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Credit Erosion: Cracks Are Starting to Show in Subprime Auto

Fitch Ratings reported subprime delinquencies hit a 20-year high in March, and some of the smaller lenders in the space have cut back on originations, stopped issuing securitizations, or shuttered their doors completely, multiple sources told Auto Finance News. The number of new players entering the space has “slowed down,” Nathan Benson, chief executive of […]

CREDIT: Delinquencies Rise, Lenders Tighten Credit

Subprime 60-plus-day delinquencies declined to 4.28% in February, compared with 5.09% in January, according to S&P Global. Year over year, however, February subprime delinquencies were up 14% over the same month a year prior. “Generally, delinquencies decline from January to February due to tax refunds, and this pattern played out again this past year,” S&P wrote […]

Pelican Restricts Repo Policy Amid Industry Concerns

Pelican Auto Finance LLC has changed two collection and repossession policies in the wake of increased attention from the Federal Trade Commission and Consumer Financial Protection Bureau, Joel Kennedy, the lender’s chief performance and compliance officer, told Auto Finance News. The use of GPS-enabled kill switches that can disable a car remotely, as well as […]

DOJ Inspects BMW Financial Services’ Military Compliance

BMW Financial Services received a request for information from the U.S. Justice Department regarding the company’s leasing compliance, under the Servicemembers Civil Relief Act (SCRA), according to documents obtained by Bloomberg. The Justice Department sought the information in August and BMW doesn’t know how many leases could be affected by the law — which provides […]

Kill Switches Expose Lenders to Regulatory Enforcement, Analyst Says

Lenders are likely running away from the use of kill switches right now because “you expose yourself to regulatory enforcement,” John Hecht, managing director of equity research and specialty finance at Jefferies LLC, told Auto Finance News. Westlake Financial Services, Credit Acceptance Corp. and DriveTime Automotive Group Inc. have all been tapped by the Federal […]

FTC Taps Westlake For Info on Auto Kill Switches

The Federal Trade Commission issued a civil investigative demand to Westlake Financial Services in November, seeking information about the use of kill switches used to remotely track and shut down the vehicles of delinquent borrowers, according to private bond-offering documents obtained by Bloomberg. Westlake is the third lender the agency has reached out to about […]

CACC and DriveTime Tapped in FTC Kill Switch Inquiry

The Federal Trade Commission sought information regarding the use of kill switches from Credit Acceptance Corp. and DriveTime Automotive Group Inc., both companies reported in separate securities filings late last week. Kill switches and GPS technology are used by some lenders to more accurately identify and track down the vehicles of delinquent borrowers and potentially […]

The Cost of Compliance [SPONSORED]

Since July 2010, the Consumer Financial Protection Bureau has made significant waves in the auto finance space. In 2013, they issued their bulletin titled “Indirect Auto Lending and Compliance with the Equal Opportunity Act” stating that they would regulate lenders on unanticipated discriminatory practices. With very little guidance on how to be compliant, lenders and […]
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