Trends in subprime auto lending and related ABS have evoked comparisons to the subprime mortgage meltdown. Where many see an imminent crisis, others point to significant differences to pre-financial crisis subprime mortgage market and RMBS. To shed light on the issue, the Credit Chronometer has identified the main indicators of crisis – within lending practices, securitization practices and the underlying market for the assets backing the pooled loans – that foreshadowed the fall of subprime mortgages and analyzes subprime auto lending using a disciplined comparative approach.
The Subprime Auto Loan Crisis Chronometer provides a quick view of risk in the market based on the indicators of crisis and their prevalence in subprime auto lending and ABS today.
Marketplace lending, sometimes referred to in various forms as peer-to-peer, P2P or online lending, has been marked by a meteoric rise and fall to earth in 2017. Lending platforms and ABS transactions continue to be shaped by advances in fintech, regulatory uncertainty and recent major legal decisions regarding “true lender,” “valid when made” and the application of usury laws. A technologically savvy consumer base creates the potential for marketplace lenders to outperform their traditional counterparts. The Credit Chronometer offers in-depth analysis and advice for avoiding the pitfalls that have historically led to shorter growth cycles and battles over loss distribution.
Pre-financial crisis subprime RMBS litigation may be entering a new phase, moving on from fraud and repurchase actions brought by investors against sponsors and sellers to new actions by deal participants to recoup litigation losses from one another. The risk of new government actions and investigations continues. The Credit Chronometer identifies litigation trends and the merits of potential claims.
After a long dormancy, subprime RMBS has made a comeback. The Credit Chronometer is on the lookout for history repeating itself and identifies best practices to avoid issues of the past.
Property Assessed Clean Energy (PACE) financing is one of the fastest growing, and most controversial, type of financing, in which environmentally efficient home improvements are repaid through an assessment on the real property. Issues exist for all participants: borrowers, who are unaware of their repayment obligations; local governments, who are tasked with reporting defaults and enforcing obligations owed to private lenders; investors, who are often in the dark as to borrower defaults; and lenders, who face uncertain rules and regulations. The survival of the industry may soon require a significant shift in practices. The Credit Chronometer closely follows all aspects of this dynamic market and analyzes the issues from the perspective of past turning points and industry shifts.
James R. Serritella
James R. Serritella is a partner in the Insolvency, Creditors’ Rights & Financial Products Practice Group of Davis & Gilbert and his practice focuses on complex litigation in the financial services sector, bankruptcy litigation and insurance recovery on behalf of policyholders. James has also written for several publications, including Pratt’s Journal of Bankruptcy Law and The Banking Law Journal. In recognition of his achievements, James was selected as a Rising Star by New York Metro Super Lawyers (2015-2017). For James’ full background, click here.
Seiji Newman is counsel in the Insolvency, Creditors’ Rights & Financial Products Practice Group of Davis & Gilbert. Seiji’s practice focuses on complex commercial litigation, including disputes relating to the financial services sector, class actions, bankruptcy, residential mortgage-backed securities (RMBS), and real estate. He practices in both trial and appellate courts, representing a wide spectrum of clients as both plaintiff and defendant. For Seiji’s full background, click here.
Massimo Giugliano is counsel in the Corporate and Insolvency, Creditors’ Rights & Financial Products Practice Groups of Davis & Gilbert. Massimo advises financial institutions and service sector businesses in connection with a broad range of insolvency-related matters and credit transactions. In recognition of his achievements, Massimo was selected as a Rising Star by New York Metro Super Lawyers (2016-2017). For Massimo’s full background, click here.
Davis & Gilbert’s Insolvency, Creditors’ Rights & Financial Products Practice Group represents clients in a broad range of corporate finance, insolvency and litigation matters. The group regularly prosecutes and defends litigation involving complex financial instruments, guides clients through financially distressed situations and helps formulate and execute creditor enforcement strategies, including foreclosure under the Uniform Commercial Code. The group also advises on a full range of financing transactions, including secured revolving and term credit facilities, receivable financing arrangements, intercreditor agreements, warehouse lending facilities and loan purchase agreements.Their practice covers a wide range of litigation involving financing transactions and complex financial products. The broad and diverse experience of their attorneys, who come from litigation, bankruptcy and corporate backgrounds, makes them particularly well-equipped to advise clients in rapidly evolving industries, such as, marketplace lending, auto loans, student loans and PACE (Property Assessed Clean Energy) loans.
The group has been actively involved in many of the most notable and highly visible business events in recent years related to the last economic downturn and have vast experience in the area of residential mortgage lending from the operation of origination platforms to defending repurchase (put-back) and fraud actions in residential mortgage-backed securities (RMBS) litigation. For more information about the Insolvency, Creditors’ Rights & Financial Products Practice Group, click here.