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NCUA rules trump California auto repo law
ALEXANDRIA, Va. (1/7/08)—In its last legal opinion posted in 2007, the National Credit Union Administration (NCUA) declared that its lending regulations expressly preempt state laws affecting the terms of repayment for all loans. The opinion specifically addressed a California law that requires a notice of intent when a creditor acts to dispose of a repossessed vehicle. “The California law at issue affects the terms of repayment by placing additional burdens on lenders before they may recover deficiency balances owed by borrowers. NCUA’s long-standing position is that state laws affecting terms of repayment are preempted,” wrote NCUA Associate General Counsel Sheila Albin. Also, Albin wrote, the NCUA has exclusive authority to take enforcement actions against a federal credit union. Therefore, the letter said, the NCUA views the California statute’s effect of eliminating a right to collect deficiencies for failure to comply with the notice provisions as an enforcement tool and, therefore, its application to FCUs would be “inappropriate.” A footnote in the letter noted that a recent ruling by a California court of appeals found that the notice requirement if preempted by Office of Thrift Supervision regulations for federally chartered thrifts.
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