On Tuesday, November 29, 2005, the Montgomery County Council passed Bill 36-04, a predatory lending ordinance.  The bill expands the categories of lending activities that constitute discriminatory housing practices and increases the damages that the County office of Human Rights may award to victims to $500,000 from $5,000.  It also clarifies that individuals must not engage in discriminatory lending practices and requires that the County Commission on Human Rights provide an annual report on discriminatory lending activity in the County to the County Executive and the County Council.  The bill passed the Council by a vote of 7-2 and is now before the County Executive for his signature.  The County Executive has 10 days to decide on whether to sign or veto the bill.  If the County Executive signs the bill, it will become effective 91 days after the bill is signed.

MBA has sent a letter to the County Executive urging him to veto this bill on the grounds that it violates Maryland's predatory lending law, enacted in 2002, and contains specific pre-emptive language that prohibits local governments from enacting ordinances that seek to regulate the extension of credit by financial institutions doing business in the state.  In addition, MBA expressed concern about the provision increasing the fine for discriminatory lending to $500,000 and the effect that such a broad and undefined penalty provision may have on lenders' ability to sell loans made in the County on the secondary market, and the reluctance of investors and buyers to invest in or purchase loans made in the County that may also be subject to this substantial fine on loans found in violation of the new ordinance.

The letter is attached.