Captives To Face CFPB Oversight

Derek Kreindler
by Derek Kreindler

New rules being announced by the Consumer Financial Protection Bureau would mean that the captive finance arms would be subject to oversight from the CFPB.

Automotive News reports that the CFPB will now have jurisdiction over “nonbank lenders” that “make, acquire, or refinance 10,000 or more loans or leases in a year.” This rule would encompass virtually all captive finance arms, covering a total of 38 lenders that originate roughly 90 percent of nonbank auto loans and leases.

Until now, the CFPB has not defined its cutoff point for overseeing “larger participants”, which largely included financial institutions. But the new definition brings auto maker finance arms under the CFPBs umbrella, something which has been expected for some time.

Derek Kreindler
Derek Kreindler

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  • 28-Cars-Later 28-Cars-Later on Sep 18, 2014

    Consumer Financial Protection Bureau: such an Orwellian name. "Automotive News reports that the CFPB will now have jurisdiction over “nonbank lenders” that “make, acquire, or refinance 10,000 or more loans or leases in a year.”" So... who's protecting consumer finances from the certified banksters? Serious question.

    • See 18 previous
    • Big L from Chicago Big L from Chicago on Oct 13, 2014

      @28-Cars-Later Better late than never. Happy Columbus Day

  • Greaseyknight Greaseyknight on Sep 18, 2014

    I've looked over, learned about the CFPB Guidelines for mortgages and such, and IMHO they are mostly a waste of paper. Alot of good/helpful idea, that are very confusing, so many days this, so many days that, and this coming from a lawyer. The big problem is that they do not have any real consequences for not following the guidelines. Maybe in the big picture, but there's nothing like "You messed up a loan mod, so you get fined for it" or something like that.

  • Highdesertcat Highdesertcat on Sep 18, 2014

    After reading all the comments here re the CFPB, I was compelled to add my 2-cents. My perspective is a little different because I think that the CFPB does nothing to protect the lenders from borrowers who willfully and often fraudulently overstate their assets and income in order to get a loan for whatever, but then are the first to holler and scream that they've been financially raped or otherwise wronged by the lender. The concept of the CFPB may be sound, but the practical application of the concept can often result in a lender being punished for something that the borrowers readily agreed to beforehand in order to get that loan. Caveat Emptor, yet no recourse against borrowers who cannot repay their debts.

    • Ruggles Ruggles on Sep 19, 2014

      Lenders these days are quite sophisticated. They don't just accept one's "word" for income. They can request pay stubs and tax returns, as well as proof of any other claimed income. Of course, if the LTV is advantageous, and the borrower has a strong credit score, income verification isn't a big deal. It is quite common for a lender to "approve" a deal via the dealer with a host of "stips" attached. (Stipulations)i.e. The bank "approves" the deal with an extra $2k down, 3 years of tax returns, and 6 months current pay stubs to get to a tier 3 interest rate. Credit Applications aren't either approved or turned down. They are 95% approved under some set of "stips." If you're a complete "credit criminal," known in the South as a "bogue," you probably don't have a job and have never paid attention, let alone paid payments on any loan. You still won't be turned down. You'll be directed to a car you can buy for 50% down.