The Illinois Appellate Court for the First Judicial District has ruled that the Illinois Interest Act pre-empts two federal laws that ban certain types of predatory lending.Justice Calvin Campbell's ruling could significantly affect mortgage lenders and homeowners in the state in regard to high-fee, high-interest, and subprime loans. The decision means that the vast majority of subprime lenders in Illinois could collect damages that include twice the total of all interest, discount, and charges due under the loan or paid by the homeowner. The move comes after a Circuit Court judge declared that the Depository Institutions Deregulation and Monetary Control Act and the Parity Act, both federal laws, pre-empted the state law. Several low-income homeowners facing foreclosure on subprime loans had counter-sued various banks in Circuit Court, alleging that the loans violated the Illinois Interest Act prohibition on combining fees in excess of 3% of the principal with an interest rate in excess of 5%.

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