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Maryland Commissioner of Financial Regulation Asserts Action against Non-Maryland State Bank for Lending Without State License
By: Latif Zaman
On January 21, 2021, the Maryland Commissioner of Financial Regulation filed an administrative charge letter against an FDIC-insured, out-of-state, state chartered bank and its non-bank service providers in connection with the bank s consumer lending platform. Among other allegations, the Commissioner asserted that the bank was required to hold state lending licenses to originate loans to Maryland residents, despite the fact that Maryland law apparently prohibits the Commissioner from licensing banks. The defendants recently removed the case from the Maryland Office of Administrative Hearings to the U.S. District Court for the District of Maryland.
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A Maryland administrative action recently removed to the state’s federal district court illustrates how Maryland law continues to present challenges for the bank partner structure used by many lenders.
Last month, Bank of Missouri, an FDIC-insured, Missouri state-chartered bank, and Atlanticus Service Corporation and Fortiva Financial, LLC, the Bank’s non-bank service providers, removed an administrative matter filed against them in January 2021 by the Maryland Department of Labor, Office of the Commissioner of Financial Regulation (OCFR) alleging that the Bank and Atlanticus/Fortiva violated Maryland law by failing to hold required Maryland lending and other licenses. According to the factual allegations in