Small Business Administration § 120.975

Total Page:16

File Type:pdf, Size:1020Kb

Small Business Administration § 120.975 Small Business Administration § 120.975 the outstanding principal balance of AUTHORITY OF CDCS TO PERFORM LIQ- the loan being assumed. UIDATION AND DEBT COLLECTION LITI- (b) CSA fees. The CSA may charge an GATION initiation fee on each loan and a monthly servicing fee under the terms § 120.975 CDC Liquidation of loans and of the Master Servicing Agreement. debt collection litigation. (c) Other agent fees. Agent fees and (a) PCLP CDCs. If a CDC is designated charges necessary to market and serv- as a PCLP CDC under § 120.845, the CDC ice Debentures and Certificates may be must liquidate and handle debt collec- assessed to the Borrower or the inves- tion litigation with respect to all tor. The fees must be approved by SBA PCLP Loans in its portfolio on behalf and published periodically in the FED- of SBA as required by § 120.848(f), in ac- ERAL REGISTER. cordance with subpart E of this part. (d) SBA fees. (1) SBA charges a 0.5 With respect to all other 504 loans that percent guarantee fee on the Deben- a PCLP CDC makes, the PCLP CDC is ture. an Authorized CDC Liquidator and (2) For loans approved by SBA after must exercise its delegated authority September 30, 1996, SBA charges a fee to liquidate and handle debt-collection of not more than 0.9375 percent annu- litigation in accordance with subpart E ally on the unpaid principal balance of of this part for such loans, if the PCLP the loan as determined at five-year an- CDC is notified by SBA that it meets niversary intervals. either of the following requirements to (e) Miscellaneous fees. A funding fee be an Authorized CDC Liquidator, as not to exceed 0.25 percent of the Deben- determined by SBA: ture may be charged to cover costs in- (1) The PCLP CDC has one or more curred by the trustee, fiscal agent, employees who have not less than two transfer agent. years of substantive, decision-making experience in administering the liq- [61 FR 3235, Jan. 31, 1996, as amended at 64 uidation and workout of defaulted or FR 2119, Jan. 13, 1999; 68 FR 57988, Oct. 7, problem loans secured in a manner sub- 2003] stantially similar to loans funded with 504 loan program debentures, and who § 120.972 Third Party Lender partici- pation fee and CDC fee. have completed a training program on loan liquidation developed by the (a) Participation fee. For loans ap- Agency in conjunction with qualified proved by SBA after September 30, CDCs that meet the requirements of 1996, SBA must collect a one-time fee this section; or equal to 50 basis points on the Third (2) The PCLP CDC has entered into a Party Lender’s participation in a contract with a qualified third party Project when the Third Party Lender for the performance of its liquidation occupies a senior credit position to responsibilities and obtains the ap- SBA in the Project. proval of SBA with respect to the (b) CDC fee. For loans approved by qualifications of the contractor and the SBA after September 30, 1996, SBA terms and conditions of the contract. must collect an annual fee from the (b) All other CDCs. A CDC that is not CDC equal to 0.125 percent of the out- authorized under paragraph (a) of this standing principal balance of the De- section may apply to become an Au- benture. The fee must be paid from the thorized CDC Liquidator with author- servicing fees collected by the CDC and ity to liquidate and handle debt collec- cannot be paid from any additional fees tion litigation with respect to 504 loans imposed on the Borrower. on behalf of SBA, in accordance with subpart E of this part, if the CDC [68 FR 57988, Oct. 7, 2003] meets the following requirements: (1) The CDC meets either of the fol- lowing criteria: (i) The CDC participated in the loan liquidation pilot program established 311 VerDate Mar<15>2010 14:16 Mar 01, 2011 Jkt 223042 PO 00000 Frm 00321 Fmt 8010 Sfmt 8010 Y:\SGML\223042.XXX 223042 erowe on DSK5CLS3C1PROD with CFR § 120.990 13 CFR Ch. I (1–1–11 Edition) by the Small Business Programs Im- and/or debt collection litigation under provement Act of 1996 prior to October this section. 1, 2006; or [72 FR 18365, Apr. 12, 2007] (ii) During the three fiscal years im- mediately prior to seeking such au- ENFORCEABILITY OF 501, 502 AND 503 thority, the CDC made an average of LOANS AND OTHER LAWS not less than ten 504 loans per year; and § 120.990 501, 502 and 503 loans. (2) The CDC meets either of the fol- SBA has discontinued loan programs lowing requirements: for 501, 502, and 503 loans. Outstanding (i) The CDC has one or more employ- loans remain under these programs, ees who have not less than two years of and Borrowers, CDCs, and SBA must substantive, decision-making experi- comply with the terms and conditions ence in administering the liquidation of the corresponding notes and Deben- and workout of defaulted or problem tures, and the regulations in this part loans secured in a manner substan- in effect when the obligations were un- tially similar to loans funded with 504 dertaken or last in effect, if applicable. loan program debentures, and who have completed a training program on loan § 120.991 Effect of other laws. liquidation developed by the Agency in No State or local law may preclude conjunction with qualified CDCs that or limit SBA’s exercise of its rights meet the requirements of this section; with respect to notes, guarantees, De- or bentures and Debenture Pools, or of its (ii) The CDC has entered into a con- enforcement rights to foreclose on col- tract with a qualified third party for lateral. the performance of its liquidation re- sponsibilities and obtains the approval Subpart I—Risk-Based Lender of SBA with respect to the qualifica- tions of the contractor and the terms Oversight and conditions of the contract. (c) CDC counsel. To perform debt col- SOURCE: 72 FR 25194, May 4, 2007, unless lection litigation under paragraphs (a) otherwise noted. or (b) of this section, a CDC must also SUPERVISION have either in-house counsel with ade- quate experience as approved by SBA § 120.1000 Risk-Based Lender Over- or entered into a contract for the per- sight. formance of debt collection litigation (a) Risk-Based Lender Oversight. SBA with an experienced attorney or law supervises, examines, and regulates, firm as approved by SBA. and enforces laws against, SBA Super- (d) Application for authority to liq- vised Lenders and the SBA operations uidate and litigate. To seek authority to of SBA Lenders, Intermediaries, and perform liquidation and debt collection NTAPs. litigation under paragraphs (b) and (c) (b) Scope. Most rules and standards of this section, a CDC other than a set forth in this subpart apply to SBA PCLP CDC must submit a written ap- Lenders as well as Intermediaries and plication to SBA and include docu- NTAPs, However, SBA has separate mentation demonstrating that the CDC regulations for enforcement grounds meets the requirements of paragraph and enforcement actions for Inter- (b) and (c) of this section. If a CDC in- mediaries and NTAPs at § 120.1425 and tends to use a contractor to perform § 120.1540. liquidation, it must obtain approval from SBA of both the qualifications of [73 FR 75519, Dec. 11, 2008] the contractor and the terms and con- ditions in the contract covering the § 120.1005 Bureau of PCLP Oversight. CDC’s retention of the contractor. SBA SBA’s Bureau of PCLP Oversight will notify a CDC in writing when the within OCRM, monitors the capitaliza- CDC can begin to perform liquidation tion of PCLP CDC pilot participants’ 312 VerDate Mar<15>2010 14:16 Mar 01, 2011 Jkt 223042 PO 00000 Frm 00322 Fmt 8010 Sfmt 8010 Y:\SGML\223042.XXX 223042 erowe on DSK5CLS3C1PROD with CFR.
Recommended publications
  • GOVERNMENT of the DISTRICT of COLUMBIA Office of the Attorney General
    GOVERNMENT OF THE DISTRICT OF COLUMBIA Office of the Attorney General ATTORNEY GENERAL KARL A. RACINE April 24, 2020 GUIDANCE ON THE DEBT COLLECTION PROVISIONS OF THE COVID-19 RESPONSE SUPPLEMENTAL EMERGENCY AMENDMENT ACT OF 2020 On April 10, 2020, the Council for the District of Columbia passed the emergency Act 23-286, the COVID-19 Response Supplemental Emergency Amendment Act of 2020 (“Emergency Act”) which aims to help DC residents deal with the fallout from the coronavirus pandemic. Section 207 of the Emergency Act amended D.C. Code § 28-3814 to add a number of temporary restrictions related to the collection of consumer debt during the coronavirus pandemic. The District of Columbia Office of the Attorney General (“OAG”) enforces the prohibitions in D.C. Code § 28-3814 though its enforcement authority under the Consumer Protection Procedures Act, D.C. Code § 28-3909. OAG issues the following guidance on how it interprets the Emergency Act for enforcement purposes to provide clarity regarding the law’s debt collection provisions. The Emergency Act covers any debt that is 30 days past due and was made for the purchase of goods, services, or property for personal, family or household purposes. This includes motor vehicle loans but does not include home mortgages or other loans on real property.1 For the duration of the declared coronavirus emergency, and for 60 days after its conclusion, the Emergency Act prohibits creditors and debt collectors from threatening or initiating any new legal action to collect a debt, visiting a debtor’s home or place of employment, or confronting the debtor about the debt in any public place.
    [Show full text]
  • 1 Chairman Phil Mendelson 2 3 4 5 6 7 a BILL 8 9 10
    1 _______________________________ 2 Chairman Phil Mendelson 3 4 5 6 7 8 A BILL 9 10 11 _________ 12 13 14 IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 15 16 __________________ 17 18 19 To amend, on a temporary basis, Section 28-3814 to include all consumer debt under the 20 District’s collection law; to prohibit deceptive behavior from debt collectors including 21 threatening to accuse people of fraud, threatening to sell or assign consumer debt such 22 that the consumer would lose defense to a claim or disclosing or threatening disclose 23 consumer debt information without acknowledging such debt is in dispute or in a way 24 that would harm the consumers reputation for credit worthiness; to prohibit debt 25 collectors from making more than three phone calls to a consumer in seven days; to 26 prohibit the communication of consumer indebtedness to employer’s, except when such 27 indebtedness is guaranteed by the employer, the employer requests the loan, or the 28 information is an attachment to an execution or judgment allowed by law; to prohibit debt 29 collectors from communicating an individuals indebtedness to family, friends or 30 neighbors except through proper legal processes; to require debt collectors to have 31 complete documentation related to the consumer debt being collected; to require debt 32 collectors who enter into a payment schedule or settlement to provide a written copy of 33 said schedule or agreement; to implement specific requirements for a debt collector when 34 initiating a cause of action against a consumer for
    [Show full text]
  • Debt Collection Practices (Regulation F): Final Rule
    BILLING CODE: 4810-AM-P BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1006 [Docket No. CFPB-2019-0022] RIN 3170-AA41 Debt Collection Practices (Regulation F) AGENCY: Bureau of Consumer Financial Protection. ACTION: Final rule; official interpretation. SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule to revise Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA) and currently contains the procedures for State application for exemption from the provisions of the FDCPA. The Bureau is finalizing Federal rules governing the activities of debt collectors, as that term is defined in the FDCPA. The Bureau’s final rule addresses, among other things, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection. DATES: This rule is effective [INSERT DATE ONE YEAR AFTER PUBLICATION IN THE FEDERAL REGISTER]. FOR FURTHER INFORMATION CONTACT: Dania Ayoubi, Joseph Baressi, Seth Caffrey, Brandy Hood, David Jacobs, Courtney Jean, Jaclyn Maier, Adam Mayle, Kristin McPartland, Michael Scherzer, or Michael Silver, Senior Counsels, Office of Regulations, at 202-435-7700. If you require this document in an alternative electronic format, please contact [email protected]. 1 SUPPLEMENTARY INFORMATION: I. Summary of the Final Rule The Bureau is finalizing amendments to Regulation F, 12 CFR part 1006, which implements the FDCPA.1 The amendments prescribe Federal rules governing the activities of debt collectors, as that term is defined in the FDCPA (debt collectors or FDCPA debt collectors). The final rule focuses on debt collection communications and related practices by debt collectors.
    [Show full text]
  • Fraud and Abuse Online: Harmful Practices in Internet Payday Lending the Pew Charitable Trusts Susan K
    A report from Oct 2014 Report 4 in the Payday Lending in America series Fraud and Abuse Online: Harmful Practices in Internet Payday Lending The Pew Charitable Trusts Susan K. Urahn, executive vice president Travis Plunkett, senior director Project team Nick Bourke, director Alex Horowitz Walter Lake Tara Roche External reviewers The report benefited from the insights and expertise of the following external reviewers: Mike Mokrzycki, independent survey research expert; Nathalie Martin, Frederick M. Hart chair in consumer and clinical law at the University of New Mexico; and Alan M. White, professor of law at the City University of New York. These experts have found the report’s approach and methodology to be sound. Although they have reviewed the report, neither they nor their organizations necessarily endorse its findings or conclusions. Acknowledgments The small-dollar loans project thanks Pew staff members Steven Abbott, Dan Benderly, Hassan Burke, Jennifer V. Doctors, David Merchant, Bernard Ohanian, Andrew Qualls, Mark Wolff, and Laura Woods for providing valuable feedback on the report, and Sara Flood and Adam Rotmil for design and Web support. Many thanks also to our other former and current colleagues who made this work possible. In addition, we would like to thank the Better Business Bureau for its data and Tom Feltner of the Consumer Federation of America for his comments. Finally, thanks to the small-dollar loan borrowers who participated in our survey and focus groups and to the many people who helped us put those groups together. For further information, please visit: pewtrusts.org/small-loans 2 Cover photo credits: 1 3 1.
    [Show full text]
  • Credit and Collection Procedures
    Credit and Collection Procedures Finance Area: Vice President for Finance Responsible or Contact Office/Role: Financial Reporting & Operations (Accounts Receivable), Student Financial Services Purpose: These procedures apply to University departments, divisions or schools who extend credit for goods or services to students, faculty, staff and other customers, or that handle collections of accounts receivable including student receivables managed by Student Financial Services (SFS). These procedures do not cover accounts receivable managed by the Office of Sponsored Programs (OSP) or gift pledge receivables which are managed through University Advancement. Definitions: Billing Department: A department, division, school, or other unit that has been authorized to extend credit for the sale of goods and services, or that is responsible for the collection of accounts receivable. Central Accounts Receivable (Central AR): A unit within Financial Operations & Reporting that has the primary responsibility for generating invoices and dunning notices, and managing other collection efforts for accounts receivable processed through the Integrated System Accounts Receivable module (OAR), other than sponsored programs accounts receivable managed by the Office of Sponsored Programs (OSP). Collection Agency: An outside third party that acts as an agent to the University, responsible for the collection of delinquent debts for a fee or percentage of the total amount that has been referred. Dunning Letter: A collection letter, or series of letters, sent to past due or delinquent debtors with the purpose of receiving immediate payment. These letters remind the debtor of other possible collection actions that may be taken if payment is not received, such as referral to a collection agency or to the Setoff Debt Collection Program.
    [Show full text]
  • Stopping the Payday Loan Trap Alternatives That Work, Ones That Don’T
    Stopping the payday Loan trap AlternAtives thAt Work, ones thAt Don’t NCLC® NATIONAL CONSUMER June 2010 L AW C E N T E R® © Copyright 2010, National Consumer Law Center, Inc. All rights reserved. About the Authors Lauren K. Saunders is the Managing Attorney of NCLC’s Washington, DC office, where she handles legislative, administrative and other advocacy efforts on behalf of low income consumers. She contributes to several NCLC publications, including Fair Credit Reporting, Fair Debt Collection and Consumer Banking and Payments Law. She graduated magna cum laude from Harvard Law School where she was an Executive Editor of the Harvard Law Review, and holds a Masters in Public Policy from Harvard’s Kennedy School of Government and a B.A., Phi Beta Kappa, from Stanford University. Leah A. Plunkett is a staff attorney at NCLC, where she focuses on predatory small dollar loans, auto policy, protection of exempt funds, and the consumer needs of domestic violence survivors. Before coming to NCLC, Leah clerked in the United States District Court for the District of Maryland and established the Youth Law Project at New Hampshire Legal Assistance. Leah is a cum laude graduate of Harvard Law School, where she was on the board of both the Harvard Legal Aid Bureau and HLS for Choice. Carolyn Carter is NCLC’s Deputy Director for Advocacy. She is a contributing author to Cost of Credit, Truth in Lending, Unfair and Deceptive Acts and Practices and several other NCLC treatises. Prior to joining NCLC, she worked for legal services programs in Ohio and Pennsylvania.
    [Show full text]
  • Small Business Administration § 120.975
    Small Business Administration § 120.975 (h) Additional servicing requirements (b) CSA fees. The CSA may charge an are set forth in subpart E of this part. initiation fee on each loan and a monthly servicing fee under the terms [68 FR 57988, Oct. 7, 2003, as amended at 72 FR of the Master Servicing Agreement. 18364, Apr. 12, 2007] (c) Other agent fees. Agent fees and FEES charges necessary to market and serv- ice Debentures and Certificates may be § 120.971 Allowable fees paid by Bor- assessed to the Borrower or the inves- rower. tor. The fees must be approved by SBA and published periodically in the FED- (a) CDC fees. The fees a CDC may ERAL REGISTER. charge the Borrower in connection with a 504 loan and Debenture are lim- (d) SBA fees. (1) SBA charges a 0.5 ited to the following: percent guarantee fee on the Deben- ture. (1) Processing fee. The CDC may (2) For loans approved by SBA after charge up to 1.5 percent of the net De- September 30, 1996, SBA charges a fee benture proceeds to process the financ- of not more than 0.9375 percent annu- ing. Two-thirds of this fee will be con- ally on the unpaid principal balance of sidered earned and may be collected by the loan as determined at five-year an- the CDC when the Authorization for niversary intervals. the Debenture is issued by SBA. The (e) A funding fee portion of the processing fee paid by Miscellaneous fees. not to exceed 0.25 percent of the Deben- the Borrower may be reimbursed from ture may be charged to cover costs in- the Debenture proceeds; curred by the trustee, fiscal agent, (2) Closing fee.
    [Show full text]
  • The Three Faces of Bankruptcy Law
    The Three Faces of Bankruptcy Law A Dissertation Presented to the Faculty of the Law School Of Yale Univesity In Candidacy for the Degree of Doctor of the Science of Law By G. Eric Brunstad, Jr. Dissertation Committee Supervisor: William N. Eskridge, Jr. Readers: William N. Eskridge, Jr. Ian Ayres George L. Priest February, 2014 © 2014 by G. Eric Brunstad, Jr. All rights reserved Table of Contents Chapter 1: Introduction...................................................................................................................1 The Creditors’ Bargain...............................................................................................................24 Bankruptcy Contracting, Super-Foreclosure, and the Cost-of-Capital Metric ...............................................................................................................54 Bankruptcy Contracting..........................................................................................................57 Super-Foreclosure...................................................................................................................84 The Cost-of-Capital Metric ....................................................................................................95 Bankruptcy Law as an Assortment of Loss-Spreading Norms .......................................................................................................................................101 Chapter 2: The Problems of Insolvency......................................................................................112
    [Show full text]
  • Debt Collection Guide Update
    Debt Collection Guide Update This Update includes new information you should know when dealing with debt collectors. 1. In New York, a debt collector cannot collect or attempt to collect on a payday loan. Payday loans are illegal in New York. A payday loan is a high-interest loan borrowed against your next paycheck. To apply for a payday loan, you need to have a checking account and proof of income. In New York State, most payday loans are handled by phone or online. If a collection agency tries to collect on a payday loan, visit nyc.gov/dca or contact 311 to file a complaint with DCA. 2. Beware of debt collection companies or companies working with debt collection companies that offer you a credit card if you repay, in part or in full, an old debt that may have expired. Companies may use terms like “Fresh Start Program” or “Balance Transfer Program” to describe offers to transfer your old debt to a new credit card account after you make a certain number of payments. If you accept the credit card offer and start making pay- ments, the debt collection agency’s time limit (statute of limitations) for suing you to collect this debt will restart. The company offering the credit card may not tell you that this is a consequence of getting the credit card. See the section What Should You Do When a Debt Collection Agency Contacts You? for information about statute of limitations. 3. It is illegal for a debt collection agency to use “caller ID spoofing.” Some debt collection agencies are using spoofed (or faked) phone numbers to disguise their identities on caller ID.
    [Show full text]
  • CFPB Consumer Laws and Regulations FDCPA
    CFPB Consumer Laws and Regulations FDCPA Fair Debt Collection Practices Act1 The Fair Debt Collection Practices Act (FDCPA)(15 U.S.C. 1692 et seq.), which became effective March 20, 1978, was designed to eliminate abusive, deceptive, and unfair debt collection practices. In addition, the federal law (15 U.S.C. 1692 et seq.) protects reputable debt collectors from unfair competition and encourages consistent state action to protect consumers from abuses in debt collection. The Dodd-Frank Act granted rulemaking authority under the FDCPA to the Consumer Financial Protection Bureau (CFPB)2 and, with respect to entities under its jurisdiction, granted authority to the CFPB to supervise for and enforce compliance with the FDCPA.3 Debt That Is Covered The FDCPA applies only to the collection of debt incurred by a consumer primarily for personal, family, or household purposes. It does not apply to the collection of corporate debt or to debt owed for business or agricultural purposes. Debt Collectors That Are Covered Under FDCPA, a “debt collector” is defined as any person who regularly collects, or attempts to collect, consumer debts for another person or institution or uses some name other than its own when collecting its own consumer debts. That definition would include, for example, an institution that regularly collects debts for an unrelated institution. This includes reciprocal service arrangements where one institution solicits the help of another in collecting a defaulted debt from a customer who has moved. Debt Collectors That Are Not Covered An institution is not a debt collector under the FDCPA when it collects: • Another’s debts in isolated instances.
    [Show full text]
  • The Criminalization of Private Debt a Pound of Flesh the Criminalization of Private Debt
    A Pound of Flesh The Criminalization of Private Debt A Pound of Flesh The Criminalization of Private Debt © 2018 AMERICAN CIVIL LIBERTIES UNION Contents Executive Summary .................................................................................................................................... 4 How the Court System Is Used to Send Debtors to Jail .................................................................... 5 The Role of Civil Court Judges ............................................................................................................. 6 Prosecutors and Debt Collectors as Business Partners ................................................................... 7 A System That Breeds Coercion and Abuse ....................................................................................... 7 Key Recommendations ......................................................................................................................... 7 A Nation of Debtors on the Financial Edge .............................................................................................. 9 The Debt-to-Jail Pipeline ............................................................................................................................12 State and Federal Laws That Allow the Jailing of Debtors .............................................................14 When Judges Reflexively Issue Arrest Warrants for Debtors .......................................................15 How Courts Use the Threat of Jail to Extract Payment ...................................................................16
    [Show full text]
  • Legal Aid Center
    Nevada Task Force on Financial Security Short-Term Lending & Consumer Protection 725 E. Charleston Blvd. Las Vegas, NV 89104 (702) 386-1070 www.lacsn.org Agenda Item VI B-1 (FINANCIAL SECURITY) Meeting Date: 05-21-2018 What We Do Legal Aid Center of Southern Nevada’s Consumer Rights Project fights tirelessly to provide access to justice through legal counsel, advice and representation for vulnerable and low-income community members in the following areas: • Bankruptcy • Landlord / Tenant • Car Information • Payday Loans • Consumer Credit • Predator Loans • Debt Collection • Criminal Record Sealing • Foreclosures • Small Claims Court • Health Insurance • Social Security • Homestead • Student Loans • Identity Theft • #VegasStrong *Legal Aid Center offers all of our program services to Veterans and active-duty military in our community. What We See • Debt-treadmill: – Lenders give borrowers loans they cannot afford to repay. – They get multiple loans sometimes from multiple lenders. – They can’t afford the payment so they are given new loans to pay off existing loans. • Garnishment: – Once the borrower finally defaults and cannot get more loans to pay existing loans, lenders file lawsuits. – Borrowers do not realize there may be a defense and ignore the lawsuits. – Lenders get large numbers of defaults and garnish the borrowers. • Bankruptcy – Many borrowers who get stuck on the debt-treadmill or are garnished, turn to their last hope and file bankruptcy that would not have otherwise filed. • Income qualifications for our clients requires that they make at or under just 55% of Clark County median family income: family of 4: $35,365. NRS 604A Lending • These loans are meant to be a short-term, one-time fix for an emergency situation, however they are often used to cover ordinary, reoccurring expenses.
    [Show full text]