Opinion ID: 619531
Heading Depth: 2
Heading Rank: 2

Heading: Michigan Usury Act claim

Text: The district court properly dismissed the Moloskys' claim under the Michigan Usury Act as preempted by HOLA. Preemption claims under the Home Owners' Loan Act are governed by the implementing regulations of the Office of Thrift Supervision (OTS). [1] The Moloskys' claim based on the Michigan Usury Act, M.C.L. § 438.31, is preempted according to the explicit terms of 12 C.F.R. § 560.2(b). The Michigan law, which prohibits among other things the charging of certain types of prepayment fees, is the type of state law explicitly listed as preempted in § 560.2(b), which extends preemption to state laws purporting to impose requirements regarding ... (5) Loan-related fees, including ... prepayment penalties, servicing fees, and overlimit fees. Congress gave the OTS broad authority under HOLA to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as Federal savings associations... giving primary consideration of the best practices of thrift institutions in the United States. 12 U.S.C. § 1464(a). The Supreme Court has found this power to be very broad, and exclusive: Congress plainly envisioned that federal savings and loans would be governed by what the [OTS]not any particular Statedeemed to be the `best practices.' Fidelity Fed. Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 161, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982). Pursuant to this grant, the OTS has issued regulations that assert its authority to promulgate regulations that preempt state laws affecting the operations of federal savings associations and that are intended to occup[y] the entire field of lending regulation for federal savings associations. 12 C.F.R. § 560.2(a). To that end, the OTS has laid out a system of regulation so pervasive as to leave no room for state regulatory control. Silvas v. ETrade Mortg. Corp., 514 F.3d 1001, 1004 (9th Cir.2008) (internal citation omitted). Moreover, there is no presumption against preemption here; the state regulations are intruding into an area of law with a history of significant federal presence. United States v. Locke, 529 U.S. 89, 108, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000); see also Wimbush v. Wyeth, 619 F.3d 632, 642 (6th Cir.2010). Contrary to the Moloskys' claims, HOLA preemption is applicable in situations where, as here, a federal savings association did not originate the loan but instead later serviced it. The grant of power to the OTS is very broad, and through 12 C.F.R. § 560.2 it has elected to make use of that breadth. State laws that propose to regulate a federal organization's lending activities, or affect them in a more than incidental way, are preempted. The situation before us is precisely the sort to fit the OTS's purview. The Moloskys are protesting the legality of payoff statement fees and recording fees, fees charged to them by Washington Mutual, a federal savings and loan association. The claim is predicated on the actions of Washington Mutual that occurred after the loan was transferred, and so are premised on the argument that state laws should regulate Washington Mutual's actions. The valid OTS regulation clearly preempts such suits. The Moloskys' argument against this conclusion, predicated on one paragraph of an OTS opinion letter and several cases from the 1980s and 1990s, is unconvincing. The state court and federal district court cases predate the current version of OTS regulation on preemption, which is far broader and more detailed than any of its predecessors, making their analysis largely inapplicable. The OTS opinion letter, somewhat ambiguous, appears to require that a loan originator be a federal savings association in order to be exempt from state requirements dealing with origination. See Re Preemption of Georgia Fair Lending Act, OTS Op. Letter (Jan. 21, 2003) at 4 (available at http://www.ots. treas.gov/_files/56301.pdf). It does not follow that when a federal savings association services a loan previously originated by a state bank that the federal savings association is subject to state requirements regarding servicing. This is not a situation like that distinguished in In re Ocwen Loan Servicing, 491 F.3d 638 (7th Cir.2007), where state law purported to forbid servicing or prescribe the terms of the assignment. Id. at 645. The Moloskys are not contesting that Washington Mutual was legally allowed to service the loan, but rather that Washington Mutual's servicing violated state law.