12 U.S.C. § 5538 — Mortgage loans; rulemaking procedures;

Page 1977 TITLE 12—BANKS AND BANKING § 5538 1 So in original. Probably should be followed by a comma. quirements established by the Suitability in Annuity Transactions Model Regulation of the National Association of Insurance Commissioners (or any successor thereto). (f) Subgrants A State or eligible entity that receives a grant under this section may make a subgrant, as the State or eligible entity determines is necessary to carry out the activities funded using a grant under this section. (g) Reapplication A State or eligible entity that receives a grant under this section may reapply for a grant under this section, notwithstanding the limitations on grant amounts under subsection (e). (h) Authorization of appropriations There are authorized to be appropriated to carry out this section, $8,000,000 for each of fis- cal years 2011 through 2015. (Pub. L. 111–203, title IX, § 989A, July 21, 2010, 124 Stat. 1941.) Editorial Notes CODIFICATION Section was not enacted as part of subtitle C of title X of Pub. L. 111–203, which comprises this part. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. § 5538. Mortgage loans; rulemaking procedures; enforcement (a)(1) The Bureau of Consumer Financial Pro- tection shall have authority to prescribe rules with respect to mortgage loans in accordance with section 553 of title 5. Such rulemaking shall relate to unfair or deceptive acts or prac- tices regarding mortgage loans, which may in- clude unfair or deceptive acts or practices in- volving loan modification and foreclosure rescue services. Any violation of a rule prescribed under this paragraph shall be treated as a viola- tion of a rule prohibiting unfair, deceptive, or abusive acts or practices under the Consumer Financial Protection Act of 2010 and a violation of a rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair or deceptive acts or practices. (2) The Bureau of Consumer Financial Protec- tion shall enforce the rules issued under para- graph (1) in the same manner, by the same means, and with the same jurisdiction, powers, and duties, as though all applicable terms and provisions of the Consumer Financial Protection Act of 2010 were incorporated into and made part of this subsection. (3) Subject to subtitle B of the Consumer Fi- nancial Protection Act of 2010 [12 U.S.C. 5511 et seq.], the Federal Trade Commission shall en- force the rules issued under paragraph (1), in the same manner, by the same means, and with the same jurisdiction, as though all applicable terms and provisions of the Federal Trade Com- mission Act [15 U.S.C. 41 et seq.] were incor- porated into and made part of this section. (b)(1) Except as provided in paragraph (6), in any case in which the attorney general of a State has reason to believe that an interest of the residents of the State has been or is threat- ened or adversely affected by the engagement of any person subject to a rule prescribed under subsection (a) in practices that violate such rule, the State, as parens patriae, may bring a civil action on behalf of its residents in an ap- propriate district court of the United States or other court of competent jurisdiction— (A) to enjoin that practice; (B) to enforce compliance with the rule; (C) to obtain damages, restitution, or other compensation on behalf of the residents of the State; or (D) to obtain penalties and relief provided under the Consumer Financial Protection Act of 2010, the Federal Trade Commission Act [15 U.S.C. 41 et seq.], and such other relief as the court deems appropriate. (2) The State shall serve written notice to the Bureau of Consumer Financial Protection or the Commission, as appropriate 1 of any civil action under paragraph (1) at least 60 days prior to ini- tiating such civil action. The notice shall in- clude a copy of the complaint to be filed to ini- tiate such civil action, except that if it is not feasible for the State to provide such prior no- tice, the State shall provide notice immediately upon instituting such civil action. (3) Upon receiving the notice required by para- graph (2), and subject to subtitle B of the Con- sumer Financial Protection Act of 2010 [12 U.S.C. 5511 et seq.], the Bureau of Consumer Fi- nancial Protection or the Commission, as appro- priate 1 may intervene in such civil action and upon intervening— (A) be heard on all matters arising in such civil action; (B) remove the action to the appropriate United States district court; and (C) file petitions for appeal of a decision in such civil action. (4) Nothing in this subsection shall prevent the attorney general of a State from exercising the powers conferred on the attorney general by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the pro- duction of documentary and other evidence. Nothing in this section shall prohibit the attor- ney general of a State, or other authorized State officer, from proceeding in State or Federal court on the basis of an alleged violation of any civil or criminal statute of that State. (5) In a civil action brought under paragraph (1)— (A) the venue shall be a judicial district in which the defendant is found, is an inhabitant, or transacts business or wherever venue is proper under section 1391 of title 28; and (B) process may be served without regard to the territorial limits of the district or of the State in which the civil action is instituted. (6) Whenever a civil action or an administra- tive action has been instituted by or on behalf of the Bureau of Consumer Financial Protection or Page 1978 TITLE 12—BANKS AND BANKING § 5538 the Commission for violation of any provision of law or rule described in paragraph (1), no State may, during the pendency of such action insti- tuted by or on behalf of the Bureau of Consumer Financial Protection or the Commission, insti- tute a civil action under that paragraph against any defendant named in the complaint in such action for violation of any law or rule as alleged in such complaint. (7) If the attorney general of a State prevails in any civil action under paragraph (1), the State can recover reasonable costs and attorney fees from the lender or related party. (Pub. L. 111–8, div. D, title VI, § 626(a), (b), Mar. 11, 2009, 123 Stat. 678; Pub. L. 111–24, title V, § 511(a), May 22, 2009, 123 Stat. 1763; Pub. L. 111–203, title X, § 1097, July 21, 2010, 124 Stat. 2102.) Editorial Notes REFERENCES IN TEXT The Consumer Financial Protection Act of 2010, re- ferred to in subsecs. (a) and (b)(1)(D), (3), is title X of Pub. L. 111–203, July 21, 2010, 124 Stat. 1955, which en- acted this subchapter and enacted, amended, and re- pealed numerous other sections and notes in the Code. Subtitle B of title X is classified generally to part B (§ 5511 et seq.) of this subchapter. For complete classi- fication of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables. The Federal Trade Commission Act, referred to in subsecs. (a)(3) and (b)(1)(D), is act Sept. 26, 1914, ch. 311, 38 Stat. 717, which is classified generally to subchapter I (§ 41 et seq.) of chapter 2 of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 58 of Title 15 and Tables. CODIFICATION Section was enacted as part of the Omnibus Appro- priations Act, 2009, and not as part of subtitle C of title X of Pub. L. 111–203, which comprises this part. Section was formerly set out as a note under section 1638 of Title 15, Commerce and Trade. AMENDMENTS 2010—Subsec. (a). Pub. L. 111–203, § 1097(1), added sub- sec. (a) and struck out former subsec. (a) which read as follows: ‘‘(a)(1) Within 90 days after March 11, 2009, the Fed- eral Trade Commission shall initiate a rulemaking pro- ceeding with respect to mortgage loans in accordance with section 553 of title 5. Such rulemaking shall relate to unfair or deceptive acts or practices regarding mort- gage loans, which may include unfair or deceptive acts or practices involving loan modification and fore- closure rescue services. Any violation of a rule pre- scribed under this subsection shall be treated as a vio- lation of a rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair or de- ceptive acts or practices. ‘‘(2) Paragraph (1) shall not be construed to authorize the Federal Trade Commission to promulgate a rule with respect to an entity that is not subject to enforce- ment of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) by the Commission. ‘‘(3) Before issuing a final rule pursuant to the pro- ceeding initiated under paragraph (1), the Federal Trade Commission shall consult with the Federal Re- serve Board concerning any portion of the proposed rule applicable to acts or practices to which the provi- sions of the Truth in Lending Act (15 U.S.C. 1601 et seq.) may apply. ‘‘(4) The Federal Trade Commission shall enforce the rules issued under paragraph (1) in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made part of this section.’’ Subsec. (b)(1). Pub. L. 111–203, § 1097(2)(A), added par. (1) and struck out former par. (1) which read as follows: ‘‘Except as provided in paragraph (6), in any case in which the attorney general of a State has reason to be- lieve that an interest of the residents of that State has been or is threatened or adversely affected by the en- gagement of any person subject to a rule prescribed under subsection (a) in a practice that violates such rule, the State, as parens patriae, may bring a civil ac- tion on behalf of the residents of the State in an appro- priate district court of the United States or other court of competent jurisdiction— ‘‘(A) to enjoin that practice; ‘‘(B) to enforce compliance with the rule; ‘‘(C) to obtain damages, restitution, or other com- pensation on behalf of residents of the State; or ‘‘(D) to obtain penalties and relief provided by the Federal Trade Commission Act and such other relief as the court considers appropriate.’’ Subsec. (b)(2). Pub. L. 111–203, § 1097(2)(B), substituted ‘‘the Bureau of Consumer Financial Protection or the Commission, as appropriate’’ for ‘‘the primary Federal regulator’’. Subsec. (b)(3). Pub. L. 111–203, § 1097(2)(B), (C), in- serted ‘‘and subject to subtitle B of the Consumer Fi- nancial Protection Act of 2010,’’ after ‘‘paragraph (2),’’ and substituted ‘‘the Bureau of Consumer Financial Protection or the Commission, as appropriate’’ for ‘‘the primary Federal regulator’’. Subsec. (b)(6). Pub. L. 111–203, § 1097(2)(D), substituted ‘‘the Bureau of Consumer Financial Protection or the Commission’’ for ‘‘the primary Federal regulator’’ in two places. 2009—Subsec. (a). Pub. L. 111–24, § 511(a), designated existing provisions as par. (1), inserted ‘‘Such rule- making shall relate to unfair or deceptive acts or prac- tices regarding mortgage loans, which may include un- fair or deceptive acts or practices involving loan modi- fication and foreclosure rescue services.’’, and added pars. (2) to (4). Subsec. (b)(1). Pub. L. 111–24, § 511(a)(2)(A), added par. (1) and struck out former par. (1) which read as follows: ‘‘Except as provided in paragraph (6), a State, as parens patriae, may bring a civil action on behalf of its resi- dents in an appropriate State or district court of the United States to enforce the provisions of section 128 of the Truth in Lending Act (15 U.S.C. 1638), any other provision of the Truth in Lending Act, or any mortgage loan rule promulgated by the Federal Trade Commis- sion to obtain penalties and relief provided under such Act or rule whenever the attorney general of the State has reason to believe that the interests of the residents of the State have been or are being threatened or ad- versely affected by a violation of such Act or rule.’’ Subsec. (b)(2), (3), (6). Pub. L. 111–24, § 511(a)(2)(B), substituted ‘‘primary Federal regulator’’ for ‘‘Commis- sion’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. EFFECTIVE DATE OF 2009 AMENDMENT Pub. L. 111–24, title V, § 511(b), May 22, 2009, 123 Stat. 1764, provided that: ‘‘The amendments made by sub- section (a) [amending this section] shall take effect on March 12, 2009.’’ Page 1979 TITLE 12—BANKS AND BANKING § 5551 1 See References in Text note below. PART D—PRESERVATION OF STATE LAW § 5551. Relation to State law (a) In general (1) Rule of construction This title,1 other than sections 1044 through 1048,1 may not be construed as annulling, al- tering, or affecting, or exempting any person subject to the provisions of this title 1 from complying with, the statutes, regulations, or- ders, or interpretations in effect in any State, except to the extent that any such provision of law is inconsistent with the provisions of this title,1 and then only to the extent of the in- consistency. (2) Greater protection under State law For purposes of this subsection, a statute, regulation, order, or interpretation in effect in any State is not inconsistent with the provi- sions of this title 1 if the protection that such statute, regulation, order, or interpretation affords to consumers is greater than the pro- tection provided under this title.1 A deter- mination regarding whether a statute, regula- tion, order, or interpretation in effect in any State is inconsistent with the provisions of this title 1 may be made by the Bureau on its own motion or in response to a nonfrivolous petition initiated by any interested person. (b) Relation to other provisions of enumerated consumer laws that relate to State law No provision of this title,1 except as provided in section 1083,1 shall be construed as modifying, limiting, or superseding the operation of any provision of an enumerated consumer law that relates to the application of a law in effect in any State with respect to such Federal law. (c) Additional consumer protection regulations in response to State action (1) Notice of proposed rule required The Bureau shall issue a notice of proposed rulemaking whenever a majority of the States has enacted a resolution in support of the es- tablishment or modification of a consumer protection regulation by the Bureau. (2) Bureau considerations required for issuance of final regulation Before prescribing a final regulation based upon a notice issued pursuant to paragraph (1), the Bureau shall take into account whether— (A) the proposed regulation would afford greater protection to consumers than any existing regulation; (B) the intended benefits of the proposed regulation for consumers would outweigh any increased costs or inconveniences for consumers, and would not discriminate un- fairly against any category or class of con- sumers; and (C) a Federal banking agency has advised that the proposed regulation is likely to present an unacceptable safety and sound- ness risk to insured depository institutions. (3) Explanation of considerations The Bureau— (A) shall include a discussion of the con- siderations required in paragraph (2) in the Federal Register notice of a final regulation prescribed pursuant to this subsection; and (B) whenever the Bureau determines not to prescribe a final regulation, shall publish an explanation of such determination in the Federal Register, and provide a copy of such explanation to each State that enacted a resolution in support of the proposed regula- tion, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives. (4) Reservation of authority No provision of this subsection shall be con- strued as limiting or restricting the authority of the Bureau to enhance consumer protection standards established pursuant to this title 1 in response to its own motion or in response to a request by any other interested person. (5) Rule of construction No provision of this subsection shall be con- strued as exempting the Bureau from com- plying with subchapter II of chapter 5 of title 5. (6) Definition For purposes of this subsection, the term ‘‘consumer protection regulation’’ means a regulation that the Bureau is authorized to prescribe under the Federal consumer finan- cial laws. (Pub. L. 111–203, title X, § 1041, July 21, 2010, 124 Stat. 2011.) Editorial Notes REFERENCES IN TEXT This title, referred to in subsecs. (a), (b), and (c)(4), is title X of Pub. L. 111–203, July 21, 2010, 124 Stat. 1955, known as the Consumer Financial Protection Act of 2010, which enacted this subchapter and enacted, amended, and repealed numerous other sections and notes in the Code. For complete classification of title X to the Code, see Short Title note set out under sec- tion 5301 of this title and Tables. Sections 1044 through 1048, referred to in subsec. (a)(1), are sections 1044 to 1048 of Pub. L. 111–203, which enacted and amended sections 25b and 1465 of this title and enacted provisions set out as a note below. Section 1083, referred to in subsec. (b), is section 1083 of Pub. L. 111–203, which amended sections 3802 and 3803 of this title and enacted provisions set out as notes under section 3802 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 111–203, title X, § 1048, July 21, 2010, 124 Stat. 2018, provided that: ‘‘This subtitle [subtitle D (§§ 1041–1048) of title X of Pub. L. 111–203, enacting this part and enacting and amending sections 25b and 1465 of this title] shall become effective on the designated transfer date.’’ [The term ‘‘designated transfer date’’ is defined in section 5481(9) of this title as the date established under section 5582 of this title.]