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Fidelity Federal Savings & Loan Association v. De La Cuesta

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The issue in this 1982 U.S. Supreme Court case was the pre-emptive effect of a regulation issued by the Federal Home Loan Bank Board (FHLBB) that permitted federal savings and loan associations to invoke "due-on-sale" clauses in mortgage contracts if the property was sold or transferred. The regulation was in conflict with a provision of California state law and a California state court decision that limited a lender's right to exercise such a clause to cases where the lender could demonstrate the transfer of the property would impair the lender's security interest. The Supreme Court held the FHLBB acted within its authority in issuing the regulation and it was the intent of the regulation to pre-empt conflicting state limitations on the due-on-sale practices of federal savings and loans.

The De La Cuesta case was decided in February, 1982. In October, 1982, Congress passed the Garn-St. Germain Depository Institutions Act, legislatively making due-on-sale clauses enforceable. For more on the issue, readd "The Truth About Getting Around Due-on-sale Clauses".

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