Updated: December 31, 2008 (Revisions are highlighted in yellow)  

Effective July 1, 2003, state-licensed mortgage creditors will no longer be able to rely on the Parity Act to preempt state limitations, restrictions or prohibitions of prepayment charges assessed in alternative mortgage transactions. Accordingly, state-licensed mortgage creditors wishing to impose prepayment charges in connection with alternative mortgage transactions made on or after July 1, 2003 must conform to the requirements of applicable state law. To assist DocMagic® software users in coping with this change, we have researched the applicable prepayment laws in all jurisdictions; this memorandum is the result of our research.

The following article is reprinted from Basis Points® , Vol. 2, Issue 3, Copyright © 2003, with the permission of CounselorLibrary.com, LLC. All Rights Reserved. Further reproduction is prohibited without permission.

In a recent letter, the OCC has opined that an operating subsidiary of a national bank has the same authority to export interest as its parent national bank. This letter may encourage any number of banks to shift portions of their direct lending business to one or more operating subsidiaries. This is particularly true of business where there is presently no federal preemption of state limits on usury, such as junior lien mortgage lending and personal property lending. It is also true of any type of lending where the lender wants the ability to impose prepayment penalties. Under the doctrine of exportation, a lender can take the interest authority it has in the state where the loan is made and charge that interest to borrowers in any other state. "Interest" has been defined by regulation to include periodic interest, as well as such incidental charges as annual fees, loan origination fees, overlimit fees, NSF fees, late fees and prepayment penalties.

The following article is reprinted from Basis Points® , Vol. 2, Issue 4, Copyright © 2003, with the permission of CounselorLibrary.com, LLC. All Rights Reserved. Further reproduction is prohibited without permission.

For years now, people have argued back and forth over whether Section 8 of RESPA permits volume-based compensation. In what appears to be the first decision on the issue from a Federal appellate court, the Ninth Circuit has announced that discount arrangements do not violate the prohibition against referral fees and kickbacks so long as the discount is reasonably related to the value of settlement services performed. The court found that an increase in the volume of transactions can lead to economies of scale and familiarity with procedures and forms. These, in turn, can lead to lower costs to provide the service. These lower costs were fairly represented in a discounted fee structure.

The following article is reprinted from Basis Points® , Vol. 2, Issue 5, Copyright © 2003, with the permission of CounselorLibrary.com, LLC. All Rights Reserved. Further reproduction is prohibited without permission.

In a well-reasoned opinion, a federal court decided that Section 501 of DIDMCA preempts a California requirement that lenders wait until the day before the security instrument is recorded to begin assessing interest. As a result, lenders may continue assessing interest on first lien mortgage loans from the date they disburse funds, and not from the date the deed of trust is recorded.

The following article is reprinted from Basis Points® , Vol. 2, Issue 6, Copyright © 2003, with the permission of CounselorLibrary.com, LLC. All Rights Reserved. Further reproduction is prohibited without permission.

Although the plaintiffs raised TILA, RESPA and Pennsylvania UDAP violations, the only issue finally decided in this opinion was the TILA claim - and it was not decided favorably to the mortgage lender, Homeside Lending, Inc.