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Title 12 — Banks and BankingRelease 119-73not60

§3803 Alternative Mortgage Authority

Title 12 › Chapter 39— ALTERNATIVE MORTGAGE TRANSACTIONS › § 3803

Last updated Apr 3, 2026|Official source

Summary

Lets state law lets state-chartered banks and other non-federal housing lenders make, buy, and enforce "alternative" mortgage deals, but it ties what rules apply to the lender type and a "designated transfer date" (the date set by section 1062 of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5582]). For national banks, federal credit unions, and federally chartered thrifts, the law applies only to transactions made on or before that designated transfer date and only under the regulations their old federal regulators issued (the Comptroller of the Currency, the National Credit Union Administration, or the Director of the Office of Thrift Supervision) to the extent those regulators had authority. Transactions after the designated transfer date must follow rules the Bureau of Consumer Financial Protection issues. A transaction will count as following the rules even if there is a minor mistake, as long as it mostly follows the rule and the lender fixes the mistake within 60 days, including any account adjustments. Federal law also overrides state bans on alternative mortgages, but not general state mortgage rules (for example limits on prepayment penalties or late fees). The Bureau must review the listed regulator rules as of the designated transfer date, decide if they are fair and not deceptive and meet the Consumer Financial Protection Act’s goals, and then create rules for loans made after that date.

Full Legal Text

Title 12, §3803

Banks and Banking — Source: USLM XML via OLRC

(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].

Legislative History

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.

Reference

Citations & Metadata

Citation

12 U.S.C. § 3803

Title 12 — Banks and Banking

Last Updated

Apr 3, 2026

Release point: 119-73not60