On May 29, the Maryland Office of the Attorney General (OAG) announced that it had filed a statement of charges against a real estate company and three individual corporate officers, alleging they engaged in unfair, abusive and deceptive trade practices by operating an illegal consumer lending scheme.

The OAG alleges that between late 2021 and late 2022, respondents originated as many as 1,047 “Homeowner Benefit Agreements” with Maryland homeowners. According to the OAG, respondents advanced homeowners small sums (i.e., a median of approximately $1,000) styled as “Promotion Fees” under the agreements, which purported to require no repayment. In exchange, homeowners were allegedly required to enter 40-year agreements granting respondents an exclusive right to act as listing agent for any future sale of the home. The filing contends that the respondents recorded these agreements, which functioned as liens securing a payment obligation of at least 3 percent of the home’s value if the homeowner sold or transferred title without using the respondents’ services, yielding what the OAG characterized as a “usurious gross return of 1,111%.”

According to the OAG, respondents violated: (i) the Maryland Consumer Loan Law by engaging in unlicensed lending, not providing required disclosures, charging usurious interest rates, and taking security interests in real property for loans under $4,000; (ii) the Consumer Debt Collection Act by attempting to collect debts with no legal right to do so; and (iii) the Consumer Protection Act. The action seeks a cease-and-desist order, termination and release of all recorded agreements, restitution of money taken from consumers, civil penalties of $10,000 per violation, and costs. The case is scheduled for hearing at the Office of Administrative Hearings beginning September 8.