There has been a recent trend in Texas litigation of borrowers asserting claims or counterclaims against their lenders for breach of fiduciary duty. The first thing that a plaintiff has to establish in such a claim is that the lender actually owed it a fiduciary duty—a serious legal relationship that only arises in certain defined […]
Do Banks Owe Their Borrowers a Fiduciary Duty?
Nuts and Bolts of Funding a Main Street Loan
By Gordon Russell and Kathleen Thompson A Lender has two choices for funding a Main Street Loan. A Lender may fund a Main Street Loan and then seek to sell a participation interest in said Main Street Loan to the Main Street SPV. A Lender may condition its extension of credit to the Eligible Borrower […]
UPDATED: July 31 Changes to Main Street Lending FAQs
By Gordon Russell and Kathleen Thompson The following documents were updated by the Federal Reserve Friday, July 31st: (1) Lender Registration Certifications and Covenants; (2) Loan Participation Agreement Transaction Specific Terms; (3) Loan Participation Agreement Standard Terms and Conditions; (4) Servicing Agreement; (5) Assignment-in-Blank; (6) Co-Lender Agreement Transaction Specific Terms; (7) Co-Lender Agreement Standard Terms […]
KRCL CARES: MAIN STREET LENDING TASK FORCE – A Comparison of the June 26, 2020 FAQs to the June 20, 2020 FAQs
By Gordon Russell and Kathleen Thompson On Friday, June 26th, the Federal Reserve circulated a revised version of its Frequently Asked Questions (FAQs) for the Main Street Lending (“MSL”) Program. This blog reviews the five new FAQs that were added and the two minor changes that were made. Specifically, the new FAQs include H.12-H.14 relating […]
Appraisal Requirements Deferred for 120 Days for Certain Real Estate Transactions Due to COVID-19
On April 14, 2020, the Office of the Comptroller of Currency, Board of Governors of the Federal Reserve System and Federal Deposit Insurance Corporation (collectively, the “Agencies”) issued an interim final rule (the “Interim Rule”) deferring requirements for appraisals and evaluations for certain real estate transactions for 120 days. Title XI of the Financial Institutions […]
Warning Paycheck Protection Program Lenders! Limitations on Permissible Loan Applicants Lead To Class Action Lawsuits
In an effort to manage the huge volume of loan applications being received under the Paycheck Protection Program (“PPP”) created under the Coronavirus Aid, Relief, and Economic Security Act, H.R. 748 (“CARES Act”), some banks have placed limitations on those eligible to apply for PPP loans. Commonly, banks are requiring that PPP applicants have a […]
Five Years Later: Madden v. Midland Funding, LLC’s Limited Impact on the Valid-When-Made Doctrine
The “valid-when-made doctrine” is an important component of usury law. It provides that a loan that has a non-usurious interest rate when it is made cannot become usurious if the loan is subsequently transferred to a third party, even if the third party is in a different state with different lending laws. For example, if […]
Acceleration Notices Can Be Unilaterally Withdrawn Despite Borrower’s Claim of Detrimental Reliance
Every lender that has accelerated a note in order to pursue foreclosure has likely faced the argument from a borrower at one time or another that foreclosure proceedings were filed too late because of a prior acceleration that started the statute of limitations. The U.S. Court of Appeals for the Fifth Circuit has attempted to […]
Law Firms Conducting Foreclosures Are Not Debt Collectors
In a win for foreclosure lawyers, today the United States Supreme Court ruled that law firms that conduct non-judicial foreclosures are generally not considered debt collectors for purposes of the Fair Debt Collection Practices Act. In Obduskey vs. McCarthy & Holthus LLP (No. 17-1307), the Supreme Court addressed whether a law firm hired to carry […]
Considerations For Banks In Preparing For The End Of LIBOR
By Michael A. Attaway and Charles E. Aster On July 27, 2017, Andrew Bailey, the head of the U.K. Financial Conduct Authority (FCA), surprised the banking industry (and other financial markets) when he announced the London Interbank Offered Rate (LIBOR) may cease to be published as early as the end of 2021. In his speech, […]