Mercedes-Benz Auto Trust Flags Servicing Lapses, Trustee Faces RMBS Suits

TL;DR

Mercedes-Benz's auto loan trust revealed minor servicing compliance failures and its trustee is embroiled in significant RMBS litigation, signaling potential operational and legal headwinds for asset-backed securities.

AI Summary

The Mercedes-Benz Auto Receivables Trust 2023-2 10-K filing for the fiscal year ended December 31, 2025, primarily details compliance with servicing criteria and legal proceedings, rather than traditional revenue or net income figures for the trust itself. Mercedes-Benz Financial Services USA LLC, as Servicer, reported two material instances of noncompliance with servicing criteria under Item 1122(d)(4)(vii). Specifically, the Servicer failed to send a post-repossession notice within the required timeframe for one defaulted receivable and did not send a pre-repossession notice for one receivable released from bankruptcy, both of which were not part of the assets backing the Notes. The Servicer plans to modify workflow processes, reporting, and provide additional training to address these issues. U.S. Bank Trust Company, National Association, as Indenture Trustee, reported no material instances of noncompliance. The filing also disclosed ongoing legal proceedings against U.S. Bank National Association related to its role as trustee for certain residential mortgage-backed securities (RMBS) trusts and student loan-backed securities (DSTs), including the NCMSLT Action filed on March 9, 2018, though U.S. Bank denies liability in these cases.

Why It Matters

This filing provides crucial transparency for investors in asset-backed securities, highlighting operational risks within the servicing function of Mercedes-Benz Financial Services USA LLC, even if the specific non-compliant receivables were not part of the trust's assets. The ongoing legal challenges faced by U.S. Bank National Association, a key Indenture Trustee, could impact its capacity or reputation, potentially affecting future trust structures or increasing scrutiny on existing ones. For customers, these servicing lapses, though minor in this instance, underscore the importance of timely communication in default and bankruptcy scenarios. The competitive landscape for auto ABS trusts demands robust compliance, and these reported issues could prompt other issuers to review their own servicing protocols.

Risk Assessment

Risk Level: medium — The risk level is medium due to the reported material instances of noncompliance by Mercedes-Benz Financial Services USA LLC, as Servicer, under Item 1122(d)(4)(vii), even though the specific receivables were not part of the trust's assets. Additionally, the Indenture Trustee, U.S. Bank National Association, is involved in multiple significant legal proceedings concerning its trustee roles in RMBS and student loan trusts, which could pose reputational or operational risks to the trust's administration.

Analyst Insight

Investors should scrutinize the Servicer's remediation plans for the identified compliance failures and monitor the progress of the legal proceedings against U.S. Bank National Association. While the direct impact on this specific trust's notes is currently limited, these issues could signal broader systemic risks in asset-backed securities servicing and trustee oversight, warranting a review of other ABS holdings with similar structures or participants.

Key Numbers

• 2 — Material instances of noncompliance (Reported by Mercedes-Benz Financial Services USA LLC as Servicer for the fiscal year ended December 31, 2025.)
• 2025-12-31 — Fiscal year end date (The period covered by the 10-K filing.)
• 2023-10-01 — Indenture and Trust Agreement effective date (Key agreements governing the trust were dated as of this date.)
• 2018-03-09 — Date of NCMSLT Action filing (Lawsuit against U.S. Bank National Association regarding student loan-backed securities.)

Key Players & Entities

• Mercedes-Benz Auto Receivables Trust 2023-2 (company) — Issuing Entity
• Mercedes-Benz Financial Services USA LLC (company) — Sponsor and Servicer
• U.S. Bank Trust Company, National Association (company) — Indenture Trustee
• Wilmington Trust, National Association (company) — Owner Trustee
• Christian Rottenkolber (person) — Vice President and Chief Financial Officer of Servicer
• Mercedes-Benz Retail Receivables LLC (company) — Depositor
• BofA Securities, Inc. (company) — Underwriter
• BNP Paribas Securities Corp. (company) — Underwriter
• SMBC Nikko Securities America, Inc. (company) — Underwriter
• Clayton Fixed Income Services LLC (company) — Asset Representations Reviewer

FAQ

Risk Factors

• Litigation against Indenture Trustee [medium — legal]: U.S. Bank National Association, as Indenture Trustee, is involved in multiple lawsuits related to its role in RMBS and DST trusts. These cases allege failures to enforce repurchase obligations, notify securityholders of defaults, and abide by heightened standards of care. The NCMSLT Action, filed on March 9, 2018, concerning student loan-backed securities, is currently stayed pending resolution of other disputes.
• Servicing Noncompliance [low — operational]: Mercedes-Benz Financial Services USA LLC, as Servicer, reported two material instances of noncompliance with servicing criteria for the fiscal year ended December 31, 2025. These involved a missed post-repossession notice and a missed pre-repossession notice for receivables not backing the Notes. The Servicer is implementing workflow modifications and additional training to address these issues.

Industry Context

The auto finance industry is characterized by intense competition among lenders, with a focus on efficient servicing and risk management. Trends include increasing digitalization of loan origination and servicing, evolving regulatory landscapes, and the impact of economic conditions on consumer credit quality and vehicle sales.

Regulatory Implications

The filing highlights the importance of adhering to servicing criteria as mandated by Regulation AB. Non-compliance, even for immaterial assets, can lead to scrutiny and require corrective actions. Ongoing litigation involving trustees can also create uncertainty and potential reputational risks for the securitization market.

What Investors Should Do

1. Monitor Servicer Compliance
2. Assess Indenture Trustee Litigation Risk

Key Dates

• 2025-12-31: Fiscal year end — Marks the end of the reporting period for the 10-K filing, detailing compliance and legal matters.
• 2018-03-09: NCMSLT Action filing — Initiation of a significant lawsuit against U.S. Bank National Association concerning student loan-backed securities, which remains ongoing and has been stayed.

Glossary

Servicer

The entity responsible for managing and servicing the pool of auto receivables, including collecting payments and handling defaults. (Mercedes-Benz Financial Services USA LLC acts as the Servicer and is subject to servicing criteria compliance.)

Indenture Trustee

A financial institution appointed to hold the trust's assets and act on behalf of the noteholders, ensuring compliance with the indenture agreement. (U.S. Bank Trust Company, National Association is the Indenture Trustee and its legal proceedings are disclosed.)

Regulation AB

SEC rules governing the registration, reporting, and disclosure requirements for asset-backed securities. (The filing adheres to various items within Regulation AB, particularly concerning servicing criteria and legal proceedings.)

RMBS

Residential Mortgage-Backed Securities, which are bonds backed by pools of residential mortgages. (U.S. Bank is involved in litigation related to its role as trustee for RMBS trusts.)

DSTs

Delaware Statutory Trusts, often used as entities for securitization transactions. (U.S. Bank is involved in litigation concerning DSTs that issued securities backed by student loans.)

Year-Over-Year Comparison

This filing for the fiscal year ended December 31, 2025, focuses on servicing compliance and legal proceedings rather than financial performance metrics of the trust itself. The previous year's filing (not provided) would likely have contained similar disclosures regarding servicing criteria and any material legal matters involving the trust's parties.

Filing Documents

• mbart20232_10k_32026.htm (10-K) — 109KB
• e311_mbart20232.htm (EX-31) — 10KB
• e331_mbenserv23.htm (EX-33) — 65KB
• e332_ubtcintr.htm (EX-33) — 97KB
• e341_mbenserv23.htm (EX-34) — 14KB
• e342_ubtcintr.htm (EX-34) — 9KB
• e351_mbenserv23mbart20232.htm (EX-35) — 6KB
• 0001853620-26-000091.txt ( ) — 311KB

Unresolved

Item 1B. Unresolved Staff Comments. Nothing to report. The following Items have been omitted in accordance with General Instruction J(1) to Form 10-K: Item 1. Business. Item 1A. Risk Factors. Item 1C. Cybersecurity. Item 2. Properties. Item 3. Legal Proceedings. Item 4. Mine Safety Disclosures. PART II

Other

Item 9B. Other Information. Nothing to report. 1 The following Items have been omitted in accordance with General Instruction J(1) to Form 10-K: Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Item 8. Financial Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Item 9A. Controls and Procedures. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections PART III The following Items have been omitted in accordance with General Instruction J(1) to Form 10-K: Item 10. Directors, Executive Officers and Corporate Governance. Item 11. Executive Compensation. Item 12. Security Item 13. Certain Relationships and Related Transactions, and Director Independence. Item 14. Principal Accountant Fees and Services. PURSUANT TO GENERAL INSTRUCTION J(2) THE FOLLOWING SUBSTITUTE INFORMATION IS BEING PROVIDED IN THIS REPORT ON FORM 10-K:

(b)

Item 1112(b) of Regulation AB. Significant Obligors of Pool Assets – Financial Information. Nothing to report.

(b)(2)

Item 1114(b)(2) of Regulation AB. Credit Enhancement and Other Support, Except for Certain Derivatives Instruments – Financial Information. Nothing to report.

(b)

Item 1115(b) of Regulation AB. Certain Derivatives Instruments – Financial Information. Nothing to report. Item 1117 of Regulation AB. Legal Proceedings. There are no legal proceedings pending, or any proceedings known to be contemplated by governmental authorities, against the Sponsor, the Depositor, U.S. Bank Trust Company, National Association (the "Indenture Trustee"), Wilmington Trust, National Association (the "Owner Trustee"), the Issuing Entity, or any property thereof, that are material to holders of the Asset Backed Notes issued by the Issuing Entity (the "Notes”), except to the extent set forth below with respect to the Indenture Trustee. 2 The Indenture Trustee has provided the information contained in the following five paragraphs for purposes of compliance with Regulation AB: U.S. Bank National Association (“U.S. Bank”) and other large financial institutions have been sued in their capacity as trustee or successor trustee for certain residential mortgage backed securities ("RMBS") trusts. The complaints, primarily filed by investors or investor groups against U.S. Bank and similar institutions, allege the trustees caused losses to investors as a result of alleged failures by the sponsors, mortgage loan sellers and servicers to comply with the governing agreements for these RMBS trusts. Plaintiffs generally assert causes of action based upon the trustees’ purported failures to enforce repurchase obligations of mortgage loan sellers for alleged breaches of representations and warranties, notify securityholders of purported events of default allegedly caused by breaches of servicing standards by mortgage loan servicers and abide by a heightened standard of care following alleged events of default. U.S. Bank denies liability and believes that it has performed its obligations under the RMBS trusts in good faith, that its actions were not the cause of losses to investors, that it h

(b) below

Item 15(b) below. (b) Exhibits Required by Item 601 of Regulation S-K 4 Exhibit Number Description 1.1

Underwriting

Underwriting Agreement, dated October 19, 2023, among Mercedes-Benz Retail Receivables LLC, Mercedes-Benz Financial Services USA LLC and BofA Securities, Inc., BNP Paribas Securities Corp. and SMBC Nikko Securities America, Inc.,, as representatives of the several underwriters named therein (included in Exhibit 1.1 to the Form 8-K of the Issuing Entity, as filed with the SEC on October 23, 2023, which is incorporated herein by reference). 3.1 Certificate of Formation of Mercedes-Benz Retail Receivables LLC (included in Exhibit 3.1 to the Registration Statement on Form SF-3 of Mercedes-Benz Retail Receivables LLC, No. 333-266303, as filed with the SEC on July 22, 2022, which is incorporated herein by reference). 3.2 Limited Liability Company Agreement of Mercedes-Benz Retail Receivables LLC (included in Exhibit 3.2 to the Form 8 K/A of Mercedes-Benz Auto Receivables Trust 2022-1 (cik: 0001951118), as filed with the SEC on November 18, 2022, which is incorporated herein by reference). 4.1 Indenture, dated as of October 1, 2023, between the Issuing Entity and U.S. Bank Trust Company, National Association, as indenture trustee (included in Exhibit 4.1 to the Form 8-K of the Issuing Entity, as filed with the SEC on October 26, 2023, which is incorporated herein by reference). 4.2 Amended and Restated Trust Agreement, dated as of October 1, 2023, between Mercedes-Benz Retail Receivables LLC, as depositor, and Wilmington Trust, National Association, as owner trustee (included in Exhibit 4.2 to the Form 8-K of the Issuing Entity, as filed with the SEC on October 26, 2023, which is incorporated herein by reference). 10.1 Sale and Servicing Agreement, dated as of October 1, 2023, among the Issuing Entity, Mercedes-Benz Retail Receivables LLC, and Mercedes-Benz Financial Services USA LLC, as seller and as servicer (included in Exhibit 10.1 to the Form 8-K of the Issuing Entity, as filed with the SEC on October 26, 2023, which is incorporated herein by refer

SIGNATURES

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Mercedes-Benz Auto Receivables Trust 2023-2 (Issuing Entity) By: Mercedes-Benz Financial Services USA LLC (Servicer) By: /s/ Rottenkolber Name: Christian Rottenkolber Title: Vice President and Chief Financial Officer (senior officer in charge of the servicing function for the Servicer) Dated: March 25, 2026 7 EXHIBIT INDEX Exhibit Number Description 1.1 Underwriting Agreement, dated October 19, 2023, among Mercedes-Benz Retail Receivables LLC, Mercedes-Benz Financial Services USA LLC and BofA Securities, Inc., BNP Paribas Securities Corp. and SMBC Nikko Securities America, Inc.,, as representatives of the several underwriters named therein (included in Exhibit 1.1 to the Form 8-K of the Issuing Entity, as filed with the SEC on October 23, 2023, which is incorporated herein by reference). 3.1 Certificate of Formation of Mercedes-Benz Retail Receivables LLC (included in Exhibit 3.1 to the Registration Statement on Form SF-3 of Mercedes-Benz Retail Receivables LLC, No. 333-266303, as filed with the SEC on July 22, 2022, which is incorporated herein by reference). 3.2 Limited Liability Company Agreement of Mercedes-Benz Retail Receivables LLC (included in Exhibit 3.2 to the Form 8 K/A of the Mercedes-Benz Auto Receivables Trust 2022-1 (cik: 0001951118), as filed with the SEC on November 18, 2022, which is incorporated herein by reference). 4.1 Indenture, dated as of October 1, 2023, between the Issuing Entity and U.S. Bank Trust Company, National Association, as indenture trustee (included in Exhibit 4.1 to the Form 8-K of the Issuing Entity, as filed with the SEC on October 26, 2023, which is incorporated herein by reference). 4.2 Amended and Restated Trust Agreement, dated as of October 1, 2023, between

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