Deregulation of banks' mortgage units passes

Maryland Watch

April 02, 1997

The House of Delegates gave final legislative approval yesterday to a bill that would eliminate state licensing and regulation of mortgage-lending subsidiaries of commercial banks, if those banks have a branch in Maryland.

H. Robert Hergenroeder Jr., Maryland's commissioner of financial regulation, and banking lobbyists maintained that state oversight is redundant because of federal regulation. The bill will affect 103 subsidiaries.

The legislation is the Senate's considerably watered-down version of a House bill to deregulate the mortgage industry -- a controversial measure opposed by consumer proponents and housing advocates for the poor.

Last month, the House killed its version, which would have changed a host of laws governing the regulation of second-mortgage brokers, lenders and bankers.

The bill approved yesterday would create a task force to examine proposals opposed by the consumer and housing advocates. The most controversial among them is one to relieve mortgage brokers -- the middlemen between borrowers and lenders -- of a fiduciary duty to act in the best interests of borrowers.

Pub Date: 4/02/97

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