GM's financing arm, GM Financial, was subpoenaed by the Justice Department last month.

GM Financial’s subprime auto loans are the target of a subpoena from the U.S. Justice Department served last month. The documents requested go as far back as 2007, the company reported in a Securities and Exchange Commission filing.

Federal investigators served General Motors financial arm on July 27 with a subpoena seeking documents involving origination and securitization.

Company executives have confirmed the request, but quickly point out that no allegations or charges have been filed.

“Our understanding is that the request is focused on the subprime auto finance space in general,” Susan Sheffield, GM Financial executive vice president and treasurer, told the Detroit News. “There are no allegations set forth in the subpoena and GMF is cooperating with the request.”

Neither Ford Credit nor Chrysler Credit has received a subpoena.

The investigation of subprime credit comes as auto sales are humming along for the last 18 months. Part of the reason for those results is a loosening of automotive credit, including in the subprime market.

According to Equifax and its National Consumer Credit Trends Report, there is $902.2 billion in outstanding auto loans: a new record. In fact, auto loans are breaking all kinds of records this year, including:

  • The total number of new loans originated year-to-date in April is 8.1 million, an eight-year high;
  • The total number of new loans originated in that same time for subprime borrowers, or consumers with risk scores of 640 or lower, is 2.6 million, representing 32% of all auto loans originated today;
  • Similarly, the total balance of subprime auto loans is $46.2 billion, an eight-year high and representing 28.2% of the total balance of new auto loans.

Part of the reason for confidence in the ongoing easing of restrictions is the fact that delinquencies are at about 1%, which is near an all-time loan.

(Auto sales jumping as banks loosen credit reins. For more, Click Here.)

GM Financial may have attracted attention because its subprime portfolio is a greater percentage of its overall loans.

(Click Here for details on Lexus regaining luxury sales crown in July.)

The financing unit reported a profit of $258 million last quarter: an increase over $254 million in the same period last year. Subprime lending makes up 8.1% the company’s lending, which is down slightly from 8.5% from year-ago results.

(To see more about BMW exceeding its quarterly forecasts, Click Here.)

The industry average was 6.8% in the second quarter, up from 6.3% in the same period last year. The unit is increasingly becoming the go-to lender for GM dealers seeking subprime approvals, garnering 30% of those loans to GM dealers, up from 25% last year. The company has handed out more than $2 billion in subprime loans in 2014, and is the nation’s second-largest subprime auto lender.

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