Saturday, May 6, 2006 - Anti-Predatory Lending Legislation

Montgomery County, Maryland – Oops!

March 3, 2006

Montgomery County Council approved Bill 36-04 for all loans secured by residential properties to become effective March 8, 2006.  The ordinance limits lenders from charging more than 1.5% for all fees and points including discount, YSP, origination and junk fees.  The ordinance further authorizes the fine for discriminatory lending to be up to $500,000 per violation up from $5,000. What?

March 7, 2006

The day before the March 8, effective date, more than three dozen mortgage lenders and securitizers  vow to completely halt business activity in Montgomery County, Md. No residential loans in Montgomery County.

March 8, 2006

Circuit Court Judge Michael Mason issued an injunction that delays implementation of the anti-discriminatory lending ordinance for four months which was supposed to be instituted today. The temporary injunction was issued pursuant to a lawsuit filed by several mortgage brokers and the American Financial Services Association.

March 14, 2006

The same Montgomery County Council introduced a bill that would repeal the recently enacted portions of the anti-discriminatory lending law. Cant’ sell a house, can’t buy a house, can’t close a loan in the County.  Hmm, I think we better rethink this one.

April 25, 2006

MCC public hearing

Federal Law Update

A Federal predatory lending bill has been the works for several years.  House Financial Services Consumer Credit Subcommittee Chairman Spencer Bachus, R-Ala plans to introduce a national predatory lending bill similar to the anti-predatory lending bill passed by North Carolina in 1999.  It was chosen as a model because compliance has not forced lenders to stop serving subprime borrowers but will probably go further to address liability, arbitration and how to restrict interest rates and fees.

The National bill will include a “Federal Preemption provision” which would be a problem for Montgomery County, Maryland.