A Montgomery County judge yesterday said he needs more time to consider the legality of a predatory lending law that a group of mortgage lenders is contesting.
Circuit Court Judge Michael D. Mason maintained an injunction barring the law from taking effect until he makes a final ruling.
"The issues are many and the issues are complex," he said.
The Montgomery County Council approved the legislation by a 7-2 vote in November.
The law prohibits lenders from marketing "high-cost home loans with exorbitant and unnecessary fees" to families on the basis of race, national origin, sex or religion. It increases the maximum damages that can be awarded for "humiliation and embarrassment" from $5,000 to $500,000.
More than 50 mortgage brokers and lenders, including several Wall Street firms, stopped doing business in the county because of the law. Most of them temporarily reinstated their services when a preliminary injunction was issued the day before the law was supposed to take effect March 8.
Attorneys for a group of lenders led by the American Financial Services Association made three arguments yesterday for a permanent injunction.
Attorney Tom Biemer told the court that first, the law is not local because it does not contain geographic limitations. Mortgage brokers, rather than retail lenders, can be located just about anywhere, he said.
Second, Mr. Biemer said, only the state has the authority to regulate mortgage lending. Allowing each locality to devise its own regulations would result in a "hodgepodge" of potentially conflicting laws, he added.
Third, phrases such as "excessive points and fees" and "abusive prepayment penalties" are "impermissibly vague," he said, and could be defined at the whim of county administrators.
"This amendment is designed to cap rates and fees," Mr. Biemer argued, "but [county officials are] not allowed to do that."
Clifford Royalty, an associate Montgomery County attorney in charge of the case, said the law regulates discrimination, not lending.
"This bill does not even resemble a usury law," Mr. Royalty said. "We have jurisdiction over discrimination, and that's the only thing we're addressing."
Mr. Royalty rejected Mr. Biemer's assertion that the law is not local, saying it would be applied to instances of discrimination inside the county.
He also defended the wording of the law, saying county officials have flexibility when interpreting legislation.
"These terms can be found in a dictionary," he said. "The plaintiffs obviously know what these words mean."
Judge Mason did not say when he expects to issue his ruling.