Gaps in data verification likely contributed to missed double-pledging of assets at Tricolor Auto, prompting changes at rating agencies, Larry Chiavaro, president at his consulting company LC Advisors Group, told Auto Finance News during a special recording of the Weekly Wrap podcast.  

Chiavaro also served as executive vice president and co-founder of First Associates Loan Servicing from 2010 to 2021. That company was rebranded as Vervent in 2020. The backup servicer took over Tricolor’s portfolio following the company’s Sept. 10 bankruptcy filing.  

Tricolor is under investigation for allegations of fraudulently double-pledging assets to warehouse lines, with former Tricolor Chief Executive Daniel Chu and other former Tricolor executives facing a federal indictment alleging they committed fraud at the company.  

The Tricolor bankruptcy served as a “wake-up call for the industry” and has spurred changes, Chiavaro tells AFN.

In this special episode of the Weekly Wrap, Auto Finance News Founder and CEO JJ Hornblass joins Chiavaro to discuss the collapse of Tricolor Auto, backup servicing operations and risk management.