Certified Forensic Loan Auditors, LLC

 
  Upcoming Classes

Search CFLA's Article Archive:

DOJ Probes Subprime Auto-Lending under FIRREA

jdsupra.com | August 13, 2014

By Malcolm Dorri, Hector Gonzalez and Michael H. Park

Two of the largest subprime auto-lenders disclosed last week that they have received subpoenas from the U.S. Department of Justice (DOJ). The U.S. Attorney’s Office for the Southern District of New York is leading an investigation into the origination and securitization practices of subprime automobile lenders. The subpoenas were issued under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which the government has used in recent years to extract large settlements in cases involving subprime mortgages. The government appears to suspect that the auto-lending industry suffers from deficiencies similar to those uncovered in residential mortgage-backed securities (RMBS) investigations.

This DOJ probe comes on the heels of a New York Times article last month reporting on aggressive lending practices in the subprime auto-loan industry and alleging that lenders are making high-interest loans to marginal borrowers, which sounds reminiscent of practices that led to the housing crisis. As in the RMBS cases, the government is focused on how subprime auto-lenders made and packaged loans to consumers and whether they properly reviewed and represented the quality of those loans to purchasers. Specifically, the subpoenas request information relating to the underwriting criteria used to originate automobile loan contracts and the representations and warranties made by the lenders relating to those underwriting criteria.

Over the past five years of RMBS investigations and lawsuits, the government developed a relatively novel legal theory based on FIRREA, which was a congressional response to the savings and loan crisis in the 1980s. FIRREA authorizes the government to bring a civil action based on violations of various criminal statues as long as the conduct at issue “affects” “a federally insured financial institution.” The government chose FIRREA as its prosecutorial weapon of choice in RMBS cases because of its (1) broad scope, encompassing a wide range of conduct; (2) lower evidentiary threshold, applying civil standards to quasi-criminal acts without providing the protections of criminal law; and (3) ten-year statute of limitations.

The DOJ is now using the same playbook to probe the subprime auto-lending industry. The same office that is leading the investigation into these subprime auto-lenders was involved in major RMBS actions based on FIRREA against companies for its mortgage origination practices. It appears that the government is now searching for issues like auto-loan servicing misconduct, loan origination problems, and securities misrepresentations.

Industry experts are quick to note the many differences between auto- and mortgage-backed securities, including the fact that auto-loan securitizations never experienced losses during the capital markets crisis and continue to perform well. Nonetheless, the government’s investigation appears likely to expand in the coming months to other auto-lenders and possibly underwriters and rating agencies as well. It remains to be seen whether the government’s legal theory based on FIRREA will work in the context of auto-lending.

 

Back to August 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
spacer
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
 
BBB Logo

 

spacer
Contact us or view our Sample Documents & Audits by completing the form below.

  • Reload
  • Should be Empty:


 

DVD Sets Only $99

 

FREE Mortgage Fraud Analysis

 

Order Cutting-Edge Services Now

 

Quiet Title Packages from Licensed Attorneys

 

Affiliate Services

 

CFLA Sponsored Attorney Links

 

Take-Home Education Package

 

ALB Law Firm

 

Advocate Legal

 

The True News Network

 

Sutton Law Firm, P.L.L.C.

 

Rubenstein Business Law

 

Atighechi Law Group

 

Scunziano & Associates

 

Get Certified to Perform Mortgage Securitization Audits

 

CFLA Training Academy

 

Expert Witness Services

 

Cutting Edge Expert Securitization Reports

 

CFLA Credit Cards

 

Breaking News

 

Letters to the Editor

 

CFLA Weekly Newsletters

 

Code of Ethics

 

Testimonials

 

Instructional Videos

 

Job Opportunities

 

License Opportunities

 

MARS Rule

 

Product Samples

 

Resource Links

 

Servicer Information

 

Foreclosure Laws

 

REST Report

 

Quiet Title Packages from Licensed Attorneys

 

Advertise on CFLA

 

Advertising Space: Mortgage Securitization, Quiet Title

 

Certified Forensic Loan Auditors, LLC
13101 West Washington Blvd.
Suite 444
Los Angeles, CA 90066

Phone: 832-932-3951
Toll Free: 888-758-CFLA (2352)
Mobile Users: CLICK TO CALL
info@certifiedforensicloanauditors.com

   
 
CFLA IS NOT A LAW FIRM AND DOES NOT PROVIDE ANY LEGAL ADVICE. CFLA DOES NOT OFFER FORECLOSURE CONSULTING OR FORECLOSURE RELIEF
SERVICES. CFLA DOES NOT OFFER OR ASSIST WITH ANY LOAN MODIFICATION SERVICE. CFLA ALWAYS RECOMMENDS THAT CLIENTS RETAIN COMPETENT COUNSEL IN THEIR RESPECTIVE JURISDICTION. CFLA HAS A FREE PROGRAM TO REFER CFLA CLIENTS TO LAW FIRMS IN NEARLY EVERY STATE AND CFLA
DOES NOT CHARGE OR OBTAIN REFERRALS FEES FOR THESE SERVICES. SERVICES NOT OFFERED TO RESIDENTS OF THE STATE OF NEVADA.

 
Home About Us Privacy Policy Terms of Service Disclaimer SERVICES Careers Contact Us
 
COPYRIGHT © 2007-2016 Certified Forensic Loan Auditors ™ All rights reserved