From RMBS to SLABS: Is History Repeating Itself?

The fallout from the last financial crisis and recession is far from over. More than a decade after the demise of Lehman and Bear Stearns, among others, litigation continues related to alleged deficiencies in mortgage loans securitized as part of residential mortgage-backed securities (RMBS) offerings. Our firm thus remains extremely busy with, for example, defense of mortgage loan originators and brokers sued for purported breaches of contractual indemnification provisions and representations and warranties — regarding loans sold prior to 2008. We must also be attentive, however, to various candidates for an extremely dubious distinction: the next financial “bubble” to burst. One of them garnering significant concern is student loan asset-backed securities, or “SLABS.” Like RMBS, SLABS are securities backed by income streams generated by loans to individuals.  RMBS are generated from collateralized mortgages, while SLABS are based on…

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