Alert March 20, 2012

Seventh Circuit Holds HAMP-based State Law Claims Not Preempted

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.