On this coming Thursday, July 11, from Noon until 1 pm, ET, we will be holding a Webinar Roundtable about the Supreme Court’s recent opinion on May 30, in which a unanimous Supreme Court reversed and remanded the Cantero v. Bank of America case to the Second Circuit. This is a case of extraordinary importance to national banks and non-banks that partner with them where the objective, at least in part, is to take advantage of a national bank’s preemption of state law. Register here to attend the Webinar Roundtable. We will have as our guests 4 lawyers who were our guests on the previous Webinar Roundtable we held shortly after the oral argument in the Cantero case. My colleague, Joseph Schuster and I will also partake.
The issue in Cantero is whether a national bank should have complied with a New York State law which requires the payment of 2% interest on residential mortgage escrow accounts. The Second Circuit had found preemption on the basis that the New York law affected the national bank’s power to establish and maintain mortgage escrow accounts. The Supreme Court held that the Second Circuit applied the wrong test for determining preemption and instead should have applied the “prevent or significantly interfere” test established by the Supreme Court and codified by the Dodd-Frank Act and other Supreme Court opinions dealing with preemption of state laws for national banks. This guidance is not very helpful.
We will also discuss two other similar cases (one involving Flagstar Bank where the Supreme Court granted cert, and reversed and remanded the case to the Ninth Circuit and the other involving Citizens Bank which was stayed pending the decision in Cantero. As a result, there are now three separate Circuits that will be trying to figure out how to apply the Supreme Court’s fuzzy opinion in Cantero to 3 state laws which require the payment of 2% interest on mortgage escrow accounts.
We will also discuss the viability of the OCC’s regulations in light of Cantero, the language in Dodd-Frank which prohibits the use of the Chevron Deference Doctrine and the Supreme Court’s opinion in Loper Bright Enterprises which overruled the Chevron case.
Finally, we will discuss what national banks should be doing in order to evaluate whether they can ignore state laws mandating the payment of interest on residential mortgage escrow accounts and thousands of other state and local laws that by their terms apply to national banks.