Fitch Rates Household Automobile Trust 2001-2
NEW YORK--July 31, 2001--Fitch rates the auto receivable asset-backed notes issued by Household Automobile Trust 2001-2 as listed below:| -- | $149,000,000 3.74% class A-1 notes `F1+'; |
| -- | $173,000,000 4.12% class A-2 notes `AAA'; |
| -- | $205,000,000 4.83% class A-3 notes `AAA'; |
| -- | $173,000,000 5.39% class A-4 notes `AAA'. |
The 2001-2 transaction marks Household Automotive Finance Corp.'s (HAFC) seventh auto securitization backed by retail loans to nonprime borrowers. The ratings are based on initial credit enhancement of 31.50%, subordination of the 2.25% servicing fee while Household Finance Corp. (HFC; rated `A+/F1' by Fitch) is servicer, availability of excess spread, the transaction's sound legal and cash flow structure, and the capabilities of HFC as servicer and HAFC as subservicer. Fitch's ratings address the likelihood that the noteholders will receive full and timely payment of interest and ultimate payment of principal by the legal final scheduled payment date of each class.
Initial credit enhancement of 31.50%, consisting of 30.50% overcollateralization (OC) and a 1% reserve account, is lower than that of the previous four HAFC transactions. The lower enhancement is due to continued performance stability within the indirect portfolio, the current interest rate environment, and the inclusion of directly originated loans. The anticipated coupon on the 2001-2 notes is expected to offset the lower weighted average annual percentage rate (APR) on the pool collateral resulting in excess spread levels similar to those of prior securitizations.
Interest and principal on the notes is distributed on the seventeenth of each month, or next business day, beginning Aug. 17, 2001. Principal payments on the notes are made sequentially beginning with the class A-1 notes until paid in full, unless an event of default occurs, in which case principal will be paid pro rata.
The 2001-2 notes are backed by fixed-rate, level pay, fully amortizing installment sales contracts secured by new and used automobiles, light duty trucks, and vans to nonprime borrowers. Obligors under the loans are considered nonprime due to poor credit history or lack of credit history. As of the June 24, 2001 statistical cutoff date, the aggregate principal balance on the pool was $1,014,511,484, and the weighted average APR on the loans was 17.87%. The weighted average APR is down from 18.35% in the 2001-1 transaction, due to the inclusion of direct originations (12.7% of the pool principal balance). Analysis of credit scores and static pool data suggests direct loans are typically extended to borrowers with better credit profiles and therefore outperform indirect originations.
HAFC, the subservicer, is a wholly owned special purpose subsidiary of the servicer, HFC, which is a wholly owned subsidiary of Household International, Inc. (Household; rated `F1/A', Rating Outlook Stable by Fitch). HAFC, headquartered in San Diego, was created in 1997 through the merger of a subsidiary of Household and nonprime auto lender ACC Consumer Finance Corp. (ACC) of San Diego. Since the acquisition, HAFC has increased originations and initiated numerous underwriting, systems, and collections enhancements. Currently, HAFC's serviced portfolio consists of approximately $4.7 billion in auto loans.