Massachusetts Attorney General Martha Coakley is said to be investigating Santander Consumer USA Inc.’s subprime auto lending practices, according to a report in the Boston Globe Friday.
Specifically, the attorney general’s office is looking for the type of predatory practices similar to those that led to the mortgage crisis and subsequent recession a few years ago, the report said. it is also investigating to see if SCUSA is issuing auto loans to borrowers more likely to default, and then packaging those loans into securities to be sold to investors.
Brad Puffer, spokesman for the attorney general, told the Globe that ”Coakley has subpoenaed Santander’s US auto finance company to produce documents related to borrowers’ credit histories, the interest rates they were charged, and how the loan risks were described to investors.”
He also said that the attorney general is questioning a handful of other auto lenders, whom he declined to name, and that attorneys general across the country have launched similar investigations into auto loan practices.
SCUSA received a separate subpoena from the Department of Justice earlier this year, it revealed in a 10-Q filed with the Securities and Exchange Commission on August 7th, in connection with the bank’s underwriting and securitization of nonprime auto loans.
SCUSA wrote in the August filing, “We recently received a civil subpoena from the U.S. Department of Justice (DOJ) under FIRREA requesting the production of documents and communications that, among other things, relate to the underwriting and securitization of nonprime auto loans since 2007. We are cooperating with this request.”
No SEC filing has been made public yet by SCUSA regarding the attorney general’s current investigation in Massachusetts.
