Sweeney v. Savings First Mortgage Limited Liability Company

No. C-04-0471 (Md. Ct. App. Aug. 9, 2005) ; Clearinghouse Number: 55932

Description

Mortgage Brokers Are Not Creditors Under Depository Institutions Deregulation and Monetary Control Act; Maryland State Law Not Preempted

Abstract

The Maryland Court of Appeals ruled that the Depository Institutions Deregulation and Monetary Control Act, 12 U.S.C. § 1735f-7a, does not preempt Maryland’s Finder’s Fee Law. The court said that preemption under the Act applied only to state laws regulating the creditor involved in a covered loan transaction, and the Maryland law covered only mortgage brokers who were not “creditors.” Using defendant as her mortgage broker, plaintiff refinanced her residential mortgage loan twice: first for $140,250, with defendant receiving a fee of $8,427, and again for $158,400, with defendant’s fee of $10,788. Plaintiff later sued, contending that under Maryland’s Finder’s Fee Law the maximum fee defendant was allowed to charge for the second loan was $1,452, or 8 percent of the amount by which the second loan exceeded the first. Defendant moved to dismiss, arguing that the Act expressly preempted the state law. The lower court granted defendant’s motion, with prejudice. On plaintiff’s appeal, the court rejected plaintiff’s arguments that preemption under the Act applied only to aspects of covered loans affecting interest and did not extend to state consumer protection statutes such as the Finder’s Fee Law and that the Act applied only to purchase money loans and not to refinance mortgage loans. However, the court agreed with plaintiff that the Act’s preemption provision applied only to creditors and not to mortgage brokers. Examining legislative history, the court concluded that defendant, as a mortgage broker, did not qualify as a creditor. The court said that Congress’ intent in passing the Act’s preemption provision was to protect lenders from state regulation and promote a national housing policy, not to protect all other parties to the transaction.

Additional Information

Attorney Information
Appellant represented by F. Paul Bland, Trial Lawyers for Public Justice, 1717 Massachusetts Ave. NW, Suite 800, Washington, DC 20036 (202.797.8600).
Docket Date
2005-08-09 00:00:00+00:00
Attorney Email
pbland@tlpj.org

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