Lakeview Loan Serv. v. Baxter

Lakeview Loan Servicing LLC & Nationstar Mortgage LLC v. Tonda M. Baxter, No. 691,
September Term, 2024. Opinion by Nazarian, J.

CREDIT GRANTOR CLOSED END CREDIT PROVISIONS – CREDIT
GRANTORS – LOAN SERVICERS

A loan servicer who holds rights and obligations under a debt instrument governed by the
Credit Grantor Closed End Credit Provisions (“CLEC”), Md. Code (1975, 2013 Repl.
Vol.), § 12-1001 et seq. of the Commercial Law Article (“CL”), qualifies as a credit grantor
for purposes of CLEC.

CREDIT GRANTOR CLOSED END CREDIT PROVISIONS – FEE
RESTRICTIONS – CONVENIENCE FEES

CLEC regulates a relationship between the credit grantor and the borrower such that its
fee restrictions apply throughout the life of the loan and are not confined to one moment
in time.
Circuit Court for Anne Arundel County
Case No. C-02-CV-22-000654
REPORTED

IN THE APPELLATE COURT

OF MARYLAND

No. 0691

September Term, 2024
______________________________________

LAKEVIEW LOAN SERVICING LLC &
NATIONSTAR MORTGAGE LLC

v.

TONDA M. BAXTER
______________________________________

Nazarian,
Kehoe, S.,
Wright, Jr., Alexander
(Senior Judge, Specially Assigned),

JJ.
______________________________________

Opinion by Nazarian, J.
______________________________________

Filed: November 25, 2025

* Judge Dan Friedman and Judge Rosalyn Tang
Pursuant to the Maryland Uniform Electronic Legal
Materials Act (§§ 10-1601 et seq. of the State
Government Article) this document is authentic.
did not participate in the decision to report this
2025.11.25 opinion pursuant to Md. Rule 8-605.1.
15:08:35 -05'00'
Gregory Hilton, Clerk
This appeal tests the reach of the Credit Grantor Closed End Credit Provisions

(“CLEC”), contained in Title 12 of the Commercial Law Article. Three years after Tonda

Baxter took out a loan secured by a deed of trust on her home (the “loan”), Lakeview Loan

Servicing LLC (“Lakeview”) acquired the servicing rights to the loan and retained

Nationstar Mortgage LLC (“Nationstar”) as its sub-servicer. In a civil complaint for

declaratory relief in the Circuit Court for Anne Arundel County, Ms. Baxter alleged that

Lakeview and Nationstar violated CLEC when they charged and collected convenience

fees in connection with the loan. Lakeview and Nationstar moved for summary judgment

and Ms. Baxter responded with a cross-motion under Maryland Rule 2-502 that asked the

court to decide CLEC’s applicability to the loan, to Lakeview and Nationstar as credit

grantors, and to the relationship between the parties. The circuit court denied Lakeview

and Nationstar’s summary judgment motion, granted Ms. Baxter’s cross-motion, and

entered a declaration in her favor. Lakeview and Nationstar appeal the court’s order and

declaration, and we affirm.

I. BACKGROUND

On June 26, 2018, Ms. Baxter signed a promissory note with NFM, Inc. (“NFM”)

for $284,747.00 (the “note”) and secured the note with a purchase money deed of trust on

her residential property. The note elected CLEC as the governing law for the loan

transaction and authorized NFM to transfer it, stating that “anyone who takes this Note by

transfer and who is entitled to receive payments under this Note is called the ‘Note

Holder.’” Section 19 of the deed of trust discussed the possibility of the note being sold in

the future as well. It provided that if two different entities obtained interests in the note by
purchasing it or acquiring servicing rights to it, the successor loan servicer would remain

responsible for carrying out the original servicing obligations under the note:

Sale of Note; Change of Loan Servicer; Notice of
Grievance. The Note or a partial interest in the Note (together
with this Security Instrument) can be sold one or more times
without prior notice to Borrower. A sale might result in a
change in the entity (known as the “Loan Servicer”) that
collects Periodic Payments due under the Note and this
Security Instrument and performs other mortgage loan
servicing obligations under the Note, this Security Instrument,
and Applicable Law. There also might be one or more changes
of the Loan Servicer unrelated to a sale of the Note. If there is
a change of the Loan Servicer, Borrower will be given written
notice of the change which will state the name and address of
the new Loan Servicer, the address to which payments should
be made and any other information RESPA[ 1] requires in
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connection with a notice of transfer of servicing. If the Note is
sold and thereafter the Loan is serviced by a Loan Servicer
other than the purchaser of the Note, the mortgage loan
servicing obligations to Borrower will remain with the Loan
Servicer or be transferred to a successor Loan Servicer and are
not assumed by the Note purchaser unless otherwise provided
by the Note purchaser.

NFM indorsed the note to AmeriHome Mortgage Company, LLC (“AmeriHome”)

and AmeriHome notified Ms. Baxter that it would service her loan effective August 1,

2018. The notice of servicing transfer directed Ms. Baxter to list AmeriHome as her

“mortgagee” on her homeowners’ insurance policy. About three years later, AmeriHome

transferred servicing of the loan to Central Loan Administration & Reporting (“CLAR”).

Like the notice from AmeriHome, the notice of servicing transfer instructed Ms. Baxter to

list CLAR as her new mortgagee. Ms. Baxter sued AmeriHome and CLAR alleging, in

1
RESPA refers to the Real Estate Settlement Procedures Act codified as 12 U.S.C. § 2061
et seq.

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relevant part, that the companies had violated CLEC by charging and collecting

unauthorized convenience fees. See Baxter v. AmeriHome Mortgage Company, LLC, 617

F.Supp.3d 346, 349–50 (D. Md. 2022). Ms. Baxter settled her claims against both entities

in 2023.

Meanwhile, loan servicing transferred to a third entity, Lakeview’s sub-servicer

Nationstar, effective September 2, 2021. Like the prior servicers, Nationstar directed Ms.

Baxter to update her homeowners’ insurance policy to list Nationstar as her new

mortgagee. In its introductory letter, Nationstar offered two phone payment options:

payment through an automated service for $14 and payment through a live customer

service representative for $19 (the “convenience fees”). From October 15, 2021 to April

15, 2022, Nationstar charged Ms. Baxter $103.00 in convenience fees.

On April 15, 2022, Ms. Baxter sued Lakeview and Nationstar, on behalf of a class

of similarly situated Maryland borrowers, for alleged violations of the Maryland Consumer

Debt Collection Act and the Maryland Consumer Protection Act (Count I). Individually,

she asked the court to find that CLEC governed the relationship between the parties, that

Lakeview and Nationstar could only exercise the rights assigned to them, that their

imposition of convenience fees violated CLEC, and that they must comply with CLEC

(Count II):

that (i) the relationship between Lakeview and [Nationstar] on
the one hand and Baxter on the other hand in relation to the
Baxter Loan is subject to CLEC and Lakeview and [Nationstar]
were entitled to no greater rights in relation to the Baxter Loan
than their assignor(s) had to give them; (ii) since October 2021
Lakeview and [Nationstar] wrongfully imposed and collected
certain fees . . . from Baxter that are barred by CLEC . . . or

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otherwise acted in contravention of CLEC . . . and (iii)
Lakeview and [Nationstar] should be Ordered to comply with
CLEC . . . and not collect or attempt to collect any interest,
costs, fees, or other charges with respect to Baxter Loan in
violation of [CLEC] . . . .

In their answer to the complaint, Lakeview and Nationstar admitted that they “voluntarily

elected to acquire the Baxter Loan.” On May 16, 2022, Nationstar stopped charging

convenience fees for phone payments, and the company issued refund checks to all

Maryland consumers who had paid convenience fees since October 1, 2018, including Ms.

Baxter.

Lakeview and Nationstar entered into a settlement agreement on Ms. Baxter’s class

action claims and moved for summary judgment on her declaratory judgment claim. Ms.

Baxter filed a cross-motion under Maryland Rule 2-502 to separate the Count II questions

for decision by the circuit court. On May 10, 2024, the court entered an order and a

declaration of law, finding that (i) the loan was subject to CLEC, (ii) Lakeview and

Nationstar qualified as “credit grantors” under the statute, (iii) the convenience fees were

a controversy between the parties, (iv) Ms. Baxter informed Lakeview and Nationstar that

the convenience fees were unauthorized charges under CLEC, (v) Lakeview and Nationstar

didn’t cure the error and, thus, (vi) pursuant to CLEC, Lakeview and Nationstar had

forfeited the right to collect anything other than the principal of the loan. Lakeview and

Nationstar noted their appeal on June 4, 2024.

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II. DISCUSSION

Lakeview and Nationstar raise three questions on appeal, 2 which we rephrase and
1F

condense: first, whether the circuit court erred when it concluded that they are credit

grantors under CLEC; and second, whether the determination that CLEC applies to the

assessment of convenience fees and to a loan secured by a first lien on residential property

was erroneous. We hold that the circuit court ruled correctly on both questions.

A motion to separate questions for decision asks the court to decide a discrete issue

in advance of further litigation. Md. Rule 2-502; Simpkins v. Ford Motor Credit Co., 389

2
Lakeview and Nationstar identified the following three Questions Presented in their brief:
1. Whether a loan servicer is a “credit grantor” within the meaning of the CLEC
when the servicer assumes a loan servicing function with respect to a
first-priority mortgage lien instrument but the loan servicer neither originated
the mortgage loan, nor acquired or obtained assignment of the mortgage loan.
2. Whether the CLEC—a statute intended to prohibit the imposition of certain
additional fees at origination of a closed end extension of credit—proscribes
post-origination “convenience fees” related to servicing a mortgage loan and
charged by a loan servicer after the homeowner expressly agrees to pay such
fees.
3. Whether a first-priority mortgage loan for the purchase of residential property is
subject to the CLEC, despite the inclusion of an express provision exempting
extensions of credit secured by a first lien on residential property from the
statute’s purview.

Ms. Baxter phrased the Questions Presented as follows:
1. Does CLEC apply to assignees and their agents? (YES)
2. May a licensed Maryland mortgage lender/service charge junk fees not expressly
authorized under CLEC or any written instrument either at origination of the
mortgage loan or thereafter until the loan is satisfied? (NO)
3. May Appellants raise on appeal arguments and claims or defenses it did not
assert or preserve below? (NO)

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Md. 426, 441–42 (2005) (citation omitted). The court’s decision is a trial on the merits with

regard to the issues presented. Bender v. Schwartz, 172 Md. App. 648, 664 (2007).

Accordingly, we review the grant of a Rule 2-502 motion de novo to consider whether the

court’s conclusions were legally correct, and we defer to its factual determinations unless

they are “‘clearly erroneous.’” See id. (quoting Md. Rule 8-131(c)).

A. The Circuit Court Did Not Err When It Concluded That
Lakeview And Nationstar Are Credit Grantors Under CLEC
Because Lakeview and Nationstar Are Subsequent Holders Of
Rights Under The Debt Instrument.

Lakeview and Nationstar argue first that the circuit court erred as a matter of law

when it concluded that they qualify as “credit grantors” whose actions fall within CLEC’s

reach. They maintain that NFM is the lender of record who extended credit to Ms. Baxter

and that they merely service the loan. They admit that they obtained an assignment of

servicing rights to the loan but deny that they own the note, 3 and they argue that CLEC
2F

3
Lakeview and Nationstar highlight that Ms. Baxter hasn’t produced proof that they are
assignees of the loan through, for example, an “assignment of mortgage that was duly
recorded in the Baltimore City Land Records.” In response, we note that in Maryland
recordation isn’t required for an assignment of a deed of trust. 63 Op. Att’y Gen. 87, 88
(Md. 1978) (The “deed of trust need not be assigned” because the promissory note is fully
negotiable and, unlike a mortgage, the property is held by a third party trustee “in trust, for
the benefit of and to secure the payment of the note to the lender and any subsequent bona
fide holder in due course of the note.”); 1 Maryland State Bar Association, Residential Real
Estate Transactions, The Lender’s Role § 5.31 (5th ed. 2024) (“many lenders prefer to use
deeds of trust, because the security for a loan may be assigned by the mere endorsement
and delivery of the note without the need to record an assignment among the land
records . . . .”); Billingsley v. Mitchell, 257 Md. 301, 307 (1970) (“‘The deed of trust need
not and properly speaking cannot be assigned like a mortgage . . . but the note can be
transferred freely, and, when transferred, carries with it the security, if any, of the deed of
trust . . . .’” (quoting Le Brun v. Prosise, 197 Md. 466, 474 (1951))). The absence of a
recorded assignment wouldn’t affect whether an assignment has occurred.

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would apply to them only if the latter were true. 4 Ms. Baxter claims that Lakeview and
3F

Nationstar’s admissions, their statements in court, and relevant case law all support the

circuit court’s holding that the assignment of servicing rights brings them within CLEC’s

purview. We hold that Lakeview and Nationstar are credit grantors under CLEC because

they hold rights and obligations under the debt instrument, in this case the note.

CLEC regulates how credit grantors offer and extend closed end credit to

borrowers. 5 Md. Code (1975, 2013 Repl. Vol.), § 12-1001 et seq. of the Commercial Law
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Article (“CL”). It establishes “parameters and requirements with which credit grantors

must comply” and provides “various remedies to a borrower” in the event of

noncompliance. Lyles v. Santander Consumer USA Inc., 478 Md. 588, 594 (2022). To

determine whether the term “credit grantor” encompasses a person with servicing rights

under a loan, we look first at the plain text of the statutory definition through an “ordinary,

popular understanding of the English language.” See Bolling v. Bay Country Consumer

Fin., Inc., 251 Md. App. 575, 589 (2021). CLEC provides that a credit grantor includes

4
Ms. Baxter suggests that this argument isn’t preserved for appellate review because
Lakeview and Nationstar didn’t present it to the trial court. We disagree. At the motions
hearing, counsel for Lakeview and Nationstar argued expressly for a distinction between
assignments of servicing rights and assignments of the note, stating “what the original
lender is giving to Nationstar and Lakeview is the servicing right. So, they’re not
transferring to Nationstar or Lakeview the underlying contract.” They have preserved the
argument sufficiently. More generally, Ms. Baxter asserts that Lakeview and Nationstar
have raised factual questions and legal arguments on appeal that the circuit court didn’t
decide which, if true, would violate Maryland Rules 8-131(a) and 8-504(a)(4). She doesn’t
specify how Lakeview and Nationstar violated those rules, however, and we decline to
divine for ourselves what she means. Instead, we’ll review each issue on its merits.
5
Closed-end credit is the extension of credit under an arrangement that isn’t a revolving
credit plan. CL § 12-1001(d).

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“any person who acquires or obtains the assignment of an agreement for an extension of

credit made under [the statute].” CL § 12-1001(g)(2)(iii). First, we recognize that the

words “any person” are broad in scope. “Acquire” means “to come into possession or

control of often by unspecified means,” Merriam-Webster’s Collegiate Dictionary, (11th

ed. 2025), and “obtain” is the act of gaining or attaining something “usually by planned

action or effort.” Id. Said plainly, “assignment” means “the act of assigning something” or

“a specified task or amount of work assigned or undertaken as if assigned by authority.”

Id. Therefore, under a plain construction of CL § 12-1001(g)(2)(iii), a credit grantor

includes any person who comes into possession or gains the assigned task or work of a

CLEC agreement.

We continue by examining the statute’s context, “‘overall statutory scheme, and

archival legislative history of relevant enactments.’” Santander, 478 Md. at 603 (quoting

In re: S.K., 466 Md. 31, 50 (2019)). The General Assembly added CLEC to the Commercial

Law Article when it passed the Credit Deregulation Act of 1983 (the “Act”). 1983 Md.

Laws, Chap. 143, 721–22; Estate of Brown v. Ward, 261 Md. App. 385, 411 (2024) (citing

Ford Motor Credit Company, LLC v. Roberson, 420 Md. 649, 662 (2011)). The Act aimed

to regulate the terms on which credit grantors could extend closed-end credit, 1983 Md.

Laws, Chap. 143, 721–22, and it defined a credit grantor as any individual or entity

“making a loan or other extension of credit” to a borrower. 1983 Md. Laws, Chap. 143,

sec. 1, § 12-1001, 742–43. The Act established two penalties for statutory violations—a

single forfeiture of interests, costs, or charges (the “single forfeiture penalty”) or a treble

forfeiture for knowing violations:

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(A) Except for a bona fide error of computation, if a credit
grantor violates any provision of this subtitle the credit grantor
may collect only the principal amount of the loan and may not
collect any interest, costs, or other charges with respect to the
loan.

(B) In addition, a credit grantor who knowingly violates any
provision of this subtitle shall forfeit to the borrower 3 times
the amount of interest and charges collected in excess of that
authorized by this subtitle.

1983 Md. Laws, Chap. 143, sec. 2, § 12-1018, 752. The Act gave credit grantors a chance

to avoid either penalty if they corrected the error within sixty days of discovering it:

A credit grantor is not liable for any failure to comply with a
provision of this subtitle if, within 60 days after discovering an
error and prior to institution of an action under this subtitle or
the receipt of written notice from the borrower, the credit
grantor notifies the borrower of the error and makes whatever
adjustments are necessary to correct the error.

Id. § 12-1020, 752.

In 1990, the General Assembly amended the statute to clarify “the rights of

borrowers and credit grantors” should either party discover calculation errors related to the

credit agreement. 1990 Md. Laws, Chap. 458, sec. 1, § 12-1001, 1880–81; Estate of Brown,

261 Md. App. at 413; Senate Bill 403—Revolving Credit and Closed End Credit—

Corrections (1990 General Assembly) in legislative file for Senate Bill 403 at 7, 9.

Specifically, the body proposed amending CL § 12-1018 to give credit grantors a “very

narrow right” to cure certain CLEC violations and avoid the single forfeiture penalty. See

Senate Bill 403—Floor Report of Revolving Credit and Closed End Credit—Corrections

(1990 General Assembly) in legislative file for Senate Bill 403 at 21. As part of that effort,

the General Assembly expanded the definition of “credit grantor” to include “any person

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who acquires or obtains the assignment” of a credit agreement. See Senate Bill 403—Bill

Analysis of Revolving Credit and Closed End Credit—Corrections (1990 General

Assembly) in legislative file for Senate Bill 403 at 11. With this expansion, the legislature

sought to cover “any subsequent holder of the debt instrument.” See Senate Bill 403—

Floor Report of Revolving Credit and Closed End Credit—Corrections (1990 General

Assembly) in legislative file for Senate Bill 403 at 25.

From a review of this history, we know that, at minimum, the General Assembly

intended to offer this remedy to later owners of the debt instrument, as evidenced by an

example in its Floor Report that describes the sale of a debt instrument to an assignee. See

id. The reference to “any subsequent holder of the debt instrument” also could mean a

future noteholder who doesn’t own the instrument but nevertheless can enforce it. See

Michael J. McKeefery & Richard E. Solomon, Gordon on Maryland Foreclosures,

Noteholders § 1 (5th ed. 2021) (the holder of a debt instrument can enforce the rights

granted under it without being an owner of the instrument itself); see id. (“the common

meaning of ‘owner’ in a mortgage loan context is one who is ultimately entitled to

payments made under the instrument. . . . there may be intermediaries, such as loan

servicers . . . who may be entitled to a share of the payments, in compensation for services

provided to the investor, but, if there is a separate servicer, they are not considered an

‘owner.’”); CL § 3-301 (“A person may be entitled to enforce the instrument even though

the person is not the owner of the instrument or is in wrongful possession of the

instrument.”). Further, “subsequent holders of the debt instrument” could reach others

entitled to act under the agreement. See id. (“‘Person entitled to enforce’ an instrument

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[includes] . . . (ii) a nonholder in possession of the instrument who has the right of a

holder”); cf. Nationstar Mortgage LLC v. Kemp, 476 Md. 149, 188 (2021) (purchaser of

note, as assignee, and loan servicer, as assignee’s agent, were “lenders” subject to Usury

Law proscription of property inspection fees even though statutory definition did not

include “assignees” explicitly).

Next, we look for additional evidence of intent in the legislature’s statements about

the policy problem it was trying to solve in 1990, see B.F. Saul Company v. West End Park

North, Inc., 250 Md. 707, 720 (1968) (“[i]n order to divine the legislative intent behind [a

statutory provision] it is necessary to consider the primary objective sought to be achieved

by the [legislative act] . . . .”), and from that we learn that the General Assembly had certain

CLEC requirements in mind when it fashioned this cure remedy:

Background. Currently, under the Credit Deregulation Act, a
credit grantor is subject to forfeiture of interest, costs, or other
charges if the credit grantor violates the Credit Deregulation
Act; this penalty does not apply in cases of bona fide errors of
computation. A knowing violation by a credit grantor could
result in a penalty of 3 times the interest, costs, and other
charges.

Currently, a credit grantor is not liable for damages for any
violation of the Credit Deregulation Act if the credit grantor
notifies the borrower of the error and cures the error:

1) Within 60 days after discovering the error; and
2) Prior to the institution of a suit by the borrower or notice of
the error by the borrower to the credit grantor.
In other words, under the current law, the credit grantor has an
affirmative duty to discover an error before the borrower
notifies the credit grantor, whether through a written letter or
through the institution of a lawsuit. []

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***

Under the amended bill, a credit grantor that violates a
provision related to interest rates and fees is not subject to the
[single forfeiture penalty] if: 1) The violation was
unintentional and in good faith; 2) Within 10 days after the
credit grantor receives notice of the error or violation the credit
grantor: a) corrects the error or violation; and b) makes the
borrower whole for all losses, including reasonable attorney’s
fees and interest, where appropriate.

The credit grantor’s right to “cure” only applies to
unintentional and good faith violations of the following
provisions: 1) Interest rate limits, calculation of interest, and
balloon payment prohibition [§ 12-1003]; 2) Variation in
periodic interest rate [§ 12-1004]; 3) Fees and charges
[§ 12-1005]; 4) Charges for default or delinquency
[§ 12-1008]; or 5) Attorney’s fees and court or other collection
costs [§ 12-1011].

Senate Bill 403—Bill Analysis and Floor Report of Revolving Credit and Closed End

Credit—Corrections (1990 General Assembly) in legislative file for Senate Bill 403 at 11,

13, 15. This history illustrates the General Assembly’s intent to afford cure rights to the

lender or any person who comes to hold the authority to take the actions in CL §§ 12-1003,

12-1004, 12-1005, 12-1008, or 12-1011.

For instance, the General Assembly created a right to cure unintentional violations

of CL § 12-1003, a provision that permits credit grantors to charge and collect interest on

a loan subject to the terms of the debt instrument so long as the “effective rate of simple

interest” doesn’t exceed twenty-four percent per year. CL § 12-1003(a). Additionally, CL

§ 12-1003 authorizes credit grantors to calculate interest “by way of simple interest” or by

any other method permitted under the debt instrument, or to precompute the interest

amount. CL § 12-1003(b). Through Senate Bill 403, the General Assembly wanted any

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person having the authority to charge, collect, or compute the interest due on a loan—

whether an original lender or a subsequent holder—to have the chance to cure a violation

within ten days of being placed on notice of the error.

Commercial Law Article § 12-1008 is another requirement tagged by the General

Assembly for this cure opportunity. That provision authorizes credit grantors to impose a

“late or delinquency charge on payment or portions of payments” and limit any fees to

fifteen dollars or less if a check payment is dishonored, provided that the debt instrument

so allows. CL § 12-1008(a). The General Assembly granted cure rights for violations of a

credit grantor’s obligation to charge and collect a variable periodic percentage rate of

interest (CL § 12-1004), additional fees (CL § 12-1005), and collection costs (CL

§ 12-1011) in accordance with the statute and the debt instrument. The legislature’s effort

to provide a cure for these violations is meaningful only to persons in a position to take

those actions, whether at the time of loan origination or after the authority to act has been

assigned. Loan servicers like Lakeview and Nationstar fall into the latter group.

It is undisputed that Lakeview and Nationstar are subsequent holders of rights under

the loan because they received an assignment of servicing rights to the loan. 6 Nationstar,
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6
This fact stands whether Lakeview and Nationstar hold these rights on their own or as
agents of the assignee who purchased the note. Both claim that the loan was securitized
into an investment trust that acquired the note and hired Lakeview and Nationstar as master
servicer and sub-servicer of the loan, although there is no documentation of this claim in
the record. In fact, the only indorsement in the record before us is from NFM to
AmeriHome. Even so, Lakeview and Nationstar concede that the trust legitimately
qualifies as a credit grantor under CLEC. If the investment trust now owns the loan through
assignment, and if the trust hired Lakeview and Nationstar to service it, then Lakeview and

Continued . . .

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as sub-servicer, collects payments on loans, issues monthly statements that identify all fees

and charges it has collected and imposed on borrowers’ mortgage accounts since the last

periodic statement, and communicates directly with borrowers. Nationstar charges late fees

and applies borrower payments to principal and interest, escrow amounts, and fees and

other assessed charges based on a “predetermined sequence.” Nationstar directs borrowers

to change the mortgagee clause on their homeowners’ insurance premiums to list it as the

“mortgagee.” And it performs escrow analyses on loans and has the authority to adjust the

monthly loan payment amount to match. The record supports the finding that Lakeview

and Nationstar possess authority to act under CL §§ 12-1003 and 12-1008.

We see no reasonable basis on which to conclude that Lakeview and Nationstar hold

rights to act on the loan but lack the obligations that come with that authority, especially

obligations that flowed with that authority at its inception. Cf. Kemp, 476 Md. at 163, 172,

187–88 (rejecting loan servicer’s position that its principal could act as “lender” in charging

inspection fees under deed of trust but not be a “lender” subject to its restrictions on

imposing those fees). Nor do they explain who would be responsible for violating

provisions like CL §§ 12-1003 and 12-1008 if not them. See section 19 of deed of trust

above (“If the Note is sold and thereafter the Loan is serviced by a Loan Servicer other

than the purchaser of the Note, the mortgage loan servicing obligations to Borrower will

remain with the Loan Servicer or be transferred to a successor Loan Servicer . . . .”).

Nationstar are servicing the loan on behalf of the investment trust, making them agents of
the assignee. Cf. Kemp, 476 Md. at 188.

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Lakeview and Nationstar are subsequent holders of rights and obligations under a

note governed by CLEC. This conclusion squares with the legislative intent that assignees

avert unforgiving penalties for unintentional errors committed by them or their assignor,

and it finds support in the undisputed facts of record. Moreover, CLEC is a remedial statute

that we construe liberally to effectuate its broad remedial purpose, Bolling, 251 Md. App.

at 609 (citing Cathey v. Bd. of Rev., Dept. of Health and Mental Hygiene, 422 Md. 597,

605 (2011)), and that construction would be difficult to accomplish if we were to accept

the proposition that an assignee of servicing rights is exempt from the statutory

requirements.

First, that would seem to place Lakeview and Nationstar in a more favorable legal

position than their assignors, an outcome that would be inconsistent with the established

principle that an assignee inherits the same rights and responsibilities as their assignor. See

Lyles v. Santander Consumer USA Inc., 263 Md. App. 583, 608 (2024) (citation omitted),

cert. granted, 490 Md. 81 (2025); Kemp, 476 Md. at 156. The parties do not dispute that

NFM and Ms. Baxter elected CLEC to govern the loan and that NFM was subject to the

statute. Because the original holder of servicing rights to the loan was subject to CLEC,

Lakeview and Nationstar fall within its purview as well. Cf. Patton v. Wells Fargo Fin.

Md., Inc., 437 Md. 83, 114 (2014) (By accepting assignment of a contract that elected to

be governed by CLEC, assignee “expressly agreed to be governed by CLEC in the exercise

of its rights under the contract.”). Second, embracing Lakeview and Nationstar’s position

would mean that statutory violations would go unchecked and borrowers’ protections from

unwarranted interest charges, fees, and other collection costs would evaporate as soon as a

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credit grantor transferred any of its loan responsibilities to a third party. We doubt that the

General Assembly intended to invite this outcome. See Kemp, 476 Md. at 170 (“It is

important to consider the consequences of alternative interpretations of the statute, in order

to avoid constructions that are ‘illogical or nonsensical, or that render a statute

meaningless’” (quoting Couret-Rios v. Fire & Police Emps. Ret. Sys., 468 Md. 508, 528

(2020))); B.F. Saul Company, 250 Md. at 722 (Courts should endeavor to construe statutes

in a way that avoids “oppressive, absurd, or unjust consequences”); Estate of Brown, 261

Md. App. at 422 (“The General Assembly is no doubt aware that loans and mortgages are

frequently assigned from their original lenders to third parties. Thus, we see no obvious

reason why the General Assembly would abandon all concern about the fitness of the credit

grantor as soon as the plan is assigned.”). In light of the undisputed facts in this record, we

hold that the circuit court’s conclusion that Lakeview and Nationstar are credit grantors

under CLEC was correct legally.

B. CLEC Applies To Nationstar’s Convenience Fees And To Ms.
Baxter’s Loan Because CLEC Regulates The Grantor-Borrower
Relationship And The Fee Limitations In CL § 12-1005(d) Apply
To The Loan Regardless Of The Partial Exemption In CL
§ 12-1005(a)(3)

Lakeview and Nationstar argue next that CLEC doesn’t apply to Nationstar’s

convenience fees because Nationstar assessed them after the loan originated. They contend

that CLEC seeks to regulate fees imposed at loan origination and that CL §§ 12-1002 and

12-1005 support their interpretation. As a result, they assert that Nationstar’s convenience

fees fall beyond CLEC’s reach because they were not assessed when NFM extended credit

to Ms. Baxter. Ms. Baxter counters that CLEC applies throughout the entire loan period

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and bars the imposition of any fee not agreed in writing between the borrower and the

original lender. We hold that CLEC prohibits credit grantors from assessing unauthorized

fees at any point during the life of the loan.

Any credit grantor may “offer and extend closed end credit to a borrower,” and in

connection with the loan, “may charge and collect the interest and other charges permitted

by [CLEC] and may take any security as collateral . . . .” CL § 12-1002. Generally, they

may charge and collect “loan fees, points, finder’s fees, and other charges,” so long as the

sum of the charges do not exceed ten percent of the loan amount. CL § 12-1005(a)(1).

Additionally, CL § 12-1005 allows credit grantors to charge and collect reasonable service

fees or reimbursements for expenses incurred:

In addition to interest at a periodic percentage fate or rates
permitted by §§ 12-1003 and 12-1004 of this subtitle, a credit
grantor may charge and collect:

***

(b) Service fees. — Reasonable fees for services rendered or
for reimbursement of expenses incurred in good faith by the
credit grantor or its agents in connection with the loan,
including:

(1) Commitment fees;

(2) Official fees and taxes;

(3) Premiums or other charges for any guarantee or insurance
protecting the credit grantor against the borrower’s default or
other credit loss;

(4) Costs incurred by reason of examination of title, inspection,
recording, and other formal acts necessary or appropriate to the
security of the loan;

(5) Filing fees;

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(6) Attorney’s fees; and

(7) Travel expenses.

CL § 12-1005(b). Within this category, credit grantors can only assess four types of service

fees and expense reimbursement charges to consumer borrowers like Ms. Baxter:

[Loans to consumer borrowers. —] (1) in the case of a loan to
a consumer borrower, a fee permitted under [CL § 12-1005(b)]
may not be charged and collected unless:

(i) The agreement, note, or other evidence of the loan permits;

(ii) The fee is an actual and verifiable expense of the credit
grantor not retained by him; and

(iii) Limited to charges for:

1. Attorney’s fees for services rendered in connection with the
preparation, closing, or disbursement of the loan;
2. Any expense, tax, or charge paid to a governmental agency;
3. Examination of title, appraisal, or other costs necessary or
appropriate to the security of the loan; and
4. Premiums for any insurance coverage permitted under this
subtitle.
(2) Notwithstanding [the prohibition on prepayment charges],
fees and charges permitted under this subsection may be
imposed, charged, and collected at any time.

CL § 12-1005(d). CLEC allows credit grantors to impose, charge, and collect these limited

charges “at any time.” CL § 12-1005(d)(2). Additionally, the statute permits credit grantors

to charge delinquent or late fees, CL § 12-1008(a), subject to certain limitations for

consumer borrowers. Id. § 12-1008(b) (“In the case of a loan to a consumer borrower, no

late or delinquency charge may be charged unless the agreement, note or other evidence of

the loan permits. No more than 1 late or delinquency charge may be imposed for any single

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payment or portion of payment . . . .”). CLEC prohibits credit grantors from charging

inspection fees on loans to consumer borrowers that are secured by a lien in residential real

property unless certain exceptions apply. CL § 12-1027. And if a credit grantor knowingly

violates the statute, they must pay the borrower “3 times the amount of interest, fees, and

charges collected in excess of that authorized by” the statute. CL § 12-1018(b).

Together, these provisions define the universe of fees and charges that a credit

grantor can assess relative to a loan made under CLEC. Lakeview and Nationstar’s focus

on the timing of the fee assessment is a distinction without a difference because any fee

outside the statutory scope of permissible practices is unauthorized anyway. See Senate

Bill 347—Fiscal and Policy Note Credit Regulation—Credit Grantor Provisions—Fees,

Charges, and Penalties (2008 General Assembly) in legislative file for Senate Bill 347 at

11 (“Credit grantors of open-and closed-ended credit plans may not impose fees or charges

on a consumer borrower in addition to the interest or finance charges permitted by statute,

with some specific exceptions” like, for example, the expenses listed in CL

§ 12-1005(b)(1)–(7)); Santander, 478 Md. at 603 (the amount that is trebled when

calculating the penalty for knowing violations “are those amounts collected that are not

authorized under CLEC.”). In other words, even if CLEC only gives credit grantors the

authority to charge and collect loan origination fees, that still means that Lakeview and

Nationstar assessed a post-origination fee beyond what the statute authorizes.

The fee restrictions in CL § 12-1005 continue throughout the life of the loan because

CLEC, at its inception and to this day, regulates a relationship between the credit grantor

and the borrower that isn’t confined to one moment in time. To the contrary, the statute

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regulates the credit grantor’s conduct until the loan is satisfied. See generally CL

§§ 12-1003, 12-1004, 12-1005, 12-1008, 12-1011, 12-1027. From our review of the

statutory scheme, CLEC endeavors to protect consumer borrowers by ensuring that they

know what fees and charges they will have to pay upfront and what fees they might have

to pay later. See e.g. CL §§ 12-1005(a)(2) (special conditions for charging consumer

borrowers loan fees, points, and finder’s fees), 12-1005(d) (special limitations for the kinds

of expense reimbursement charges that may be assessed on consumer borrowers),

12-1008(b) (special restrictions on delinquency fee charges for consumer borrowers).

Further, the statute binds a credit grantor’s practices to the terms of the underlying loan

agreement consistently throughout its provisions. See id. Moreover, Lakeview and

Nationstar haven’t pointed to (and can’t point to) any source of authority under CLEC or

the note that supports the assessment of convenience fees.

Lastly, Lakeview and Nationstar argue that the circuit court erred in concluding that

CLEC applied to the loan. They maintain that the loan is an extension of credit secured by

a first lien on a residential property and that CLEC exempts those kinds of credit extension

agreements from its fee limitations. In response, Ms. Baxter points to CL § 12-1005(d), a

provision that allows credit grantors to charge and collect fees from consumer borrowers

if the loan agreement so permits. We agree that CLEC, through CL § 12-1005(d), applies

to the loan.

As stated above, credit grantors can impose “loan fees, points, finder’s fees, and

other charges” so long as they don’t exceed ten percent of the original loan amount. CL

§ 12-1005(a)(1). Generally, credit grantors can’t assess these fees on consumer borrowers

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unless they have secured the loan with a lien on residential real property. CL

§ 12-1005(a)(2)(ii). If that’s the case, a credit grantor can charge a consumer borrower

“loan fees, points, finder’s fees, and other charges,” but only if they disclose the charges in

accordance with the federal Truth in Lending Act, if the charges are a term of the credit

agreement, and if the borrower agrees to pay them in writing. CL § 12-1005(a)(2)(i), (iii).

The statute exempts a credit grantor from complying with these restrictions if the loan is

secured by a first lien on residential real property. CL § 12-1005(a)(3)(i).

It is undisputed that the loan in this case falls into that category. Even so, Lakeview

and Nationstar’s argument fails. CLEC exempts first liens on residential real property from

the fee limits in CL § 12-1005(a)(1) and (a)(2). CL § 12-1005(a)(3). But it doesn’t relieve

Lakeview or Nationstar of the fee limitations mandated by CL § 12-1005(b) and (d), which

cover service fees, expense reimbursement charges, and loans to consumer borrowers. The

parties don’t dispute that Ms. Baxter is a consumer borrower under CLEC. Accordingly,

the fee limitations for consumer borrowers in CL § 12-1005(d) still apply to the loan and

define the extent of the additional fees and charges that Lakeview and Nationstar can assess

in connection with the loan. On the undisputed facts of this case, we hold that CLEC applies

to the controverted convenience fees and to the loan, and the circuit court’s conclusion to

that effect was correct legally.

JUDGMENT OF THE CIRCUIT COURT
FOR ANNE ARUNDEL COUNTY
AFFIRMED. APPELLANT TO PAY
COSTS.

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