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Legal case jeapordizing current P2P model may head to Supreme Court

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faithful_steward2:
I don't think this is a big problem. Prosper currently receives the notes from webbank after origination. If the court rules the local laws would apply when transferred, prosper would just tell webbank to continue owning the notes after origination but that prosper would be the sole investor in the originated notes. Nothing else would need to change. From the Joe Lender perspective, he doesn't own the notes currently when he "lends" money on prosper so it wouldn't affect him much.

havastat:
I realize there's some precedent for changing the legal structure midstream. When Prosper was near bankruptcy a couple of years ago, it  created Prosper Funding as a way of separating ownership of the notes from the lawsuits and possible bankruptcy claims against it. But there may be problems with it. I gather LendingClub might prefer to defend the point and hope it retains the right to hold the loans evolved in its own right. Perhaps it can wait until the legal issues are settled, and rearrange things if the Supreme Court finds it is subject to state usury laws.

ira01:

--- Quote from: havastat on December 24, 2015, 03:58:53 pm ---Perhaps it can wait until the legal issues are settled, and rearrange things if the Supreme Court finds it is subject to state usury laws.
--- End quote ---

The Supreme Court hears VERY few cases -- it agrees to hear about 1% of the cases in which a litigant requests it to after losing in the Courts of Appeal.  And usually the SCOTUS would hear a case like this after there is a split in the lower courts, which there isn't here.  So while it's possible, it doesn't seem especially likely the SCOTUS will agree to hear it. 

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