The Consumer Financial Protection Bureau has been investigating instances where legally protected classes of borrowers, such as racial minorities, may have paid larger mark-ups than other consumers with similar credit profiles. A recent settlement with a major bank included incentives for the bank to switch to a flat-fee pricing model.

Under a flat-fee system, auto traders would receive a fixed amount of compensation for each loan, rather than a sum based on negotiations with each buyer. The bank declined to consider switching to a flat-fee system.

Christopher J. Willis, a Ballard Spahr partner, said it’s possible that other big lenders will elect to switch to a new pricing model, but timing would be key. No one wants to go first and risk a sudden loss of business.

“I continue to believe that the market is headed away from dealer participation,” Mr. Willis said. “I just don’t think that the conditions for that to occur have coalesced yet.”

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Consumer Financial Services
Mortgage Banking