Auto Finance
Practice Overview
The auto finance industry finds itself in the crosshairs of various state and federal agencies. In response, Buckley is able to apply its deep knowledge of consumer financial services law, as well as broad experience in litigation, enforcement, and transactional matters, to the needs of the auto finance industry.
We bring an experienced perspective, an understanding of how the auto finance industry works, and an appreciation for the issues that are most likely to be scrutinized by regulators. We help clients assess and mitigate risks in their existing operations, design new products, vendor management (including evaluating counterparties for prospective transactions), obtain necessary licenses, defend private litigation, resolve governmental enforcement actions, and negotiate and document critical third-party relationships as well as the purchase and sale of auto loans/receivables.
Our team advises on the key federal and state legal and regulatory compliance issues for auto finance, including the Consumer Financial Protection Bureau’s (CFPB) entry into the supervision of nonbank auto finance companies, fair lending, leasing, compliance with state installment sales acts and consumer credit codes, motor vehicle leasing, servicing and collections, repossession, and replevin. We counsel clients on issues pertaining to privacy, identity theft, and data security, and assist bank and nonbank finance companies with supervisory examinations and other regulatory matters.
We are also called upon regularly to conduct legal reviews and structure technology platforms for digital auto finance operations, including systems for the creation, storage, and transfer of “electronic chattel paper.” We participate in the development of the American National Standards Institute (ANSI) technical standard approved by ANSI’s Accredited Standards Committee, X9: ANS X9.103-2004 (Motor Vehicle Retail Sale and Lease Electronic Contracting) to provide guidance for the creation of electronic chattel paper in the automotive industry.
Noteworthy matters include:
- Represented American Honda Finance Corporation in its $24 million settlement with the Department of Justice (DOJ) and CFPB in a fair lending matter related to dealer participation practices
- Ongoing representation of multiple indirect auto finance companies in an investigation by the New York Department of Financial Services (NYDFS) into fair lending compliance
- Engaged in a 50-state lease review and re-write for a large national bank
- Completed a 50-state licensing survey applicable to indirect lending, leasing, securitization trusts, and insurance agencies for the U.S.-based captive finance subsidiary of a major foreign auto maker
- Represented an indirect auto finance company in a state attorney general investigation regarding the company's marketing of its inspection process and service warranties
- Conducted numerous compliance risk assessments related to originations, collections, credit reporting, and ancillary products
- Developed or enhanced fair lending compliance programs for more than a dozen banks and companies engaged in auto finance
Articles
Special Alert: California Assembly to introduce legislation for Covid-19-related relief for mortgage loans, vehicle-secured credit, PACE financing, and deferred deposit transactions
We understand that the California State Assembly will shortly propose amendments to Assembly Bill No. 2501 to create the “COVID-19 Homeowner, Tenant, and Consumer Relief Law of 2020.” Note: The proposed legislation was available on California’s legislative service website shortly after publication...
Special Alerts"Dorian update: How state laws protect servicemembers" by Jeffrey P. Naimon, Sasha Leonhardt, and Jessica M. Shannon (Law360)
Hurricane Dorian devastated the Bahamas and southeastern United States in late August and early September, and the governors of Florida, Georgia, North Carolina, South Carolina and Puerto Rico authorized the activation of state National Guard forces for response efforts. In addition, the Rhode...
Articles"Equipment finance: Understanding licensing obligations" by Kathryn L. Ryan, Moorari K. Shah, and Frida Alim (Equipment Leasing & Finance Magazine)
Licensing Considerations, Generally The applicability of state licensing laws may depend on multiple factors, including transaction structures, business entity types and whether the activities are appropriately classified as “commercial” or another type of non-consumer transaction. Although the...
Articles"Hurricane Florence: How state laws protect service members" by Jeffrey P. Naimon, Sasha Leonhardt, and Jessica M. Shannon (Law360)
As the southeastern United States braces for Hurricane Florence, the governors of North Carolina, South Carolina and Virginia have authorized their state National Guard for response efforts, and neighboring governors in Maryland and West Virginia have placed their National Guard members on notice...
ArticlesMarshall T. Bell and Megan E. Whitehill Authored a Law360 Article, "Ability-To-Repay Enforcement Comes To Auto Finance"
In recent years, regulators and enforcement agencies have eagerly exercised their authority to prosecute what they perceive as unfair or deceptive acts and practices (UDAPs). Unfortunately for the auto finance industry, these regulators and agencies show no sign of tapping the brakes on such...
ArticlesSpecial Alert: District Court Confirms Telephonic Consent to Preauthorized ACH Debits Complies with ESIGN and EFTA
On February 17, a U.S. District Court in Nashville, TN found that a creditor complied with both the Electronic Signatures in Global and National Commerce Act [1] (“ESIGN”) and the Electronic Fund Transfer Act [2] and its implementing regulation, Regulation E [3] (collectively “EFTA”) when it...
ArticlesSpecial Alert: CFPB's Proposed Rule Regarding Payday, Title, and Certain Other Installment Loans
On June 2, 2016, the CFPB published its proposed rule (the “ Proposed Rule ”) addressing payday loans, vehicle title loans, and certain other installment loans (collectively “covered loans”). This alert summarizes the Proposed Rule and compares the Proposed Rule to the CFPB’s March 26, 2015 outline...
ArticlesYear in Review: Auto Finance and the CFPB in 2015
The auto finance industry gained a new regulator in 2015 with the publication of the CFPB’s larger participant rule , which, for the first time, allows the Bureau to supervise larger non-bank auto finance companies. In this new compliance environment, larger participants would be prudent to...
ArticlesAncillary Products Are Anything but Ancillary for the CFPB
It’s no secret that the Consumer Financial Protection Bureau (CFPB) has its sights set on the U.S. automobile finance industry. As evidenced by recent CFPB Bulletins and consent orders with indirect auto finance sources, the CFPB’s current focus within the industry is largely on the practice of...
ArticlesSpecial Alert: CFPB Finalizes Rule to Oversee Nonbank Auto Lenders
On June 10, the CFPB issued its final rule to oversee “larger participant” nonbank auto finance companies. Although the CFPB received significant feedback during the comment period, the final rule is nearly identical to that proposed in September 2014. Under the final rule, the CFPB will have...
ArticlesSpecial Alert: CFPB Takes Enforcement Action Against "Buy-Here, Pay-Here" Auto Dealer for Alleged Unfair Collection and Credit Reporting Tactics
On November 19, the CFPB announced an enforcement action against a ‘buy-here, pay-here’ auto dealer alleging unfair debt collection practices and the furnishing of inaccurate information about customers to credit reporting agencies. ‘Buy-here, pay-here’ auto dealers typically do not assign their...
ArticlesStarter Interrupters Expose Lenders to SCRA Risks
As the subprime auto loan market has grown over the past few years, so too have the number of starter interrupters in use. According to a recent New York Times story, these devices have been installed in approximately 2 million vehicles and are used in about one-quarter of all subprime auto loans...
ArticlesHighway to the Danger Zone: Automotive Lending and the Servicemembers Civil Relief Act
Over the past few years, federal regulators — led by the Department of Justice — have sharply increased their focus on SCRA compliance. Although most recent headlines related to SCRA enforcement have arisen in the area of home mortgages, several major enforcement actions and multi-million dollar...
ArticlesSpotlight on Auto Finance, Part 2: New Database to Combat Fraud Against Military and Veterans
The federal government is increasing scrutiny of financial services companies’ practices affecting active military members, veterans and their families. Earlier this year, the CFPB along with the FTC, the Department of Defense and the New York Attorney General announced the launch of the...
Articles
News & Blogs
Maryland Department of Labor issues financial relief guide for Marylanders
On June 19, the Maryland Department of Labor’s Office of the Commissioner of Financial Regulation issued the Covid-19 Health Crisis: Financial Relief Guide for Marylanders . Among other things, the guide contains information and resources regarding relief programs for consumers relating to economic...
InfoBytesTexas Office of Consumer Credit updates guidance for regulated lenders
On June 12, the Texas Office of the Consumer Credit Commissioner issued updated guidance for regulated lenders navigating the Covid-19 crisis. The guidance: (1) addresses the June 1 due date for filing annual reports; (2) encourages lenders to work with consumers, including by working out...
InfoBytesTexas Office of Consumer Credit updates guidance urging motor vehicle sales finance licensees to work with borrowers
On June 12, the Texas Office of the Consumer Credit Commissioner issued an updated advisory bulletin urging motor vehicle sales finance licenses to work with consumers during the Covid-19 crisis (previously covered here and here ). Among other measures, the regulator urged licensees to increase...
InfoBytesLouisiana Office of Financial Institutions updates non-depository emergency declarations
On June 5, the Louisiana Office of Financial Institutions updated its non-depository 2020 Covid-19 emergency declarations to extend earlier guidance regarding closure of licensed locations and temporary location changes for residential mortgage lenders, brokers and originators , check cashers ,...
InfoBytesNorth Carolina Attorney General announces joint relief effort for North Carolinians facing Covid-19 financial hardship
On June 4, the North Carolina attorney general announced the Carolina Relief Plan, a voluntary agreement whereby participating financial institutions will offer certain financial relief to customers facing Covid-19 financial hardships. Relief includes, among other things, allowing eligible...
InfoBytesSouth Carolina regulator issues interim guidance to businesses regarding payment or performance deferrals and modifications
On June 1, the South Carolina Department of Consumer Affairs issued interim guidance regarding business activities during Covid-19, including payment or performance deferrals and modifications. The department strongly encourages persons and entities engaging in consumer credit transactions or other...
InfoBytesAuto financing company settles multistate subprime lending action for $550 million
On May 19, the California attorney general, along with 33 other attorneys general, announced a multistate $550 million settlement with an auto sales financing company for allegedly placing subprime borrowers in auto loans that carried a high risk of default, in violation of state consumer...
InfoBytesState attorneys general send letter to auto manufacturers regarding Covid-19 practices
On May 20, a coalition of state attorneys general sent a letter to ten major auto manufacturers relating to reports that dealerships have been engaging in predatory and harmful practices in connection with the return of leased vehicles during the Covid-19 pandemic. The coalition calls upon auto...
InfoBytesTexas regulator urges motor vehicle sales finance licensees to work with borrowers
The Texas Office of the Consumer Credit Commissioner revised an advisory bulletin urging motor vehicle sales finance licenses to work with consumers during the Covid-19 crisis (previously covered here ). Among other measures, the regulator urged licensees to increase consumer communication, work...
InfoBytesNew Jersey Department of Banking extends filing deadlines for certain annual reports
On May 12, the New Jersey Department of Banking Insurance issued a bulletin regarding the extension of deadlines for certain entities and individual regulated by the Division of Banking to file annual reports. Certain enumerated licensees, including check cashers, insurance premium finance...
InfoBytes
Press Releases & Announcements
Buckley Sandler launches APPROVED licensing service
WASHINGTON, D.C. (March 7, 2018) – Buckley Sandler LLP today formally announced the launch of APPROVED , a new approach to licensing for financial services companies. Buckley Sandler is building upon years of financial services experience and licensing know-how to offer APPROVED, a technology-...
Press ReleasesBuckleySandler Hosts Eighth Annual Fair Lending Today Conference
BuckleySandler LLP hosted its eighth annual Fair Lending Today conference in Washington, DC on March 13-14, 2016. The two-day event featured an evening of interactive roundtable discussions on fair lending issues, followed by a full day of seminars. The sessions were led by BuckleySandler attorneys...
Press ReleasesBuckley Sandler Hosts Annual Fair Lending Today Conference
Buckley Sandler LLP hosted its annual Fair Lending Today conference in Washington, DC, March 15-16, 2015. The two-day event featured an evening of interactive roundtable discussions on fair lending issues, followed by a full day of seminars. The roundtables and seminars were led by Buckley Sandler...
Press Releases
Our Auto Finance Team
Partners
Counsel
Associates
FYI
Special Alert: California Assembly to introduce legislation for Covid-19-related relief for mortgage loans, vehicle-secured credit, PACE financing, and deferred deposit transactions
Recent Blog Posts
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June 19, 2020
Maryland Department of Labor issues financial relief guide for Marylanders
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June 12, 2020
Texas Office of Consumer Credit updates guidance for regulated lenders
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June 12, 2020
Texas Office of Consumer Credit updates guidance urging motor vehicle sales finance licensees to work with borrowers
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June 5, 2020
Louisiana Office of Financial Institutions updates non-depository emergency declarations
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June 4, 2020
North Carolina Attorney General announces joint relief effort for North Carolinians facing Covid-19 financial hardship