Alert March 11, 2008

OTS Issues Legal Opinion on Preemption of State Predatory Lending Laws

The OTS issued an opinion letter stating that state predatory lending laws preempted by the Home Owners’ Loan Act and OTS regulations are preempted without additional OTS action. The letter, issued to Standard & Poor’s, notes that several opinion letters have been issued discussing the preemption of specific state predatory lending laws (Georgia, New Jersey, New Mexico and New York). The OTS indicates that to the extent other states have similar predatory lending laws, the same preemption finding would apply. The OTS points out that these letters were issued in response to specific requests from federal savings banks and because the OTS has already issued several state predatory lending law preemption opinions, it has not issued additional, largely duplicative opinions addressing substantially similar laws of other states. Click here for a copy of the opinion.