Beware The Boilerplate: Introduction

If there's anything we've learned from this Great Recession, it's that better loans make better asset-backed securities. While lots of attention has been focused on loan quality in terms of underwriting, not much has been said about how the quality of loan documents themselves affect collectability and, by extension, value to the pool. But when the time comes to enforce a loan or guaranty, the devil is in the drafting—not just of the negotiated terms, but of those standard provisions often copied from one transaction to another. Over the next few weeks, we'll look at several standard "boilerplate" provisions found in loan documents, and discuss why it just might be time to give your forms a second look.