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Dilworth Lawyers Obtain Critical Injunction for MD Lenders and Brokers

Represented by Dilworth partners Thomas Biemer and Patrick Northen, the American Financial Services Association and seven Maryland mortgage brokers have obtained a preliminary injunction preventing the enforcement of a Montgomery County, Maryland predatory lending bill. The bill claims to regulate lending discrimination in Montgomery County by identifying specific lending practices as presumptively discriminatory. The bill also raises the damages for a violation that may be awarded by a County administrative agency to $500,000, from the previous cap of $5,000.

Plaintiffs argued to Circuit Court Judge Michael D. Mason that the Ordinance at issue attempts to regulate specific credit terms and practices under the guise of anti-discrimination legislation, and therefore, is preempted by a Maryland statute that provides: "[o]nly the State may enact a law which purports to regulate extensions of credit made by a financial institution." Plaintiffs also asserted that the bill is beyond the power delegated to County lawmakers under Maryland's Express Powers Act, since it applies to matters of statewide concern and is not a purely local law. Following a hearing held on March 7, 2006, Judge Mason concluded that Plaintiffs' challenge to the bill raises questions "that are serious, substantive and fair grounds for litigation" and that the Plaintiffs would suffer irreparable injury unless a preliminary injunction were issued.

The preliminary injunction will remain in effect until a full hearing on the merits, which is scheduled for July 6, 2006.