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WHEREAS, WESTLAKE SERVICES, LLC d/b/a WESTLAKE FINANCIAL SERVICES, Los Angeles, California (Westlake or the Company), a licensed motor vehicle sales finance company under Massachusetts General Laws chapter 255B, section 2 and 209 CMR 20.00 et seq. and its wholly owned subsidiary, Western Funding Incorporated (WFI), have entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (Consent Agreement) with representatives of the Division of Banks (Division) dated July 25, 2017, whereby, solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a motor vehicle sales finance company, Westlake and WFI agree to the issuance of this CONSENT ORDER (Order) by the Commissioner of Banks (Commissioner);
WHEREAS, the Division, through the Commissioner, has jurisdiction over the licensing and regulation of persons and entities engaged in the business of a motor vehicle sales finance company in Massachusetts pursuant to Massachusetts General Laws chapter 255B, section 2;
WHEREAS, Westlake is, and at all relevant times has been, a corporation conducting business in the Commonwealth of Massachusetts. Westlake’s main office is located at 4751 Wilshire Blvd, Suite 100, Los Angeles, California;
WHEREAS, on March 15, 2016 the Commonwealth of Massachusetts Office of the Attorney General (AGO) and Westlake voluntarily entered into an Assurance of Discontinuance pursuant to M.G.L. c. 93A, § 5 (AOD);
WHEREAS, Paragraph 20 of the AOD states that the AOD “will be binding upon Westlake and any of Westlake’s agents, subsidiaries and subdivisions, successors, assigns, and/or purchasers of all or substantially all of Westlake’s business assets;”
WHEREAS, WFI has been a fully owned subsidiary of Westlake since January 6, 2014;
WHEREAS, in Paragraph 4 of the AOD, the AGO alleged that Westlake violated M.G.L. c. 93A, §2 by charging an APR that exceeded the Massachusetts APR cap when debt cancellation coverage (GAP) premiums were included as part of the finance charge;
WHEREAS, Paragraph 11 of the AOD states, in pertinent part:
Westlake agrees that with respect to any RIC [Motor Vehicle Retail Installment Contract] that (a) was purchased by Westlake between January 1, 2008 and the entry date of this AOD; (b) included GAP; and (c) is identified as having exceeded the twenty-one percent maximum APR when the calculation accounts for GAP in accordance with the Commissioner's opinion, ("Affected Loans"), Westlake will (i) refund all finance charges paid to date, together with all delinquency, collection, and refinancing charges paid to date (collectively the "Refund"); and (ii) waive all future finance charges, together with all delinquency, collection, and refinancing charges.
WHEREAS, Paragraph 14 of the AOD states, “Affected Loans shall be identified and remediation provided in the manner described in Appendix A;”
WHEREAS, the Division alleges that from January 16, 2015 through December 20, 2016, WFI purchased 157 motor vehicle retail instalment contracts from one or more retail sellers while it was not appropriately licensed by the Division, in violation of M.G.L. c. 255B, § 2;
WHEREAS, of those contracts, 33 had annual percentage rates (APR) in excess of the 21% limit established by General Laws chapter 255B, section 14 (Affected Contracts) because WFI did not consider GAP as a finance charge for the purposes of the APR cap;
WHEREAS, accounts acquired by WFI were not included in the universe of “Affected Loans” remediated under the AOD and finance charges for WFI’s Affected Contracts were not refunded in the manner prescribed by Paragraphs 11 and 14 of the AOD;
WHEREAS, on December 20, 2016, the Commissioner and Westlake entered into a Stipulation and Consent to the Issuance of a Consent Order (2016 Consent Order) for the purpose of addressing alleged violations applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a motor vehicle sales finance company in the Commonwealth;
WHEREAS, the parties now seek to resolve by mutual agreement the matters identified above.
NOW COME the parties in the above-captioned matter, the Division, Westlake and WFI stipulate and agree as follows:
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 25th day of July, 2017
By: Terence A. McGinnis
Commissioner of Banks
Commonwealth of Massachusetts