• Maryland Collection Agency Licensing: Questions Continue
  • August 11, 2017 | Authors: Ned T. Himmelrich; Lawrence D. Coppel; Marjorie A. Corwin; Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • We have previously reported, in our June 2010 Maryland Legal Alert and April 2015 Maryland Legal Alert, about Maryland's Collection Agency Licensing Act (MCALA), found at MD Code Ann., Bus. Reg. §7-101 et seq. In particular, as a result of a 2007 statutory change and a 2010 regulatory advisory, it has become clear that persons who acquire consumer credit claims that are in default at the time of acquisition must be licensed under MCALA even if the debt buyer is completely passive in its collection efforts and the consumer credit claims are pursued only by persons licensed or exempt from licensing under that Act. A recent court decision has extended this conclusion to foreclosure actions by statutory trusts. In an unreported opinion issued April 17, 2017, Maryland's Court of Special Appeals, our intermediate appeals court, determined in a case of first impression that a Delaware statutory trust which acquired Maryland mortgage loans in default could not foreclose on the underlying properties because the trust was not licensed as a Maryland collection agency. The Court of Special Appeals affirmed the lower court's dismissal of the foreclosure actions. The trust argued that foreclosing is not collecting a "consumer claim" as defined in MCALA because foreclosure is an in rem action. The trust also argued it was exempt from MCALA because it is a "trust company." Further, the trust argued that MCALA only applies to persons engaged in the business of collecting consumer claims and because it was not "doing business" as defined in Maryland's foreign corporations registration law, it was not subject to MCALA. The court rejected all of the trust's arguments. This is just one of a number of ongoing cases where adverse impacts of failing to be licensed under MCALA are at issue. Please contact Margie Corwin if you would like to discuss this subject in greater detail.