LAKE SUCCESS, NY – Nissan Motors Acceptance Corporation has securitized approximately $80 million of electronic contracts originated and stored on the DealerTrack eContracting system. It was the first time in history that more than a limited amount of electronic contracts were included in an automotive securitization, according to DealerTrack.
Separately, Standard & Poor's Corp. (S&P) has tentatively agreed to a template for legal opinions that it will accept from DealerTrack financing sources along with transaction-specific information to support its ratings of securitized electronic contracts on an ongoing basis. This standard language opinion, which DealerTrack is making available to all financing sources in its eContracting program, describes in detail how the DealerTrack system facilitates each of the legal requirements giving the owner of an electronic contract control of the "authoritative copy," similar to protections given to a holder of a paper contract under the Uniform Commercial Code.
"This recent successful securitization of eContracts, together with S&P's comfort level with the legal underpinnings of eContracting through DealerTrack's system, confirm that this technology has arrived in the mainstream banking and investment communities," said Vince Passione, president of DealerTrack, Inc. "With our storage vault and the template legal opinion to offer financing sources, DealerTrack eContracting is truly a turnkey, end-to-end solution that enables lenders to enjoy all the portfolio management options they have with traditional paper contracts."
DealerTrack's eContracting, which the company pioneered several years ago, is integrated with the DealerTrack online credit application-processing network. It enables dealers to pre-populate, complete, and submit retail installment sales contracts (including digital customer signatures) electronically to financing sources. This results in faster, more accurate completion of contracts and funding for the dealer as soon as the same day. The process reduces contracts-in-transit and enhances dealership cash flow. In the traditional paper-intensive process, overnight mailing, cross-checking, re-contracting (if necessary), and finally funding a retail contract can take up to a week or more.
With eContracting, the consumer receives a paper copy of the contract, but the "authoritative copy" contract remains in electronic form and is stored securely in DealerTrack's vault. As an alternative to using DealerTrack's vault, the financing source can create its own storage system or outsource this storage function to a third-party vendor.