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07-22-2015, 03:08 PM #1
from a banks perspective it will be a lot easier if there is one set of rules they have to comply with rather then 50 different sets of rules that change state to state. If you go with belief that regulation is eventually going to come all our lives will be easier with 1 set of rules rather then 50.. Some of the banks can barely underwrite deals with no regulation can you imagine what it would be like trying to get an approval from some of these companies if they have to underwrite every file based on a different set of rules and criteria
John Celifarco
Managing Partner
Horizon Funding Group
3423 Ave S
Brooklyn, NY 11234
T: (347) 773-3990 | F: (718) 795-1990
Linkedin: Profile
Email: john@horizonfundinggroup.com
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07-22-2015, 03:33 PM #2
The larger issue here is that there are several groups and companies petitioning the CFPB to clarify the rules on Section 1071 of Dodd Frank and to begin enforcing them. Section 1071 expands the Equal Credit Opportunity Act's power in commercial financing (yes business lending and MCA).
The law as currently written potentially makes it illegal (for discrimination) for an underwriter to see a merchant's drivers license, google them, view their social media profiles, talk to them over the phone, meet them in person, visit their website, evaluate their marketing strategy, know their surname, and more. Basically the entire subjective MCA underwriting process as it uniformly exists today potentially violates discrimination laws under the Dodd Frank addition to the Equal Credit Opportunity Act. This is not a law people are considering. This is already the law and groups are petitioning the CFPB to start rolling it out.
The law most likely extends to ISOs too since all "financial institutions" are subject to it. As defined in the text, it says: “the term ‘financial institution’ means any partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity that engages in any financial activity.”
That means how an ISO places a deal depending on the circumstances or how many points they charge depending on the merchant and the situation may also be illegal. Again, this isn't an imaginary scenario. This is already the law.
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07-22-2015, 03:37 PM #3John Celifarco
Managing Partner
Horizon Funding Group
3423 Ave S
Brooklyn, NY 11234
T: (347) 773-3990 | F: (718) 795-1990
Linkedin: Profile
Email: john@horizonfundinggroup.com
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07-22-2015, 03:40 PM #4
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