Opinion ID: 2681043
Heading Depth: 2
Heading Rank: 2

Heading: clec

Text: CLEC provides certain protections to consumer borrowers4 in transactions involving closed end credit. Among other things, CLEC sets limits on the rate of interest, as well as other fees, that may be charged by a lender – referred to as a “credit grantor” in the statute.5 See CL §§12-1003, 12-1005. The statute confers on a consumer borrower the right to prepay the loan in full at any time without penalty. CL §12-1009. If a consumer borrower is in 4 The statute defines “consumer borrower” as “an individual receiving a loan or other extension of credit ... for personal, household, or family purposes, or an individual receiving a commercial loan or other extension of credit for any commercial purpose not in excess of $75,000, secured by residential real property.” CL §12-1001(f). 5 The statute defines “credit grantor” in pertinent part as follows: (1) “Credit grantor” means any individual, ... or any other legal or commercial entity making a loan or extension of credit under [CLEC] which is incorporated, chartered or licensed pursuant to State or federal law .... (2) “Credit grantor” includes: (i) Any bank, trust company, depository institution, or savings bank having a branch in this State; .... (iii) Any person who acquires or obtains the assignment of an agreement for an extension of credit made under [CLEC]. CL §12-1001(g). 3 default on a loan, the credit grantor may repossess the collateral for the loan, but must follow certain procedures in doing so. CL §12-1021. In particular, once the lender has taken possession of the collateral, it must advise the borrower of the borrower’s right to redeem the property, the location of the property, the rights of the borrower with respect to resale of the property, and the borrower’s potential liability for a deficiency. CL §12-1021(e). The lender may charge the borrower the “actual and reasonable expenses of retaking and storing the property” only if the lender provides the borrower with advance notice of the repossession. CL §12-1021(c), (h)(3). The statute allows the creditor to sell the collateral at private sale or public sale. CL §12-1021(j). In the case of a private sale, it requires the lender to provide an accounting to the borrower, including specified information. CL §12-1021(j)(2); see also Gardner v. Ally Financial, Inc., 430 Md. 515, 523-33, 61 A.3d 817 (2013). The statute also contains other authorizations and protections not pertinent to this case. The statute provides various remedies to a borrower if the lender fails to comply with CLEC. For example, in some circumstances, the lender may be limited to collecting the principal of the loan and prohibited from collecting interest and other charges. CL §121018(a)(2). A knowing violation of the statute may result in the lender forfeiting three times the amount of any interest, fees, and charges in excess of those allowed by CLEC. CL §121018(b). The statute provides that, if a lender fails to observe various requirements concerning repossession and notice, the lender is not entitled to a deficiency judgment for the unpaid balance of the loan. CL §12-1021(k)(4). The statute also confers certain 4 administrative regulatory powers on the Commissioner of Financial Regulation and provides a criminal penalty for willful violations of the statute. CL §12-1015 through §12-1018.1. The statute specifies that the phrase “credit grantor” includes an assignee. CL §121001(g)(2)(iii). Thus, an entity that receives an assignment of a loan contract governed by CLEC from the originator of the loan is also subject to the requirements of CLEC.