When a pool of loans are assigned to an assignee in a large number of more than tens of thousands accounts, the purchaser generally seeks the credit related information on consumers in the loan pool to review creditworthiness thereof and price it to the extent of the reasonable estimation of the credit cost thereto. The credit review will be difficult in accurate and proper manners only with the transactions and experiences data. To evaluate the creditworthiness, the information obtained by the creditor under creditor’s contractual status in the application of the borrower for the loan, whether financial or not, will help more accurately review it. Though the information so obtained is allowed the use by the assignor creditor for that limited purpose, that cannot be reused or distributed to the purchaser without prior consent of the borrower for reasons that such information is not related to the transactions arising from the loan agreement. Nor available is the information shared only by members of the lenders exchange such as LE number and total debt amount borrowing.
When, upon assignment by securitization, the pool of revolving loans originated in accordance with the Nonbanking Lending Act are transferred and the servicing right is separately created form the originator, to the detriment of borrowers will be generated risks associated with the on-going post-stage credit monitoring which merely works well in the case that the assignor acts as servicer that is obligated to continuously renew and update the borrower’s activities by reporting to the credit exchange center. Once the servicing role is assigned to any other third party which is not the authorized member of the exchange center, such reporting cannot be continued and the borrowing status of the borrowers subject to the securitization will remain incorrect and incomplete unless credit monitoring is serviced. In such case, borrowers will no doubt lose the repayment incentives and intention since their debt status is not monitored.
Further, in the circumstances where the aforesaid available credit information can be no more shared or used by the backup servicer for revolving which is allowed in the initial loan agreement and more revolving is no longer allowed, however creditworthy, borrowers’ incentives for payments will be dampened. Protection of investors from those risks will be addressed as well as protection of borrowers’ rights to privacy.
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