Subprime deals at Credit Acceptance Corp under investigation

Indirect auto finance specialist Credit Acceptance Corp has become the latest subprime lender to be put under investigation by the US Department of Justice (DOJ).

In a statement filed with the Securities and Exchange Commission (SEC), the Michigan-based company revealed it has been issued with a subpoena, “pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, directing the company to produce certain documents,” relating to subprime automotive finance and associated securitization activities.

Credit Acceptance’s statement follows filings last week from Toyota Motor Credit and American Honda Finance Corp. in which both companies revealed they had received letters from the DOJ and Consumer Financial Protection Bureau (CFPB).

However, Credit Acceptance does not say that it is being investigated by the CFPB, although it is receiving scrutiny from the Office of the Attorney General of the Commonwealth of Massachusetts.

In its SEC submission, Credit Acceptance states: “Earlier in December, the Company received a civil investigative demand from the Office of the Attorney General of the Commonwealth of Massachusetts relating to the origination and collection of non-prime auto loans in Massachusetts.”

The company has stated it intends to cooperate with the inquiries.