On February 4, 2021, acting CFPB Director Dave Uejio published a blog post sharing statements recently made to the staff of the CFPB’s Division of Research, Markets, and Regulations (RMR). In his post, Uejio stressed two policy priorities for the CFPB: “(1) relief for consumers facing hardship due to COVID-19 and the related economic crisis
Florida Court Affirms That Merchant Cash Advance Product Not Subject to Usury Statute
This month, a Florida appellate court held that a merchant cash advance (MCA) purchase and sale agreement was not a “disguised loan” and, therefore, was not subject to Florida’s criminal usury statute. MCA purchase and sale agreements, which offer merchants a fast and efficient way to obtain funding for their operations, are not loans. Rather,
New York Enacts Small Business Truth in Lending Disclosure Requirement Affecting Small Business Loans, MCAs, and Other Forms of Business Finance
A new year brings new compliance requirements for non-banks and fintechs conducting business in New York, including Merchant Cash Advance (MCA) companies. On December 23, 2020, New York Gov. Andrew Cuomo signed SB5470 expanding the New York Financial Services law to require non-banks and fintechs to provide small businesses with lending disclosures similar to those
CFPB Releases Small Business Lender Compliance Cost Survey to Aid in Dodd-Frank 1071 Rulemaking
Recently, the CFPB released an online survey designed to collect information from “institutions engaged in small business financing” regarding one-time costs of compliance with Dodd-Frank 1071. Section 1071 of the Dodd-Frank Act, which we have discussed in detail on this blog, creates robust reporting requirements for lenders engaged in lending to women-owned, minority-owned, and
New Mortgage Licensing Requirements Come to the West
During this pandemic, both Idaho and South Dakota have been busy adding new mortgage licensing requirements. As discussed below, these new licensing requirements will materially impact mortgage lenders and servicers doing business in these states.
Idaho
Earlier in 2020, Idaho passed H0401, which amended the definition of “mortgage lender” to include mortgage companies that
FTC and NY AG Target Merchant Cash Advance Companies
On June 10, 2020, the Federal Trade Commission and the New York Office of the Attorney General filed actions against two merchant cash advance (MCA) companies – RCG Advances and Ram Capital Funding – and individuals associated with both companies in the Southern District of New York and the Supreme Court of the State of
Dodd Frank 1071 Update: CFPB Status Report Sheds Light on Implementation
In January, we discussed the upcoming implementation of Section 1071 of the Dodd-Frank Act, which amends the Equal Credit Opportunity Act to require certain reporting requirements for specific categories of business loans. The implementation of Section 1071, which contains reporting and disclosure requirements that are comparable to the Home Mortgage Disclosure Act (HMDA), through an
Lender Liability and False Claims Act Issues Under the Paycheck Protection Program
Among the most significant aspects of the CARES Act is the $660 billion small business forgivable loan program known as the Paycheck Protection Program (PPP), and it was perhaps inevitable that the administration of the program would be followed by a wave of related litigation. Already, the PPP application process has generated lawsuits over the
Pre-Bankruptcy Automatic Stay Waivers – More Valuable Than Ever These Days?
In the very unusual period in which we find ourselves today, it seems to be common wisdom that an avalanche of commercial loan defaults is coming. As such, it is a good time to take a fresh look at the terms and provisions used in commercial workout documents, whether in a simple agreement that extends
Individual Employs New Small Business Bankruptcy Law to Modify Mortgage
Small businesses often struggle to reorganize in bankruptcy. To address this issue, Congress passed the Small Business Reorganization Act of 2019 (the SBRA). The SBRA took effect in February 2020 and makes small business bankruptcies faster and less expensive.
The recent case of In re Ventura, 2020 WL 1867898 (E.D.N.Y. Apr. 10, 2020) addresses