A witness at a subcommittee hearing of the House Financial Services Committee to be held today has harsh words for a bill that would undo a court ruling which holds that a subsequent purchaser of a loan is protected by the same laws that were used to originate that loan in the first place.
Adam Levitin is a law professor at Georgetown University and is speaking at a hearing today on opportunities and challenges in the financial technology (fintech) marketplace. The hearing is being held by the Subcommittee on Financial Institutions and Consumer Credit.
Levitin’s testimony focuses on two bills before Congress, including H.R. 3299, The Protecting Consumers Access to Credit Act of 2017. The bill has been passed by the House Financial Services Committee and put before the whole House of Representatives for its approval.
The bill, if passed, would deem that a loan which was valid when it was originated continues to be valid even after the loan is subsequently assigned, including being sold to a debt buyer. The bill seeks to “undo” a court ruling in the case of Madden v. Midland Funding, which ruled that Midland Funding violated a state usury law when it attempted to continue to collect on a debt which had an interest rate that exceeded the state law. The loan was originated by Bank of America, which was pre-empted from following state laws. The court ruled that Midland did not have the same pre-emption that was afforded to Bank of America and thus, could not continue to collect at the same interest rate.
If passed, H.R. 3299 would facilitate “unrestricted” payday lending, Levitin said in his prepared testimony.
“H.R. 3299 would facilitate not just marketplace lending, but also payday lending, and not just payday lending generally, but payday lending without any restrictions on interest rates, something that no state currently permits,” he said.
