Court Opinion

ID: 9693116
Source: CourtListenerOpinion
Date Created: 2023-08-25 16:23:09.437025+00
Date Added: 2024-06-11T18:19:18.665570
License: Public Domain

WILNER, J.
With respect, I dissent. The Court correctly identifies the Secondary Mortgage Loan Law, from which this dispute arises, as a consumer protection law. It was designed to curb predatory practices that had caused many people, often minorities and older people who were in debt and ignorant of the intricacies of the law, to lose their homes and become subject to crushing deficiency judgments for hugely inflated interest, costs, and fees. It is quintessential^ remedial in nature and must be liberally construed to achieve the Legislature’s objective. Regrettably, the Court fails to give the statute that required reading.
The Court acknowledges the problem caused by balloon payments. It recognizes that many States prohibit them altogether, as Maryland once did, but that the General Assembly later chose to allow them in two limited circumstances, both of which were subject to certain express conditions. Section 12-404(e) of the Commercial Law Article begins with the mandate that “[a] loan shall be amortized in equal or substantially equal monthly installments without a balloon payment at maturity.” Three exceptions are stated to that mandate, two of which allow for a balloon payment. Section 12-404(c)(2) — the subsection at issue here — permits a lender who makes a loan for the purpose of aiding the borrower in the sale of the borrower’s residence or the purchase of a new *334residence to create a balloon payment at maturity of the loan, but only
“If the balloon payment is:
(1) Expressly disclosed to the borrower;
(2) Agreed to by both the borrower and the lender/seller in writing; and
(3) Required to be postponed one time, upon becoming due, at the borrower’s request, for a period not to exceed 6 months, provided that the borrower continues to make the monthly installments provided for in the original loan agreement, and no new closing costs, processing fees or similar fees are imposed on the borrower as a result of the extension.”
Unless those three conditions — all of them — are satisfied, the balloon payment is not allowed; it is expressly prohibited. The simple fact — noted but then ignored by the Court — is that the loan agreement here does not require the balloon payment to be postponed one time at the borrower’s request. Because the agreement does not contain that requirement, the balloon payment is illegal. It violates the general mandate that a loan be amortized in substantially equal monthly installments “without a balloon payment at maturity.” Indeed, the problem in this case goes beyond the mere absence of an affirmative right of the borrower to postpone payment. The agreement states affirmatively that there is no such right. How else can the statement, in capital letters, that “THE LENDER IN THIS TRANSACTION IS UNDER NO OBLIGATION TO REFINANCE THE OUTSTANDING PRINCIPAL BALANCE OF THIS LOAN DUE ON MATURITY DATE,” be read?
Instead of reading the statute as it should, to carry out the clearly expressed intent of the General Assembly, the Court adopts the obfuscation offered by the holder of the mortgage — that the requirement of a one-time postponement does not have to be disclosed to the borrower, that the borrower does not have to be informed in the agreement that he/she has this right. What, then, is the point of having the right if it *335does not have to be disclosed in the agreement — if, indeed, it can, in capital letters, be negated in the agreement? How are borrowers with fewer resources or less luck than the Drews supposed to know that they have the right to a one-time postponement when the balloon payment comes due? The Court says that its role is to apply the statute in a “commonsensical” manner. Why, then, does it not do so? It cannot possibly have been the legislative intent to impose this requirement as an express condition to allowing a balloon payment and yet permit the agreement not to contain the condition, much less to disavow the requirement, hoping, perhaps, that, in the end, the holder of the mortgage will gratuitously do the right thing. I would answer the certified question as I believe the Legislature intended it to be answered, in the affirmative. A negative answer, preferred by the Court, effectively repeals that provision of the statute.
Chief Judge BELL and Judge HARRELL have authorized me to state that they join in this dissent.