Some Georgians will receive millions in settlement with a car loan company

Attorney General Chris Carr, along with a bipartisan coalition of 34 Attorneys General, announces a settlement with Santander Consumer USA Inc. (Santander) that includes approximately $ 550 million in consumer relief, with more relief in additional waivers of expected deficiencies.

The settlement resolves allegations that Santander violated consumer protection laws by exposing high-risk consumers to unnecessarily high levels of risk and knowingly placing those consumers in auto loans with a high probability of default.

“Businesses that take advantage of Georgian consumers by resorting to unfair lending practices will be held accountable by our office,” said Attorney General Carr.

The settlement stems from a multi-state investigation into Santander’s subprime lending practices. In March 2015, the Illinois attorney general’s office led the coalition in opening an investigation into the nation’s largest sub-prime auto finance company after receiving an increase in consumer complaints related to sub-prime auto loans.

Based on the multi-state investigation, the coalition alleges that Santander, through its use of sophisticated credit scoring models to forecast default risk, knew that certain segments of its population would have a high probability of default. Santander exposed these borrowers to unnecessarily high levels of risk due to high loan-to-value ratios, high management fees and high payments-to-income ratios. Santander also mistakenly underestimated the risk by turning a blind eye to the abusive dealer practices behind many of these loans and failing to meaningfully monitor dealer behavior to minimize the risk of receiving information. falsified, including amounts specified for consumer income and expenditure. Finally, the coalition alleges that Santander engaged in deceptive service practices and actively misled consumers about their rights and the risks of part payments and loan extensions.

Under the regulations, Santander is required to provide relief to consumers and, in the future, is required to take into account a consumer’s ability to repay the loan in their subscription.

Santander will pay the 34 participating states $ 65 million for the restitution of certain at-risk consumers who defaulted on their loans between January 1, 2010 and December 31, 2019, of which Georgian consumers may receive $ 6,254,427.66. For consumers with the lowest quality loans who have defaulted on December 31, 2019 and have not had their car repossessed, Santander is required to allow them to keep their car and forfeit any outstanding balance. loan, up to a total value of $ 45 million in loan forgiveness. . Santander will also pay up to $ 2 million to the settlement administrator who will administer restitution claims, and pay an additional $ 5 million to states.

The settlement also includes significant consumer relief through loan forgiveness. In total, Santander has agreed to waive deficit balances for some defaulting consumers, with around $ 433 million in immediate cancellation of loans still held by Santander, and additional waivers of loan deficits that Santander no longer owns but must attempt. to redeem. Santander will give up a number of consumer loans in Georgia for a collective value of around $ 35 million. In the event that Santander is able to repurchase certain loans, additional loans in Georgia totaling approximately $ 27 million could be canceled.

Going forward, Santander cannot extend funding if a consumer has negative residual income after taking into consideration a list of actual monthly debts. In addition, Santander is required to test all loans that default in the future to see if the consumer, at the time of origination, had negative income. The test should include an amount for basic living expenses. If the loan turns out to be unaffordable and the consumer defaults within a certain period, Santander is required to cancel that loan.

Santander does not have the right to require dealers to sell ancillary products, such as vehicle maintenance contracts. Santander will also implement measures to monitor dealers who engage in illegal practices such as income inflation, expense inflation, power reservation, and Santander will adopt additional documentation requirements for these dealers. Additionally, while Santander previously allowed these problematic resellers to waive the income and expense documentation requirements, Santander will no longer allow such exceptions. If Santander is to use a default mortgage or rent payment value, the amount entered should reasonably reflect the payment value for the geographic location. Finally, Santander will maintain policies and procedures for adjournments, abstentions, modifications and other collection matters that all employees must follow.

If you believe you are eligible for relief under this regulation, you can check for updates on the administration of reliefs by visiting

Attorneys General of California, Illinois, Maryland, New Jersey, Oregon, and Washington, who make up the Executive Committee, join Attorney General Carr in settlement; as well as the Attorneys General of Arizona, Arkansas, Connecticut, District of Columbia, Florida, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana , Maine, Michigan, Minnesota, Nebraska, New Hampshire, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, West Virginia and Wyoming .


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