CFPB Ramps Up Auto Finance Scrutiny: A Look at the New Data Collection Initiative

Sheppard Mullin Richter & Hampton LLP

In a move to bridge significant data gaps identified through its February 2023 Auto Finance Data Pilot where it sent information requests to nine large auto lenders about their lending portfolios, the Consumer Financial Protection Bureau is requesting comments for the collection of additional auto financing data. As with its prior requests, the Bureau is issuing these orders under its market monitoring authority which allows it to “gather information from time to time regarding the organization, business conduct, markets, and activities of covered persons and service providers.” 12 U.S.C. C. § 5512(c)(1) & (4). Compliance with the requests is mandatory.

The two-fold annual data collection process includes:

  • Comprehensive data from large lenders. Lenders originating over 20,000 auto loans in the previous year will submit comprehensive loan-level data, mirroring the original order’s scope.
  • Limited data from smaller lenders. Lenders with 500 to 20,000 loan originations will report on specific metrics like the number of vehicles repossessed and the number of loan modifications.

Putting it into Practice: With an estimated 4,000 auto finance companies on its radar, the Bureau’s expanded request is designed to collect a wealth of information that will enhance the CFPB’s ability to monitor the auto finance market for risks to consumers. As we discussed previously (here, here, and here), the Bureau is focused on the rise of auto prices and the impact it has had on borrowers’ loan amounts, monthly payment amounts, delinquencies and repossessions. The Bureau is also seeking to learn more about auto lenders that operate in the subprime space and that offer vehicle add-on products. As we have seen with this CFPB, market monitoring orders are often a precursor to formal rulemaking. Accordingly, auto lenders should pay careful attention.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Sheppard Mullin Richter & Hampton LLP

Written by:

Sheppard Mullin Richter & Hampton LLP
Contact
more
less

PUBLISH YOUR CONTENT ON JD SUPRA NOW

  • Increased visibility
  • Actionable analytics
  • Ongoing guidance

Sheppard Mullin Richter & Hampton LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide