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MAMP
Legislative Center
Montgomery
County Council's Bill 36-04;
What it Means to YOU!
As
was reported in last month's Maryland Mortgage
Press, the Montgomery County Council passed
Bill 36-04 which amends the County's Anti-Discrimination
Law to cure what it perceives to be rampant predatory
lending in the County. The legislation was sponsored
primarily by Councilman Tom Perez, an unannounced
candidate for Attorney General of Maryland.
Though
Maryland law expressly preempts any local attempt
to enact such measures, Montgomery County hope
its new laws will circumvent state laws by viewing
it as anti-discrimination legislation rather than
financial/mortgage law. At this time there is
no information available as to whether either
the State or the Office of the Attorney General
is going to take a position on this legislation;
although is anticipated that an Opinion of the
Attorney General is going to be requested by an
elected official. These "Opinions" are
not binding on the courts, nor do they serve as
legal precedent. An Opinion finding that this
law is preempted by existing State law, however,
would be helpful in any legal challenge. Likewise,
it is believed that private litigation is being
drafted to challenge this law in the judicial
system. MAMP is fully cooperating with this suit
and will monitor it closely and advise the membership
on an ongoing basis.
There
are certain specific provisions of the new law
that should be outlined since they impact all
facets of the lending business whether one is
acting as a broker or a lender. The Council begins
by broadening the protected classes of people
beyond the recognized State and Federal categories.
It is a violation of the Act if the lender or
broker considers any of the following in the making
or denial of a loan: race, color, religion, ancestry,
natural origin, sex, marital status, disability,
and presence of children in the household, family
responsibilities, source of income, sexual orientation
and age.
The
next section of specific concern to all licensees
is the prohibited actions under the new law. The
main thrust is to prohibit "steering"
which is broadly defined as restricting or attempting
to restrict a person's choices because of factors
other than a person's income or credit level in
connection with a seeking, negotiating, buying
or renting a dwelling - including seeking a
mortgage for a dwelling. The definition goes
on to specifically prohibit discouraging a person
from a mortgage loan with more favorable terms
if that person may qualify for that particular
mortgage loan. The next paragraph of the legislation
goes further in prohibiting directing a person
away from a mortgage loan product, program or
service with more favorable terms if the person
may qualify for it. In order to capture any possible
mortgage where the lowest possible terms were
not offered to the buyer, the law prohibits even
the offering of a less favorable mortgage loan
terms under which the borrower would qualify.
Substantively,
the law goes on to specifically prohibit "excessive
upfront points, excessive fees, or excessive prepayment
penalties". Please note that these terms
are undefined in the new law. The legislation
does not offer any guidelines or legislative history
that would help offer guidance as to what is excessive.
For example, the law does not tell the industry
whether the number of points or the fees charged
may vary from transaction to transaction or if
there is a fixed threshold over which a fee is
considered excessive. This is one of a myriad
or questions posed by a reading of the new law.
To
make matters potentially more difficult for brokers
and lenders, the law directs Montgomery County's
Office of Consumer Protection to assist anyone
who thinks he or she may have been discriminated
against. The Office is directed to investigate
each case and aid the borrower in his or her quest.
In
order to enforce these rather vague and uncertain
prohibitions, the new law allows for unprecedented
damages awards including attorney fees, up to
$500,000 for embarrassment and humiliation (again
undefined), return of all funds paid, and "any
other relief that furthers the purposes"
of the law. The most difficult aspect of these
damage awards is the uncertainty that may be created
in the mortgage market both short and long term.
Rest
assured that MAMP will continue to monitor the
situation in Montgomery County and continue to
advise the membership as matters change.
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720
Light St., Baltimore, MD 21230
TEL: (410) 752-6262 | FAX: (410) 752-8295
EMAIL: MAMP@assnhqtrs.com
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