The Future Of Auto Lease Securitization ~ Part 1

For years, participants in the securitization market have predicted a dramatic increase in the issuance of auto lease-backed securities. This article examines the "retitling problem," the most important reason this increase has failed to materialize; the use of titling trusts to solve the retitling problem; and issues that arise in the creation of a titling trust and the securitization of auto leases.

I. Introduction

Auto leasing has quickly become popular among consumers, particularly for luxury autos. As new car prices have become less favorable for the average consumer, people have jumped at the opportunity to drive a better car with little or no down payment and to make monthly lease payments that are lower than the loan payments would be if they had bought the car. The people who always want to drive a new car rather than an older car normally would sell a car after two or three years and invest the proceeds in another new car. Because drivers who lease vehicles do not have to