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Madden Matters: Structuring Bank-Origination Partnerships

By Thomas Brown & Molly Swartz

Marketplace lenders, bank-affiliated lenders, and debt collection startups face an evolving legal landscape. Madden v. Midland Funding, LLC unsettled the relatively well-established body of law stipulating that loan assignees step into the shoes of the lender and are entitled to enforce the rights of the lender pursuant to agreement terms determined at the time the loan is made. As marketplace lenders, bankaffiliated lenders, i.e., nonbank entities that market, fund, service, or collect on loans originated by a depository institution, debt collectors and other loan assignees review existing assignment agreements and evaluate loan purchase programs, it’s worth examining the reach of Madden since the Second Circuit’s February 2015 decision.

This article was originally published in Bloomberg BNA