Triad Loans Yield 7%-8% And No Losses

CBSC Partnered With Triad in 2006 to Offer CBAI Members a Source For Prime-Rated Manufactured Housing Loans. At the time, three member banks had been purchasing triad loans for years. Their affirmative recommendation made the board comfortable with triad, but we put them through due diligence anyway.

We examined their financials. They are rock-solid. The company has no debt. The banker who performed much of the analysis said, “I’d like to bank them.”

We spoke to the state banking regulators. They had a lot of questions that we were able to answer. One unresolved issue is refinances. They may not be permissible under a poorly written Illinois housing finance law, so Triad doesn’t send any refinance business to state chartered banks. There is no problem with national banks. Triad monitors laws and regulations in individual states to make sure they are in compliance.

A dealer reserve equal to 15% of the loan amount is established at the bank and funded by Triad to charge-back unearned interest in the event of an early payoff and deficiencies in the case of repossessions. The reserve is a critical safety net. We “stress-tested” its viability under a number of prepayment and repossession scenarios. And it passed. The CBSC board is convinced that the reserve account structure provides more than adequate funding for charge-backs and repossession-related losses.

In summary, Triad passed all the tests: strong financials, regulator acceptance, great references. So, we launched the partnership.

Since the Program’s inception three years ago, nearly three dozen CBAI member banks have purchased approximately 2,000 loans totaling more than $100 million in Triad-originated manufactured housing loans. Participating bankers have earned an average yield approaching seven percent, with few delinquencies, AND NO LOSSES!

Why are Triad borrowers – characteristically people with modest means – performing so well?

  • Their median FICO score is 730, few if any are below 620, the segment usually designated “sub-prime”.
  • They took out loans they could afford with the intention of paying them off.
  • They did not assume they could always sell their home at a profit if they couldn’t make payments.
  • They did not count on making their loan payments by means of refinancing.
  • They did not sign-up for teaser rates that reset to an unaffordable payment amount.
  • They made honest to goodness down payments.

Jimmy Stewart would have loved these folks!

If your bank is searching for good loans, Triad has them available. Contact Darrell Boyd, Triad senior vice president, at 270/748-7702 for more information.