Expert Analysis: Financial Crisis Anniversary - Trends In Credit Crisis Settlements

Tue Sep 19 09:46:53 EDT 2017
By Faten Sabry, Sungi Lee, and Linh Nguyen

Ten years after the beginning of the US credit crisis, financial experts are working to examine what happened and address its repercussions. The legal realm is still busy with various settlements, particularly those related to mortgage-backed securities (MBS). In a bylined article for Law360, NERA Bankruptcy Chair Dr. Faten Sabry, Consultant Sungi Lee, and Senior Analyst Linh Nguyen present highlights from their credit crisis whitepaper “Not All MBS Settlements Are Equal” as part of Law360’s Expert Analysis special series that looks back at the crisis and where we stand today.

The authors provide an overview of credit crisis-related settlement activity and trends in litigation-related and non-litigation settlements. Settlements to do with mortgage-backed securities made up 73% of litigation-related settlements between 2007 and July 2017. The team finds, among other things, “that class action settlements have, on average, much lower settlement ratios than settlements with the government agencies or monoline insurers.” Though litigation-related MBS settlements began to slow after 2014, a handful of important crisis-related lawsuits and investigations are still ongoing.