Category Archives: California

Excessive Interest Caused By Contingency Under Debtor’s Control Not Usurious

A horse owner provided a loan to a horse trainer. The promissory note required simple interest payments of 4% per annum. The trainer had the option of providing free training for two of the owner’s horses in lieu of paying … Continue reading

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Sale of Promissory Note Does Not Render Loan Usurious

A home buyer purchased a property that was subject to a mortgage. The mortgage secured a $500,000 loan that the home seller had received from its lender. The buyer purchased the home from the seller but the property remained subject to the … Continue reading

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California Lender Subject to Compound Interest Disclosure Requirement Despite Exemption from Usury Restrictions

An insurance company provided four loans to a customer. The policies were secured by the value of the customer’s life insurance policies. The policy documents provided that any loans taken out against the policies would charge compound interest. After taking the loans, the customer … Continue reading

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When it Comes to Usury Law, Be Careful What You Ask For

In a previous post, Creditor Fails to Navigate Usury Law “Minefield”, Ordered to Refund $1.3 Million to Debtor, I discussed a recent bankruptcy case in California. In the case, a lender had filed a claim in the borrower-debtor’s bankruptcy case. The … Continue reading

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Federal Court Finds that State Usury Laws Are Not a Fundamental Public Policy of the United States

The enforcement of a choice of law provision where a claim of usury is involved often turns on whether the interest rate set by the chosen state would violate the usury laws of the forum state. If they would, the court must determine … Continue reading

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Court Finds Loan to be Usurious, Permits Recovery of Legal Interest Rate

In a recent case in California, a trial court found that the interest rate charged on a loan exceeded the state’s usury cap but still permitted the lender to recover the legal rate of interest. The lender had made a … Continue reading

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Creditor Fails to Navigate Usury Law “Minefield”, Ordered to Refund $1.3 Million to Debtor

A recent court decision demonstrates the complexity and dangers faced by creditors attempting to navigate California’s usury laws. In the case, a lender agreed to purchase a debtor’s promissory note from a bank and refinance it for a lower amount. The entity that … Continue reading

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Blyden v. Navient Corp: A Glimpse of a Post-Madden Future?

A recent US District Court decision out of California offers a rough idea of the usury litigation that may occur if the decision in Madden vs. Midland Funding, LLC ultimately stands. The case centered around the plaintiff’s student loan which had been originated by a national bank. … Continue reading

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California Court of Appeal: Assignee of Finance Lender Exempt from Usury Restrictions

Montgomery v. GCFS, Inc., 2015 Cal. App. LEXIS 508 (Cal. App. 1st Dist. June 12, 2015) A debt collector purchased consumer debt from a licensed California finance lender. One of the debts purchased was owed by Khalema Montgomery. The debt … Continue reading

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Usury Exceptions No Help to Lender

Flemmer v. Newell (In re Vill. Concepts, Inc.), 2015 U.S. Dist. LEXIS 33816 (E.D. Cal. Mar. 17, 2015) The plaintiff, a seller of manufactured homes, filed a complaint alleging that the defendant had made a usurious loan to the plaintiff.  The … Continue reading

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