Weiss
Weiss v. Washington Mutual Bank
Opinion
lead Opinion
Vogel, J.
The question on this appeal is whether a lawsuit challenging a federal savings and loan association’s prepayment penalty formula is preempted by the Home Owners’ Loan Act (HOLA) and the regulations promulgated by the Office of Thrift Supervision (OTS). ( 12 U.S.C. § 1461 et seq.; 12 C.F.R. §§ 560.2 , 560.34 (2007)). Our answer is yes.
FACTS 1
A.
In July 2003, Mitchell Weiss (and others included in our references to Weiss) borrowed about $4 million from Washington Mutual Bank and signed two 10-year promissory notes—one for $1.175 million plus interest at 5.33 percent per annum and with monthly payments of $6,546.74 (secured by real property in Los Angeles), the other for $2.85 million plus interest at 5.33 percent per annum and with monthly payments of $15,879.32 (secured by real property in Beverly Hills). A prepayment addendum to each note set forth a formula for calculating the “prepayment premium” due in the event *75 Weiss prepaid his obligations under the notes. Weiss negotiated the loans with Jeffrey Monahan, a Washington Mutual loan officer.
When Weiss read the prepayment addenda, he believed the prepayment penalty would be “below two percent” of the unpaid…