Securities and Finance

Credit Crisis Litigation

Over the past few years, credit markets contracted quickly, as several economic factors caused the credit boom to stop and a meltdown to start. These factors include the rise in short-term and long-term interest rates and the decrease in the rate of home price appreciation, as well as declines in home prices. The credit crisis affected all areas of subprime lending, including auto loans and credit cards, and spilled over into prime lending. Problems in the lending market affect a broad array of stakeholders. Examples of disputes that have arisen include allegations of predatory lending, misrepresentation and omissions related to the valuation of the loans and the profits from selling or servicing them, suitability of investments, breach of contract related to loan servicing, and fraudulent conveyance issues.

Resolving these issues requires a deep understanding of the economic foundations and roles of each stakeholder in the subprime lending market; an understanding of how that market performed over time; and a broad, objective analysis of the events that caused the meltdown. NERA experts have substantial background in the subprime lending market and experience with litigation among the stakeholders in that market, including our work in the previous subprime market crash in 1998.

We are working with clients to better understand and navigate the fallout from the dramatic collapse of the subprime lending industry. Our expertise in this area includes:

Bankruptcy Issues

• Analyzing market factors and what was reasonably known at the time of a transaction
• Determining fair market values of loan portfolio and other assets
• Conducting econometric analysis of defaults
• Assessing solvency and capital adequacy
• Examining fraudulent conveyance issues
• Performing deepening insolvency analysis

Portfolio Performance Analysis

• Analyzing causes of collateral failure
• Examining due diligence procedures
• Using statistical analysis to evaluate the quality of loan servicing

Securities Fraud Class Actions

Complex Commercial Disputes

Accounting

• Estimating expected loan losses
• Assessing collateral performance reporting
• Analyzing accountant and auditor liability
• Conducting forensic accounting analyses