Published Article
DIDMCA in the Age of True Lender Legislation and Opt-Outs
Read Time: 1 minMember Robert Savoie (Cleveland) authored an article on the Depository Institutions and Monetary Control Act (DIDMCA) in the age of true lender legislation and opt-outs in the Conference on Consumer Finance Law (CCFL) Quarterly Report, Volume 78, No. 1.
The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) created interest rate parity between state and federally chartered depository institutions over forty years ago, allowing state-chartered depository institutions to have uniformity and consistency in the terms of credit extended to their customers across the United States. A surge of recent state legislation has created challenges to this interest rate parity through opt-out legislation withdrawing states from the interest rate exportation authority established through DIDMCA and through true lender legislation targeting non-depository partners. However, federal court precedent calls into question both types of legislation. High profile litigation in Colorado indicates that the impact of DIDMCA opt-out legislation may not extend to loans made by out-of-state depository institutions, while older precedent indicates that true lender legislation may not be enforceable when it materially interferes with the exportation rights of chartered depository institutions, even indirectly.
Robert’s article “reviews the mechanisms through which DIDMCA established interest rate exportation authority, the increase in focus on DIDMCA opt-out legislation and the limitations recent court decisions may impose on such opt-outs, the nature of a new wave of true lender legislation, and the impact of existing federal court precedent on whether such true lender legislation would actually be enforceable if challenged in federal court.”
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