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Letter in Opposition to House Bill 1025 |
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RE:
Opposition to House Bill 1025 – Commercial Law – Mortgage Brokers
– Finder’s Fee The Maryland
Public Interest Research Group (MaryPIRG) and the Maryland Consumer Rights
Coalition join in opposing House Bill 1025 – Commercial Law – Mortgage
Brokers – Finder’s Fee, as enacting HB 1025 would be a tremendous step
backward for consumers in The purpose of the Finder’s Fee Act, which this bill would amend, is to protect consumers from the often unscrupulous practices of mortgage brokers. In theory, a mortgage broker helps a borrower find the best mortgage loan available and acts in the best interest of the borrower. In practice, many mortgage brokers put borrowers into high cost loans, because the higher the cost of the loan, the greater the broker’s fee. The practice of maximizing the cost of loans to unsophisticated consumers has resulted in the skimming of equity out of homes of elderly consumers in many communities. One of the practices prohibited by the Finders Fee Act is “table funding.” With table funding, the broker hides his role in the deal by representing himself to be the lender. The broker’s name appears on the loan documents as the lender, but in fact the broker is not the source of the funds for the loan and immediately assigns the loan to the actual lender. Under current law, a broker cannot act as both the broker and the lender. HB1025 attempts to undermine this important consumer protection by changing the definition of mortgage broker to exclude a broker who is listed as the lender – even if the loan is immediately assigned to the true lender. If this bill is passed, it would allow mortgage brokers to completely avoid complying with the Finder’s Fee Act by listing themselves as the nominal lender in the transaction. For these reasons, the Maryland Consumer Rights Coalition and the Maryland Public Interest Research Group urge you to give HB 1025 an unfavorable report. Gigi Kellett Cheryl L. Hystad Public Interest Advocate Executive Director MaryPIRG
190 Duke of 410-267-1160 410-366-1965 |
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