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ARTICLE · 07 OCTOBER 2022

Five Things To Know To Prepare For Consumer ABS Litigation

Davis+Gilbert LLP
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As performance risk grows in consumer ABS, legal risks will ensue. To negotiate best terms and prepare for potential disputes, every investor and deal party should know the ways the law...

United StatesLitigation, Mediation & Arbitration
Joseph Cioffi
Joseph Cioffi
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If economic forces such as rising consumer debt and inflation overcome deal structures and credit enhancements in consumer ABS (e.g., auto, residential mortgages, credit cards), the ensuing battles over loss allocation between noteholders and trust representatives acting on their behalf, on the one hand, and deal parties, on the other, will need to recognize recent changes in applicable law arising from litigation related to pre-financial crisis subprime RMBS.

Below is a brief look at the five most significant ways subprime RMBS disputes are likely to continue to broadly impact ABS deal structures and potential litigation, particularly among trust representatives, sponsors and originators.

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