§3803 — Title 12 Banks and Banking | U.S. Code

Summary

Let state-chartered banks, credit unions, and other nonfederal housing lenders make, buy, and enforce alternative mortgage deals, but follow the rules tied to a "designated transfer date." For transactions made on or before that date, each type of lender follows the alternative-mortgage rules issued by its old regulator (the Comptroller for national banks, the NCUA for federal credit unions, and the Director of the Office of Thrift Supervision for federally chartered thrifts) to the extent those regulators had authority. For transactions made after the designated transfer date, lenders must follow rules the Bureau of Consumer Financial Protection issues under its authority. The Bureau must review the earlier regulators’ rules, check they are fair and not deceptive, and then issue its own rules after the designated transfer date. The "designated transfer date" is the date set in section 1062 of the Consumer Financial Protection Act of 2010. A mortgage is treated as following the applicable rule even if the lender made a mistake, so long as the loan mostly followed the rule and the lender fixes the error within 60 days after finding it, including any account adjustments. State laws that simply ban alternative mortgages do not stop lenders from using these rules, but ordinary state mortgage regulations (for example limits on prepayment penalties or late charges) are not covered by that protection.

Title 12, §3803

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(a)In order to prevent discrimination against State-chartered depository institutions, and other nonfederally chartered housing creditors, with respect to making, purchasing, and enforcing alternative mortgage transactions, housing creditors may make, purchase, and enforce alternative mortgage transactions, except that this section shall apply—

(1)with respect to banks, only to transactions made on or before the designated transfer date, as determined under section 1062 of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5582], in accordance with regulations governing alternative mortgage transactions as issued by the Comptroller of the Currency for national banks, to the extent that such regulations are authorized by rulemaking authority granted to the Comptroller of the Currency with regard to national banks under laws other than this section;

(2)with respect to credit unions, only to transactions made on or before the designated transfer date, as determined under section 1062 of the Consumer Financial Protection Act of 2010, in accordance with regulations governing alternative mortgage transactions as issued by the National Credit Union Administration Board for Federal credit unions, to the extent that such regulations are authorized by rulemaking authority granted to the National Credit Union Administration with regard to Federal credit unions under laws other than this section;

(3)with respect to all other housing creditors, including without limitation, savings and loan associations, mutual savings banks, and savings banks, only to transactions made on or before the designated transfer date, as determined under section 1062 of the Consumer Financial Protection Act of 2010, in accordance with regulations governing alternative mortgage transactions as issued by the Director of the Office of Thrift Supervision for federally chartered savings and loan associations, to the extent that such regulations are authorized by rulemaking authority granted to the Director of the Office of Thrift Supervision with regard to federally chartered savings and loan associations under laws other than this section; and

(4)with respect to transactions made after the designated transfer date, only in accordance with regulations governing alternative mortgage transactions, as issued by the Bureau of Consumer Financial Protection for federally chartered housing creditors, in accordance with the rulemaking authority granted to the Bureau of Consumer Financial Protection with regard to federally chartered housing creditors under provisions of law other than this section.

(b)For the purpose of determining the applicability of this section, an alternative mortgage transaction shall be deemed to be made in accordance with the applicable regulation notwithstanding the housing creditor’s failure to comply with the regulation, if—

(1)the transaction is in substantial compliance with the regulation; and

(2)within sixty days of discovering any error, the housing creditor corrects such error, including making appropriate adjustments, if any, to the account.

(c)An alternative mortgage transaction may be made by a housing creditor in accordance with this section, notwithstanding any State constitution, law, or regulation that prohibits an alternative mortgage transaction. For purposes of this subsection, a State constitution, law, or regulation that prohibits an alternative mortgage transaction does not include any State constitution, law, or regulation that regulates mortgage transactions generally, including any restriction on prepayment penalties or late charges.

(d)The Bureau of Consumer Financial Protection shall—

(1)review the regulations identified by the Comptroller of the Currency and the National Credit Union Administration,11 So in original. The comma probably should not appear. (as those rules exist on the designated transfer date), as applicable under paragraphs (1) through (3) of subsection (a);

(2)determine whether such regulations are fair and not deceptive and otherwise meet the objectives of the Consumer Financial Protection Act of 2010; and

(3)promulgate regulations under subsection (a)(4) after the designated transfer date.

(e)As used in this section, the term “designated transfer date” means the date determined under section 1062 of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5582].

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Consumer Financial Protection Act of 2010, referred to in subsec. (d)(2), is title X of Pub. L. 111–203, July 21, 2010, 124 Stat. 1955, which enacted subchapter V (§ 5481 et seq.) of chapter 53 of this title and enacted, amended, and repealed numerous other sections and notes in the Code. For complete classification of this Act to the Code, see

Short Title

note set out under section 5301 of this title and Tables.

Amendments

2010—Subsec. (a)(1), (2), (3). Pub. L. 111–203, § 1083(a)(2)(A)(i), inserted “on or before the designated transfer date, as determined under section 1062 of the Consumer Financial Protection Act of 2010,” after “transactions made”. Subsec. (a)(4). Pub. L. 111–203, § 1083(a)(2)(A)(ii)–(iv), added par. (4). Subsec. (c). Pub. L. 111–203, § 1083(a)(2)(B), added subsec. (c) and struck out former subsec. (c). Prior to amendment, text read as follows: “An alternative mortgage transaction may be made by a housing creditor in accordance with this section, notwithstanding any State constitution, law, or regulation.” Subsecs. (d), (e). Pub. L. 111–203, § 1083(a)(2)(C), added subsecs. (d) and (e). 1989—Subsec. (a)(3). Pub. L. 101–73 substituted “Director of the Office of Thrift Supervision” for “Federal Home Loan Bank Board” wherever appearing.

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the designated transfer date, see section 1083(b) of Pub. L. 111–203, set out as a note under section 3802 of this title.

Effective Date

Section effective Oct. 15, 1982, see section 807(a) of Pub. L. 97–320, set out as a note under section 3801 of this title.

§3803 Alternative mortgage authority

Summary

Title 12, §3803

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata