MBA Leads Industry Response to Trust Licensing Issues in Maryland

On Friday, an MBA-led coalition of industry trade groups including the Maryland Mortgage Bankers and Brokers Association submitted a comment letter to the Maryland Office of Financial Regulation to respond to OFR’s guidance and emergency regulations to facilitate compliance with the state Appellate Court’s April 2024 ruling in the case of the Estate of Brown v. Ward.

The guidance and regulations have raised urgent issues for entities involved in the secondary mortgage market because OFR’s interpretation significantly (and unnecessarily) expanded on the Court’s opinion.

The letter will strongly encourage OFR to rescind its regulations, and the legislation – sponsored by key Committee leaders in both chambers – would create the necessary exemptions for trusts to the Installment Loan Licensing Law and Mortgage Lender Law. The bill would also create a one-year study commission to review the issue and make recommendations to the Legislature.

The case in focus was limited to an assignee of a home equity line of credit and whether the assignee needed a license to have the legal authority to bring a foreclosure action. The Court agreed that a license was required, but the OFR unnecessarily expanded the regulation to cover purchasers/assignees of closed-end credit such as passive trusts of residential mortgages loans, which under the order would also need to be licensed. The requirement was effective January 10th, but OFR has delayed enforcement until April 10th.

MBA and MMBA last fall strongly urged the OFR not to expand its rules beyond the court’s decision and warned of the harmful and immediate consequences to the Maryland mortgage market and consumers. In recent weeks, the industry’s predictions of detrimental impact to Maryland borrowers have proven prescient as several purchasers of Maryland loans have announced that they will either raise costs for them or cease their purchases.

MBA and MMBBA will continue to work with its coalition partners in supporting the legislation and encouraging its passage in both chambers and speedy enactment.

For more information, please contact William Kooper at (202) 557-2737 and Justin Wiseman (202) 557-2854.