OTS Finalizes Partial Rollback of Parity Act Preemption
The OTS finalized amendments to its regulations governing the federal Alternative Mortgage Transaction Parity Act (the "Parity Act") that eliminate, for state "housing creditors" governed by OTS regulation (i.e., housing creditors, other than state chartered commercial banks (which are governed by OCC rules) and state chartered credit unions (which are governed by the NCUA)), Parity Act preemption of state laws restricting prepayment penalties and late fees in making alternative mortgages. The Parity Act allows creditors to make alternative mortgages - generally, adjustable rate and balloon mortgage loans - notwithstanding state laws that would prohibit or restrict them. In its d iscussion of the change, the OTS notes its view that the ability to impose prepayment penalties is not "intrinsic" to the ability to offer alternative mortgages and that the OTS is not required by the Parity Act to create a level playing field in
