The Office of Thrift Supervision issued a Final Rule under the Alternative Mortgage Transaction Parity Act deleting from the list of regulations applicable to state housing creditors the regulations on prepayment fees and late charges. The revised rule will take effect January 1, 2003.

    The Parity Act provides that housing creditors may make alternative mortgage transactions by following the OTS regulations in Section 560.220(b) notwithstanding any state constitution, law or regulation. By removing from Section 560.220(b) the references to the OTS regulations on prepayment fees and late charges, state housing creditors will be subject to state rather than OTS prepayment and late fee restrictions. This will create a significant new compliance issue for these creditors, including state‑chartered banks.

    In issuing the revised rule, the OTS indicated that it had determined that the provisions dealing with prepayment fees and late charges were not essential to making alternative mortgages. The OTS also recommended that Congress revisit the Parity Act in the context of broader mortgage reform legislation involving the Real Estate Settlement Procedures Act, the Truth in Lending Act and predatory lending.

    For more information regarding this Alert , please contact Mike Tomkies at (614) 628‑1603 or [email protected] or Elizabeth Anstaett at (614) 628‑1604 or [email protected] .