’s going on. Now, just like I mentioned, the investors who called and said, tell me more about ability to pay, you know, um, I have no issue.

[00:33:08] They can always contact me. They can get my, um, email through the site. They can, um, they can communicate with me that way. Um, but I’m hoping folks will go to credit and take the survey. I’d love to hear from you. Outstanding.

[00:33:23] Joel Kennedy: [00:33:23] Well, folks, it’s been Joe. Thank you. Thank you so much. It’s been Joe Cioffi of Davis and Gilbert.

[00:33:30] He is the architect, uh, of the credit chronometer which in my mind. This is a bigger deal than architecting. The CFPB you’ve you’ve succeeded. You’ve successfully eclipse them. You’re you’re better than Elizabeth Warren.

[00:33:44] Joe Cioffi: [00:33:44] All right, thank you.

[00:33:52] Joel Kennedy: [00:33:52] All right, everybody. Well, thanks for listening to the podcast, please like follow and chair. Um, you can always provide feedback to me [00:34:00] and then, um, please consider participating in the credit. Chronometer Joe. Thank you so much.

[00:34:06] Joe Cioffi: [00:34:06] Thank you really appreciate it. Glad to see you again too. Likewise.