| Of Interest

On March 20, Alston & Bird Partner Stephen Ornstein issued a Client Alert to inform clients regarding a somewhat obscure California court case that contains very significant consequences for the financial services industry in connection with California consumer loans exempt from the state’s usury law. In a 2018 California Supreme Court case, the Client Alert explains how consumer loans that are exempt from usury may be deemed “unconscionable” under California law.

The Client Alert highlights the California Supreme Court’s decision on August 13, 2018 in Eduardo De La Torre et al. v. CashCall, Inc. (S. Cal. 5^th 966 (2018)) in a usury case that the interest rate on consumer loans of $2,500 or more may render the loan “unconscionable” under the California Financial Code, even though such a loan would not be deemed usurious under California law. The Client Alert advises clients in the financial services industry to carefully review their contracts to eliminate potentially unduly harsh provisions that could render the loan product as unconscionable.

The Client Alert can be found here on our website.

On March 12, Alston & Bird Partner Nanci Weissgold, and Senior Associate Lisa Lanham issued a Client Alert on Ohio Division of Financial Institution’s (“Division”) guidance on clarification of legislative amendments (as enacted by HB 489 and currently in effect as of March 20, 2019) to the Ohio Residential Mortgage Lending Act (“RMLA”), that requires mortgage loan servicers to be registered under the RMLA. The Division answered the industry’s question as to whether the registration requirement would apply to passive secondary market investors in Ohio Mortgage Servicing Rights (“MSRs”). Accordingly, the Division issued answers to its Frequently Asked Questions to provide guidance and explicitly stated that even though a passive secondary market investor in MSRs is not conducting any direct servicing activities, it is still required to be licensed or registered as a mortgage servicer under the RMLA amendments.

The Client Alert can be found here on our website.

State Law