Maryland bankers appear poised to secure payments from customers who prepay certain loans, despite resistance from some lawmakers who say the proposal unfairly burdens homeowners keeping up with their finances.
Senators on Tuesday debated legislation that would protect state-chartered banks from a December ruling from Maryland?s highest court that declared fees for prepaid home equity loans illegal. Bankers said the decision puts them at an unfair disadvantage with federally chartered lenders, which can charge customers who refinance their homes for a specified time but then repay the bank early.
The fees help banks offset lost interest and closing costs, supporters said.
“It?s a good product ? everyone wants one,” said Sen. Thomas Middleton, a Charles County Democrat who chairs the Senate Finance Committee. “This is a very consumer-minded piece of legislation.”
The measure passed the House of Delegates unanimously and met little opposition in a Senate hearing last month ? where only a lawyer from the law office of Peter Angelos, owner of the Baltimore Orioles, testified against the bill. Angelos? firm represented a Maryland homeowner who was charged a fee for repaying a loan with Provident Bank earlier than he had agreed.
After success before the Court of Appeals in December, the law firm wants to set up a class-action lawsuit on behalf of thousands of homeowners that could cost banks millions.
Some lawmakers called legislation premature until the issue plays out in court.
“Why do we get involved?” Sen. Nathaniel McFadden, a Baltimore City Democrat, asked Tuesday, directing his comments to Middleton. “You don?t like the decision and the bankers don?t like the decision the court has made.”
The state attorney general receives about 50 complaints each year about early-payment fees, according to state analysts.
The proposal has the support of Gov. Martin O?Malley.
