Nearly 6,000 Michigan automotive customers will be eligible for relief and possible loan forgiveness from Santander Consumer USA as part of the settlement agreed to between the subprime lender and a coalition of state attorneys general.
Santander allegedly violated consumer protection laws by placing borrowers with subprime credit into auto loans it knew carried a high probability of default, according to the settlement announced last month with attorneys general in 33 states and the District of Columbia.
Michigan Attorney General Dana Nessel said in a statement Monday that the 5,925 consumers have been identified and will each receive a $225 relief payment. A portion of those consumers will qualify for loan forgiveness, Nessel's office said.
"Many individuals who enter into subprime lending agreements are working to build their credit and have few other options to obtain financing for a vehicle. For a business to take advantage of those consumers by exposing them to risky loans, excessive fees and unacceptable treatment from dealers is simply wrong," Nessel said in the statement.
The states, which include California, New York, Florida, Pennsylvania and Indiana, secured $7 million to manage restitution claims from the lender. Santander agreed to pay $65 million for restitution for some customers and to waive deficiency balances on $478 million in loans.
In a statement released May 19, Santander said it was pleased to resolve the investigation and "no additional charges will be taken in connection with the settlement."
The "voluntary agreement with the attorneys general resolves a legacy underwriting issue stemming from an investigation that commenced in 2014, and is another key milestone in addressing issues related to that time period," Santander said in in the statement. "We are pleased to put this matter behind us. Santander Consumer ... has fully cooperated with the attorneys general throughout the investigation, and the settlement has no material impact on SC’s or Santander US’ operations or our ability to serve customers"