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March 07, 2006
Unintended Consequences in Action--Maryland Lending Law Edition
From the Washington Times (with a HT to Mike DeBow): 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. Jonathan Turgel of Germantown was refinancing his home when he received a call from his mortgage broker Feb. 24 informing him that the prospective lending company, Credit Suisse, a Wall Street investment banking firm and wholesale lender, had stopped funding mortgages in the county effective that afternoon. "I said, 'Well, what's going on?' " said Mr. Turgel, a 40-year-old business owner. Unfamiliar with the law, he did some research and soon was e-mailing County Council members. "I'm not a person who's in the bad credit, low credit or no credit category and it's affecting me," said Mr. Turgel, who has a strong credit rating of 785. "We were planning to refinance and take the kids to Disney World." Mr. Turgel said he is considering moving his wife and their seven children to Frederick County. "God help you if you have to refinance your house right now. I don't care if you have great credit -- you're not going to get the loan you could have gotten three weeks ago," he said. Mr. Turgel is one of dozens of homeowners, brokers, lenders and real estate agents calling on County Council members to repeal or revise the ordinance, said Brian Jones, spokesman for council member Michael Knapp, Germantown Democrat, who has called for the law to be repealed. 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." Posted by E. Frank Stephenson at 04:00 PM in Economics
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