Tag: CashCall

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Who bears the risk? Federal Court holds that a purchaser of unsecured consumer loans is the “true lender”

Who bears the risk? Federal Court holds that a purchaser of unsecured consumer loans is the “true lender”

By Irene C. Freidel and David D. Christensen

A California federal court has held that the purchaser of consumer loans is the “true lender” and thus subject to state usury laws, even though a separate entity funded and closed the loans in its own name. The recent decision, however, is another reminder that US state and federal regulators, as well as plaintiffs’ attorneys, may be able to pierce these partnerships where the financial institution funding and closing the loan does not bear substantial risk on those loans.

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