Historically, investors in subprime auto asset-backed securities (ABS) have been able to sleep well at night. They have rested easy in part because credit enhancements in securitizations have protected them from losses. Today, due in large part to the safety expected from credit enhancements, rumblings about the parallels between subprime auto lending and pre-financial crisis subprime mortgage lending – and the cataclysmic end those parallels could portend – have barely disturbed the subprime auto ABS market.
Overcollateralization (O/C) rates are often touted as particularly protective for subprime auto ABS. It’s true, of course: As investors have rightfully demanded greater O/C rates on riskier pools,…
Bright, shiny objects are hard to resist. Like the glowing orb cast by the anglerfish – the last thing its prey sees before the deadly bite – subprime lending is back with the potential for profits shining like a beacon. There are several ways for lenders and investors to grab a piece of the action, but are the latest moves tempting a fate similar to 2007?
There’s smoke . . .
Although the housing market has been a relative sea of calm in recent years, the mortgage market has slowed down….
It’s been said that a war doesn’t determine who is right, but rather, who is left.
Although there’s been much talk of an epic battle between states and the federal government that will determine the scope of federal preemption in the student loan space, it’s not going to be much of a fight if only one side shows up. If current trends hold, it looks like states will be left to dominate the legal landscape of consumer protection.
In the wake of statements by the resigning student loan ombudsman at the Bureau of Consumer Financial Protection that current political leadership has repeatedly undermined the Bureau’s efforts to protect consumers,…
It’s back to school time, and there’s so much noise about a student loan crisis that there’s a need to corral all the noisemakers and to gain an understanding of what’s actually going on. Sister Mary Elephant had the right idea when she scolded her classroom to be quiet some 40 years ago.
It does sound pretty bad. Student debt surpassed $1.5 trillion earlier this year, and it’s estimated that nearly 40 percent of borrowers will default on their student loans by 2023. But talks of a collapse are not marrying up with performance and other data….
There’s a caution flag out for subprime auto loan securitizations.
The Class C tranche of Honor Finance’s HATS 2016-1 – the deal that jump-started the debate as to how low deep subprime issuances could go before subprime auto ABS’s reputation for safety would be blemished – has been downgraded by S&P and KBRA. And now, what investors looked for yesterday is likely different than what investors will look for today. Two areas to watch: the strength of management and the level of credit enhancements. Rating agencies are sensitive to both,…
Originations and Issuances, by the Numbers
To date since the inception of Property Assessed Clean Energy (PACE) financing, $5.17 billion has been advanced to homeowners under residential PACE (R-PACE) programs, and an additional $672 million has been advanced for commercial PACE (C-PACE) projects. In 2017, R-PACE originations totaled $1.6 billion, down 6% compared with 2016. In 2018 so far, R-PACE originations have reached $372 million. C-PACE originations, on the other hand, are on the rise, totaling $251.4 million in 2017, which is almost double 2016’s volume. So far in 2018, C-PACE originations have reached $84.8 million….