Today's Trends in Credit Regulation

Welcome to Hudson Cook Insights - a collection of articles written each month by the attorneys of Hudson Cook, LLP, in an effort to keep their clients and other compliance professionals informed about current trends and developments in consumer credit finance that will affect the way they do business.

December 2018/January 2019

Proposed Appraisal Requirements Would Exempt More Transactions

By Jed Mayk and Caleb Rosenberg

The Office of the Comptroller of the Currency, Federal Reserve, and Federal Deposit Insurance Corporation (the "Regulators") recently issued a notice of proposed rulemaking that seeks to amend exemptions to appraisal requirements for certain regulated depository institutions. Currently, an exemption applies to real estate transactions of $250,000 or less, and the amendment would raise that threshold to $400,000 or less. Additionally, the recently enacted Economic Growth, Regulatory Relief and Consumer Protection Act (the "Act") exempts from the appraisal requirement certain residential transactions in rural areas (the "Rural Exemption"). The amended regulations would also incorporate this change, however, if the Regulators retain the $400,000 threshold in the final rule, the Rural Exemption will be superfluous. article continued

Auto Direct Lending on the Upswing

By Nicole Munro and Nora Udell

It's the time of year for predictions and several recent headlines have signaled that traditional auto finance may have a competitor moving in - direct lending.[1] In recent months, we've seen traditional and non-traditional finance sources jump into the direct lending marketplace. But isn't that what finance companies do - auto lending? Not exactly. Is the difference important? Yes, yes, a thousand times yes. Auto secured retail installment sales (i.e. indirect sales financing) and auto secured loans (i.e. direct lending) are different financial products. Although compliance obligations are similar, the obligations are not the same because direct and indirect lending programs are often governed by different state law and federal laws apply differently to the products. article continued

How Artful Drafting and Good Compliance Practices Can Save Contracts from an Untimely Death

By Blake Sims and Dailey Wilson

If you're like most consumer financial services providers you probably called up your lawyer years ago and had them draft an arbitration clause requiring claims or disputes to be resolved before an arbitrator, rather than through a traditional court proceeding. You inserted it into your transaction documents. And you probably haven't thought about it since. If this is you, you certainly aren't alone. But what happens when your arbitration clause arguably doesn't evolve to address changes in the law or the industry? On October 16, 2018, the Supreme Court of Missouri issued its ruling in A-1 Premium Acceptance, Inc. v. Hunter, answering this very question. article continued

Clash of the Titans: Federal v. State Interests in Bank Partnerships

By Catherine M. Brennan

There is a slow-moving high drama happening in Colorado between the Federal Deposit Insurance Corporation ("FDIC") and the Administrator of the Colorado Uniform Consumer Credit Code ("UCCC"). This refers, of course, to the litigation filed by the Colorado UCCC Administrator against Avant and related parties and Marlette Funding and related parties[1] (hereinafter the "Partners"). This drama intensified last fall when the regulator amended its complaint, originally filed on (March 2017) to add national bank defendants. In these cases, the national bank defendants - Wilmington Trust, N.A. and Wilmington Savings Fund Society, FSB - act as the trustee for trusts established to hold bank-originated loans or receivables that are sold by the banks after origination. article continued

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