Madden v. Midland Funding, LLC

On May 22, the Second Circuit Court of Appeals ruled that when a nonbank entity purchases loans from a national bank, the interest rate the nonbank entity may charge is limited to the rate of interest of the state of residence of the obligor (See Madden v. Midland Funding, LLC 2015 U.S. App. LEXIS 8483 (May 22, 2015).  The court stated that because the entity is not a national bank or its agent, or otherwise acting on behalf of a national bank, and because applying state law would not significantly interfere with the national bank's ability to sell loans to third parties, the National Bank Act did not preempt the obligor's claim that the rate charged on the loan exceeded state rate ceilings.