American Banker // Does Latest Surge in Past-Due Car Loans Mean Problem is Here to Stay? - Press Mention - 03/07/2017
Insolvency, Creditors’ Rights & Financial Products Alert >> Claims Against Navient Echo Problems with Subprime Mortgage Loan Servicers - Alert - 02/23/2017
The allegations in the recent CFPB action against Navient are reminiscent of the abusive tactics that the CFPB alleged subprime mortgage servicers employed against struggling borrowers, which ultimately led to record-setting settlements. Unlike mortgage loan servicers that have had an opportunity or were required to adjust their policies and procedures in response to the subprime mortgage era litigation, student loan servicers are just now entering the crosshairs. If, under the Trump Administration, the federal government is viewed as soft on enforcing consumer protections, there is the potential for substantial private litigation. As student loan servicers have not been challenged to date, such litigation may seek to reveal vulnerabilities in their procedures that may be said to have contributed to the mounting student debt crisis. Based on the extensive battery of actions that ensnarled the mortgage industry for years, it appears the student loan servicing industry may be on the verge of following a similar course.
Insolvency, Creditors’ Rights & Financial Products Alert >> Recent Actions Against Navient May Expose Problems Contributing to the Student Loan Debt Crisis - Alert - 01/26/2017
It is uncertain how the Trump administration will deal with the student loan problem. On the one hand, his negative views of the current head of the CFPB and even regulation generally are well documented. But on the other hand, he has proposed more borrower-favorable income-based repayment plans that would allow for earlier extinguishment of debt versus current plans. Further, Trump’s inauguration speech struck a decidedly populist tone that would suggest support for the student loan borrower. Ultimately, even if the CFPB under Trump does not have an interest in pursuing the lawsuit, we may see state attorneys general pick up the charge in actively pursuing claims against student loan servicers.
Structured Creditor Investor // Heavy Burden: Student Loan Servicing Under the Spotlight - Press Mention - 01/25/2017
ValueWalk // Navient Lawsuit and Parallels Student Loans/Subprime Mortgage Crisis - Press Mention - 01/21/2017
Banking Exchange // Tick, Tick, Tick for DOJ. With Time Running Out, Feds Ramp Up Mortgage Litigation - Press Mention - 01/07/2017
Davis & Gilbert LLP Elects Five New Partners and One Counsel - Press Release - 01/04/2017
S&P Global Market Intelligence // With Time Running Out, U.S. Government Ramps up Mortgage Litigation - Press Mention - 12/29/2016
Lending Times // Is Auto Lending Headed Down the Same Path as Mortgage Lending? - Press Mention - 12/20/2016
Auto Finance News // New ABS Rule Unlikely to Escalate Disparate Impact Cases, Lawyer Says - Press Mention - 12/19/2016
Insolvency, Creditors’ Rights & Financial Products Alert >> Is Risk Retention in the Future of Marketplace Lending? - Alert - 12/14/2016
The goals of risk retention, including encouraging sound underwriting practices, would seem to have relevance in the marketplace lending context where a lender does not retain the risk of non-payment. However, if President-elect Trump can be taken at his word, the current risk retention rules will be repealed, along with Dodd-Frank, leaving the marketplace lending industry unaffected and reducing the likelihood of any separate risk retention rules for online lenders.
Auto Finance News // Credit Decline May Spur 'Big' Problems, Lawyer Says - Press Mention - 12/14/2016
Auto Finance News // Honor Finance Issues 'Risky' Deep Subprime Auto ABS, Lawyer Says - Press Mention - 12/12/2016
Insolvency, Creditors' Rights & Financial Products Alert >> Marketplace Lending Regulatory Landscape Begins to Take Shape with the OCC’s Plans for a National Charter - Alert - 12/07/2016
The OCC's plan for a fintech national charter alleviates some of the uncertainty felt by marketplace lenders in the wake of Madden v. Midland Funding, LLC. However, in determining whether to seek chartered status, marketplace lenders must weigh the benefits, including the ability to avoid state usury laws, against the regulatory burden that comes with chartered status.
ValueWalk // As Subprime Auto Loan Delinquencies Spike, Parallels And Differences With 2008 Housing Crisis Linger - Press Mention - 12/02/2016
International Financing Review // Strong Interest for Honor's High-Risk Subprime Auto Debut - IFR News - Press Mention - 12/02/2016
Law360.com // Natixis Says Suit Over $400M in RMBS Losses is Too Late - Press Mention - 08/23/2016
Structured Credit Investor // Next Steps: Madden Ruling Creates Landscape of Uncertainty - Press Mention - 07/12/2016
AltFi // Supreme Court Rejects Midland Appeal in Major Blow to Marketplace Lenders - Press Mention - 06/28/2016
Structured Credit Investor // Madden Uncertainty to Continue - Press Mention - 06/28/2016
Insolvency, Creditors' Rights & Financial Products Alert >> Challenges to Marketplace Lending Structures May Ultimately Impact Securitizations - Alert - 06/23/2016
The ripple effects of the Second Circuit’s decision Madden v. Midland may soon reach ABS backed by loans issued through marketplace lenders that use a bank origination model. Should performance of such securitizations suffer, history suggests lawsuits by and on behalf of investors will follow. At this time, both investors in and issuers of ABS backed by marketplace lending loans should consider actions to protect their respective interests going forward, including review of the representations and warranties made by lenders and issuers in existing deals and evaluation of their approach and criteria for future investments and transactions.
Insolvency, Creditors' Rights & Financial Products Alert >> Proposed Amendments to the Bankruptcy Code Could Adversely Affect Student Loan Securitizations - Alert - 06/02/2016
The historically lender-friendly aspects of student loans that have attracted so many new players to the market and investors in SLABS may be negatively impacted by proposed legislation aimed at student debt relief. At this time, both investors in and issuers of SLABS should consider actions to protect their respective interests going forward, including review of the representations and warranties made by originators and issuers in existing deals and evaluation of their approach and criteria for future investments and transactions.
Global Restructuring Review // New York Court Dismisses Madoff Trustee's Fraud Claims Against Investment Funds - Press Mention - 03/21/2016
Insolvency, Creditors' Rights & Financial Products Alert >> Opportunities Exist for Purchasers in Chapter 11 Bankruptcies, but Risks Remain - Alert - 02/03/2016
A 363 sale can present a great acquisition opportunity for potential purchasers. Under section 363 of the Bankruptcy Code, a purchaser can acquire substantially all of a debtor’s assets free and clear of any claims or interests and be confident that the bankruptcy court’s approval of the sale will not be overturned on appeal. Despite these benefits, however, purchasers should be wary of potential successor liability claims and consult with counsel to determine how best to minimize such risks.
Insolvency, Creditors' Rights & Financial Products Alert >> Regulations Targeting Auto Lending May Ultimately Increase Litigation Related To Securitizations - Alert - 01/26/2016
The run-up in subprime auto lending and securitizations is reminiscent of pre-financial crisis trends in the subprime residential mortgage market, which has resulted in significant litigation. This time around, regulations aimed at curbing abuses may contribute to a new wave of litigation involving auto loan securitizations.
At this time, both investors and sponsors should consider actions to protect their respective interests going forward, including review of representations and warranties made by originators and sponsors and examining auto loan financing processes of originators for compliance with applicable laws.