Maryland Legal Alert for Financial Services
Maryland Legal Alert October 2009
In This Issue:
• DEEDS OF TRUST – REMEMBER TO NAME AN “INDIVIDUAL” AS TRUSTEE
• NEW TRUTH IN LENDING ACT ADVERTISING RULES ARE EFFECTIVE
• ON THE SUBJECT OF ADVERTISING . . .
• PEOPLE HAVE BEEN CALLING ABOUT . . .
DEEDS OF TRUST – REMEMBER TO NAME AN “INDIVIDUAL” AS TRUSTEE
In today’s economic environment where deeds of trust are being foreclosed at a heightened rate, lenders must be ever vigilant about securing their interest in collateral – especially in terms of assuring their ability to properly dispose of collateral if necessary. To that effect, lenders making loans that are secured by real property located in Maryland must remember to name an individual rather than an entity as trustee under a deed of trust to ensure that the lender will have the power to sell such a property in the event of a default. For an excellent, in-depth discussion on the matter, please see Edward J. Levin’s article “What’s in a name?”, a shorter version of which was published in the September 28, 2009 edition of the Daily Record,Maryland Lawyer. If you have questions, please contact Tim Chriss.
NEW TRUTH IN LENDING ACT ADVERTISING RULES ARE EFFECTIVE
On October 1, 2009, comprehensive changes to advertising rules applicable to both open-end home equity lines and closed-end loans secured by dwellings became effective. No credit advertising should be considered without reviewing these new rules. The new FRB Regulation Z requirements were published in the July 30, 2008 Federal Register. Attached is our outline describing these rules. We also have an outline of Advertising Rules for Financial Institutions, which expands to include existing advertising issues specific to depository institutions. To discuss these new rules, or if you would like a copy of our expanded outline for depository institutions, please contact Margie Corwin or Carla Witzel.
ON THE SUBJECT OF ADVERTISING . . .
As a reminder, a Maryland law effective October 1, 2009, SB 10/HB 175, now prohibits a business from placing a telephone directory advertisement (including telephone listing) that misrepresents the location of the business. While the initial intention of this legislation was to stop unscrupulous out of state businesses from falsely advertising local addresses and local phone numbers, the final statutory language is broad and could apply to an advertisement that simply contains an incorrect address. These prohibitions do not apply to any federal or Maryland bank, trust company, savings bank or any other state bank that maintains a branch in Maryland. A person who violates this law is subject to a $500 civil penalty for each violation. Please contact Margie Corwin or Bob Enten if you have any questions.
PEOPLE HAVE BEEN CALLING ABOUT . . .
Internet Gambling and compliance with the Unlawful Internet Gambling Enforcement Act of 2006 and Regulation GG. Compliance with the new rules will be mandatory December 1, 2009, but many were hopeful that the law would be repealed or invalidated in court. No such luck. Financial institutions need to adopt policies and procedures, which may include confirming that their payment systems (e.g., VISA) have systems in place, to identify whether customers are involved in illegal internet gambling transactions and to spell out the steps that will be taken if the institution has "actual knowledge" of illegal transactions. Model policies are suggested in the regulation. In addition, deposit agreements should be tweaked to contain some additional disclosures, and, potentially, protections for the depository. Some training will need to be done to make sure any "actual notice" of illegal internet gambling transactions is brought to the attention of the right staff member. If you have questions, please contact Carla Witzel.