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SANTA FE, N.M. – On the heels of NCUA’s preemption of New Mexico’s new predatory home loan law, the state’s top credit union regulator, William Verant, is seeking parity for state-charters and hopes new regulations will become effective “by the end of March.” Verant, who is director of the Financial Institution Division, said his office is writing the new rules aimed at removing the 32 state CUs from provisions of the statute which applies chiefly to predatory mortgage practices. In doing so, he is following up on NCUA’s action in early February exempting federal charters from the Home Loan Protection Act which went into effect Jan. 1. As amended two weeks ago by the state legislature, an onerous section dealing with lender liability on warranties for manufactured home units and home improvements was to be eliminated from the law. “That particular section had put a pall on the entire market for manufactured homes in the state,” said Verant, noting also his office had pursued the new state CU exemption following requests by the New Mexico Credit Union League. Regarding pre-emption for federals, NCUA attorneys noted because the New Mexico law limits or affects rates, terms of repayment and other loan conditions, it is pre-empted by NCUA’s own lending regulation. Additionally, said the agency, CUs are unlikely to engage in predatory activities the law is aimed at preventing. The agency also pointed out that the Federal Credit Union Act and NCUA regulations contain significant consumer protections for all loans. The New Mexico statute is similar to those recently preempted in Georgia and New Jersey. The New Mexico law defines “high cost” loans as those exceeding established interest rate or closing costs and adds numerous restrictions and obligations to creditors offering them. Once the new regulations take effect for state CUs, the Home Protection Act will apply principally to mortgage banks and mortgage brokerage firms since banks are also pre-empted by their own set of statutes. -

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