The Seventh Circuit ruled that state common law and statutory claims based on a failure to modify under the federal Home Affordability Modification Program are not preempted. Plaintiff alleged that defendant promised to modify her loan if she qualified under HAMP, but then refused to grant the modification, even though her loan met HAMP requirements. The Seventh Circuit held that these state law claims were not field preempted by the Home Owners’ Loan Act because the claims did not concern state licensing and regulation, but rather were claims of general applicability. The Court also refused to find conflict preemption, on the ground that the claims did not seek to modify or otherwise affect servicers’ substantive duties under HAMP. Click here for the opinion.
The District Court for the Northern District of West Virginia reversed a bankruptcy court decision, holding that West Virginia’s consumer protection statute is not a “state consumer financial law” subject to preemption under the Dodd-Frank Act. The plaintiffs alleged that defendant violated the Consumer Credit and Protection Act by continuing its collection calls after being informed by bankruptcy counsel that plaintiffs had retained counsel.The Court noted that the Dodd-Frank Act revamped preemption under the National Bank Act and provides three instances in which state consumer financial laws are preempted: (1) discriminatory effect on national banks compared with the effect of the law on a state-chartered bank; (2) prevention or significant interference with a national bank’s exercise of its powers; and (3) preemption by a federal law. The Court held that the Consumer Credit and Protection Act is not preempted by the National Bank Act because it “was not designated to regulate financial transactions or accounts, but rather to protect West Virginia residents from unfair or abusive collection practices.” Click here for the opinion.