Judge Nullifies County's Strict Lending Law

by Mike Bevel, CollectionIndustry.com

A Montgomery County, MD, judge has put the kibosh on a law that would require stiffer penalties against predatory and discriminatory lending practices.

The law would have allowed fines of up to $500,000 against mortgage lenders if it could be proved that they discriminated against minority borrowers by giving them more expensive loans with onerous repayment terms. The late-proposed and newly ?nuh-uhed? fine is ten times more than the current fine of $5,000.

It?s no secret that lenders opposed the law ? calling it ?too vague? and hinting that, had it passed, they would have been forced to pack up their banks and head for friendlier pastures. Not that they were looking for ways out of responsibility. In a written statement yesterday, the American Financial Services Association said that in opposing Montgomery County’s law — as well as similar ones in other jurisdictions — the organization “did not seek to defend or allow abusive lending, a practice condemned by AFSA and its members.”

In his decision striking down the law, Circuit Judge Michael D. Mason wrote: “No matter how noble the purpose, a ‘general’ law is beyond the authority of the county to enact and is unconstitutional.” The law “has substantial territorial effect beyond the borders of Montgomery County,” he wrote.

Heaving a sigh of relief, the AFSA said the ruling “resolves uncertainty that has surrounded Montgomery County’s mortgage market since last year and preserves borrowers’ access to mortgage credit.”