Beyond COVID-19’s impact on the public’s health and safety, massive unemployment and extreme economic uncertainty are causing a realignment of Americans’ financial priorities in ways that may shape the credit markets for years to come. This is especially true for those exposed to the most financially vulnerable of borrowers, such as, sub-prime auto asset-backed securities (ABS). With the prospect of rising delinquencies and investor losses, the market is nearing the event horizon of litigation on behalf of investors that mirrors the battles over loss allocations that ensued, and continues to this day, as a result of the last financial crisis.
It’s time for sub-prime auto participants to become familiar with the roadmap provided by nearly a decade of sub-prime residential mortgage-backed securities (RMBS) litigation.