"Thirty-three states and the District of Columbia accused Santander of extending loans that were too big relative to borrowers’ incomes, charging excessive fees and failing to monitor dealership loan-approval practices.
California Attorney General Xavier Becerra said Santander profited by extending high-interest loans to buyers “who were doomed from the start” to default.
The settlement includes $65 million of restitution for consumers. It also involves some $433 million in loan forgiveness, including for customers who have had cars repossessed but still owe money to Santander."
Full disclosure: I have been banking with Santander for more than 15 years (I signed up for an account when they were called Sovereign Bank). I have never taken out an auto loan loan with them, but this is crazy.
Note that if Santander had not made these awful loans, Becerra would have sued them for not helping the “underserved,” or “California’s most vulnerable” who “lack access to credit.”
NY Post article included a couple of interesting tidbits I thought were notably new in such settlements
Consumers across the US who defaulted on their loans and haven’t yet had their car repossessed as of Dec. 31, 2019, will be given the titles to their vehicles and have the balances on their loans forgiven totaling up to $45 million, James said.
and
Santander has also agreed to forgive loans for people who default in the future, if their loans were found to be unaffordable at the time of signing.
I’ve had difficulty finding out exactly what laws were broken. All the news reports lack legal detail. Saying a loan is unaffordable/designed to fail is pretty nebulous. Although I guess if the payments are more than the persons total income that might be clear enough. My best guess is Santander knowing let dealerships intentionally lie about customers income in order to get the loans approved.
Id surmize it was egregious enough that Santander just wanted it to go away and not have to go through a public trial about their conduct. That is why they are letting people just keep the cars.
Mostly predatory loan laws related to charging fees, rates and extending credit beyond “reasonable” repayment ability.
For example, if you know someone’s credit application can only support 10k loan but you extend 15k but charge higher interest, application fees etc and once they can’t afford payments that they should not have received in the 1st place, they get charged higher fees & interest & eventually repossessed car & hurt their credit more
I don’t think he views it that way, his past comments suggest that it was the “borrower’s” fault.
Anyone who thinks that people in bad financial situation don’t get taken advantage of at their lowest point is being ignorant.
Not everyone is financially savy, they rely on banks, financial officers, loans officers to help them and end being taken advantage of cuz of their greed.
of subprime.