APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY -- TRENTON (D.C. Civil No. 77-2168)
Before Gibbons, Weis and Sloviter, Circuit Judges.
"Redlining"-discrimination in the granting of home mortgages-is a matter of concern to both national and state government. This appeal presents the question whether national banks are subject to the provisions of a state antiredlining statute when federal legislation has covered some, but not all, of the field. The district court determined that insofar as a New Jersey statute required disclosure of mortgage statistics, it was preempted by the federal Home Mortgage Disclosure Act of 1975, 12 U.S.C. §§ 2801-2809 (1976). However the court also found that since federal legislation did not explicitly prohibit redlining, the antidiscrimination provision of the state statute was effective and could be enforced against national banks by state officials. We agree with the district court's determinations, except we hold that enforcement of the state statute is the responsibility of federal officials. With that modification, we affirm.
In 1977 the New Jersey legislature enacted a statute, N.J.Stat.Ann. §§ 17:16F-1 to -11 (West Cum.Supp.1980), which (1) prohibits geographic discrimination, on an arbitrary or lending risk basis unsupported by reliable analysis, in granting, denying, or setting the terms of mortgages, id. § 17:16F-3; (2) requires depository institutions to compile and disclose to the public statistical information covering, among other items, the number and amount of mortgages originated or purchased annually and the locations of the properties, id. §§ 17:16F-4 to -6; (3) establishes a private right-of-action against institutions discriminating in violation of the Act, id. § 17:16F-7; (4) empowers the Commissioner, Department of Banking of New Jersey, to investigate, hold hearings, and issue subpoenas and cease and desist orders, id. §§ 17:16F-8 & -9; (5) authorizes the imposition of penalties for noncompliance, id. § 17:16F-10; and (6) provides that the Commissioner may adopt enforcement regulations consistent with the Act, id. § 17:16F-11.
The statute was designed to prohibit the arbitrary denial of mortgage loans on the basis of property location, to encourage the availability of mortgage capital for neighborhoods generally denied it, and to provide state officials with the information necessary to assess the statute's effectiveness. Id. § 17:16F-1. The legislation focused on the practice of restricting loans secured by mortgages on property in older or deteriorating areas; in the vernacular, "redlining"-marking off certain areas where mortgages will be given, if at all, only on more onerous terms.*fn1
In 1977 the Commissioner adopted implementing regulations and notified all depository institutions doing business in the state, including national banks, of her intention to enforce them vigorously. The plaintiffs, National State Bank of Elizabeth, New Jersey and New Jersey Bank (National Association), sought declaratory and injunctive relief against the Commissioner, asserting that the New Jersey statute and regulations were unconstitutional. On cross motions for summary judgment, the United States District Court for the District of New Jersey held that the provisions of the statute prohibiting redlining were constitutional, but that the sections requiring banks to compile and disclose information, as well as those empowering the Commissioner to compel the production of other evidence, were preempted by the Home Mortgage Disclosure Act, insofar as the state sought to apply them to national banks. National State Bank v. Long, 469 F. Supp. 1068 (D.N.J.1979).*fn2
Congress enacted the Home Mortgage Disclosure Act in 1975 for the purpose of compiling information to determine whether depository institutions were "filling their obligations to serve the housing needs of the communities and neighborhoods in which they are located." 12 U.S.C. § 2801(b).*fn3 The information gathered also would assist public officials in distributing public sector investments so as to improve the private investment environment. Id. The Act authorized enforcement against national banks by the Comptroller of the Currency. Id. § 2804(b)(1)(A). Similar responsibility for the regulation of federal savings and loan institutions was given to the Federal Home Loan Bank Board. Id. § 2804(b)(2). The Act also provided that a state chartered depository institution could be exempted if state law imposed substantially similar requirements. Id. § 2805(b). Institutions in New Jersey were granted such an exemption.
Two other federal statutes, the Community Reinvestment Act of 1977, 12 U.S.C. §§ 2901-2905 (Supp. III 1979), and the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f (1976), also were asserted to be relevant-the plaintiffs invoking the former, the defendant the latter. The Community Reinvestment Act requires the appropriate federal supervisory agency to assess an institution's record of meeting the credit needs of the entire community, including low and moderate income neighborhoods, 12 U.S.C. § 2903(1), and simultaneously to encourage the institution to do so, id. § 2901(b).
The federal agencies, including the Comptroller of the Currency, have adopted regulations implementing the Act. See Note, The Community Reinvestment Act Regulations: Another Attempt To Control Redlining, 28 Cath.U.L.Rev. 635, 638-39 (1979). With the information required by these regulations, the Comptroller may, but need not, deny an application for a deposit facility to a national bank that fails to meet the needs of its local community. 12 U.S.C. § 2903; see 12 C.F.R. § 25.8 (1980).
Like the Home Mortgage Disclosure Act and the Community Reinvestment Act, the Equal Credit Opportunity Act does not expressly prohibit redlining but bans discrimination based on race, color, religion, national origin, sex, marital status, age, the fact that the applicant's income is derived from public assistance, or the good faith exercise of any right thereunder. 15 U.S.C. § 1691(a). A private right-of-action is granted, id. § 1691e, and, if the same act or omission constitutes a violation of state law as well, the aggrieved party must elect to proceed under either federal or state law, id. § 1691d(e). The Equal Credit Opportunity Act, therefore, is an example of a situation where federal and state regulation co-exist. See id. § 1691d(f).
On appeal the plaintiffs also rely on the National Neighborhood Policy Act, 42 U.S.C. § 1441 (Supp. II 1978), and § 202(a) of the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C. § 57a(f) (1976 & Supp. III 1979).*fn4 The National Neighborhood Policy Act created the National Commission on Neighborhoods to investigate and study the factors contributing to the decline of city neighborhoods and the factors necessary to neighborhood survival and revitalization. Pub.L.No.95-24, § 204(a), 91 Stat. 57. The Commission fulfilled its responsibility to ...