Illinois Assocation of Mortgage Brokers v. Office of Banks and Real Estate

Case No. 02-1018 (7th Cir. September 17, 2002); Clearinghouse Number: 54339

Description

District Court Ruling that Illinois Office of Banks and Real Estate Predatory Lending Regulations Are Not Preempted by Federal Alternative Mortgage Transaction Parity Act Reversed by Seventh Circuit With Direction to Determine Which State Regulations Are Preempted

Abstract

The Seventh Circuit held that Illinois Office of Banks and Real Estate regulations, which imposed stricter terms on lenders making high-risk home loans in an attempt to limit predatory lending, are preempted under section 3803 (c) of the Alternative Mortgage Transaction Parity Act of 1982 “to the extent that they block state lenders from extending credit on terms open under federal regulations, when the lenders actually comply with the federal regulations.” Plaintiff mortgage broker association, bringing suit under Section 1983, sought a declaratory judgment that the state regulations are federally preempted. In its motion for summary judgment, defendant claimed that the regulations were not preempted but were consistent with the Home Ownership and Equity Protection Act of 1994. In an amicus brief in support of defendants, several fair lending and housing advocacy organizations submitted evidence showing the harmful effects of predatory lending on individuals and communities in Illinois. The district court granted defendant's summary judgment motion, finding that the Home Ownership and Equity Protection Act of 1994 was the applicable statute to to analyze for consistency with the new regulations and found that the new regulations were valid. The Seventh Circuit disagreed, finding that the 1994 Act’s regulation of all home mortgage lenders did not repeal the Alternative Mortgage Transaction Parity Act’s rule of parity between state and federal institutions in alternative mortgage transactions. The Court remanded the case to the district court to determine which, if any, of the state regulations were preempted by the 1982 Act and its regulations. The Court also held that the Office of Banks and Real Estate must be dismissed as a party because it is not a “person” under Section 1983.

Additional Information

Attorney Information
Amici Curiae represented by Nina E. Vinik, Chicago Lawyers' Committee for Civil Rights Under Law, Inc., 100 N. LaSalle St., Suite 600, Chicago, IL 60602-2403 (312.630.9744); Diana White, Brenda Grauer, Michelle Weinberg, Legal Assistance Foundation of Metropolitan Chicago, 111 W. Jackson Blvd., Suite 300, Chicago, IL 60604 (312.347.8359); Dory Rand, Sargent Shriver National Center on Poverty Law, 50 E. Washington, Suite 500, 2d Floor, Chicago, IL 60602, (312.263.3860); Stephen Stern, Leadership Council for Metropolitan Open Communities, 111 W. Jackson Blvd., 12th Floor, Chicago, IL 60604 (312.341.5678); Jean Constantine-Davis, Nina F. Simon, AARP Foundation Litigation; Michael Schuster, AARP, 601 E Street NW, Washington, D.C. 20049 (202.434.2158).
Docket Date
2002-09-17 23:00:00+00:00