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Fourth Circuit Opinion Limits Scope of Preemption of Consumer Remedies


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JL
- 508 days ago - pubcit.typepad.com
Yesterday's decision from the Fourth Circuit in McCauley v. Home Loan Investment Bank cabins the preemptive scope of the Home Owners' Loan Act and associated regulations to pre-Dodd Frank consumer claims



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JL A. (275)
Sunday April 7, 2013, 2:41 pm
Tuesday, March 26, 2013
Fourth Circuit opinion limits scope of preemption of consumer remedies

Yesterday's decision from the Fourth Circuit in McCauley v. Home Loan Investment Bank cabins the preemptive scope of the Home Owners' Loan Act and associated regulations to pre-Dodd Frank consumer claims (Dodd-Frank has changed the legal landscape going forward, but the old regulations still govern a number of cases arising out of the Great Recession). McCauley brought claims of unconscionability and fraud under state law for misrepresentations and substantive unfairness in connection with her mortgage. The Fourth Circuit held the unconscionability claim preempted because its substantive nature intruded on the federally regulated field, but the court held that a fraud claim is not preempted, because HOLA regulations do not displace "basic norms that undergird commercial transactions." Moreover, "Determining that the tort of fraud falls within the scope of [HOLA regulations] would preclude fundamental state regulation of deceptive practices in which unscrupulous savings and loan associations might engage."

Posted by Scott Michelman
 

Kit B. (276)
Sunday April 7, 2013, 5:33 pm

I'm sorry, I needed a little more information to fully grasp what this means: (still do not)

Three Types of Federal Preemption
1. Express.
Congress may preempt state law by expressly stating its
intent. see Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977).

2. "Field." Congressional intent may be inferred in a particular area, see California Federal , 479 U.S. at 280. "Implied" includes statutes in which "the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress 'left no room' for supplementary state regulation."
Rice v. Santa Fe Elevator Corp ., 331 U.S. 218, 230 (1947). In this latter situation, Congressional intent to preempt state law results from the fact that Congress has "occupied the field" available to state regulation.

3. "Conflict."
Federal law preempts state law even where there is no express or implied intent of Congress to preempt state regulation, if the state law conflicts with federal law. This conflict can result from the fact that state regulation makes compliance with the federal law a "physical impossibility," Florida Lime and Avocado Growers. Inc. v. Paul
, 373 U.S. 132, 142 - - 43 (1963) or where the state law stands "as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."
Hines v. Davidowitz , 312 U.S. 52, 67 (1941).
See also
Barnett Bank v. Nelson , 517 U.S. 25 (1996).

Overview of HOLA Preemption.
With respect to federal associations, the Home Owners Loan Act, ("HOLA"), provides for the chartering and regulation of such in institutions and has been regarded as "occupying the field" with respect
to their operations and activities. This view was first stated in California v. Coast Federal Savings and Loan Association , 98 F. Supp. 311 (S.D. Cal. 1951). It was discussed favorably by the United States
Supreme Court in Fidelity Federal Savings and Loan Association v. de la Cuesta , 458 U.S. 141 (1982) ("de la Cuesta") but not relied on in the holding. OTS regulations and staff interpretations incorporate this view.

http://www.gibsondunn.com/fstore/documents/pubs/Home_Owners_Loan_Act_Preemp.pdf

I still am more than a bit over whelmed by all of this, but I think this is still a protective practice, even if we do not grasp the depth of the law. I wonder why we must hire attorneys?
 

Kit B. (276)
Sunday April 7, 2013, 5:34 pm

I'm am so sorry, I did realize that would be so long on the page. Go ahead and have that removed.
 

JL A. (275)
Sunday April 7, 2013, 5:37 pm
Thanks Kit for helping people understand pre-emption. The part that is good news for consumers was:
"the court held that a fraud claim is not preempted, because HOLA regulations do not displace "basic norms that undergird commercial transactions." Moreover, "Determining that the tort of fraud falls within the scope of [HOLA regulations] would preclude fundamental state regulation of deceptive practices in which unscrupulous savings and loan associations might engage."
 

Elle B. (81)
Monday April 8, 2013, 12:12 am
Ty for posting JL A. ...and Kit for providing important information and link.
 

JL A. (275)
Monday April 8, 2013, 7:20 am
You are welcome Elle.
 

Carol D. (109)
Monday April 8, 2013, 2:07 pm
Noted thanks
 

JL A. (275)
Monday April 8, 2013, 3:43 pm
You are welcome Carol
 
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