Third Circuit Holds Securitization Trusts Are "Covered Persons" Under CFPA

Key Takeaways

• A long-awaited Third Circuit decision held that securitization trusts holding student loans are "covered persons" subject to the CFPB's enforcement and investigative powers because they "engage" in offering or providing consumer financial products or services.
• The Third Circuit's decision was rooted in the language of the trust agreement, which provided that the trusts' purpose was to "engage in" certain activities relating to the ownership of the student loans.

On March 19, 2024, the U.S. Court of Appeals for the Third Circuit issued an opinion in Consumer Financial Protection Bureau v. National Collegiate Master Student Loan Trust et. al that involved fifteen special-purpose trusts (the "Trusts") formed in connection with the securitization of over 800,000 student loans.¹ In the ordinary course of the securitizations, the Trusts contracted with third-party administrators, servicers and special servicers through various agreements, which