Maryland Senate Bill 485 attempts to reverse Blackstone v. Sharma, 233 Md. App. 58, 161 A.3d 718 (2017) Decision

By: Richard Solomon and Christianna Kersey

On February 4, 2019, a bill was introduced in the Maryland legislature, with the stated intent of abrogating the holding of the Court of Appeals of Maryland in Blackstone v. Sharma, 27 461 Md. 87, 191 A.3d 1188 (2018), and reinstating the decision of the Court of Special Appeals of Maryland in Blackstone v. Sharma, 233 Md. App. 58, 161 A.3d 718 (2017).  In short, that decision stated that, notwithstanding any separate licensing by the loan servicer, if different, the owner of loan, if not otherwise exempt, must be licensed under the Maryland Collection Agency License Act (MCALA) in order to commence a foreclosure on real property in this state securing a “consumer loan,” if the loan was in default at the time acquired by the current owner.  Banks, credit unions, saving & loan associations, government-sponsored enterprises and entities that are otherwise licensed under the Maryland Mortgage Lender Law (“MMLL”), are exempt from the requirements of the proposed law.  However, the decision in Blackstone v. Sharma, 233 Md. App. 58, 161 A.3d 718 (2017) specifically held that foreign statutory trusts were not exempt from the requirements of the law.

The introduction of this Bill left many investors and attorneys concerned. After waiting over a year for the Court of Appeals decision in Blackstone v. Sharma, 233 Md. App. 58, 161 A.3d 718 (2017), investors were scrambling to determine if becoming licensed was the best option, as another hold up would cause major timeline delays.

On March 12, 2019, the first hearing was held in front of the Senate Finance Committee, at which time numerous lobbyists and attorneys testified in favor of upholding the Court of Appeals decision.  On March 29, 2019, the Senate Finance Committee returned an unfavorable report on the Bill.

Although this Bill did not make it out of Senate, it should be noted that it was sponsored by nearly half the members of the Maryland Senate, and had the support of the Office of the Attorney General. With that being said, this licensing issue could remain a hot button topic for future legislative sessions. Although the future of any required licensing is uncertain, investors can rest easy for at least another year.

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