Lawyers and title agents are warming up for their annual battle over interest on client escrow accounts -- the interest earned on the large sums of money they hold briefly when their clients buy homes.
Last year's struggle became particularly nasty as various lawmakers dragged legal and housing programs for the poor into the fray. After dozens of late-session machinations, the fight ended in a stand-off.
This year's legislative proposal has Sen. Walter Baker, chairman of the Judicial Proceedings Committee and a longtime enemy of the Maryland Legal Services Corp., planning his own kind of escrow account. The state would collect money from various sources to provide funds for the Public Defender's Office, low-income housing services and legal services for the poor -- in whatever way the legislature sees fit.
The money would be pooled from two sources. One target: the interest on lawyers' trust accounts, or IOLTA, a mandatory program since 1989 that last year raised $4.9 million for the legal services agency.
The other: interest on title companies' accounts (IOTA). Title agents have fought off encroachment on their escrow interest for years. There are no firm estimates on how much money such a program might bring.
Here's a new twist, though: The Maryland Attorney Grievance Commission reportedly is ready to release an opinion about the ethics of lawyers setting up title companies and keeping the interest on their real estate escrow accounts.
If this practice is deemed permissible, as expected, out the window will go one of the strongest arguments that some lawyers had for creating a mandatory IOTA program for title companies. Their argument: if the practice is unethical for lawyers, it's unethical for title agents, who do basically the same work.
Out the window as well will go much of the IOLTA money. Most lawyers will feel free to set up a title company for their real estate business, and to keep the escrow interest with a relatively clear conscience.
There's still the revenue argument, of course, a persuasive one for a legislature struggling to fill a $1 billion budget gap. And with support from Mr. Baker, D-Cecil; from Senate Budget and Taxation Chairman Laurence Levitan, D-Montgomery, long a foe of title attorneys who keep their escrow interest; and from Senate Economic and Environmental Affairs Chairman Clarence Blount, D-Baltimore, who likes the idea of a stronger funding source for low-income housing, the bill may be tough to refuse.
File this under: "People who are able to do something about it." Sen. F. Vernon Boozer, R-Baltimore Co., ticked off about banks that underestimate loan closing costs, on Tuesday told his Finance Committee colleagues about Senate Bill 183, which would require lenders to come up with a good faith estimate of all closing costs well before settlement and stick to that estimate.
Bankers and mortgage bankers opposed the bill at the hearing. The committee hasn't voted yet.
On Wednesday, the Senate Finance Committee will consider a series of bills to rein in what Sen. John A. Pica Jr., D-Baltimore, considers an uncontrolled insurance industry. The bills would make insurers liable for failing to fulfill their obligations without excuse and would repeal a prohibition against insurers' granting rebates, among other things.
Also, a House Appropriations Committee hearing on Wednesday morning about the state pension system may draw some sparks when the topic of investment comes up. Many lawmakers are nervous about the system's $15 million investment in the new Maryland Venture Capital Trust, and they're likely to question how that decision was made.