« The Proposed Credit Card Interchange Settlement | Main | Predictably Reliable »

Securitization Trusts Are Subject to the Consumer Financial Protection Act

posted by Adam Levitin

The CFPB won a significant case this week that could shake things up in the securitization world. In CFPB v. National Collegiate Master Student Loan Trust, the 3d Circuit held that a securitization trust is a "covered person," for the purposes of the Consumer Financial Protection Act, putting it within the enforcement ambit of the CFPB.  While securitization trusts themselves are basically passive holding entities for loans, they contract with third-parties (servicers) to manage the loans. That contracting was enough for the Third Circuit to find that the trusts are "engaged" in "extending credit or servicing loans," and language in the opinion suggests that merely holding the loans would be sufficient. The opinion means that securitization trusts—and therefore securitization investors—face the possibility of liability for servicer wrong-doing.

Comments

The comments to this entry are closed.

Contributors

Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.

Categories

Bankr-L

  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless ([email protected]) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

OTHER STUFF