The Honorable Stanley Russ State Senator P.O. Box 787 Conway, AR 72032
Dear Senator Russ:
This is in response to your request for an opinion concerning the federal preemption of state usury laws. I have paraphrased your specific question as follows:
Does the federal preemption of state usury laws apply to all mortgages or only to those that are primarily for homes occupied by the owners?
It is my opinion that this question has been addressed previously in Op. Att'y Gen. 88-216, a copy of which is attached hereto. That opinion concluded that the provisions of12 U.S.C. § 1735(f)(7) (note (Supp. 1988)) preempt state usury limits, and place no limit on loans within its purview. The section is applicable to all loans secured by first liens on residential real property which are made after March 31, 1980, and which are described in the National Housing Act. The law makes no distinction as to whether the "residential real property" is occupied by an owner.
As you can see, federal preemption of the state usury laws set out in Amendment 60 to the Arkansas Constitution (codified at Art. 19, § 13) applies to any mortgage which meets the criteria of 12 U.S.C. § 1735(f)(7) note, (Supp. 1988) as set out in the attached opinion.
The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Elana L. Cunningham.
Sincerely,
WINSTON BRYANT Attorney General
SD/WB:ch
Enclosure