Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 22

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1
Chunk 22
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 for managing our collection
efforts, we regularly work with our customers to resolve delinquencies. Our staff is trained to employ a counseling approach to assist
our customers with their cash flow management skills and help them to prioritize their payment obligations to avoid losing their vehicle
to repossession. Through our experience, we have learned that once a contract becomes greater than 90 days past due, it is more likely
than not that the delinquency will not be resolved and will ultimately result in a charge-off. Contracts originated since January 2018
are accounted for at fair value and the economic impact of late payments is incorporated into the estimated net yield on those contracts.

If an obligor exceeds the
90 days past due threshold at the end of one period, and then makes the necessary payments such that it becomes equal to or below 90 days
delinquent at the end of a subsequent period, the related contract would be restored to full accrual status for our financial reporting
purposes. At the time a contract is restored to full accrual in this manner, there can be no assurance that full repayment of interest
and principal will ultimately be made. However, we monitor each obligor’s payment performance and are aware of the severity of his
delinquency at any time. The fact that the delinquency has been reduced below the 90-day threshold is a positive indicator. Should the
contract again exceed the 90-day delinquency level at the end of any reporting period, it would again be reflected as a non-accrual account.

Our policy for placing a contract
on non-accrual status is independent of our policy to grant an extension. In practice, it would be an uncommon circumstance where an extension
was granted and the account remained in a non-accrual status, since the goal of the extension is to bring the contract current (or nearly
current).

Securitization of Automobile Contracts

Throughout the period for which
information is presented in this report, we have purchased automobile contracts with the intention of financing them on a long-term basis
through securitizations, and on an interim basis through warehouse credit facilities. All such financings have involved identification
of specific automobile contracts, sale of those automobile contracts (and associated rights) to one of our special-purpose subsidiaries,
and issuance of asset-backed securities to be purchased by institutional investors. Depending on the structure, these transactions may
be accounted for under generally accepted accounting principles as sales of the automobile contracts or as secured