The Maryland Court of Appeals unanimously ruled on August 9, 2005, that mortgage brokers cannot charge exorbitant fees in defiance of the Maryland Finder’s Fee Law, a state consumer protection statute meant to protect home buyers against excessive transaction costs. The Court held that the Finder’s Fee Law is not preempted by a 1980 federal statute and, therefore, brokers are accountable for violating Maryland law. The Court sent the case back to the Circuit Court to determine whether the mortgage broker in this case charged excessive fees in violation of the Finder’s Fee Law.

In Sweeney v. Savings First Mortgage, LLC, plaintiff Linda Sweeney alleges that mortgage broker Savings First violated Maryland’s Finder’s Fee Law when it charged her more than $10,000 in fees to refinance her home in 2001. The broker’s fee was so large that it exceeded the added loan value Ms. Sweeney received from refinancing – less than $8,000. The trial court dismissed the case, ruling that the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”) wiped away Sweeney’s Maryland law claims. Sweeney appealed to the intermediate appellate court, but Maryland’s highest court decided to review the case on its own motion. Trial Lawyers for Public Justice (TLPJ), a national public interest law firm with headquarters in Washington, D.C. and a West Coast office in Oakland, joined the appeal to urge the Court to preserve the Maryland law against the broker’s federal preemption argument.

The case was argued before the Maryland Court of Appeals on June 6, 2005, by TLPJ Staff Attorney F. Paul Bland, Jr. TLPJ’s Brayton-Baron Fellow, Leslie A. Bailey, was co-counsel on appeal and the lead author of TLPJ’s brief to the Court of Appeals.

“This is an extremely important decision for consumers. The Court made clear that predatory mortgage brokers who charge sky-high fees cannot hide behind federal law to avoid accountability,” said Bland.

“The Court recognized that to expand the federal law to cover brokers like Savings First would essentially make state consumer protection laws like Maryland’s Finder Fee Law meaningless,” added Bailey. “This is clearly not what Congress intended.”

“This is a great decision for Ms. Sweeney and all Maryland consumers,” said Scott Borison of the Legg Law Firm, a prominent Maryland consumer lawyer who is co-counsel for Sweeney. “In less than two years, Ms. Sweeney paid more in fees than she makes in an entire year working hard as a bus driver. Without this Maryland law, there would be no protection for Maryland consumers against greedy brokers.”
 
In addition to Bland, Bailey, and Borison, co-counsel in Sweeney includes Doug Bowman of the Legg Law Firm. TLPJ’s brief in Sweeney v. Savings First Mortgage, LLC is posted on TLPJ’s website, www.tlpj.org. An amici brief was filed in support of appellants by the Public Justice Center, the Maryland Consumer Rights Coalition, the Community Law Center, NCLC, the Center for Responsible Lending, and AARP. To read the Maryland Court of Appeals’ decision, click here.