Articles Posted in Banking

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Lender’s assignee (Assignee), while operating as an unlicensed debt collector, obtained a judgment against a credit card debtor (Debtor) in district court. Debtor’s contract with Lender included an arbitration provision. Debtor then filed a class action suit collaterally attacking the judgment based on violations of Maryland consumer protection laws. Assignee filed a motion to arbitrate the class action suit pursuant to an arbitration clause between Lender and Debtor. Assignee moved to compel arbitration. The circuit court granted the motion to compel, thus rejecting Debtor’s argument that Assignee waived its right to arbitrate when it brought its collection action against Debtor. The Court of Special Appeals affirmed. The Court of Appeals reversed, holding that because Assignee’s collection action was related to Debtor’s claims, Assignee waived its contractual right to arbitrate Debtor’s claims when it chose to litigate the collection action. View "Cain v. Midland Funding, LLC" on Justia Law

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Following his arrest for illegal drug activity, Petitioner was released on bond and withdrew all of the money contained in two bank accounts. Law enforcement traced the money to Petitioner’s sister’s bank account and seized the bank account. Less than ninety days after the conclusion of Petitioner’s criminal proceedings, the Department of Finance of Montgomery County filed a complaint petition for currency forfeiture as to the sister’s bank account. Petitioner’s sister argued that her bank account was not “money” under Maryland's forfeiture statute and that the complaint for forfeiture was untimely filed. The circuit court rejected that argument and ultimately found that the funds in the bank account constituted illegal drug proceeds. The court, therefore, granted forfeiture of the entire amount. The Court of Special Appeals affirmed. The Court of Appeals affirmed, holding (1) the funds contained in a bank account are “money” for purposes of the forfeiture statute; and (2) the forfeiting authority timely filed the complaint for forfeiture of the bank account within the deadline applicable to the filing of a complaint for forfeiture of money. View "Bottini v. Dep’t of Finance, Montgomery County" on Justia Law

Posted in: Banking, Criminal Law

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The Fangmans sought to represent a class of approximately 4,000 to 5,000 individuals who, from 2009 to 2014, retained Genuine Title for settlement and title services and utilized various lenders for the purchase and/or refinancing of their residences, allegedly as a result of referrals from the lenders. All of the lenders are servicers of federally related mortgage loans. The complaint alleges an illegal kickback scheme and that “sham companies” that were created by Genuine Title to conceal the kickbacks, which were not disclosed on the HUD-1 form. After dismissing most of the federal claims, the federal court certified to the Maryland Court of Appeals the question of law: Does Md. Code , Real Prop. [(1974, 2015 Repl. Vol.) 14-127 imply a private right of action?” The statute prohibits certain consideration in real estate transactions. That court responded “no” and held that RP 14-127 does not contain an express or implied private right of action, as neither its plain language, legislative history, nor legislative purpose demonstrates any intent on the General Assembly’s part to create a private right of action. View "Fangman v. Genuine Title, LLC" on Justia Law

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While living in Maryland, Petitioner opened a personal line of credit and a credit card account with Respondent. Respondent later filed two complaints against Petitioner in a Maryland district court, one for the outstanding balance on the credit card account and the other for the amount owed on the line of credit. At the time of the filings, Petitioner was living and working in Texas. Respondent was awarded default judgments. Respondent subsequently secured two writs of garnishment in the same actions from the district court. The writs were served on the resident agent of Petitioner’s employer. Petitioner moved to quash the writs, arguing that his wages earned solely for work he performed in Texas were not subject to garnishment in Maryland. The district court denied the motions to quash. The Court of Appeals affirmed, holding that the district court in its continuing and ancillary jurisdiction properly ordered Petitioner’s wages earned in Texas to be subject to garnishment served upon Petitioner’s employer because of the employer’s continuous and systematic business in Maryland. View "Mensah v. MCT Fed. Credit Union" on Justia Law

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At issue in this case was whether a lender who takes possession of property but does not become the fee simple record owner of the property through foreclosure or a deed in lieu of foreclosure is liable for homeowners’ association assessments. The resolution of the question was not addressed on appeal, however. Petitioner, a homeowners association, filed a complaint against Respondent, a bank, alleging that Respondent had failed to pay homeowners’ association dues since taking possession of property. The district court granted Respondent’s motion to dismiss. The circuit court affirmed. The Supreme Court dismissed Petitioner’s appeal for lack of jurisdiction because Petitioner’s appeal from the district court to a circuit court was untimely. View "Brownstones at Park Potomac Homeowners Ass’n v. JP Morgan Chase Bank, N.A." on Justia Law

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Respondents, three married couples, obtained home equity lines of credit from Petitioners, a bank and its loan officer. Approximately four years later, Petitioners filed a putative class action alleging that these transactions were part of an elaborate “buy-first-sell-later” mortgage fraud arrangement carried out by Petitioners and other defendants. Petitioners alleged numerous causes of action, including fraud, conspiracy, and violations of Maryland consumer protection statutes. The circuit court granted summary judgment for Petitioners, concluding that the statute of limitations barred several of Respondents’ claims and that no Petitioner violated the Maryland Secondary Mortgage Loan Law as a matter of law. The Court of Special Appeals reversed. The Court of Appeals reversed, holding that the Court of Special Appeals (1) erred in concluding that Respondents stated a claim upon which relief could be granted under the Maryland Secondary Mortgage Loan Law; and (2) erred in concluding that it was a question of fact to be decided by the jury as to whether Respondents’ claims against Petitioners were barred by the relevant statute of limitations. View "Windesheim v. Larocca" on Justia Law

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At issue in this case was whether a borrower may rescind a loan that has not been consummated pursuant to the federal Truth in Lending Act (TILA). Prior to closing on a home refinancing loan, Respondent submitted to the lender a notice of rescission of the loan. Thereafter, Respondent signed a note and deed of trust consistent with the negotiated terms of the loan. The loan proceeds were distributed as previously agreed to by the parties, and Respondent made payments on the note for approximately two years. Respondent subsequently defaulted on the loan, and the home was sold at a foreclosure public auction. Respondent filed exceptions to the foreclosure sale, arguing that he had rescinded the loan. The circuit court overruled the exceptions and ratified the sale. The court of special appeals reversed, holding that the rescission notice was timely because there was no language in 15 U.S.C. 1635 or TILA’s implementing regulation prohibiting a borrower from rescinding a loan prior to consummation of the transaction, and therefore, such an action was supported by statute. The Court of Appeals reversed, holding that, under TILA, a loan may not be rescinded before it is consummated. View "Burson v. Capps" on Justia Law

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Appellant used NVR Mortgage Finance, Inc. to apply for a mortgage and paid NVR Mortgage a broker fee. More than three but fewer than twelve years later, Appelalnt sued NVR Mortgage and NVR, Inc. (collectively, NVR) for allegedly violating Md. Code Ann., Com. Law 12-805(d) by failing to make certain disclosures to Appellant and similarly situated homebuyers before collecting finder’s fees for brokering mortgages. At issue before the Supreme Court was whether an alleged violation of CL 12-805(d) is an “other specialty” under Md. Code Ann., Cts. & Jud. Proc. 5-102(a)(6), which is subject to a twelve-year statute of limitations. The Supreme Court answered the certified question of law in the negative, holding that an alleged violation of CL 12-805(d) is not an “other specialty” under CJP 5-102(a)(6), and thus is subject to the default three-year statute of limitations. View "NVR Mortgage Fin., Inc. v. Carlsen" on Justia Law

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Petitioners obtained a loan from a Lender by taking out a second mortgage on their residence secured by a deed of trust on that property. The Lender sold the loan to another entity, to whom it assigned the loan instruments. That entity, in turn, sold the loan and assigned the loan instruments. After Petitioners had paid off the note and Respondent had released the deed of trust, Petitioners sued the Lender and Respondent, alleging that Lender had violated the Maryland Secondary Mortgage Loan Law (SMLL) at the time of the original transaction. The circuit court granted summary judgment for Respondent. The court of special appeals affirmed, holding (1) Petitioners’ sole recourse against an assignee such as Respondent for the Lender’s violations of the SMLL would be by way of recoupment, but (2) because Petitioners filed suit only after they had paid off the loan, that remedy was not available to them. The Court of Appeals affirmed, holding (1) Respondent was not liable for violations of the SMLL committed by the Lender when the loan was originated, and (2) Respondent was not derivatively liable under statute or the common law for a violation of the SMLL committed by the Lender. View "Thompkins v. Mountaineer Invs., LLC" on Justia Law

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Appellant financed the purchase of a car over time pursuant to a loan contract. The car dealer assigned the contract to Appellee, a financial services company. Because Appellant stopped making payments before the loan was paid off, Appellee repossessed and sold the car. Appellant sued Appellee, alleging that the repossession and sale of the car did not comply with the Credit Grantor Closed End Credit Law (CLEC). The circuit court dismissed the complaint, concluding (1) Appellant’s statutory claims were untimely under the Maryland Equal Credit Opportunity Act’s one-year statute of limitations, and (2) Appellant’s complaint did not state a cause of action for breach of contract because the requirements of CLEC were not incorporated into the contract as to Appellee. The Court of Appeals reversed, holding (1) an action alleging a violation of CLEC must be brought no later than six months after the loan is satisfied pursuant to the CLEC’s statute of limitations, and therefore, Appellant’s claims under CLEC on limitations grounds were improperly dismissed; and (2) Appellant may assert a contract claim against Appellee because the loan contract adequately incorporated CLEC as part of the contractual obligations, and Appellee voluntarily accepted that provision in taking the assignment. View "Patton v. Wells Fargo Fin. Md., Inc." on Justia Law

Posted in: Banking, Consumer Law