State officials aren’t far behind the federal government in the present crackdown on auto lenders, especially in the subprime segment.
That means lenders -- and indirectly, dealers -- have more to worry about than just the Consumer Financial Protection Bureau.
The New York Department of Financial Services in December announced a settlement worth $3 million in penalties plus another $8 million to $9 million in consumer refunds, in the case of subprime auto lender Condor Capital Corp.
A court order had prevented Condor Capital, of Hauppauge, N.Y., from originating any new loans since last April. In a consent order, the lender agreed to sell off its remaining outstanding loans.
In April Condor Capital had more than $300 million in outstanding loans for customers in 30 states, according to court documents and the company’s website. The state said Condor Capital had failed to make required refunds, was careless with customer records and suffered from a “complete lack of policies, procedures and controls.”
In a separate case, the Massachusetts state attorney general’s office last week confirmed press reports that Massachusetts was one of the “several” states cited by Santander Consumer USA in a Securities and Exchange Commission filing in November.
Santander, of Dallas, said the states had requested “documents and communications that, among other things, relate to the origination, underwriting and securitization of auto loans for varying time periods since 2007.”
The New York and Massachusetts actions echo those by federal regulators. In making its complaint against Condor Capital, the New York Department of Financial Services cited the federal Dodd-Frank consumer protection law of 2010, the same law that created the Consumer Financial Protection Bureau.
And the language in Santander’s disclosure regarding state information requests sounds similar to that in disclosures by several other lenders citing information requests from the U.S. Department of Justice and SEC.