The House recently passed legislation that would codify the “valid when made” doctrine, stipulating that the interest rate of loan must not change after the loan is transferred to another person or entity, including when being sold from a depository institution to a non-bank, third party.
The bill is touted as a means of clarifying confusion created by the Second Circuit Court’s 2015 Madden v. Midland decision, however many national and state consumer groups have argued that it would open doors for predatory lenders.
Find out more about what the bill proposes and what arguments are being made for and against its enactment.