The Consumer Financial Protection Bureau published its quarterly consumer credit trends report on September 25. In the Report, the CFPB gave an in-depth look at bankruptcy trends and the impact of filing for the period 2001-2018, which includes the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) and the Great Recession.
Below are summaries of the noteworthy decisions, laws and requirements impacting the commercial lending industry which occurred or took effect in 2018. Please feel free to contact us for additional information or details on any of the items listed below and/or to discuss whether updates to your loan documents may be needed to address the same.
1. New, Improved Rules for High Volatility Real Estate Loans
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Senior lienholders sued lenders holding junior liens on common collateral, arguing that the junior lienholders violated an intercreditor agreement. The bankruptcy court addressed the issues in the context of motions to dismiss the senior lienholder complaints.
Morris v. Ark Valley Credit Union (In re Gracy), 522 B.R. 686 (Bankr. D. Kan. 2015) –
A chapter 7 trustee sought to avoid a credit union’s security interest in a manufactured home by asserting his strong arm powers as a hypothetical lien creditor based on the lender’s failure to perfect its lien. The bankruptcy court declined to avoid the lien since it held there was no lien to avoid.
U.S. Bank, N.A. v. Brumfiel (In re Brumfiel), 514 B.R. 637 (Bankr. D. Colo. 2014) –
After a debtor reopened her chapter 7 bankruptcy case, a lender moved for relief from the automatic stay in order to continue with a foreclosure action. The debtor objected, arguing among other things that the lender did not have standing to request relief.
In connection with a proposed sale of real property, a chapter 11 debtor sought to prohibit the mortgagee from submitting a credit bid. It contended that there was “cause” based on its argument that the mortgagee’s claims were subject to a bona fide dispute.