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The Appellate Court of Maryland delivered a consequential interpretation of the Credit Grantor Closed End Credit Provisions ("CLEC") in Lakeview Loan Servicing LLC & Nationstar Mortgage LLC v. Tonda M. Baxter, No. 691, September Term 2024 (filed Nov. 25, 2025). The Court held that mortgage loan servicers who acquire servicing rights under a CLEC-governed loan qualify as "credit grantors" and are subject to CLEC’s fee restrictions throughout the life of the loan. The court further held that CLEC prohibits unauthorized "convenience fees" assessed post-origination, even on firstlien residential mortgage loans.

The case arose from Nationstar’s practice of charging borrowers optional phone-payment convenience fees of $14 for automated payments and $19 for live-agent payments after it became sub-servicer on Ms. Baxter’s mortgage loan. Although the loan was originated by a different lender, expressly elected CLEC, and was secured by a first lien on residential property, Ms. Baxter alleged that the fees violated CLEC’s strict limitations on permissible charges. The circuit court agreed, and the appellate court affirmed.

The servicers’ principal argument was jurisdictional in nature: They contended that CLEC regulates only originating lenders or assignees of the note itself, not entities that merely service loans. The court rejected that distinction. Focusing on CLEC’s statutory definition of "credit grantor," which includes "any person who acquires or obtains the assignment of an agreement for an extension of credit," the court held that an assignment of servicing rights is sufficient to bring a servicer within CLEC’s scope. The opinion emphasized that Lakeview and Nationstar held, and exercised, core rights under the debt instrument: collecting payments, assessing late charges, applying payments, managing escrow, and communicating directly with the borrower — and with those rights come corresponding statutory obligations.

The court’s reasoning was grounded in statutory text, legislative history, and practical consequences. It found that CLEC’s remedial structure, including severe forfeiture penalties and limited cure provisions, would be incoherent if entities empowered to charge and collect fees could evade regulation simply because they did not originate the loan or hold recorded title to the note. The General Assembly’s 1990 expansion of the "credit grantor" definition was intended to cover "any subsequent holder of the debt instrument," a phrase the court interpreted broadly to include those who hold enforceable rights under the loan, whether as owners, assignees, or agents.

Equally significant is the court’s holding on fee timing. Lakeview and Nationstar argued that CLEC regulates only origination-stage fees and does not reach post-origination servicing charges that a borrower voluntarily elects to incur. The court flatly rejected that position. The Court found that CLEC regulates the ongoing credit relationship, not a single moment in time, and strictly defines the universe of fees a credit grantor may impose, and that "convenience fees" for payment methods are not among them. Absent express statutory authorization or clear permission in the loan documents consistent with CLEC, such fees are impermissible, regardless of when they are assessed.

The court also addressed the common industry assumption that first-lien residential mortgage loans are largely exempt from CLEC fee restrictions. While CLEC does exempt such loans from certain origination-fee caps, that exemption does not extend to service fees and consumer-borrower protections under § 12-1005(b) and (d). Those provisions continue to apply and sharply limit the types of reimbursable expenses a servicer may charge.

For mortgage loan servicers, the implications are substantial. The decision confirms that CLEC compliance is not limited to loan origination or note ownership. Servicers operating in Maryland must assume that they stand in the shoes of the original credit grantor for CLEC purposes and that unauthorized fees — even small, optional, or widely used convenience charges — can trigger draconian remedies, including forfeiture of all interest and charges. Compliance programs, fee matrices, and vendor arrangements should be reassessed accordingly. The court’s message is clear: In Maryland, CLEC follows the loan and includes the servicer.

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