Federal Govt Seeks to Prevent Illegal Repos

With inflation and other factors creating an environment where automobile repossessions are increasing, the The Consumer Financial Protection Bureau is seeking to prevent the illegal aspects:

“With today’s high car prices, auto lenders and investors might be tempted to seize vehicles for resale in the hot used car market,” said CFPB Director Rohit Chopra. “No American ever wants to wake up to see their car stolen. Auto loan servicers need to ensure that every repossession is lawful.”

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Illegally seizing cars: Servicers are repossessing vehicles from borrowers who made payments sufficient to stop the repossession or who entered a payment plan. Given the high level of harm caused by wrongful repossessions, servicers must ensure that every single repossession is valid.

Sloppy record keeping: Incorrectly coded records or agents failing to talk to their colleagues about canceling repossession orders hurts consumers and is a violation of federal law. Servicers need to ensure proper communication between them and any third-party processing a repossession.

Unreliable balance inquiries: Inaccurate balances can lead to a borrower paying less than a sufficient amount to avoid delinquency, resulting in a repossession. People are also having their vehicles repossessed because their loan payments are processed in a different order than what they had been told.

Ransom for personal property: Servicers are still holding personal property found in repossessed vehicles hostage until the property owner pays a fee, a practice the CFPB has been cracking down on for years .

As the Washington Post Reports:

Without admitting or denying any wrongdoing, in 2020 the auto financing subsidiary of Nissan North America, which services auto loans and leases originated by Nissan and Infiniti dealerships, agreed to settle allegations by the CFPB that it illegally repossessed vehicles. The company agreed to a $4 million fine and to pay up to $1 million in restitution to consumers.

In other cases, the agency said some auto loan servicers have refused to release personal property found in vehicles unless delinquent borrowers paid a storage fee. Servicers have been slammed for sloppy bookkeeping in which consumers were incorrectly coded as being delinquent. Servicers have ignored bankruptcy rules that would have — at least temporarily — stopped a repossession.

Finally MarketWatch adds:

Used car and truck prices increased 40.5% in January from a year ago, according to government data, while helping drive consumer prices up 7.5% on a yearly basis to a 40-year high.

The consumer protection bureau said its examinations and investigations already revealed “examples of conduct” that may violate federal consumer financial laws, including fees that pushed some consumers into default and repossession, as well as other unfair, deceptive or abusive practices.