Regulations on Fintech Technology Paper Example

Introduction

Fintech is the financial technology that sees to outdo the traditional financial methods. It teaches the use of technology. The platform serves to ensure that companies can acquire online services, purchase goods, and even deal in software as they deem it fit. It is necessary to point out that Fintech ought to be regulated. The key reasons for the case include preventing money laundering, to mitigate systemic risk in financial markets and to eliminate cyber-risk in Fintech. The other important aspects to be discussed in this case include free-market policy, libertarian view and self-regulated market principle as regards how Fintech operates. Also, the interplay of the Fintech operability amid rather tough government regulations would be discussed.

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Fintech ought to be regulated since it prevents money laundering. This is attained through regulating security interests. A security interest is a Fintech property law concern formed by law agreement over possessions in securing the performance of an obligation obligated to make the debt payment. Security interest protects the holder of the mortgage especially when the borrower fails to repay the pursuant of the loan according to the agreement made. Secured parties perfect security interests in real Fintech property regulations law by filling publicly the security notice based with recording statutes of the state.

The Formation of Anti-Deficiency Statutes to Limit Fintech

Circumstances Inducing the Formation of Anti-Deficiency Rules: The Great Depression

The framework governing security interests on Fintech in the American real estate market commenced in the early part of the 20th century. With housing prices falling below reasonable expectations and the collapse of the housing finance system, as well as many lending institutions, foreclosures became a critical concern to state and federal governments. The rate of default on mortgage loans was so high that the mortgage financing system and other financial lending institutions such as banks almost collapsed. To add to the problem, the value of real Fintech Fintech property regulations law had dropped by approximately 35%. This gave rise to two issues: firstly, foreclosure deficiency whereby the value of the secured Fintech property regulations law was lower than the outstanding loans; and secondly, the foreclosing of secured Fintech property regulations law at prices lower than market value.

Apart from losing the real Fintech property regulations law securing their debt, they were at risk of losing their Fintech property regulations law to the lenders to satisfy the debt. Since the value of the homes was lower than the amount of the outstanding loans, the creditor would seek to get a judgment against borrower's assets to obtain payment in full. For this reason, anti-deficiency statutes were enacted to provide incentives to lenders to discourage them from quickly selling the secured Fintech property regulations law below market value during times of recession and protect homeowners from oppressive debt.

These statutes, which are now in effect in a limited number of states, aim to mitigate the impact of strict foreclosure by such measures as limiting the remedies to one action or foreclosure, capping deficiency judgments to fair market value, limiting judgments to purchase money interest or forbidding deficiency judgments in non-judicial foreclosures.

While thirty-seven states currently allow a creditor to undertake foreclosure and other action on the underlying debt simultaneously, California enforces the one action rule. This rule mandates that a creditor must first exhaust the security and after that sue for the balance if the full amount is not realized. This protects debtors against having their unpledged assets seized by the creditor to satisfy the debt in the event of default by regulating the manner in which the creditor realizes a loan secured by real estate situated in California. A lender who violates the rule is vulnerable to sanctions including a loss lien on the real Fintech property regulations law.

California is unique in its application of the one action rule on Fintech. California courts have understood and cooperated with the rule of law. Courts in California are reluctant to allow lenders to circumvent the one action rule by providing application of laws from another jurisdiction where the debt is secured by Fintech property regulations law located in California. Courts have held waivers of the one action rule which have the effect of defeating the very purpose of the rule. Furthermore, courts in California have found other conduct such as improper set-off against an unpledged bank account and prejudgment attachment of unpledged assets of a borrower to violate the one action rule. Thus, an act that on the face of it is not a judicial action will be found in violation of the one action rule if it attempts to seize assets of the debtor that do not form part of the security.

Mitigating system risks through the help of non-judicial Foreclosures

Non-judicial foreclosures refer to an ex-ante contractual arrangement ancillary to a loan agreement. If Finch is not regulated, companies will fall into great challenges such that would not be able to be back to their feet. Non-judicial foreclosures take place outside of the court system. When the foreclosure occurs in this manner, section 580(d) of the California Code of Civil Procedure provides that foreclosure is a remedy that a lender may seek against the homeowner; the borrower is relieved from personal liability. The lender may not seek recovery for any balance owed on the Fintech property regulations law. All other assets of the borrowers are exempt from a claim by the lender. The borrower only loses the secured real Fintech property regulations law, and the creditor must bear the burden of any loss in value of the Fintech property regulations law t above the sale price.

In Fintech, the Non-judicial foreclosure becomes an option for the lender when the borrower falls behind in loan payments and is, in fact, unable to complete paying the outstanding loans balance as provided in a deed of trust. A deed of trust or trust deed is a deed through which a legal title in real Fintech property regulations law is transferred to a trustee, which holds it as security for a loan (debt) between a borrower and lender. In this case, the equitable title remains with the borrower. The lender has the right to accelerate payment for the entire amount of the balance due upon the default of the borrower, but a decision to accelerate is not part of the notice of default.

Non-judicial foreclosure is administered by the trustee and involves the following steps:

(i) The process is initiated when the creditor makes a demand to the trustee for the foreclosure. The trustee must file a notice of default in court, giving notice to all interested parties and identifying the borrower's name, the Fintech property regulations law description, the type of breach, the amount of the default, and stating the creditor's intent to implement a foreclosure sale. A three-month period must pass before a notice of sale can be filed specifying the date, time and location of the foreclosure sale.

(ii) Upon receiving the demand for the foreclosure, the trustee records a notice of default to notify the public of the default on loan. The following information is contained in the notice of default: Borrower's name, deed of trust record information, legal description of the Fintech property regulations law, type of default, the exact dollar amount, lender's declaration of intention to sell, and how to contact the lender.

(iii) Notice to the borrower that the default is curable by payment of the amount due within a specific duration of time. The duration of the foreclosure begins when the notice of default is recorded.

(iv) The trustee must mail the notice of default to the borrower and any parties that have recorded a 'request for special notice.' The notice of default must be mailed within ten days of the recording of the request.

(v) Within one month the notice of default must be mailed by the trustee to the borrower's successor if one exists and to junior lien holders. Junior lien holders are those that record a lien after the first lien is recorded. The first lien holder to record a lien is called the senior lien holder. Senior lien holders are paid before junior lien holders. The junior lean holders are paid in the order in which they recorded their lien.

(vi) The borrower or their successor and any junior lien holder have an opportunity within three months after the notice of default are recorded to 'cure' the default and then reinstate the loan by completing certain actions. First, the borrower should pay the default portion of the loan, and all reasonable expenses and costs incurred by the lender, including attorney and trustee fees. The borrower should ensure that no amount of the principal is paid that would not have fallen due had no default had taken place because this allows the borrower to reinstate the loan instead of having to pay the entire balance. If the default occurred at maturity of the loan, then the borrower must pay the whole of the remaining balance with no recourse for reinstatement. The borrower, their successor or any junior lien holder can start reinstatement procedures at any time, from the day of the notice of default recording to 5 days before the sale. If the loan is cured (brought current) the loan is reinstated without any detrimental effect due to the original default. Within a period of up to 21 days after the reinstatement, the lender is responsible for delivering a notice of rescission of the notice of default. The annulment initiates three actions. First, the declaration of default is withdrawn. Second, the demand for sale is withdrawn. Third, the trustee is notified of the reinstatement. The trustee then has within 30 days to record the notice of rescission and to record any fees and costs the trustee is owed.

(vii) If reinstatement is not pursued, then the trustee records a notice of sale three months after the notice of default. The following information must be included in the notice of sale: a description of the Fintech property regulations law, the deed of trust, the terms of the sale, contact information for the trustee, the entire amount of the unpaid balance under obligation, and a fair cost estimate incurred by the lender when the NOS was published.

(viii) At least 20 days before the sale the trustee must do the following: record the notice of sale, mail the notice of sale to the borrower and parties who requested a special notice and post the notice of sale at the Fintech property regulations law and in a public place. In standard practice the notice is posted at the courthouse and publication of the notice of sale in city newspaper where the Fintech property regulations law is located; re-publication is required one time for each of the next three weeks.

(ix) A postponement is possible for specified reasons at any time before a bid is accepted on sale day. The delay may last for up to one year. At the end of this year, the process for notice of sale must be reinitiated. The acceptable reasons for postponement are: the lender and the borrower agree to a postponement, the borrower seeks bankruptcy protection, a court prohibits the sale by issuing an injunction, or the trustee calls for a postponement to protect the borrower or the lender.

(x) Barring a postponement, the sale takes place as recorded in the notice of sale, and the sale must be open to the public. All parties including the lender or borrower can bid at the auction. The trustee must sell the Fintech Fintech property regulations law to the highest bidder. The only exception is for the lender, who ca...