Westlake Financial Services, officially Westlake Services, LLC, is a significant name in the auto finance industry, particularly known for dealing with subprime and near-subprime loans. If you have a car loan through Westlake, you might be concerned about repossession. This article, brought to you by Car Repair Online experts, will delve into Westlake’s repossession practices, your rights, and potential defenses if you’re facing a deficiency lawsuit. We aim to provide a comprehensive understanding, empowering you with knowledge and helping you navigate this challenging situation.
I. Understanding Westlake Financial Services
Westlake Financial is headquartered in Los Angeles, California, and operates as a large auto finance company specializing in loans for borrowers with less-than-perfect credit. They partner with a vast network of dealerships across the United States, numbering over 50,000, to fund car purchase contracts. While a private entity under the Hankey Group umbrella, Westlake claims to be the “largest privately held finance company in the United States.” Key figures at Westlake include Ian Anderson (Group President) and Don Hankey (Chairman), with Bret Hankey as Vice Chairman.
Westlake is often categorized as a subprime lender. Subprime auto loans are designed for individuals with lower credit scores, typically below 600. These loans come with higher interest rates to offset the increased risk of default associated with borrowers who have a history of credit challenges. Interest rates on subprime loans can be significantly higher, often three times or more than prime loan rates.
Alt Text: Westlake Financial Services headquarters building in Los Angeles, California, showcasing their corporate presence in the automotive finance industry.
II. Westlake’s Repossession Practices: Yes, They Can Repo Your Car
It’s crucial to understand that yes, Westlake Financial can repossess your vehicle, especially if you fall behind on payments. Missing even a single payment can trigger the repossession process.
Consider the case of Rashana Williams from Tampa, Florida. Ms. Williams owned her car outright and had no liens on it. Despite this, her vehicle was wrongfully repossessed due to a mistake by Westlake. Action Towing Services, LLC, the repo company, confirmed Westlake’s involvement. Despite Ms. Williams’ attempts to resolve the issue with Westlake, she initially received no cooperation.
This error caused significant disruption to Ms. Williams’ life, forcing her to rent a car at considerable expense and endure public embarrassment. While Westlake eventually acknowledged their mistake and settled with Ms. Williams after legal action was taken, this case highlights that repossession, even wrongful repossession, is a real possibility when dealing with Westlake. Even though in Ms. Williams’ case it was a mistake, it underlines the aggressive approach lenders can take.
Alt Text: Headshot of John Schwartz, Senior Legal Analyst at Westlake Financial Services, who initially denied responsibility in the wrongful repossession case but later negotiated a settlement.
Alt Text: Professional portrait of James Randolph Liebler II, an attorney from Liebler, Gonzalez and Portuondo law firm, who represented Westlake Financial in settlement negotiations after a wrongful repossession claim.
III. Defending Against a Westlake Deficiency Lawsuit
If Westlake repossesses your vehicle and sells it for less than what you owe on your loan, you might face a deficiency lawsuit to recover the remaining balance. However, you have defenses.
Commercially Reasonable Repossession and Sale
The Uniform Commercial Code (UCC) mandates that every aspect of a vehicle repossession and sale, including the method, manner, time, place, and terms, must be “commercially reasonable.” This means Westlake must follow specific procedures to ensure a fair process.
Here are key steps Westlake must take:
- Notice of Intent to Sell: Westlake must provide you with an authenticated notice of their intent to sell the vehicle at least 10 days before the sale. This notice must be reasonable in terms of timing, manner, and content, informing you about the sale details and your rights.
- Maximize Sale Value: Westlake is obligated to pursue the best possible return when selling your repossessed vehicle, whether through a public auction or private sale. Courts tend to scrutinize private sales more heavily if a debtor later challenges the commercial reasonableness of the sale.
- Proper Application of Sale Proceeds: After covering the costs associated with the repossession and sale (legal and administrative fees), Westlake must apply the sale proceeds to your outstanding debt. Any remaining funds after settling the debt and any claims from junior creditors should be returned to you.
If Westlake fails to adhere to these commercially reasonable standards, you may have a strong defense against a deficiency lawsuit.
Holder in Due Course Rule
The Holder in Due Course Rule offers protection to car buyers when their auto loan contracts are sold to lenders like Westlake. This rule preserves your right to raise claims and defenses against the lender that you might have against the original car dealer.
For instance, if the car dealer engaged in fraud or misrepresentation during the sale, you can use that dealer’s misconduct as a defense against Westlake’s demand for payment. The Retail Installment Contract you signed should include a notice stating that any holder of the contract is subject to claims and defenses you could assert against the seller.
In a Florida case against Westlake Financial, Danielle Gump purchased a used BMW with undisclosed significant defects from Autosports, LLC. The car had faulty headlights and engine problems shortly after purchase, which the dealer failed to rectify. When Westlake, as the holder of her loan contract, sued her for deficiency after repossession, Ms. Gump successfully used the Holder in Due Course Rule. Because Autosports breached their contract by selling a defective vehicle, Ms. Gump’s defenses against the dealer were valid against Westlake. She was also potentially entitled to attorney’s fees due to a clause in her contract.
This rule makes lenders accountable for the actions of the dealerships they work with, encouraging them to partner with reputable dealers.
Alt Text: Official seal of the Consumer Financial Protection Bureau (CFPB), an agency that has taken action against Westlake Financial for deceptive practices, highlighting consumer protection in financial services.
Statute of Limitations
In Florida, the statute of limitations for breach of written contract actions is five years. This means Westlake must file a lawsuit to recover a deficiency balance within five years from when the deficiency was established. If they sue you after this period, the lawsuit may be barred by the statute of limitations.
IV. Westlake’s Legal Troubles: DOJ and CFPB Actions
Westlake Financial has faced scrutiny and legal action from government agencies, indicating a pattern of potentially problematic practices.
Department of Justice Lawsuit
In 2017, the Department of Justice (DOJ) filed a complaint against Westlake for violating the Service Members Relief Act (SCRA). The DOJ alleged that Westlake unlawfully repossessed at least 70 vehicles from service members protected by the SCRA. This act provides certain legal protections to military personnel on active duty, including safeguards against wrongful repossession. Westlake settled this case, paying over $700,000 to affected service members, a civil penalty, and agreeing to monitoring by the DOJ.
Further DOJ monitoring revealed issues with Westlake’s handling of interest rate benefits for service members under the SCRA. The DOJ found that Westlake was not applying interest rate reductions retroactively to the date of active duty orders and improperly delayed approvals for these benefits.
Consumer Financial Protection Bureau (CFPB) Action
The CFPB also took action against Westlake and its subsidiary, Wilshire Consumer Credit, LLC, for deceptive debt collection practices. The CFPB found that Westlake engaged in illegal tactics, including:
- Deceptive Calling Practices: Using a service called “Skip Tracy” to mask caller ID and impersonate repossession companies, pizza delivery services, flower shops, or even family members to trick borrowers into answering calls and revealing vehicle locations or pressuring payments.
- False Threats and Misrepresentations: Falsely threatening criminal prosecution, misrepresenting the amount needed to release a repossessed vehicle, and falsely claiming imminent repossession to create urgency.
- Privacy Violations: Disclosing borrowers’ loan information to employers, friends, and family.
- Deceptive Loan Modification Disclosures: Failing to properly disclose that changing loan due dates or extending loan terms would result in increased interest payments.
- Misleading Title Loan Advertising: Wilshire misleadingly advertised monthly interest rates for title loans without clearly disclosing annual interest rates.
As a result of the CFPB consent order, Westlake was required to provide $44.1 million in redress and balance relief to borrowers and pay a $4.25 million civil penalty. They were also mandated to cease deceptive debt collection practices, ensure advertising compliance, and provide borrowers with accurate information about loan modifications.
V. Frequently Asked Questions About Westlake Repossession
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After how many missed payments will Westlake repossess my car?
Westlake can initiate repossession after just one missed payment. There’s no set grace period. It’s critical to contact Westlake immediately if you anticipate payment difficulties to explore options and prevent repossession.
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Is Westlake responsible for the actions of the towing company they hire?
Yes. Under Florida law and similar statutes in other states, Westlake is responsible for ensuring that the repossession process is conducted legally and without breaching the peace. “Breach of peace” includes actions that disrupt public order or decency. Repossession agents cannot break locks, damage property, or illegally enter your property. If the towing company breaches the peace during repossession, Westlake can be held liable.
Conclusion
Westlake Financial Services is a lender that can and will repossess vehicles, often after minimal payment delinquency. Understanding your rights and Westlake’s obligations is crucial if you have a loan with them or are facing repossession. Know your defenses against deficiency lawsuits, be aware of Westlake’s history of legal issues, and understand your rights regarding commercially reasonable repossession and the Holder in Due Course Rule. If you’re struggling with your Westlake auto loan, seek advice from consumer rights experts or legal counsel to protect your interests. Staying informed and proactive is your best defense in navigating the complexities of auto repossession.
