• Legislative Fix on Horizon for Madden Uncertainty?
  • April 23, 2018 | Author: Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • We reported in our July 2016 Maryland Legal Alert that the United States Supreme Court had declined to review the decision of the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC. The Madden decision sowed uncertainty and confusion among debt buying and bank-partnership model lending businesses, because of its holding that the purchaser of debt from a national bank (charged-off debt in the case of Madden) was not a beneficiary of the preemptive interest rate authority of the lender, a national bank, under Section 85 of the National Bank Act. Even though the loan was valid when made, a purchaser of the debt, unlike a national bank, could be subject to usury limitations under state law. On February 14, 2018, the United States House of Representatives passed H.R. 3299 (entitled the “Protecting Consumers’ Access to Credit Act of 2017”) in an effort to legislatively overturn the Second Circuit’s Madden decision and provide certainty concerning the “valid when made” interest rate doctrine. It is unclear whether H.R. 3299 will become law. If you have any questions about this topic, please contact Christopher Rahl.