## Facts

- The Massachusetts Attorney General brought an enforcement action against Dime Savings Bank of New York, a federally chartered savings bank making residential mortgage loans in Massachusetts.
- The dispute concerned loan-related charges assessed on Massachusetts mortgages, including late charges imposed when borrowers paid after the due date and other ancillary fees connected to the loan relationship.
- The Attorney General alleged that these charges effectively operated as interest or finance charges under Massachusetts rate-limitation statutes and also constituted unfair or deceptive practices under G.L. c. 93A.
- Dime argued that federal law regulating federal savings banks authorized the challenged charges and preempted Massachusetts attempts to restrict them; it also contended the fees were not “interest” under Massachusetts usury concepts.
- The trial court rejected the Attorney General’s claims and ruled for Dime; the Attorney General appealed.

## Issues

1. Whether federal law governing federally chartered savings banks preempted Massachusetts statutes and enforcement efforts that would restrict or prohibit Dime’s mortgage-related charges.
2. Whether late charges and similar fees on residential mortgages constituted “interest” for purposes of Massachusetts usury or interest-rate limitation laws.
3. Whether the Attorney General could use G.L. c. 93A to condemn, as unfair or deceptive, loan charges that federal law permitted a federal savings bank to impose.

## Decision

- The Supreme Judicial Court affirmed the judgment for Dime.
- The court held that federal regulation of federal savings banks’ loan terms and permissible charges preempted state-law limits to the extent those limits would bar or materially restrict federally authorized charges.
- The court concluded that late charges triggered by delinquency were not treated as “interest” under the Attorney General’s usury-based theory in this context.
- The court rejected the use of state consumer-protection enforcement to prohibit or penalize charges that federal law affirmatively allowed for a federal savings bank.

## Legal Principles

- Where federal law and federal banking regulations authorize loan terms or categories of loan-related charges for federal savings banks, state statutes that would forbid or materially limit those charges are preempted as applied to the federal institution.
- Late charges assessed only upon delinquency are generally distinct from interest charged for the use of money and are not automatically aggregated into the loan’s interest rate for state usury analysis, particularly when federal banking law governs the lender’s authority.
- State consumer-protection statutes may not be applied to label federally permitted bank practices as “unfair” or “deceptive” when that application would conflict with federal authorization and the federal regulatory scheme.

## Conclusion

The court held that Massachusetts could not enforce state interest-limit and consumer-protection theories to restrict a federal savings bank’s federally permitted mortgage-related fees, including delinquency-based late charges, and it affirmed judgment for the bank.


Attorney Gen. v. Dime Sav. Bank of N.Y., 413 Mass. 284, 596 N.E.2d 1013 (1992)