County Predatory Law Struck Down

The anti-predatory lending ordinance of Montgomery County, Md., has been declared unconstitutional by a state court and permanently enjoined from enforcement.In American Financial Services Ass'n v. Montgomery County, Circuit Court Judge Michael Mason said the Maryland Constitution vests the power to enact laws principally in the state legislature. "No matter how noble the purpose, a 'general' law is beyond the authority of the county to enact and is unconstitutional," the judge wrote. The ruling is good news for current and prospective homeowners, the AFSA said in response to the judge's decision. "It resolves uncertainty that has surrounded Montgomery County's mortgage market since last year and preserves borrowers' access to mortgage credit." The AFSA, along with a group of lenders, filed suit in February seeking injunctive relief. The plaintiffs argued that the bill was beyond the county's authority to enact and said the state has pre-empted the authority of the county to enact legislation that affects lending. They said the bill was vague and violated the lenders' rights to due process. According to the AFSA, courts have consistently ruled that regulatory authority for mortgage lending lies at the state level.