Banking Brief: Financial Services Insights

Banks own and operate a surprising amount of real estate for their branches and offices. There were over 77,500 bank branches in America as of the end of 2023. By comparison, McDonalds has about 13,000 stores in the US. That’s a lot of property, and it comes with a lot of legal considerations.

After an Event of Default occurs, it is important to understand the options available to the Lender other than demanding repayment or simply waiving the default.  A Forbearance Agreement allows the Lender to preserve, rather than waive, the default, while also obtaining key releases from the Borrower and allowing for strategic and customized modifications to the relationship.

Many financial institutions are familiar with the term “sovereign citizen” but aren’t quite sure what the term entails or how to handle the demands of those who refer to themselves as “sovereign citizens.” This movement has seemingly increased in recent years, spreading through social media platforms such as Facebook, TikTok, and Instagram.

This past week, Indiana Governor Eric Holcomb signed H.B. 1284 and S.B. 188 into law, each of which will become effective on July 1, 2024.

The spate of class-action lawsuits against banks and credit unions (“Financial Institutions”) involving overdraft fees has prompted Indiana Financial Institutions to amend their existing account agreements to provide for arbitration (in lieu of costly litigation) and to prohibit consumers from initiating or joining into class-actions against Financial Institutions (“Arbitration/Class Action Waivers”). 

With the advent of the federal Corporate Transparency Act (“CTA”) that begins on January 1, 2024, financial institutions will need to re-think their information and certification requirements for account and loan customers.

Before responding to a creditor’s citation to discover assets ("CDA"), financial institutions should consider whether the court presiding over the judgment can lawfully direct them to act against a debtor's accounts. Even if a CDA is correctly filed and served, this does not necessarily mean that courts have proper jurisdiction. Thus, responding to these requests can lead to unsavory consequences.

Indiana recently enacted laws allowing creditors involved in consumer credit transactions secured by motor vehicles or other titled assets to record their liens electronically.

On June 14, 2023, the Office of the Comptroller of the Currency (OCC) published its Semiannual Risk Perspective which identifies key issues facing the federal banking system.

Since early 2023, there has been consistent reporting of possible turbulence and increased default risk relating to commercial real estate loans. These concerns are driven by historic levels of maturing debt, which is in many cases secured by real estate that has taken a sharp hit in value.