Some ABS pros are predicting a small wave of seller/servicer disruptions resulting from the increased financial disclosure environment and the personal liability written into the Sarbanes-Oxley Act of 2002.

The fear is that public specialty finance companies with niche-like servicing exposures, such as residual devaluation, may be prompted to disclose what otherwise might have been swept under the rug. The resulting impairment charges, in turn, could spur investor lawsuits and/or breaches of warehouse covenants, particularly should stock prices tumble.

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