ADVERTISEMENT

The lending unit of General Motors Co., the largest U.S. automaker, said the Department of Justice subpoenaed documents related to its subprime lending practices.

The July 28 subpoena covers documents related to origination and securitization of subprime loans since 2007, GM Financial said in a filing Monday with the U.S. Securities and Exchange Commission. The Justice Department also is seeking information on underwriting criteria and warranties.

The inquiry by federal prosecutors adds another challenge for GM Chief Executive Officer Mary Barra, who is already grappling with a separate Justice Department investigation over the automaker’s slow handling of potentially fatal defects in millions of its small cars. While that crisis has roiled for six months, GM’s U.S. sales have kept increasing with new products such as the Chevrolet Tahoe and Buick Encore.

Easy credit has helped fuel industrywide U.S. auto sales, which are on pace for the best year since 2006.

GM Financial, the captive-finance arm of Detroit-based GM, represents the automaker’s efforts to rebuild its ability to finance cars in-house after selling off 51 percent of then-GMAC to Cerberus Capital Management LP in 2006.

Following a bankruptcy reorganization in 2009, the automaker in 2010 purchased Fort Worth, Texas-based AmeriCredit Inc., which it renamed GM Financial, for $3.5 billion to write loans for subprime consumers and boost car sales. In late 2012, GM announced a deal to purchase Ally Financial Inc.’s international operations to help expand GM Financial’s efforts overseas.

The Justice Department has been looking closely at the auto lending industry. In December, Ally agreed to pay a record $98 million to settle Justice Department and regulatory claims that the firm helped car dealers inflate the cost of auto loans to black and Hispanic borrowers.