July 31, 1997
David L. Ray, Esq.
Fletcher, Ray & Satterfield
130 North Front Street, Suite 300
Wilmington, North Carolina 28401
Dear Mr. Ray:
You have asked whether �1.21(b)(i)(B) of NCUA Rules and
Regulations preempts a provision of the North Carolina law concerning
late charges. 12 C.F.R. �1.21(b)(i)(B) and N.C. GEN. STAT.
�-10.1 (1996). It does. NCUA's regulatory provision on
preemption of state laws concerning loans to members expressly
provides for preemption of state laws that purport to limit or
affect rates of interest and finance charges, including late charges.
12 C.F.R. �1.21(b)(i)(B).
You have also asked about a portion of the National Housing Act
that exempts certain types of loans from state laws limiting interest
rates and other charges, but which also allows a state to opt
out of that exemption and, in effect, have state law provisions
continue to apply. 12 U.S.C. �35f-7a. North Carolina
has opted out of the National Housing Act exemption. N.C. GEN.
STAT. �-2.3. You have asked what interplay, if any, there
is between NCUA's preemption and the exemption provided in the
National Housing Act.
The exemption from state law provided in the National Housing
Act and the election by North Carolina to opt out of the exemption's
application do not affect the authority of a federal credit union
(FCU) to charge late fees in excess of that permitted under North
Carolina law. In brief, an FCU's authority flows from the Federal
Credit Union Act (the Act) and NCUA Rules and Regulations, not
the National Housing Act. The Act establishes the power of FCUs
to make loans, setting out particular criteria, and specifically
authorizes FCUs to levy late charges in accordance with their
bylaws. 12 U.S.C. Ё1757(5), (10); Article XII, Section
8 of the FCU Bylaws. Under that authority, as noted above, NCUA
Rules and Regulations specifically preempt any state law limiting
late charges. 12 C.F.R. �1.21(b)(i)(B). North Carolina's
ability to opt out or elect not to have a provision of the National
Housing Act apply in North Carolina is only David L. Ray, Esq.
with respect to that federal statute and has no effect on the
authority provided in the Act or NCUA regulations.
I hope that we have been of assistance.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/MFR:bhs
SSIC 3320
97-0633