• Massachusetts Federal Court Agrees Dodd-Frank Preemption Provisions Are Not Retroactive
  • November 27, 2013 | Authors: David A. Elliott; Kristen Peters Watson
  • Law Firm: Burr & Forman LLP - Birmingham Office
  • In Henning v. Wachovia Mortg., FSB, No. 11-11428-WGY, 2013 WL 5229837 (D. Mass. Sept. 17, 2013), the U.S. District Court for the District of Massachusetts recently agreed with numerous decisions of other courts finding that the preemption provisions of the Dodd-Frank Act do not apply retroactively.

    Plaintiff, a mortgagor, filed suit against Wachovia Mortgage raising a number of claims based on Wachovia’s purported wrongful conduct in providing him with a subprime stated-income loan knowing that he would likely default. After removal, Wachovia moved to dismiss based on preemption, arguing that the Court should apply the preemption standards under HOLA and its implementing regulations, 12 C.F.R. § 500-99, which occupied the field of federal lending regulation at all times relevant to plaintiff’s claims. Plaintiff argued the Court should instead interpret HOLA preemption in light of the Dodd-Frank Act.

    The Court noted that following the “mortgage meltdown,” Congress enacted the Dodd-Frank and “significantly diminished the extent to which HOLA and its implementing regulations may preempt state law.” 2013 WL 5229837 at *5. Importantly, however, “the provisions of Dodd-Frank are not retroactive.” Id. Thus, while noting that courts are split on the exact date the Dodd-Frank preemption provisions became effective, the Court held that “HOLA preemption applies to mortgages originated before either July 21, 2010 or July 21, 2011.” Id. Because Plaintiff’s loan at issue in the case originated in 2006, the Court found it did not need to weigh in on the exact date of effectiveness, and the “appropriate preemption standard to apply to [Plaintiff's] claims is that extant prior to the effective date of Dodd-Frank.” Id.