Montgomery County, MD, weighs predatory lending measure.

Position:Business Alert

LOTSTEIN BUCKMAN LLP, WASHINGTON, D.C., applauded the Mortgage Bankers Association (MBA) and its members for leading a campaign to educate lawmakers about and to clarify language in a Montgomery County, Maryland, antipredatory lending ordinance, Bill 36-04.

Montgomery County Council President Thomas E. Perez and councilmember Michael L. Subin introduced the measure on Oct. 26, 2004, that proposed amending Montgomery County's existing restrictions pertaining to housing discrimination.

The ordinance addresses predatory lending activities by adding certain practices to those considered discriminatory and illegal. It would prohibit a person from discriminating in a loan for a dwelling, as well as prohibit the origination of predatory loans, the practice of steering, and engaging in practices contrary to the current county housing discrimination law, according to Lotstein Buckman.

"The goal of the bill is to identify specific categories of predatory lending activities that constitute discriminatory housing practices to put banks, broker and borrowers on notice that discriminatory lending may result in damages imposed by the commission," said Sonya E. Healy, legislative analyst, in a memorandum to the Montgomery County Council. "The change will enable the commission to investigate loan brokers and other third parties that engage in predatory lending practices."

The Maryland General Assembly enacted House Bill 649, which became Chapter 532 of the Annotated Code of Maryland 2002, a predatory lending bill providing pre-emption on localities regulating the extension of credit made by a financial institution. However, the preemption does not "restrict or otherwise affect a local government's ability to enact laws or adopt regulation relating to fair housing or other civil rights," the memorandum stated.

"Basically, the localities are allowed to enact laws or regulations related to fair housing or civil rights," said Philip P. Bohi, an associate with Lotstein Buckman. "Montgomery County decided to incorporate predatory lending activities in their existing law on discriminatory housing practices."

A unique feature of the Montgomery County ordinance, according to Lotstein Buckman, is that it is an antipredatory lending ordinance masquerading as a fair housing bill. The ordinance expands the categories of predatory lending activities that count as discriminatory acts.

"There are other localities that have enacted predatory lending ordinances. But I don't...

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