ALEXANDRIA, Va. -NCUA recently issued a legal opinion preempting the New Mexico Home Loan Protection Act. Following a request from New Mexico Credit Union League Director of Governmental Affairs Tracey Rock, NCUA Associate General Counsel Sheila Albin wrote a legal opinion letter (04-0147) stating that the law, which addresses predatory practices by creditors making consumer mortgage loans, does not apply to federally chartered credit unions. Albin explained that because the state’s new law limits or affects the rates, terms of repayment and other conditions of loans and lines of credit, the law is preempted by NCUA’s lending regulation. Additionally, predatory lending is a non-issue with credit unions, she said. Albin wrote, “Credit unions are nonprofit cooperatives, owned by their members and democratically controlled, that may only lend and pay dividends to their members and, as such, are disinclined by their nature and structure to engage in the kinds of practices regarded as predatory or abusive.” Finally, she pointed out that the Federal Credit Union Act and NCUA regulations do contain significant consumer protections for all loans. The law is similar to those recently preempted in Georgia and New Jersey. In addition, it defines “high cost” loans as those exceeding established interest rate or closing costs and adds numerous restrictions and obligations to creditors offering them.

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