Exeter Finance LLC will shell out $5.5 million to settle allegations that it financed subprime auto loans deemed “unfair” by the Massachusetts Consumer Protection Law.
The Office of Attorney General Maura Healey alleged that Exeter “facilitated the origination of certain loans that Exeter knew or should have known were unfair,” according to an April 5 filing in Suffolk Superior Court. The subprime lender is resolving the violations without admitting any liability.
Lenders are in violation of the statute if they are unable to prove a “basis for believing that borrowers will be able to repay their loans in a normal course,” the attorney general noted in a press release. Exeter also allegedly mishandled servicing and collection activities in violation of state regulations. The Irving, Texas-based lender has agreed to pay $4.7 million to an independent trust to make payments and provide relief for borrowers involved.
Exeter will also pay an $825,000 fine to the state and create a “Relief List” consisting of borrowers that it “preliminarily determines” are eligible for relief, according to the filing. The list will include certain subprime contracts that were acquired by Exeter between 2011 and 2015 that charged off or are at heightened risk of charge-off.
Meanwhile, the Delaware Attorney General’s Office entered into a settlement with Exeter, according to an April 5 cease-and-desist agreement. Following investigations by the Office of Attorney General Kathleen Jennings and the Delaware Department of Justice, Exeter will pay $550,000 to provide relief for eligible customers and $50,000 to the state of Delaware. Exeter agreed to pay without admitting liability.
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