About

Timing Matters. Stay Ahead with Credit Chronometer.


Economic, market and political events shape the legal landscape and impact loan and credit markets, each time moving us closer or farther away from a cycle's end, a crisis' beginning or the next boom. From the perspective of lawyers and other professionals who have lived through past cycles, the Credit Chronometer™ is dedicated to analyzing the effects of these events on future performance and participants' legal exposure.

Certain markets warrant special attention due to risky practices, an evolving regulatory environment or dynamic market forces.



 

Main Markets Covered


Trends in subprime auto lending and related ABS have evoked comparisons to the subprime mortgage meltdown. Where many see an imminent crisis, others point to significant differences to pre-financial crisis subprime mortgage market and RMBS. To shed light on the issue, the Credit Chronometer has identified historical indicators of crisis – within lending practices, securitization practices and the underlying market for the assets backing the pooled loans – and analyzes the market using a disciplined comparative approach.

The Subprime Auto Loan Crisis Chronometer provides a quick view of risk in the market based on the indicators of crisis and their prevalence in subprime auto lending and ABS today.


Marketplace lending, in the broadest sense including peer-to-peer and online lending, continues to be shaped by advances in fintech, regulatory uncertainty and major legal decisions regarding “true lender,” “valid when made” concepts and the application of usury laws. A technologically savvy consumer base creates the potential for marketplace lenders to outperform their traditional counterparts and their successes are providing lessons to be learned by traditional lenders. The Credit Chronometer offers analysis and advice for avoiding the pitfalls that have historically led to shorter growth cycles and battles over loss distribution.


With the escalating cost of higher education and vocational training, student loans are now the second largest source of household debt in the US behind mortgages. Delinquency rates are high relative to historical levels and to other types of consumer debt. A greater understanding of the issues – the large concentration of smaller loans owed by students that did not graduate or attended for-profit schools is a greater issue than the size of the overall debt level – could lead to both reforms benefiting students and opportunities in education finance. The Credit Chronometer provides insight that helps separate fact from fiction.


Pre-financial crisis subprime RMBS litigation may be entering a new phase, moving on from fraud and repurchase actions brought by investors against sponsors and sellers to new actions by deal participants to recoup litigation losses from one another. The Credit Chronometer identifies litigation trends and the merits of potential claims.

After a long dormancy, subprime RMBS has made a comeback. The Credit Chronometer is on the lookout for history repeating itself and identifies best practices to avoid issues of the past.


Property Assessed Clean Energy (PACE) financing, in which environmentally efficient home improvements are repaid through an assessment on the real property, has grown in recent years, but not without controversy. Issues exist for all participants: borrowers, who are unaware of their repayment obligations; local governments, who are tasked with reporting defaults and enforcing obligations owed to private lenders; investors, who may be in the dark as to borrower defaults; and lenders, who face uncertain rules and regulations. The survival of the industry may soon require a significant shift in practices. The Credit Chronometer closely follows all aspects of this dynamic market and analyzes the issues from the perspective of past turning points and industry shifts.


 

 

Contributors

 

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Joseph Cioffi | Primary Author

Joseph Cioffi is a partner at Davis & Gilbert in New York City where he is Chair of the Insolvency, Creditors’ Rights & Financial Products Practice Group, a multidisciplinary practice spanning corporate, insolvency and litigation. He has a unique perspective afforded by his experience in all stages of credit and market cycles, including in subprime lending investments, operations and litigation. Joseph and his group have been deeply involved in disputes and litigation resulting from the last financial crisis. He has written for or has been quoted by numerous publications, including American Banker, Law360, Asset Securitization Reporter, The Banking Law Journal, The Journal of Bankruptcy Law and Auto Finance News, regarding auto loans, student loans, marketplace lending, subprime residential mortgage-backed securities (RMBS) and PACE (Property Assessed Clean Energy) financing.

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James R. Serritella

James R. Serritella is a partner in the Insolvency, Creditors' Rights & Financial Products Practice Group of Davis & Gilbert and his practice focuses on complex litigation in the financial services sector, bankruptcy litigation and insurance recovery on behalf of policyholders. James has also written for several publications, including Pratt's Journal of Bankruptcy Law and The Banking Law Journal. In recognition of his achievements, James was selected as a Rising Star by New York Metro Super Lawyers (2015-2018).

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Seiji Newman

Seiji Newman is counsel in the Insolvency, Creditors' Rights & Financial Products Practice Group of Davis & Gilbert. Seiji's practice focuses on complex commercial litigation, including disputes relating to the financial services sector, class actions, bankruptcy, residential mortgage-backed securities (RMBS), and real estate. He practices in both trial and appellate courts, representing a wide spectrum of clients as both plaintiff and defendant.

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Massimo Giugliano

Massimo Giugliano is counsel in the Corporate and Insolvency, Creditors' Rights & Financial Products Practice Groups of Davis & Gilbert. Massimo advises financial institutions and service sector businesses in connection with a broad range of insolvency-related matters and credit transactions. In recognition of his achievements, Massimo was selected as a Rising Star by New York Metro Super Lawyers (2016-2018). 

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Insolvency, Creditors' Rights & Financial Products Group

Davis & Gilbert’s Insolvency, Creditors’ Rights & Financial Products Practice Group represents clients in a broad range of corporate, insolvency and litigation matters. The group has been actively involved in many of the most notable and highly visible business events in recent years related to the last economic downturn and has vast experience in the area of subprime lending, including the operation of origination platforms, relationships with servicers and defending large-scale asset-backed securities litigation. The broad and diverse experience of their attorneys makes them particularly well-equipped to advise clients in rapidly evolving markets, such as, those for auto loans, student loans, marketplace lending, mortgage loans and PACE (Property Assessed Clean Energy) financing.  Additional highlights of the practice include the following:

Litigation: The group regularly prosecutes and defends litigation involving complex financial transactions and instruments and has defended residential mortgage-backed (RMBS) securitization litigation, including fraud and repurchase claims, involving nearly $2 billion in claims.

Bankruptcy: The group guides clients through financially distressed situations and helps formulate and execute creditor enforcement strategies, in particular, in the case of intermediaries facing obligations to third parties. The group has defended nearly $1 billion in fraudulent transfer claims brought by the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC.

Corporate: The group also advises on a full range of financing transactions, including secured revolving and term credit facilities, receivable financing arrangements, intercreditor agreements, warehouse lending facilities and loan purchase agreements.

For more information about the Insolvency, Creditors’ Rights & Financial Products Practice Group, click here.



 

Davis & Gilbert LLP

Davis & Gilbert LLP is a strategically focused, full-service mid-sized law firm of more than 130 lawyers. Founded over a century ago and located in New York City, the firm represents a wide array of clients – ranging from small, independent start-ups to some of the world’s largest public companies and financial institutions – throughout the United States and internationally. Davis & Gilbert has practices focusing on Corporate; Litigation; Real Estate; Intellectual Property; Insolvency, Creditors’ Rights & Financial Productions; Taxation; Benefits & Compensation; Labor & Employment; Private Client Services; Advertising, Marketing & Promotions; Digital Media, Technology & Privacy; and Entertainment, Media & Sports. Davis & Gilbert is ranked in publications and legal directories such as Chambers USA, The Legal 500 United States, and “Best Law Firms” by U.S. News & World Report – Best Lawyers®, and is consistently recognized in The BTI Consulting Group’s “Client Service A-Team” (2012-2019).