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 […]
Five Years Later: Madden v. Midland Funding, LLC’s Limited Impact on the Valid-When-Made Doctrine
Acceleration Notices Can Be Unilaterally Withdrawn Despite Borrower’s Claim of Detrimental Reliance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, […]
New Texas Online Notarization Law Allows Remote Acknowledgment in Domestic and Cross-Border Transactions
The 85th Session of the Texas Legislature passed H.B. 1217 to allow online notarization, making it the third state (after Virginia and Montana) to allow notaries to perform remote notarial acts. Effective on July 1, 2018, the new law enables a signing party to acknowledge documents via audio-visual communication, while retaining the option to physically […]
4 Tips for a Better (Loan) Workout
Business bankruptcy filings have dropped by more than one-third over the last five years. One potential reason for this drop is that lenders have increasingly sought non-bankruptcy solutions for defaulted or distressed loans. Virtually all non-bankruptcy solutions involve some form of “workout.” Below are some practical tips for lenders to consider both before and during […]
Bill That Would Overturn Madden v. Midland Funding, LLC And Codify Valid-When-Made Doctrine Passes In House
The House of Representatives recently passed H.R. 3299, the “Protecting Consumers Access to Credit Act of 2017.” This act codifies the “valid-when-made” doctrine and ensures that bank loans that fall within the maximum rate of interest allowable under federal law when made will remain valid regardless of whether a bank subsequently sells or assigns the […]
Are Your Loan Documents Ready For The Death Of LIBOR?
The London Interbank Offered Rate (“LIBOR”) is a nearly 50-year old global borrowing benchmark which underpins more than $350 trillion of financial products. LIBOR is based on daily submissions from a panel of banks estimating the interest rate on which they estimate they would be able to borrow funds from one another in five different […]
Overdraft Policies Require More Than Compliance With Regulation E
In the past few years, the Consumer Financial Protection Bureau (“CFPB”) has focused on taking action against multiple financial institutions for their overdraft services practices. These practices are regulated by the Federal Reserve Board’s “Regulation E”, as restated by the CFPB in 12 C.F.R. § 1005.17. Regulation E prohibits financial institutions from assessing overdraft fees […]
U.S. Supreme Court Dismisses Writ in Recharacterization of Debt Proceeding
Late last week, the United States Supreme Court said that it erred when it granted certiorari to resolve a bankruptcy dispute over whether state or federal law should apply to the recharacterization of debt. In In re Province Grande Olde Liberty, LLC, the Fourth Circuit affirmed the judgment of the bankruptcy court and district court, both […]