• Massachusetts Prepayment and Late Fee Provisions Not Preempted for Anybody, Claims Massachusetts Bank Commissioner
  • February 17, 2006 | Authors: Steven M. Kaplan; David L. Beam
  • Law Firm: Kirkpatrick & Lockhart Preston Gates Ellis LLP - Washington Office
  • In what appears to be a challenge to federal preemption, the Massachusetts Commissioner of Banks (the "Commissioner") sent a letter to mortgage servicers licensed by the Division of Banks advising them that Massachusetts's restrictions on prepayment and late fees apply to all entities that make loans to borrowers in the Commonwealth, including "federally-chartered banks" and "out-of-state banks." Such efforts by other states' regulators have been roundly shot down by courts, and it may be that the Commissioner's position will eventually have to be evaluated by the courts as well. In the meantime, mortgage lenders and servicers that do business in Massachusetts must decide how to respond to an issuance by a state regulator who has considerable power to make their lives difficult if they do not fall into line. This Alert discusses the Commissioner's letter and its implications for lenders and servicers doing business in Massachusetts.