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ALEXANDRIA, Va. – Four months after it asked the NCUA to issue a preemption letter for federal credit unions in the District of Columbia from the D.C. Home Loan Protection Act of 2002, the NCUA has issued a legal opinion to the D.C. League that states the D.C. Home Loan Protection Act of 2002 is preempted for federal credit unions by the Federal Credit Union Act. The D.C. Home Loan Protection Act of 2002 became effective January 28, 2003. It directly impacted federal credit union home mortgage lending in D.C. The NCUA made it clear in its May 23-letter that, “Our opinion is that this law is preempted because it purports to limit or affect the rates, terms of repayment and other conditions of loans and lines of credit that FCUs may offer to their members. Our opinion is that the District of Columbia may not require FCUs to comply with it.” The agency’s letter further states that, “NCUA’s lending regulation expressly preempts any state laws that would limit or affect lending rates, repayment terms or lending conditions by FCUs.” NCUA’s letter also makes it clear that “the NCUA Board retains exclusive examination and administrative enforcement jurisdiction over Federal credit unions. Only the NCUA and not, as stated in the HLPA, the Mayor, has the authority to take enforcement actions, including the imposition of administrative penalities against FCUs.if violations of state law occur and the matter cannot be resolved informally, the imposition of fines and penalties falls within NCUA’s enforcement jurisdiction.” The Federal CU Act regulates the rates, terms of repayment and other conditions of loans and lines of credit for federally-chartered credit unions. In January, D.C. CU League Senior Vice President Ed Wills wrote NCUA Chairman Dennis Dollar asking him to issue a preemption letter Wills said would allow D.C. federally-chartered credit unions to “avoid unnecessary compliance” with the District’s predatory lending statute (CU Times, Feb. 12). Wills stated in his letter that banks and thrifts are exempted from compliance with the lending law because they’re regulated by federal agencies and because of their regulation and duty to comply with the federal Home owners Equity Protection Act (HOEPA). He pointed out that federal credit unions must also comply with HOEPA. “It is our belief that provisions of the District of Columbia’s Act limiting or otherwise prohibiting rates, terms and conditions of federal credit union loans should also be preempted,” Wills wrote in his January letter to Dollar. NCUA has also acted on behalf of credit unions in California and North Carolina, exempting them from local consumer protection statutes. -

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