OREANDA-NEWS. The US unsecured consumer credit ABS market has grown substantially in recent years. However, short operating history for new institutions, untested business models, evolving regulation, and servicing continuity risk in the market all present analytical challenges for investors, Fitch Ratings says.

Business models that require more scrutiny include lenders that do not take actual credit risk by holding loans on-balance sheet and whose fee structures are strongly biased towards origination fees are common examples. The evolving regulatory landscape and concerns over servicing continuity for decentralized branch-based lenders also add to investor uncertainty.

Additionally, Fitch has more rigorous expectations for data when reviewing subprime collateral pools as these assets may experience the most substantial deterioration when placed under economic stress.