Bloomberg BNA recently looked into the current state of “true lender” litigation. These issues do not directly impact NAFSA because our members are structured in a way in which the lending enterprise that originated the loan is also the entity that services the loan. However, there is considerable confusion about tribally-owned lending entities, and we are happy to be given the opportunity to set the record straight.
Our full statement, from Executive Director Gary Davis:
“NAFSA member tribal lending enterprises are structured in a way in which the lending enterprise that originated the loan is also the entity that services the loan, which means they do not encounter true lender concerns. Further, NAFSA members have established considerable regulatory and industry best practices to ensure tribal lenders are at the forefront of federal and tribal compliance. Our members must comply with NAFSA Best Practices on lending, operations, marketing, and payments. Each NAFSA member conducts a full business licensing process for all tribal lending entities and adheres to a strict tribal council approved lending code. Our members have also each set up an independent regulatory commission to address customer concerns and find new ways to evolve tribal lending codes.
“In general, we continue to stress that tribes interested in consumer lending must perform due diligence and avoid injurious business deals that can potentially damage the reputation and sovereign status of legitimate tribal lending entities.”
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