Madden v. Midland Appeal Rejected
Alternative lenders might have reason to lose a little bit of sleep going forward. The United States Court of Appeals for the Second Circuit shot down a request for a rehearing of Madden v. Midland. The original ruling stated that third party debt buyers are not covered under National Bank Act pre-emption. That decision had major ramifications for alternative lenders who often rely on banks to issue the loans and then immediately sell them to the “lender” to book and service.
You can read a legal brief of the case here.
Lending Club’s CEO recently addressed this case and he explained that he believed his company would be unaffected because of their choice of law provision.
And Patrick Siegfried, Esq, the author of the Usury Law Blog, has previously said that Madden v. Midland may be the start of new usury Litigation.
Last modified: August 13, 2015