The Maryland General Assembly is considering a resolution aimed at providing additional protections against falling prey to what lawmakers characterize as unfair lending practices. Right now, federal law allows financial institutions located in areas with no state oversight to flout the laws of a state where a borrower is located. For example, a lender from Delaware can ignore consumer protections instituted by Maryland to prevent unfair lending practices. In a hearing Tuesday at the State House, lawmakers considered a resolution calling on the General Assembly to lobby Congress to change laws that allow this practice.
“The Maryland General Assembly has lost the ability to protect Maryland consumers from out-of-state lenders,” Maryland Commissioner of Financial Regulation Charles Turnbaugh said. “We need new legislation on the federal level creating national laws fair to all lenders and consumers.” The push for greater protection for Maryland borrowers comes as the number of foreclosures and late payments on subprime mortgages — home loans given to people with blemished credit records — are at record highs. This is troubling news in Maryland’s District suburbs, where the number of subprime loans outpaces the national average.
For 2004, 10 percent of all home loans in Montgomery and 26 percent in Prince George’s were subprime, compared with the national average of 5 percent.
“It’s bad to see people getting into loan products that are really bad for them without understanding what they’re getting into,” said Tom Debrine, manager of the single-family home ownership program at Montgomery County’s Housing Opportunities Commission.
