CFBP says it's keeping a sharp eye on car repos in the $1.5 trillion auto-loan market.
The top U.S. watchdog for households, the Consumer Finance Protection Bureau, issued a warning shot on Monday to lenders and loan servicers who may be tempted to illegally repossess cars as used-vehicle prices soar.
“No American ever wants to wake up to see their car stolen. Auto-loan servicers need to ensure that every repossession is lawful.” It also said some loan servicers applied partial payments to late fees first, instead of the order of allocation described on their websites, resulting in borrowers “deemed more delinquent than they would have been.”
Consumers in focus In the earlier part of the pandemic, Congress unleased direct payments to most households that led to a temporary surge in household savings. “It’s also an indication the CFPB sees higher risk of defaults ahead and the potential for high collateral values and resulting recoveries to influence a servicer’s dealing with borrowers, requiring enhanced protection.”
Under the Biden administration, the CFPB also has ramped up its oversight of mortgage foreclosures during the pandemic. The agency didn’t say if this notice puts auto lenders and servicers under the same level of scrutiny as the mortgage industry. Instead, a CFPB spokesperson said it was “closely watching the auto-lending market and taking action against illegal repossessions and sloppy servicing of auto loans.”Even before Russia attacked Ukraine, sending shocks through markets SPX, -0.