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News Now

CU System
Maryland closing-costs bill goes to governor
ANNAPOLIS, Md. (3/18/08)--A credit union-backed, closing-costs measure that reverses the Maryland Court of Appeals Bednar v. Provident decision passed the Maryland General Assembly last week and is on its way to the governor for signature. The reversal means that a financial institution can recapture closing costs from a borrower who repays a mortgage loan early, according to the Maryland and District of Columbia Credit Union Association (MDDCCUA) (FOCUS Newsletter March 17). In December, the Court of Appeals had ruled that a financial institution could not recapture closing costs because to recapture waived closing costs essentially created a prepayment penalty. However, no commissioner on financial regulation had ever guided state-chartered institutions this way, said MDDCCUA. Maryland would have been the only state required to comply with the decision. Senate Bill 347 and House Bill 852 allows state-chartered credit unions and banks to continue legally the practice of collecting the closing costs on both mortgage loans and lines of credit that are repaid early. MDDCCUA CEO Mike Beall and outside counsel Jim Brown testified in support of the legislation during legislative hearings last month.


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