April 29, 2009

NASCUS Encourages House Financial Services Committee to Integrate Enhanced State Authority in Mortgage Reform Bill, H.R. 1728

ARLINGTON, Va. — The National Association of State Credit Union Supervisors (NASCUS) wrote to House Financial Services Committee leaders April 27 stating that H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009, can be enhanced by preserving and strengthening the states' role in consumer protection.

H.R. 1728 creates a federal standard for mitigating predatory lending. NASCUS recommends that Congress create the federal standard as a minimum, allowing states to legislate and regulate appropriately for their states' citizens, which in some cases may be more stringent than the federal standard.

"If the federal standard is a maximum ceiling, it will act to suppress state law and a state's authority to provide enhanced consumer protections for its citizens," wrote NASCUS. "A minimum standard will allow states to build on the federal standard and address evolving predatory practices."

NASCUS recommends that two areas of the legislation be amended to recognize state authority. Section 208 preempts states from enacting laws with specific liabilities that would protect citizens against abusive practices. NASCUS suggests that this legislation be amended so as to not preempt state law.

"This section effectively ties the hands of state legislatures as it concerns liabilities to address predatory lending practices," stated NASCUS. "It establishes a maximum level for federal regulations and prevents states from taking actions they may find useful in fighting abusive practices."

Additionally, NASCUS asks the Committee to recognize state regulatory expertise when writing and prescribing regulations for mortgage reform. As currently written, the legislation provides this authority to the federal banking agencies and the National Credit Union Administration. This includes all the members of the Federal Financial Institution Examination Council (FFIEC), with the exception of the Chairperson of the State Liaison Committee (SLC), a voting representative of the FFIEC, as added by Congress in 2006. NASCUS asks that the federal banking agencies coordinate rule making through the FFIEC, and include the Chairman of the SLC to provide the critical state regulatory perspective.

To view NASCUS' full letter, follow this link.

Information Contact:
Kate Hartig, VP, Public Relations and Legislative Affairs, (703) 528-0669 or
The NASCUS mission is to enhance state credit union supervision and advocate a safe and sound state credit union system.