Opinion ID: 3037388
Heading Depth: 3
Heading Rank: 3

Heading: Extent of Congressional Intent to Preempt

Text: Quicken’s claim, despite its identification as an express preemption argument, is better construed as an argument that the per diem statutes “ ‘stand[ ] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ” Gade, 505 U.S. at 98 (quoting Hines v. Davidowitz, 312 U.S. at 67). This is because only by looking to Congress’ purposes and objectives could one hope to identify what “preemption is necessary to achieve parity.” Quicken does not explain what it means by this phrase, although it does distinguish it from “absolute parity,” which it does not seek. By disclaiming the standard of “absolute parity,” Quicken implicitly concedes that the Parity Act does not preempt “all state restrictions on alternative mortgage transactions made by non-federally chartered creditors.” Quicken argues for preemption “to the extent required for ‘parity’ — not ‘absolute parity.’ ” Without offering a formulation of parity for this court to adopt, Quicken argues that “the Parity Act’s preemptive scope is not limited to state restrictions that conflict with regulations identified by the OTS.” We are therefore asked to articulate the preemptive scope of the Parity Act. Notwithstanding § 3801(b) and § 3803(c), Congress explicitly referred to the ongoing validity of state licensing requirements and “regulatory requirements and enforcement mechanisms provided by State law” governing housing creditors. 12 U.S.C. § 3802(2). Given this explicit reference, Congress did not intend to preempt all state regulation. Quicken does not seek this ‘absolute parity’ holding, and we do not adopt it. See also Black, 112 Cal. Rptr. 2d at 457 (declining to read § 3801(b) to require absolute parity or complete preemption). We must therefore determine the scope of the clause: “notwithstanding any State constitution, law, or regulation.” 12 5606 QUICKEN LOANS, INC. v. WOOD U.S.C. § 3803(c). Other courts asked to rule on the preemptive scope of the Parity Act have confronted direct conflicts between state laws and OTS regulations. See, e.g., Nat’l Home Equity Mortgage Ass’n v. Face, 239 F.3d 633 (4th Cir. 2001) (state prepayment law); Shinn v. Equity Mortgage Servs., Inc., 96 F. Supp. 2d 419 (D.N.J. 2000) (same); Glukowsky v. Equity One, Inc., 180 N.J. 49 (2004) (same). This case does not present a direct conflict with an OTS regulation, nor does it present a direct conflict with the Parity Act because the per diem statutes do not prohibit alternative mortgage transactions. [7] The California Court of Appeals has addressed whether California’s per diem statutes are preempted by the Parity Act because they “stand[ ] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Black, 112 Cal. Rptr. 2d at 456. That court rejected the argument that “the goal of the Parity Act is national uniformity in the regulation of state-chartered housing lenders with respect to alternative mortgage transactions” because “[g]iven the dearth of applicable federal regulations, the national uniform standard for state-chartered housing lenders would be ‘anything goes.’ That is hardly a uniform standard.” Id. at 457. It specifically rejected the argument that Congress’ purpose required preemption of the state laws at issue because the state claims did “not seek to prohibit or impede the making of alternative mortgage transactions that comport with the applicable federal regulations,” and the claims do not “tread on the areas of federal regulation applicable to non-federally chartered housing creditors, namely, [those areas covered by regulations the OTS identified as applicable to non-federally chartered housing creditors].” Id. at 458. [8] Black’s reasoning applies to this case as well. Here, California’s per diem statutes do not ‘tread on’ an area of federal regulation which the OTS has identified as applicable to non-federally chartered housing creditors. The per diem statutes also do not prohibit the making of alternative mortgage QUICKEN LOANS, INC. v. WOOD 5607 transactions. That leaves the issue of impeding the making of alternative mortgage transactions. This essentially returns the analysis to its original point of determining what is ‘necessary to achieve parity’ — i.e., what impedes the making of alternative mortgage transactions. California’s per diem statutes apply to mortgages on real property, and do not distinguish between alternative mortgages and fixed-rate, fixed-term mortgages. CAL. CIV. CODE § 2948.5. The per diem statutes therefore do not impede the making of alternative mortgage transactions per se. These statutes do not apply to federally chartered housing creditors because Congress delegated “complete authority to regulate federal savings and loan associates” to the OTS. Wash. Mut. Bank v. Superior Court of L.A. County, 95 Cal. App. 4th 606, 618 (Cal. Ct. App. 2002). Quicken argues that because the statutes do not apply to federally chartered creditors, they should not apply to nonfederally chartered creditors. However, Congress has not delegated similarly complete authority to the OTS to regulate nonfederally chartered housing creditors. 12 U.S.C. § 3802. The full purposes and objectives of Congress in enacting the Parity Act do not include delegating complete authority to regulate nonfederally chartered housing creditors to the OTS. Id. § 3802. Section 3802(2) suggests that Congress did not intend to preempt all state laws relating to nonfederally chartered housing creditors. Indeed, § 3801 suggests that the Parity Act was intended to eliminate the discriminatory impact that regulations authorizing federally chartered depository institutions to engage in alternative mortgage financing have upon nonfederally chartered housing creditors. Section 3801 further states that it is the purpose of the Parity Act to provide nonfederally chartered housing creditors with parity by authorizing all housing creditors to make, purchase, and enforce alternative mortgage transactions so long as the transactions are in conformity with OTS regulations. 5608 QUICKEN LOANS, INC. v. WOOD [9] The per diem statutes do not apply exclusively to alternative mortgages, but rather are statutes of general applicability. They do not touch upon the areas identified by the OTS as essential and intrinsic to the ability to engage in alternative mortgage transactions. The per diem statutes do not restrict a housing creditor’s ability to make an alternative mortgage transaction, any more than does any statute which applies to nonfederally chartered housing creditors but not to federally chartered housing creditors. Because the California per diem statutes do not conflict with OTS regulations applicable to nonfederally chartered housing creditors; do not prohibit making, purchasing, or enforcing alternative mortgage transactions; and do not inhibit the making, purchasing, or enforcing of alternative mortgage transactions per se, they are not preempted by the Parity Act.