12 U.S.C. § 3803 — Alternative mortgage authority

Page 1571 TITLE 12—BANKS AND BANKING § 3803 ment of this title [Oct. 15, 1982], the Comptroller of the Currency, the National Credit Union Administration, and the Federal Home Loan Bank Board shall identify, describe, and publish those portions or provisions of their respective regulations that are inappropriate for (and thus inapplicable to), or that need to be conformed for the use of, the nonfederally chartered housing credi- tors to which their respective regulations apply, in- cluding without limitation, making necessary changes in terminology to conform the regulatory and disclo- sure provisions to those more typically associated with various types of transactions including credit sales.’’ § 3802. Definitions As used in this chapter— (1) the term ‘‘alternative mortgage trans- action’’ means a loan or credit sale secured by an interest in residential real property, a dwelling, all stock allocated to a dwelling unit in a residential cooperative housing corpora- tion, or a residential manufactured home (as that term is defined in section 5402(6) of title 42), in which the interest rate or finance charge may be adjusted or renegotiated, de- scribed and defined by applicable regulation; and (2) the term ‘‘housing creditor’’ means— (A) a depository institution, as defined in section 501(a)(2) of the Depository Institu- tions Deregulation and Monetary Control Act of 1980; (B) a lender approved by the Secretary of Housing and Urban Development for partici- pation in any mortgage insurance program under the National Housing Act [12 U.S.C. 1701 et seq.]; (C) any person who regularly makes loans, credit sales, or advances secured by interests in properties referred to in paragraph (1); or (D) any transferee of any of them. A person is not a ‘‘housing creditor’’ with re- spect to a specific alternative mortgage trans- action if, except for this chapter, in order to enter into that transaction, the person would be required to comply with licensing require- ments imposed under State law, unless such person is licensed under applicable State law and such person remains, or becomes, subject to the applicable regulatory requirements and enforcement mechanisms provided by State law. (Pub. L. 97–320, title VIII, § 803, Oct. 15, 1982, 96 Stat. 1545; Pub. L. 111–203, title X, § 1083(a)(1), July 21, 2010, 124 Stat. 2080.) Editorial Notes REFERENCES IN TEXT Section 501(a)(2) of the Depository Institutions De- regulation and Monetary Control Act of 1980, referred to in par. (2)(A), is section 501(a)(2) of Pub. L. 96–221, title V, Mar. 31, 1980, 94 Stat. 161, which is set out as a note under section 1735f–7 of this title. The National Housing Act, referred to in par. (2)(B), is act June 27, 1934, ch. 847, 48 Stat. 1246, which is classi- fied principally to chapter 13 (§ 1701 et seq.) of this title. For complete classification of this Act to the Code, see section 1701 of this title and Tables. AMENDMENTS 2010—Par. (1). Pub. L. 111–203 substituted ‘‘section 5402(6) of title 42), in which the interest rate or finance charge may be adjusted or renegotiated, described and defined by applicable regulation; and’’ for ‘‘section 5402(6) of title 42)— ‘‘(A) in which the interest rate or finance charge may be adjusted or renegotiated; ‘‘(B) involving a fixed-rate, but which implicitly permits rate adjustments by having the debt mature at the end of an interval shorter than the term of the amortization schedule; or ‘‘(C) involving any similar type of rate, method of determining return, term, repayment, or other vari- ation not common to traditional fixed-rate, fixed- term transactions, including without limitation, transactions that involve the sharing of equity or ap- preciation; described and defined by applicable regulation; and’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–203, title X, § 1083(b), July 21, 2010, 124 Stat. 2081, provided that: ‘‘This section [amending this section and section 3803 of this title and enacting provi- sions set out as a note under this section] and the amendments made by this section shall become effec- tive on the designated transfer date.’’ [For definition of ‘‘designated transfer date’’, see sec- tion 5481 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. CONSTRUCTION OF 2010 AMENDMENT Pub. L. 111–203, title X, § 1083(c), July 21, 2010, 124 Stat. 2081, provided that: ‘‘The amendments made by subsection (a) [amending this section and section 3803 of this title] shall not affect any transaction covered by the Alternative Mortgage Transaction Parity Act of l982 (12 U.S.C. 3801 et seq.) and entered into on or before the designated transfer date.’’ [For definition of ‘‘designated transfer date’’, see sec- tion 5481 of this title.] § 3803. Alternative mortgage authority (a) General authority; compliance by banks, credit unions and all other housing creditors with applicable regulations In order to prevent discrimination against State-chartered depository institutions, and other nonfederally chartered housing creditors, with respect to making, purchasing, and enforc- ing alternative mortgage transactions, housing creditors may make, purchase, and enforce al- ternative mortgage transactions, except that this section shall apply— (1) with respect to banks, only to trans- actions 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 regula- tions governing alternative mortgage trans- actions as issued by the Comptroller of the Currency for national banks, to the extent that such regulations are authorized by rule- making 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 Page 1572 TITLE 12—BANKS AND BANKING § 3804 1 So in original. The comma probably should not appear. 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 rule- making 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 credi- tors, 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 accord- ance with regulations governing alternative mortgage transactions as issued by the Direc- tor of the Office of Thrift Supervision for fed- erally chartered savings and loan associations, to the extent that such regulations are au- thorized 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 accord- ance with regulations governing alternative mortgage transactions, as issued by the Bu- reau of Consumer Financial Protection for fed- erally chartered housing creditors, in accord- ance with the rulemaking authority granted to the Bureau of Consumer Financial Protec- tion with regard to federally chartered hous- ing creditors under provisions of law other than this section. (b) Transactions deemed in compliance with ap- plicable regulations For the purpose of determining the applica- bility of this section, an alternative mortgage transaction shall be deemed to be made in ac- cordance with the applicable regulation not- withstanding the housing creditor’s failure to comply with the regulation, if— (1) the transaction is in substantial compli- ance 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) Preemption of State law An alternative mortgage transaction may be made by a housing creditor in accordance with this section, notwithstanding any State con- stitution, law, or regulation that prohibits an alternative mortgage transaction. For purposes of this subsection, a State constitution, law, or regulation that prohibits an alternative mort- gage 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) Bureau actions The Bureau of Consumer Financial Protection shall— (1) review the regulations identified by the Comptroller of the Currency and the National Credit Union Administration,1 (as those rules exist on the designated transfer date), as ap- plicable 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 Protec- tion Act of 2010; and (3) promulgate regulations under subsection (a)(4) after the designated transfer date. (e) Designated transfer date As used in this section, the term ‘‘designated transfer date’’ means the date determined under section 1062 of the Consumer Financial Protec- tion Act of 2010 [12 U.S.C. 5582]. (Pub. L. 97–320, title VIII, § 804, Oct. 15, 1982, 96 Stat. 1546; Pub. L. 101–73, title VII, § 744(c), Aug. 9, 1989, 103 Stat. 438; Pub. L. 111–203, title X, § 1083(a)(2), July 21, 2010, 124 Stat. 2080.) Editorial Notes REFERENCES IN TEXT The Consumer Financial Protection Act of 2010, re- ferred 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 sec- tion 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 sub- sec. (c) and struck out former subsec. (c). Prior to amendment, text read as follows: ‘‘An alternative mortgage transaction may be made by a housing cred- itor 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 ‘‘Direc- tor of the Office of Thrift Supervision’’ for ‘‘Federal Home Loan Bank Board’’ 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 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. § 3804. Applicability of preemption provisions (a) The provisions of section 3803 of this title shall not apply to any alternative mortgage transaction in any State made on or after the effective date (if such effective date occurs on or after October 15, 1982, and prior to a date three years after October 15, 1982) of a State law or a certification that the voters of such State have voted in favor of any provision, constitutional or otherwise, which states explicitly and by its