July 19, 2021

New York Law Journal

Our previous article on this topic outlined the challenging issue of LIBOR transition—that is, moving from LIBOR to another benchmark rate—for asset-backed securities such as residential mortgage-backed securities (RMBS), and particularly, the complication created by there being two levels of transition:  LIBOR-indexed mortgage notes that are assets of an RMBS securitization trust, and LIBOR-indexed interest rates paid on the securities issued by the securitization trust.

Here, we discuss legislative solutions—both one that already has been enacted and another that has been proposed—to the problem of LIBOR transition in securitization trusts.  These solutions address some of the LIBOR transition challenges, but uncertainty—and hence substantial litigation risk—remains on their ultimate scope or effectiveness.

Coverage of the case can be found here: