The Maryland Senate approved legislation that would let state-chartered banks collect fees they initially waived if borrowers prepay their mortgages or home equity loans.
The Senate voted 36 to 10 last week in favor of the bill, according to its sponsor, Sen. Thomas Middleton, D-Charles County. Earlier in the week the state House passed an identical bill unanimously.
Gov. Martin O'Malley, a Democrat, supports the bill and is likely to sign it.
The legislation was a response to a Maryland Court of Appeals decision in December that found Provident Bankshares Corp. of Baltimore had violated state law on prepayment charges by collecting on fees it had initially waived once customers prepaid their loans. The fees included attorney closing fees and other fees Provident paid out of pocket in return for a guarantee that customers would not prepay the loan. The ruling did not affect federally chartered banks or those chartered in other states.
Though the $6-2 billion-asset Provident still would have to reimburse its borrowers for the fees it collected, the legislation would shield it from additional punitive damages. It would also protect state-chartered banks from similar lawsuits in the future.
