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,…
Red and blue is the new black and white, but the country could use a lot more purple. Seems few can take a position publicly these days unless it’s extreme – whether it’s a political debate or the meaning of the New York Fed’s recent Quarterly Report on Household Debt and Credit showing an uptick in subprime auto delinquency. Intelligence includes the ability to see the other side’s point of view. The truth is out there – and it can be found in the gray area between the absolutists.
There Are Reasons to Stay the Course
If you want to know the truth, no one can really predict the future of any market by themselves; everyone is limited by data and perceptions. Without shared knowledge and experience, the future remains a puzzle only time can solve. Where there is limited information, J.D. Salinger’s prediction is inevitable: “the fact is always obvious much too late.”
But in subprime auto ABS, we don’t have to succumb to Salinger’s fatalism. By taking the pulse of all types of industry participants – lenders, servicers, investors, trustees and others – Credit Chronometer’s survey will contribute to a more informed,…
Like Ali v. Frazier II and III, it’s not much of a rivalry if one side keeps winning the decision.
The battle began when the Department of Education fired a shot across the bow with its letter arguing that state laws attempting to regulate student loan servicers – whether through licensing requirements or consumer protection laws – were preempted by federal law, which calls for uniform administration of federal student loan programs. Now state victories are starting to pile up.
Given consumer disclosures are regulated under federal laws,…
No one had suffered any losses, or at least it seemed no one could remember having done so. S&P had not downgraded any subprime auto loan ABS since just after the turn of the century or any other auto loan ABS since 2011. Credit enhancements were widely deemed sufficient to absorb any worst-case scenario. With a long track record of success and protections in place, few blinked when one non-bank lender, Honor Finance, went decidedly deep down the credit scale.
It was 2016 and Honor Finance had just brought its HATS 2016-1 securitization to market….
Move over mortgages – there’s a new kind of real estate that could benefit from a new type of funding. As higher interest rates and rising prices are making affordable housing a challenge in many markets, cities can fight the problem with a small-scale solution – accessory dwelling units (ADUs).
What’s an ADU?
ADUs are additions (attached or detached) to homes or converted spaces within already existing buildings that can be used as rental units. Local governments on the west coast have become friendlier to the development of ADUs as a new housing option for strapped markets….