Today, the CFPB released a bulletin explaining that certain lenders that offer auto loans through dealerships may be responsible for unlawful and discriminatory pricing. As Robin, Batman’s young sidekick might say, “Holy Fair Lending violations, Batman!”. If your bank is involved in any type of dealer financing, you should review the parameters and determine whether changes need to be made. The announcement, bulletin, and a cool little chart may be found here http://www.consumerfinance.gov/blog/buying-a-car-heres-what-you-need-to-know/
To combat the scourge of unfair pricing in auto financing, the CFPB bulletin recommends that bank take steps to curtail such activity, including, but not limited to:
- Imposing controls on dealer markup, or otherwise revising dealer markup policies;
- Monitoring and addressing the effects of markup policies as part of a robust fair lending compliance program; and
- Eliminating dealer discretion to markup buy rates, and fairly compensating dealers using a different mechanism that does not result in discrimination, such as flat fees per transaction.
Let’s see, in its short tenure, the CFPB has singlehandedly impacted the consumer real estate, student loan, and auto lending markets (and not always for the better), caused jitters in the credit card industry, and is making the consumer reporting industry begin to shake. Before long, Uncle Vito will be the only place to get a loan, and even the CFPB doesn’t want to make Uncle Vito mad.
ABS is helping as best we can so that you don’t get an offer from the CFPB that you can’t refuse.
