Lending Law a Wrench in Home Finances

Kara Rowland, Washington Times, March 7, 2006

Montgomery County residents in the process of buying, selling or refinancing a home are finding themselves in a tight spot as at least 50 mortgage lenders have pulled their services out of the county as a result of a discriminatory lending law scheduled to go into effect tomorrow.

{snip}

The ordinance, which was passed by a vote of 7-2 and bans discriminatory lending on the basis of national origin, race or sex, increases the maximum fine from $5,000 to $500,000. Mortgage lenders have limited or suspended their loan businesses in the county rather than risk being punished for violations such as “abusive prepayment penalties” or “excessive points and fees.”

Seven lenders, led by the American Financial Services Association, a D.C. trade group, are in court today to challenge the County Council’s authority to pass the law, which they say is having unintended consequences because it is too vague.

The hearing before Montgomery County Circuit Court Judge Michael D. Mason will decide whether to impose a preliminary injunction that would bar the law from going into effect tomorrow pending the outcome of a trial.

Supporters of the law, including Montgomery County Executive Douglas M. Duncan, who is running for governor in the fall, consider it an added protection against lenders who discriminate. Lenders call the law unnecessary and say existing safeguards against discriminatory lending should be enforced more vigorously.

Montgomery County residents say they already have felt the effects of the ordinance.

Robert Carlisle, a 39-year-old defense contractor, was supposed to close on a refinancing Thursday when he received an e-mail from his broker notifying him that Honey Mae Home Loans, the underwriter, was ceasing its business in the county.

“She said unless we can close this loan by Monday, all loans by Honey Mae Home Loans are going to be canceled. I was so close,” said Mr. Carlisle, who for six months had been thinking about refinancing his Damascus home as a way to consolidate debt.

“With so many lenders pulling out, I don’t know who we’re going to find,” he said.

{snip}

Topics:

Share This

We welcome comments that add information or perspective, and we encourage polite debate. If you log in with a social media account, your comment should appear immediately. If you prefer to remain anonymous, you may comment as a guest, using a name and an e-mail address of convenience. Your comment will be moderated.

Comments are closed.