Papers by Catherine M Brennan
During the past year, small-dollar lenders continued to face increasing legal and regulatory scru... more During the past year, small-dollar lenders continued to face increasing legal and regulatory scrutiny at the state and federal level.1 One large lender blamed increasing regulatory pressure as the leading reason for ceasing to offer payday and title loans. This survey reviews some of the key investigation, enforcement, litigation, legislation, and rulemaking developments since August 2014
Small-business lenders that proceed online must confront a variety of issues under state and fede... more Small-business lenders that proceed online must confront a variety of issues under state and federal laws. The authors discuss in particular exemptions from the TILA for business loans, consumer laws that may apply, and licensing and usury issues. They also address electronic contracting and the new reporting requirements under Section
For many years, banks have partnered with non-bank companies to offer loan
programs to consumers.... more For many years, banks have partnered with non-bank companies to offer loan
programs to consumers. Some of these bank partnerships have been challenged
by consumer advocates through so-called “true lender” litigation in state and federal
court, by state regulators, and through criminal prosecutions.
The crux of the true lender challenge is that, at the time a loan is originated, the
lender on the face of the loan paper, the bank, is not the true lender. Rather, the
true lender is another non-bank financial company that marketed and sold the financial
product or service to the consumer. If a true lender challenge is successful,
the non-bank financial company may face significant civil and criminal penalties
for failing to be licensed as a lender, and the loans may be usurious and void in
some jurisdictions. Tribal lending programs have also been challenged in true
lender litigation. Participants in the bank partnership space should be familiar
with the tribal lending cases, as favorable outcomes for true-lender-test proponents
in tribal lending cases make it more likely that a true lender challenge
will be successful with respect to a bank partnership. This survey reviews key developments
in true lender challenges in the past year.
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Papers by Catherine M Brennan
programs to consumers. Some of these bank partnerships have been challenged
by consumer advocates through so-called “true lender” litigation in state and federal
court, by state regulators, and through criminal prosecutions.
The crux of the true lender challenge is that, at the time a loan is originated, the
lender on the face of the loan paper, the bank, is not the true lender. Rather, the
true lender is another non-bank financial company that marketed and sold the financial
product or service to the consumer. If a true lender challenge is successful,
the non-bank financial company may face significant civil and criminal penalties
for failing to be licensed as a lender, and the loans may be usurious and void in
some jurisdictions. Tribal lending programs have also been challenged in true
lender litigation. Participants in the bank partnership space should be familiar
with the tribal lending cases, as favorable outcomes for true-lender-test proponents
in tribal lending cases make it more likely that a true lender challenge
will be successful with respect to a bank partnership. This survey reviews key developments
in true lender challenges in the past year.
programs to consumers. Some of these bank partnerships have been challenged
by consumer advocates through so-called “true lender” litigation in state and federal
court, by state regulators, and through criminal prosecutions.
The crux of the true lender challenge is that, at the time a loan is originated, the
lender on the face of the loan paper, the bank, is not the true lender. Rather, the
true lender is another non-bank financial company that marketed and sold the financial
product or service to the consumer. If a true lender challenge is successful,
the non-bank financial company may face significant civil and criminal penalties
for failing to be licensed as a lender, and the loans may be usurious and void in
some jurisdictions. Tribal lending programs have also been challenged in true
lender litigation. Participants in the bank partnership space should be familiar
with the tribal lending cases, as favorable outcomes for true-lender-test proponents
in tribal lending cases make it more likely that a true lender challenge
will be successful with respect to a bank partnership. This survey reviews key developments
in true lender challenges in the past year.