2015, the AG’s Office brought an action relating to Santander’s funding of loans that allegedly included expensive insurance coverages, which caused the cost of the loans to exceed the state usury limit. This is the second settlement between the AG’s Office and Santander relating to its role in subprime auto lending in Massachusetts. Those cases recovered hundreds of millions of dollars for Massachusetts homeowners who had been placed in unaffordable and unlawful loans. The AG’s Office began its review of subprime auto loans after bringing successful mortgage cases against numerous investment banks including Goldman Sachs, Morgan Stanley, Royal Bank of Scotland, Countrywide Securities, Barclays, JPMorgan, and Citigroup. Subprime auto loan funding mechanisms have many similarities to the residential mortgage loan funding which played an important role in the 2008 financial crisis. This settlement is part of AG Healey’s ongoing review of securitization practices in the subprime auto market-an industry-wide investigation that remains ongoing.

Santander also allegedly identified a group of dealers it called the “fraud dealers,” but continued to fund loans through them. Despite identifying a group of dealers that had extremely high default and delinquency rates and other problems, the company continued to fund loans through these dealers. The AG’s Office found that Santander’s own internal audit concluded that the company’s oversight of auto dealer conduct when making subprime loans was inadequate.

Santander has also agreed to implement new oversight policies. Today’s settlement, filed in Suffolk Superior Court, includes $16 million in relief to more than 2,000 affected consumers and a $6 million payment to Massachusetts. Money obtained from this process is then used to fund more subprime loans. As part of the funding process, many financial entities resell or repackage the loans, passing them along to third parties. In fact, Santander predicted that many of the loans would default, and allegedly knew that the reported incomes, which were used to support the loan applications submitted to the company by car dealers, were incorrect and often inflated.Ĭar 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 Santander. The AG’s investigation, handled jointly with the Delaware Attorney General’s Office, revealed that Santander allegedly funded auto loans without having a reasonable basis to believe that the borrowers could afford them. This first-in-the-nation settlement relating to subprime auto loan funding will provide relief to thousands of car buyers in Massachusetts and prevent these practices from being used against our residents.” “We found that Santander, a leading player in the business of packaging and reselling subprime auto loans, funded unfair and unaffordable auto loans for more than 2,000 Massachusetts residents. “After years of combatting abuses from subprime mortgage lenders, these practices are unfortunately familiar,” said AG Healey. (Santander), will pay $22 million for its role in facilitating unfair, high-rate auto loans for thousands of Massachusetts car buyers, Attorney General Healey announced today. BOSTON - A major subprime auto loan funder in Massachusetts, Santander Consumer USA Holdings Inc.

Exeter finance settlement