Ford Motor Credit Co. is one of several auto finance companies being investigated by the Securities and Exchange Commission in connection with securitizing subprime auto loans. Securitization is where auto lenders sell off bundles of loans to investors, to raise money to fund new loans.
Ford Credit said in a Securities and Exchange Commission filing last week that in October 2014 Ford Credit received a “voluntary document request” from the SEC, in connection with the SEC’s investigation into “certain practices in subprime auto loan ABS,” short for asset-backed securities. The captive finance company initially disclosed late last year that it was part of the investigation.
“The SEC informed Ford Credit that the request was made to a number of automotive finance companies as part of an industry-wide investigation, and Ford Credit is cooperating with the request,” Ford Credit said in the filing last week.
Other lenders that have made similar disclosures include Ally Financial, CapitalOne, GM Financial, and Santander Consumer USA.
In a note aimed at investors, Ford Credit said, “It is not clear whether this or other regulatory activity, if applicable to Ford Credit, would not have an adverse impact on Ford Credit’s securitization programs or your notes.” A Ford Credit spokeswoman said today Ford Credit had no additional comment.
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