News & Analysis as of

Usury

OCC small dollar lending bulletin gets mixed reviews from consumer advocates

by Ballard Spahr LLP on

The bulletin issued this week by the OCC encouraging the banks it supervises “to offer responsible short-term, small-dollar installment loans” quickly met with mixed reviews from consumer advocates....more

Marketplace Lending Update #3: Kabbage Heads to Court

A recently filed California lawsuit raises the stakes in the ongoing challenge to the “bank origination model.” The lawsuit, Barnabas Clothing, Inc. v. Kabbage, Inc., was filed on March 22, 2018 in Superior Court in Los...more

Default Judgment Entered on a Promissory Note Even Though Claim Likely Violated Criminal Usury Laws

by Farrell Fritz, P.C. on

So a plaintiff obtains a default judgment against a defendant on a promissory note case. Defendant fails to appear or defend. ...more

California Usury Law: A Search for Clarity around Compound Interest

California usury law is addressed in multiple places: the California Constitution, statutes, case law, and initiative measures. Due to the patchwork nature of this body of law, differing interpretations and ambiguity are...more

“True Lender” Litigation on the Rise: Recent Litigation and Enforcement Actions Challenge Traditional Bank Partnership Model

Over the last two years the financial industry has seen an uptick in litigation and enforcement actions aimed at banks and their non-bank lending partners. These actions have primarily challenged the validity of the bank...more

Marketplace Lending Update #2: Another Rocky Mountain Remand

In our prior Clients & Friends Memo “Who’s My Lender?” published on March 14, 2018, we analyzed two actions brought against marketplace lenders, one against Kabbage Inc. (“Kabbage”) in federal court in Massachusetts and the...more

3rd Circuit Invalidates Arbitration Provision on Consumer Loan Due to Illusory Arbitral Forum

by Weiner Brodsky Kider PC on

The U.S. Court of Appeals for the Third Circuit recently found a consumer loan agreement’s arbitration provisions were unenforceable because: (i) the arbitral forum designated by such provisions’ forum selection clause was...more

Marketplace Lending Update: Who’s My Lender?

Over the last several weeks, two notable cases in federal court challenging certain aspects of the business model of marketplace lending companies headed down separate paths. ...more

Madden Fix Bill Passes House, Faces Uncertain Fate In Senate

The United States House of Representatives passed H.R. 3299, commonly known as the “Madden fix” bill, by a vote of 245-171 on February 14, 2018. The bill, which is officially entitled “Protecting Consumers’ Access to Credit...more

Passive Investors in Payday Lending Operations Get Partial Reprieve

While tossing certain claims brought by Pennsylvania’s attorney general, a federal judge denied part of a motion to dismiss brought by online short-term lenders in an action accusing them of “renting” Native American tribes...more

House passes “Madden fix” bill

by Ballard Spahr LLP on

By a vote of 245-171, the House passed H.R. 3299, the “Madden fix” bill (whose official title is the “Protecting Consumers’ Access to Credit Act of 2017.”) In Madden, the Second Circuit ruled that a nonbank that purchases...more

Top 10 New York Commercial Division Cases and Developments of 2017

In 2017, the New York Commercial Division continued to implement new rules and refine existing rules in order to streamline litigation in the court. The year also saw some key decisions by the Commercial Division as well as...more

Federal jury convicts operator of payday lenders sued by CFPB and FTC

by Ballard Spahr LLP on

Richard Moseley Sr., the operator of a group of interrelated payday lenders, was convicted by a federal jury on all criminal counts in an indictment filed by the Department of Justice, including violating the Racketeer...more

Update on CFPB/NY AG lawsuit against RD Legal Funding

by Ballard Spahr LLP on

RD Legal Funding, LLC is seeking to dismiss the lawsuit filed against it, two of its affiliates, and their individual principal in February 2017 by the CFPB and the New York Attorney General in a NY federal district court...more

California Supreme Court to Decide Key Finance Lender Law Usury and Unconscionability Issue

by Ballard Spahr LLP on

Although the California Finance Lenders Law (the CFLL) does not limit the interest rates that may be charged on loans of $2,500 or more, Section 22302 of the law expressly states that loans made under the CFLL may be held...more

Minnesota Supreme Court rules schools needed lending license to make student loans

by Ballard Spahr LLP on

The Minnesota Supreme Court recently ruled that two for-profit postsecondary education schools had charged usurious interest rates on student loans and could not charge rates greater than 8% without obtaining a lending...more

Real Estate Finance: Massachusetts

by WilmerHale on

A Q&A guide to real estate finance law for borrowers and lenders in Massachusetts. This Q&A addresses state laws relating to security instruments, usury laws, limitations on personal liability, recording requirements and...more

Ten (plus one) things to consider when you do a leveraged finance deal in Italy

by White & Case LLP on

European Leveraged Finance Alert Series: Issue 6 - Legislative changes in Italy (starting from 2012) facilitated leveraged transactions facilitating security in both bank and bond financings and aligning bond and bank...more

Can Usury Ever Be Waived?

by Allen Matkins on

California courts have defined “usury” as “the exacting, taking or receiving of a greater rate than is allowed by law, for the use or loan of money.” Ross v. Wheeler 140 Cal. App. 217, 222 (1934). The California Constitution...more

When is a Working Capital Agreement a Loan? It Depends on Your Claim

Suppose you’ve entered into a financial arrangement that resembles a lending agreement, but it is not formally designated as such, and you think you’re paying too much....more

Equity Kickers and the Criminal Rate of Interest

by Bennett Jones LLP on

Entering into a loan transaction that also has an equity component, such as the issuance of shares or warrants, has previously given rise to some concern that the loan could ultimately run afoul of the 60 percent criminal...more

CFPB doubles down on its attacks against online tribal lenders

by Ballard Spahr LLP on

In a new lawsuit filed in an Illinois federal district court, the CFPB alleges that four online tribal lenders engaged in unfair, deceptive, and abusive acts or practices in violation of the Consumer Financial Protection Act...more

CFPB Lawsuit Targets High-Interest Online Lenders

by Goodwin on

On April 27, 2017, the Consumer Financial Protection Bureau (CFPB) announced the filing of a suit against four online lenders alleging that the lenders illegally collected debts on invalid loans. The complaint alleged...more

Controversial NY lender and student loan servicer licensing proposals removed from budget bill

by Ballard Spahr LLP on

A New York lender licensing proposal that threatened to create new regulatory burdens for financial service providers and to potentially adversely affect credit availability to New York residents and businesses, has been...more

Banks Seek Judgment That Loans Facilitated By Online Platforms Are Exempt From Colorado Lending Laws

In the last two weeks, WebBank and Cross River Bank—federally insured banks chartered in Utah and New Jersey, respectively—filed separate federal court actions (WebBank Complaint; Cross River Bank Complaint) against the...more

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