## Facts

- In 1994, Charles T. and Corinne E. Black, elderly homeowners, entered into a reverse mortgage transaction secured by their home.
- The reverse mortgage was marketed as a financial planning device for seniors to convert home equity into cash.
- In 1998, the Blacks, acting as trustees of their trust, sued the originating lender and related entities and individuals.
- The complaint alleged that defendants’ marketing and sale of the reverse mortgage involved misrepresentations and failures to comply with California consumer-protection and elder-protection statutes.
- Defendants sought summary judgment, arguing the state-law causes of action were preempted by federal statutes regulating mortgage lending and disclosures.

## Issues

1. Whether the Alternative Mortgage Transaction Parity Act of 1982 (AMTPA) and implementing regulations expressly or impliedly preempt California claims targeting the marketing and sale of a reverse mortgage by nonfederally chartered entities.
2. Whether the Truth in Lending Act (TILA) preempts California statutory and common-law remedies addressing deceptive marketing or related misconduct in connection with a reverse mortgage.
3. Whether the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) preempts California consumer and elder-protection claims arising from the reverse mortgage transaction.

## Decision

- The Court of Appeal reversed the summary judgment for defendants.
- The court held AMTPA did not preempt the asserted California causes of action because they targeted deceptive marketing and related conduct rather than regulating permissible alternative mortgage terms.
- The court held TILA did not preempt the claims where they operated as complementary state remedies and did not impose conflicting disclosure requirements.
- The court held DIDMCA did not preempt the claims because its focus on interest-rate and usury-related deregulation did not extend to displacing generally applicable state protections against deceptive or abusive practices.
- The matter was remanded for further proceedings on the merits of the state-law claims.

## Legal Principles

- Federal preemption may be express, by occupation of the field, or by conflict; courts apply a presumption against preemption absent a clear congressional purpose to displace state law.
- AMTPA’s preemptive effect is limited to enabling certain “alternative mortgage transactions” to proceed under federal rules as to specified loan-structure and interest-related constraints; it does not confer broad immunity from generally applicable state consumer-protection laws.
- State laws of general applicability regulating fraud, deception, unfair business practices, and protections for vulnerable borrowers are not preempted merely because they are applied to mortgage transactions, so long as they do not effectively bar or materially impede the federally permitted mortgage product.
- TILA generally preserves state laws and remedies that are consistent with its disclosure regime; complementary state-law claims may proceed if they do not mandate disclosures that conflict with federal requirements.
- DIDMCA’s deregulation of interest-rate limitations does not displace state regulation aimed at truthful marketing, fair dealing, and protection of elderly consumers.

## Conclusion

The court held that federal mortgage and disclosure statutes cited by defendants did not preempt California consumer and elder-protection claims centered on alleged deceptive marketing and sale practices for a reverse mortgage, and it reversed summary judgment entered on preemption grounds.


Black v. Fin. Freedom Senior Funding Corp., 92 Cal. App. 4th 917, 112 Cal. Rptr. 2d 445 (Cal. Ct. App. 2001)