Saliha Madden (“Madden”) claims that Midland Funding LLC (“Midland”) illegally charged Madden and other similarly situated New York debtors a usurious rate of interest on certain defaulted credit card obligations that Midland had purchased from a national bank.
After a previous summary judgement for Midland was reversed, the U.S. District Court for the Southern District of New York in part denied a renewed motion by Midland to dispose of claims brought by Madden under the Fair Debt Collection Practices Act (FDCPA) and the New York General Business Law (NYGBL) – in a February 27, 2017 decision.
The court held that New York’s criminal usury cap prevents a debt holder from collecting interest above 25%, even if such debt is in default, and that New York law, not Delaware law, applies to the dispute.
The long-recognized, common law principle “valid when made,” which provides that loan terms that are valid when made remain valid loan terms until they are satisfied or forgiven, irrespective of whether or to whom the loan is sold, was not discussed. As a result, the relationship between the conclusions memorialized in the Order and the “valid when made” principle is unclear.
Further action is pending on a class action.
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