CFPB Increases Oversight of Auto Finance: Reflects on New Data Collection Initiatives
In an effort to fill critical data gaps identified in the February 2023 Auto Finance Data Pilot, the Consumer Financial Protection Bureau sent requests for information about their loan portfolios to nine major auto lenders to provide additional auto finance. We are seeking comments regarding data collection. As with previous requests, the department issued these orders under its market surveillance authority, which allows it to “gather from time to time information regarding the organization, business conduct, markets, and activities of covered persons and service providers.” is possible. 12 USCC § 5512(c)(1) and (4). Compliance with the requirements is mandatory.
The two annual data collection processes include:
- Comprehensive data from leading financial institutions. Lenders that originated 20,000 or more auto loans in the previous year will submit comprehensive loan-level data that reflects the scope of their original orders.
- Data from small financial institutions is limited. Lenders with 500 to 20,000 loan originations report certain metrics such as number of repossessed vehicles and number of loan modifications.
Practice: With an estimated 4,000 auto finance companies under surveillance, the bureau’s expansion request is intended to gather a wealth of information that will strengthen the CFPB’s ability to monitor the auto finance market for risks to consumers. As previously explained ( here , here , and here ), the bureau focuses on rising vehicle prices and the impact it has on borrowers’ loan amounts, monthly payments, delinquencies and foreclosures. The agency is also looking to take a closer look at auto lenders that operate in the subprime space and offer vehicle add-on products. As we have seen in this Office, market surveillance orders are often a precursor to formal rulemaking. Therefore, car financiers need to be extremely careful.
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