Nominations sought for The CEO Issue

CARY, NC –

Chief executive officers flourishing in the subprime auto finance space juggle a host of responsibilities. They develop sensible strategies and lead teams to execute those plans, all the while remaining competitive and compliant with growing regulatory burdens.

In an effort to recognize the special individuals who hold these positions, SubPrime Auto Finance News is asking the industry to nominate the CEOs of finance companies and their critical support service providers to be included in the March/April print edition that’s being dubbed, “The CEO Issue.”

AG Rutledge Files Lawsuit Against NWA Auto Dealers

LITTLE ROCK, Ark. – Attorney General Leslie Rutledge filed a lawsuit on Tuesday against multiple automobile dealerships in Northwest Arkansas.

The dealerships include Automatic Auto Finance, Jorja Trading Company andCashfish Motor Pawn. The AAF/Jorjacompanies are a group of buy-here-pay-here dealerships, Rutledge said.

The attorney general accused them of financing used vehicles and then using prohibited collection methods against customers.

A buy-here-pay-here dealership is one that offers vehicles for sale along with in-house financing, Rutledge said. Many consumers who are unable to obtain traditional financing from banks or credit unions are often forced to consider the credit options of a buy-here-pay-here dealership because of limited financial resources and poor credit ratings.

Rutledge accused the dealerships of selling and financing low-value vehicles at inflated prices to customers who are likely to default on the contract, reselling repossessed vehicles in a commercially unreasonable sale to create a significant deficiency balance, using prohibited collection practices to collect on that deficiency balance and then reselling vehicles to other customers to repeat the scheme.

The attorney generals office has identified 2,252 cases of prohibited collection practices by businesses since 2010, officials said.

Rutledge has asked a judge to impose civil penalties, restitution and other relief against the dealerships.

Copyright 2016 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Carvana secures additional credit to expand

This extended credit line represents financing for 7,100 vehicles, up from 3,400 vehicles.

The credit line will support Carvana’s floorplan financing as the startup pursues expansion plans this year.

“The way consumers shop, buy and finance vehicles continues to evolve as the industry responds to consumer preferences toward a digital experience,” Ally President of Auto Finance Tim Russi said in a statement. “As a leading finance provider in the industry, Ally is positioned to support this evolution and is pleased to expand our relationship with an innovative company like Carvana.

Carvana seeks to disrupt the traditional auto-buying experience with its online platform.

“Our goal is to create a better way to buy a car by putting the consumer back in control of the buying process,” Carvana co-founder and CEO Ernie Garcia III said in a statement. “We’re using technology and transparency to revolutionize car buying, and as we look to expand to new markets this year, our relationship with Ally will help to provide us with the resources and financial flexibility that we need to continue with our exciting, rapid growth.”

Besides Atlanta and Dallas, where the company has a distribution center, Carvana also operates out of Nashville, Charlotte, Birmingham, Raleigh, Houston, San Antonio and Austin. Six of those markets opened in 2015.

Garcia said the company’s target is to eventually be in 100 cities across the country.

Ally Financial Doubles Floorplan Credit Line for Online Auto Retailer Carvana

Ally Financial Doubles Floorplan Credit Line for Online Auto Retailer Carvana

Extended credit to support the growth of Carvana’s online auto sales platform
February 08, 2016: 09:00 AM ET

DETROIT, Feb. 8, 2016 /PRNewswire/ — Ally Financial announced today that it has extended its financing relationship with online auto retailer Carvana, increasing its floorplan credit line from $60 million to $125 million, representing financing for approximately 7,100 vehicles, up from 3,400 vehicles. The credit line is to support floorplan financing as Carvana pursues expansion plans this year.

“The way consumers shop, buy and finance vehicles continues to evolve as the industry responds to consumer preferences toward a digital experience. As a leading finance provider in the industry, Ally is positioned to support this evolution and is pleased to expand our relationship with an innovative company like Carvana,” said Ally President of Auto Finance Tim Russi

Carvana, which launched in 2013, offers a unique online car buying experience that lets customers browse a large selection of used vehicles, secure financing and complete a car purchase, all from its easy-to-use website. After purchase, customers can opt for home delivery, or pick up their vehicle from one of the company’s car vending machine locations in Atlanta or Nashville. Carvana was named No. 5 on the Forbes “America’s Most Promising Companies” list in 2015.

“Our goal is to create a better way to buy a car by putting the consumer back in control of the buying process,” says Ernie Garcia, Carvana founder and CEO. “We’re using technology and transparency to revolutionize car buying and as we look to expand to new markets this year, our relationship with Ally will help to provide us with the resources and financial flexibility that we need to continue with our exciting, rapid growth.”

Ally and Carvana are also exploring other opportunities to expand their relationship. Ally offers a full spectrum of financial products and services, such as retail financing, leasing, insurance and remarketing.

About Ally Financial Inc.
Ally Financial Inc. (NYSE: ALLY) is a leading automotive financial services company powered by a top direct banking franchise. Ally’s automotive services business offers a full spectrum of financial products and services, including new and used vehicle inventory and consumer financing, leasing, vehicle service contracts, commercial loans and vehicle remarketing services, as well as a variety of insurance offerings, including inventory insurance, insurance consultative services for dealers and other ancillary products. Ally Bank, the company’s direct banking subsidiary and member FDIC, offers an array of deposit products, including certificates of deposit, savings accounts, money market accounts, IRA deposit products and interest checking. Ally’s Corporate Finance unit provides financing to middle-market companies across a broad range of industries.

With approximately $158.6 Billion in assets as of Dec. 31, 2015, Ally operates as a financial holding company. For more information, visit the Ally media site at http://media.ally.com or follow Ally on Twitter: @Ally.

About Carvana
Founded in 2013 and based in Phoenix, Ariz., Carvana is the first complete online auto retailer offering vehicle purchase in as little at 11 minutes, with an average savings of $1,681. Additionally, Carvana launched the world’s first-ever, fully-automated, coin-operated car Vending Machine, in Nashville, Tenn. With Carvana, you can shop for, finance, purchase and trade-in a car entirely online, while also receiving as soon as next-day vehicle delivery or pick-up at the nation’s first vehicle vending machine. Carvana cars come with an accident-free guarantee, undergo a rigorous 150-point inspection and come with a 100-day/4,189 mile bumper-to-bumper warranty, as well as a 7-Day Test Drive and No-Questions-Asked Return Policy. Carvana is revolutionizing the car buying process through technology, transparency and exceptional customer service.  

For further information on Carvana please visit www.carvana.com, or connect with us on Facebook, Instagram or Twitter.

Media Contacts:

Sari Martin
Ally
646-781-2539
sari.martin@ally.com

Carvana
carvana@olson.com

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ally-financial-doubles-floorplan-credit-line-for-online-auto-retailer-carvana-300216328.html

SOURCE Ally Financial

 

Car veers off road in Rusk, strikes multiple vehicles

Emergency crews responded to a call at 1:15 pm, of an accident at East Texas Auto Finance, in the 400 block of North Dickinson Drive (US Highway 69).

A Crown Victoria sedan driven by Jones was traveling southbound along the highway when it “hit a curb, went airborne, struck three cars (in the dealership lot), then continued traveling and struck the trailers of two tractor-trailer rigs parked beside East Texas Auto Finance,” George said.

The accident remains under investigation.

Subprime auto loans, delinquencies up: Experian

The percentage of auto loans to buyers with the poorest credit ratings is growing faster than the rest of the auto finance market, according to a new report.

Experian Automotives analysis of open auto loans in the fourth quarter raises more questions about the health of the American consumer.

In addition to the growth in subprime and deep subprime auto loans, the report also shows a slight decrease in auto loans one month past due but an increase in auto loans at least 60 days delinquent. In the fourth quarter, 0.77 percent of all auto loans were at least two months past due.

CFPB Orders "Buy Here, Pay Here" Auto Dealer to Pay $800000 for "Abusive" Financing Schemes

Why it matters

Continuing to keep a close eye on the auto lending industry, the Consumer Financial Protection Bureau (CFPB) ordered a Buy Here, Pay Here car dealer to pay $700,000 in restitution to customers, with a $100,000 suspended civil penalty. Herbies Auto Sales engaged in abusive financing schemes, the Bureau alleged, advertising a 9.99% annual percentage rate (APR) without disclosing additional costs, such as a required warranty and a payment reminder device, resulting in a much higher rate than was advertised. These actions triggered the prohibition on unfair, deceptive or abusive acts or practices found in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the agency said, by luring consumers into the dealership and keeping them in the dark about the true cost of financing their cars. The CFPB agreed to suspend the civil penalty as long as the $700,000 in restitution is paid in full. In addition, Herbies must not misrepresent interest rates, finance charges, or other material facts concerning the financing of a motor vehicle going forward, and must clearly and prominently post the purchase price and provide certain information (the actual APR, price of the car, and all finance charges) prior to purchase. The action serves as a reminder that auto lending remains on the Bureaus enforcement radar, following a $48 million action against an indirect auto lender that allegedly engaged in deceptive debt collection practices used to coerce borrowers tomake payments on car loansand the addition of the larger participants in the nonbank auto-financing ecosystem tothe CFPBs oversight. The order is also significant in that it provides further guidance as to what the CFPB may view as abusive under the Dodd-Frank Act, which term the CFPB to date has effectively defined through enforcement actions rather than through the normal issuance of regulations.

Detailed discussion

For allegedly hiding auto finance charges and misleading consumers, the Consumer Financial Protection Bureau (CFPB) ordered Herbies Auto Sales to pay $700,000 in restitution to consumers, with a suspended civil penalty of $100,000.

Located in Greeley, Colorado, Y King S Corp., doing business as Herbies, ran afoul of the Dodd-Frank Wall Street Reform and Consumer Protection Acts prohibition on unfair, deceptive or abusive acts or practices (UDAAP) the Bureau said. The Buy Here, Pay Here used car dealer both sells the car and originates the auto loan without selling the loan to a third party.

For the period of 2012 through May 2014, Herbies offered financing to about 1,000 people. But according to the CFPB, the offersfound in marketing materials, showroom window displays, and Truth in Lending Act disclosureswere unlawful. Although the dealer advertised an annual percentage rate (APR) of 9.99%, it failed to disclose other finance charges that the CFPB asserted significantly increased the actual APR, including a $1,650 required warranty and $100 for a required GPS payment reminder device.

This financing scheme tricked consumers into visiting the dealership using false advertising, the Bureau charged, taking advantage of consumers inability to protect their interests in selecting Herbies financing and therefore in the CFPBs view constituting an abusive practice.

In addition, although the dealer was willing to negotiate prices with cash customers, Herbies refused to negotiate with those paying with credit, the CFPB alleged. The resulting finance charge for credit customers should have been included in the disclosed cost of credit, including the APR, but was not.

Pursuant to the consent order, Herbies will provide $700,000 in restitution to consumers who financed cars with the dealership since January 1, 2012. A civil penalty of $100,000 was suspended by the Bureau pending payment of the redress. Herbies is also required to halt future misrepresentations of any fact material to consumers concerning the financing of any motor vehicle, including interest rates, finance charges, or amounts financed. The purchase price of all automobiles must be clearly and prominently posted when auto financing is offered, and Herbies is required to provide a written statement with certain financing informationthe actual APR, price of the car, and all finance charges, among other itemsto consumers for a signed acknowledgment before or at the time financing is offered.

To read the consent order inIn the Matter of Y King S Corp., clickhere.

Moody’s ABCP rating activity ending February 5, 2016

New York, February 10, 2016 — Moodys ABCP rating activity for the period ending February 5, 2016

NO RATING IMPACT ON THE FOLLOWING ABCP PROGRAMS FROM FEBRUARY 1,
2016 THROUGH FEBRUARY 5, 2016:

Moodys has reviewed the following ABCP programs in conjunction
with the proposed additions and amendments, as applicable.
At this time the additions and amendments, in and of themselves,
will not result in any rating impact on the respective program.
Moodys does not believe they will have an adverse effect on the credit
quality of the securities such that the Moodys ratings are impacted.
Moodys does not express an opinion as to whether the additions and amendments
could have other, non-credit-related effects.

BNPS MATCHPOINT AMENDS PROGRAMME

Matchpoint Finance plc (Matchpoint), a fully supported,
multiseller ABCP programme sponsored and administered by BNP Paribas has
removed Morgan Stanley as dealer and placement agent and replaced Citibank
NA with BNP Paribas New York as US Depositary and Issuing Paying Agent.
The amendments will not, in and of itself and at this time,
cause the rating of the current ABCP issued by Matchpoint to be reduced
or withdrawn.

Matchpoints purchase limit is approximately EUR 5.992 billion
and it had EUR 4.601 billion ABCP outstanding.

BNPS STARBIRD AMENDS AN AUTO LOAN FACILITY

Starbird Funding Corporation (Starbird), a partially supported,
multiseller ABCP program sponsored and administered by BNP Paribas (BNP),
has amended an existing auto loan facility originated by an investment-grade
rated auto financing company. The facility was increased to $600
million from $300 million. Additionally, the expected
loss matrix, which is used to calculate the required overcollateralization
was amended. Transaction-specific credit enhancement is
comprised of overcollateralization and a cash reserve account.
This transaction is partially supported by a liquidity facility provided
by Prime-1(cr) BNP.

Starbird had approximately $7.6 billion of purchase commitments
and $4.7 billion in outstanding ABCP. Its program-wide
credit enhancement is approximately $473 million with a $150
million floor.

CIBCS SAFE AND SURE RENEW CAD500 MILLION CREDIT CARD SECURITIZATION

SAFE Trust (SAFE) and SURE Trust (SURE), two partially
supported, multiseller Candian ABCP programs administered by Canadian
Imperial Bank of Commerce (CIBC) have extended an existing
CAD500 million revolving credit card securitization facility for three
years to February 2019. The securitization is for an investment-grade
rated financial institution and includes a combination of revolving retail
consumer and business accounts. The transaction is structured as
an uncommitted multi-year revolving facility.

Transaction-specific credit enhancement is comprised of overcollateralization
sized at 8% of the invested amount and excess spread. This
transaction is partially supported by liquidity provided by Prime-1(cr)
CIBC. SAFE and SURE do not have any program-wide credit
enhancement.

SAFE currently has CAD1.9 billion of purchase commitments and CAD1.5
billion of ABCP outstanding.

SURE currently has CAD1.4 billion of purchase commitments and CAD1.2
billion of ABCP outstanding.

SCOTIAS KING AND BAY STREET AMEND EXISTING AUTO LEASE SECURITIZATION

King Street Funding Trust (King Street) and Bay Street Funding Trust
(Bay Street), two partially supported, multiseller
Canadian ABCP programs administered by Scotia Capital Inc.,
a wholly owned subsidiary of Bank of Nova Scotia (Scotiabank)
have amended their commitment in an existing auto lease securitization
facility to allow the inclusion of 60 month leases in the securitized
lease pool. The auto leases are originated by an investment-grade
rated auto finance company.

Transaction-specific credit enhancement is comprised of non-declining
overcollateralization sized at 20% of the initial securitization
value, a 1.0% non-declining cash reserve account
and minimum excess spread. This transaction is partially supported
by liquidity provided by Prime-1(cr) Scotiabank. King Street
and Bay Street do not have any program-wide credit enhancement.

King Street currently has CAD1.9 billion of purchase commitments
and CAD1.3 billion of ABCP outstanding.

Bay Street currently has CAD2.3 billion of purchase commitments
and CAD1.4 billion of ABCP outstanding.

The principal methodology used in these ratings was Moodys Approach
to Rating Asset-Backed Commercial Paper published in July 2015.
Please see the Credit Policy page on www.moodys.com for
a copy of this methodology.

Moodys monitors and analyzes ABCP programs on an ongoing basis.
A detailed description of each program is published in the ABCP Program
Review. Some ABCP programs have updated performance information,
which is published in the Performance Overviews. All publications
are available on www.moodys.com.

This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com
for the most updated credit rating action information and rating history.

Valerie Oliveri
Associate Analyst
Structured Finance Group
Moodys Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
USA.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Lisa Singman
VP – Sr Credit Officer/Manager
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moodys Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
USA.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moodys ABCP rating activity ending February 5, 2016

TCF Financial Upgraded to Neutral at Compass Point, Price Target Cut to $12.50 (NYSE:TCB)

TCF Financial (NYSE:TCB) was upgraded to neutral from sell by Compass Point while the firm trimmed their price target to $12.50 from $13.00 a share.

The stock decreased 3.97% or $0.45 during the last trading session, hitting $10.89. TCF Financial Corporation (NYSE:TCB) has declined 33.07% since July 6, 2015 and is downtrending. It has underperformed by 22.66% the Samp;P500.

TCF Financial Corporation operates as the bank holding company for TCF National Bank that provides various retail and commercial banking products and services. The companyƂ’s Lending segment offers retail lending services, including consumer loans for personal, family, and household purposes, such as home purchases, debt consolidation, and financing of home improvements. This segment also provides loans secured by personal property, as well as unsecured personal loans; commercial real estate and business lending products; lease and equipment finance; inventory finance; and auto finance.

Its Funding segment provides deposit products, including free checking accounts, money market accounts, regular savings accounts, certificates of deposit, and retirement savings plan accounts. This segment also offers treasury services. As of December 31, 2014, the company had 381 branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona, South Dakota, and Indiana. TCF Financial Corporation was founded in 1923 and is headquartered in Wayzata, Minnesota.

Obama Race Nazis Shake Down Toyota For $22 Million

Extortion: As Obama’s consumer watchdog agency kneecaps yet another car lender for payola for Democrat constituents, Hillary Clinton and Bernie Sanders pledge to double down on the monstrous abuses carried about by the agency.
The five-year-old Consumer Financial Protection Bureau, now the single most powerful and least accountable federal agency in Washington, just put a $22 million hit on Toyota Motor Credit over more trumped-up racism charges.
All told, the out-of-control agency has extracted more than $220 million from the auto finance industry, including major players Ally Bank, Honda and Fifth Third Bank. Several other lenders are under anti-bias investigation.
The CFPB admits “the investigation did not find that Toyota intentionally discriminated against its customers” but only that its interest rates “resulted in discriminatory outcomes.”
The crackdown has little to do with racial equality and every thing to do with equalizing credit outcomes. Under the terms of the settlement, Toyota must cap the retail interest rates it charges car buyers.
Toyota asserts “it has treated all of its customers fairly and without regard to impermissible factors such as race or national origin” and settled “solely for the purpose of avoiding contested litigation.” The Torrance, Calif.-based company also states that it “disagrees with the agencies’ methodologies” for determining discrimination.
A recently released 20-page investigative report by the House banking committee blasted CFPB for “engineering its desired result” by ignoring “factors other than discrimination” for disparities in loan outcomes.
The bureau unfairly compares borrowers who are not similarly situated,” the report found, and does not base its cases on actual discrimination,” but on statistics generated by the bureau’s flawed disparate impact methodology.”
“(CFPB) Director (Richard) Cordray defined being ‘overcharged’ as ‘paying more than the white average markup’ (but) the fact that a particular consumer paid more or less than average says nothing about whether that consumer was treated unfairly,” the report said. Only by comparing that consumer to other similarly situated consumers — those with a similar creditworthiness (and) financing a similar amount at the same dealer at around the same time, etc. — can the bureau draw a meaningful conclusion about whether a particular consumer was ‘overcharged?
“The bureau ignores the fact that financing costs are but one part of the transaction: the price of the vehicle and trade-in value are all negotiated by a car buyer, but not examined by the bureau for the purposes of imposing” racial bias charges on car lenders.
The report also notes that many white borrowers were charged dealer rates that were higher than the white average, which further undercuts the government’s case that discrimination was behind disparities in loan outcomes.
Bottom line: CFPB is falsely accusing car lenders of fleecing consumers for a dollar here, a dollar there, so it can justify fleecing lenders for hundreds of millions of dollars.
The racket won’t end if Sanders or Clinton have anything to do with it. Both Democrat hopefuls have pledged to unleash the rabidly anti-business watchdog agency on Wall Street. They charge the banking system is “defrauding consumers.” But who’s defrauding whom?