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Secondary Mortgage Law: Balloon Payment - Maryland Courts - courts state md

Secondary Mortgage Law: Balloon Payment - Maryland Courts - courts state md 2025

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The case of Drew v. First Guaranty Mortgage Corporation addresses whether Maryland's Secondary Mortgage Loan Law mandates that lenders disclose in writing the borrower's right to request a one-time postponement of a balloon payment at maturity. The court held that Section 12-404(c)(2) does not require such written disclosure, concluding that the absence of an express requirement for written notice indicates legislative intent to exclude it. The decision emphasizes the interpretation of statutory language and legislative history regarding consumer protection in mortgage transactions.

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Are balloon payments a good idea?

Balloon payments are not great for the every day buyer. Essentially deferring a one off large payment in the future on the hope that you will be disciplined and have the funds available when the time comes. Suggest having a higher loan payment (gonna need to save the money anyway) and forego the balloon.

What is a disadvantage of a balloon payment?

Although a balloon-payment option can make your monthly payments more affordable, youre taking on extra debt to buy an asset that is depreciating the value of your vehicle may end up less than the amount still owed.

Are balloon payment mortgages a good idea?

No, balloon payments are usually a bad idea if you are buying a home that you plan to live in for any length of time. They add a level of risk and variability to home ownership that doesnt make sense. If you cant afford the payments on a fixed rate mortgage, you cant afford the home and should walk away.

Can a qualified mortgage have a balloon payment?

In addition to the requirements that apply to all four types of QMs no negative amortization, no interest-only payments, no loan terms in excess of 30 years, and limitations on points and fees General QMs may not have balloon payment features.

Are mortgage prepayment penalties legal in Maryland?

Prepayment penalties may be permissible under certain Maryland law and are subject to certain limitations. However, many Maryland laws do not permit prepayment penalties. The language in the contract governs and must be reviewed carefully. A prepayment penalty may be allowed depending on the contract.

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Can you make a balloon payment on a mortgage?

A balloon payment on a mortgage is a large, one-time payment at the end of the loan term. If you have a mortgage with a balloon payment, your payments may be lower in the years before the balloon payment is due, but you could owe a big amount at the end of your loan.

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