While Tempting, Lending Loopholes Could Lead to UDAAP Traps
By Ari Karen
The Consumer Financial Protection Bureau’s recent victory against an online loan servicer serves as an important lesson both as to the CFPB’s expansive use of Unfair, Deceptive or Abusive Acts or Practices and the risks associated with joint ventures as well as the mini-correspondent model. Lenders that find loopholes or technicalities contradicting the clear intent and spirit of the laws are subject to UDAAP — the trump card the CFPB can use at any time.
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