Federal prosecutors are asking questions about the practices of GM Financial

Article by Christian A., on August 8, 2014

The United States Department of Justice wants GM Financial to produce documents on underwriting criteria, origination, warranties and securitization of subprime loans since 2007, asking questions about its practices. The office of Manhattan US Attorney Preet Bharara sent a subpoena for documents to GM Financial, a person privy with the matter said.

"There are no allegations set forth in the subpoena and GM Financial is cooperating," said Chrissy Heinke, a company spokeswoman. GM president Dan Ammann said that the request is part of an industry-wide inquiry into the subprime order financing across a number of lenders.

He added that the company has yet to open its own internal investigation into its own practices. The inquiry is based on a 1989 law known as FIRREA that the US government relied on to go after mortgage lenders accused of wrongdoing.

FIRREA imposes a lower burden of proof than a criminal prosecution and could result to penalties of over $1 million for each fraudulent statement or act. Countrywide Financial was recently ordered to pay $1.3 billion in penalties for selling defective mortgage loans to Fannie Mae and Freddie Mac in the run-up to the 2008 financial crisis.

It was found liable last year for selling thousands of bad loans to Fannie Mae and Freddie Mac. Michael Bresnick, a former head of the department's financial fraud task force, remarked that DOJ's use of FIRREA in the past few years has resulted to some “enormous settlements” or court-ordered penalties, particularly when mortgages are concerned. [source: Bloomberg]

Topics: gm, united states

If you liked the article, share on:

Comments

Recommended

The Swedish moose test is known to have victimized many in the past, including the Toyota Hilux that massively failed. So knowing that many cars from trusted and leading automakers...
by - June 27, 2017
All-new BMW X3 (G01) just made its debut! The updated model has a familiar design, and slightly increased dimensions compared to its successful predecessors. For more cabin space, the wheelbase...
by - June 27, 2017
Polestar is notably known to be Volvo's internal performance specialists, and around last year Polestar revealed to the public that it will utilize electrification to further advance the power of...
by - June 26, 2017
Earlier this month, Porsche introduced to us the 911 Turbo S Exclusive Series. The car wore a Golden Yellow Metallic paint. The same time it was launched, the company said...
by - June 26, 2017
Last month, the Lamborghini Centenario made its way to the Transformers: The Last Knight premiere where it got the attention of many. Following that event, three Lamborghini Centenario coupes landed...
by - June 26, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries