Fintech and Marketplace Lending

Chapman wrote the book on the marketplace lending regulatory landscape that the entire industry has come to rely upon. First published in 2013, the 2024 update covers a vast array of topics affecting the marketplace lending industry.

Amidst an ever-changing US regulatory landscape, Israeli fintechs need to carefully consider their licensing obligations when offering their products to US consumers. Chapman partner Tobias Moon provides perspective on regulatory considerations associated with the credit products Israeli fintech companies are offering to US-based consumers in the US-Israel Legal Review, published by Israel Desks.

Chapman's Kathleen Moriarty and Morrison Warren are speaking at Exchange: An ETF Experience, which is sponsored by Chapman.

Chapman's Morrison Warren hosts a session at Real Vision's The Takeover: The Future of Blockchian.

Chapman’s Morrison Warren co-moderates a panel on the future of digital asset ETFs at a live event hosted by the Chamber of Digital Commerce. Chapman is a member and sponsor of the Chamber.

A recent federal district court decision out of Massachusetts found that a bank was the true lender on a loan subsequently transferred to a trust consisting of student loans. Robinson and Spears v. Nat’l. Collegiate Student Loan Trust 2006-2, 2021 WL 1293707, Case No. 20-cv-10203 ADB (D. Mass. April 7, 2021).

In the past few days, two courts have actions that are of significance to marketplace lenders and their funding sources. 

Chapman sponsored the virtual LendIt Fintech USA 2020 conference.

In 2015, the Second Circuit Court of Appeals issued an opinion finding that, under the doctrine of federal preemption, a non-bank assignee of a bank loan could not charge and collect the rates and fees that the bank could charge and was therefore subject to state law usury limits.

The Office of the Comptroller of the Currency recently issued its final rule codifying as a regulation that the interest charged on loans that is permissible before the loan is transferred remains in effect after the loan is transferred.

The parties to the closely watched litigation by the Attorney General of Colorado as Administrator of the Colorado Uniform Consumer Credit Code against two marketplace lending platforms have agreed to settle the litigation.

On July 22, Online Lending Policy Institute hosted a conversation covering the new FDIC rule issued on June 25 which adopts the common law doctrine of “valid when made” as well as other topics related to fintech.

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have been quite active in issuing or proposing new regulations and initiatives focused on financial technology and innovation in financial services.

The Online Lending Policy Institute will be hosting a conversation with Chairman of the FDIC, Jelena McWilliams. Chapman attorney Marc Franson will also be moderating a conversation with FDIC Deputy to the Chairman & Chief of Staff, Brandon Milhorn.

On June 11, the Online Lending Policy Institute hosted a conversation covering the expansive advance notice of proposed rulemaking in the fintech space.

Chapman attorney Marc Franson moderated a conversation with OCC Senior Deputy Comptroller and Chief Counsel, Jonathan Gould, on the proposed new rulemaking from the OCC.

On May 29, the Office of the Comptroller of the Currency issued its final rule codifying as a regulation that the interest charged on loans that is permissible before the loan is transferred remains in effect after the loan is transferred.

H.R. 748 better known as the CARES Act or more informally as the $2 trillion stimulus bill signed by President Trump on March 27, 2020, contains one important provision for all consumer lenders and another two provisions related to federally-backed mortgage loans.

Chapman attorney Marc Franson spoke at the 5th Annual ABS Tech Conference.

Chapman attorney Greg Xethalis spoke at the Fordham Law Blockchain Regulatory Symposium.

Chapman attorney Marc Franson spoke at the 4th Annual Online Lending Policy Summit, hosted by the Online Lending Policy Institute. 

Chapman attorneys Kathleen Moriarty and Greg Xethalis spoke at the Digital Asset Strategy Summit. 

Chapman attorney Walt Draney spoke at the Alternative Finance Summit 2019.

Chapman attorney Greg Xethalis spoke at a program held in connection with New York Blockchain Week.

Chapman attorney Greg Xethalis spoke at LendIt Fintech USA 2019.

The state of Colorado initiated two lawsuits against online lending platforms. The suits alleged that the platforms had violated the state’s Uniform Consumer Credit Code by charging interest and some fees in excess of those allowed under Colorado law and that the consumer loan agreements utilized a non-Colorado governing law provision, also in violation of the law.

On September 30, the Governor of California signed into law Senate Bill No. 1235, which amends the California Financing Law (previously known as the Finance Lenders Law) to impose new disclosure requirements on licensed commercial lenders and brokers including for online lending programs doing business in California.

Chapman attorney Marc Franson participated in the inaugural episode of Talking Fintech with hosts Jeremy Potter and Colin Darke. 

On June 12, the Department of Treasury issued the first report in a series regarding regulation of the financial system in a manner consistent with Core Principles set forth in Executive Order 13772 signed by President Trump on February 3, 2017.

The May 2015 decision of the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC sent shockwaves through the marketplace lending industry, and nearly two years later the questions generated by this case remain largely unanswered. These questions have been further complicated by the long-awaited remand decision from the U.S. District Court for the Southern District of New York.

Chapman Partner Marc Franson participated in a panel discussion, entitled "True Lender and Madden Case: Impact on the Industry Two Years In," at the 2017 LendIt USA Conference.

On February 27, the U.S. District Court for the Southern District of New York issued its long-awaited remand decision in Madden v. Midland Funding, LLC. 

Considering the flurry of activity in the fintech arena, is there a place for banks and, if so, what role can banks play? Given that marketplace lending is the most developed form of fintech today, it can be analyzed to see how banks do play important roles and employ different strategies dealing with this emerging market segment.

On Friday, Comptroller of the Currency Thomas Curry announced that the Office of the Comptroller of the Currency will issue limited-purpose bank charters to qualified fintech companies.

A recent decision of the Maryland Court of Appeals could require marketplace lenders and others who arrange for federal or state banks to fund consumer loans to consumers residing in Maryland to obtain licenses as “credit services businesses” and could prohibit them from arranging those loans at interest rates exceeding the applicable Maryland usury caps.

On May 10, 2016 the U.S. Department of the Treasury published a white paper entitled “Opportunities and Challenges in Online Marketplace Lending.” The White Paper follows the “Request for Information” which the Department published in July 2015 to solicit public input on various topics concerning marketplace lending.

Pratt's Privacy & Cybersecurity Law Report republished a special edition of Chapman's To the Point! newsletter. 

On Friday, March 18, 2016, the United States Supreme Court issued a call for the views of the Solicitor General of the United States before it decides whether to hear an appeal from a Second Circuit Court of Appeals decision rendered last May in the case of Madden v. Midland Funding, LLC.

On March 7, the CFPB announced that it is accepting consumer complaints about online marketplace lenders, giving consumers “a greater voice in these markets and a place to turn to when they encounter problems.” The CFPB also issued a bulletin to provide consumers with information on marketplace lending.

A recent decision of the U.S. District Court for the Eastern District of Pennsylvania has highlighted once again the regulatory risks that the so-called “true lender” doctrine can create for internet-based lenders who partner with banks to establish exemptions from applicable state consumer protection laws.

A recent decision of the Maryland Court of Special Appeals could impact marketplace and other lenders who arrange for federal or state banks to fund consumer loans in Maryland at rates in excess of the applicable Maryland usury caps. 

The Banking Law Journal republished a Chapman Client Alert.

In the case of Madden v. Midland Funding, LLC, the Second Circuit narrowly interpreted the scope of federal preemption of state usury laws under the National Bank Act as such laws apply to certain non‑bank loan assignees.

In this edition:

• Telephone Consumer Protection Act Declaratory Ruling
• CFPB First Monthly Complaint Report
• Treasury Department Inquires about Marketplace Lending

In this edition:

• U.S. Supreme Court Will Not Hear CashCall Case – Uncertainty for Marketplace Lenders?
• FinCEN Current Priorities
• Guidance on Youth Savings Programs
• Overdraft Update – CFPB Enforcement Action