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Rosenberg v. Washington Mutual Bank, FA

369 N.J. Super. 456, 849 A.2d 566 (App. Div. 2004)

BANKS—Even if there is something deceptive in the billing statements sent by a federally chartered savings association, state courts may not act against the bank because regulation of such billing statements banks is preempted by federal law.

A borrower got a thirty-year bank loan. He stopped making payments and then brought suit against the bank, seeking injunctive relief and damages for alleged consumer fraud violations and breach of contract. Specifically, the borrower claimed that the bank’s billing statements were deceptive. The lower court dismissed the actions based on its conclusion that federal law preempted the claims. The Appellate Division affirmed, holding that even if not preempted, there was nothing deceptive or fraudulent in the billing statements. The borrower had been told in large, bold print, that changes could occur in his interest rate and monthly payment. Each month, the bank sent a loan statement plainly showing each change in the interest rate and monthly payments.

The bank was a federally chartered savings association. Therefore, it was subject to the regulatory authority of the federal Office of Thrift Supervision (OTS), which draws its authority from the Congressional enactment of the Home Owners’ Loan Act (HOLA). Congress specifically authorized the OTS to adopt regulations that would preempt state laws affecting the operations of federal savings associations. The OTS did so. The preemptive reach of the OTS’ authority extends not only to state statutory and regulatory laws, but to any state ruling, order or judicial decision. Specifically, 12 C.F.R. §560.2(b)(9) expressly applies its preemption to “[d]isclosure and advertising, including laws requiring specific statements, information, or other content to be included in . . . billing statements.”

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