Pence v. Norwest Bank Minnesota, N.A., 363 Md. 267

Summary

The Maryland Court of Appeals held that a Baltimore City deferred rehabilitation loan agreement did not create a mortgage or equitable lien constituting a prior encumbrance under Maryland’s Secondary Mortgage Loan Law. The court affirmed the Court of Special Appeals and therefore did not reach the respondents’ conditional question concerning federal preemption.

Holdings

1. The Baltimore City Deferred Loan Agreement created neither a mortgage nor an equitable lien against the property and therefore was not a lien of a prior encumbrance sufficient to trigger Maryland's Secondary Mortgage Loan Law.
2. The circuit court erred as a matter of law in granting Pence's motion for summary judgment because the undisputed agreement did not establish a qualifying prior encumbrance.

Questions Presented

1. Whether the Baltimore City Deferred Loan Agreement created a lien of a prior encumbrance within the meaning of Maryland's Secondary Mortgage Loan Law.
2. Whether the circuit court properly granted summary judgment on the lien issue.
3. Whether a federal savings bank that purchased a loan originated by a Maryland finance company could claim broad federal preemption of Maryland's Secondary Mortgage Loan Law.

Disposition

affirmed