The Second Circuit Denies Midland's Request For Rehearing On Its Decision That Upended Longstanding Principles Of Lending Law

On August 12, 2015, the United States Court of Appeals for the Second Circuit denied Midland Funding, LLC and Midland Credit Management (collectively, "Midland")'s petition for panel rehearing, or, in the alternative, rehearing en banc, of the Second Circuit's recent decision in Madden v. Midland Funding, LLC ("Madden"), 786 F.3d 246 (2d Cir. 2015), that upended well-settled lending law by holding that the federal preemption of state usury laws does not extend to non-national bank assignees of national banks, thus calling into doubt the enforceability of loans that were valid when made, depending on the identity and location of the assignee.1 The Second Circuit denied Midland's petition despite longstanding precedent that recognized that a loan that was valid when made remains valid and enforceable upon assignment, including as to the rate of interest and regardless as to whom the loan was assigned.2

Next Steps

Midland has 90 days from the...