Financial Services Alert - Seventh Circuit Holds that HOEPA Does Not Preclude Alternative Mortgage Transaction Parity Act from Preempting Illinois High Cost Loan Restrictions

Mondaq Business Briefing, October, 2002

The U.S. Court of Appeals for the Seventh Circuit (the "Seventh Circuit") vacated a summary judgment decision of the District Court for the Northern District of Illinois (the "District Court") in an action brought by the Illinois Association of Mortgage Brokers against the Illinois Office of Banks and Real Estate ("OBRE"). The trade group sought a declaratory judgment that the Illinois regulations relating to high-cost home loans, such as limits on balloon payments and prepayment penalties, do not apply to loans classified as "alternative mortgage instruments" under the Alternative Mortgage Transaction Parity Act of 1982 (the "Parity Act") that are made by "state housing creditors" (i.e., state-licensed mortgage lenders) governed by OTS regulation along with state and federal...