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. The Second Circuit held that a non-bank assignee of loans originated by a national bank was not entitled to the federal preemption afforded to the bank with respect to claims of usury. This controversial decision raised signiﬁcant questions as to whether non-bank assignees of loans from an originating bank would be able to enforce the loans in accordance with their terms. 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, which was issued on February 27, 2017.
This article was published by The Banking Law Journal in its May 2017 issue. The full article is posted with permission.