Quicken Sues CA Over Interest Statute

Quicken Loans Inc., Livonia, Mich., has filed suit against the commissioner of the California Department of Corporations, contending that federal law takes priority over a state law that allows borrowers to use the mortgage lender's funds without interest until the mortgage is recorded.The suit was filed in the U.S. District Court for the Eastern District of California - Sacramento Division. "The California law purports to prohibit lenders from charging interest until the mortgage is recorded by the title company and the county recorder's office, a process that is outside the control of the lender and can be delayed days or weeks, during which time the borrower has full use of the lender's money," said William Emerson, chief executive officer of Quicken Loans. "It is in effect an interest-free loan until the mortgage is recorded." Quicken and other mortgage lenders contend that interest charges should begin when the funds are disbursed to the borrower. (Wells Fargo Home Mortgage filed suit against the DOC recently after the agency threatened to revoke its residential mortgage lending license for refusing to refund fees allegedly charged in violation of state law.) The Quicken lawsuit seeks a declaration that federal law pre-empts state law governing mortgage interest payments. Quicken can be found on the Web at http://www.quickenloans.com.