A divided panel of the U.S. Court of Appeals for the Tenth Circuit has ruled in Walker v. BOKF, National Association that the extended overdraft fees charged by BOKF were not “interest” under the National Bank Act (NBA).  The Tenth Circuit’s ruling on what it called “an issue of first impression in this circuit” follows similar rulings by the First and Fifth Circuits.… Continue Reading

Opportunity Financial, LLC (OppFi) has filed a Complaint for Declaratory and Injunctive Relief in a California state court against the California Department of Financial Protection and Innovation (DFPI), seeking to block the DFPI from applying California usury law to loans made through OppFi’s partnership with Fin Wise Bank (Bank), a state-chartered FDIC-insured bank located in Utah.… Continue Reading

The New Mexico House and Senate have both passed House Bill 132 which would create a 36% annual percentage rate (APR) cap on loans up to $10,000 made under the New Mexico Bank Installment Loan Act of 1959 (BILA) and the New Mexico Small Loan Act (SLA).  In an apparent effort to reach non-bank participants in bank-model programs, the bill would also expand the SLA’s anti-evasion provision. … Continue Reading

A California federal district court judge has rejected challenges to the OCC’s and FDIC’s Madden-fix rules brought in two separate lawsuits by state attorneys general.  The OCC rule is codified at 12 C.F.R. Section 7.4001(e) and the FDIC rule is codified at 12 C.F.R. Section 160.110(d).  The rules provide that a loan made by a national bank, federal savings association, or federally-insured state-chartered bank that is permissible under applicable federal law (Section 85 of the National Bank Act (NBA) or Section 27 of the Federal Deposit Insurance Act (FDIA)) is not affected by the sale, assignment, or other transfer of the loan.… Continue Reading

The U.S. Court of Appeals for the Third Circuit recently ruled that the application of Pennsylvania usury laws to auto title loans made to Pennsylvania residents who travel outside of Pennsylvania to obtain such loans does not violate the Commerce Clause of the U.S. Constitution.  The decision could have significant implications for all providers of consumer credit whose operations involve cross-border lending.… Continue Reading

Last week, the California Department of Financial Protection and Innovation (DFPI) announced that it had entered into a consent order with Wheels Financial Group, LLC d/b/a LoanMart, a California-based company that markets and services automobile title loans.  LoanMart was the subject of an investigation launched in September 2020 in which the DFPI (then still named the Department of Business Oversight) was investigating whether LoanMart, through its partnership with a Utah bank, was evading the interest rate cap in the Fair Access to Credit Act (FACA). … Continue Reading

A group of Democratic House members, joined by a Republican House member, has reintroduced a bill  (H.R. 5974) that would make consumer credit extended to any consumer subject to the Military Lending Act’s “all-in” 36% rate cap.

The bill provides that 10 U.S.C. Sec. 987(b) applies “to a creditor who extends consumer credit to a consumer to the same extent as such section applies to a creditor who extends credit to a covered member or a dependent of a covered member.”… Continue Reading

Ballard Spahr attorneys have now completed a months-long project in updating and expanding a 2017 White Paper addressing bank-model lending—programs involving partnerships between banks (or savings associations) and fintech or other nonbank companies in the interstate delivery of loans.

The new White Paper, which runs 49 pages single-spaced, is designed to serve as a comprehensive survey of laws, cases and regulatory attitudes addressing bank-model lending.  … Continue Reading

The OCC’s true lender rule was intended to create a bright line test for when a national bank or federal savings association should be considered the “true lender” in the context of third party partnerships but Congress overturned the rule.  After reviewing the relevant background, we examine the Congressional override’s implications for future federal true lender rulemaking and its impact on existing law, key federal and state court challenges and decisions, state legislative and administrative developments, and risk mitigants for bank/nonbank partnerships, including potential loan program structures.… Continue Reading