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A ruling late last year by a U.S. District Court judge in Wilmington, Delaware, put the structured-finance industry on high alert because of the serious legal and financial implications it poses for the private-label securities (PLS) market. The fate of the litigation is now in the hands of the U.S. Court of Appeals for the Third District, however. The federal appeals court, based in Philadelphia, this week decided to weigh in on the major arguments in the case by agreeing to hear a rare interlocutory appeal filed by the defendants — a group of student-loan securitization trusts. Normally, parties to a case cannot appeal until the lower court enters a final judgement. If a case raises important legal questions, however, they can seek permission to appeal early, while the case is still pending, via an interlocutory appeal. In the litigation, “Consumer Financial Protection Bureau v. National Collegiate Master Student Loan Trust et al.,” a group of 15 student loan trusts stand accused by the CFPB of being liable for the deeds of loan servicers that were acting on behalf of the securitization trusts. Those services filed multiple allegedly flawed lawsuits in state courts to pursue loan defaults against borrowers.   The servicers allegedly “executed and notarized deceptive affidavits” and “filed … collections lawsuits lacking” important evidence, according to pleadings in the federal case — pending since 2017 in U.S. District Court for the District of Delaware. “The Third Circuit Court’s decision to hear the appeal allows the trusts’ appeal to be docketed…

The post Lawsuit pits PLS industry against CFPB appeared first on Emerald Coast Gazette – NWF News.

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