Saturday, June 5, 2010

FYI: CSBS/AARMR Issue 2009 NMLS Report

According to the attached 2009 annual report, forty-eight states and territories are now using the Nationwide Mortgage Licensing System and Registry and all states are expected to be using the system by the end of 2010.
 
As you recall, the NMLS meets the requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 for state-licensed mortgage loan originators in the areas of education, testing, integrity, and financial responsibility.
 
Some highlights from the system’s 2009 annual report include:  (1) NMLS management of 106,537 unique companies, branches and mortgage loan originators that held 134,731 state licenses;  (2) collection and disbursement of more than $33 million in state license fees;  (3) adoption of enabling legislation by 49 states, the District of Columbia and the Virgin Islands;  (4) delivery of more than 420,000 hours of education through 152 approved course providers and 248 approved courses. For the future, the system will be working with federal banking and farm credit regulators to register mortgage loan originators; and expand and improve its functions, operations and services. 
 
Let me know if you have any questions.  Thanks.
 

 

Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

Fax:  (866) 581-9302
Mobile:  (312) 493-0874

RWutscher@kw-llp.com

http://www.kw-llp.com

 

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Monday, May 31, 2010

FYI: Cal App Distinguishes Ninth Circuit Opinion in Rose, Holds Cal Civ Code 1748.9 Not Preempted by NBA Absent Impairment Showing

A California appellate court recently held that California Civil Code Section 1748.9, which requires certain disclosures in connection with credit card checks, is not preempted on its face as it does not preclude national banks from exercising their authority to lend money on personal security and, in this particular case, there was no basis for preemption of Section 1748.9 without a factual record that Section 1748.9 forbids or significantly impairs the exercise of powers granted to national banks.  A copy of the opinion is attached.

California Civil Code Section 1748.9 requires credit card issuers who extend credits by means of pre-printed checks or drafts to make certain disclosures on an attachment to such checks or drafts.  This class action lawsuit was brought against a national bank for its purported unlawful business practices for allegedly failing to comply with the disclosure requirements of Section 1748.9.  The trial court granted the defendant national bank's motion for judgment on the pleadings, holding that Section 1748.9 is preempted by federal law applicable to national banks.

In reversing the lower court's holding, the appellate court focused on Rose v. Chase Manhattan Bank USA, a Ninth Circuit case the lower court used to determine that Section 1748.9 was preempted as to national banks by the National Bank Act and regulations promulgated thereunder ("NBA"), noting that the court was not bound by federal court precedent, however, if it was "persuaded federal law preempts section 1748.9 as to national banks, the supremacy clause ... obligates this court to honor federal law."  

In Rose, the Ninth Circuit used Supreme Court precedent to distill the rule that, where "Congress has explicitly granted a power to a national bank without any indication that Congress intended for that power to be subject to local restriction, Congress is presumed to have intended to preempt state laws such as Cal. Civ. Code § 1748.9."  The court disagreed with the Ninth Circuit's interpretation of Supreme Court precedent to mean that the NBA preempts the disclosure requirements of Section 1748.9 because the NBA gives national banks the power to loan money on personal security. 
 
Instead, the state appellate court found that under Supreme Court conflict preemption precedent, the NBA precludes states from forbidding or impairing significantly the exercise of a power explicitly granted to national banks by the NBA, and that on its face Section 1748.9 does not forbid or significantly impair the exercise of banking power authorized by the NBA.  The court further held that "when a state disclosure requirement does not, on its face, forbid or significantly impair national banks from exercising a power granted to it by Congress under the NBA, national banks claiming preemption must make a factual showing that the disclosure requirement significantly impairs the exercise of the relevant power or powers."

Finally, the court also held that 12 Code of Federal Regulations part 7.4008(d) also does not preempt Section 1748.9, as was held by the district court in Rose.
Let me know if you have any questions.  Thanks.
 

 

Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

Fax:  (866) 581-9302
Mobile:  (312) 493-0874

RWutscher@kw-llp.com

http://www.kw-llp.com

 

NOTICE:  We do not send unsolicited emails.  If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention.  Thank you.

 

Our updates are available on the internet, in searchable format, at: http://updates.kw-llp.com

 

 

FYI: MI App Ct Says NBA Preemption May Extend to Third-Party Agents

A Michigan appellate court recently held that Michigan state statutes, as well as common law, may be preempted by the National Bank Act ("NBA"), even where the alleged violation of those laws is committed by a third-party agent of a national bank.  A copy of the opinion is attached.

 

Plaintiff-borrowers sought damages from ABN AMRO based upon the alleged violations of Michigan state law by ABN AMRO's alleged agent, Concept One Mortgage Corporation ("Concept One").  Plaintiffs alleged that, among other things, Concept One failed to comply with state licensing and registration laws, and that ABN AMRO benefited from fraudulent statements made by Concept One while initiating and processing mortgage applications with the Plaintiffs. 

 

The lower court granted ABN AMRO's motion for summary disposition, holding that Plaintiffs' claims were preempted by the NBA, and the Court of Appeals affirmed.

 

The Court first addressed whether ABN AMRO was entitled to preemption under the NBA, despite the alleged misconduct being committed by a third-party agent.  Interpreting the NBA's implementing regulations, specifically 12 CFR § 34.4, the Court relied on the reasoning of the Sixth Circuit and focused "on the exercise of defendant's power, granted by federal law, to make real estate transactions" and "not on defendant's corporate or agency structure."  Concept One's actions were "done in furtherance of" ABN AMRO's power to make real estate loans, and ABN AMRO's "use of Concept One's services was specifically authorized by" regulation 12 CFR § 7.1004.  Accordingly, ABN AMRO was entitled to whatever preemptive protection might be afforded to it under the NBA.

 

The Court next addressed whether Plaintiffs' claims were actually preempted under the NBA.  As you may recall, 12 CFR § 34.4 allows national banks to "make real estate loans without regard to state law limitations concerning…licensing or registration or the processing or origination of mortgages."  Therefore, Plaintiffs' licensing and registration claims were "expressly and directly preempted" by the NBA. 

 

The Court also held Plaintiffs' common law claims preempted under the NBA.  12 CFR §34.4 does allow national banks to be subject to certain common law claims, but "only if such claims merely 'incidentally effect the exercise of defendant's real estate lending powers.'"  Again relying on the Sixth Circuit, the Court held that Plaintiffs' claims, if successfully pursued, would "have far more than an 'incidental' affect on [ABN AMRO's] exercise of the real estate lending powers granted under the federal scheme."

 
Let me know if you have any questions.  Thanks.
 

 

Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

Fax:  (866) 581-9302
Mobile:  (312) 493-0874

RWutscher@kw-llp.com

http://www.kw-llp.com

 

NOTICE:  We do not send unsolicited emails.  If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention.  Thank you.

 

Our updates are available on the internet, in searchable format, at: http://updates.kw-llp.com