“Call protection” (which you may also hear referred to variously as a “prepayment fee”, “prepayment premium”, “call premium”, “prepayment penalty”, “non‑call”, “hard call”, “soft call” or “make‑whole”) is a core economic term...more
It may not be the next Taylor Swift song, but a prepayment changes the Lender-Borrower relationship. In a swap, we all know there are consequences. Rather than a “breakage cost”, the swap market just calls it an early...more
A new year brings new compliance requirements for non-banks and fintechs conducting business in New York, including Merchant Cash Advance (MCA) companies. On December 23, 2020, New York Gov. Andrew Cuomo signed SB5470...more
Costs associated with LIBOR's discontinuation could tip the scale in favour of fixed-rate loans in real estate finance. LIBOR's phasing out in 2021 is set to shake up the real estate finance market, amplifying the appeal...more
Financial institutions that operate only in the United States (US) or only in the European Union (EU) might be excused for believing that they face unreasonable burdens under local consumer credit protection laws. Broadly...more
AB 539 was cleared by the California Senate’s Banking Committee on June 26. The bill would change several aspects of the California Financing Law (CFL), including by setting new interest rate caps, imposing new rules...more
Last week, by a vote of 60 to 4 (with 16 not voting), the California Assembly cleared AB 539, which would change several aspects of the California Financing Law (CFL), including by setting new interest rate caps, imposing new...more
A bill introduced last week in the California State Assembly could change the consumer lending landscape in California considerably....more
659 Chestnut LLC v. Parke Bancorp Inc., C.A. N17-05-114 MMJ (December 6, 2018) - This is an interesting decision because it deals with the rare instance when a party can prove a mutual mistake as to a contract’s terms so...more
...Just as the violin student may overlook the importance of the bow, the real estate investor may overlook the importance of financing options and structure. Yet, the types and terms of financing used in the capital stack...more
The IRS announced yesterday, in IR 2017-210 (the “Advisory”), that state property taxes must be “assessed” in 2017 in order for such taxes to be prepaid in calendar year 2017 and therefore deductible in 2017. The Advisory...more
Under California law, a provision of a contract found to impose a penalty is unenforceable as a forfeiture and contrary to public policy. The characteristic feature of a penalty is the lack of proportional relation between...more
On November 17, 2016, the US Court of Appeals for the Third Circuit in Delaware Trust Co. v. Energy Future Intermediate Holding Co. LLC, No. 16-1351 (3d Cir. Nov. 17, 2016) clarified the often-muddy interplay between...more
In re Oak Knoll Assocs., L.P., 525 B.R. 175 (Bankr. D. Me. 2015) – A real estate broker sought allowance of an administrative expense claim for his commission in connection with a sale of real estate. The debtor and...more
Brandywine Townhouses, Inc. v. Fed. Nat’l Mortgage Ass’n (In re Brandywine Townhouses, Inc.), 518 B.R. 671 (Bankr. N.D. Ga. 2014) – The debtor objected to a secured creditor’s claim on a number of grounds: it did not...more
Kaisa Crisis - The recent financial crisis of Kaisa Group Holdings Ltd. (“Kaisa”), a large-scale Chinese property developer listed on the Hong Kong Stock Exchange (“SEHK”), has been in the headlines for several months....more
A California Court of Appeals recently opined on what appear to be fairly normal yield maintenance provisions. The Borrower defaulted. The bank accelerated the note and later foreclosed. The note provided that the prepayment...more
In the context of make-whole premiums, court decisions suggest that the applicability of the premium upon a refinancing in bankruptcy will be governed by the wording of the debt documents, and that if an automatic...more
On August 26, 2014, the U.S. Department of Housing and Urban Development (HUD) issued a final rule to allow FHA-approved lenders to charge an FHA loan borrower interest only through the date the loan is prepaid. The final...more
The CFPB has issued a proposed rule clarifying and making technical amendments to the 2013 Escrows Final Rule issued by the Bureau in January 2013. This is the first of the CFPB’s planned issuances to clarify and provide...more
A lender’s entitlement to a make-whole premium, that is, a prepayment penalty designed to compensate the lender for the loss of interest payments it would have received had the borrower continued to service the debt through...more