EX-99.1 2 a19-22306_4ex99d1.htm EX-99.1

Exhibit 99.1

 

Harley-Davidson Motorcycle Trust 2020-A

Motorcycle Contract Backed Notes

Sample Contract Agreed-Upon Procedures

 

Report To:

Harley-Davidson Financial Services, Inc.

Harley-Davidson Credit Corp.

Harley-Davidson Customer Funding Corp.

 

9 January 2020

 

 

 

Ernst & Young LLP
5 Times Square
New York, NY 10036

Tel: +1 212 773 3000
Fax: +1 212 773 6350
ey.com

 

Report of Independent Accountants on Applying Agreed-Upon Procedures

 

Harley-Davidson Financial Services, Inc.

Harley-Davidson Credit Corp.

Harley-Davidson Customer Funding Corp.

222 West Adams Street, Suite 2000

Chicago, Illinois 60606

 

Re:                             Harley-Davidson Motorcycle Trust 2020-A (the “Issuing Entity”)

Motorcycle Contract Backed Notes (the “Notes”)

Sample Contract Agreed-Upon Procedures

 

We have performed the procedures enumerated in Attachment A, which were agreed to by Harley-Davidson Financial Services, Inc. (“Harley-Davidson Financial”), Harley-Davidson Credit Corp. (the “Sponsor”), Harley-Davidson Customer Funding Corp. (the “Depositor”), Citigroup Global Markets Inc. (the “Structuring Agent”), J.P. Morgan Securities LLC (“J.P. Morgan”) and MUFG Securities Americas Inc. (“MUFG,” together with Harley-Davidson Financial, the Sponsor, the Depositor, the Structuring Agent and J.P. Morgan, the “Specified Parties”), solely to assist the Depositor with respect to certain information relating to a pool of fixed rate, simple interest promissory notes or security agreements relating to the retail purchase of new and used motorcycles (the “Contracts”) relating to the Issuing Entity’s securitization transaction.  This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants.  The sufficiency of the procedures is solely the responsibility of the Specified Parties.  Consequently, we make no representation regarding the sufficiency of the procedures described in Attachment A, either for the purpose for which this report has been requested or for any other purpose.

 

The procedures performed and our associated findings are included in Attachment A.

 

 

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For the purpose of the procedures described in this report, the Sponsor, on behalf of the Depositor, provided us with:

 

a.                                      Electronic data files:

 

i.                                          Labeled “2019-B Prelim Pool (09-30-2019) for EY.xlsx” and corresponding record layout and decode information, as applicable (the “Base Preliminary Data File”), that the Sponsor, on behalf of the Depositor, indicated contains information relating to a pool of fixed rate, simple interest promissory notes or security agreements relating to the retail purchase of new and used motorcycles (the “Preliminary Contracts”) as of 30 September 2019 (the “Preliminary Cutoff Date”) that the Sponsor, on behalf of the Depositor, indicated are expected to be representative of the Contracts and

 

ii.                                       Labeled “HDMOT 2020-A Final Pool (12-31-2019).xlsx” and corresponding record layout and decode information, as applicable (the “Base Data File,” together with the Base Preliminary Data File, the “Provided Data Files”), that the Sponsor, on behalf of the Depositor, indicated contains information relating to the Contracts as of 31 December 2019 (the “Cutoff Date”),

 

b.                                      Information, assumptions and methodologies (collectively, the “Provided Calculation Methodology”), which are shown on Exhibit 1 to Attachment A, that the Sponsor, on behalf of the Depositor, indicated relate to the calculation of the characteristic(s) listed on Exhibit 1 to Attachment A (the “Provided Calculation Characteristic”) for each Preliminary Contract or Contract, as applicable,

 

c.                                       Imaged copies of:

 

i.                                          The promissory note and security agreement (collectively, the “Sales Contract”) and

 

ii.                                       Certain printed screen shots from the Sponsor’s computerized loan origination or servicing system (collectively, the “System Screen Shots,” together with the Sales Contract, the “Source Documents”)

 

that the Sponsor, on behalf of the Depositor, indicated relate to each Sample Contract (as defined in Attachment A), as applicable,

 

d.                                      The list of relevant characteristics (the “Sample Characteristics”) on the Preliminary Data File (as defined in Attachment A), which is shown on Exhibit 2 to Attachment A, and

 

e.                                       Instructions, assumptions and methodologies, which are described in Attachment A.

 

The procedures included in Attachment A were limited to comparing or recalculating certain information that is further described in Attachment A.  The Depositor is responsible for the Provided Data Files, Provided Calculation Methodology, Source Documents, Sample Characteristics and the determination of the instructions, assumptions and methodologies that are described herein.  We were not requested to perform and we have not performed any procedures other than those listed in Attachment A.  We have not verified, and we make no representation as to, the accuracy, completeness or reasonableness of the Provided Data Files, Provided Calculation Methodology, Source Documents or any other information provided to us by the Sponsor, on behalf of the Depositor, upon which we relied in forming our findings.  Accordingly, we make no representation and express no opinion as to (a) the existence of the Preliminary Contracts or Contracts, (b) questions of legal or tax interpretation and (c) the accuracy, completeness or reasonableness of any instructions, assumptions and methodologies provided to us by the Sponsor, on behalf of the Depositor, that are described in this report.  We undertake no responsibility to update this report for events and circumstances occurring after the date hereof.

 

We were not engaged to, and did not, conduct an examination to express an opinion or a review to express a conclusion in accordance with attestation standards established by the American Institute of Certified Public Accountants on any of the items referred to herein.  Accordingly, we do not express such an opinion or conclusion.  Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

 

The agreed-upon procedures described in this report were not performed for the purpose of:

 

a.                                      Satisfying any criteria for due diligence published by a nationally recognized statistical rating organization (a “rating agency”) or

 

b.                                      Making any findings with respect to:

 

i.                                          Whether the origination of the Contracts conformed to, or deviated from, stated underwriting or credit extension guidelines, standards, criteria or other requirements,

 

ii.                                       The value of the collateral securing the Contracts,

 

 

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iii.                                    Whether the originator(s) of the Contracts complied with federal, state or local laws or regulations or

 

iv.                                   Any other factor or characteristic of the Contracts that would be material to the likelihood that the issuer of the Notes will pay interest and principal in accordance with applicable terms and conditions.

 

This report is intended solely for the use of the Specified Parties and is not intended to be and should not be used by anyone other than the Specified Parties.  It is not intended to be and should not be used by any other person or entity, including investors and rating agencies, who are not identified in the report as Specified Parties but who may have access to this report as required by law or regulation.

 

/s/ Ernst & Young LLP

 

9 January 2020

 

 

Attachment A

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Procedures performed and our associated findings

 

1.                                      As instructed by the Sponsor, on behalf of the Depositor, we appended the information for each Preliminary Contract on the Base Preliminary Data File with the Provided Calculation Characteristic, which we calculated using the Provided Calculation Methodology.

 

The Base Preliminary Data File, as adjusted, is hereinafter referred to as the “Preliminary Data File.”

 

2.                                      As instructed by the Sponsor, on behalf of the Depositor, we randomly selected a sample of 150 Preliminary Contracts from the Preliminary Data File (the “Sample Contracts”).  For the purpose of this procedure, the Sponsor, on behalf of the Depositor, did not inform us as to the basis for how they determined the number of Sample Contracts or the methodology they instructed us to use to select the Sample Contracts from the Preliminary Data File.

 

For the purpose of the procedures described in this report, the 150 Sample Contracts are referred to as Sample Contract Numbers 1 through 150.

 

3.                                      For each Sample Contract, we compared the Sample Characteristics listed on Exhibit 2 to Attachment A, as shown on the Preliminary Data File, to the corresponding information located on, or to the corresponding information we recalculated using information located on, the Source Documents, subject to the instructions, assumptions and methodologies provided to us by the Sponsor, on behalf of the Depositor, described in the notes to Exhibit 2 to Attachment A.  The Source Document(s) that we were instructed by the Sponsor, on behalf of the Depositor, to use for each Sample Characteristic are shown on Exhibit 2 to Attachment A.  Except for the information shown on Exhibit 3 to Attachment A, all such compared information was in agreement.

 

4.                                      As instructed by the Sponsor, on behalf of the Depositor, we appended the information for each Contract on the Base Data File with the Provided Calculation Characteristic, which we calculated using the Provided Calculation Methodology.

 

The Base Data File, as adjusted, is hereinafter referred to as the “Data File.”

 

               

Attachment A

Page 2 of 2

 

 

5.                                      For each new and used motorcycle contract on the Data File and Preliminary Data File, we compared the account number (the “Account Number”), as shown on the Data File, to the corresponding Account Number, as shown on the Preliminary Data File, and noted that:

 

a.                                      All of the Contracts included on the Data File were included on the Preliminary Data File,

 

b.                                      28,247 of the Preliminary Contracts included on the Preliminary Data File were not included on the Data File (the “Removed Preliminary Contracts”) and

 

c.                                       13 of the Removed Preliminary Contracts were Sample Contracts (the “Removed Sample Contracts”).

 

The Removed Sample Contracts are Sample Contract Numbers 15, 23, 27, 49, 56, 60, 62, 69, 100, 119, 133, 139 and 143.

 

6.                                      For the 137 Sample Contracts included on the Data File, we compared the Sample Characteristics listed on Exhibit 2 to Attachment A (except for the current borrower state and current loan balance Sample Characteristics, which the Sponsor, on behalf of the Depositor, instructed us not to compare due to the passage of time between the Preliminary Cutoff Date and Cutoff Date), as shown on the Preliminary Data File, to the corresponding information, as shown on the Data File.  All such compared information was in agreement.

 

 

Exhibit 1 to Attachment A

 

Provided Calculation Methodology

 

For the purpose of calculating the Provided Calculation Characteristic for each Preliminary Contract on the Base Preliminary Data File and Contract on the Base Data File, as applicable, we were instructed by the Sponsor, on behalf of the Depositor, to perform the following calculation(s):

 

Provided
Calculation Characteristic

 

Calculation Methodology

 

 

 

Vehicle value

 

The sum of the PrimaryAssetValue and SecondaryAssetValue, both as shown on the Base Preliminary Data File or Base Data File, as applicable

 

 

Exhibit 2 to Attachment A

Page 1 of 2

 

Sample Characteristics and Source Documents

 

Sample Characteristic

 

Preliminary
Data File Field Name

 

Source Document(s)

 

Note

 

 

 

 

 

 

 

Account Number

 

PCD_ACCT_NBR

 

System Screen Shots

 

i.

 

 

 

 

 

 

 

Application number

 

ApplicationNumber

 

System Screen Shots

 

i.

 

 

 

 

 

 

 

Co-obligor presence

 

JointIndicator

 

System Screen Shots

 

 

 

 

 

 

 

 

 

Origination date

 

OriginationDate

 

Sales Contract

 

 

 

 

 

 

 

 

 

Original maturity date

 

OrigMaturityDate

 

System Screen Shots

 

 

 

 

 

 

 

 

 

Original loan amount

 

OriginalBal

 

Sales Contract

 

 

 

 

 

 

 

 

 

Original interest rate

 

APR_Original

 

Sales Contract

 

ii.

 

 

 

 

 

 

 

Original term

 

OriginalTerm

 

Sales Contract

 

 

 

 

 

 

 

 

 

First payment date

 

FirstPaymentDate

 

Sales Contract

 

 

 

 

 

 

 

 

 

Scheduled payment amount

 

PaymentAmount

 

Sales Contract

 

iii.

 

 

 

 

 

 

 

Vehicle manufacturer

 

AssetMake

 

Sales Contract

 

iv.

 

 

 

 

 

 

 

Vehicle model

 

AssetModel

 

Sales Contract

 

iv.

 

 

 

 

 

 

 

Model year

 

AssetYear

 

Sales Contract

 

 

 

 

 

 

 

 

 

Vehicle type (new/used)

 

NewUsed

 

Sales Contract

 

 

 

 

 

 

 

 

 

Vehicle value

 

Vehicle value

 

System Screen Shots

 

 

 

 

 

 

 

 

 

Obligor credit score

 

FICO

 

System Screen Shots

 

 

 

 

 

 

 

 

 

Current loan maturity date

 

MaturityDate

 

System Screen Shots

 

 

 

 

 

 

 

 

 

Current borrower state

 

CustomerState

 

System Screen Shots

 

 

 

 

 

 

 

 

 

Current interest rate

 

APR_Current

 

System Screen Shots

 

ii.

 

 

 

 

 

 

 

Current loan balance

 

O_PrinBal

 

System Screen Shots

 

 

 

 

Exhibit 2 to Attachment A

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Notes:

 

i.                                          For identification purposes only.

 

ii.                                       For the purpose of comparing the indicated Sample Characteristics for each Sample Contract, the Sponsor, on behalf of the Depositor, instructed us to ignore differences of +/- 0.01% or less.

 

iii.                                    For the purpose of comparing the scheduled payment amount Sample Characteristic for each Sample Contract, the Sponsor, on behalf of the Depositor, instructed us to ignore differences of +/- $0.01 or less.

 

iv.                                   For the purpose of comparing the indicated Sample Characteristics for each Sample Contract, the Sponsor, on behalf of the Depositor, instructed us to ignore differences that are due to abbreviations, truncations or punctuation.

 

We performed no procedures to determine the accuracy, completeness or reasonableness of the instructions, assumptions and methodologies provided by the Sponsor, on behalf of the Depositor, that are described in the notes herein.

 

 

Exhibit 3 to Attachment A

 

Sample Characteristic Difference

 

Sample
Contract Number

 

Sample Characteristic

 

Preliminary
Data File Value

 

Source
Document Value

 

 

 

 

 

 

 

15

 

Vehicle type (new/used)

 

N

 

U