Attorney General Healey Secures $5.5 Million for Consumers, State in Subprime Auto-Loan Settlement
April 8, 2019 – A finance company operating in Massachusetts, Exeter Finance LLC, will pay more than $5.5 million for its role in allegedly financing unfair, subprime auto loans for Massachusetts car buyers, Attorney General Maura Healey announced today.
“This company’s loans put Massachusetts car buyers in economic danger,” AG Healey said. “Today’s settlement with Exeter provides millions of dollars in relief and repairs damaged credit. Our office will continue to investigate the subprime lenders, financiers, and securitizers, and protect consumers.”
This assurance of discontinuance, filed in Suffolk Superior Court, includes $4.675 million that will be available to provide relief to harmed borrowers and an $825,000 payment to the state. Exeter will also waive deficiencies on certain subprime loans and will ask the major credit bureaus to wipe all trade lines for involved subprime loans on consumers’ credit reports.
The AG’s Office alleges that Exeter facilitated the origination of Massachusetts auto loans that the company knew or should have known were unfair and in violation of the state Consumer Protection Law. Courts have held that lending is unlawful under the statute if lenders do not have a basis for believing that borrowers will be able to repay their loans in normal course. Exeter also allegedly mishandled servicing and collecting activities in violation of the Attorney General’s debt collection regulations.
Car loans to consumers with poor credit, known as subprime auto loans, are often made through contracts signed at the car dealership, but the loans are funded by non-dealer financial institutions, like Exeter. As part of the funding process, these financial institutions securitize the loans, funding them by selling investment notes.
This settlement is part of AG Healey’s review of securitization practices in the subprime auto market—an industry-wide investigation that remains ongoing. Previously, the AG’s Office secured $22 million from Santander for its role in financing subprime auto loans.
The AG’s Office worked collaboratively with the Delaware Attorney General’s Office on this investigation. Today, the Delaware Attorney General’s Office has also entered into a settlement with Exeter.
Consumers eligible for payments from today’s settlement will be contacted by an independent trustee and the AG’s Office. Consumers with questions about settlement eligibility should contact AG Healey’s Insurance and Financial Services hotline at 1-888-830-6277.
This matter was handled in the AG’s Office by staff of the AG’s Insurance and Financial Services Division, including Peter Leight, Burt Feinberg, Matt Frank, Tim Hoitink, Maggie Wallace, Jessica Nario, Arwen Thoman, Erin Morris, and Division Chief Glenn Kaplan.
By the Office of Attorney General Maura Healey
Read More Here