On September 3, 2020, the California Department of Business Oversight (DBO) announced that it has launched a formal investigation into whether Wheels Financial Group, LLC d/b/a LoanMart, formerly one of California’s largest state-licensed auto title lenders, “is evading California’s newly-enacted interest rate caps through its recent partnership with an out-of-state bank.” Coupled with the California
true lender
Ballard Spahr Submits Comment Letter to OCC in Support of Proposed True Lender Rule
Ballard Spahr LLP has submitted a comment letter to the OCC in support of its proposed rule, “National Banks and Federal Savings Associations as Lenders” (the “Proposed Rule”). As detailed in our letter, we applaud the Proposed Rule, which would establish a clear and logical bright line confirming and clarifying that a bank (or…
Colorado Settlement Provides a Possible Path Forward for Certain Bank-Fintech Online Lending Partnerships
We have previously blogged about the lawsuits filed by the Colorado Attorney General against fintechs Avant and Marlette Funding and their partner banks WebBank and Cross River Bank. These lawsuits challenged on Madden and “true lender” grounds the interest rates charged under the defendants’ loan programs. The AG has now settled with the defendants and…
Federal court rejects Madden and finds loan valid when made per OCC final rule, but remands case to allow discovery on true lender question
By Jeremy T. Rosenblum & Mindy Harris on
In an order issued August 12, 2020, the United States District Court for the District of Colorado relied on the OCC’s “Madden fix” rule to hold that, under Section 27 of the Federal Deposit Insurance Act, 12 U.S.C. § 1831d, a promissory note with an interest rate that was valid when made remains valid…
OCC issues proposed “true lender” rule
Less than two months after issuing its final “Madden fix” rule, the OCC has now issued a proposed rule to address when a national bank or federal savings association should be considered the “true lender” in the context of a third party relationship. Comments on the proposal, which was published in today’s Federal …
OCC to propose “true lender” rule
By Alan S. Kaplinsky on
Posted in OCC, Regulatory and Enforcement
In remarks made during a recent online event held by the Online Lending Policy Institute, Acting Comptroller of the Currency Brian Brooks indicated that the OCC will soon be issuing a “true lender” proposed rule to supplement its recently-released final rule intended to remove the legal uncertainty created by the Second Circuit’s Madden decision.
While…
House passes “Madden fix” bill
By Alan S. Kaplinsky 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 loans from a national bank could not charge the same rate of interest on…
Bipartisan bill to provide “true lender” fix introduced in House
By Scott M. Pearson on
A bipartisan group of five House members introduced a bill (H.R. 4439) last month that is intended to address the so-called “true lender” issue, which creates risk with respect to some loans made by banks with substantial marketing and servicing assistance from nonbank third parties, and then sold shortly after origination. These loans…
Colorado UCCC Administrator faces challenge in bank-model dispute
By Taylor R. Steinbacher on
Posted in Marketplace Lending, Regulatory and Enforcement
Two state-chartered banks recently filed complaints for declaratory judgment and injunctive relief against the Administrator of the Uniform Consumer Credit Code for the State of Colorado, Julie Ann Meade. The complaints were filed in Colorado federal court and seek to permanently enjoin enforcement actions brought by Meade against the banks’ non-bank partners who, according to…