The financial services company Santander's subprime auto lending business is under investigation by Massachusetts Attorney General Martha Coakley's office over concerns it may have been engaged in predatory lending practices.

Coakley's office has subpoenaed Santander’s U.S. auto finance company to produce documents related to borrowers' credit histories, the interest rates they were charged and how the loan risks were described to investors, said Brad Puffer, spokesman for the AG's office.

The pattern of lending under investigation is similar to what mortgage lenders followed in the lead-up to the last housing bust, which resulted in widespread loan defaults, worthless securities and the near collapse of the banking system. It is considered unlikely that problems in the subprime auto lending market will spiral into another financial crisis, mostly because auto loans are only a fraction of mortgage debt and it's much easier to repossess a car to recover money than to foreclose on a home.

Coakley’s office is particularly looking at whether Santander lent to borrowers who were unlikely to repay the money and then sold those loans to Wall Street, where they were packaged into securities and resold to investors. Regulators worry that losses from these loans will cost consumers in the form of higher interest rates and make it harder for credit-worthy customers to get auto financing.

Santander, a Spanish bank with U.S. headquarters in Boston, issued a statement that it is cooperating with the investigation and that its policy is to comply with all lending and loan servicing laws, as well as the rules and guidance of our supervisors and regulators. Bank officials declined to comment specifically on the Massachusetts investigation. But its U.S. subsidiary, Santander Holdings USA Inc., acknowledged in regulatory filings this fall that it also was subpoenaed by the U.S. Department of Justice and several state attorneys general over its auto loan business, which accounts for nearly one-third of its U.S. assets.

Puffer said the attorney general is questioning a handful of other auto lenders, whom he declined to name, and attorneys general across the country have launched similar investigations into auto loan practices.

The New York Department of Financial Services (DFS) earlier this month said it issued subpoenas to Santander and six other auto lenders over discriminatory practices after it found a significant difference between interest rates offered to minority and other borrowers. DFS is the state's top bank regulator.

Auto lending is considered a healthy business. As investor demand pushes institutions to make more loans and dealerships to sell more cars, consumers have taken on more debt. Auto delinquency rates jumped by 13% in the third quarter of 2014 from a year earlier, driven mostly by subprime lending, according to TransUnion.

Auto lending performed well in recent years even as consumers cut back credit card, mortgage and other debt. Auto loan debt among U.S. households reached an all-time high this year, $934 billion, up 15% from 2007, when the recession began. Mortgage debt was $8.13 trillion in the third quarter.

Santander became a strong player in the subprime market in 2006, when it paid $636 million to buy Drive Financial Services, a Dallas-based lender specializing in subprime loans.

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