LOAN BROKER
STATUTES
Presented by:
Robert S. Cohen, Esq.
Partner
400 Garden City Plaza ● Garden City, NY 11530
Phone: (516) 873-2000 ● Fax: (516) 873-2010
rcohen@moritthock.com ● www.moritthock.com
Long Island ● Manhattan
Loan Broker Statutes
• The definition of “loan broker” varies from statute to
statute.
• Misconception is the statutes only apply to consumer
lenders and lessors.
• Although banks and regulated financial institutions are
typically exempt from the definition of loan broker, some
of the statutes extend to commercial lenders and
equipment or real property lessors.
Loan Broker Statutes
Several states have enacted statutes
regulating “loan brokers” since the early
1990s.
Arizona
Arkansas
California
Connecticut
Florida
Georgia
Idaho
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Mississippi
Missouri
New Jersey
Nebraska
North Carolina
North Dakota
South Carolina
Loan Broker Statutes
The statutes include certain requirements
for loan brokers such as:
– registration with the state offices;
– posting of a surety bond;
– establishment of a trust account with a
minimum balance; and/or
– maintaining a certain net worth.
Prohibited Acts
• Some statutes prohibit payment of fees, commissions or
bonuses to merchants, dealers or any other person for
referrals of loan business.
• Other statutes prohibit advertisements by a loan broker
that do disclose the loan broker’s name, address and
telephone number.
• Some statutes prohibit a loan broker from performing
services for a borrower without a written agreement that
contains certain disclosures.
Advance Fees
• Most loan broker statutes prohibit or restrict the
assessment or collection of advance fees also known as
“up front money.”
• Some statutes also prohibit or restrict the assessment or
collection of commitment fees, security deposits and
advance rentals collected prior to closing.
• Other statutes are worded broadly enough to include
direct finance leases and true leases of personal
property.
Violation of the Statutes
• Most statutes impose fines for each violation which range
from $1,000.00 to $10,000.00 per violation.
• Some statutes also provide for recovery of actual
damages, punitive damages, costs and/or attorney’s
fees.
• Other statutes deem a person who violates the statute
guilty of misdemeanor or felony.
• Some statutes extend penalties to principals, directors,
officers and agents of a loan broker.
Compliance with
Loan Broker Statutes
• Lack of a physical presence in a state does not
necessarily exempt an out of state corporation from
compliance with that state’s statute.
• Consult with an attorney prior to doing business in a
certain state to confirm registration and other statutory
requirements. Also, discuss the fees you intend to
assess and/or collect and timing of receipt of such fees
for compliance purposes.
THE BALANCING ACT OF
AUTOMATIC RENEWALS
Presented by:
Barry S. Marks
Marks & Weinberg, P.C.
505 North 20th Street
Financial Center Suite 1615
Birmingham, AL 35202
Direct: (205) 251-8303
Email: barry@leaselawyer.com
www.leaselawyer.com
No doubt this is how as Lessors may feel when it comes to
managing rentals and equipment. Will the customer pay each
month? Will I get the equipment back? What will the
equipment be worth if I do have to remarket it? And how long
will that take?
Put your name here
So….. you are working hard and doing what it takes
to get the next deal….
And people like you ……………
Maybe this is really how the world sees you. Maybe?
What’s wrong with this picture?
Not less than 120 nor more than 150 days prior to the end of
the term, Lessee shall give Lessor written notice by certified
mail, return receipt requested stating whether Lessee
intends to purchase the Equipment, renew the Term or
return the Equipment in accordance with the terms of this
Lease. If Lessee fails so to notify Lessor, the Term shall
automatically be renewed for 12 months.
from baseball-almanac.com
Abbott: Well, let's see, we have on the bags,
Who's on first, What's on second, I Don't
Know is on third...
Costello: That's what I want to find out.
Abbott: I say Who's on first, What's on
second, I Don't Know's on third.
Costello: Well then who's on first?
Abbott: Yes.
Costello: I mean the fellow's name.
Abbott: Who.
Costello: Same as you! Same as YOU! I throw
the ball to who. Whoever it is drops the ball
and the guy runs to second. Who picks up
the ball and throws it to What. What throws it
to I Don't Know. I Don't Know throws it back
to Tomorrow, Triple play. Another guy gets up
and hits a long fly ball to Because. Why? I
don't know! He's on third and I don't give a
darn!
Abbott: What?
Costello: I said I don't give a darn!
Abbott: Oh, that's our shortstop.
So……Who’s on first?
At the end of the Term, subject to the terms of this Lease, Lessee shall
have the option to return the Equipment, purchase the Equipment or
renew the Term in each case as provided herein.
[elsewhere in the Lease]
Notwithstanding any other provision of this Lease, if Lessee elects to
return the Equipment at the end of the Term, Lessee shall lease
replacement Equipment from Lessor on terms and conditions mutuallyacceptable to the parties.
[elsewhere in the Lease]
If Lessee elects to purchase the Equipment, the purchase price shall be fair
market value as determined by Lessor.
[elsewhere in the Lease]
If Lessee does not return or purchase the Equipment in accordance with the
terms of this Lease, the Term shall renew for an additional period of 12 months. At
the end of the Term as so renewed, Lessee shall have the option to return or
purchase the Equipment or renew the Term in each case as provided herein.
If we don’t police ourselves,
someone else will do it for us!
DOING IT THE
RIGHT WAY:
FAIR DEBT
COLLECTION
PRACTICES
Presented by:
John G. Rosenlund, CLP
Director—Risk Management
Portfolio Financial Servicing Company
2121 SW Broadway, Suite 200
Portland,OR 97201
503-721-3211 V
jrosenlund@pfsc.com
INTRODUCTION
“Creditors have better memories than debtors.”
– Benjamin Franklin
∙ Federal Law: The Fair Debt Collection Practices Act (“FDCPA”)
∙ Enacted in 1978;
∙ Judicial Policy: “Because Congress enacted the FDCPA to
protect debtors from abusive debt collection practices...we
have consistently interpreted the statute to achieve that
objective.”Evon vs. Law Offices of Mickel, (9th Cir, 2012).
∙ Does not pre-empt State Law.
∙ State Law: May Provide Broader Protection Than the FDCPA.
∙ Example: California and other states expand debt
collection laws to creditors collecting their own Debts, such
as in house collection departments.
FDCPA - Selected Issues
∙ Is it a Consumer or Commercial Debt?
∙
“Consumer” - any natural person obligated or allegedly obligated to
pay any debt. §803(3).
∙
“Debt” - any obligation or alleged obligation of a consumer to pay
money rising out of a transaction in which the money, property or
services which are the subject of the transaction are primarily for
personal, family or household purposes, whether or not such
obligation has been reduced judgment. §803(5) [Emphasis Added].
∙
Grey Areas -Tough Fact Patterns
FDCPA – KEY TERMS
∙
“Consumer” - Discussed earlier.
∙
“Debt” - Discussed earlier.
∙
“Debt Collector” - principal purpose of which is the collection
of any debts, or-regularly collects or attempts to collect,
directly or indirectly, debts owed or asserted to be owed or
due another.
* Federal Act does not include “creditors” as a “debt collector.” Some state
collection practice laws do not have this distinction.
FDCPA – REGULATED PRACTICES
OF DEBT COLLECTORS
∙
Communication with consumers: §805
∙
∙
∙
Method
Required Communications
Communications With Third Parties. §804; §805(b).
-identify himself.
-confirming location information of consumer.
-do not state consumers owes debt.
-do not send collection letters to employers.
FDCPA – PROHIBITED CONDUCT
∙
Conduct the natural consequence of which is to harass,
oppress, or
abuse any person in collection with the
collection of a debt. §806
-6 enumerated examples
∙
False or Misleading Representations §807.
-16 enumerated examples
∙
Unfair Practices §808.
- 8 enumerated examples
∙
These Statutes provide examples only; they are not exclusive.
FDCPA – VIOLATION OF THE STATUTE
∙
Creates Ammunition for Defaulting Party
- Actual Damage up to $1,000.00.
- Recovery of legal fees/costs.
- Class Action exposure.
∙
Bona Fide Error Defense 813(3)(c)
- unintentional;
- bona fide error; and
- procedures in place to avoid error.
CONCLUSIONS
∙
Be Preventive!
∙
Document commercial, not consumer transaction.
∙
Be sensitive to FDCPA and applicable state statute laws.
∙
Have procedures for FDCPA knowledge, education and compliance
in place to insulate against collection practice claims .