Maryland Mortgage Assistance Relief Services Act: Summary of Bill Passed by the 2013 General Assembly

J. Paul Reiger, Jr. of First American Title Insurance Company and John P. Machen of the Baltimore City Law Department contributed the following summary of SB383/HB291 passed during the 2013 session of the Maryland General Assembly:

Federal law enacted in 2009 clarified the Federal Trade Commission’s (FTC’s) rulemaking authority and specified that rulemaking “shall relate to unfair or deceptive acts or practices regarding mortgage loans, which may include unfair or deceptive practices involving loan modifications and foreclosure rescue services.” Pursuant to that authority and the FTC’s finding that deceptive and unfair trade practices were common among providers of mortgage assistance relief services, the FTC adopted the Mortgage Assistance Relief Services Rule which went into effect on December 29, 2010. This bill expresses the intent of the General Assembly, in enacting Title 7, Subtitle 5 of the Real Property Article, to implement in State law the consumer protections available under the FTC rules governing mortgage assistance relief service providers.

The bill requires a mortgage assistance relief service provider providing mortgage assistance relief services in connection with a dwelling in the State to comply with specified federal regulations issued by the Consumer Financial Protection Bureau. The bill gives the Commissioner of Financial Regulation, the Attorney General, and State’s Attorneys specified investigatory and enforcement authority over violations of the bill. Violation of the bill is an unfair or deceptive trade practice under the Maryland Consumer Protection Act (MCPA), subject to MCPA’s civil and criminal penalty provisions. The bill expresses legislative intent to implement in State law the consumer protections available under federal regulations governing mortgage assistance relief service providers.

The bill creates a private right of action for damages incurred as the result of a violation of the bill. The person may do so without having first exhausted the bill’s administrative remedies and regardless of the status of an administrative action or a criminal prosecution, if any. The bill authorizes a person who is awarded damages in an action to also seek reasonable attorney’s fees. If the court finds a violation, the court may award damages equal to three times the amount of actual damages. The bill clarifies that the attorney exemptions in the specified federal regulations at 12 C.F.R. § 1015.7 apply only to an individual admitted to practice law in the State who provides mortgage assistance relief services as part of the individual’s regular exempts, as of July 1, 2013, an assistance relief service provider regulated under the bill’s provisions from the Maryland Credit practice of law.

This bill is effective July 1, 2013. Real Property Article 7-501-511 (creates a new subtitle “Subtitle 5.34 Maryland Mortgage Assistance Relief Services Act”); Commercial Law Article 14-1901(e)(3)

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