Impact of Regulation AB on Auto Loan and Lease Securitization

Abstract

The purpose of this article is to identify provisions in SEC Regulation AB that will change the way public offerings of auto asset-backed securities are conducted, and to analyze various approaches that transaction parties may adopt to comply with these rules. Auto securitization sponsors and servicers should begin the process of reviewing their underwriting, servicing, and compliance procedures in order to comply with this regulation. Most auto securitization issuers will need to re-write much of their standard disclosure in order to tailor it to the new requirements of Regulation AB. In addition, a greater degree of cooperation in developing disclosure will be required from non-affiliates of the securitization sponsor such as trustees, non-affiliated originators, third-party credit enhancement providers, and derivate counterparties.