Recent comments from HUD Secretary Ben Carson struck a sour note for supporters of the PACE loan program, through which thousands of homeowners and businesses have made energy-efficient improvements to their properties. Just last year, in an effort to boost the program, the FHA, under the Obama Administration, said it would back mortgages on homes encumbered by PACE loans. But earlier this month, Carson said that the new administration is “very, very amenable to adjusting that policy.” The comments suggest a clear willingness to reverse the FHA policy—and beyond that, signal an existential threat to a well-intentioned program….
Beneath all the excitement surrounding the fast-growing “fintech” industry has been a more practical question: who, exactly, is going to regulate this new breed of enterprise?
The U.S. Office of the Comptroller of the Currency offered one answer recently, announcing its intention to grant national bank charters to fintech companies. The OCC action would allow companies that gain charters to operate nationwide. Equally significant, it would result in state-level preemption. Chartered fintech companies could be free of capital requirements imposed by states, for instance, as well as state consumer protection laws such as those prohibiting usury,…
In a recent Asset Securitization Report article, Joseph Cioffi examines how the President’s campaign rhetoric and post-election plans may support a court ruling that a class action lawsuit is a more reliable and superior way to enforce borrower rights relative to a competing action by a weakened CFPB or an inherently weak successor agency. Joseph notes that the administration seems poised to follow through on campaign promises of less regulation and reducing the CFPB’s enforcement power, including actions affecting the Public Service Loan Forgiveness program and for-profit schools’ federal aid eligibility. To read the full article,…
Joseph Cioffi is quoted in an American Banker article discussing the recent settlement between the Massachusetts Attorney General and Santander, arising from alleged fraudulent auto loan activity at certain “high-risk” car dealerships. Joseph says, “The lesson is that audits and controls in place are not enough, you can’t just monitor a problem. You have to take action.” Click here to view the full article.
In “Madden Creates More Uncertainty for Marketplace Lenders,” a Law360 article, Joseph Cioffi and Massimo Giugliano discuss the ongoing case of Madden v. Midland Funding and its impact on the marketplace lending. The authors explain the significance of the initial decision by the Second Circuit in 2015, which created substantial risk for marketplace lenders that rely on a partner bank origination model to avoid state usury caps, and analyze the potential impact of a subsequent decision striking down a choice of law clause often relied on by lenders to guard against usury claims….