KY Attorney General Announces Multi-State Settlement with Santander That Raises Up To $ 12 Million For Kentucky Consumers | news
FRANKFORT, KY – Attorney General Daniel Cameron announced Tuesday that Kentucky has entered into a multi-state agreement with Santander Consumer USA Inc. that will mean up to $ 12 million for Kentucky consumers who have defaulted on subprime auto loans.
Attorney General Daniel Cameron says the settlement clears up allegations that Santander violated consumer protection laws by approving high-probability subprime auto loans.
“Santander has misled consumers by failing to pass on the financial risk associated with subprime lending, violating our consumer protection laws and placing Kentuckers on loans that are likely to default,” said Attorney General Daniel Cameron. “I am delighted that we have reached an agreement on behalf of the Kentuckians that will compensate consumers for their financial losses due to Santander’s illegal and fraudulent lending practices.”
The attorney general says the settlement will reimburse Kentucky consumers a total of $ 1.1 million, waive deficiencies on 532 outstanding Kentucky consumer loans totaling $ 5.3 million, and ask Santander to file 769 deficiency waivers in Kentucky Repurchase an additional $ 5.3 million.
Santander will also be serving Kentucky consumers after Jan.
That deal includes a 34-state coalition launching an investigation into the lending practices of Santander, the country’s largest sub-prime auto finance company.
The attorney general says the coalition alleged Santander, in its aggressive pursuit of market share, ignored expected default risks and exposed borrowers at unnecessarily high risk by approving high-mortgage-lending auto loans with substantial back-end fees and high payout percentages.
Based on the investigation, the bureau alleges that the coalition alleged Santander failed to adequately monitor traders to prevent the bias in consumers’ income and expenditure information and that the subprime lender was making consumers aware of their rights and the misleading risks associated with partial payments and loan extensions.
The bureau says in order to protect consumers from future defaults, Santander must now consider a consumer’s monthly debt before a loan is granted to ensure that the borrower does not have a negative residual income. Santander is also required to test all future loan defaults to see if the consumer can afford the loan.
If the loan wasn’t affordable, the office says Santander needs to cancel the debt.
The bureau also says the settlement will force Santander to implement steps to monitor traders involved in income inflation, expense inflation and benefit posting. In addition, the subprime lender is not allowed to make any exceptions to these traders when documenting income and expenses. The settlement terms also require Santander to adhere to policies and procedures for deferrals, deferrals, amendments and other collection matters.
Attorney General Cameron was accompanied by attorneys general from Arizona, Arkansas, California, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Indiana, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, West Virginia, and Wyoming in the settlement.
To read the terms of the settlement, click here.