<section article="gcl" article_name="Commercial Law" number="12-101" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Borrower” means a person who borrows money under this subtitle.</text> </level> <level label="c"> <text>“Commercial loan” means a loan which is made:</text> <level label="1"> <text>Solely to acquire or carry on a business or commercial enterprise; or</text> </level> <level label="2"> <text>To any business or commercial organization.</text> </level> </level> <level label="d"> <text>“Effective rate of simple interest” means the yield to maturity rate of interest received or to be received by a lender on the face amount of a loan, computed in accordance with § 12–107 of this subtitle.</text> </level> <level label="e"> <text>“Interest” means, except as specifically provided in § 12–105 of this subtitle or § 12–1501 of this title, any compensation directly or indirectly imposed by a lender for the extension of credit for the use or forbearance of money, including any loan fee, origination fee, service and carrying charge, investigator’s fee, time–price differential, and any amount payable as a discount or point or otherwise payable for services.</text> </level> <level label="f"> <text>“Lender” means a licensee or a person who makes a loan subject to this subtitle.</text> </level> <level label="g"> <text>“Licensee” means a person that is required to be licensed to make loans subject to this subtitle, regardless of whether the person is actually licensed.</text> </level> <level label="h"> <level label="1"> <text>“Loan” means a loan or an advance of money or credit subject to this subtitle, regardless of whether the loan or advance of money or credit is or purports to be made under this subtitle.</text> </level> <level label="2"> <text>“Loan” does not include:</text> <level label="i"> <text>A loan or advance of money or credit subject to Subtitle 3 of this title, unless a written election is made under § 12–101.1 of this subtitle;</text> </level> <level label="ii"> <text>A plan or loan for which a written election is made under Subtitle 3, Subtitle 4, Subtitle 9, or Subtitle 10 of this title; or</text> </level> <level label="iii"> <text>An installment sale agreement as defined in § 12–601 of this title.</text> </level> </level> </level> <level label="i"> <text>“Mobile home” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="j"> <text>“Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> <level label="k"> <text>“Point” means a fee, premium, bonus, loan origination fee, service charge, or any other charge equal to 1 percent of the principal amount of a loan which is charged by the lender at or before the time the loan is made as additional compensation for the loan.</text> </level> <level label="l"> <text>“Simple interest” means interest charged on the principal amount loaned to the borrower.</text> </level> <level label="m"> <text>“Stated rate of interest” means the annual rate of interest stated in percentage which appears on the face of the bond, draft, mortgage, deed of trust, security agreement, promissory note, or other instrument which evidences the indebtedness.</text> </level> <level label="n"> <level label="1"> <text>“Tip” means a voluntary payment by a consumer to a lender or third party who provides or arranges a loan:</text> <level label="i"> <text>Made at the time of the transaction in recognition of the lender’s or third party’s provision or arrangement of the loan;</text> </level> <level label="ii"> <text>Made at the sole discretion of the consumer; and</text> </level> <level label="iii"> <text>That does not affect the willingness of the lender or third party to provide or arrange the loan or any future loan or affect the terms of any loan.</text> </level> </level> <level label="2"> <text>“Tip” does not include any payment made by a consumer for expedited processing or disbursement or for a membership, registration, or subscription fee.</text> </level> </level> <level label="o"> <text>“Usury” means the charging of interest by a lender in an amount which is greater than that allowed by this subtitle.</text> </level> <level label="p"> <text>“Wages” means all remuneration paid to any employee for the employee’s employment, including the cash value of all remuneration paid in any medium other than cash.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-101.1" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>On or after January 1, 2019, a lender may, at the lender’s option, elect to make a loan to any borrower either under this subtitle or as otherwise authorized by applicable law.</text> </level> <level label="b"> <text>If a lender makes a written election in the agreement, note, or other evidence of the loan specifying that this subtitle will govern the loan, Subtitles 3, 4, 5, 6, 9, and 10 of this title do not apply to the loan.</text> </level> <level label="c"> <text>If a lender that makes or contracts to make a loan does not make a written election under this subtitle or Subtitle 3, Subtitle 4, Subtitle 9, or Subtitle 10 of this title, this subtitle still applies to the loan if the loan is:</text> <level label="1"> <text>For an amount over $25,000; or</text> </level> <level label="2"> <level label="i"> <text>For an amount of $25,000 or less; and</text> </level> <level label="ii"> <text>Not subject to Subtitle 3 of this title.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-102" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <text>Except as otherwise provided by law, a person may not charge interest in excess of an effective rate of simple interest of 6 percent per annum on the unpaid principal balance of a loan.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-103" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <level label="1"> <text>Except as provided in subsections (b), (c), (d), (e), and (f) of this section, a lender may charge interest at an effective rate of simple interest not in excess of 8 percent per year on the unpaid principal balance of a loan if there is a written agreement signed by the borrower which sets forth the stated rate of interest charged by the lender.</text> </level> <level label="2"> <text>If a loan made under paragraph (1) of this subsection is secured by the pledge of collateral which is a certificate of deposit held by the borrower, the lender may charge interest at a rate not to exceed 2 percent in excess of the rate of interest payable on the certificate of deposit.</text> </level> <level label="3"> <text>If a loan made under paragraph (1) of this subsection is secured by the pledge of collateral which is other than a savings account or if such loan is unsecured, the lender may charge a rate of interest not in excess of 18 percent. However, on a loan made on or after July 1, 1982, a lender may charge an effective rate of simple interest not in excess of 24 percent per year on the unpaid principal balance, provided that:</text> <level label="i"> <text>If the loan is a renewal or refinancing of a loan made prior to July 1, 1982, the lender complies with § 12–116 of this subtitle;</text> </level> <level label="ii"> <text>If the loan includes a provision for a rate of interest which may be adjusted by the lender during the term of the loan, the lender complies with § 12–118 of this subtitle;</text> </level> <level label="iii"> <text>Upon the borrower’s default, if the loan is secured by personal property, the lender complies with § 12–115 of this subtitle concerning repossession and redemption of the goods securing the loan;</text> </level> <level label="iv"> <text>If the loan is for the purchase of consumer goods, the loan contract complies with § 12–117 of this subtitle; and</text> </level> <level label="v"> <text>The loan does not include a balloon payment, unless payment in full is due on demand or in one year or less.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>A lender may charge interest at any effective rate of simple interest on the unpaid principal balance of a loan if:</text> <level label="i"> <text>There is a written agreement signed by the borrower which sets forth the stated rate of interest charged by the lender;</text> </level> <level label="ii"> <text>The loan is secured by a first mortgage or first deed of trust on any interest in residential real property;</text> </level> <level label="iii"> <text>There is no prepayment penalty in connection with the loan;</text> </level> <level label="iv"> <text>The loan is made and the mortgage or deed of trust is executed after the effective date of this section;</text> </level> <level label="v"> <text>The loan is not a refinancing of a loan secured by a first mortgage or first deed of trust on any interest in residential real property unless:</text> <level label="1"> <text>The lender is a banking institution, a national banking association, a federal savings bank, a federal or State savings and loan association, or a federal or State credit union; or</text> </level> <level label="2"> <text>The loan is subject to the provisions of § 501(a)(1) of the Depository Institutions Deregulation and Monetary Control Act of 1980, Public Law 96–221, 94 Stat. 161; and</text> </level> </level> <level label="vi"> <text>The lender does not require payment of any interest in advance except any points permitted under this subtitle.</text> </level> </level> <level label="2"> <text>For purposes of this subsection, “refinancing” means increasing or altering the balance due, the term, or the interest rate of an existing loan or paying off an existing loan whether or not the lender also made the existing loan.</text> </level> <level label="3"> <level label="i"> <text>If the loan is a refinancing, the lender is limited as to the interest, fees and other charges made in connection with the refinanced loan to those provided in Subtitle 4 of this title.</text> </level> <level label="ii"> <text>The provisions of subparagraph (i) of this paragraph do not apply to:</text> <level label="1"> <text>A purchase money loan;</text> </level> <level label="2"> <text>A lender refinancing an existing loan if the lender is a banking institution, a national banking association, a federal savings bank, a federal or State savings and loan association, a federal or State credit union, or a credit grantor refinancing the loan pursuant to Subtitle 9 or Subtitle 10 of this title; or</text> </level> <level label="3"> <text>A loan that is subject to the provisions of § 501(a)(1) of the Depository Institutions Deregulation and Monetary Control Act of 1980, Public Law 96–221, 94 Stat. 161.</text> </level> </level> </level> <level label="4"> <text>A lender making a mortgage loan as defined under § 11–501 of the Financial Institutions Article shall be subject to the licensing provisions of Title 11, Subtitle 5 of the Financial Institutions Article.</text> </level> </level> <level label="c"> <level label="1"> <text>Subject to paragraph (2) of this subsection, a lender may charge interest at an effective rate of simple interest not in excess of 18 percent per year on the unpaid principal balance of the loan. However, on a loan made on or after July 1, 1982, a lender may charge an effective rate of simple interest not in excess of 24 percent per year on the unpaid principal balance of the loan provided that:</text> <level label="i"> <text>If the loan is a renewal or refinancing of a loan made prior to July 1, 1982, the lender complies with § 12–116 of this subtitle;</text> </level> <level label="ii"> <text>If the loan includes a provision for a rate of interest which may be adjusted by the lender during the term of the loan, the lender complies with § 12–118 of this subtitle;</text> </level> <level label="iii"> <text>Upon the borrower’s default, if the loan is secured by personal property, the lender complies with § 12–115 of this subtitle concerning repossession and redemption of the goods securing the loan;</text> </level> <level label="iv"> <text>If the loan is for the purchase of consumer goods, the loan contract complies with § 12–117 of this subtitle; and</text> </level> <level label="v"> <text>The loan does not include a balloon payment, unless payment in full is due on demand or in 1 year or less.</text> </level> </level> <level label="2"> <text>The rates permitted by this subsection may be charged only if:</text> <level label="i"> <text>There is a written agreement signed by the borrower which sets forth the stated rate of interest charged by the lender;</text> </level> <level label="ii"> <text>The loan is not secured by a first mortgage or first deed of trust on real property;</text> </level> <level label="iii"> <text>The borrower is required to repay the loan in periodic installments, which may be regular, irregular, equal or unequal installments;</text> </level> <level label="iv"> <text>The loan is not secured by a confession of judgment or power of attorney to the lender or to a third person to confess judgment or appear for the borrower in a judicial proceeding;</text> </level> <level label="v"> <text>The loan is not secured by an instrument in which blanks are left to be filled after execution;</text> </level> <level label="vi"> <text>The loan is not secured by a note, promise to pay, or security instrument which does not state:</text> <level label="1"> <text>The principal amount of the loan;</text> </level> <level label="2"> <text>A schedule of payments or a description of the schedule; and</text> </level> <level label="3"> <text>The agreed amount or rate of interest, charges, and fees to be charged;</text> </level> </level> <level label="vii"> <text>The loan is not secured by real property;</text> </level> <level label="viii"> <text>The loan is not secured by personal property for any loan under $700 in value or amount; and</text> </level> <level label="ix"> <text>The loan is not fully secured by investment securities or savings accounts.</text> </level> </level> <level label="3"> <text>If interest on a loan made under this subsection is precomputed, and if the effective rate of simple interest required to be disclosed under § 12–106 of this subtitle is exceeded by reason of a prepayment of the loan, the lender shall refund the excess to the borrower or credit it to any unpaid principal balance owed by him.</text> </level> <level label="4"> <text>A lender who makes a loan under this subsection is subject to the licensing provisions of Title 11, Subtitle 3 of the Financial Institutions Article.</text> </level> </level> <level label="d"> <text>A lender may charge interest at any rate not in excess of that permitted by federal law if the loan is:</text> <level label="1"> <text>Secured by a mortgage or deed of trust;</text> </level> <level label="2"> <text>Insured or guaranteed in full or in part by the Federal Housing Administration, Veterans Administration, or any other federal agency or instrumentality; and</text> </level> <level label="3"> <text>Made in full compliance with applicable federal law.</text> </level> </level> <level label="e"> <level label="1"> <text>A lender may charge interest at any rate if the loan is:</text> <level label="i"> <text>A loan made to a corporation;</text> </level> <level label="ii"> <text>A commercial loan in excess of $15,000 not secured by residential real property; or</text> </level> <level label="iii"> <text>A commercial loan in excess of $75,000 secured by residential real property.</text> </level> </level> <level label="2"> <text>Commercial loans to individuals secured by residential real property shall comply with the provisions of § 12–407.1 of this article.</text> </level> <level label="3"> <text>As used in this subsection, residential real property is owner–occupied property having a dwelling on it designated principally as a residence with accommodations for not more than 4 families.</text> </level> </level> <level label="f"> <text>A broker or dealer, who is registered under the Securities Exchange Act of 1934, as amended, and under Title 11 of the Corporations and Associations Article, and who extends credit to a customer on pledged securities, may charge the customer on his debit balance interest at any rate if:</text> <level label="1"> <text>The debit balance is payable on demand; and</text> </level> <level label="2"> <text>The debit balance is secured by securities as defined in § 11–101(s) of the Corporations and Associations Article.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-104" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <text>Interest at a rate otherwise allowed by this subtitle is not usurious solely because of any one or more of the following:</text> <level label="1"> <text>For a period of less than one year, interest is calculated on the premise that there are 360 days in the year and 30 days in each month, which may include the date of the loan and the date due or paid;</text> </level> <level label="2"> <text>Interest on a periodic payment of principal is computed to the due date; or</text> </level> <level label="3"> <text>Except for installment loans made under § 12-103(c) of this subtitle:</text> <level label="i"> <text>Interest-drop calculations are made on sums not in excess of multiples of $100, without regard to interim partial payments; or</text> </level> <level label="ii"> <text>Interest-drop calculations are made on periods not in excess of one year, without regard to interim partial payments.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-105" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>In this section, “mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="b"> <text>Fees and charges collected at the direction of and actually paid to a government or governmental agency may be collected and are not interest under this subtitle.</text> </level> <level label="c"> <text>Except as provided in subsection (d) of this section, if the loan contract provides for them, the following fees and charges also may be collected and are not interest under this subtitle:</text> <level label="1"> <text>A service charge for investigation and the continued servicing of collateral for a commercial loan secured by inventory or accounts receivable;</text> </level> <level label="2"> <text>A service charge made by a broker or dealer dealing in investment securities if:</text> <level label="i"> <text>Money is advanced on the security of pledged investment securities; and</text> </level> <level label="ii"> <text>Services are rendered in the collection, crediting, and disbursement of income on the investment securities and in the furnishing of income tax and other information in connection with that income;</text> </level> </level> <level label="3"> <text>A delinquent or late charge of the greater of $2 or 5 percent of the total amount of any delinquent or late periodic installment of principal and interest, if:</text> <level label="i"> <text>The delinquency has continued for at least 15 calendar days; and</text> </level> <level label="ii"> <text>A delinquent or late charge has not already been charged for the same delinquency; and</text> </level> </level> <level label="4"> <text>A prepayment charge or penalty on a prepayment of the unpaid principal balance of the loan, if the loan is secured by a home, by a combination of home and business property, or by agricultural property, or if the loan is a commercial loan not in excess of $15,000, provided that the charge or penalty:</text> <level label="i"> <text>May be imposed only on prepayments made within 3 years from the date the loan is made; and</text> </level> <level label="ii"> <text>May not exceed an amount equal to 2 months’ advance interest on the aggregate amount of all prepayments made in any 12–month period in excess of one–third of the amount of the original loan.</text> </level> </level> </level> <level label="d"> <text>In connection with a mortgage loan, a lender may not require or authorize the imposition of a penalty, fee, premium, or other charge in the event the mortgage loan is prepaid in whole or in part.</text> </level> <level label="e"> <text>The following charges, if actual expenses of the lender, also may be collected and, if not retained by him, are not interest under this subtitle:</text> <level label="1"> <text>Charges by the lender’s attorney for service rendered in connection with the preparation, closing, or disbursement of the loan;</text> </level> <level label="2"> <text>Charges for the payment of any property expense, tax, or governmental charge; and</text> </level> <level label="3"> <text>Charges for the payment of any premium and cost for insuring:</text> <level label="i"> <text>The lender against loss or liability on or in connection with the loan; or</text> </level> <level label="ii"> <text>The life or health of the borrower.</text> </level> </level> </level> <level label="f"> <text>Fees and charges otherwise includable as interest under this subtitle paid by a developer to the lender for the purpose of making permanent loans available to home purchasers are not interest under this subtitle. These fees and charges may not be charged to the home purchaser unless they are charged as interest and do not violate § 12–108 of this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-106" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>This section does not apply to any loan:</text> <level label="1"> <text>Described in § 12-103(e) of this subtitle; or</text> </level> <level label="2"> <text>Made under Title 18, Subtitle 10 of the Education Article.</text> </level> </level> <level label="b"> <level label="1"> <text>Before the execution of a loan contract under this title, the lender shall furnish to the borrower a written statement which sets forth:</text> <level label="i"> <text>The total principal amount of the loan and the total amount of finance charge as defined in the federal Truth in Lending Act to be paid, stated in dollars, except that on loans payable on demand, the total amount of finance charge to be paid shall be stated on a per diem basis;</text> </level> <level label="ii"> <text>The annual effective rate of simple interest charged, stated in percentage calculated to the nearest 0.2 percent; and</text> </level> <level label="iii"> <text>The itemized amount of payments in addition to interest payable to the lender in connection with the loan at the time the loan is made, stated in dollars.</text> </level> </level> <level label="2"> <text>If the loan is made to two or more borrowers, delivery of the statement to one borrower is sufficient, but a copy of the statement shall be furnished to each other borrower.</text> </level> <level label="3"> <text>Paragraphs (1)(i), (ii), and (iii) of this subsection do not apply to any loan subject to the disclosure provisions of the federal Truth in Lending Act, if the lender complies with the applicable disclosure provisions of the federal act and its regulations.</text> </level> <level label="4"> <text>A statement that complies with the applicable disclosure provisions of the federal Truth in Lending Act is sufficient to meet the requirements of this title.</text> </level> </level> <level label="c"> <text>At least annually and, on request of the borrower, at any other reasonable time or interval, a lender who receives scheduled monthly periodic payments on more than five loans secured by an interest in real property shall furnish to the borrower a written statement informing the borrower of the amount of:</text> <level label="1"> <text>Payments credited to reducing the principal;</text> </level> <level label="2"> <text>Payments credited to interest as defined in this subtitle; and</text> </level> <level label="3"> <text>The remaining unpaid principal balance.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-106.1" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>A person may not require a borrower, as a condition to receiving a loan, to make any false or misleading statement or characterization that a loan is a commercial loan under § 12–101(c), § 12–103(e), or § 12–105 of this subtitle or § 12–401(i)(3) of this title if the loan is not a commercial loan.</text> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, any person who willfully requires a borrower to make a false or misleading statement in violation of subsection (a) of this section, or who willfully procures such statement, knowing that it is false or misleading, shall forfeit to the borrower three times the amount of interest and charges contracted for or collected in excess of that permitted by law, in addition to any other penalty otherwise provided in this title.</text> </level> <level label="2"> <text>When a loan obtained by a borrower is not subject to restrictions imposed by law on the maximum amount of a finance charge and interest, any person who willfully requires a borrower to make a false or misleading statement in violation of subsection (a) of this section, or who willfully procures such statement, knowing that it is false or misleading, shall forfeit the finance charge or interest, brokerage fees, points, or any other charges or fees in addition to any other penalty otherwise provided in this title.</text> </level> <level label="3"> <text>This section may not affect the rebuttable presumption that the loan was made for commercial purposes.</text> </level> </level> <level label="c"> <text>If a written complaint for violation of this section is filed with the Consumer Protection Division of the Office of the Attorney General, the Office may investigate the complaint and hold a hearing in accordance with Title 13 of this article.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-107" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <text>If a charge or fee considered interest under this subtitle is charged at or before the inception of a loan contract, the effective rate of simple interest permitted to be charged by §§ 12-102 and 12-103 of this subtitle, and required to be disclosed by § 12-106 of this subtitle shall be determined in the same manner as if the fee or charge had not been charged, except that the principal of the loan used in determining the rate of interest is the face amount of the loan less the fee or charge.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-108" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>Except for a loan described in § 12–103(d) or (e) of this subtitle, a lender may not charge a borrower or any other person any point or fraction of a point.</text> </level> <level label="b"> <text>Notwithstanding the provisions of subsection (a) of this section, a lender may charge points on a mortgage loan which is not insured or guaranteed by an agency or instrumentality of the United States government if:</text> <level label="1"> <text>The loan is eligible for purchase by an agency or instrumentality of the United States government, or a subsidiary thereof, pursuant to the Emergency Home Purchase Assistance Act of 1974 (PL93–449) or any amendment to it, and is tendered in good faith for purchase pursuant to a commitment obtained by the lender from such an agency, instrumentality, or subsidiary; and</text> </level> <level label="2"> <text>The federal law, rules, or regulations under which the agency, instrumentality, or subsidiary is authorized to purchase the loan allows the payment of points, and the points charged and the interest rate on the loan are not in excess of those allowed under the federal program.</text> </level> </level> <level label="c"> <text>Notwithstanding the provisions of subsection (a) of this section, a lender may impose and collect, as a condition of making a loan, all fees, discounts, points, or other charges that lenders are permitted or required to impose, collect, or pay pursuant to a federal or Maryland law providing for a program of mortgage purchases or loans originated pursuant to a State or local governmental program of direct lending or mortgage purchase, or by any federal agency or instrumentality or subsidiary thereof, including, but not limited to, Government National Mortgage Association, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Federal Reserve Bank, Federal Home Loan Bank, and the Farmers Home Administration, provided that all of the following conditions are met:</text> <level label="1"> <text>The loan is eligible for purchase by, and is tendered in good faith, for purchase, pursuant to a commitment or offer to purchase by the federal, State, or local governmental agency, instrumentality, or subsidiary;</text> </level> <level label="2"> <text>The fees, discounts, points, or other charges imposed, and the interest rate on the loan, do not exceed those allowed by the applicable federal or Maryland law providing for the mortgage purchase program; and</text> </level> <level label="3"> <text>Not more than one point is charged to the borrower, unless the federal law specifies a higher limit on points which may be charged to the borrower.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-109" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Escrow account” means an expense or escrow account which tends to protect the security of a loan by the accumulation of funds for the payment of taxes, insurance premiums, water and sewer facilities assessments, or other expenses.</text> </level> <level label="3"> <text>“Lending institution” means a bank, savings bank, or savings and loan association doing business in Maryland.</text> </level> <level label="4"> <level label="i"> <text>“Water and sewer facilities assessment” means a fee or charge that is:</text> <level label="1"> <text>Assessed on an owner of residential real property that is served by public water or wastewater facilities for which deferred water or sewer charges have been established by a recorded covenant or declaration to cover or defray the cost of installing or maintaining during construction all or part of the public water or wastewater facilities constructed by the developer; and</text> </level> <level label="2"> <text>Paid to the lienholder of the lien recorded on the residential real property for public water and wastewater facilities.</text> </level> </level> <level label="ii"> <text>“Water and sewer facilities assessment” includes a front foot benefit fee or charge.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>A lending institution which lends money secured by a first mortgage or first deed of trust on any interest in residential real property and creates or is the assignee of an escrow account in connection with that loan shall pay interest to the borrower on the funds in the escrow account at an annual rate not less than the weekly average yield on United States Treasury securities adjusted to a constant maturity of 1 year, as published by the Federal Reserve in “Selected Interest Rates (Daily) – H.15”, as of the first business day of the calendar year.</text> </level> <level label="2"> <text>Interest on these funds shall be:</text> <level label="i"> <text>Adjusted, if applicable, as of the first day of each calendar year to reflect the rate to be paid during that year, as determined under paragraph (1) of this subsection;</text> </level> <level label="ii"> <text>Computed on the average monthly balance in the escrow account; and</text> </level> <level label="iii"> <text>Paid annually to the borrower by crediting the escrow account with the amount of interest due.</text> </level> </level> <level label="3"> <text>The lending institution shall annually provide the borrower with a statement of the escrow balance.</text> </level> </level> <level label="c"> <text>The provisions of this section do not apply to a lending institution which provides for the payment of taxes, insurance, water and sewer facilities assessments, or other expenses under the direct reduction method by which these expenses, when paid by the lender, are added to the outstanding principal balance of the loan.</text> </level> <level label="d"> <text>This section does not apply if the loan is purchased by an out–of–state lender through the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation and the out–of–state lender as a condition of purchase elects to service the loan. However, this section shall apply if the out–of–state lender sells the loan to a Maryland lender or places the loan with a Maryland lender for servicing.</text> </level> <level label="e"> <text>On request of a borrower, a lending institution that lends money secured by a first mortgage or first deed of trust on any interest in residential real property may, at the option of the lending institution, create an escrow account in connection with that loan solely for the payment of water and sewer facilities assessments.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-109.1" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>The provisions of this section do not apply to escrow accounts maintained in connection with loans described in § 12–103(e)(1) of this subtitle.</text> </level> <level label="b"> <text>Except in a foreclosure, release, or as provided in subsection (c) of this section, funds in any escrow account for use in paying taxes, insurance premiums, ground rents, and water and sewer facilities assessments may not be used to:</text> <level label="1"> <text>Reduce the principal; or</text> </level> <level label="2"> <text>Pay interest or other loan charges.</text> </level> </level> <level label="c"> <text>If there is periodically a balance in the escrow account that exceeds the amount provided for in the note, loan agreement, or security instrument, the borrower shall be given at least annually the option of:</text> <level label="1"> <text>Receiving a refund of the excess amount;</text> </level> <level label="2"> <text>Applying the excess amount to the payment of principal and interest; or</text> </level> <level label="3"> <text>Leaving the excess amount in the escrow account.</text> </level> </level> <level label="d"> <text>A refund of any excess amount shall be made:</text> <level label="1"> <text>Within 60 days after the receipt by the lender of the borrower’s request for a refund; or</text> </level> <level label="2"> <text>If the borrower has not notified the lender of the option chosen by the borrower under subsection (c) of this section, within 60 days after the date the lender mailed notice of the excess amount to the borrower.</text> </level> </level> <level label="e"> <level label="1"> <text>Subject to paragraph (3) of this subsection, if, after recalculating the amount that is required to be maintained in escrow under a first mortgage or first deed of trust on residential real property, a lender or a servicer of a loan determines that the amount that a borrower is required to pay must increase, the lender or servicer may not include, for a 1–year period after the determination is made, the amount of the increase in escrow payments in any calculation of the amount of interest or any fee due under the loan.</text> </level> <level label="2"> <text>This subsection may not be construed to limit the ability of a lender or a servicer of a loan to impose a late fee for any escrow payment that is due and not timely paid.</text> </level> <level label="3"> <level label="i"> <text>In this paragraph, “other expenses” does not include money required by a lender or a servicer of a loan for an escrow account cushion as permitted by the federal Real Estate Settlement Procedures Act.</text> </level> <level label="ii"> <text>A lender or a servicer of a loan may charge interest to a borrower on the amount of funds the lender or servicer advances to pay taxes, insurance premiums, or other expenses owed by the borrower in order to protect the security of the loan.</text> </level> <level label="iii"> <text>Interest may be charged by a lender or a servicer of a loan under subparagraph (ii) of this paragraph only if:</text> <level label="1"> <text>The lender or servicer advances its own funds because funds of the borrower were not available to pay the taxes, insurance premiums, or other expenses owed by the borrower;</text> </level> <level label="2"> <text>The need for the advance was not caused by an error of the lender or servicer in servicing the loan;</text> </level> <level label="3"> <text>The lender or servicer provides notice to the borrower that the advance was made and that interest will be charged on the advance;</text> </level> <level label="4"> <text>Interest does not begin to accrue until 60 days after notice has been provided to the borrower in accordance with item 3 of this subparagraph;</text> </level> <level label="5"> <text>Interest is charged only on the amount of funds actually advanced by the lender or servicer after the lender or servicer has used all available funds of the borrower to pay taxes, insurance premiums, or other expenses owed by the borrower; and</text> </level> <level label="6"> <text>The borrower is permitted to repay the advance as permitted by the federal Real Estate Settlement Procedures Act.</text> </level> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-109.2" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <level label="1"> <text>In this section the following terms have the meanings indicated.</text> </level> <level label="2"> <text>“Escrow account” has the meaning stated in § 12-109 of this subtitle.</text> </level> <level label="3"> <text>“Lender” includes a lender and assignee of a lender.</text> </level> <level label="4"> <text>“Mortgage” includes a mortgage and a deed of trust.</text> </level> </level> <level label="b"> <level label="1"> <text>Funds in any escrow account shall be kept separate from and may not be commingled with the funds of the lender.</text> </level> <level label="2"> <text>A lender may place escrow funds received in connection with more than one mortgage into a single escrow account.</text> </level> <level label="3"> <text>In the event of the bankruptcy of the lender, any escrow funds placed in any escrow account under this section may not be considered to be part of the bankrupt estate of the lender.</text> </level> </level> <level label="c"> <text>A lender may not impose a collection fee or service charge on the maintenance of an escrow account on a first mortgage.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-110" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <text>An assignment of wages is void if given as security for the payment or fulfillment of a usurious contract or the payment of the principal or interest on a usurious loan.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-111" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>This section does not apply to a loan subject to § 12–114.1 of this subtitle.</text> </level> <level label="b"> <text>A private action for usury under this subtitle may not be brought more than 6 months after the loan is satisfied.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-112" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>This section does not apply to a loan subject to § 12–114.1 of this subtitle.</text> </level> <level label="b"> <text>A claim or plea of usury is not available against a legal or equitable assignee, endorsee, or transferee of any bond, draft, mortgage, deed of trust, security agreement, promissory note, or other instrument or evidence of indebtedness, if he receives it for a bona fide and legal consideration without notice of any usury in its creation or subsequent assignment.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-113" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>Except as provided in subsection (b) of this section, a lender may not refuse to lend money to any person solely because of:</text> <level label="1"> <text>Geographic area or neighborhood; or</text> </level> <level label="2"> <text>Race, creed, color, age, sex, sexual orientation, gender identity, disability, marital status, handicap, or national origin.</text> </level> </level> <level label="b"> <text>A lender may refuse to make a loan:</text> <level label="1"> <text>On property outside a geographic area of the State in which the lender normally does business;</text> </level> <level label="2"> <text>To be used in a type of business or activity other than a type in connection with which the lender normally makes loans; or</text> </level> <level label="3"> <text>Because of a greater than normal risk, including one due to:</text> <level label="i"> <text>The presence of an airport;</text> </level> <level label="ii"> <text>An unusual drainage condition; or</text> </level> <level label="iii"> <text>Any other situation which causes a greater than normal risk of loss in a particular area.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-114" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>This section does not apply to a loan subject to § 12–114.1 of this subtitle.</text> </level> <level label="b"> <level label="1"> <text>Any person who violates the usury provisions of this subtitle shall forfeit to the borrower the greater of:</text> <level label="i"> <text>Three times the amount of interest and charges collected in excess of the interest and charges authorized by this subtitle; or</text> </level> <level label="ii"> <text>The sum of $500.</text> </level> </level> <level label="2"> <text>A claim or plea of usury is not valid if, within 30 days from the date the loan contract was executed, the lender:</text> <level label="i"> <text>Notifies the borrower and any other party to the loan contract that the loan was usurious; and</text> </level> <level label="ii"> <text>Agrees to modify it by substituting for the usurious rate of interest a legal rate of interest not exceeding the stated rate of interest.</text> </level> </level> </level> <level label="c"> <text>Any person who violates the disclosure provisions of § 12–106(b) and (c) of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000 or imprisonment not exceeding 1 year or both.</text> </level> <level label="d"> <text>Even if a loan document is executed outside of the State, this section is applicable if the loan is made to a resident of Maryland and is secured by property located within the State.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-114.1" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <level label="i"> <text>“Covered loan” means a loan subject to § 12–103(a)(3) or (c) of this subtitle, made for personal, family, or household purposes, regardless of whether the loan is or purports to be made under this subtitle.</text> </level> <level label="ii"> <text>“Covered loan” does not include:</text> <level label="1"> <text>A loan or an advance of money or credit subject to Subtitle 3 of this title, unless a written election is made under § 12–101.1 of this subtitle;</text> </level> <level label="2"> <text>A plan or loan for which a written election has been made under Subtitle 3, Subtitle 4, Subtitle 9, or Subtitle 10 of this title; or</text> </level> <level label="3"> <text>An installment sale agreement as defined in § 12–601 of this title.</text> </level> </level> </level> <level label="3"> <text>“Unlicensed person” means a person who is not:</text> <level label="i"> <text>Licensed in the State to make a covered loan; and</text> </level> <level label="ii"> <text>Exempt from licensing in the State.</text> </level> </level> </level> <level label="b"> <text>This section applies to a covered loan made to any person.</text> </level> <level label="c"> <level label="1"> <text>An unlicensed person may not make a covered loan.</text> </level> <level label="2"> <text>A person may not make a covered loan if the person directly or indirectly contracts for, charges, or receives a rate of interest, charge, discount, or other consideration that is greater than the amount authorized under State law.</text> </level> <level label="3"> <text>A person may not make a covered loan that violates the federal Military Lending Act.</text> </level> </level> <level label="d"> <level label="1"> <text>A covered loan made by an unlicensed person is void and unenforceable.</text> </level> <level label="2"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, a covered loan is void and unenforceable if a person contracts for a covered loan that has a rate of interest, charge, discount, or other consideration greater than the amount authorized under State law.</text> </level> <level label="ii"> <text>A covered loan is not void and unenforceable if:</text> <level label="1"> <text>A clerical error or mistake resulted in the rate of interest, charge, discount, or other consideration being greater than the amount authorized under State law; and</text> </level> <level label="2"> <text>A person corrects the error or mistake before the first payment is due under the loan.</text> </level> </level> </level> <level label="3"> <text>A covered loan that violates the federal Military Lending Act is void and unenforceable.</text> </level> <level label="4"> <text>With respect to a loan that is void and unenforceable under this section, a person may not:</text> <level label="i"> <text>Collect or attempt to collect, directly or indirectly, any amount from the borrower;</text> </level> <level label="ii"> <text>Enforce or attempt to enforce the contract against any property securing the loan; or</text> </level> <level label="iii"> <text>Sell, assign, or otherwise transfer the loan to another person.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-115" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>With respect to any loan made at a rate of interest pursuant to § 12–103(a) and (c) of this subtitle or § 12–306 of this title:</text> <level label="1"> <text>A lender may repossess goods securing a loan under an agreement if the borrower is in default in:</text> <level label="i"> <text>The payment of any sum due under the agreement;</text> </level> <level label="ii"> <text>The performance of any other condition which the agreement lawfully requires him to perform in order to obtain unencumbered title to the goods; or</text> </level> <level label="iii"> <text>The performance of any promise the breach of which is expressly made a ground for repossessing the goods; and</text> </level> </level> <level label="2"> <text>The lender may repossess goods only by:</text> <level label="i"> <text>Legal process; or</text> </level> <level label="ii"> <text>Self–help, without use of force.</text> </level> </level> </level> <level label="b"> <text>Nothing in this section authorizes a violation of criminal law.</text> </level> <level label="c"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, at least 10 days before a lender repossesses any goods, a lender may serve a written notice on the borrower of the lender’s intention to repossess the goods.</text> </level> <level label="2"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, at least 30 days before a lender repossesses a mobile home that is primarily for personal, family, or household use, the lender shall serve on the borrower a written notice of the lender’s intention to repossess the mobile home.</text> </level> <level label="ii"> <text>The notice required under subparagraph (i) of this paragraph may be served by the lender less than 30 days before repossession if:</text> <level label="1"> <text>The mobile home:</text> </level> <level label="A"> <text>Is vacant and abandoned, based on a determination by the lender that at least three of the circumstances listed in § 7–105.18(d) of the Real Property Article have been met; or</text> </level> <level label="B"> <text>Has been voluntarily surrendered by the borrower to the lender; and</text> </level> <level label="2"> <text>The notice is accompanied by a certification from the lender identifying the circumstances demonstrating that the mobile home is vacant and abandoned or that the mobile home has been surrendered.</text> </level> </level> </level> <level label="3"> <text>The notice shall:</text> <level label="i"> <text>State the default and any period at the end of which the goods will be repossessed; and</text> </level> <level label="ii"> <text>Briefly state the rights of the borrower in case the goods are repossessed.</text> </level> </level> </level> <level label="d"> <text>The notice may be delivered to the borrower personally or sent to the borrower’s last known address by registered or certified mail.</text> </level> <level label="e"> <text>Within 5 days after he repossesses the goods, the lender shall deliver to the borrower personally or send to him at his last known address by registered or certified mail, a written notice which briefly states:</text> <level label="1"> <text>The right of the borrower to redeem the goods, and the amount payable for them;</text> </level> <level label="2"> <text>The rights of the borrower as to a resale, and his liability for a deficiency; and</text> </level> <level label="3"> <text>The exact location where the goods are stored and the address where any payment is to be made or notice delivered.</text> </level> </level> <level label="f"> <text>For 15 days after the lender gives the notice required by subsection (e) of this section, the lender shall retain any repossessed goods.</text> </level> <level label="g"> <text>During the period provided for in subsection (f) of this section, the borrower may:</text> <level label="1"> <text>Redeem and take possession of the goods; and</text> </level> <level label="2"> <text>Resume the performance of the agreement.</text> </level> </level> <level label="h"> <text>To redeem the goods, the borrower shall:</text> <level label="1"> <text>Tender the amount due under the agreement at the time of redemption, without giving effect to any provision which allows acceleration of any installment otherwise payable after that time;</text> </level> <level label="2"> <text>Tender performance of any other promise for the breach of which the goods were repossessed; and</text> </level> <level label="3"> <text>If the discretionary notice provided for in subsection (c) of this section was given, pay the actual and reasonable expenses of retaking and storing the goods.</text> </level> </level> <level label="i"> <text>This section does not apply if the borrower was guilty of fraudulent conduct, intentionally and wrongfully concealed, removed, damaged, or destroyed the goods, or attempted to do so, and the goods were repossessed because of that conduct.</text> </level> <level label="j"> <level label="1"> <text>The lender shall sell the repossessed goods at private sale (subject to the provisions of paragraph (2) of this subsection) or at public auction. At least 10 days before the sale, the lender shall notify the borrower in writing sent by certified mail, return receipt requested, sent to the borrower’s last known address of the time and place of sale. Any sale of repossessed property must be accomplished in a commercially reasonable manner.</text> </level> <level label="2"> <text>In all cases of a private sale of repossessed goods under this section, a full accounting shall be made to the borrower in writing and the seller shall retain a copy of this accounting for at least 24 months. This accounting shall contain the following information:</text> <level label="i"> <text>The unpaid balance at the time the goods were repossessed;</text> </level> <level label="ii"> <text>The refund credit of unearned finance charges and insurance premiums, if any;</text> </level> <level label="iii"> <text>The remaining net balance;</text> </level> <level label="iv"> <text>The proceeds of the sale of the goods;</text> </level> <level label="v"> <text>The remaining deficiency balance, if any, or the amount due the buyer;</text> </level> <level label="vi"> <text>All expenses incurred as a result of the sale;</text> </level> <level label="vii"> <text>The purchaser’s name, address, and business;</text> </level> <level label="viii"> <text>The number of bids sought and received; and</text> </level> <level label="ix"> <text>Any statement as to the condition of the goods at the time of repossession which would cause their value to be increased or decreased above or below the market value for goods of like kind and quality.</text> </level> </level> <level label="3"> <text>The Commissioner of Financial Regulation may make a determination concerning any private sale that the sale was not accomplished in a commercially reasonable manner. Upon that determination, the Commissioner may enter an order disallowing any claim for a deficiency balance.</text> </level> </level> <level label="k"> <level label="1"> <text>The provisions of this subsection apply to a public sale of goods which secured a loan in excess of $2,000 at the time the loan was made.</text> </level> <level label="2"> <text>The proceeds of a sale to which this subsection applies shall be applied, in the following order, to:</text> <level label="i"> <text>The actual and reasonable cost of the sale;</text> </level> <level label="ii"> <text>The actual and reasonable cost of retaking and storing the goods; and</text> </level> <level label="iii"> <text>The unpaid balance owing under the agreement at the time the goods are repossessed.</text> </level> </level> <level label="3"> <text>The lender shall furnish to the buyer a written statement which shows the distribution of the proceeds.</text> </level> <level label="4"> <text>If the provisions of this section, including the requirement of furnishing a notice following repossession, are not followed, the lender shall not be entitled to any deficiency judgment to which he would be entitled under the loan agreement.</text> </level> </level> <level label="l"> <text>If there is no resale of repossessed goods, all obligations of the borrower under the agreement shall be discharged, and the holder may retain the goods as his own property without obligation to account to the buyer.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-116" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <text>Any loan made before July 1, 1982, which is refinanced at a higher rate pursuant to § 12–103(a) and (c) of this subtitle or § 12–306 or § 12–404 of this title must comply with the following requirements:</text> <level label="1"> <text>The lender must give the following disclosures in writing to the borrower prior to the execution by the borrower of the new loan agreement:</text> <text>If you do agree to consolidate your existing loan, you will be paying an annual percentage rate of . . . . .% on the existing net balance of $. . . ., instead of the rate of . . . . . .% which you are now paying.</text> <text>Schedule of Monthly Payments</text> <text>Separate loan agreements Consolidated loan agreement </text> <text>$ . . . . per month for $ . . . . per month for</text> <text>the next . . . .months the next . . . .months </text> <text>Then </text> <text>$ . . . . per month for </text> <text>. . . . months after that </text> <text>Total of Payments</text> <text>Separate loan agreements Consolidated loan agreement</text> <text>$ . . . . total of payments $ . . . . total of payments</text> <text>for your existing loan for your consolidated</text> <text>. . . . for your new loan loan </text> <text>total of payments </text> </level> <level label="2"> <text>The lender must allow the borrower the choice of repaying his existing loan balance at the originally agreed upon rate and obtaining any additional extension of credit as a separate loan, notwithstanding any law which limits the lender’s ability to make more than 1 loan to the same borrower;</text> </level> <level label="3"> <text>The lender must refund or credit to the borrower’s account any unearned interest and any returned insurance premiums upon the cancellation of insurance sold in connection with the loan;</text> </level> <level label="4"> <text>Except in the case of a demand loan, a loan may be refinanced only upon the borrower’s request;</text> </level> <level label="5"> <text>The lender must allow the borrower the right to cancel the consolidated loan agreement within 3 business days. The lender shall provide to the borrower conspicuous notice of the provisions of this subsection; and</text> </level> <level label="6"> <text>Nothing in this subsection shall prohibit the receipt of the loan proceeds by the borrower at the time the consolidated loan agreement is made. The borrower must return any loan proceeds received pursuant to the consolidated loan agreement if he elects to cancel the consolidated loan agreement pursuant to subsection (5) of this section. The borrower may retain the loan proceeds if he elects the separate loan option pursuant to subsection (2) of this section.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-117" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <text>With respect to any loan made at a rate pursuant to § 12–103(a) and (c) of this subtitle or § 12–404 of this title, the lender must comply with § 14–1302 of this article except that subsection (c) of § 14–1302 is not applicable.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-118" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <text>A lender may not enter into a loan agreement, providing for an initial interest rate pursuant to § 12–103(a) and (c) of this subtitle or § 12–306 or § 12–404 of this title, which contains a provision that permits the lender to increase or decrease the applicable rate of interest or finance charges from time to time during the term of the obligation, unless:</text> <level label="1"> <text>The loan is secured by an interest in real property;</text> </level> <level label="2"> <text>Any such provision limits adjustments in the rate on an obligation as follows:</text> <level label="i"> <text>The increase and decrease in the rate is determined by an objective index which is not directly controlled by the lender and which is agreed upon by the parties to the agreement.</text> </level> <level label="ii"> <text>The rate may not be adjusted more frequently than once in a 6 month period.</text> <level label="1"> <text>The amount of increase in any 6 month period may not be more than the equivalent of 1 percentage point above the rate in effect prior to the rate change.</text> </level> <level label="2"> <text>Notwithstanding subparagraph (i) of this paragraph, if the rate of change in any index so allows, the rate may be increased to not more than the originally contracted for rate if authorized by the loan agreement. The agreed upon additional increases must comply with subparagraph (i).</text> </level> <level label="3"> <text>Notwithstanding subparagraph (i) of this paragraph, the lender may decrease the rate at any time and by any amount;</text> </level> </level> </level> <level label="3"> <text>Interest rate decreases warranted by decreases in the agreed upon index shall be mandatory except to the extent that past increases in the index have not been implemented by the lender, either at his option or because the lender was subject to the rate change limitation of paragraph (2) of this section;</text> </level> <level label="4"> <text>The loan instrument shall specify the circumstances under which the rate may increase or decrease, any limitations on an increase or decrease, and the effects of an increase or decrease;</text> </level> <level label="5"> <text>A lender must allow the borrower the choice of implementing the variable rate feature of the loan either by changes in the amount of periodic payments or by extending or reducing the length of the term of the obligation;</text> </level> <level label="6"> <text>Through a periodic billing statement or other written notice, the borrower is notified of the basis and effect of a change in rate, including any change in the required periodic payment amount, at least 15 days prior to the due date of the first payment that reflects the changed rate; and</text> </level> <level label="7"> <text>No new closing costs, processing fees or similar fees are imposed on the borrower as a result of adjustments in rate.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-119" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>This section applies to any application for a loan, other than a commercial loan, to be secured by a first mortgage or first deed of trust on a borrower's primary residence.</text> </level> <level label="b"> <text>Any lender that imposes fees on borrowers for settlement services, or document review services, performed by a lender-designated attorney, or who conditions settlement on the employment of a particular attorney or title insurance company under § 12-120(c) of this subtitle, shall provide a prospective borrower with a written notice stating:</text> <level label="1"> <text>The lender’s requirements concerning selection of an attorney, title insurance company, or other person to perform settlement services relating to the purchase of the real property;</text> </level> <level label="2"> <text>The borrower’s ability to choose an attorney or title insurance company under § 12-120(c) of this subtitle; and</text> </level> <level label="3"> <text>A good faith estimate of the fee or fees to be charged to the borrower.</text> </level> </level> <level label="c"> <text>If notice is required by this section:</text> <level label="1"> <text>The notice shall be provided at the time of or within 3 days after the application for a loan, or earlier upon request; and</text> </level> <level label="2"> <text>A copy of the notice, signed by the applicant, shall accompany any executed application for a loan.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-120" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>This section applies to any loan, other than a commercial loan, to be secured by a mortgage or deed of trust on a borrower’s primary residence.</text> </level> <level label="b"> <text>A lender may require the borrower to pay for services rendered by the lender’s attorney in connection with a loan described in subsection (a) of this section only if:</text> <level label="1"> <text>The attorney’s fee is limited to legal services attributable to processing and closing the loan and not to unrelated services performed by the attorney for the lender;</text> </level> <level label="2"> <text>The amount of the attorney’s fee, if in excess of $100, is supported by a statement, provided to the borrower at or prior to settlement, that:</text> <level label="i"> <text>Describes the services performed;</text> </level> <level label="ii"> <text>Sets forth the time spent by the attorney and the hourly rate or other basis for determining the fee;</text> </level> <level label="iii"> <text>States that the legal services are being performed on behalf of the lender and not on behalf of the borrower; and</text> </level> <level label="iv"> <text>States that the services are being paid for by the borrower;</text> </level> </level> <level label="3"> <text>The amount of the attorney’s fee is reasonable on the basis of the legal services performed; and</text> </level> <level label="4"> <text>The attorney’s fee is separately itemized on the loan settlement sheet and identified as a fee to the lender’s attorney.</text> </level> </level> <level label="c"> <level label="1"> <text>A lender may not require as a condition of settlement that a borrower employ a particular attorney or title insurance company to perform a title search, examination of title, or closing if:</text> <level label="i"> <text>The borrower notifies the lender, within 7 days after application for the loan, of the name and business address of the borrower’s choice of attorney or title insurance company to perform the title search, examination of title, or closing; and</text> </level> <level label="ii"> <text>The lender does not reject the borrower’s choice of attorney or title insurance company for good cause within 7 days after the receipt of the notice under item (i) of this paragraph.</text> </level> </level> <level label="2"> <text>Subject to the requirements of subsection (b) of this section, this subsection may not be construed to prohibit a lender from requiring a borrower to pay for:</text> <level label="i"> <text>Preparation of loan closing documents;</text> </level> <level label="ii"> <text>Title insurance;</text> </level> <level label="iii"> <text>Review of documents prepared by the borrower’s attorney; or</text> </level> <level label="iv"> <text>Attendance at settlement by the lender’s attorney.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-121" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>In this section, the term “lender’s inspection fee” means a fee imposed by a lender to pay for a visual inspection of real property.</text> </level> <level label="b"> <text>Except as provided in subsection (c) of this section, a lender may not impose a lender’s inspection fee in connection with a loan secured by residential real property.</text> </level> <level label="c"> <text>A lender’s inspection fee may be charged if the inspection is needed to ascertain completion of:</text> <level label="1"> <text>Construction of a new home; or</text> </level> <level label="2"> <text>Repairs, alterations, or other work required by the lender.</text> </level> </level> <level label="d"> <text>This section does not apply to an appraisal of the value of real property by a lender or to fees imposed in connection with an appraisal.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-122" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <text>Any lender who knowingly and willfully violates any provision of § 12-103, § 12-109.2, § 12-119, § 12-120, or § 12-121 of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $500, or imprisonment not exceeding 6 months, or both.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-123" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>In this section, “binder” means a binder or other temporary contract of insurance as provided under § 12-106 of the Insurance Article.</text> </level> <level label="b"> <text>A lender shall comply with this section if the lender:</text> <level label="1"> <text>Makes any loan secured by a first mortgage or a first deed of trust on any interest in owner-occupied residential real property; and</text> </level> <level label="2"> <text>As a condition of making the loan, requires the borrower to purchase property insurance or credit loss insurance.</text> </level> </level> <level label="c"> <text>A lender who makes a loan subject to this section shall accept as evidence of insurance a written binder issued by any authorized insurer or its insurance producer if the binder includes or is accompanied by:</text> <level label="1"> <text>The name and address of the insured borrower;</text> </level> <level label="2"> <text>The name and address of the lender;</text> </level> <level label="3"> <text>A description of the insured residential real property;</text> </level> <level label="4"> <text>A provision that the binder may not be canceled within the term of the binder unless the lender and the insured borrower receive written notice of the cancellation at least 10 days prior to the cancellation;</text> </level> <level label="5"> <text>Except in the case of the renewal of a policy subsequent to the closing of the loan, a paid receipt for the full amount of the applicable premium; and</text> </level> <level label="6"> <text>The amount of coverage.</text> </level> </level> <level label="d"> <text>This section does not prohibit a lender from refusing to honor a binder in cases where:</text> <level label="1"> <text>The lender receives notice of the cancellation of the binder by the insurer; or</text> </level> <level label="2"> <text>At the expiration of 30 days of the date the binder was given, the insurer has failed to issue the policy of insurance.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-124" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <level label="1"> <level label="i"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="ii"> <text>“Flood insurance coverage” means flood insurance against losses caused by flooding that are covered under a policy issued by:</text> <level label="1"> <text>The federal government; or</text> </level> <level label="2"> <text>An insurer.</text> </level> </level> <level label="iii"> <text>“Improvements” means buildings or structures erected upon or affixed to real property that enhance the value of the real property.</text> </level> <level label="iv"> <text>“Property insurance coverage” means property insurance against losses caused by perils that commonly are covered in insurance policies described with terms similar to “standard fire” or “standard fire with extended coverage”.</text> </level> <level label="v"> <level label="1"> <text>“Replacement cost” means the amount needed to repair damage to or rebuild improvements on real property to restore the improvements to their pre-loss condition.</text> </level> <level label="2"> <text>“Replacement cost” does not include the value of land.</text> </level> </level> </level> <level label="2"> <text>A lender may not require a borrower, as a condition to receiving or maintaining a loan secured by a first mortgage or first deed of trust, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement cost of the improvements on the real property.</text> </level> <level label="3"> <text>A lender may not require a borrower, as a condition to receiving or maintaining a loan secured by a first mortgage or first deed of trust, to provide or purchase flood insurance coverage in an amount exceeding the replacement cost of the improvements on the real property.</text> </level> <level label="4"> <text>In determining the replacement cost of the improvements on any real property, the lender may:</text> <level label="i"> <text>Accept the value placed on the improvements by the insurer; or</text> </level> <level label="ii"> <text>Use the value placed on the improvements by the lender’s appraisal of the improvements.</text> </level> </level> <level label="5"> <text>A lender may not require that the insurance be purchased through a particular insurance producer or insurance company.</text> </level> </level> <level label="b"> <level label="1"> <text>A violation of this section shall entitle the borrower to:</text> <level label="i"> <text>Seek an injunction to prohibit the lender who has engaged or is engaging in the violation from continuing or engaging in the violation;</text> </level> <level label="ii"> <text>Reasonable attorney’s fees; and</text> </level> <level label="iii"> <text>Damages directly resulting from the violation.</text> </level> </level> <level label="2"> <text>A violation of this section does not affect the validity of the first mortgage or first deed of trust securing the loan.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-124.1" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Covered loan” means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership Equity Protection Act set forth in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026.</text> </level> <level label="3"> <text>“Credit health insurance” has the meaning stated in § 13–101 of the Insurance Article.</text> </level> <level label="4"> <text>“Credit involuntary unemployment benefit insurance” has the meaning stated in § 13–101 of the Insurance Article.</text> </level> <level label="5"> <level label="i"> <text>“Credit life insurance” means insurance on the life of a borrower that provides indemnity for repayment of a specific loan or credit transaction on the death of the borrower.</text> </level> <level label="ii"> <text>“Credit life insurance” does not include life insurance payable to a beneficiary designated by the borrower other than the obligee of a specific loan or credit transaction.</text> </level> </level> <level label="6"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="7"> <text>“Premium” has the meaning stated in § 1–101 of the Insurance Article.</text> </level> <level label="8"> <text>“Single premium coverage” means insurance for which the total premium is payable in one lump sum at or before the time coverage commences.</text> </level> </level> <level label="b"> <level label="1"> <text>Except as provided in this subsection, a lender making a covered loan may not finance as a part of the covered loan transaction single premium coverage for:</text> <level label="i"> <text>Credit health insurance;</text> </level> <level label="ii"> <text>Credit involuntary unemployment benefit insurance; or</text> </level> <level label="iii"> <text>Credit life insurance.</text> </level> </level> <level label="2"> <text>Nothing in this subsection shall prohibit the financing of any insurance coverage in connection with a mobile home or its premises, as those terms are defined in § 8A–101 of the Real Property Article.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-125" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Borrower” means a person who makes an application for a loan secured by a first mortgage or first deed of trust on a 1– to 4–family home to be occupied by the borrower as the borrower’s primary residence.</text> </level> <level label="3"> <text>“Commitment” means a written, specific, binding agreement between a borrower and a lender which sets forth the terms of a loan being extended to the borrower.</text> </level> <level label="4"> <text>“Financing agreement” means a written agreement between a borrower and a lender which sets forth the terms of a purchase money loan or a refinancing of an existing loan that:</text> <level label="i"> <text>Results in or is secured by a first mortgage or a first deed of trust on a 1– to 4–family home to be occupied by the borrower; and</text> </level> <level label="ii"> <text>Is offered or extended to the borrower.</text> </level> </level> <level label="5"> <level label="i"> <text>“Lender” means a person subject to the licensing requirements of Title 11, Subtitle 5 of the Financial Institutions Article.</text> </level> <level label="ii"> <text>“Lender” does not include a person exempt from licensure under § 11–502 of the Financial Institutions Article.</text> </level> </level> <level label="6"> <level label="i"> <text>“Loan application” means any oral or written request for an extension of credit that is made in accordance with procedures established by a lender for the purpose of inducing the lender to seek to procure or make a mortgage loan.</text> </level> <level label="ii"> <text>“Loan application” does not include the use of an account or line of credit to obtain a loan within a previously established credit limit.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>A lender who offers to make or procure a loan secured by a first mortgage or first deed of trust on a 1– to 4–family home to be occupied by the borrower shall provide the borrower with a financing agreement executed by the lender within 10 business days after the date the loan application is completed.</text> </level> <level label="2"> <text>The financing agreement shall provide:</text> <level label="i"> <text>The term and principal amount of the loan;</text> </level> <level label="ii"> <text>An explanation of the type of mortgage loan being offered;</text> </level> <level label="iii"> <text>The rate of interest that will apply to the loan and, if the rate is subject to change or is a variable rate or is subject to final determination at a future date based on some objective standard, a specific statement of those facts;</text> </level> <level label="iv"> <text>The points, if any, to be paid by the borrower or the seller, or both; and</text> </level> <level label="v"> <text>The term during which the financing agreement remains in effect.</text> </level> </level> <level label="3"> <text>If all the provisions of the financing agreement are not subject to future determination, change, or alteration during its term, the financing agreement shall constitute the final binding agreement between the parties as to the items covered by the financing agreement.</text> </level> <level label="4"> <text>A disclosure provided by a lender to a borrower in compliance with 12 C.F.R. § 1026.37 shall satisfy the requirements of this subsection.</text> </level> </level> <level label="c"> <level label="1"> <text>If any of the provisions of the financing agreement are subject to change or determination after its execution, the lender shall provide the borrower with a commitment, executed by the lender, at least 72 hours before the time of settlement agreed to by the parties, providing:</text> <level label="i"> <text>The effective fixed interest rate or initial interest rate that will be applied to the loan; and</text> </level> <level label="ii"> <text>A restatement of all the remaining unchanged provisions of the financing agreement.</text> </level> </level> <level label="2"> <text>Subsequent to execution of the financing agreement, the borrower may waive in writing the 72–hour advance presentation requirement and accept the commitment at settlement only if compliance with the 72–hour requirement is shown by the lender to be infeasible.</text> </level> <level label="3"> <text>A disclosure provided by a lender to a borrower in compliance with 12 C.F.R. § 1026.38 shall satisfy the requirements of this subsection.</text> </level> </level> <level label="d"> <text>If a lender fails to comply with the requirements of this section, the lender shall be subject to the penalties set forth in § 11–523 of the Financial Institutions Article.</text> </level> <level label="e"> <text>A borrower aggrieved by any violation of this section shall be entitled to bring a civil suit for damages, including reasonable attorney’s fees, against the lender.</text> </level> <level label="f"> <text>This section may not be construed to exempt a lender from the provisions of §§ 12–119 through 12–122 of this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-126" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>This section applies only to a loan that:</text> <level label="1"> <text>Is secured by a mortgage or deed of trust on the borrower’s primary residence; and</text> </level> <level label="2"> <text>Is not a commercial loan.</text> </level> </level> <level label="b"> <text>Except to the extent expressly provided otherwise in the loan contract, a borrower may prepay all or part of outstanding unpaid indebtedness under a loan at any time.</text> </level> <level label="c"> <text>In the event of prepayment of the entire loan, the lender shall refund or credit to the borrower the unearned portion of the precomputed interest charge. This refund or credit shall be in an amount not less than the amount which would be refunded or credited if the unearned precomputed interest charge were calculated in accordance with the actuarial method, except that the borrower may not be entitled to a refund or credit of less than $5. The unearned portion of the precomputed interest charge is, at the option of the lender, either:</text> <level label="1"> <text>That portion of the precomputed interest charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions of payment periods, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each period, or portion of a period, had the loan not been prepaid, by applying to the unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deferred. The lender, at its option, may round this annual percentage rate to the nearest 1/4 of 1 percent; or</text> </level> <level label="2"> <text>The total precomputed interest charge less the earned precomputed interest charge. The earned precomputed interest charge shall be determined by applying an annual percentage rate based on the total precomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.</text> </level> </level> <level label="d"> <text>As used in subsection (c) of this section, the following terms have the meanings indicated.</text> <level label="1"> <text>“Actuarial method” means the method of allocating payments made on a loan between the outstanding principal balance of the loan and interest, by which a payment is applied first to the accumulated interest, and any remainder is subtracted from the outstanding principal balance of the loan.</text> </level> <level label="2"> <text>“Payment period” means the time period within which scheduled payments on a loan are due as provided in the agreement, note, or other evidence of the loan.</text> </level> <level label="3"> <text>“Precomputed interest charge” means interest as computed by an add on, discount, or other similar method.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-127" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Fully indexed rate” means the index rate, as defined in the mortgage loan documents, prevailing at the time the mortgage loan is approved by the lender, plus the margin that will apply after the expiration of an introductory interest rate.</text> </level> <level label="3"> <level label="i"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="ii"> <text>“Mortgage loan” does not include a reverse mortgage loan.</text> </level> </level> </level> <level label="b"> <text>A lender may not make a mortgage loan without giving due regard to the borrower’s ability to repay the mortgage loan in accordance with its terms, including the fully indexed rate of the mortgage loan, if applicable, and property taxes and homeowner’s insurance whether or not an escrow account is established for the collection and payment of these expenses.</text> </level> <level label="c"> <level label="1"> <text>Due regard to a borrower’s ability to repay a mortgage loan must include:</text> <level label="i"> <text>Consideration of the borrower’s debt to income ratio, including existing debts and other obligations; and</text> </level> <level label="ii"> <text>Verification of the borrower’s gross monthly income and assets by review of third–party written documentation reasonably believed by the lender to be accurate and complete.</text> </level> </level> <level label="2"> <text>Acceptable third–party written documentation includes:</text> <level label="i"> <text>The borrower’s Internal Revenue Service form W–2;</text> </level> <level label="ii"> <text>A copy of the borrower’s income tax return;</text> </level> <level label="iii"> <text>Payroll receipts;</text> </level> <level label="iv"> <text>The records of a financial institution; or</text> </level> <level label="v"> <text>Other third–party documents that provide reasonably reliable evidence of the borrower’s income or assets.</text> </level> </level> <level label="3"> <text>This subsection does not apply to a mortgage loan:</text> <level label="i"> <text>Approved for government guaranty by the Federal Housing Administration, the Veterans Administration, the United States Department of Agriculture, the Maryland Department of Housing and Community Development, or the Community Development Administration; or</text> </level> <level label="ii"> <text>That refinances an existing mortgage loan if the refinance mortgage loan is:</text> <level label="1"> <text>Offered under the federal Homeowner Affordability and Stability Plan; and</text> </level> <level label="2"> <text>Made available by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.</text> </level> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-128" title_number="12" title_name="Credit Regulations" subtitle_number="1" subtitle_name="Interest and Usury"> <level label="a"> <text>A lender may not accept a tip from a consumer or give a consumer the option to provide a tip.</text> </level> <level label="b"> <text>A lender may not directly or indirectly suggest that providing a tip will influence:</text> <level label="1"> <text>The lender’s willingness to provide a loan to a consumer at any time; or</text> </level> <level label="2"> <text>The terms of any loan offered to the consumer by that lender.</text> </level> </level> <level label="c"> <text>A lender who receives a tip may not be found in violation of this subtitle if the lender returns all of the tip within 7 days after receiving the tip.</text> </level> <level label="d"> <text>A lender shall prominently disclose that it is prohibited from accepting a tip from a consumer.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-301" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Commissioner” means the Commissioner of Financial Regulation.</text> </level> <level label="c"> <text>“Interest” has the meaning stated in § 12–101 of this title.</text> </level> <level label="d"> <text>“Lender” means a licensee or a person who makes a loan subject to this subtitle.</text> </level> <level label="e"> <text>“Licensee” means a person who is required to be licensed under Title 11, Subtitle 2 of the Financial Institutions Article, the Maryland Consumer Loan Law – Licensing Provisions, regardless of whether the person is actually licensed.</text> </level> <level label="f"> <level label="1"> <text>“Loan” means any loan or advance of money or credit subject to this subtitle, regardless of whether the loan or advance of money or credit is or purports to be made under this subtitle.</text> </level> <level label="2"> <text>“Loan” does not include an installment sale agreement as defined in § 12–601 of this title.</text> </level> </level> <level label="g"> <text>“Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> <level label="h"> <text>“Tip” has the meaning stated in § 12–101 of this title.</text> </level> <level label="i"> <text>“Wages” means all remuneration paid to any employee for the employee’s employment, including the cash value of all remuneration paid in any medium other than cash.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-302" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <text>A person may not engage in the business of making loans under this subtitle unless the person is licensed under or is exempt from the licensing requirements of Title 11, Subtitle 2 of the Financial Institutions Article, the Maryland Consumer Loan Law -- Licensing Provisions.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-303" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>This subtitle applies to a loan of $25,000 or less made for personal, family, or household purposes.</text> </level> <level label="2"> <text>Except as provided in paragraph (3) of this subsection, this subtitle applies regardless of:</text> <level label="i"> <text>Whether the transaction is or purports to be made under this subtitle;</text> </level> <level label="ii"> <text>Whether the transaction is or purports to be an installment loan;</text> </level> <level label="iii"> <text>The duration of the repayment period;</text> </level> <level label="iv"> <text>Whether the transaction is or purports to be nonrecourse or contingent; and</text> </level> <level label="v"> <text>Whether the transaction purports to be the purchase of wages, pensions, governmental benefits, or other similar future payment streams.</text> </level> </level> <level label="3"> <text>This subtitle does not apply to:</text> <level label="i"> <text>A plan or loan for which a written election has been made under Subtitle 1, Subtitle 4, Subtitle 9, or Subtitle 10 of this title;</text> </level> <level label="ii"> <text>A loan made by an individual provided the individual:</text> <level label="1"> <text>Does not make more than three loans in a calendar year; and</text> </level> <level label="2"> <text>Does not engage in the business of making loans; or</text> </level> </level> <level label="iii"> <text>A loan between an employer and an employee.</text> </level> </level> </level> <level label="b"> <text>A lender may not make a loan subject to this subtitle unless the loan is in an original amount or value which does not exceed $25,000.</text> </level> <level label="c"> <level label="1"> <text>The purpose of this subsection is to prevent evasion of the provisions of this subtitle by means of a purchase or assignment of wages.</text> </level> <level label="2"> <text>For the purposes of this subtitle:</text> <level label="i"> <text>The payment of $25,000 or less in money, credit, goods, or things in action as consideration for any sale, assignment, or order for the payment of wages, whether earned or to be earned, is considered a loan of money secured by the sale, assignment, or order for payment of wages; and</text> </level> <level label="ii"> <text>The amount by which the wages exceed the consideration paid for them is considered interest or charges on the loan from the date of the payment to the date the wages are payable.</text> </level> </level> <level label="3"> <text>The transaction described in this subsection is governed by and subject to the provisions of this subtitle.</text> </level> </level> <level label="d"> <text>This subtitle applies but is not limited to a lender who:</text> <level label="1"> <text>As security for a loan, use, or forbearance of money, goods, or things in action or for any loan, use, or sale of credit, whether or not the transaction is or purports to be made under this subtitle, makes a pretended purchase of property from any person and permits the owner or pledgor to retain possession of the property; or</text> </level> <level label="2"> <text>By any device or pretense of charging for his services or otherwise, seeks to obtain any interest, charges, discount, or like consideration.</text> </level> </level> <level label="e"> <level label="1"> <text>A lender who lends or contracts to lend an amount which exceeds $25,000 may not directly or indirectly contract for, charge, or receive any interest, fee, or other charge in excess of that which the lender would be permitted to charge if the lender were not authorized to make loans under this subtitle.</text> </level> <level label="2"> <text>The provisions of this subsection apply to any debt in excess of $25,000 which is directly or contingently owed or contracted to be so owed by any person jointly or severally:</text> <level label="i"> <text>Whether as a borrower, an endorser, guarantor, or surety for a borrower, or otherwise; and</text> </level> <level label="ii"> <text>Whether the debt is part of a single transaction or the aggregate of more than one transaction.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-304" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>A lender may not directly or indirectly print, publish, distribute, or broadcast any false, misleading, or deceptive statement regarding the rates, terms, or conditions of a loan.</text> </level> <level label="b"> <level label="1"> <text>If charges or rates of charges are advertised by a licensee, the Commissioner may require him to state them fully and clearly in any manner the Commissioner considers necessary to prevent misunderstanding by a prospective borrower.</text> </level> <level label="2"> <text>Subject to any condition which the Commissioner may impose to prevent a false impression regarding the scope or degree of protection provided by this subtitle, the Commissioner may permit or require a licensee to refer in his advertising to the fact that his business is under State supervision.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-305" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>In granting or denying an application for a loan, a licensee may not discriminate against any loan applicant only on the basis of race, color, creed, national origin, sex, sexual orientation, gender identity, disability, marital status, or age.</text> </level> <level label="b"> <level label="1"> <text>A licensee is not in violation of this section if the licensee is in compliance with the federal Equal Credit Opportunity Act and the regulations adopted under that act.</text> </level> <level label="2"> <text>Denying an application for a loan by an applicant who is a minor is not discrimination on the basis of age.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-306" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>Except as provided in subsections (b) and (c) of this section, a lender may charge interest on a loan at a rate not more than the rates specified in this subsection.</text> </level> <level label="2"> <text>For any loan with an original principal balance of $2,000 or less, the maximum interest rate is:</text> <level label="i"> <level label="2"> <text>75 percent interest per month on that part of the unpaid principal balance not more than $500;</text> </level> </level> <level label="ii"> <text>2 percent interest per month on that part of the unpaid principal balance that is more than $500 but not more than $700; and</text> </level> <level label="iii"> <level label="1"> <text>25 percent interest per month on that part of the unpaid principal balance that is more than $700.</text> </level> </level> </level> <level label="3"> <text>For any loan with an original principal balance of more than $2,000 and not more than $3,500, the maximum interest rate is 1.75 percent interest per month on the unpaid principal balance of the loan.</text> </level> <level label="4"> <text>For any loan with an original principal balance of more than $3,500 and not more than $5,000, the maximum interest rate is 1.5 percent interest per month on the unpaid principal balance of the loan.</text> </level> <level label="5"> <text>For any loan with an original principal balance of more than $5,000, the maximum interest rate is 1.35 percent interest per month on the unpaid principal balance of the loan.</text> </level> <level label="6"> <text>Notwithstanding the provisions of paragraphs (2) through (5) of this subsection on any loan made on or after July 1, 1982, a lender under this subtitle may charge interest not exceeding the following rates:</text> <level label="i"> <text>For any loan with an original principal balance of $2,000 or less, 2.75 percent interest per month on that part of the unpaid principal balance not more than $1,000 and 2 percent interest per month on that part of the unpaid principal balance that is more than $1,000;</text> </level> <level label="ii"> <text>For any loan with an original principal balance of more than $2,000, the maximum rate of interest is 2 percent per month on the unpaid principal balance of the loan.</text> </level> </level> <level label="7"> <text>A loan may be made pursuant to paragraph (6) of this subsection provided that:</text> <level label="i"> <text>If the loan is a renewal or refinancing of a loan made prior to July 1, 1982, the lender complies with § 12-116 of this title;</text> </level> <level label="ii"> <text>If the loan includes a provision for a rate of interest which may be adjusted by the lender during the term of the loan, the lender complies with § 12-118 of this title;</text> </level> <level label="iii"> <text>Upon the borrower’s default, if the loan is secured by personal property, the lender complies with § 12-115 of this title concerning repossession and redemption of the goods securing the loan; and</text> </level> <level label="iv"> <text>The loan does not include a balloon payment, unless payment in full is due on demand or in 1 year or less.</text> </level> </level> </level> <level label="b"> <text>If any principal balance remains unpaid 6 months after the loan matures as originally scheduled or deferred, the lender may not contract for, charge, or receive interest at a rate exceeding 6 percent simple interest per annum on the actual unpaid principal balances from time to time.</text> </level> <level label="c"> <text>If the lender refinances a loan in the ordinary course of business, he may not add to the principal balance or deduct from the proceeds of the new loan more than 60 days’ interest then due.</text> </level> <level label="d"> <level label="1"> <text>The lender shall compute interest on the actual unpaid principal balances outstanding from time to time, and he may not contract for, charge, or receive interest in advance or compounded interest.</text> </level> <level label="2"> <text>For each day on which an unpaid principal balance is outstanding, the lender may charge on that unpaid balance 1/30th of the interest permitted under this subtitle to be charged for 1 month.</text> </level> <level label="3"> <text>For purposes of this section, each of the 12 calendar months in the year shall be treated as having 30 days, as follows:</text> <level label="i"> <text>The last day of each month which has 31 days shall be omitted; and</text> </level> <level label="ii"> <text>The necessary number of days shall be added at the end of February to make 30 days.</text> </level> </level> </level> <level label="e"> <text>The maximum term of any loan made under this subtitle may not exceed:</text> <level label="1"> <text>For any loan with an original principal balance of $700 or less, 30 months and 15 days;</text> </level> <level label="2"> <text>For any loan with an original principal balance of more than $700 but less than $2,000, 36 months and 15 days; and</text> </level> <level label="3"> <text>For any loan with an original principal balance of $2,000 or more, 72 months and 15 days.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-307" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>At the time a loan is made, a lender may collect from the borrower:</text> <level label="1"> <text>As to any item of the total property that secures a loan:</text> <level label="i"> <text>The fees paid to a public official or governmental agency for recording or satisfying a mortgage, encumbrance, or lien on any property securing the loan; or</text> </level> <level label="ii"> <text>An equal or lesser amount for nonfiling insurance premium on any property, or portion of the property, that is not recorded if:</text> <level label="1"> <text>The Insurance Commissioner approves the rates; and</text> </level> <level label="2"> <text>A commission is not paid on the policy; and</text> </level> </level> </level> <level label="2"> <text>The title insurance premiums or reasonable attorney’s fees paid for searching and insuring the title to any real property securing the loan.</text> </level> </level> <level label="b"> <text>A lender may collect from the borrower a fee not exceeding $15 if payment is made with a check that is dishonored on the second presentment.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-307.1" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>On any loan with an original principal balance of more than $2,000, if a borrower defaults under the terms of a loan and the lender refers the borrower’s account for collection to an attorney who is not a salaried employee of the lender, and if the note, contract, or other evidence of the loan permits, the lender may charge and collect from the borrower court costs and attorney’s fees not exceeding 15 percent of the amount due and payable under the terms of the loan.</text> </level> <level label="b"> <text>On any loan with an original principal balance of $2,000 or less, if a borrower defaults under the terms of a loan and the lender refers the borrower’s account for collection to an attorney who is not a salaried employee of the lender, and if the note, contract, or other evidence of the loan permits, the lender may recover from the borrower court costs and attorney’s fees not exceeding 15 percent of the amount due and payable under the terms of the loan, to be set by the court in the event of the filing of suit.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-308" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>At the time a loan is made, the lender shall deliver to the borrower a statement in the English language which:</text> <level label="i"> <text>Quotes §§ 12–306, 12–307, and 12–312 of this subtitle, in their entireties; and</text> </level> <level label="ii"> <text>Complies with § 12–106(b) of this title.</text> </level> </level> <level label="2"> <text>If there are two or more borrowers, the lender:</text> <level label="i"> <text>May deliver the statement to any one of the borrowers; and</text> </level> <level label="ii"> <text>At the request of any other borrower, shall deliver a copy of the statement to that borrower within 10 days after the request.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraphs (2), (3), and (4) of this subsection, at the time a lender receives a payment on account of a loan, the lender shall deliver to the person making the payment a receipt which specifies:</text> <level label="i"> <text>The amount applied to principal;</text> </level> <level label="ii"> <text>The amount applied to interest and other charges; and</text> </level> <level label="iii"> <text>The unpaid principal balance of the loan.</text> </level> </level> <level label="2"> <text>The lender may deliver an unitemized receipt at the time of payment if he delivers the required itemized receipt within 10 days after the payment.</text> </level> <level label="3"> <text>The lender is not required to issue a receipt if, before the due date of each payment, he regularly delivers to the borrower a billing statement which specifies:</text> <level label="i"> <text>The previous unpaid principal balance of the loan;</text> </level> <level label="ii"> <text>The amount and date of each payment made during the billing period;</text> </level> <level label="iii"> <text>The amount of each of these payments applied to interest;</text> </level> <level label="iv"> <text>The amount of each of these payments applied to principal;</text> </level> <level label="v"> <text>The current unpaid principal balance; and</text> </level> <level label="vi"> <text>The amount and due date of the next maturing installment.</text> </level> </level> <level label="4"> <text>The lender is not required to issue a receipt if the lender issues to the borrower a payment book or coupon book and payment is made by check or money order.</text> </level> </level> <level label="c"> <level label="1"> <text>A lender shall permit a borrower to prepay a loan in full or in part at any time, without penalty.</text> </level> <level label="2"> <text>Each partial prepayment shall be applied:</text> <level label="i"> <text>First, to any interest accrued on the unpaid principal balance to the date of the payment; and</text> </level> <level label="ii"> <text>Then, to the unpaid principal balance.</text> </level> </level> </level> <level label="d"> <text>After full repayment of a loan, the lender shall:</text> <level label="1"> <level label="i"> <text>Indelibly mark with the word “paid” or “canceled” and return each note, contract, or other evidence of obligation of the borrower in the possession of the lender; or</text> </level> <level label="ii"> <text>Furnish the borrower with a written statement that identifies the loan transaction and states that the loan has been paid in full;</text> </level> </level> <level label="2"> <text>Release any mortgage, security agreement, or other form of security instrument which no longer secures any indebtedness to the lender; and</text> </level> <level label="3"> <text>Restore any pledge or certificate of title.</text> </level> </level> <level label="e"> <text>At the request of the borrower, the lender shall furnish the borrower with a written statement of the account. However, the lender is not required to do so more than once in any 30–day period.</text> </level> <level label="f"> <text>A lender making or offering to make a loan secured by residential real property shall comply with § 12–125 of this title, as applicable.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-309" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>If a lender makes a loan for the purpose of enabling a borrower to buy goods or services used primarily for personal, family, or household purposes, then, in addition to any other claim or defense which the borrower has under this subtitle, the lender is subject to the claims and defenses of the borrower against the seller arising from the sale of the goods or services, if:</text> <level label="1"> <text>The lender knows that the seller arranged for the extension of credit by the lender; or</text> </level> <level label="2"> <text>The lender otherwise knowingly participated in the sale.</text> </level> </level> <level label="b"> <text>In determining that a lender knowingly participated in a sale transaction, the following factors, among others, may be considered:</text> <level label="1"> <text>The lender was a person related to the seller, unless the relationship was remote or was not a factor in the sale or loan;</text> </level> <level label="2"> <text>The proceeds of the loan were made payable in whole or in part to the seller;</text> </level> <level label="3"> <text>The lender took a purchase-money security interest in the goods which were the subject of the sale;</text> </level> <level label="4"> <text>The seller guaranteed the loan or otherwise assumed the risk of loss by the lender on the loan;</text> </level> <level label="5"> <text>The lender directly supplied to the seller a form used by the borrower to evidence or secure the loan; or</text> </level> <level label="6"> <text>The loan was conditioned on purchase by the borrower of the goods or services from the particular seller, but the payment by the lender of any proceeds of the loan to the seller does not establish in itself that the loan was so conditioned.</text> </level> </level> <level label="c"> <level label="1"> <text>The liability of a lender under this section may not exceed the amount owed to the lender with respect to the sale at the time the lender has notice of a claim or defense of the buyer against the seller.</text> </level> <level label="2"> <text>If two or more loans are consolidated, the maximum amount owed to the lender under paragraph (1) of this subsection is determined as follows:</text> <level label="i"> <text>If the consolidated loans arose from sales made on the same day, the payments received after the consolidation are considered to be applied first to the smallest loan; and</text> </level> <level label="ii"> <text>In any other case, the payments received after the consolidation are considered to be applied first to payment of the loan first made.</text> </level> </level> </level> <level label="d"> <text>The lender is subrogated to each right and remedy which the borrower has against the seller.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-310" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>For purposes of this subtitle, any profit or advantage which a person contracts for, collects, receives, or obtains by a collateral sale, purchase, or agreement in connection with negotiating, arranging, or making a loan is considered a charge for the loan.</text> </level> <level label="b"> <text>This section does not apply to any commission, dividend, retrospective rating credit, or other consideration received by a licensee or a licensed insurance producer who is an officer, director, agent, employee, or affiliate of a licensee on insurance sold under this subtitle in accordance with the applicable provisions of the Insurance Article.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-311" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Fully indexed rate” means the index rate, as defined in the mortgage loan documents, prevailing at the time the mortgage loan is approved by the lender, plus the margin that will apply after the expiration of an introductory interest rate.</text> </level> <level label="3"> <level label="i"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="ii"> <text>“Mortgage loan” does not include a reverse mortgage loan.</text> </level> </level> </level> <level label="b"> <text>A lender may not take as security for a loan any:</text> <level label="1"> <text>Confession of judgment or power of attorney to him or to a third person to confess judgment or appear for the borrower in a judicial proceeding;</text> </level> <level label="2"> <text>Assignment or order for payment of wages;</text> </level> <level label="3"> <text>Instrument in which blanks are left to be filled after execution; or</text> </level> <level label="4"> <text>Note, promise to pay, or security instrument which does not state:</text> <level label="i"> <text>The principal amount of the loan;</text> </level> <level label="ii"> <text>A schedule of payments or a description of the schedule; and</text> </level> <level label="iii"> <text>The agreed amount and rate of interest, charges, and fees.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>A lender may not take any security interest in:</text> <level label="i"> <text>Real property for any loan under $4,000 in value or amount; or</text> </level> <level label="ii"> <text>Personal property for any loan under $1,400 in value or amount.</text> </level> </level> <level label="2"> <text>Any lien taken in violation of this subsection is void.</text> </level> <level label="3"> <text>This subsection does not apply to or affect a lien on an interest in real property which results from a judgment obtained by the lender based on a loan otherwise secured or unsecured.</text> </level> </level> <level label="d"> <text>A lender may not make a mortgage loan without giving due regard to the borrower’s ability to repay the mortgage loan in accordance with its terms, including the fully indexed rate of the mortgage loan, if applicable, and property taxes and homeowner’s insurance whether or not an escrow account is established for the collection and payment of these expenses.</text> </level> <level label="e"> <level label="1"> <text>Due regard to a borrower’s ability to repay a mortgage loan must include:</text> <level label="i"> <text>Consideration of the borrower’s debt to income ratio, including existing debts and other obligations; and</text> </level> <level label="ii"> <text>Verification of the borrower’s gross monthly income and assets by review of third–party written documentation reasonably believed by the lender to be accurate and complete.</text> </level> </level> <level label="2"> <text>Acceptable third–party written documentation includes:</text> <level label="i"> <text>The borrower’s Internal Revenue Service form W–2;</text> </level> <level label="ii"> <text>A copy of the borrower’s income tax return;</text> </level> <level label="iii"> <text>Payroll receipts;</text> </level> <level label="iv"> <text>The records of a financial institution; or</text> </level> <level label="v"> <text>Other third–party documents that provide reasonably reliable evidence of the borrower’s income or assets.</text> </level> </level> <level label="3"> <text>This subsection does not apply to a mortgage loan:</text> <level label="i"> <text>Approved for government guaranty by the Federal Housing Administration, the Veterans Administration, the United States Department of Agriculture, the Maryland Department of Housing and Community Development, or the Community Development Administration; or</text> </level> <level label="ii"> <text>That refinances an existing mortgage loan if the refinance mortgage loan is:</text> <level label="1"> <text>Offered under the federal Homeowner Affordability and Stability Plan; and</text> </level> <level label="2"> <text>Made available by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.</text> </level> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-312" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Covered loan” means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership Equity Protection Act set forth in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026.</text> </level> <level label="3"> <text>“Credit health insurance” has the meaning stated in § 13–101 of the Insurance Article.</text> </level> <level label="4"> <text>“Credit involuntary unemployment benefit insurance” has the meaning stated in § 13–101 of the Insurance Article.</text> </level> <level label="5"> <level label="i"> <text>“Credit life insurance” means insurance on the life of a borrower that provides indemnity for repayment of a specific loan or credit transaction on the death of the borrower.</text> </level> <level label="ii"> <text>“Credit life insurance” does not include life insurance payable to a beneficiary designated by the borrower other than the obligee of a specific loan or credit transaction.</text> </level> </level> <level label="6"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="7"> <text>“Premium” has the meaning stated in § 1–101 of the Insurance Article.</text> </level> <level label="8"> <text>“Single premium coverage” means insurance for which the total premium is payable in one lump sum at or before the time coverage commences.</text> </level> </level> <level label="b"> <text>Subject to the provisions of this section, a lender may collect from the borrower, at the option of the borrower, the premiums paid for:</text> <level label="1"> <text>Insurance covering any real or personal property pledged as security for the loan;</text> </level> <level label="2"> <text>Credit health insurance covering any one or more borrowers, if the insurance does not provide for benefits exceeding the actual period of disability;</text> </level> <level label="3"> <text>Credit life insurance:</text> <level label="i"> <text>Covering any one borrower for any loan under $700 in value or amount; or</text> </level> <level label="ii"> <text>Covering any one or more borrowers for any loan of $700 or more in value or amount; and</text> </level> </level> <level label="4"> <text>Credit involuntary unemployment benefit insurance covering any one borrower, if the insurance:</text> <level label="i"> <text>Does not provide for benefits exceeding the actual period of unemployment; and</text> </level> <level label="ii"> <text>Is not contingent upon the purchase of any other type of insurance permitted under this subtitle.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>A lender may not require that the insurance be purchased through a particular insurance producer or insurance company.</text> </level> <level label="2"> <text>The lender may:</text> <level label="i"> <text>Assist an applicant or act with the applicant in forwarding an application to an insurance producer; and</text> </level> <level label="ii"> <text>Receive and transmit premiums or other identifiable charges for the insurance.</text> </level> </level> <level label="3"> <text>Subject to subsection (e) of this section, at the option of the borrower, a lender may be coinsured or protected to the extent of his interest by a mortgagee clause.</text> </level> </level> <level label="d"> <level label="1"> <level label="i"> <text>Subject to subsection (e) of this section, the amount of property insurance may not exceed either the reasonable value of the property insured or the originally scheduled total of payments under the loan contract.</text> </level> <level label="ii"> <text>The terms and conditions of the property insurance policy shall be filed with and approved by the Insurance Commissioner.</text> </level> <level label="iii"> <text>Property insurance may be provided by the lender if the borrower, at the time the loan is made, fails to furnish a loss payable endorsement for the protection of the lender in an amount sufficient to cover the amount of the loan or the value of the property securing the loan, whichever is less.</text> </level> <level label="iv"> <text>If, however, within 30 days of the inception date of the loan, the borrower does provide a loss payable endorsement for the protection of the lender, and no claim has been filed under the coverage purchased, the lender shall cancel the property insurance on the loan and shall refund the entire original property insurance premium to the borrower.</text> </level> <level label="v"> <text>A lender providing property insurance under this section shall give the borrower, at the time the loan is made, a written notice of the borrower’s right to provide a loss payable endorsement for the protection of the lender and the borrower’s right to a refund of the entire property insurance premium.</text> </level> </level> <level label="2"> <text>Credit health insurance shall provide for:</text> <level label="i"> <text>Benefits not exceeding the then scheduled unpaid total of payments of the loan;</text> </level> <level label="ii"> <text>A waiting period of at least 14 days; and</text> </level> <level label="iii"> <text>Periodic benefits, the amount of each of which may not exceed the originally scheduled total of payments under the loan contract, divided by the number of installments.</text> </level> </level> <level label="3"> <text>The amount of credit life insurance in force may not exceed the unpaid principal but shall include all accrued interest under the loan contract.</text> </level> <level label="4"> <text>Credit involuntary unemployment benefit insurance shall provide that, in the event of involuntary loss of employment, the aggregate amount of periodic benefits payable in the event of involuntary loss of employment, as defined in the policy, may not exceed the then scheduled unpaid total of payments of the loan.</text> </level> <level label="5"> <level label="i"> <text>Except as provided in this paragraph, a person making a covered loan may not finance as a part of the covered loan transaction single premium coverage for:</text> <level label="1"> <text>Credit health insurance;</text> </level> <level label="2"> <text>Credit involuntary unemployment benefit insurance; or</text> </level> <level label="3"> <text>Credit life insurance.</text> </level> </level> <level label="ii"> <text>Nothing in this paragraph shall prohibit the financing of any insurance coverage in connection with a mobile home or its premises, as those terms are defined in § 8A-101 of the Real Property Article.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>In this subsection, “property insurance coverage” means property insurance against losses caused by perils that commonly are covered in insurance policies described with terms similar to “standard fire” or “standard fire with extended coverage”.</text> </level> <level label="2"> <level label="i"> <text>A lender may not require a borrower, as a condition to receiving or maintaining a loan secured by a first mortgage or first deed of trust, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement value of improvements on the real property.</text> </level> <level label="ii"> <text>In determining the replacement value of the improvements on any real property, the lender may:</text> <level label="1"> <text>Accept the value placed on the improvements by the insurer; or</text> </level> <level label="2"> <text>Use the value placed on the improvements that is determined by the lender’s appraisal of the real property.</text> </level> </level> </level> <level label="3"> <text>A violation of this subsection or of subsection (c)(1) of this section shall entitle the borrower to seek:</text> <level label="i"> <text>An injunction to prohibit the lender who has engaged or is engaging in the violation from continuing or engaging in the violation;</text> </level> <level label="ii"> <text>Reasonable attorney’s fees; and</text> </level> <level label="iii"> <text>Damages directly resulting from the violation.</text> </level> </level> <level label="4"> <text>A violation of this subsection or of subsection (c)(1) of this section does not affect the validity of the first mortgage or first deed of trust securing the loan.</text> </level> </level> <level label="f"> <text>Under this subtitle, insurance may be obtained only:</text> <level label="1"> <text>From an insurance company qualified to do business in the State; and</text> </level> <level label="2"> <text>At rates not exceeding those approved by the Insurance Administration.</text> </level> </level> <level label="g"> <text>Within 25 days after a lender has charged for any insurance in connection with a loan, he shall deliver a copy of the appropriate policy or certificate to the borrower.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-314" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>A person may not lend $25,000 or less if:</text> <level label="1"> <text>The person directly or indirectly contracts for, charges, or receives a greater rate of interest, charge, discount, or other consideration than that authorized by the laws of this State;</text> </level> <level label="2"> <text>The transaction violates the federal Military Lending Act; or</text> </level> <level label="3"> <text>The person is not licensed under or exempt from the licensing requirements under the Maryland Consumer Loan Law – Licensing Provisions.</text> </level> </level> <level label="b"> <level label="1"> <level label="i"> <text>A loan made in the amount of $25,000 or less, regardless of whether the loan is or purports to be made under this subtitle, is void and unenforceable if:</text> <level label="1"> <text>Except as provided in subparagraph (ii) of this paragraph, a person contracts for a loan that has a rate of interest, charge, discount, or other consideration greater than that authorized under State law;</text> </level> <level label="2"> <text>The loan violates the federal Military Lending Act; or</text> </level> <level label="3"> <text>A person who is not licensed under or exempt from the licensing requirements under Title 11, Subtitle 2 of the Financial Institutions Article made the loan.</text> </level> </level> <level label="ii"> <text>A loan is not void and unenforceable if:</text> <level label="1"> <text>A clerical error or mistake resulted in the rate of interest, charge, discount, or other consideration being greater than the amount authorized under State law; and</text> </level> <level label="2"> <text>A person corrects the error or mistake before the first payment is due under the loan.</text> </level> </level> </level> <level label="2"> <text>A person may not receive or retain any principal, interest, fees, or other compensation with respect to any loan that is void and unenforceable under this subsection.</text> </level> <level label="3"> <text>This subsection does not apply to a person who is exempt from licensing under this subtitle.</text> </level> </level> <level label="c"> <level label="1"> <text>This section does not apply to a loan transaction validly made in another state in compliance with a similar loan law of that state.</text> </level> <level label="2"> <text>A lender may not collect an amount that is more than the total amount that would be permitted if this subtitle were applicable.</text> </level> <level label="3"> <text>This section applies to all loans made by a lender domiciled in another state to a borrower who is a resident of this State if the application for the loan originated in this State.</text> </level> </level> <level label="d"> <text>With respect to a loan that is void and unenforceable under this section, a person may not:</text> <level label="1"> <text>Collect or attempt to collect, directly or indirectly, any amount from the borrower;</text> </level> <level label="2"> <text>Enforce or attempt to enforce the contract against any property securing the loan; or</text> </level> <level label="3"> <text>Sell, assign, or otherwise transfer the loan to another person.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-315" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <text>This subtitle shall be interpreted and construed to effectuate its general remedial purpose.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-316" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <text>Any licensee or his officer or employee who knowingly violates any provision of §§ 12–303 through 12–306, § 12–308, § 12–311, or § 12–314 of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $500 or imprisonment not exceeding 6 months or both.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-316.1" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>A licensee or a person exempt from licensing under this subtitle is not subject to a penalty involving the forfeiture of interest or principal for a violation that arises because the licensee or person exempt from licensing in good faith:</text> <level label="1"> <text>Performed or omitted to perform an act in conformity with or in reliance upon:</text> <level label="i"> <text>A written opinion of the Attorney General of Maryland or a regulation adopted by the Commissioner;</text> </level> <level label="ii"> <text>A written opinion by the Commissioner given on request of the licensee or person exempt from licensing; or</text> </level> <level label="iii"> <text>An interpretation by the Commissioner in a written notice or examination report; or</text> </level> </level> <level label="2"> <text>Used a form or procedure that has been approved in writing by the Commissioner and the Attorney General.</text> </level> </level> <level label="b"> <text>The provisions of subsection (a) of this section do not apply to an act or omission to act that occurs after:</text> <level label="1"> <text>The opinion, regulation, or interpretation relied on is amended, repealed, or determined to be invalid for any reason by any judicial or other authority; or</text> </level> <level label="2"> <text>Approval for a form or procedure is amended, rescinded, or determined to be invalid for any reason by any judicial or other authority.</text> </level> </level> <level label="c"> <text>This section may not be construed to:</text> <level label="1"> <text>Limit the imposition of any civil or criminal penalty for a knowing or willful violation of this subtitle; or</text> </level> <level label="2"> <text>Limit the power of the Commissioner or the courts to order a refund to a borrower of moneys collected in violation of this subtitle.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-317" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>This subtitle may be cited as the Maryland Consumer Loan Law -- Credit Provisions.</text> </level> <level label="b"> <text>This subtitle and the Maryland Consumer Loan Law -- Licensing Provisions may be cited jointly as the Maryland Consumer Loan Law.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-318" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <level label="a"> <text>A lender may not accept from any consumer, or give any consumer the option to provide, a tip.</text> </level> <level label="b"> <text>A lender may not directly or indirectly suggest that providing a tip will influence:</text> <level label="1"> <text>The lender’s willingness to provide a loan to a consumer at any time; or</text> </level> <level label="2"> <text>The terms of any loan offered to the consumer by that lender.</text> </level> </level> <level label="c"> <text>A lender who receives a tip may not be found in violation of this subtitle if the lender returns all of the tip within 7 days after receiving the tip.</text> </level> <level label="d"> <text>A lender shall prominently disclose that it is prohibited from accepting a tip from a consumer.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-319" title_number="12" title_name="Credit Regulations" subtitle_number="3" subtitle_name="Consumer Loans -- Credit Provisions"> <text>Notwithstanding any other provision of this title, a loan shall be subject to this subtitle, whether or not elected, if the loan is consumer–directed earned wage access under Subtitle 15 of this title.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-401" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Lender” means:</text> <level label="1"> <text>A licensee; or</text> </level> <level label="2"> <text>A person who makes a secondary mortgage loan but is exempt expressly from the licensing requirements of the Maryland Mortgage Lender Law.</text> </level> </level> <level label="c"> <text>“Licensee” means a person who is required to be licensed under the Maryland Mortgage Lender Law, regardless of whether the person is actually licensed.</text> </level> <level label="d"> <text>“Lien on real property” includes:</text> <level label="1"> <text>A confessed judgment note or consent judgment required by a person who ordinarily requires such an instrument for the purpose of acquiring a lien on property described in subsection (i) of this section; and</text> </level> <level label="2"> <text>A sale and leaseback required by a person for that purpose.</text> </level> </level> <level label="e"> <text>“Loan” means a secondary mortgage loan.</text> </level> <level label="f"> <text>“Net proceeds” means the difference between:</text> <level label="1"> <text>The full amount of a secondary mortgage loan; and</text> </level> <level label="2"> <text>The amount of interest taken in advance on the loan plus the amount of the loan origination fee.</text> </level> </level> <level label="g"> <text>“Payment period” means the period scheduled by the terms of a loan to elapse between the days on which installment payments are required to be made on the loan.</text> </level> <level label="h"> <text>“Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> <level label="i"> <level label="1"> <text>“Secondary mortgage loan” means a loan or deferred purchase price secured in whole or in part by a mortgage, deed of trust, security agreement, or other lien on real property located in the State, which property:</text> <level label="i"> <text>Is subject to the lien of one or more prior encumbrances, except a ground rent or other leasehold interest; and</text> </level> <level label="ii"> <text>Has a dwelling on it designed principally as a residence with accommodations for not more than four families.</text> </level> </level> <level label="2"> <text>“Secondary mortgage loan” does not include:</text> <level label="i"> <text>A loan to any corporation unless the lender required the borrower to incorporate as a condition for obtaining the loan; or</text> </level> <level label="ii"> <text>A commercial loan of more than $75,000, as defined in § 12–101(c) of this title.</text> </level> </level> <level label="3"> <text>If a commercial loan of $75,000 or less is made in the name of an individual, secured by owner–occupied residential real property and not to a business or commercial organization, the mortgage lender, as defined by the provisions of § 11–501 of the Financial Institutions Article, shall document independent evidence that the borrower is seeking funds for a legitimate commercial enterprise before the lender grants any loan for that purpose. An affidavit is not by itself evidence of a commercial loan. However, if the borrower is seeking funds to start a business and has not yet incorporated or prepared documentation of proof of ownership of a commercial enterprise, an affidavit by itself is sufficient if it states the purpose for which the proceeds are to be used and the nature of the business conducted by the borrower.</text> </level> </level> <level label="j"> <text>“Wages” means all remuneration paid to any employee for his employment, including the cash value of all remuneration paid in any medium other than cash.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-402" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>A person may not make a loan under this subtitle unless he is licensed under or exempt from the licensing requirements of the Maryland Mortgage Lender Law.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-402.1" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>On or after January 1, 2019, a lender may, at the lender’s option, elect to make a loan to any borrower either under this subtitle or as otherwise authorized by applicable law.</text> </level> <level label="2"> <text>In order to make a loan under this subtitle, a lender shall make a written election in the agreement, note, or other evidence of the loan specifying that this subtitle will govern the loan.</text> </level> </level> <level label="b"> <level label="1"> <text>If a lender elects to make a loan under this subtitle in accordance with this section, Subtitles 1, 3, 9, and 10 of this title do not apply to the loan.</text> </level> <level label="2"> <text>If a lender who makes or contracts to make a loan does not make a written election under this subtitle or Subtitle 1, Subtitle 3, Subtitle 9, or Subtitle 10 of this title:</text> <level label="i"> <text>Subtitle 1 of this title will apply to the loan if the loan is:</text> <level label="1"> <text>For an amount over $25,000; or</text> </level> <level label="2"> <level label="A"> <text>For an amount of $25,000 or less; and</text> </level> </level> <level label="B"> <text>Not subject to Subtitle 3 of this title; or</text> </level> </level> <level label="ii"> <text>Subtitle 3 of this title will apply to the loan if the loan is:</text> <level label="1"> <text>For an amount of $25,000 or less; and</text> </level> <level label="2"> <text>Subject to Subtitle 3 of this title.</text> </level> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-403" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <text>A person may not advertise directly or indirectly in the State any false or misleading statement regarding secondary mortgage loans or their availability.</text> </level> <level label="b"> <text>This section does not apply to the owner, publisher, operator, or employee of any publication or radio or television station which disseminates the statement without knowledge of its false or misleading character.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-403.1" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>In granting or denying any application for a loan, a lender may not discriminate against any loan applicant solely on the basis of age. Refusal to grant a loan to an applicant who is under the age of 18 is not discrimination solely on the basis of age.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-404" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <text>A lender may:</text> <level label="1"> <text>Make a loan in such an amount that the net proceeds of the loan equal a predetermined sum; and</text> </level> <level label="2"> <text>Take interest in advance on the full amount of the loan for the period from the date the loan is made to the date of maturity of the final installment.</text> </level> </level> <level label="b"> <text>A lender may charge interest at any effective rate of simple interest not to exceed 16 percent per annum on the principal balance of a loan, except as provided in subsection (d) of this section.</text> </level> <level label="c"> <text>A loan shall be amortized in equal or substantially equal monthly installments without a balloon payment at maturity, except that:</text> <level label="1"> <text>Payment on the loan may be reduced or suspended until all prior liens or encumbrances are wholly or partially satisfied;</text> </level> <level label="2"> <text>A lender, including a seller who takes a mortgage or deed of trust to secure payment of all or a portion of the purchase price of a residence sold to a borrower, may make a loan for the purpose of aiding the borrower in the sale of the borrower’s residence or the purchase of a new residence, and may create a balloon payment at maturity of this loan if the balloon payment is:</text> <level label="i"> <text>Expressly disclosed to the borrower;</text> </level> <level label="ii"> <text>Agreed to by both the borrower and the lender/seller in writing; and</text> </level> <level label="iii"> <text>Required to be postponed one time, upon becoming due, at the borrower’s request, for a period not to exceed 6 months, provided that the borrower continues to make the monthly installments provided for in the original loan agreement, and no new closing costs, processing fees or similar fees are imposed on the borrower as a result of the extension; and</text> </level> </level> <level label="3"> <level label="i"> <text>A commercial loan of $75,000 or less made under this subtitle need not be amortized in equal or substantially equal payments and may contain a balloon payment at maturity if the borrower is authorized to postpone the maturity date one time and continue to make installment payments as provided in the original loan agreement and the postponed maturity date does not exceed:</text> <level label="1"> <text>24 months if the original maturity date is more than 12 months after the loan is made; or</text> </level> <level label="2"> <text>6 months if the original maturity date is 12 months or less after the loan is made.</text> </level> </level> <level label="ii"> <text>No new closing costs, processing fees, or similar fees may be imposed on a borrower who elects to postpone the maturity date in accordance with this subsection.</text> </level> </level> </level> <level label="d"> <text>Notwithstanding the provisions of subsections (a), (b), and (c) of this section, on any loan made on or after July 1, 1982, a lender under this subtitle may charge interest not exceeding 24 percent per annum simple interest on the loan provided that:</text> <level label="1"> <text>The interest is computed on the unpaid principal balances outstanding from time to time;</text> </level> <level label="2"> <text>The lender does not contract for, charge, or receive any interest in advance or any compounded interest;</text> </level> <level label="3"> <text>If the loan is a renewal or refinancing of a loan made prior to July 1, 1982, the lender complies with § 12-116 of this title;</text> </level> <level label="4"> <text>If the loan includes a provision for a rate of interest which may be adjusted by the lender during the term of the loan, the lender complies with § 12-118 of this title; and</text> </level> <level label="5"> <text>If the loan is for the purchase of consumer goods, the loan contract complies with § 12-117 of this title.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-404.1" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>Notwithstanding the provisions of §§ 12-404, 12-405(a), and 12-411 of this subtitle, a lender may impose and collect, as a condition of making a loan, all fees, discounts, points, or other charges that lenders are permitted or required to impose, collect, or pay pursuant to a federal law providing for a program of mortgage purchases or loans originated pursuant to a State or local governmental program of direct lending or mortgage purchase, or by any federal agency or instrumentality or subsidiary thereof, including but not limited to the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Reserve Bank, the Federal Home Loan Bank, and the Farmers Home Administration, if the following conditions are met:</text> <level label="1"> <text>The loan is eligible for purchase pursuant to a commitment or offer to purchase by the federal, State, or local government agency, instrumentality, or subsidiary; and</text> </level> <level label="2"> <level label="i"> <text>The sum of the fees, discounts, points, or other charges imposed plus the interest rate on the loan does not exceed 24 percent; and</text> </level> <level label="ii"> <text>The fees, discounts, points, or other charges imposed and the interest rate on the loan do not exceed those allowed by the applicable federal law providing for the mortgage purchase program.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-405" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>A lender may collect a loan origination fee for making a loan under this subtitle only as provided in this section.</text> </level> <level label="2"> <text>The aggregate amount of the loan origination fee imposed by a lender under this section when combined with any finder’s fee imposed by a mortgage broker under § 12-804 of this title may not exceed the greater of:</text> <level label="i"> <text>$500 or 10 percent of the net proceeds of a commercial loan of $75,000 or less made under this subtitle; or</text> </level> <level label="ii"> <text>$250 or 10 percent of the net proceeds of any other loan made under this subtitle.</text> </level> </level> <level label="3"> <text>A lender may not collect from the borrower any other commission, finder’s fee, or point for obtaining, procuring, or placing a loan under this subtitle.</text> </level> <level label="4"> <text>A lender who utilizes the provisions of § 12-404.1 of this subtitle, relating to federal second mortgage purchase programs, is not entitled to the origination fee provided for in paragraph (2) of this subsection in addition to the fees, discounts, points, or charges allowed under § 12-404.1(2) of this subtitle. All other second mortgage programs in this State are limited to the charges and fees provided in paragraph (2) of this subsection.</text> </level> </level> <level label="b"> <text>A lender may collect the fees paid to a public official or governmental agency for recording or satisfying the instrument securing the loan.</text> </level> <level label="c"> <level label="1"> <text>A lender may collect from the borrower a delinquent or late charge of the greater of $2 or 5 percent of the amount of any delinquent or late periodic installment, if:</text> <level label="i"> <text>The delinquency has continued for at least 10 days; and</text> </level> <level label="ii"> <text>A delinquent or late charge has not already been charged for the same delinquency.</text> </level> </level> <level label="2"> <text>The lender shall deduct the charge from the next payment made by the borrower.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-406" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <text>Except as permitted by § 12-405(a) of this subtitle, any commission, finder’s fee, or point shall be paid by the lender, and may be paid only to:</text> <level label="1"> <text>A licensed real estate broker;</text> </level> <level label="2"> <text>A lawyer licensed to practice law in the State; or</text> </level> <level label="3"> <text>A licensee.</text> </level> </level> <level label="b"> <text>An agreement to pay a commission, finder’s fee, or point may not be enforced unless it is in writing and signed by the lender.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-407" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Commissioner” has the meaning stated in § 12–301(b) of this article.</text> </level> <level label="3"> <text>“Cost of the loan” means the total amount of:</text> <level label="i"> <text>As nearly as the same can be determined, the charges payable by the borrower for the loan under §§ 12–405(a) and (b) and 12–410 of this subtitle; and</text> </level> <level label="ii"> <text>The interest which will be charged if the loan is carried to maturity.</text> </level> </level> </level> <level label="b"> <text>At the time a loan is made, the lender shall deliver to the borrower a statement in a form required by the Commissioner that complies with § 12–106(b) of this title.</text> </level> <level label="c"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, at the time a lender receives a payment on account of a loan, the lender shall give to the borrower a plain and complete receipt for the payment.</text> </level> <level label="2"> <text>If the payment is made by personal check, money order, cashier’s check, or treasurer’s check, the lender need give a receipt to the borrower only on the request of the borrower.</text> </level> </level> <level label="d"> <level label="1"> <text>A lender shall permit a borrower to prepay a loan in full or in part at any time, without penalty.</text> </level> <level label="2"> <text>If a borrower prepays a loan in full, he shall receive a refund credit for the interest taken in advance. The amount of the refund shall be calculated in accordance with subsection (f) of this section.</text> </level> </level> <level label="e"> <level label="1"> <text>After full repayment of a loan, the lender shall:</text> <level label="i"> <text>Indelibly mark with the word “paid” or “canceled” and return each note or other paper signed by the borrower; and</text> </level> <level label="ii"> <text>Release the mortgage, deed of trust, security agreement, or other lien.</text> </level> </level> <level label="2"> <text>The lender shall prepare the release of the mortgage, deed of trust, security agreement, or other lien at his own expense.</text> </level> </level> <level label="f"> <text>If interest charged pursuant to this subtitle in respect of a loan to a borrower has been precomputed, then, in the event of prepayment of the entire loan, the lender shall refund or credit to the borrower the unearned portion of the precomputed interest charge. This refund or credit shall be in an amount not less than the amount which would be refunded or credited if the unearned precomputed interest charge were calculated in accordance with the actuarial method, except that the borrower may not be entitled to a refund or credit of less than $5. The unearned portion of the precomputed interest charge is, at the option of the lender, either:</text> <level label="1"> <text>That portion of the precomputed interest charge which is allocable to all originally scheduled, or, if deferred, all deferred payment periods, or portions of payment periods, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each period, or portion of a period, had the loan not been precomputed, by applying to the unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deferred. The lender, at its option, may round this annual percentage rate to the nearest 1/4 of 1 percent; or</text> </level> <level label="2"> <text>The total precomputed interest charge less the earned precomputed interest charge. The earned precomputed interest charge shall be determined by applying an annual percentage rate based on the total precomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-407.1" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <text>The Commissioner shall develop and prepare a form that each lender shall furnish to an applicant for a secondary mortgage loan. The form shall state the following:</text> <level label="1"> <text>The purpose for which the loan is to be used;</text> </level> <level label="2"> <text>A disclosure that, if the loan is for a commercial purpose, the borrower shall forfeit certain rights.</text> </level> </level> <level label="b"> <text>The form shall state that the forfeiture of rights includes:</text> <level label="1"> <text>The borrower’s right to pay a loan origination fee that, when combined with any finder’s fee imposed by a mortgage broker under § 12-804 of this title, does not exceed the greater of:</text> <level label="i"> <text>$500 or 10 percent of the net proceeds of a commercial loan of $75,000 or less made under this subtitle; or</text> </level> <level label="ii"> <text>$250 or 10 percent of the net proceeds of any other loan made under this subtitle;</text> </level> </level> <level label="2"> <text>The borrower’s right not to pay any other commission, finder’s fees, or points for obtaining, procuring, or placing a loan; and</text> </level> <level label="3"> <text>The borrower’s right not to pay an interest rate greater than 24 percent.</text> </level> </level> <level label="c"> <text>This section does not prevent a lender from imposing fees, discounts, points, or other charges whenever permitted under § 12-404.1 of this subtitle concerning mortgage loan programs of state and federal agencies.</text> </level> <level label="d"> <text>Compliance with the provisions of this section does not relieve the lender or mortgage broker from the provisions of § 12-401(i)(3) of this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-408" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>A lender may not refinance a loan more often than:</text> <level label="1"> <text>Once during any twelve-month period of the loan; and</text> </level> <level label="2"> <text>Twice during any five-year period of the loan.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-409" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>An instrument which evidences or secures a loan may not contain any:</text> <level label="1"> <text>Acceleration clause under which any part or all of the unpaid balance of the loan not yet matured may be declared due and payable for any reason other than default by the debtor in the payment or in another required term of the instrument;</text> </level> <level label="2"> <text>Provision by which the debtor waives any right accruing to him under the provisions of this subtitle; or</text> </level> <level label="3"> <text>Assignment or order for the payment of wages, whether earned or to be earned.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-409.1" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Covered loan” means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership Equity Protection Act set forth in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026.</text> </level> <level label="3"> <text>“Fully indexed rate” means the index rate, as defined in the secondary mortgage loan documents, prevailing at the time the secondary mortgage loan is approved by the lender, plus the margin that will apply after the expiration of an introductory interest rate.</text> </level> <level label="4"> <text>“Home buyer education or housing counseling” means instruction on preparing for home ownership, shopping for a home, obtaining a mortgage, loan closing, and life as a homeowner.</text> </level> </level> <level label="b"> <text>A lender may not make a secondary mortgage loan without giving due regard to the borrower’s ability to repay the secondary mortgage loan in accordance with its terms, including the fully indexed rate of the secondary mortgage loan, if applicable, and property taxes and homeowner’s insurance whether or not an escrow account is established for the collection and payment of these expenses.</text> </level> <level label="c"> <level label="1"> <text>Due regard to a borrower’s ability to repay a secondary mortgage loan must include:</text> <level label="i"> <text>Consideration of the borrower’s debt to income ratio, including existing debts and other obligations; and</text> </level> <level label="ii"> <text>Verification of the borrower’s gross monthly income and assets by review of third–party written documentation reasonably believed by the lender to be accurate and complete.</text> </level> </level> <level label="2"> <text>Acceptable third–party written documentation includes:</text> <level label="i"> <text>The borrower’s Internal Revenue Service form W–2;</text> </level> <level label="ii"> <text>A copy of the borrower’s income tax return;</text> </level> <level label="iii"> <text>Payroll receipts;</text> </level> <level label="iv"> <text>The records of a financial institution; or</text> </level> <level label="v"> <text>Other third–party documents that provide reasonably reliable evidence of the borrower’s income or assets.</text> </level> </level> <level label="3"> <text>This subsection does not apply to a secondary mortgage loan:</text> <level label="i"> <text>Approved for government guaranty by the Federal Housing Administration, the Veterans Administration, the United States Department of Agriculture, the Maryland Department of Housing and Community Development, or the Community Development Administration; or</text> </level> <level label="ii"> <text>That refinances an existing mortgage loan if the refinance mortgage loan is:</text> <level label="1"> <text>Offered under the federal Homeowner Affordability and Stability Plan; and</text> </level> <level label="2"> <text>Made available by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.</text> </level> </level> </level> </level> <level label="d"> <level label="1"> <text>In this subsection, “loan application” has the meaning stated in § 12–125 of this title.</text> </level> <level label="2"> <text>At the time a borrower completes a loan application for a covered loan, the lender shall provide the borrower with:</text> <level label="i"> <text>A written recommendation that the borrower seek home buyer education or housing counseling; and</text> </level> <level label="ii"> <text>A list of agencies and organizations approved by the county in which the residential real property securing the covered loan is located to provide home buyer education or housing counseling.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-410" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Covered loan” means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership and Equity Protection Act set forth in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026.</text> </level> <level label="3"> <text>“Credit health insurance” has the meaning stated in § 13–101 of the Insurance Article.</text> </level> <level label="4"> <text>“Credit involuntary unemployment benefit insurance” has the meaning stated in § 13–101 of the Insurance Article.</text> </level> <level label="5"> <level label="i"> <text>“Credit life insurance” means insurance on the life of a borrower that provides indemnity for repayment of a specific loan or credit transaction on the death of the borrower.</text> </level> <level label="ii"> <text>“Credit life insurance” does not include life insurance payable to a beneficiary designated by the borrower other than the obligee of a specific loan or credit transaction.</text> </level> </level> <level label="6"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="7"> <text>“Premium” has the meaning stated in § 1–101 of the Insurance Article.</text> </level> <level label="8"> <text>“Single premium coverage” means insurance for which the total premium is payable in one lump sum at or before the time coverage commences.</text> </level> </level> <level label="b"> <text>Subject to the provisions of this section, a lender may require a borrower to insure and may collect from the borrower the premiums paid for insurance on:</text> <level label="1"> <text>Any real property securing the loan;</text> </level> <level label="2"> <text>The life of any person obligated on the loan; and</text> </level> <level label="3"> <text>The title of any real property securing the loan.</text> </level> </level> <level label="c"> <text>Subject to the provisions of this section, the licensee may collect from the borrower, at the borrower’s option, the premiums paid for credit health insurance covering any one borrower obligated on the loan. The insurance may not provide benefits exceeding the actual period of disability.</text> </level> <level label="d"> <level label="1"> <text>Subject to the provisions of subsections (e), (f), (g), and (h) of this section, a lender may collect from a borrower, at the option of the borrower, the premiums paid for credit involuntary unemployment benefit insurance covering the borrower.</text> </level> <level label="2"> <text>The availability of credit involuntary unemployment benefit insurance to a borrower may not be made contingent on the purchase of any other type of insurance permitted under this section.</text> </level> </level> <level label="e"> <level label="1"> <text>Except as provided in this subsection, a lender making a covered loan may not finance as a part of the covered loan transaction single premium coverage for:</text> <level label="i"> <text>Credit health insurance;</text> </level> <level label="ii"> <text>Credit involuntary unemployment benefit insurance; or</text> </level> <level label="iii"> <text>Credit life insurance.</text> </level> </level> <level label="2"> <text>Nothing in this subsection shall prohibit the financing of any insurance coverage in connection with a mobile home or its premises, as those terms are defined in § 8A-101 of the Real Property Article.</text> </level> </level> <level label="f"> <level label="1"> <level label="i"> <level label="1"> <text>In this paragraph the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Improvements” means buildings or structures erected upon or affixed to real property that enhance the value of the real property.</text> </level> <level label="3"> <text>“Property insurance coverage” means property insurance against losses caused by perils that commonly are covered in insurance policies described with terms similar to “standard fire” or “standard fire with extended coverage”.</text> </level> <level label="4"> <level label="A"> <text>”Replacement cost” means the amount needed to repair damage to or rebuild improvements on real property to restore the improvements to their pre-loss condition.</text> </level> </level> <level label="B"> <text>“Replacement cost” does not include the value of land.</text> </level> </level> <level label="ii"> <text>A lender may not require a borrower, as a condition to receiving or maintaining a secondary mortgage loan, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement cost of the improvements on the real property.</text> </level> <level label="iii"> <text>In determining the replacement cost of the improvements on any real property, the lender may:</text> <level label="1"> <text>Accept the value placed on the improvements by the insurer; or</text> </level> <level label="2"> <text>Use the value placed on the improvements by the lender’s appraisal of the improvements.</text> </level> </level> <level label="iv"> <text>Any property insurance coverage required by a lender shall bear a reasonable relation to the existing risk of loss.</text> </level> <level label="v"> <text>A violation of this paragraph or of subsection (h) of this section shall entitle the borrower to:</text> <level label="1"> <text>Seek an injunction to prohibit the lender who has engaged or is engaging in the violation from continuing or engaging in the violation;</text> </level> <level label="2"> <text>Reasonable attorney’s fees; and</text> </level> <level label="3"> <text>Damages directly resulting from the violation.</text> </level> </level> <level label="vi"> <text>A violation of this paragraph or of subsection (h) of this section does not affect the validity of the mortgage or deed of trust securing the secondary mortgage loan.</text> </level> </level> <level label="2"> <text>The amount of credit life insurance may not exceed the total original amount payable under the loan contract.</text> </level> <level label="3"> <text>The credit health insurance shall provide:</text> <level label="i"> <text>Benefits not exceeding the then scheduled unpaid total of payments of the loan;</text> </level> <level label="ii"> <text>A waiting period for the collection of benefits of at least 14 days; and</text> </level> <level label="iii"> <text>Periodic benefits, the amount of each of which may not exceed the originally scheduled total of payments under the loan contract, divided by the number of installments.</text> </level> </level> <level label="4"> <text>The credit involuntary unemployment benefit insurance may not provide that:</text> <level label="i"> <text>The periodic benefits shall continue for a period exceeding the actual period of the borrower’s involuntary unemployment; or</text> </level> <level label="ii"> <text>The aggregate amount of periodic benefits payable in the event of a borrower’s involuntary loss of employment shall exceed the scheduled unpaid total of payments remaining on the loan on the date of the borrower’s involuntary loss of employment.</text> </level> </level> <level label="5"> <text>A lender may not require a borrower to purchase credit involuntary unemployment benefit insurance as a condition of obtaining a loan.</text> </level> </level> <level label="g"> <text>Under this subtitle, insurance may be obtained only:</text> <level label="1"> <text>From an insurance company qualified to do business in the State; and</text> </level> <level label="2"> <text>At rates not exceeding those approved by the Insurance Administration.</text> </level> </level> <level label="h"> <text>A lender may not require the borrower to purchase any insurance:</text> <level label="1"> <text>Through a particular insurance producer or insurance company; or</text> </level> <level label="2"> <text>From the lender.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-411" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>A lender may not directly or indirectly, contract for, charge, or receive, any interest, discount, fee, fine, commission, brokerage, charge, or other consideration in excess of that permitted by this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-412" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>A lender may not make or offer to make any secondary mortgage loan except within the terms and conditions authorized by this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-413" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>Except for a bona fide error of computation, if a lender violates any provision of this subtitle he may collect only the principal amount of the loan and may not collect any interest, costs, or other charges with respect to the loan. In addition, a lender who knowingly violates any provision of this subtitle also shall forfeit to the borrower three times the amount of interest and charges collected in excess of that authorized by law.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-414" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>Any lender, his officer or employee and any other person who willfully violates any provision of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000 or imprisonment not exceeding one year or both.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-415" title_number="12" title_name="Credit Regulations" subtitle_number="4" subtitle_name="Secondary Mortgage Loans -- Credit Provisions"> <text>This subtitle may be cited as the Maryland Secondary Mortgage Loan Law.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-501" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Account” means a retail credit account.</text> </level> <level label="c"> <level label="1"> <text>“Buyer” means a person who, under a retail credit account transaction, buys goods or obtains services from a seller not principally for the purpose of resale.</text> </level> <level label="2"> <text>“Buyer” includes:</text> <level label="i"> <text>A person who enters into a prior agreement with a financial institution by which the financial institution agrees to pay the debts of the buyer as they accrue at various retail sellers designated by the financial institution, in consideration of which the buyer pays to the financial institution the cash sale price and the finance charge; and</text> </level> <level label="ii"> <text>A prospective buyer.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>“Cash sale price” means the price for which the seller would sell or furnish to the buyer the goods or services which are the subject of a retail credit account if the sale were a sale for cash and not under the account.</text> </level> <level label="2"> <text>“Cash sale price” includes any taxes and charges for delivery, installation, servicing, repair, alteration, or any improvement which is supplied or rendered in connection with the sale.</text> </level> </level> <level label="e"> <text>“Closed end account” means a retail credit account in which the finance charge is computed in advance and assessed on the original unpaid balance of the purchase price.</text> </level> <level label="f"> <text>“Finance charge” means the amount, however expressed, in excess of the cash sale price which a seller or financial institution charges a buyer for the privilege of purchasing goods or services in a retail credit account transaction.</text> </level> <level label="g"> <level label="1"> <text>“Financial institution” means a person who enters into an agreement with a buyer by which the person agrees to extend credit to the buyer and apply it as directed by him by use of a credit card which the person issues to the buyer.</text> </level> <level label="2"> <text>“Financial institution” includes an incorporated bank, savings institution, and trust company.</text> </level> </level> <level label="h"> <level label="1"> <text>“Goods” means any tangible personal property purchased primarily for personal, family, or household purposes, including any certificate or coupon exchangeable for it.</text> </level> <level label="2"> <text>“Goods” includes goods which at or after the time of sale are affixed to real property or become a part of it, whether or not severable from it.</text> </level> <level label="3"> <text>“Goods” does not include any:</text> <level label="i"> <text>Tangible personal property purchased primarily for industrial, commercial, or agricultural purposes;</text> </level> <level label="ii"> <text>Motor vehicle, as defined in the State Motor Vehicle Law; or</text> </level> <level label="iii"> <text>Home improvement, as defined in the Maryland Home Improvement Law, or any transaction under that law.</text> </level> </level> </level> <level label="i"> <text>“Holder” means a person, including a seller and a financial institution, entitled to enforce a retail credit account against a buyer.</text> </level> <level label="j"> <text>“Open end account” means a retail credit account in which the finance charge is assessed on the outstanding balances from month to month.</text> </level> <level label="k"> <text>“Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> <level label="l"> <level label="1"> <text>“Retail credit account” means an agreement or transaction for the retail sale of goods or services, which is negotiated or entered into and pursuant to which a time sale price is established.</text> </level> <level label="2"> <text>“Retail credit account” includes credit card financing by a financial institution.</text> </level> </level> <level label="m"> <text>“Seller” means a person regularly engaged in the business of selling goods to retail buyers.</text> </level> <level label="n"> <level label="1"> <text>“Services” means work, labor, and services furnished primarily for personal, family, or household purposes.</text> </level> <level label="2"> <text>“Services” includes:</text> <level label="i"> <text>Services furnished in connection with the improvement of real property; and</text> </level> <level label="ii"> <text>Contributions to a “charitable organization” as defined in the Maryland Charitable Solicitations Act.</text> </level> </level> <level label="3"> <text>“Services” does not include any:</text> <level label="i"> <text>Work, labor, or service furnished primarily for industrial, commercial, or agricultural purposes; or</text> </level> <level label="ii"> <text>Service for which the tariff, rate, charge, cost, or expense, including in each instance the time sale price, is required by law to be filed with or approved by the United States, the State, or any department, division, commission, or agency of either.</text> </level> </level> </level> <level label="o"> <text>“Time sale price” means the total of the cash sale price and the amount of the finance charge.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-502" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>Each retail credit account established after May 31, 1967 shall comply with this subtitle.</text> </level> <level label="b"> <level label="1"> <text>Notwithstanding any situs of contract specified in it, a retail credit account is made in this State and is subject to this subtitle if:</text> <level label="i"> <text>The seller offers or agrees in this State to sell to a resident buyer of this State; or</text> </level> <level label="ii"> <text>The resident buyer of this State accepts or makes the offer in this State to buy.</text> </level> </level> <level label="2"> <text>A verbal or written solicitation or communication to sell that originates outside the State but that is forwarded to and received in the State by a resident buyer of this State shall be construed as an offer or agreement to sell in this State.</text> </level> <level label="3"> <text>A verbal or written solicitation to buy that originates in this State from a resident buyer of this State and that is forwarded to and received by a retail seller outside this State shall be construed as an acceptance or offer to buy in this State.</text> </level> </level> <level label="c"> <text>This subtitle does not apply to an installment sale agreement, as defined in § 12-601 of this title, relating to goods, as defined in that section, regardless of the cash sale price of the goods.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-503" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>A retail credit account may be established by a seller or financial institution only on the request of a buyer or with his consent.</text> </level> <level label="b"> <level label="1"> <text>A seller or financial institution may not discriminate solely on the basis of race, sex, sexual orientation, gender identity, religious beliefs, disability, marital status, geographic area of residence, neighborhood of residence, or age against a buyer who wishes to establish an account. Refusal to establish an account for a buyer who is under the age of 18 is not discrimination solely on the basis of age.</text> </level> <level label="2"> <text>An application, questionnaire, or other written document used to establish credit for an applicant may not contain any reference to the race, creed, color, or national origin of the applicant.</text> </level> <level label="3"> <text>An investigation made for the purpose of establishing credit for an applicant may not contain any information pertaining to the race, creed, color, or national origin of the applicant.</text> </level> </level> <level label="c"> <text>For the purpose of considering the eligibility of a buyer for an extension of credit, a seller or financial institution shall consider alimony or child support awarded by a court and received by the buyer as income to the buyer.</text> </level> <level label="d"> <level label="1"> <text>If a seller or financial institution establishes an account for the use of a buyer, the seller or financial institution shall confirm the fact to the buyer in writing. The confirmation shall be in type no smaller than elite typewriter characters and shall contain:</text> <level label="i"> <text>A clear and understandable statement of the amount or the rate of the finance charge;</text> </level> <level label="ii"> <text>A legend that the buyer may pay at any time the entire balance without incurring any additional charge for prepayment;</text> </level> <level label="iii"> <text>A statement which advises the buyer of his right under § 12-510 of this subtitle to an answer to a written inquiry concerning the status of his account; and</text> </level> <level label="iv"> <text>Unless set out in a copy of the application form delivered to the buyer, the legend required by subsection (e)(2) of this section.</text> </level> </level> <level label="2"> <text>If no copy of the confirmation is retained by the seller or financial institution, a notation in the permanent records of the seller or financial institution which shows that the confirmation was mailed and the date of mailing is admissible as evidence of the mailing.</text> </level> </level> <level label="e"> <level label="1"> <text>A retail credit account agreement shall be in writing and either:</text> <level label="i"> <text>Signed by the buyer; or</text> </level> <level label="ii"> <text>The seller or financial institution shall have made a reasonable attempt to obtain the signature of the buyer to the agreement.</text> </level> </level> <level label="2"> <text>A legend stating that finance charges will be made in amounts or at rates not in excess of those permitted by law shall be printed in type no smaller than elite typewriter characters in both:</text> <level label="i"> <text>The application form used by the seller or financial institution; and</text> </level> <level label="ii"> <text>A copy of either the application form or the confirmation delivered or mailed to the buyer when the retail credit account is established.</text> </level> </level> </level> <level label="f"> <text>Before the first payment on an account is due, other than any down payment, and within 40 days after each purchase, the holder of a retail credit account shall inform the buyer in writing of:</text> <level label="1"> <text>The cash sale price of the goods or services purchased;</text> </level> <level label="2"> <text>The amount of any down payment;</text> </level> <level label="3"> <text>A general description of the type of goods or services and the date of each purchase;</text> </level> <level label="4"> <text>If the account is a closed end account:</text> <level label="i"> <text>The amount of the finance charge;</text> </level> <level label="ii"> <text>The time sale price;</text> </level> <level label="iii"> <text>The amount of each installment due, expressed in dollars; and</text> </level> <level label="iv"> <text>The time or period of the payment of each installment; and</text> </level> </level> <level label="5"> <text>If the account is an open end account:</text> <level label="i"> <text>The amount or the rate of the finance charge on the outstanding balance; and</text> </level> <level label="ii"> <text>The method of determining the outstanding balance pursuant to § 12-506(c) of this subtitle.</text> </level> </level> </level> <level label="g"> <text>Unless the buyer previously received written notice by coupon, book, or otherwise of the amount of the payment and the amount of the unpaid balance after the payment, the holder of a retail credit account shall inform the buyer in writing, within 40 days after each payment, of:</text> <level label="1"> <text>The total amount remaining due to the seller; and</text> </level> <level label="2"> <text>The total amount paid by the buyer since the last written notice.</text> </level> </level> <level label="h"> <text>The buyer under an open end retail credit account may request in writing, not more frequently than once each year, that the holder of the account inform the buyer of the total amount of finance charges assessed on the account during the preceding calendar year and the holder shall so advise the buyer in writing within 30 days of the request.</text> </level> <level label="i"> <text>The holder of a retail credit account shall disclose his address and telephone number on each billing statement for the use of the buyer for status and billing inquiries under §§ 12-510 and 12-511 of this subtitle.</text> </level> <level label="j"> <text>Except as otherwise provided in this section, the information required by this section may be stated in any sequence, order, or form and in one or more documents. Additional items may be included with the information to explain the computations made in determining the amount to be paid by the buyer.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-504" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>Notwithstanding any other statutory law, a seller, financial institution, or the successor in interest of either may charge, collect, and receive under a retail credit account a finance charge, however described, not to exceed the amounts permitted in §§ 12-505 and 12-506 of this subtitle.</text> </level> <level label="b"> <text>If the date of performance or delivery of an item or service is more than 10 days from the date of purchase, the finance charge shall be computed from the date of performance or delivery.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-505" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>In a closed end account, the finance charge may not exceed the greater of:</text> <level label="1"> <text>An amount computed using the following annual simple interest rates of finance charge:</text> <level label="i"> <text>22 percent on that part of the outstanding balance not exceeding $1,000; and</text> </level> <level label="ii"> <text>18 percent on that part of the outstanding balance exceeding $1,000; or</text> </level> </level> <level label="2"> <text>A minimum charge of $10 or, if the due date of the last installment is eight months or less after the effective date of the retail credit account agreement, $8.</text> </level> <level label="3"> <text>Notwithstanding the provisions of paragraph (1) of this subsection, in a closed end account made on or after July 1, 1982, the finance charge may not exceed 24 percent per annum simple interest.</text> </level> </level> <level label="b"> <level label="1"> <text>In a closed end account, the finance charge may be computed:</text> <level label="i"> <text>On the actual unpaid principal outstanding from time to time; or</text> </level> <level label="ii"> <text>In advance, at the time the purchase is made, by adding to the original unpaid balance the amount of finance charge that would be earned if the account were repaid exactly according to its terms at the rate stated in subsection (a) of this section.</text> </level> </level> <level label="2"> <text>Nothing in this section shall be construed to prohibit any particular method of computing the finance charge on a closed end account so long as the amount of the finance charge does not result in a rate of charge in excess of that permitted by subsection (a) of this section.</text> </level> </level> <level label="c"> <text>Amounts due under a closed end account may be payable in successive monthly, semimonthly, or weekly installments.</text> </level> <level label="d"> <text>As part of the regular practice of a holder, he may include fractional periods of 15 days or more as a whole month if he also entirely excludes fractional periods of 14 days or less.</text> </level> <level label="e"> <level label="1"> <text>A buyer may prepay at any time, without penalty, all or any part of the outstanding balance of a closed end account.</text> </level> <level label="2"> <text>Except as provided in paragraph (4) of this subsection, if the buyer pays the balance in full before maturity, the holder immediately shall refund to him a portion of the finance charge, including the charge provided in subsection (a)(2) of this section.</text> </level> <level label="3"> <text>The amount of the refund shall be calculated in accordance with subsection (g) of this section.</text> </level> <level label="4"> <text>If a prepayment is made, the holder is entitled to retain a finance charge of at least $6. If the amount of credit for prepayment is less than $1, no refund need be made.</text> </level> </level> <level label="f"> <level label="1"> <text>The holder of a closed end account on which the finance charge is computed in advance may:</text> <level label="i"> <text>By agreement with the buyer, extend the scheduled due date or defer the scheduled payment of all or part of the installments payable under it; and</text> </level> <level label="ii"> <text>Charge the buyer an extension or deferral charge.</text> </level> </level> <level label="2"> <text>The extension or deferral charge may not exceed an amount equal to 1 percent per month of the amount extended or deferred for the period of extension or deferral.</text> </level> <level label="3"> <text>The period of extension or deferral may not exceed the period from the date when the extended or deferred amount would have been payable in the absence of the extension or deferral to the date when the amount is made payable under the agreement of extension or deferral.</text> </level> </level> <level label="g"> <text>If interest charged pursuant to this subtitle in respect of a loan to a buyer has been precomputed, then, in the event of prepayment of the entire loan, the holder shall refund or credit to the buyer the unearned portion of the precomputed interest charge. This refund or credit shall be in an amount not less than the amount which would be refunded or credited if the unearned precomputed interest charge were calculated in accordance with the actuarial method, except that the buyer may not be entitled to a refund or credit of less than $5. The unearned portion of the precomputed interest charge is, at the option of the holder, either:</text> <level label="1"> <text>That portion of the precomputed interest charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions of payment periods, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each period, or portion of a period, had the loan not been precomputed, by applying to the unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deferred. The holder at its option, may round this annual percentage rate to the nearest 1/4 of 1 percent; or</text> </level> <level label="2"> <text>The total precomputed interest charge less the earned precomputed interest charge. The earned precomputed interest charge shall be determined by applying an annual percentage rate based on the total precomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-505.1" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>Any closed end account made prior to July 1, 1982 which is refinanced at a higher rate pursuant to § 12–505(a)(3) of this subtitle must comply with the following requirements:</text> <level label="1"> <text>The holder must give the following disclosure in writing to the buyer prior to the execution by the buyer of the new retail credit account agreement:</text> <text>If you do agree to consolidate your existing account, you will be paying an annual percentage rate of ..... on the existing net balance of $........, instead of the rate of ....... which you are now paying.</text> <text>Schedule of Monthly Payments</text> <text>Separate Account Agreements Consolidated Account Agreement</text> <text>$....... per month for $....... per month for </text> <text>the next ....... months the next ....... months </text> <text>then</text> <text>$....... per month for</text> <text>....... months after that</text> <text>Total of Payments</text> <text>Separate Account Agreements Consolidated Account Agreement </text> <text>$....... total of $....... total of</text> <text>payments for your payments for your</text> <text>existing account consolidated account </text> <text>....... total of payments</text> <text>for your new account </text> </level> <level label="2"> <text>The holder must allow the buyer the choice of repaying his existing account balance at the originally agreed upon rate and obtaining any additional extension of credit as a separate account, notwithstanding any law which limits the holder’s ability to establish more than 1 account for the same buyer;</text> </level> <level label="3"> <text>An account may be refinanced only upon the buyer’s request;</text> </level> <level label="4"> <text>The holder must refund or credit to the buyer’s account any unearned finance charge and any returned insurance premiums upon the cancellation of insurance sold in connection with the obligation;</text> </level> <level label="5"> <text>The holder must allow the buyer the right to cancel the consolidated purchase agreement within 3 business days and to elect the separate account option pursuant to subsection (2). The holder shall provide to the buyer conspicuous notice of the provisions of this subsection; and</text> </level> <level label="6"> <text>Nothing in this subsection shall prohibit the receipt of goods or services by the buyer at the time the consolidated purchase agreement is made.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-505.2" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>A seller or holder may not enter into a closed end retail credit account agreement, providing for an initial rate of finance charge pursuant to § 12-505(a)(3) of this subtitle, which contains a provision that permits the seller or holder to increase or decrease the applicable rate of finance charge from time to time during the term of the account.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-505.3" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>With respect to a closed end retail credit account established at a rate pursuant to § 12-505(a) of this subtitle, the agreement may not provide for a balloon payment.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-506" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>In an open end account:</text> <level label="1"> <text>The finance charge may not exceed 1.5 percent a month on that part of the outstanding balance not exceeding $700;</text> </level> <level label="2"> <text>The finance charge may not exceed 1 percent per month on that part of the outstanding balance exceeding $700;</text> </level> <level label="3"> <text>Notwithstanding the provisions of paragraphs (1) and (2) of this subsection, the finance charge may not exceed 2 percent per month on that part of the outstanding balance originating on or after July 1, 1982;</text> </level> <level label="4"> <text>Including a credit card plan that provides for sales, cash advances, or both, the buyer or borrower may not be required to pay a membership fee for the privilege of participating in the plan;</text> </level> <level label="5"> <text>If made at a rate pursuant to paragraph (3) of this subsection, the seller or holder may not contract for, charge, or receive any compounded interest or compounded finance charge; and</text> </level> <level label="6"> <text>A seller or financial institution may assess either, but not both:</text> <level label="i"> <text>A finance charge equal to the rate of interest charged on past due accounts as provided in the agreement; or</text> </level> <level label="ii"> <text>A late payment charge.</text> </level> </level> </level> <level label="b"> <text>In an open end account, if a finance charge is applied to all outstanding balances within a range not exceeding $10, the finance charge may be computed on the basis of the median amount within the range.</text> </level> <level label="c"> <text>For the purpose of computing the outstanding balance of an open end account subject to the finance charge, the outstanding balance:</text> <level label="1"> <text>On any day may not exceed the sum of the total charges to the account less the amounts paid or credited to the account before that day; or</text> </level> <level label="2"> <text>May be computed by the average daily balance method except that a finance charge may not be assessed on an account if the outstanding balance is paid in full 25 days after the billing cycle.</text> </level> </level> <level label="d"> <text>In an open end account, (1) the finance charge in any given month may not exceed an amount which may be assessed pursuant to subsection (c)(2) of this section; and (2) if there is no balance at the beginning of a billing cycle, a finance charge may not be assessed on any charge added to the account during that billing cycle from the date of purchase to the end of that billing cycle.</text> </level> <level label="e"> <text>A finance charge for a monthly period may not be imposed on an open end account unless the periodic statement for that month is mailed to the buyer at least 15 days before the end of the next billing cycle.</text> </level> <level label="f"> <level label="1"> <text>If a seller or financial institution establishes two or more open end accounts for an individual buyer, the seller or financial institution may not impose a higher rate of finance charge than would be obtained if there was but one open end account between the buyer and the seller or financial institution.</text> </level> <level label="2"> <text>A seller does not establish two open end accounts within the meaning of this subsection solely because the seller accepts payment from a financial institution, as directed by a buyer by use of a credit card issued to the buyer by the financial institution, and also establishes an account directly payable to him by the buyer.</text> </level> </level> <level label="g"> <text>Regardless of the date of actual posting of a payment to an account, the payment shall be credited to the customer’s account as of the date the payment is received by the creditor, and no finance charge, late payment charge, or other charge shall be imposed with respect to the amount of the payment which is properly received by the creditor on or before the time indicated by the creditor as necessary to avoid imposition thereof, provided that:</text> <level label="1"> <text>If a creditor fails to post the customer’s payment in time to avoid the imposition of finance charges, late payment charges, or other charges, the creditor shall adjust the customer’s account so that the finance charges, late payment charges, or other charges are credited to the account during the customer’s next billing cycle.</text> </level> <level label="2"> <text>For the purposes of paragraph (g) of this section the creditor may specify on the periodic statement or on accompanying material that need not be retained by the customer, reasonable requirements with respect to the form, amount, manner, location, and time for receipt of payments, except that:</text> <level label="i"> <text>If no particular hour of the day has been clearly specified by the creditor as the time by which payment must be received by the creditor in order to obtain crediting to the customer’s account as of that date, payments received prior to the close of business on that day must be credited as of that date;</text> </level> <level label="ii"> <text>If no location(s) has been clearly specified as the location(s) at which payment may be made, then payment at any location where the creditor conducts business shall be credited as of the date payment is presented; and</text> </level> <level label="iii"> <text>If no particular manner of payment has been clearly specified, then payment by check, cash, money order, bank draft or other similar instrument in properly negotiable form shall constitute proper manner of payment.</text> </level> </level> <level label="3"> <text>If the creditor accepts payment at locations other than those specified under paragraph (g)(2)(ii) of this section, the creditor shall credit the customer’s account promptly (in no case later than five days from the date of receipt), provided that the possibility of the delay is clearly disclosed to the customer on the periodic statement or on accompanying material that need not be retained by the customer.</text> </level> <level label="4"> <text>Payments need not be credited as of the date of receipt (but in any case must be credited promptly) if a delay in crediting does not result in the imposition of any finance charges, late payment charges, or other charges for that billing cycle or a later billing cycle.</text> </level> </level> <level label="h"> <level label="1"> <text>A seller or financial institution that imposes a finance charge in connection with an open end account may not directly or indirectly contract for, charge, or receive from the buyer any finance charge, discount, fine, commission, charge, brokerage, or other consideration on that account in excess of that permitted by this section.</text> </level> <level label="2"> <text>If a credit card plan allows for both purchases and the extension of cash advances, the charges prohibited by this section may not be imposed as to either function.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-506.1" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>In this section “credit balance” means a balance on an open end retail credit account which indicates that the buyer has made payments or obtained refunds in excess of charges, resulting in a credit due to the buyer.</text> </level> <level label="b"> <text>If there is a credit balance in excess of $1 on any retail credit account:</text> <level label="1"> <text>The holder shall send to the buyer a monthly statement which indicates the amount of the credit balance; and</text> </level> <level label="2"> <text>If the credit balance remains the same after four consecutive monthly statements, the holder shall send to the buyer a check or money order in the full amount of the credit balance.</text> </level> </level> <level label="c"> <text>The provisions of this section shall apply only to credit balances remaining the same after four consecutive monthly statements for billing periods commencing after July 1, 1975.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-506.2" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>Changes in the rate applicable to an open end account, including a credit card plan which provides for sales, cash advances, or both, are limited as follows:</text> <level label="1"> <text>Any balance existing before July 1, 1982 is to be repaid at the then applicable rate of interest or finance charge regardless of any subsequent increase in the rate applicable to the account.</text> </level> <level label="2"> <text>If the rate applicable to any balance for which the borrower or buyer becomes obligated on or after July 1, 1982 is increased, the borrower or buyer may repay the existing balance at the rate in effect prior to the time the increase becomes effective. If the borrower or buyer increases the balance of his account by making purchases or requesting cash advances, the increased rate shall apply only to the portion of the balance incurred after the rate increases.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-507" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>If, as part of a retail credit account, a promissory note is taken by the seller or financial institution, the note shall refer to the account out of which it arises.</text> </level> <level label="b"> <text>The note may not contain a confession of judgment or any power of attorney to appear for the buyer or for any surety or guarantor for the buyer to confess judgment.</text> </level> <level label="c"> <text>If the note is assigned, it is subject to all defenses which the buyer might have asserted against the seller or financial institution.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-508" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>If a retail credit account agreement provides for the payment of attorney’s fees, that provision may permit the holder only to receive reasonable attorney’s fees to be set by a court in the event of the filing of suit.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-509" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>Notwithstanding any agreement to the contrary between a seller and the issuer of a credit card, the seller is permitted to offer a cash discount to consumers who pay cash instead of using the credit card.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-510" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>If a buyer inquires in writing about the status of his account and the holder fails to answer the inquiry in clear and definite terms within 60 days after receiving it, the buyer is not required to pay a finance charge for that 60-day period or for any further period during which the holder fails to so answer.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-511" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>In this section, “billing error” means the initial occurrence of an error in a billing statement given to a buyer by the holder of an account, which error results from:</text> <level label="1"> <text>An omission or commission by the holder in posting any debit or credit;</text> </level> <level label="2"> <text>The computation of any amount; or</text> </level> <level label="3"> <text>Any similar error of an accounting nature.</text> </level> </level> <level label="b"> <text>The provisions of this section do not apply to a status inquiry made under § 12-510 of this subtitle if a billing error is not asserted by the buyer.</text> </level> <level label="c"> <text>If, on receipt of a billing statement from a holder, a buyer believes the billing is in error, he may inquire as to the computation of the statement. The inquiry by the buyer shall:</text> <level label="1"> <text>Be made within 60 days of receipt of the billing statement which contains the claimed error;</text> </level> <level label="2"> <text>Be in writing and sent to the holder by mail at the address designated on the statement pursuant to § 12-503(i) of this subtitle; and</text> </level> <level label="3"> <text>Set forth sufficient information to enable the holder to identify:</text> <level label="i"> <text>The buyer and the account;</text> </level> <level label="ii"> <text>The amount and transaction shown in the billing statement which the buyer in good faith believes to be a billing error; and</text> </level> <level label="iii"> <text>The facts providing the basis for the buyer’s belief that the billing statement is in error.</text> </level> </level> </level> <level label="d"> <text>On receipt of an inquiry under this section, the holder shall:</text> <level label="1"> <text>Within 30 days after its receipt, mail a written acknowledgement to the buyer; and</text> </level> <level label="2"> <text>Within 60 days after its receipt, before taking any action to collect the amount believed by the buyer to be a billing error:</text> <level label="i"> <text>Make appropriate corrections in the account and mail to the buyer a written notice which states that the amount believed to be in error has been corrected and will be so shown on the next billing statement mailed to him; or</text> </level> <level label="ii"> <text>Send to the buyer a written notice which sets forth in a clear and definitive manner the reasons why the holder believes that the account was correctly shown in the statement.</text> </level> </level> </level> <level label="e"> <text>Notwithstanding the receipt of an inquiry, the holder may:</text> <level label="1"> <text>Transmit to the buyer regular periodic billing statements which include the amount believed by the buyer to be a billing error; and</text> </level> <level label="2"> <text>Undertake collection of any amount which the buyer does not dispute under this section.</text> </level> </level> <level label="f"> <text>On or before the first billing statement for a new account, the holder shall send to the buyer a written notice which describes the procedures to be followed by a buyer under this section to claim a billing error.</text> </level> <level label="g"> <text>On receipt of an inquiry under this section, until the holder has complied with the provisions of this section, he may not communicate to any person, including any credit bureau or credit reporting agency, unfavorable credit information concerning the buyer and based on the buyer’s failure to pay the amount believed by him to be a billing error.</text> </level> <level label="h"> <text>If a holder of an account receives a written inquiry from a buyer under this section and fails to comply with the requirements of this section, then:</text> <level label="1"> <text>If the disputed amount is not a billing error, the holder:</text> <level label="i"> <text>May proceed to collect the disputed amount; and</text> </level> <level label="ii"> <text>Shall forfeit the right to collect any finance charge assessed on the account in connection with the disputed amount from the date of the mailing of the written inquiry to the date the holder complies with this section; or</text> </level> </level> <level label="2"> <text>If the disputed amount is a billing error, the holder:</text> <level label="i"> <text>May not collect the amount of the error or any finance charge on that amount; and</text> </level> <level label="ii"> <text>Is liable to the buyer for his actual damages sustained as a result of the failure of the holder to comply with this section.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-511.1" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>A holder may not charge a buyer a fee for any reply to an account status inquiry or billing status inquiry made under § 12-510 or § 12-511 of this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-512" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>No act, agreement, or statement of a buyer may constitute a valid waiver of any benefit or protection provided to him under this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-513" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>Except as provided in subsection (b) of this section, if a holder violates any provision of this subtitle, no holder may collect or receive any finance charge from the buyer.</text> </level> <level label="b"> <level label="1"> <text>If the seller or any subsequent holder unintentionally and in good faith fails to comply with any provision of §§ 12-504 through 12-507 of this subtitle, the holder may correct the error within 10 days after:</text> <level label="i"> <text>He notices it; or</text> </level> <level label="ii"> <text>The buyer notifies him in writing of the error.</text> </level> </level> <level label="2"> <text>If the holder corrects the error within the 10-day period, he may not be subject to any penalty under this subtitle.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-514" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <level label="a"> <text>If a complaint for violation of any provision of this subtitle is filed with the Commissioner of Financial Regulation, he may investigate the complaint and hold a hearing on it in accordance with § 11-413 of the Financial Institutions Article.</text> </level> <level label="b"> <text>The Commissioner shall give to the person complained against at least 10 days’ written notice of the complaint and the time and place of any hearing. The notice shall be in writing and sent by registered or certified mail to his principal place of business.</text> </level> <level label="c"> <level label="1"> <text>If, after the hearing, the Commissioner finds that the person has engaged or is engaging in any act or practice prohibited by this subtitle, he shall order the person to cease and desist from the act or practice.</text> </level> <level label="2"> <text>The order of the Commissioner shall comply with the Administrative Procedure Act.</text> </level> </level> <level label="d"> <level label="1"> <text>If no appeal is filed, the order becomes final after expiration of the time allowed by the Administrative Procedure Act for appeals from the Commissioner’s orders.</text> </level> <level label="2"> <text>If an appeal is filed, the order becomes final after final decision of the court affirming the order or dismissing the appeal.</text> </level> </level> <level label="e"> <text>For purposes of this section, the Commissioner’s order may not apply to any:</text> <level label="1"> <text>Incorporated bank, savings institution, or trust company; or</text> </level> <level label="2"> <text>A savings and loan association.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-515" title_number="12" title_name="Credit Regulations" subtitle_number="5" subtitle_name="Retail Credit Accounts"> <text>Any person who knowingly violates or participates in the violation of any provision of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $100 for the first offense and not exceeding $500 for any subsequent offense.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-601" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Agreement” means an installment sale agreement, a renewed or extended installment sale agreement, and any renewal, extension, or refund agreement made in connection with an installment sale agreement.</text> </level> <level label="c"> <level label="1"> <text>“Buyer” means a person who buys or leases goods under an installment sale agreement, even though the person has entered into one or more renewal, extension, or refund agreements.</text> </level> <level label="2"> <text>“Buyer” includes a prospective buyer.</text> </level> </level> <level label="d"> <text>“Cash price” means the minimum price for which goods subject to an installment sale agreement, or other goods of like kind and quality, may be purchased for cash from the seller by the buyer.</text> </level> <level label="e"> <level label="1"> <text>“Collateral security” means any security interest in, encumbrance on, or pledge of property or goods that is given to secure performance of an obligation of a buyer or a surety for a buyer under an agreement.</text> </level> <level label="2"> <text>“Collateral security” includes the undertaking of a surety for a buyer.</text> </level> <level label="3"> <text>“Collateral security” does not include any goods or interest in goods that are the subject of an installment sale agreement.</text> </level> </level> <level label="f"> <text>“Consumer goods” means goods bought for use primarily for personal, family, or household purposes, as distinguished from industrial, commercial, or agricultural purposes.</text> </level> <level label="g"> <text>“County” includes Baltimore City.</text> </level> <level label="h"> <text>“Debt cancellation agreement” means an agreement between a seller and a buyer which provides for cancellation of the outstanding balance payable under an installment sale agreement in the event of theft or total destruction of the motor vehicle that is the subject of the installment sale agreement minus the proceeds of any insurance maintained on the motor vehicle or, if the buyer does not have insurance, the actual cash value of the motor vehicle at the time of loss, determined as provided in the agreement.</text> </level> <level label="i"> <text>“Down payment” includes all amounts paid in cash, credits, or the agreed value of goods, by or for a buyer and to or for the benefit of a seller at or before execution of an installment sale agreement.</text> </level> <level label="j"> <text>“Finance charge” means the amount in excess of the cash price of the goods sold, agreed on by a seller and a buyer, to be paid by the buyer for the privilege of purchasing the goods under an installment sale agreement.</text> </level> <level label="k"> <level label="1"> <text>“Goods” means all tangible personal property that has a cash price of $100,000 or less.</text> </level> <level label="2"> <text>“Goods” does not include money or things in action.</text> </level> </level> <level label="l"> <text>“Holder” means a person, including a seller and a sales finance company, entitled to enforce an agreement against a buyer.</text> </level> <level label="m"> <level label="1"> <text>“Installment sale agreement” means a contract for the retail sale of consumer goods, negotiated or entered into in this State, under which:</text> <level label="i"> <text>Part or all of the price is payable in one or more payments after the making of the contract; and</text> </level> <level label="ii"> <text>The seller takes collateral security or keeps a security interest in the goods sold.</text> </level> </level> <level label="2"> <text>“Installment sale agreement” includes:</text> <level label="i"> <text>A prospective installment sale agreement;</text> </level> <level label="ii"> <text>A purchase money security agreement; and</text> </level> <level label="iii"> <text>A contract for the bailment or leasing of consumer goods under which the bailee or lessee contracts to pay as compensation a sum that is substantially equal to or is more than the value of the goods.</text> </level> </level> <level label="3"> <text>“Installment sale agreement” does not include:</text> <level label="i"> <text>A bona fide C.O.D. transaction or a layaway agreement as defined in § 14–1101(g) of this article; or</text> </level> <level label="ii"> <text>A lease for industrial, commercial, or agricultural purposes.</text> </level> </level> </level> <level label="n"> <text>“Mechanical repair contract” has the meaning stated in Title 15, Subtitle 3 of the Transportation Article.</text> </level> <level label="o"> <text>“Motor vehicle” has the meaning stated in Title 11 of the Transportation Article.</text> </level> <level label="p"> <text>“Outstanding balance”, when used in reference to a debt cancellation agreement, does not include:</text> <level label="1"> <text>Any delinquent or deferred payments;</text> </level> <level label="2"> <text>Past due charges;</text> </level> <level label="3"> <text>Late payment charges;</text> </level> <level label="4"> <text>Unearned interest;</text> </level> <level label="5"> <text>Unearned rental payments;</text> </level> <level label="6"> <text>The portion of any financed taxes or charges, including charges for credit life insurance, credit health insurance, credit involuntary unemployment benefit insurance, and mechanical repair contracts, actually refunded to the buyer or credited as a reduction to the loan balance; or</text> </level> <level label="7"> <text>By agreement of the parties, the amount of any primary insurance deductible.</text> </level> </level> <level label="q"> <text>“Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> <level label="r"> <text>“Principal balance” means the sum of items described in § 12–606(b)(5), (6), and (7) of this subtitle.</text> </level> <level label="s"> <text>“Retail sale” means the sale of goods for use or consumption by the buyer or for the benefit or satisfaction that the buyer may derive from the use or consumption of the goods by another, but not for resale by the buyer.</text> </level> <level label="t"> <text>“Sales finance company” means a person who is engaged, whether by purchase, discount, pledge, loan, or otherwise, in the business of acquiring, investing in, or lending money or credit on the security of any interest in:</text> <level label="1"> <text>An installment sale agreement made between other parties;</text> </level> <level label="2"> <text>A retail credit account transaction, as defined in § 12–501 of this title, made between other parties; or</text> </level> <level label="3"> <text>A transaction that deals with home improvement, as defined in § 8–101 of the Business Regulation Article, made between other parties, if collateral security is required by and given to the contractor as a condition to the transaction.</text> </level> </level> <level label="u"> <text>“Security interest” has the meaning stated in § 1–201(37) of this article.</text> </level> <level label="v"> <text>“Seller” means a person who sells or leases or agrees to sell or lease goods under an installment sale agreement.</text> </level> <level label="w"> <level label="1"> <text>“Surety” includes a guarantor.</text> </level> <level label="2"> <text>“Surety” does not include a seller who sells, transfers, or assigns an agreement.</text> </level> </level> <level label="x"> <text>“Time balance” means the sum of the items described in § 12–606(b)(10) and (11) of this subtitle.</text> </level> <level label="y"> <text>“Wages” means all remuneration paid to any employee for his employment, including the cash value of all remuneration paid in any medium other than cash.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-602" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>A seller or sales finance company may not make in any advertisement, publication, display, broadcast, solicitation, or representation any false, misleading, or deceptive statement relating to:</text> <level label="1"> <text>Any finance, delinquency, or extension charge or rate; or</text> </level> <level label="2"> <text>The security interest, collateral, terms, or conditions on which it will make or finance any installment agreement.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-603" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>A seller or sales finance company may not discriminate against a buyer solely on the basis of the race, sex, sexual orientation, gender identity, religious beliefs, disability, marital status, geographic area of residence, neighborhood of residence, or age of the buyer. Refusal to grant credit to a buyer who is under the age of 18 is not discrimination solely on the basis of age.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-604" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>An installment sale agreement shall be evidenced by an instrument in writing which contains all of the agreements of the parties. It shall be signed by all parties before the seller delivers to the buyer any of the goods covered by the agreement.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-605" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <level label="1"> <text>At or before the time the buyer signs an installment sale agreement, the seller shall deliver to him an exact copy of it.</text> </level> <level label="2"> <text>If the seller does not sign the copy, and if, within 15 days after the buyer signs the installment sale agreement, the seller does not deliver to the buyer a copy of it signed by the seller, the installment sale agreement and the instruments signed by the buyer are void without any action by the buyer, and the seller immediately shall refund to the buyer all of his payments and deposits.</text> </level> </level> <level label="b"> <level label="1"> <text>Until the buyer signs an installment sale agreement and receives a copy of it signed by the seller, he has an unconditional right to cancel it and receive immediate refund of all payments and deposits made on account or in contemplation of it.</text> </level> <level label="2"> <text>The buyer’s request for the refund operates as cancellation of the installment sale agreement.</text> </level> </level> <level label="c"> <text>Until the buyer signs an installment sale agreement and receives a copy of it signed by the seller, if a payment or deposit is accepted by the seller, he immediately shall deliver to the buyer a receipt for it which clearly states in 12-point type or larger the buyer’s rights under subsection (b) of this section.</text> </level> <level label="d"> <text>An acknowledgment of delivery of a copy of an installment sale agreement shall be printed in 12-point type or larger, and, if the acknowledgment is contained in the agreement, it shall be printed immediately below the signature to the agreement and independently signed.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-606" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>An installment sale agreement shall:</text> <level label="1"> <text>State the full name, place of residence, and post office address of each party to it;</text> </level> <level label="2"> <text>State the date when signed by the buyer; and</text> </level> <level label="3"> <text>Contain a clear description of the goods sold sufficient to identify them readily.</text> </level> </level> <level label="b"> <text>An installment sale agreement also shall state in simple tabular form the following separate items in the following order:</text> <level label="1"> <text>The cash price of the goods sold;</text> </level> <level label="2"> <text>All charges for delivery, installation, or repair of or other services to the goods which, separate from the cash price, are included in the installment sale agreement;</text> </level> <level label="3"> <text>The sum of the cash price in item (1) and the charges for services in item (2);</text> </level> <level label="4"> <text>The amount of the buyer’s down payment, together with:</text> <level label="i"> <text>A statement of the respective amounts credited for cash, credits, and the agreed value of goods;</text> </level> <level label="ii"> <text>A statement of amounts actually paid or to be paid by the seller pursuant to an agreement with the buyer, on behalf of the buyer to discharge any amount financed under an outstanding loan agreement or installment sale agreement or the unpaid portion of the early termination obligation under any lease or other obligation of the lessee, with respect to a motor vehicle or other property traded in;</text> </level> <level label="iii"> <text>A statement of the net amount available to reduce the cash price, which is item (i) of this item less item (ii) of this item; and</text> </level> <level label="iv"> <text>A description of all goods sufficient to identify them;</text> </level> </level> <level label="5"> <text>The unpaid balance of the cash price payable by the buyer to the seller, which is item (3) less item (4);</text> </level> <level label="6"> <text>The cost to the buyer of any insurance for the payment of which credit is to be extended to the buyer, together with:</text> <level label="i"> <text>The amount or extent of the insurance;</text> </level> <level label="ii"> <text>The expiration date of the insurance;</text> </level> <level label="iii"> <text>The party to whom the insurance is payable; and</text> </level> <level label="iv"> <text>A concise description of the coverage, including, if the goods sold include a motor vehicle, a definite statement in 12-point bold type or larger as to whether the insurance includes coverage for personal liability and for property damage caused to others;</text> </level> </level> <level label="7"> <text>The amount of any official fees charged to the buyer which the seller expects to be paid to a public official for filing or recording the installment sale agreement or other instrument securing or evidencing the buyer’s obligation or an equal or lesser amount for a nonfiling insurance premium at rates approved by the Insurance Commissioner and on which no commissions may be paid;</text> </level> <level label="8"> <text>The cost to the buyer of any optional debt cancellation agreement sold in connection with a motor vehicle;</text> </level> <level label="9"> <text>The principal balance owed, which is the sum of items (5), (6), (7), and (8) plus, if the amount stated in item (4)(iii) of this subsection is a negative number, add that amount as a positive number;</text> </level> <level label="10"> <text>The finance charge stated as a sum in dollars; and</text> </level> <level label="11"> <text>The time balance owed by the buyer to the seller, which is the sum of items (9) and (10), the number of installment payments required to pay it, and the amount and time of each payment.</text> </level> </level> <level label="c"> <text>In addition to the items in subsections (a) and (b) of this section, the installment sale agreement shall:</text> <level label="1"> <text>State clearly any collateral security taken for the buyer’s obligation under it; and</text> </level> <level label="2"> <text>Contain the following notice in 12-point bold type or larger, directly above the space reserved in the agreement for the signature of the buyer:</text> <text>Notice to Buyer</text> </level> </level> <level label="1"> <text>You are entitled to a copy of this agreement at the time you sign it.</text> </level> <level label="2"> <text>Under the State law regulating installment sales, you have certain rights, among others:</text> <level label="1"> <text>To pay off the full amount due in advance and obtain a partial rebate of the financing charge;</text> </level> <level label="2"> <text>To redeem the property if repossessed for a default;</text> </level> <level label="3"> <text>To require, under certain conditions, a resale of the property, if repossessed.</text> </level> </level> <level label="d"> <text>A seller may not be deemed to be making loans for purposes of § 11-301(b)(6)(i) of the Financial Institutions Article merely by engaging in activities described in subsection (b)(4)(ii) of this section.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-607" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>A holder may not take or receive any instrument from a buyer or a surety for a buyer, which contains:</text> <level label="1"> <text>Except as provided in subsection (b) of this section, any blank space to be filled in after the instrument is signed by a party to it;</text> </level> <level label="2"> <text>A confession of judgment or any power of attorney to appear for the buyer or for a surety for the buyer to confess judgment;</text> </level> <level label="3"> <text>A schedule of payments under which any installment, except the down payment, is more than double the average of all other installments, excluding the down payment, or under which the interval between any consecutive installments is less than one-half the average of all other intervals, unless the buyer is given an absolute right, on default in any of the excess or irregular installments, to have the schedule of unpaid installments, including that in default, revised to conform in both amounts and intervals to the average of all preceding installments and intervals;</text> </level> <level label="4"> <text>A provision for repossession of the goods or for the acceleration of the time when any part or all of the time balance becomes payable, if the condition of the repossession or acceleration is that the holder considers himself insecure;</text> </level> <level label="5"> <text>A provision by which the buyer waives or purports to waive a tort claim or by which the seller has the right to enter unlawfully upon any premises;</text> </level> <level label="6"> <text>A provision by which a person acting on behalf of a holder in connection with the formation or execution of an agreement is treated as an agent of the buyer; or</text> </level> <level label="7"> <text>An assignment or order for payment of wages, whether earned or to be earned.</text> </level> </level> <level label="b"> <text>If, at the time of its execution, an installment sale agreement contains a sufficient description of the goods as required by § 12-606 of this subtitle, further serial numbers or other identifying marks on the goods may be inserted in the agreement on delivery of the goods.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-608" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>This section applies to an installment sale agreement negotiated and entered into without personal solicitation by a salesman or other representative of a seller, if the seller’s prices, terms of payment, and other terms are clearly set forth in a catalog or other printed solicitation of business which is generally available to the public and contains at least two copies of the form of the agreement.</text> </level> <level label="b"> <text>If the buyer enters into a sale described in subsection (a) of this section, all of the provisions of this subtitle apply, except that:</text> <level label="1"> <text>The seller is not required to deliver a copy of the installment sale agreement to him;</text> </level> <level label="2"> <text>If the installment sale agreement received by the seller from the buyer contains blank spaces to be filled in or corrections to be made, the seller may insert or correct in the appropriate blank spaces the amounts of money and other terms set forth in the seller’s catalog then in effect; and</text> </level> <level label="3"> <text>Instead of the copy of the installment sale agreement required by § 12-605 of this subtitle, the seller shall furnish to the buyer, within 15 days from the date of shipment of the goods, a written statement of the items inserted in the blank spaces.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-609" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>The finance charge imposed on the sale of a motor vehicle may not exceed an amount computed using the following annual simple interest rates of finance charge:</text> <level label="1"> <text>Class 1: A new motor vehicle -- 16.5 percent on the outstanding balance;</text> </level> <level label="2"> <text>Class 2: A used motor vehicle designated by the manufacturer by a model year not more than two years before the year in which the sale is made -- 22 percent on the outstanding balance; and</text> </level> <level label="3"> <text>Class 3: A used motor vehicle designated by the manufacturer by a model year more than two years before the year in which the sale is made -- 27 percent on the outstanding balance.</text> </level> </level> <level label="b"> <level label="1"> <text>A service or other charge not specifically provided for in this section may not be included in a retail installment sale of a motor vehicle.</text> </level> <level label="2"> <level label="i"> <text>This section does not prohibit a seller from financing the cost to the buyer of a mechanical repair contract sold in connection with a motor vehicle, provided that the cost of the mechanical repair contract is separately itemized in the financing agreement.</text> </level> <level label="ii"> <text>A seller may finance the cost of a mechanical repair contract sold in connection with a motor vehicle whether or not the motor vehicle is covered by an original manufacturer’s warranty.</text> </level> </level> <level label="3"> <text>A seller may not require a buyer of a motor vehicle, as a condition of receiving a loan, to enter a mechanical repair contract.</text> </level> <level label="4"> <text>A seller may contract for, charge for, receive, and finance the cost to the buyer of an optional debt cancellation agreement sold in connection with a motor vehicle, provided that the cost of the debt cancellation agreement is separately itemized in the financing agreement.</text> </level> </level> <level label="c"> <text>Except for an overcharge which results from a bona fide error in computation and which is corrected within 60 days from the date of the agreement, if a holder collects a charge greater in amount than the maximum permitted by this section, he shall forfeit to the buyer all finance charges paid or payable under the agreement.</text> </level> <level label="d"> <level label="1"> <text>A holder may not collect from the buyer a greater amount for insurance than that allowed by the State Insurance Department for the insurer carrying the risk.</text> </level> <level label="2"> <text>The insurance for which the holder may collect from the buyer is limited to automobile bodily injury and property damage liability, automobile physical damage, life and accident, medical reimbursement, and nonfiling insurance.</text> </level> <level label="3"> <text>Except for an overcharge which results from a bona fide error in computation and which is corrected within 60 days from the date of the agreement, if a holder collects from the buyer a charge for insurance greater than that permitted under this subsection, he shall pay to the buyer a sum equal to ten times the amount of the overcharge.</text> </level> </level> <level label="e"> <text>A finance charge in excess of the rates provided in this section may be imposed on the sale of new and used trucks, new and used truck tractors, new and used trailers, or new and used semitrailers purchased for industrial, commercial, or agricultural purposes.</text> </level> <level label="f"> <text>Notwithstanding subsection (a) of this section, the finance charge imposed on a motor vehicle sold under a contract may not exceed the following annual simple interest rates of finance charge:</text> <level label="1"> <text>Class 1: A new motor vehicle -- 24 percent on the outstanding balance; and</text> </level> <level label="2"> <text>Class 2: A used motor vehicle designated by the manufacturer by a model year not more than 2 years before the year in which the sale is made -- 24 percent on the outstanding balance.</text> </level> </level> <level label="g"> <text>A seller may assign a retail installment agreement and receive a portion of the finance charge only if the fact is disclosed in the agreement. The specific amount to be received need not be disclosed.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-610" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>Except as provided in § 12-609 of this subtitle as to a motor vehicle, and notwithstanding the provisions of any other statutory law, in the retail sale of consumer goods bought under an installment sale agreement, including any add-on contract described in § 12-618 of this subtitle, the finance charge may not exceed the greater of:</text> <level label="1"> <text>An amount computed using the following annual simple interest rates of finance charge:</text> <level label="i"> <text>22 percent on that part of the outstanding balance not exceeding $1,000; and</text> </level> <level label="ii"> <text>18 percent on that part of the outstanding balance exceeding $1,000; or</text> </level> </level> <level label="2"> <text>A minimum charge of $10 or, if the date of the last installment is eight months or less after the effective date of the installment sale agreement, $8.</text> </level> <level label="3"> <text>Notwithstanding the provisions of subsection (1) of this section, a seller may charge a finance charge at a rate not in excess of 24 percent per annum simple interest on the outstanding balance under an installment sale agreement made on or after July 1, 1982.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-610.1" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>Any agreement made before July 1, 1982, which is refinanced at a higher rate allowed by § 12–609(f) or § 12–610(3) of this subtitle must comply with the following requirements:</text> <level label="1"> <text>The holder must give the following disclosures in writing to the buyer prior to the execution by the buyer of the new agreement:</text> <text>If you do agree to consolidate your existing obligation, you will be paying an annual percentage rate of . . . .% on the existing net balance of $. . . . . ., instead of the rate of . . . . .% which you are now paying.</text> <text>Schedule of Monthly Payments</text> <text>Separate Purchase Agreements Consolidated Purchase Agreement</text> <text>$ . . . . per month for $ . . . . per month for</text> <text>the next . . . . months the next . . . . months </text> <text>then</text> <text>$ . . . . per month for</text> <text>. . . . months after that </text> <text>Total of Payments </text> <text>Separate Agreements Consolidated Agreement</text> <text>$ . . . . total of $ . . . . total of payments</text> <text>payments for your for your consolidated</text> <text>existing purchases purchases</text> <text>. . . . total of payments</text> <text>for your new purchases</text> </level> <level label="2"> <text>The holder must allow the buyer the choice of repaying his existing purchase balance at the originally agreed upon rate and obtaining any additional extension of credit as a separate agreement, notwithstanding any law which limits the holder’s ability to have more than 1 agreement with the same buyer;</text> </level> <level label="3"> <text>An existing balance may be refinanced only upon the buyer’s request;</text> </level> <level label="4"> <text>The holder must refund or credit to the buyer’s account any unearned finance charge and any returned insurance premiums upon the cancellation of insurance sold in connection with the purchases;</text> </level> <level label="5"> <text>The holder must allow the buyer the right to cancel the consolidated purchase agreement within 3 business days and to elect the separate account option pursuant to subsection (2). The holder shall provide to the buyer conspicuous notice of the provisions of this subsection; and</text> </level> <level label="6"> <text>Nothing in this subsection shall prohibit the receipt of goods or services by the buyer at the time the consolidated purchase agreement is made.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-610.2" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>A holder may not enter into a retail installment sales agreement, providing for an initial rate of finance charge pursuant to § 12-609(f) or § 12-610(3) of this subtitle, which contains a provision that permits the holder to increase or decrease the applicable rate of finance charge from time to time during the term of an agreement.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-611" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <level label="1"> <text>The finance charge under an installment sale agreement relating to consumer goods or a motor vehicle may be computed:</text> <level label="i"> <text>On the actual unpaid principal outstanding from time to time; or</text> </level> <level label="ii"> <text>In advance, at the time the agreement is made, by adding to the principal balance the amount of the finance charge that would be earned if the installment sale agreement were repaid exactly according to its terms at the applicable rate.</text> </level> </level> <level label="2"> <text>Nothing in this subtitle shall be construed to prohibit any particular method of computing the finance charge on an installment sale agreement so long as the amount of the finance charge does not result in a rate of finance charge in excess of that permitted by § 12-609 or § 12-610 of this subtitle, as applicable.</text> </level> </level> <level label="b"> <text>Amounts due under an installment sale agreement relating to consumer goods may be payable in successive monthly, semimonthly, or weekly installments.</text> </level> <level label="c"> <text>As part of the regular practice of a holder, he may include fractional periods of 15 days or more as a whole month if he also entirely excludes fractional periods of 14 days or less.</text> </level> <level label="d"> <text>Unless the buyer has notice of an assignment of an installment sale agreement relating to consumer goods, his payments to the last known holder of the agreement shall discharge his obligation to the extent of the payments.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-612" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>Notwithstanding the provisions of § 12-601(k) of this subtitle, for the purposes of this section, “goods” means any personal property bought for use primarily for personal, family, or household purposes regardless of the cash price of the goods.</text> </level> <level label="b"> <text>A buyer may prepay at any time, without penalty, all or part of the outstanding balance payable under an installment sale agreement relating to consumer goods.</text> </level> <level label="c"> <level label="1"> <text>Except as provided in subsection (d) of this section, if the buyer pays the balance in full before maturity, the holder immediately shall refund to him a portion of the finance charge, including the charge provided for in § 12-610(2) of this subtitle.</text> </level> <level label="2"> <text>The amount of the refund shall be calculated according to the actuarial method based on the original schedule of payments.</text> </level> </level> <level label="d"> <text>If a prepayment is made, the holder is entitled to retain a finance charge of at least $6.</text> </level> <level label="e"> <text>If the amount of the credit prepayment is less than $1, no refund need be made.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-613" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>The provisions of this section are in addition to and not in substitution for any other applicable provision of statutory law.</text> </level> <level label="b"> <text>If a holder undertakes at the expense of the buyer to sell, purchase, or supply insurance on the goods sold, the amount charged the buyer for the insurance may not exceed the lesser of:</text> <level label="1"> <text>The premium actually payable by the holder; or</text> </level> <level label="2"> <text>The rate charged for similar insurance coverage by those companies whose rates are promulgated by a nationally recognized organization of underwriters.</text> </level> </level> <level label="c"> <level label="1"> <text>If the buyer is charged for insurance, the holder shall deliver or mail to the buyer at his address shown on the agreement, within 25 days after delivery of the goods, a copy of each insurance policy or an owner’s certificate representing the policy, which sets forth:</text> <level label="i"> <text>The amount of the premium, type of insurance, scope of coverage, and each term, exception, limitation, restriction, and condition of the insurance contract; and</text> </level> <level label="ii"> <text>If the goods sold include a motor vehicle, a definite statement in 12-point bold type or larger as to whether the insurance includes coverage for personal liability and for property damage caused to others.</text> </level> </level> <level label="2"> <text>If the holder assigns the agreement and has not complied with the requirements of this subsection, the assignee shall deliver or mail in like manner to the buyer the copy or certificate, within the same period or within five days after the assignment, whichever is later.</text> </level> </level> <level label="d"> <text>Each cancellation, surrender, or other refund and each dividend received under the insurance policy by the holder immediately shall be remitted to the buyer or credited against any amount then due by the buyer to the holder under the agreement.</text> </level> <level label="e"> <level label="1"> <text>If the amount charged for insurance exceeds the amount authorized by subsection (b) of this section, the buyer may deduct the overcharge from the amount of any payment.</text> </level> <level label="2"> <text>If the buyer does not deduct the overcharge from his payment, the holder shall credit the amount of the overcharge against the last installment or installments under the agreement.</text> </level> </level> <level label="f"> <level label="1"> <text>If the seller or his assignee does not comply with the requirements of subsection (c) of this section, the buyer may deduct the full amount charged to him for the insurance from the amount of any payment.</text> </level> <level label="2"> <text>If the buyer does not deduct the amount charged from his payment, the holder shall credit the amount charged against the last installment or installments under the agreement.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-614" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>Except as provided in subsection (b) of this section, a holder may not directly or indirectly contract for, charge, or receive from a buyer or a surety for a buyer on account of or in connection with any agreement, any charge or amount for the extension of credit, interest, fees, commissions, delinquency, collection, repossession, and foreclosure or otherwise.</text> </level> <level label="b"> <text>A holder may charge the buyer the following charges or fees:</text> <level label="1"> <text>Subject to the provisions of § 12-630 of this subtitle, the time balance of an installment sale agreement;</text> </level> <level label="2"> <text>If allowed by a court as costs, the official fees paid to a public official in connection with a proceeding to:</text> <level label="i"> <text>Recover possession of the goods;</text> </level> <level label="ii"> <text>Enforce any obligation of the buyer or his surety; or</text> </level> <level label="iii"> <text>Realize on any security interest or collateral security;</text> </level> </level> <level label="3"> <text>If no charge was made in the agreement on account of the insurance for the period covered, the premiums for insurance as provided by § 12-613 of this subtitle;</text> </level> <level label="4"> <text>The amount paid for copies of agreements and statements of accounts pursuant to § 12-621 of this subtitle;</text> </level> <level label="5"> <text>Charges permitted by:</text> <level label="i"> <text>§§ 12-623 and 12-626 of this subtitle for delinquencies and repossession expenses; and</text> </level> <level label="ii"> <text>Law for extensions and refunds; and</text> </level> </level> <level label="6"> <text>An amount not exceeding $15 if payment is made with a check that is dishonored on the second presentment.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-615" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <level label="1"> <text>If, in addition to any down payment, a buyer is required under an installment sale agreement to make a payment to a seller before the seller is obligated to deliver the goods sold, the buyer may cancel the installment sale agreement before delivery or tender of the goods by the seller.</text> </level> <level label="2"> <text>Notwithstanding any provision of the installment sale agreement, if it is canceled pursuant to this subsection, the seller shall refund to the buyer within ten days after notice of the cancellation an amount equal to at least 90 percent of all payments made by the buyer under the installment sale agreement, including any down payment.</text> </level> </level> <level label="b"> <text>If, because of a down payment made under an installment sale agreement, the buyer is entitled to delivery of the goods before making any further payment and the buyer refuses to accept delivery of the goods in accordance with the installment sale agreement, all or part of his down payment may be forfeited to the extent provided in the installment sale agreement.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-616" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>If the holder does not pay out to a public official the full amount charged to the buyer for filing and recording instruments, the buyer shall receive credit for the amount so charged to him and not paid out.</text> </level> <level label="b"> <text>The holder shall credit the amount of the overcharge against the last installment or installments under the agreement.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-617" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <level label="1"> <text>If a payment is made on account of an agreement, the person receiving the payment shall give the buyer on his request, or, if payment is made in cash, without request, a complete written receipt for the payment.</text> </level> <level label="2"> <text>If the buyer specifies that the payment is made on one of several obligations, the receipt shall so indicate. However, this provision does not affect the allocation of payments under an add-on contract pursuant to § 12-618 of this subtitle.</text> </level> </level> <level label="b"> <level label="1"> <text>Unless a written notice of actual or intended assignment of an agreement is given to the buyer, he may pay or tender any amount due under the agreement or give any notice required by the agreement or this subtitle to the last known holder of the agreement.</text> </level> <level label="2"> <text>A payment, tender, or notice so given is binding on any subsequent holder or assignee as fully as if made to him.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-618" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>In this section, “add-on contract” means an installment sale agreement which allows the inclusion in it of additional goods subsequently purchased and under which the amount due on the subsequent purchase is combined with an unpaid balance on any prior purchase so as to permit the seller to retain a security interest in all goods under that agreement.</text> </level> <level label="b"> <text>If goods are purchased under an add-on contract, the seller shall deliver to the buyer and attach to the add-on contract, at the time of the additional purchase, a statement which:</text> <level label="1"> <text>Contains all information regarding the additional purchase required by § 12-606 of this subtitle; and</text> </level> <level label="2"> <text>Shows:</text> <level label="i"> <text>The amount due on the installment sale agreement immediately before the additional purchase;</text> </level> <level label="ii"> <text>The amount due after the additional purchase;</text> </level> <level label="iii"> <text>The payments agreed to be made subsequently; and</text> </level> <level label="iv"> <text>The number of additional months required to complete the payments.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>If a payment is made on an add-on contract after an additional purchase is added, the payment is considered as applied to each of the separate purchases in the same proportion which the cash price of each purchase bears to the total cash price of all goods in which the seller retains a security interest.</text> </level> <level label="2"> <text>Before repossessing or attempting to repossess any goods under an add-on contract, the seller shall apply all payments made to him by the buyer in the manner provided by paragraph (1) of this subsection.</text> </level> <level label="3"> <text>If the amount due on any separate purchase is paid fully, the goods paid for are the absolute property of the buyer and may not be subject to repossession for any subsequent default on the agreement.</text> </level> </level> <level label="d"> <text>The buyer under an add-on contract may prepay at any time the amount due on any of the separate purchases in the manner provided by § 12-620 of this subtitle.</text> </level> <level label="e"> <text>If the goods subject to an add-on contract are repossessed, the buyer may redeem any of the separate purchases by payment of the amount due on that purchase alone.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-619" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>The holder of an installment sale agreement on which the finance charge is computed in advance may:</text> <level label="1"> <text>By agreement with the buyer, extend the scheduled due date or defer the scheduled payment of all or part of the installments payable under it; and</text> </level> <level label="2"> <text>Charge the buyer an extension or deferral charge.</text> </level> </level> <level label="b"> <text>The extension or deferral charge may not exceed an amount equal to 1 percent per month of the amount extended or deferred for the period of extension or deferral.</text> </level> <level label="c"> <text>The period of extension or deferral may not exceed the period from the date when the extended or deferred amount would have been payable in the absence of the extension or deferral to the date when the amount is made payable under the agreement of extension or deferral.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-620" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>Notwithstanding the provisions of § 12-601(k) of this subtitle and any provision of an installment sale agreement to the contrary, a buyer may prepay at any time, without penalty, all or any part of the unpaid time balance payable under the installment sale agreement if such agreement is for the retail sale of personal property purchased primarily for personal, family, or household purposes, regardless of the original price of that personal property.</text> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, if the buyer pays the time balance in full before maturity, the holder immediately shall refund to him a portion of the finance charge. The amount of the refund shall be calculated by the actuarial method based on the original schedule of payments.</text> </level> <level label="2"> <text>If the amount of the credit for prepayment is less than $1, no refund need be made.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-621" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>At any time after execution of an agreement, but not later than one year after the last payment is made under it, the holder shall deliver or mail to the buyer at his last known address, within 10 days after the holder receives a written request from the buyer, a copy of the agreement and a signed statement which sets forth:</text> <level label="1"> <text>The amount paid by or on behalf of the buyer, and the allocation of the amount between principal obligations and charges, including charges for delinquencies, expenses of repossession, extensions, and refunds;</text> </level> <level label="2"> <text>Any amount which remains payable, and the allocation of the amount between principal obligations and charges, including charges for delinquencies, expenses of repossessions, extensions, and refunds; and</text> </level> <level label="3"> <text>The number of installments payable in the future, and the amount and time of each.</text> </level> </level> <level label="b"> <text>The statement shall be supplied free of charge, except that a fee of 50 cents may be charged for any statement supplied within 60 days after a prior statement was supplied.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-622" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <level label="1"> <text>After the buyer has paid all sums due under an agreement, the holder shall deliver or mail to the buyer at his last known address, within 15 days after the holder receives a written request from the buyer:</text> </level> <level label="i"> <text>A signed statement which describes the goods and states that all payments due or to become due under the agreement are paid in full;</text> </level> <level label="ii"> <text>Good and sufficient instruments to release all security interests in the goods and collateral security owned by the buyer; and</text> </level> <level label="iii"> <text>Good and sufficient assignments and instruments necessary to vest the buyer with complete evidence of title.</text> </level> <level label="2"> <text>If the release required by this subsection pertains to a motor vehicle, the release shall be filed electronically with the Motor Vehicle Administration in accordance with § 13–108.1 of the Transportation Article within 5 business days after the holder has received full payment.</text> </level> </level> <level label="b"> <text>After the buyer has paid all sums due under an agreement, the holder shall deliver or mail to each surety for the buyer and to each person who is the owner of collateral security, within 15 days after the holder receives a request from the buyer, surety, or other person:</text> <level label="1"> <text>A signed statement which shows that the suretyship is completely discharged; and</text> </level> <level label="2"> <text>Good and sufficient instruments to release any collateral security owned by that person.</text> </level> </level> <level label="c"> <text>If the holder fails to comply with the requirements of this section, he shall forfeit $10 to the buyer and is liable for damages.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-623" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>If an agreement on which the finance charge is computed in advance so provides, the holder of the agreement may collect a delinquency or collection charge of the lesser of $10 or 5 percent of the amount of any payment in default, if the default has continued for at least 10 days.</text> </level> <level label="b"> <level label="1"> <text>In addition to the delinquency or collection charge, the agreement may provide for the payment of:</text> <level label="i"> <text>Attorney’s fees not exceeding 15 percent of the amount due and payable under the agreement; and</text> </level> <level label="ii"> <text>Court costs.</text> </level> </level> <level label="2"> <text>Attorney’s fees may be collected only if the agreement is referred for collection to an attorney who is not a salaried employee of the holder.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-624" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>The holder may repossess goods sold under an agreement if:</text> <level label="1"> <text>The buyer is in default in:</text> <level label="i"> <text>The payment of any sum due under the agreement;</text> </level> <level label="ii"> <text>The performance of any other condition which the agreement lawfully requires him to perform in order to obtain unencumbered title to the goods; or</text> </level> <level label="iii"> <text>The performance of any promise the breach of which is expressly made a ground for repossessing the goods; or</text> </level> </level> <level label="2"> <text>The goods were seized by a police department, bureau, or force.</text> </level> </level> <level label="b"> <level label="1"> <text>The holder may repossess goods only by:</text> <level label="i"> <text>Legal process; or</text> </level> <level label="ii"> <text>Self-help, without use of force.</text> </level> </level> <level label="2"> <text>Nothing in this section authorizes a violation of criminal law.</text> </level> </level> <level label="c"> <level label="1"> <text>At least 10 days before he repossesses any goods, the holder may serve a written notice on the buyer of his intention to repossess the goods.</text> </level> <level label="2"> <text>The notice shall:</text> <level label="i"> <text>State the default and any period at the end of which the goods will be repossessed; and</text> </level> <level label="ii"> <text>Briefly state the rights of the buyer in case the goods are repossessed.</text> </level> </level> <level label="3"> <text>The notice may be delivered to the buyer personally or sent to him at his last known address by registered or certified mail.</text> </level> </level> <level label="d"> <text>Within five days after he repossesses the goods, the holder shall deliver to the buyer personally or send to him at his last known address by registered or certified mail, a written notice which briefly states:</text> <level label="1"> <text>The right of the buyer to redeem the goods, and the amount payable for them;</text> </level> <level label="2"> <text>The rights of the buyer as to a resale, and his liability for a deficiency; and</text> </level> <level label="3"> <text>The exact location where the goods are stored and the address where any payment is to be made or notice delivered.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-625" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>For 15 days after the holder gives the notice required by § 12-624(d) of this subtitle, the holder shall retain any repossessed goods in the county where the goods were sold to the buyer or were repossessed.</text> </level> <level label="b"> <text>During the period provided for in subsection (a) of this section, the buyer may:</text> <level label="1"> <text>Redeem and take possession of the goods; and</text> </level> <level label="2"> <text>Resume the performance of the agreement.</text> </level> </level> <level label="c"> <text>To redeem the goods, the buyer shall:</text> <level label="1"> <text>Tender the amount due under the agreement at the time of redemption, without giving effect to any provision which allows acceleration of any installment otherwise payable after that time;</text> </level> <level label="2"> <text>Tender performance of any other promise for the breach of which the goods were repossessed; and</text> </level> <level label="3"> <text>If the discretionary notice provided for in § 12-624(c) of this subtitle was given, pay the actual and reasonable expenses of retaking and storing the goods.</text> </level> </level> <level label="d"> <text>This section does not apply if the goods were seized by a police department, bureau, or force and the goods were repossessed because of that seizure, in which event, the buyer shall have no right to redeem or take possession, even if the buyer tenders payment of the entire balance due under the agreement.</text> </level> <level label="e"> <text>Notwithstanding subsections (b) and (c) of this section:</text> <level label="1"> <text>The holder shall have the right to require the buyer to tender payment of the entire balance due under the agreement if:</text> <level label="i"> <text>The date of the default in the payments due under the agreement that led to the present repossession occurred within 18 months after the last repossession; or</text> </level> <level label="ii"> <text>The buyer was guilty of fraudulent conduct, intentionally and wrongfully concealed, removed, damaged, or destroyed the goods, or attempted to do so, and the goods were repossessed because of that conduct.</text> </level> </level> <level label="2"> <text>Under paragraph (1) of this subsection, the payment by the buyer of the entire balance due under the agreement shall:</text> <level label="i"> <text>Constitute redemption by the buyer; and</text> </level> <level label="ii"> <text>Entitle the buyer to take possession of the goods.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-626" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>Subject to the provisions of subsection (b) of this section, the holder shall sell any repossessed goods at public auction if the buyer:</text> <level label="1"> <text>Has paid at least 50 percent of the cash price of the goods; and</text> </level> <level label="2"> <text>Within the 15-day period provided for in § 12-625(a) of this subtitle, requests sale of the goods in writing sent to the holder by registered or certified mail.</text> </level> </level> <level label="b"> <level label="1"> <text>To cover the costs of the sale, at the time a buyer requests sale of the goods he shall deposit with the holder an amount equal to the lesser of:</text> <level label="i"> <text>10 percent of the time balance due at the time of repossession; or</text> </level> <level label="ii"> <text>$10.</text> </level> </level> <level label="2"> <text>If the buyer does not make the deposit at the time of his request, the holder promptly shall notify the buyer in writing sent by registered or certified mail of the deposit requirement. If the buyer fails to make the deposit within five days after he receives the notice from the holder, his right to have the goods sold at public auction is forfeited.</text> </level> </level> <level label="c"> <text>The sale of goods at public auction shall take place within 30 days from the date the buyer requested the sale.</text> </level> <level label="d"> <text>At least 10 days before the sale, the holder shall notify the buyer in writing sent by registered or certified mail of the time and place of the sale.</text> </level> <level label="e"> <level label="1"> <text>The provisions of this subsection (e) apply to:</text> <level label="i"> <text>A public sale held under the provisions of this section; and</text> </level> <level label="ii"> <text>Any other bona fide public or private sale of goods which had a cash price in excess of $2,000 at the time of their purchase by the buyer, if the buyer has not paid at least 50 percent of the cash price of the goods or if he has paid that amount but has not requested a public sale under subsection (a) of this section.</text> </level> </level> <level label="2"> <text>The proceeds of a sale to which this subsection applies, including the deposit required by subsection (b) of this section, shall be applied, in the following order, to:</text> <level label="i"> <text>The actual and reasonable cost of the sale;</text> </level> <level label="ii"> <text>The actual and reasonable cost of retaking and storing the goods; and</text> </level> <level label="iii"> <text>The unpaid balance owing under the agreement at the time the goods are repossessed.</text> </level> </level> <level label="3"> <text>After application of the proceeds and deposit in accordance with paragraph (2) of this subsection, any remaining balance shall be paid to the buyer, unless the sale occurred because of the seizure of the goods by a police department, bureau, or force, in which event the remaining balance shall be paid to the police department, bureau, or force that seized the goods, to be disposed of in accordance with the provisions of Title 12 of the Criminal Procedure Article or any other law that applies to the seizure and forfeiture of the goods.</text> </level> <level label="4"> <text>If the proceeds and deposit are insufficient to pay the items enumerated in paragraph (2) of this subsection, the buyer is liable for the deficiency if:</text> <level label="i"> <text>The agreement provides for liability for a deficiency; and</text> </level> <level label="ii"> <text>The holder has complied with all requirements of this subtitle, including the notice requirement of § 12-624(d) of this subtitle.</text> </level> </level> </level> <level label="f"> <text>The holder shall furnish to the buyer a written statement which shows the disposition of the proceeds and deposit.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-627" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>If there is no resale of repossessed goods under § 12-626 of this subtitle, all obligations of the buyer under the agreement shall be discharged, and the holder may retain the goods as his own property without obligation to account to the buyer.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-628" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>If, as part of an installment sale, a promissory note is taken by a seller or sales finance company, the note shall refer to the agreement out of which it arises.</text> </level> <level label="b"> <text>If the note is assigned, it is subject to all defenses which the buyer might have asserted against the seller or sales finance company, except that an acknowledgment by the buyer of delivery of a copy of the agreement pursuant to § 12-605 of this subtitle is conclusive proof of the delivery in favor of an assignee of the note without actual knowledge to the contrary.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-629" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>No act, agreement, or statement of a buyer in an agreement may constitute a valid waiver of any benefit or protection provided to him under this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-630" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>Except as provided by subsections (b) and (c) of this section, a holder may not collect or receive any finance, delinquency, or collection charge from the buyer if:</text> <level label="1"> <text>The agreement does not contain the information required by §§ 12-604 through 12-606 of this subtitle;</text> </level> <level label="2"> <text>The seller fails to deliver to the buyer a required copy of the agreement; or</text> </level> <level label="3"> <text>The agreement contains a finance charge in excess of the applicable charge permitted by § 12-609 or § 12-610 of this subtitle.</text> </level> </level> <level label="b"> <text>Written acknowledgment by the buyer of delivery of a copy of the agreement pursuant to § 12-605 of this subtitle is conclusive proof of the delivery as between the buyer and any assignee of the agreement without actual knowledge to the contrary.</text> </level> <level label="c"> <text>If the seller or any subsequent holder unintentionally and in good faith fails to comply with any provision of §§ 12-609 through 12-612 of this subtitle, the holder may correct the error within 10 days after:</text> <level label="1"> <text>He notices it; or</text> </level> <level label="2"> <text>The buyer notifies him in writing of the error.</text> </level> </level> <level label="d"> <text>If an instrument contains any provision prohibited by § 12-607 of this subtitle, that provision is void and the holder may not collect or receive from the buyer, in connection with the transaction to which the instrument relates, any finance, delinquency, or collection charge.</text> </level> <level label="e"> <text>The penalties of this section are in addition to those provided in Part IV of this subtitle or in any other statutory law.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-631" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>If a complaint for violation of any provision of Part II of this subtitle is filed with the Commissioner of Financial Regulation, he may investigate the complaint and hold a hearing on it in accordance with § 11-413 of the Financial Institutions Article.</text> </level> <level label="b"> <text>The Commissioner shall give to the person complained against at least ten days’ written notice of the complaint and the time and place of any hearing. The notice shall be in writing and sent by registered or certified mail to his principal place of business.</text> </level> <level label="c"> <level label="1"> <text>If, after the hearing, the Commissioner finds that a person has engaged or is engaging in any act or practice prohibited by Part II of this subtitle, he shall order the person to cease and desist from the act or practice.</text> </level> <level label="2"> <text>The order of the Commissioner shall comply with the Administrative Procedure Act.</text> </level> </level> <level label="d"> <level label="1"> <text>If no appeal is filed, the order becomes final after expiration of the time allowed by the Administrative Procedure Act for appeals from the Commissioner’s order.</text> </level> <level label="2"> <text>If an appeal is filed, the order becomes final after final decision of the court affirming the order or dismissing the appeal.</text> </level> </level> <level label="e"> <text>For the purposes of this section, the Commissioner’s order may not apply to any:</text> <level label="1"> <text>Incorporated bank, savings institution, or trust company;</text> </level> <level label="2"> <text>A savings and loan association; or</text> </level> <level label="3"> <text>A federal credit union or State chartered credit union.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-632" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <text>In connection with an installment sale agreement, a sales finance company may:</text> <level label="1"> <text>Renew or extend the time for payment of any installment sale agreement or any installment; or</text> </level> <level label="2"> <text>Refund to the buyer, for subsequent repayment by him, the amount of any installment previously paid.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-633" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, any renewal, extension, or refund made under § 12-632 of this subtitle shall be by a written agreement signed by each party.</text> </level> <level label="2"> <text>If an extension is granted without any additional charge, the agreement need be signed only by the sales finance company.</text> </level> </level> <level label="b"> <level label="1"> <text>At the time a renewal, extension, or refund is made, the sales finance company shall deliver to the buyer an exact copy of the agreement.</text> </level> <level label="2"> <text>The agreement shall:</text> <level label="i"> <text>State the name and post office address of each party;</text> </level> <level label="ii"> <text>Identify the prior agreement to which it relates;</text> </level> <level label="iii"> <text>Describe the goods;</text> </level> <level label="iv"> <text>Describe any security interest or collateral security which was reserved or taken to secure the prior agreement and which is retained to secure the renewal, extension, or refund; and</text> </level> <level label="v"> <text>State the amount of the extended principal, the agreed rate of charge, the number of scheduled installments, and the time and amount of each installment.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-634" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>A sales finance company may charge the buyer for a renewal, extension, or refund made under § 12-632 of this subtitle, an amount not exceeding an annual effective rate of simple interest, as defined in Subtitle 1 of this title, of 15 percent per annum on the balances outstanding from time to time of the extended principal, from the date of the renewal, extension, or refund to the date set for the final payment.</text> </level> <level label="b"> <text>The extended principal may not exceed the aggregate amount of the unpaid portion of the time balance under the agreement, any delinquency charges lawfully payable, and any amount of cash actually refunded to the buyer, less a credit for prepayment computed as if the unpaid portion of the time balance had been paid in full at the time of the renewal, extension, or refund.</text> </level> <level label="c"> <text>Notwithstanding the provisions of subsection (a) of this section, a sales finance company may charge an annual effective rate of simple interest of 24 percent on renewals or extensions on contracts made on or after July 1, 1982, on the balances outstanding from time to time.</text> </level> <level label="d"> <text>No sales finance company may charge the rates permitted by subsection (c) of this section unless the sales finance company complies with the limitations of §§ 12-610.1 and 12-610.2 of this subtitle and provided that such a renewal or extension agreement may not provide for a balloon payment.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-635" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>A sales finance company shall permit a buyer to prepay in full or in part at any time, without penalty, the outstanding balance payable under a renewal, extension, or refund agreement.</text> </level> <level label="b"> <text>If a buyer prepays the entire outstanding balance, the sales finance company shall pay or credit to him the unearned portion of the charge.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-636" title_number="12" title_name="Credit Regulations" subtitle_number="6" subtitle_name="Retail Installment Sales"> <level label="a"> <text>Any person who knowingly violates or participates in the violation of any provision of Part II of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $100 for the first offense and not exceeding $500 for any subsequent offense.</text> </level> <level label="b"> <text>Any person who violates or participates in the violation of any provision of Part III of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $500 or imprisonment not exceeding six months or both.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-701" title_number="12" title_name="Credit Regulations" subtitle_number="7" subtitle_name="Equal Credit Opportunity Act"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Applicant” means any person who applies to a creditor:</text> <level label="1"> <text>Directly for an extension, renewal, or continuation of credit; or</text> </level> <level label="2"> <text>Indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit.</text> </level> </level> <level label="c"> <text>“Commissioner” means the Commissioner of Financial Regulation.</text> </level> <level label="d"> <text>“Credit” means the right granted by a creditor to a debtor to:</text> <level label="1"> <text>Defer payment of a debt;</text> </level> <level label="2"> <text>Incur a debt and defer its payment; or</text> </level> <level label="3"> <text>Purchase property or services and defer payment for it.</text> </level> </level> <level label="e"> <text>“Creditor” means any person who regularly:</text> <level label="1"> <text>Extends, renews, or continues credit for personal, family or household purposes; or</text> </level> <level label="2"> <text>Arranges for the extension, renewal, or continuation of credit.</text> </level> </level> <level label="f"> <text>“Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-702" title_number="12" title_name="Credit Regulations" subtitle_number="7" subtitle_name="Equal Credit Opportunity Act"> <level label="a"> <text>The General Assembly finds that there is a need to insure that the various financial institutions and other persons and firms engaged in the extension of credit exercise their responsibility to make credit available with fairness, impartiality, and without discrimination on the basis of sex or marital status. Economic stabilization would be enhanced, and competition among the various financial institutions and other persons and firms engaged in the extension of credit would be strengthened by an absence of discrimination on the basis of sex, sexual orientation, gender identity, disability, marital status, race, color, religion, national origin, or age (provided the applicant has capacity to contract).</text> </level> <level label="b"> <text>It is the purpose of this subtitle to require that financial institutions and other persons and firms engaged in the extension of credit do not deny credit on the basis of sex, sexual orientation, gender identity, disability, marital status, race, color, religion, national origin, or age (provided the applicant has capacity to contract).</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-703" title_number="12" title_name="Credit Regulations" subtitle_number="7" subtitle_name="Equal Credit Opportunity Act"> <level label="a"> <text>If a complaint for violation of any provisions of this subtitle is filed with the Commissioner, the Commissioner shall investigate the complaint and may hold a hearing on it in accordance with the Administrative Procedure Act.</text> </level> <level label="b"> <text>The Commissioner shall give to the creditor complained against at least 10 days’ written notice of the complaint and the time and place of any hearing. The notice shall be in writing and sent by registered or certified mail to the creditor’s principal place of business.</text> </level> <level label="c"> <level label="1"> <text>If, after the hearing, the Commissioner finds that the creditor has engaged or is engaging in any act or practice prohibited by this subtitle, the Commissioner shall order the creditor to cease and desist from the act or practice.</text> </level> <level label="2"> <text>The order of the Commissioner shall comply with the Administrative Procedure Act.</text> </level> </level> <level label="d"> <level label="1"> <text>If no appeal is filed, the order becomes final after expiration of the time allowed by the Administrative Procedure Act for appeals from the Commissioner’s orders.</text> </level> <level label="2"> <text>If an appeal is filed, the order becomes final after final decision of the court affirming the order or dismissing the appeal.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-704" title_number="12" title_name="Credit Regulations" subtitle_number="7" subtitle_name="Equal Credit Opportunity Act"> <text>With respect to any aspect of a credit transaction:</text> <level label="1"> <text>A creditor may not discriminate against any applicant on the basis of sex, sexual orientation, gender identity, disability, marital status, race, color, religion, national origin, or age;</text> </level> <level label="2"> <text>A creditor that complies with the applicable provisions of the federal Equal Credit Opportunity Act, or regulations adopted under the federal Equal Credit Opportunity Act, is in compliance with the requirements of this subtitle; and</text> </level> <level label="3"> <text>Any violation of the federal Equal Credit Opportunity Act, or any regulation adopted under the federal Equal Credit Opportunity Act, is a violation of the provisions of this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-705" title_number="12" title_name="Credit Regulations" subtitle_number="7" subtitle_name="Equal Credit Opportunity Act"> <text>Prohibited discriminatory practices include any:</text> <level label="1"> <text>Refusal to consider both applicants’ income when both parties of a marriage party apply for a joint account;</text> </level> <level label="2"> <text>Refusal to consider alimony or child support awarded by a court and received by the applicant as a valid source of income, where that source can be verified as to its amount, length of time received, and regularity of receipt;</text> </level> <level label="3"> <text>Refusal to extend credit to any person solely because of marital status or change in marital status;</text> </level> <level label="4"> <text>Refusal to issue separate accounts to married persons where each would be credit worthy if unmarried;</text> </level> <level label="5"> <text>Request for or consideration of the credit rating of an applicant’s spouse where the applicant is otherwise credit worthy and is not applying for a joint account unless the applicant lists credit references in the name of spouse or former spouse or has no individual prior credit history or the creditor permits the applicant to designate the applicant’s spouse as an authorized purchaser on the account;</text> </level> <level label="6"> <text>Refusal to recognize the legal name of any married person; and</text> </level> <level label="7"> <text>Requests for or consideration of information about birth control practices in evaluating any credit application.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-706" title_number="12" title_name="Credit Regulations" subtitle_number="7" subtitle_name="Equal Credit Opportunity Act"> <text>The provisions of this subtitle shall be administered by the Commissioner.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-707" title_number="12" title_name="Credit Regulations" subtitle_number="7" subtitle_name="Equal Credit Opportunity Act"> <level label="a"> <text>Notwithstanding the provisions of § 12–703 of this subtitle, any creditor who violates any provisions of this subtitle is liable to the applicant in an amount equal to the sum of any actual damages sustained by the applicant acting either in an individual capacity or as a representative of a class.</text> </level> <level label="b"> <text>Any creditor who fails to comply with any requirement imposed under this subtitle shall be liable to the aggrieved applicant for punitive damages in an amount not greater than $10,000, as determined by the court, in addition to any actual damages provided in subsection (a) of this section. In pursuing the recovery allowed under this subsection, the applicant may proceed only in an individual capacity and not as a representative of a class.</text> </level> <level label="c"> <text>Notwithstanding subsection (b) of this section, any creditor who fails to comply with any requirement imposed under this subtitle may be liable for punitive damages in the case of a class action in such amount as the court may allow, except that as to each member of the class no minimum recovery shall be applicable, and the total recovery in such action shall not exceed the lesser of $100,000 or 1 percent of the net worth of the creditor. In determining the amount of award in any class action, the court shall consider, among other relevant factors, the amount of any actual damages awarded, the frequency and persistence of failures of compliance by the creditor, the resources of the creditor, the number of persons adversely affected, and the extent to which the creditor’s failure of compliance was intentional.</text> </level> <level label="d"> <text>When a creditor fails to comply with any requirement imposed under this subtitle, an aggrieved applicant may institute a civil action for preventive relief, including an application for a permanent or temporary injunction, restraining order, or other action.</text> </level> <level label="e"> <text>In the case of any successful action to enforce the foregoing liability, the costs of the action together with a reasonable attorney’s fee as determined by the court shall be added to any damages awarded by the court under the provisions of subsections (a), (b), and (d) of this section.</text> </level> <level label="f"> <text>A creditor does not violate this subtitle if the creditor shows by a preponderance of evidence in any administrative or judicial proceeding that the violation was not willful or resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.</text> </level> <level label="g"> <text>An action under this title may be brought in any district court or circuit court, depending upon the amount in controversy, within one year from the date of the occurrence of the violation.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-708" title_number="12" title_name="Credit Regulations" subtitle_number="7" subtitle_name="Equal Credit Opportunity Act"> <text>This subtitle may be cited as the Maryland Equal Credit Opportunity Act.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-801" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Borrower” means an individual who obtains a loan or advance of money.</text> </level> <level label="c"> <text>“Commissioner” means the Commissioner of Financial Regulation.</text> </level> <level label="d"> <text>“Finder’s fee” means any compensation or commission directly or indirectly imposed by a broker and paid by or on behalf of the borrower for the broker’s services in procuring, arranging, or otherwise assisting a borrower in obtaining a loan or advance of money.</text> </level> <level label="e"> <text>“Lender” means a person defined as a mortgage lender under § 11–501(j)(1)(ii) of the Financial Institutions Article.</text> </level> <level label="f"> <text>“Mortgage broker” means a person defined as a mortgage lender under § 11–501(j)(1)(i) of the Financial Institutions Article.</text> </level> <level label="g"> <text>“Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-802" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <text>This subtitle does not apply to any loan:</text> <level label="1"> <text>Described in § 12–103(e) of this title; or</text> </level> <level label="2"> <text>Made by motor vehicle or recreational vehicle dealers in connection with the sale of their vehicles.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-803" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <text>A mortgage broker may not be a director, officer, or employee of any lender where he places a loan.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-804" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <level label="a"> <text>A mortgage broker may charge a finder’s fee not in excess of 8 percent of the amount of the loan or advance.</text> </level> <level label="b"> <text>In addition to a finder’s fee, a mortgage broker may charge a borrower for the actual cost of:</text> <level label="1"> <text>Any appraisal, credit report, condominium document, or subordination agreement document obtained by the mortgage broker at the written request of the borrower; and</text> </level> <level label="2"> <text>Any other good or service, as specified in regulations adopted by the Commissioner, that is required to complete a loan application process and that, at the written request of the borrower, is paid by the mortgage broker to a third–party provider of the good or service.</text> </level> </level> <level label="c"> <text>A mortgage broker obtaining a mortgage loan with respect to the same property more than once within a 24–month period may charge a finder’s fee if the fee is not in excess of 8% of the initial loan amount when combined with the finder’s fee charged on the initial loan and on any other finder’s fee collected during that 24–month period.</text> </level> <level label="d"> <text>The provisions of this section do not apply to:</text> <level label="1"> <text>The charging of fees and charges otherwise permitted under this title; or</text> </level> <level label="2"> <text>Attorney’s fees unless the attorney is functioning as a mortgage broker.</text> </level> </level> <level label="e"> <text>A mortgage broker may not charge a finder’s fee in any transaction in which the mortgage broker or an owner, part owner, partner, director, officer, or employee of the mortgage broker is the lender or an owner, part owner, partner, director, officer, or employee of the lender.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-805" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <level label="a"> <text>A mortgage broker may not receive any fee in the form of a note, mortgage, or other evidence of indebtedness.</text> </level> <level label="b"> <text>Payment of the finder’s fee to the mortgage broker out of the proceeds of the loan is not considered as interest to the lender if the finder’s fee is not in excess of that permitted by this subtitle.</text> </level> <level label="c"> <text>If the finder’s fee is paid from the proceeds of the loan, the lender shall comply with the disclosure provisions of § 12–106 of this title or the federal Truth in Lending Act and in addition shall advise the borrower, in writing, of the borrower’s right to a refund of the finder’s fee upon the exercise of any right of rescission of the loan.</text> </level> <level label="d"> <level label="1"> <text>A finder’s fee may not be charged unless it is pursuant to a written agreement between the mortgage broker and the borrower which is separate and distinct from any other document.</text> </level> <level label="2"> <text>The terms of the proposed agreement shall:</text> <level label="i"> <text>Be disclosed to the borrower before the mortgage broker undertakes to assist the borrower in obtaining a loan or advance of money;</text> </level> <level label="ii"> <text>Specify the amount of the finder’s fee; and</text> </level> <level label="iii"> <text>Contain a representation by the mortgage broker that the mortgage broker is acting as a mortgage broker and not as a lender in the transaction.</text> </level> </level> <level label="3"> <text>A copy of the agreement, dated and signed by the mortgage broker and the borrower, shall be provided to the borrower within 10 business days after the date the loan application is completed.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-806" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <text>A borrower is entitled to a refund of any finder’s fee paid to a mortgage broker if:</text> <level label="1"> <text>The loan transaction is not made to the borrower; or</text> </level> <level label="2"> <text>The borrower exercises his right to rescind the loan transaction under the federal Truth in Lending Act or any similar federal or State law.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-807" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <text>Any mortgage broker who violates any provision of this subtitle shall forfeit to the borrower the greater of:</text> <level label="1"> <text>Three times the amount of the finder’s fee collected; or</text> </level> <level label="2"> <text>The sum of $500.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-808" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <text>A licensed real estate broker, insurer, salesman, attorney-at-law, or agent thereof who arranges or procures a mortgage may not collect a finder’s fee if, in addition to acting as broker under this subtitle, he is also acting as a real estate broker, insurer, salesman, attorney-at-law, or agent thereof in connection with the subject property or transaction.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-809" title_number="12" title_name="Credit Regulations" subtitle_number="8" subtitle_name="Loans -- Finder's Fees"> <text>The provisions of this subtitle may not be used to circumvent the provisions of § 12–108 of this title.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-901" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Borrower” means a corporation, partnership, association, government or governmental subdivision or agency, trust, individual, or other entity receiving a loan or other extension of credit under this subtitle.</text> </level> <level label="c"> <text>“Commercial loan” and “extension of credit for a commercial purpose” mean an extension of credit made:</text> <level label="1"> <text>Solely to acquire an interest in or to carry on a business or commercial enterprise; or</text> </level> <level label="2"> <text>To any business or commercial organization.</text> </level> </level> <level label="d"> <text>“Consumer borrower” means an individual receiving a loan or other extension of credit under this subtitle for personal, household, or family purposes or an individual receiving a commercial loan or other extension of credit for any commercial purpose not in excess of $75,000, secured by residential real property.</text> </level> <level label="e"> <text>“Credit device” means any card, plate, check, draft, identification code, or other means of identification contemplated by the agreement governing the plan.</text> </level> <level label="f"> <level label="1"> <text>“Credit grantor” means any individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity making a loan or other extension of credit under this subtitle which is incorporated, chartered, or licensed pursuant to State or federal law, the lending operations of which are subject to supervision, examination, and regulation by a State or federal agency or which is licensed under Title 12, Subtitle 4 of the Financial Institutions Article or is a retailer.</text> </level> <level label="2"> <text>“Credit grantor” includes:</text> <level label="i"> <text>Any bank, trust company, depository institution, or savings bank having a branch in this State;</text> </level> <level label="ii"> <text>Any subsidiary of a bank holding company, as defined in the federal Bank Holding Company Act of 1956, as amended, which is domiciled, doing business, and offering a revolving credit plan involving the issuance of credit devices in this State; and</text> </level> <level label="iii"> <text>Any person who acquires or obtains the assignment of a revolving credit plan made under this subtitle.</text> </level> </level> </level> <level label="g"> <level label="1"> <text>“Loan” means a cash advance to be paid to or for the account of the borrower.</text> </level> <level label="2"> <text>“Loan” includes an advance made in accordance with the terms of a shared appreciation agreement.</text> </level> </level> <level label="h"> <text>“Mobile home” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="i"> <text>“Nonconsumer borrower” means any borrower other than a consumer borrower.</text> </level> <level label="j"> <level label="1"> <text>“Outstanding unpaid indebtedness” means on any day the total amount of purchases and loans charged to the borrower’s account under the plan which is outstanding and unpaid at the end of the day, after adding the aggregate amount of any new purchases and loans charged to the account that day and deducting the aggregate amount of any payments and credits applied to the account that day.</text> </level> <level label="2"> <text>If the agreement governing the plan permits, “outstanding unpaid indebtedness” may include the amount of any interest, finance charges, and additional charges, including late or delinquency charges, that have accrued in the account and are unpaid at the end of the day.</text> </level> </level> <level label="k"> <text>“Purchase” means an extension of credit for a purchase of real or personal, tangible or intangible property, or an extension of credit for services, licenses, taxes, official fees, fines, private or governmental obligations, or any other thing of value, including a charitable contribution.</text> </level> <level label="l"> <text>“Residential real property” means owner–occupied real property having a dwelling on it designated principally as a residence with accommodations for not more than four families.</text> </level> <level label="m"> <text>“Revolving credit plan” or “plan” means a plan that contemplates the extension of credit under an account governed by an agreement between a credit grantor and a borrower under which:</text> <level label="1"> <text>The credit grantor permits the borrower and, if the agreement governing the plan permits, persons acting on behalf of or with authorization from the borrower to make purchases or obtain loans from time to time;</text> </level> <level label="2"> <text>The amounts of purchases and loans are charged to the borrower’s account;</text> </level> <level label="3"> <text>The borrower is required to pay the credit grantor the amounts of all purchases and loans charged to the borrower’s account under the plan but has the privilege of paying amounts due from time to time as agreed; and</text> </level> <level label="4"> <text>Interest or finance charges may be charged and collected by the credit grantor from time to time on the amounts due under the plan.</text> </level> </level> <level label="n"> <text>“Shared appreciation agreement” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-902" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>Any credit grantor may, subject to the other provisions of this subtitle:</text> <level label="1"> <text>Offer and extend credit under a revolving credit plan to a borrower and in that connection charge and collect the interest, finance charges, and other charges permitted by this subtitle;</text> </level> <level label="2"> <level label="i"> <text>Take any security as collateral as may be acceptable to the credit grantor.</text> </level> <level label="ii"> <text>If real property is taken as security, the credit grantor shall record the entire line of credit when the credit plan is established.</text> </level> </level> </level> <level label="b"> <text>Without limiting subsection (a) of this section, credit may be extended under a revolving credit plan by a credit grantor’s acquisition of obligations arising out of the honoring of a credit device made available to a borrower under a plan, whether directly or indirectly by means of telephone, point of sale terminal, automated teller machine or other electronic or similar device, or through the mails, by:</text> <level label="1"> <text>A merchant;</text> </level> <level label="2"> <text>A bank or other financial institution chartered or organized under the laws of this or any other state, the District of Columbia, the United States or any district, territory, or possession of the United States, or any foreign country;</text> </level> <level label="3"> <text>Any other person or entity; or</text> </level> <level label="4"> <text>A government or governmental subdivision or agency.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-903" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <level label="1"> <text>A credit grantor may charge and collect interest or finance charges under the plan on the outstanding unpaid indebtedness in the borrower’s account under the plan at any daily, weekly, monthly, annual, or other periodic percentage rate as the agreement governing the plan provides, if the effective rate of simple interest does not exceed 24 percent per year. The rate of interest chargeable on a plan must be expressed in the agreement as a simple interest rate or rates.</text> </level> <level label="2"> <text>The repayment terms for a plan extended to a consumer borrower may not include a provision under which the consumer borrower may be required to pay a balloon payment at maturity. However, the adjustment of payment amounts, due to fluctuations in unpaid balance or rate of interest, may not be deemed to result in a balloon payment.</text> </level> <level label="3"> <text>If the plan is secured by a lien on residential real property, the credit grantor may, in addition to the periodic percentage rate charge authorized under subsection (a)(1) of this section, charge and collect at the time the plan is entered into by the borrower points, loan origination fees, loan discount fees, and similar fees, provided that:</text> <level label="i"> <text>All such fees, when combined with any finder’s fee imposed by a mortgage broker under § 12-804 of this title, may not exceed 10 percent of the maximum amount of credit made available to the borrower under the plan;</text> </level> <level label="ii"> <text>The documents evidencing the plan specifically enumerate any such fees;</text> </level> <level label="iii"> <text>The borrower agrees in writing to pay those fees; and</text> </level> <level label="iv"> <text>The fees are disclosed to the borrower in accordance with the federal Truth in Lending Act.</text> </level> </level> </level> <level label="b"> <text>With respect to a revolving credit plan of a consumer borrower, interest may be calculated on an amount not in excess of the average of the outstanding unpaid indebtedness for the applicable billing period, determined by dividing the total of the amounts of outstanding unpaid indebtedness for each day in the applicable billing period by the number of days in the billing period, or on an amount calculated by another balance computation method specified in the agreement.</text> </level> <level label="c"> <text>If the applicable periodic percentage rate under the agreement governing the plan is monthly, a billing period shall be deemed to be monthly if the last day of each billing period is on the same day of each month or does not vary by more than 4 days.</text> </level> <level label="d"> <level label="1"> <text>Notwithstanding subsections (a) and (b) of this section:</text> <level label="i"> <text>If the outstanding balance of purchase obligations under an open-end credit plan is paid in full within 25 days after the end of a prior billing period, a finance charge or interest may not be imposed on a consumer borrower with respect to such balance for the period from the end of the prior billing period to the date of the payment in full; and</text> </level> <level label="ii"> <text>If there is no purchase balance at the beginning of a current billing period or if full payment of an outstanding balance from a prior billing period is made under subparagraph (i) of this paragraph within 25 days after the end of the prior billing period, a finance charge or interest may not be imposed on a consumer borrower with respect to any purchase obligation added to the account during the current billing period from the date of purchase to the end of the current billing period.</text> </level> </level> <level label="2"> <text>Notwithstanding paragraph (1) of this subsection, if the agreement governing a plan so provides, a finance charge or interest may be imposed from the date of purchase, if the agreement does not provide any charge permitted by § 12-905(a) of this subtitle.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-904" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>If the agreement governing the revolving credit plan so provides, the periodic percentage rate of interest or finance charges under the plan may vary in accordance with an index or formula that:</text> <level label="1"> <text>Is made readily available to and verifiable by the borrower;</text> </level> <level label="2"> <text>Is beyond the control of the credit grantor; and</text> </level> <level label="3"> <text>May be within the control of the borrower.</text> </level> </level> <level label="b"> <text>The periodic percentage rate, as varied, may be made applicable to all outstanding unpaid indebtedness on or after the effective date of the variation, including any indebtedness arising out of purchases made or loans obtained prior to the variation.</text> </level> <level label="c"> <text>The periodic percentage rate, as varied, may not exceed the maximum rate permitted pursuant to § 12–903(a)(1) of this subtitle.</text> </level> <level label="d"> <text>If a formula used under subsection (a)(3) of this section measures credit risk, the periodic percentage rate of interest or finance charges:</text> <level label="1"> <text>Shall be lower for any consumer borrower measured as more creditworthy under the formula; and</text> </level> <level label="2"> <text>If the formula considers delinquency or arrearages, may not be raised unless a consumer borrower is at least 2 months in arrears in payment.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-905" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>With respect to an unsecured open end credit plan, fees or charges may not be imposed on a consumer borrower in addition to interest or finance charges as permitted by this subtitle, except as follows:</text> <level label="1"> <text>If the plan is offered by a seller of goods or services, or both, and may be used only for the purchase or lease of the seller’s goods and services, the seller may charge one of the following fees:</text> <level label="i"> <text>An annual charge in any amount the agreement provides for the privileges made available to the consumer borrower under the plan;</text> </level> <level label="ii"> <text>A transaction charge or charges in such amount or amounts as the agreement may provide for each separate purchase under the plan; or</text> </level> <level label="iii"> <text>A minimum charge for each scheduled billing period under the plan during any portion of which there is an outstanding unpaid indebtedness under the plan.</text> </level> </level> <level label="2"> <text>If the plan is offered by any other credit grantor, the credit grantor may impose any or all of the following fees:</text> <level label="i"> <text>An annual charge in any amount the agreement provides for the privileges made available to the consumer borrower under the plan;</text> </level> <level label="ii"> <text>A transaction charge or charges in such amount or amounts as the agreement may provide for each separate purchase or loan under the plan; and</text> </level> <level label="iii"> <text>A minimum charge for each scheduled billing period under the plan during any portion of which there is an outstanding unpaid indebtedness under the plan.</text> </level> </level> <level label="3"> <text>Notwithstanding the provisions of paragraph (2) of this subsection, if the credit agreement provides, a credit union may make loans or extend credit to its members incorporating the same terms and conditions as a federal credit union is permitted under federal law and regulations relating to:</text> <level label="i"> <text>An over the limit fee assessed on a credit card account; and</text> </level> <level label="ii"> <text>Fees for ancillary and administrative services requested by the member, including:</text> <level label="1"> <text>Researching account records;</text> </level> <level label="2"> <text>Providing duplicate statements and other documents; and</text> </level> <level label="3"> <text>Expedited issuance of a duplicate or original credit card or device.</text> </level> </level> </level> </level> <level label="b"> <level label="1"> <text>Except as provided in subsection (f) of this section, with respect to a secured open end credit plan, fees or charges may not be imposed on a consumer borrower in addition to interest or finance charges except for actual and verifiable fees incurred by the credit grantor and not retained by the credit grantor for the following:</text> <level label="i"> <text>Attorney’s fees for services rendered in connection with the preparation, closing, or disbursement of the loan;</text> </level> <level label="ii"> <text>Any expense, tax, or charge paid to a governmental agency;</text> </level> <level label="iii"> <text>Examination of title, appraisal, or other costs necessary or appropriate to the security of the loan; and</text> </level> <level label="iv"> <text>Premiums for any insurance coverage permitted under this subtitle.</text> </level> </level> <level label="2"> <text>The additional fees or charges permitted under this subsection may be imposed, charged, and collected at any time.</text> </level> </level> <level label="c"> <text>If a plan is established for a consumer borrower, a fee or charge may not be charged or collected unless the agreement concerning the plan permits the fee to be charged.</text> </level> <level label="d"> <text>If a plan is established for a nonconsumer borrower, the nonconsumer borrower and credit grantor may agree upon any terms concerning charges and fees.</text> </level> <level label="e"> <level label="1"> <text>For purposes of this section, the additional charges listed in subsections (a)(1) and (3), (b), and (f) of this section are not interest or finance charges with respect to a plan.</text> </level> <level label="2"> <text>Any fees or charges permitted under subsection (a)(2) of this section, when combined with any interest charged, may not exceed an effective rate of 33% per annum simple interest.</text> </level> </level> <level label="f"> <level label="1"> <text>Subject to the provisions of paragraphs (2) through (8) of this subsection, a credit grantor of an open end credit plan that is secured by a deposit, savings, passbook, or other similar account or certificate of deposit may impose:</text> <level label="i"> <text>An application fee not to exceed $35; and</text> </level> <level label="ii"> <text>An annual charge not to exceed $35 for the privileges made available to the consumer borrower under the plan.</text> </level> </level> <level label="2"> <text>If an application to the plan is approved, the credit grantor shall credit the application fee:</text> <level label="i"> <text>To the initial annual charge; and</text> </level> <level label="ii"> <text>If there is no annual charge, to the interest or finance charges under the plan.</text> </level> </level> <level label="3"> <text>If an application to the plan is rejected, the credit grantor shall return the application fee to the applicant.</text> </level> <level label="4"> <text>Within 45 days after the receipt of the application, the credit grantor shall:</text> <level label="i"> <text>Accept the application; or</text> </level> <level label="ii"> <text>Reject the application and return the application fee to the applicant.</text> </level> </level> <level label="5"> <text>Any such plan shall have a credit limit of no less than the amount of the deposit, savings, passbook, or other similar account or certificate of deposit required as security.</text> </level> <level label="6"> <text>The application shall state the amount of:</text> <level label="i"> <text>The minimum required security; and</text> </level> <level label="ii"> <text>The application fee.</text> </level> </level> <level label="7"> <text>The agreement shall state the amount of the annual charge.</text> </level> <level label="8"> <text>If an annual charge is imposed, the credit grantor shall pay interest on the deposit, savings, passbook, or other similar account or certificate of deposit required as security in the greater of:</text> <level label="i"> <text>A rate of 4 percent per annum simple interest; or</text> </level> <level label="ii"> <text>The rate of interest regularly paid on regular passbook savings accounts by the lending institution that issued the deposit, savings, passbook, or other similar account or certificate of deposit required as security.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-906" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>If the agreement governing a revolving credit plan permitting the borrower to obtain both loans and purchases so provides, a credit grantor may impose different terms on the indebtedness arising out of purchases than to the indebtedness arising out of loans.</text> </level> <level label="b"> <text>Subsection (a) of this section applies to all terms, including:</text> <level label="1"> <text>The terms governing the periodic percentage rate used to calculate interest or finance charges;</text> </level> <level label="2"> <text>The method of computing the outstanding unpaid indebtedness to which the periodic percentage rate is applied;</text> </level> <level label="3"> <text>The amounts of other charges; and</text> </level> <level label="4"> <text>The applicable repayment schedule.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-907" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>If credit under a revolving credit plan is offered and extended by a credit grantor which is a depository institution in connection with a demand deposit account or other transaction account maintained by the borrower with the credit grantor under an agreement or arrangement where the credit grantor agrees to honor checks, drafts, or other debits to the account by making extensions of credit to the borrower under a revolving credit plan, any charges customarily imposed by the credit grantor under the terms governing the account in the absence of any associated revolving credit plan may continue to be imposed on the account without specific reference or incorporation in the agreement governing the revolving credit plan.</text> </level> <level label="b"> <text>The account charges referred to in subsection (a) of this section include:</text> <level label="1"> <text>Check charges;</text> </level> <level label="2"> <text>Monthly maintenance charges;</text> </level> <level label="3"> <text>Checkbook charges;</text> </level> <level label="4"> <text>Charges for checks drawn in excess of an available line of credit; or</text> </level> <level label="5"> <text>Any similar charges.</text> </level> </level> <level label="c"> <text>The amount of any charge imposed on the account may be charged to the account under the plan as a loan and may be included in the outstanding unpaid indebtedness under the terms of the agreement governing the revolving credit plan, to the extent the balance in the demand deposit or other transaction account is insufficient to pay the charge.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-908" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <text>A credit grantor may at any time allow a borrower under a revolving credit plan to defer scheduled payments and charge the borrower a deferral charge agreed to by the credit grantor and the borrower.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-909" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>In connection with a plan established for a consumer borrower:</text> <level label="1"> <text>The purchase of credit life, credit accident and health, credit disability, involuntary unemployment benefit, and similar coverages is optional with the consumer borrower; and</text> </level> <level label="2"> <text>Subject to § 12-909.1 of this subtitle, the purchase of property insurance, title insurance, and credit loss insurance from an insurer of the borrower’s choice may be required if the loan is secured.</text> </level> </level> <level label="b"> <text>The provisions of this section do not alter or modify rights, privileges, or restrictions heretofore existing between the credit grantor and a nonconsumer borrower.</text> </level> <level label="c"> <text>Premiums for any insurance coverage permitted by this section are not interest or finance charges under the plan.</text> </level> <level label="d"> <text>The offering and placement of insurance under this section shall be subject to the provisions of the Insurance Article.</text> </level> <level label="e"> <level label="1"> <level label="i"> <text>In this subsection the following words have the meanings indicated.</text> </level> <level label="ii"> <text>“Improvements” means buildings or structures erected upon or affixed to real property that enhance the value of the real property.</text> </level> <level label="iii"> <text>“Property insurance coverage” means property insurance against losses caused by perils that commonly are covered in insurance policies described with terms similar to “standard fire” or “standard fire with extended coverage”.</text> </level> <level label="iv"> <level label="1"> <text>“Replacement cost” means the amount needed to repair damage to or rebuild improvements on real property to restore the improvements to their pre-loss condition.</text> </level> <level label="2"> <text>“Replacement cost” does not include the value of land.</text> </level> </level> </level> <level label="2"> <level label="i"> <text>A credit grantor may not require a borrower, as a condition to receiving or maintaining a loan secured by a lien, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement cost of the improvements on the real property.</text> </level> <level label="ii"> <text>In determining the replacement cost of the improvements on any real property, the credit grantor may:</text> <level label="1"> <text>Accept the value placed on the improvements by the insurer; or</text> </level> <level label="2"> <text>Use the value placed on the improvements by the credit grantor’s appraisal of the improvements.</text> </level> </level> </level> <level label="3"> <text>A violation of this subsection shall entitle the borrower to:</text> <level label="i"> <text>Seek an injunction to prohibit the credit grantor who has engaged or is engaging in the violation from continuing or engaging in the violation;</text> </level> <level label="ii"> <text>Reasonable attorney’s fees; and</text> </level> <level label="iii"> <text>Damages directly resulting from the violation.</text> </level> </level> <level label="4"> <text>A violation of this subsection does not affect the validity of the lien securing the loan.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-909.1" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>In this section, “binder” means a binder or other temporary contract of insurance as provided under § 12-106 of the Insurance Article.</text> </level> <level label="b"> <text>A credit grantor shall comply with this section if the credit grantor:</text> <level label="1"> <text>Makes any loan secured by a first lien on any interest in owner-occupied residential real property; and</text> </level> <level label="2"> <text>As a condition of making the loan, requires the consumer borrower to purchase property insurance or credit loss insurance.</text> </level> </level> <level label="c"> <text>A credit grantor who makes a loan subject to this section shall accept as evidence of insurance a written binder issued by any authorized insurer or its insurance producer if the binder includes or is accompanied by:</text> <level label="1"> <text>The name and address of the insured consumer borrower;</text> </level> <level label="2"> <text>The name and address of the credit grantor;</text> </level> <level label="3"> <text>A description of the insured residential real property;</text> </level> <level label="4"> <text>A provision that the binder may not be canceled within the term of the binder unless the credit grantor and the insured consumer borrower receive written notice of the cancellation at least 10 days prior to the cancellation;</text> </level> <level label="5"> <text>Except in the case of the renewal of a policy subsequent to the closing of the loan, a paid receipt for the full amount of the applicable premium; and</text> </level> <level label="6"> <text>The amount of coverage.</text> </level> </level> <level label="d"> <text>This section does not prohibit a credit grantor from refusing to honor a binder in cases where:</text> <level label="1"> <text>The credit grantor receives notice of the cancellation of the binder by the insurer; or</text> </level> <level label="2"> <text>At the expiration of 30 days of the date the binder was given, the insurer has failed to issue the policy of insurance.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-910" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>If the agreement governing a revolving credit plan permits, a credit grantor may:</text> <level label="1"> <text>For a nonconsumer borrower, charge a higher periodic percentage rate of interest on outstanding unpaid payments or portions of payments under the plan which are in default; and</text> </level> <level label="2"> <text>For any borrower, impose:</text> <level label="i"> <text>A late or delinquency charge on payments or portions of payments; and</text> </level> <level label="ii"> <text>If payment is made with a check that is dishonored on the second presentment, a charge not to exceed $15.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>No more than one late or delinquency charge may be imposed for any single scheduled payment or portion regardless of the period during which it remains in default.</text> </level> <level label="2"> <text>For the purpose of this subsection, all payments by the borrower shall be applied to satisfaction of scheduled payments in the order in which they become due.</text> </level> <level label="3"> <text>Charges permitted by this section may not be considered interest or finance charges under the plan.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-911" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>If a borrower defaults under the terms of a plan and the credit grantor refers the borrower’s account to an attorney who is not a salaried employee of the credit grantor for collection, the credit grantor may, if the agreement governing the revolving credit plan permits, charge and collect from the borrower a reasonable attorney’s fee.</text> </level> <level label="b"> <text>If the agreement governing the revolving credit plan permits, the credit grantor may recover from the borrower all court or other collection costs actually incurred by the credit grantor relating to the borrower’s default.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-912" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>A credit grantor may, if the agreement governing a revolving credit plan permits, at any time amend the terms of the agreement in accordance with the provisions of this section including:</text> <level label="1"> <text>The terms governing the periodic percentage rate used to calculate interest or finance charges;</text> </level> <level label="2"> <text>The method of computing the outstanding unpaid indebtedness to which the rate is applied;</text> </level> <level label="3"> <text>The amounts of other charges; and</text> </level> <level label="4"> <text>The applicable repayment schedule.</text> </level> </level> <level label="b"> <level label="1"> <text>The credit grantor shall notify each affected borrower of an amendment in the manner set forth in the agreement governing the plan and in compliance with the requirements of the federal Truth in Lending Act, and regulations promulgated thereunder. If the amendment has the effect of increasing the interest, finance charges, or other fees and charges to be paid by the borrower, including, but not limited to those enumerated in § 12–905 of this subtitle, the credit grantor shall mail or deliver to the borrower, at least 25 days before the effective date of the amendment, a clear and conspicuous written notice which shall describe the amendment, including:</text> <level label="i"> <text>A clear statement comparing the original terms and the terms under the amended agreement; and</text> </level> <level label="ii"> <text>Any other pertinent information required by the provisions of this section.</text> </level> </level> <level label="2"> <text>If the amendment has the effect of increasing the interest, finance charges, or other charges to be paid by the borrower, the amendment shall become effective as provided in subsections (c) and (d) of this section.</text> </level> </level> <level label="c"> <level label="1"> <text>Subject to the provisions of this paragraph, an amendment made under this section shall become effective as to a particular borrower on:</text> <level label="i"> <text>The first day of the billing cycle during which the effective date of the amendment occurs; or</text> </level> <level label="ii"> <text>Any later date specified in the notice of amendment.</text> </level> </level> <level label="2"> <text>After receiving the notice of amendment under subsection (b) of this section, the borrower may send a signed, written notice of refusal to the creditor that the borrower refuses to accept the amendment.</text> </level> <level label="3"> <text>The notice of refusal sent by the borrower may be accompanied by a payment on the borrower’s account and shall be mailed within 25 days of the mailing of the notice of amendment.</text> </level> <level label="4"> <text>Any borrower who gives timely notice of refusal may use the account pursuant to its original, unamended terms for:</text> <level label="i"> <level label="1"> <text>The duration of the time for which a fee was paid for use of the plan through the borrower’s credit device; or</text> </level> <level label="2"> <text>Any longer period of time as determined by the credit grantor; or</text> </level> </level> <level label="ii"> <text>If no fee is paid for use of the plan or if the remaining time period for which a fee was paid for use of the plan through the borrower’s credit device is less than 3 months, a period of time of not less than 3 months from the date of mailing of the notice of refusal.</text> </level> </level> <level label="5"> <text>At the expiration of the periods provided under paragraph (4) of this subsection, the borrower who has given a timely notice of refusal may pay any outstanding unpaid indebtedness in the account under the terms of the unamended agreement governing the plan.</text> </level> <level label="6"> <text>A credit grantor amending the agreement governing a revolving credit plan under this subsection shall include in the notice of amendment under subsection (b) of this section a statement in at least 10 point type that:</text> <level label="i"> <text>If a written notice of refusal from the borrower in which the borrower refuses to accept the amendment is not received by the credit grantor within 25 days of the mailing of the notice of amendment, the amendment will become effective on the first day of the billing cycle during which the effective date of the amendment occurs or at any later date specified in the notice of amendment;</text> </level> <level label="ii"> <text>Enumerates the borrower’s rights under paragraphs (4) and (5) of this subsection upon timely notice of refusal by the borrower; and</text> </level> <level label="iii"> <text>Includes the address to which the borrower may send notice of a refusal.</text> </level> </level> <level label="7"> <text>The notice of amendment under subsection (b) of this section shall be enclosed in an envelope that contains on its face a statement in 10 point type that an important notice of an increase in rates or fees of the revolving credit plan is enclosed.</text> </level> </level> <level label="d"> <level label="1"> <text>Notwithstanding subsection (c) of this section, at the election of the credit grantor, an amendment made under this section may become effective as to a particular borrower on the first day of the billing cycle in which the borrower:</text> <level label="i"> <text>Makes a purchase or obtains a loan under the plan, after the date specified in the notice of amendment which is not less than 25 days after the date the notice of amendment was mailed; or</text> </level> <level label="ii"> <text>Sends a notice of agreement to the credit grantor in which the borrower expressly agrees to the amendment.</text> </level> </level> <level label="2"> <text>In addition to the requirements of subsection (b) of this section, a credit grantor electing to amend the agreement governing a revolving credit plan under this subsection shall include in the notice of amendment a statement that the amendment will become effective on the first date of the billing cycle during which the borrower:</text> <level label="i"> <text>Makes a purchase or obtains a loan under the plan, so long as the purchase is made or the loan is obtained after a specific date which is at least 25 days after the mailing of the notice of amendment; or</text> </level> <level label="ii"> <text>Sends a notice of agreement to the credit grantor in which the borrower expressly agrees to the amendment.</text> </level> </level> <level label="3"> <text>A borrower who receives a notice of amendment under this subsection may pay any outstanding unpaid indebtedness in the account under the terms of the unamended agreement governing the plan if the borrower does not:</text> <level label="i"> <text>Make any purchase or obtain any loan under the plan after the date specified in the notice of amendment; or</text> </level> <level label="ii"> <text>Send a notice of agreement to the credit grantor in which the borrower expressly agrees to the amendment.</text> </level> </level> </level> <level label="e"> <text>If the terms of the agreement governing the plan, as originally drawn or as amended provide, any amendment may, on and after the date on which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower’s account under the plan, including any indebtedness which shall have arisen out of purchases made or loans obtained prior to the effective date of the amendment.</text> </level> <level label="f"> <text>For purposes of this section, a decrease in the required amount of scheduled payments shall not be deemed an amendment which has the effect of increasing the interest or finance charges to be paid by the borrower.</text> </level> <level label="g"> <text>The procedures for amendment by a credit grantor of the terms of a plan to which a nonconsumer borrower is a party may, notwithstanding the provisions of this section, be as the agreement governing the plan may otherwise provide.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-913" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>Unless otherwise provided under the express terms of the agreement governing a revolving credit plan, the provisions of Subtitle 1, 3, 4, 5, 6, or 10 of this title do not apply to any extension of credit made pursuant to a revolving credit plan if:</text> <level label="1"> <text>The plan is established before October 1, 1993; and</text> </level> <level label="2"> <text>The extension of credit is made under this subtitle before October 1, 1993.</text> </level> </level> <level label="b"> <text>For the purposes of subsection (a) of this section, an extension of credit is made under this subtitle if:</text> <level label="1"> <text>The credit grantor has made a written election to do so in the agreement governing the plan; or</text> </level> <level label="2"> <text>The agreement governing the plan is offered pursuant to the provisions of this subtitle.</text> </level> </level> <level label="c"> <text>For the purposes of subsection (a) of this section, if there is no written election to extend credit under this subtitle in the agreement governing the plan, the burden of proof is on the credit grantor to show the agreement governing the plan was offered pursuant to this subtitle.</text> </level> <level label="d"> <text>Any plan established before October 1, 1993 is not subject to § 12-913.2 of this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-913.1" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <level label="1"> <text>On or after October 1, 1993, a credit grantor may at its option elect to offer a plan to any borrower either pursuant to this subtitle or as otherwise permitted by applicable law.</text> </level> <level label="2"> <text>In order for a plan to be established under and governed by this subtitle, a credit grantor shall make a written election to that effect in the agreement governing the plan.</text> </level> </level> <level label="b"> <level label="1"> <text>If a credit grantor elects in accordance with this section to establish a plan under this subtitle, the provisions of Subtitle 1, 3, 4, 5, 6, or 10 of this title do not apply to the plan.</text> </level> <level label="2"> <text>If a person fails to elect in accordance with this section to establish a plan under this subtitle, the provisions of this subtitle do not apply.</text> </level> </level> <level label="c"> <text>Notwithstanding any other provision of this title, a loan shall be subject to the provisions of this subtitle, whether or not elected, if the loan:</text> <level label="1"> <text>Is a shared appreciation agreement; and</text> </level> <level label="2"> <text>Allows the borrower to repay advances and have any repaid amounts subsequently readvanced to the borrower.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-913.2" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>The credit grantor shall deliver a copy of the agreement governing the plan to the borrower no later than 30 days after the credit grantor establishes the account governed by the agreement for the borrower’s use.</text> </level> <level label="b"> <text>If there is more than one borrower, a copy of the agreement governing the plan may be delivered to any borrower who is primarily liable on the account.</text> </level> <level label="c"> <text>Written acknowledgment by a borrower of delivery in accordance with this section of a copy of the agreement governing the plan is conclusive proof of delivery as between the borrower and any assignee of the account established under the plan without actual knowledge to the contrary.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-914" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>If any provision of this subtitle is held invalid, the invalidity shall not affect any other provision of this subtitle which can be given effect without the invalid provision.</text> </level> <level label="b"> <text>Notwithstanding any other provisions of this title, a plan under this subtitle is subject only to the disclosure requirements of this subtitle and, to the extent applicable, of the federal Truth in Lending Act and regulations promulgated thereunder.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-915" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>A credit grantor making a loan or extension of credit under this subtitle is subject to the licensing, investigatory, enforcement and penalty provisions of Title 11, Subtitle 3 of the Financial Institutions Article unless the credit grantor or the loan or extension of credit is exempt under Title 11, Subtitle 3 of the Financial Institutions Article.</text> </level> <level label="b"> <text>In addition to any license which may be required by subsection (a) of this section, a credit grantor making a loan or extension of credit under this subtitle secured by any lien on residential real property is subject to the licensing, investigatory, enforcement and penalty provisions of Title 11, Subtitle 5 of the Financial Institutions Article unless the credit grantor or the loan or extension of credit is exempt under Title 11, Subtitle 5 of the Financial Institutions Article.</text> </level> <level label="c"> <text>If a license is required by this section, it shall be issued by the Commissioner of Financial Regulation.</text> </level> <level label="d"> <level label="1"> <text>An extension of credit made under this subtitle prior to October 1, 1994 by a home improvement contractor may not be deemed unenforceable or violative of this section because the contractor was not licensed under Title 11, Subtitle 3 of the Financial Institutions Article.</text> </level> <level label="2"> <text>Paragraph (1) of this subsection does not apply to any person engaged in the business of making loans at the time the credit was extended.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-916" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>If a written complaint for violation of any provision of this subtitle, including the disclosure requirements of this subtitle and the federal Truth in Lending Act and regulations promulgated thereunder, or any other law of this State that regulates loans or other extensions of credit is filed with the Commissioner of Financial Regulation, the Commissioner may investigate the complaint and hold a hearing on it in accordance with § 11-413 of the Financial Institutions Article.</text> </level> <level label="b"> <level label="1"> <text>The Commissioner shall give to the credit grantor against whom a complaint is filed at least 10 days’ written notice of the complaint and the time and place of any hearing. The notice shall be in writing and sent by registered or certified mail to the credit grantor’s principal place of business.</text> </level> <level label="2"> <text>Before a hearing under this section may be scheduled, the Commissioner shall:</text> <level label="i"> <text>Send a written notice to the complaining party that describes the provisions in paragraph (3) of this subsection concerning preclusion; and</text> </level> <level label="ii"> <text>Obtain from the complaining party a written:</text> <level label="1"> <text>Election to proceed with a hearing in accordance with this section; and</text> </level> <level label="2"> <text>Waiver of any right to pursue any cause of action or remedy as to the matters addressed in the complaint or the hearing.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>If a complaining party provides a written election and waiver as described in paragraph (2)(ii) of this subsection, the complaining party shall be precluded from raising or asserting against the credit grantor in any subsequent forum any claim, defense, setoff, recoupment, penalty for violation, or right of any kind based on the matters addressed in the complaint or the hearing.</text> </level> <level label="ii"> <text>The preclusion in subparagraph (i) of this paragraph does not apply to an appeal from the order of the Commissioner resulting from the hearing.</text> </level> </level> <level label="4"> <text>If a complaining party fails to provide a written election and waiver as described in paragraph (2) (ii) of this subsection, the Commissioner shall not schedule a hearing on the complaint.</text> </level> </level> <level label="c"> <level label="1"> <text>If, after the hearing, the Commissioner finds that the credit grantor has engaged or is engaging in any act or practice prohibited by this subtitle, the Commissioner shall order the credit grantor to cease and desist from the act or practice.</text> </level> <level label="2"> <level label="i"> <text>If the Commissioner finds that the act or practice described in paragraph (1) of this subsection resulted in the credit grantor collecting an amount from the complaining party not permitted under this subtitle, the Commissioner may direct the credit grantor to make a refund to the complaining party.</text> </level> <level label="ii"> <text>The Commissioner may direct a refund only up to the amount collected by the credit grantor from the complaining party that:</text> <level label="1"> <text>Exceeds the amount expressly permitted under this subtitle; or</text> </level> <level label="2"> <text>The credit grantor is expressly not permitted to collect.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>If an order issued under this section directs the credit grantor to make a refund as authorized in paragraph (2) of this subsection, the credit grantor may make the refund before the order becomes final.</text> </level> <level label="ii"> <text>If a credit grantor makes the refund directed by the Commissioner’s order, the order for the refund shall not become final and shall be withdrawn by the Commissioner.</text> </level> <level label="iii"> <text>Any order withdrawn by the Commissioner may not be considered evidence of the Commissioner’s interpretation of this subtitle.</text> </level> </level> <level label="4"> <text>The order of the Commissioner shall comply with the Administrative Procedure Act.</text> </level> </level> <level label="d"> <level label="1"> <text>If no appeal is filed, the order becomes final after expiration of the time allowed by the Administrative Procedure Act for appeals from the Commissioner’s orders.</text> </level> <level label="2"> <text>If an appeal is filed, the order becomes final after final decision of the court affirming the order or dismissing the appeal.</text> </level> </level> <level label="e"> <text>For purposes of this section, “complaining party” means an individual who files a written complaint with the Commissioner of Financial Regulation pursuant to this section.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-917" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <text>Any credit grantor or his officer or employee who willfully violates any provision of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000 or imprisonment not exceeding 1 year, or both.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-918" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <level label="1"> <text>In this subsection, “notice” means the first to occur of the following:</text> <level label="i"> <text>When the credit grantor receives a written notice from the borrower notifying the credit grantor of an error or violation;</text> </level> <level label="ii"> <text>When the credit grantor receives a written notice from the Commissioner of Financial Regulation or the appropriate regulatory authority notifying the credit grantor of an error or violation; or</text> </level> <level label="iii"> <text>When the credit grantor receives service of process in a civil action for an error or violation instituted by the borrower in a court of competent jurisdiction.</text> </level> </level> <level label="2"> <text>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 credit extended and may not collect any interest, costs, fees, or other charges with respect to the credit extension.</text> </level> <level label="3"> <text>The penalty provided under paragraph (2) of this subsection does not apply where a credit grantor:</text> <level label="i"> <text>Unintentionally and in good faith fails to comply with § 12-903, § 12-904, § 12-905, § 12-910, § 12-911, § 12-913.2, § 12-923(d), or § 12-924 of this subtitle; and</text> </level> <level label="ii"> <text>Corrects the error or violation and makes the borrower whole for all losses, including reasonable attorney’s fees and interests, where appropriate, within 10 days after the credit grantor receives notice of the error or violation.</text> </level> </level> <level label="4"> <text>The burden shall be on the credit grantor to show that the credit grantor’s failure to comply with § 12-903, § 12-904, § 12-905, § 12-910, § 12-911, § 12-913.2, § 12-923(d), or § 12-924 of this subtitle was unintentional and in good faith.</text> </level> </level> <level label="b"> <text>A credit grantor who knowingly violates any provision of this subtitle shall forfeit to the borrower 3 times the amount of interest, fees, and charges collected in excess of that authorized by this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-918.1" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>In this section, “Commissioner” means the Commissioner of Financial Regulation.</text> </level> <level label="b"> <text>Except as provided in subsection (c) of this section, the penalty provided under § 12–918(a)(2) of this subtitle does not apply if a credit grantor:</text> <level label="1"> <text>Performed or omitted to perform an act in conformity with or in reliance on:</text> <level label="i"> <text>A written opinion of the Attorney General of Maryland or a regulation adopted by the Commissioner;</text> </level> <level label="ii"> <text>A written opinion by the Commissioner or Deputy Commissioner; or</text> </level> <level label="iii"> <text>An interpretation by the Commissioner in a written notice or examination report; or</text> </level> </level> <level label="2"> <text>Used a form or procedure that has been approved in writing by the Commissioner and the Attorney General.</text> </level> </level> <level label="c"> <text>The provisions of subsection (b) of this section do not apply to an act or omission to act that occurs after:</text> <level label="1"> <text>The opinion, regulation, or interpretation relied on is amended, repealed, or determined to be invalid for any reason by any judicial or other authority; or</text> </level> <level label="2"> <text>Approval for a form or procedure is amended, rescinded, or determined to be invalid for any reason by any judicial or other authority.</text> </level> </level> <level label="d"> <text>This section may not be construed to:</text> <level label="1"> <text>Limit the imposition of any civil or criminal penalty for a knowing or willful violation of this subtitle; or</text> </level> <level label="2"> <text>Limit the power of the Commissioner or the courts to order a refund to a borrower of moneys collected in violation of this subtitle.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-919" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <text>An action for violation of this subtitle may not be brought more than 6 months after the credit extension is repaid in full.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-920" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <text>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.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-921" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <level label="1"> <text>A credit grantor may repossess tangible personal property securing a plan under an agreement if the consumer borrower is in default.</text> </level> <level label="2"> <text>The credit grantor may repossess tangible personal property from a consumer borrower only by:</text> <level label="i"> <text>Legal process; or</text> </level> <level label="ii"> <text>Self-help, without use of force.</text> </level> </level> </level> <level label="b"> <text>Nothing in this section authorizes a violation of criminal law.</text> </level> <level label="c"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, at least 10 days before a credit grantor repossesses any tangible personal property, the credit grantor may serve a written notice on the consumer borrower of the intention of the credit grantor to repossess the tangible personal property.</text> </level> <level label="2"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, at least 30 days before a credit grantor repossesses a mobile home that is primarily for personal, family, or household use, the credit grantor shall serve on the borrower a written notice of the credit grantor’s intention to repossess the mobile home.</text> </level> <level label="ii"> <text>The notice required under subparagraph (i) of this paragraph may be served by the credit grantor less than 30 days before repossession if:</text> <level label="1"> <text>The mobile home:</text> </level> <level label="A"> <text>Is vacant and abandoned, based on a determination by the credit grantor that at least three of the circumstances listed in § 7–105.18(d) of the Real Property Article have been met; or</text> </level> <level label="B"> <text>Has been voluntarily surrendered by the borrower to the credit grantor; and</text> </level> <level label="2"> <text>The notice is accompanied by a certification from the credit grantor identifying the circumstances demonstrating that the mobile home is vacant and abandoned or that the mobile home has been surrendered.</text> </level> </level> </level> <level label="3"> <text>The notice shall:</text> <level label="i"> <text>State the default and any period at the end of which the tangible personal property will be repossessed; and</text> </level> <level label="ii"> <text>Briefly state the rights of the consumer borrower in case the tangible personal property is repossessed.</text> </level> </level> </level> <level label="d"> <text>The notice may be delivered to the consumer borrower personally or sent to the borrower’s last known address by registered or certified mail.</text> </level> <level label="e"> <text>Within 5 days after the credit grantor repossesses the tangible personal property the credit grantor shall deliver to the consumer borrower personally or send to him at his last known address by registered or certified mail, a written notice which briefly states:</text> <level label="1"> <text>The right of the consumer borrower to redeem the tangible personal property, and the amount payable for it;</text> </level> <level label="2"> <text>The rights of the consumer borrower as to a resale, and his liability for a deficiency; and</text> </level> <level label="3"> <text>The exact location where the tangible personal property is stored and the address where any payment is to be made.</text> </level> </level> <level label="f"> <text>For 15 days after the credit grantor gives the notice required by subsection (e) of this section, the credit grantor shall retain any repossessed property.</text> </level> <level label="g"> <text>During the period provided for in subsection (f) of this section, the consumer borrower may:</text> <level label="1"> <text>Redeem and take possession of the property; and</text> </level> <level label="2"> <text>Resume the performance of the agreement.</text> </level> </level> <level label="h"> <text>To redeem the property, the consumer borrower shall:</text> <level label="1"> <text>Tender the amount due under the agreement at the time of redemption, without giving effect to any provision which allows acceleration of any installment otherwise payable after that time;</text> </level> <level label="2"> <text>Tender performance of any other promise for the breach of which the property was repossessed; and</text> </level> <level label="3"> <text>If the discretionary notice provided for in subsection (c) of this section was given, pay the actual and reasonable expenses of retaking and storing the property.</text> </level> </level> <level label="i"> <text>This section does not apply if the consumer borrower was guilty of fraudulent conduct, intentionally and wrongfully concealed, removed, damaged, or destroyed the property, or attempted to do so, and the property was repossessed because of that conduct, or if the property has been previously repossessed from the consumer borrower and redeemed by the consumer borrower.</text> </level> <level label="j"> <level label="1"> <level label="i"> <text>Subject to subsection (l) of this section, the credit grantor shall sell the property that was repossessed at:</text> <level label="1"> <text>Subject to paragraph (2) of this subsection, a private sale; or</text> </level> <level label="2"> <text>A public auction.</text> </level> </level> <level label="ii"> <text>At least 10 days before the sale, the credit grantor shall notify the consumer borrower in writing of the time and place of the sale, by certified mail, return receipt requested, sent to the consumer borrower’s last known address.</text> </level> <level label="iii"> <text>Any sale of repossessed property must be accomplished in a commercially reasonable manner.</text> </level> </level> <level label="2"> <text>In all cases of a private sale of repossessed goods under this section, a full accounting shall be made to the borrower in writing and the seller shall retain a copy of this accounting for at least 24 months. This accounting shall contain the following information:</text> <level label="i"> <text>The unpaid balance at the time the goods were repossessed;</text> </level> <level label="ii"> <text>The refund credit of unearned finance charges and insurance premiums, if any;</text> </level> <level label="iii"> <text>The remaining net balance;</text> </level> <level label="iv"> <text>The proceeds of the sale of the goods;</text> </level> <level label="v"> <text>The remaining deficiency balance, if any, or the amount due the buyer;</text> </level> <level label="vi"> <text>All expenses incurred as a result of the sale;</text> </level> <level label="vii"> <text>The purchaser’s name, address, and business;</text> </level> <level label="viii"> <text>The number of bids sought and received; and</text> </level> <level label="ix"> <text>Any statement as to the condition of the goods at the time of repossession which would cause their value to be increased or decreased above or below the market value for goods of like kind and quality.</text> </level> </level> <level label="3"> <text>The Commissioner of Financial Regulation may make a determination concerning any private sale that the sale was not accomplished in a commercially reasonable manner. Upon that determination, the Commissioner may enter an order disallowing any claim for a deficiency balance.</text> </level> </level> <level label="k"> <level label="1"> <text>The provisions of this subsection apply to a public sale of property which secured a plan in excess of $2,000 at the time the plan was made.</text> </level> <level label="2"> <text>The proceeds of a sale to which this subsection applies shall be applied, in the following order, to:</text> <level label="i"> <text>The actual and reasonable cost of the sale;</text> </level> <level label="ii"> <text>The actual and reasonable cost of retaking and storing the property; and</text> </level> <level label="iii"> <text>The unpaid balance owing under the agreement at the time the property was repossessed.</text> </level> </level> <level label="3"> <text>The credit grantor shall furnish to the consumer borrower a written statement which shows the distribution of the proceeds.</text> </level> <level label="4"> <text>If the provisions of this section, including the requirement of furnishing a notice following repossession, are not followed, the credit grantor shall not be entitled to any deficiency judgment to which he would be entitled under the plan.</text> </level> </level> <level label="l"> <level label="1"> <level label="i"> <text>In this subsection, “consumer goods” means tangible personal property used or bought for use primarily for personal, family, or household purposes that is:</text> <level label="1"> <text>Movable at the time a security interest attaches; or</text> </level> <level label="2"> <text>A fixture.</text> </level> </level> <level label="ii"> <text>“Consumer goods” does not include money, documents, instruments, accounts, chattel paper, or general intangibles.</text> </level> </level> <level label="2"> <text>This subsection applies to tangible personal property securing a plan that:</text> <level label="i"> <text>Has been repossessed by the credit grantor; or</text> </level> <level label="ii"> <text>Is in actual or constructive possession of the credit grantor where the perfection of the security interest in the property depends on the possession of the property.</text> </level> </level> <level label="3"> <text>In the case of a purchase money security interest in consumer goods, if a consumer borrower has paid 60 percent of the cash price and, after default, has not signed a statement renouncing or modifying the consumer borrower’s rights under this subsection, a credit grantor who has repossessed the consumer goods must take reasonable action within 90 days after the repossession to commence disposal of them in the manner provided under subsection (j) of this section.</text> </level> <level label="4"> <level label="i"> <text>In any other case involving tangible personal property securing a plan, a credit grantor may, after default, propose to retain the property in full satisfaction of the obligations of the borrower under the plan.</text> </level> <level label="ii"> <text>If, as authorized by subparagraph (i) of this paragraph, a credit grantor proposes to retain property in full satisfaction of the obligations of the borrower under the plan, the credit grantor shall send written notice of the proposal to:</text> <level label="1"> <text>The consumer borrower; and</text> </level> <level label="2"> <text>Except in the case of consumer goods, any other person who has a security interest in the property and who:</text> </level> <level label="A"> <text>Has duly filed a financing statement indexed in the name of the consumer borrower in this State; or</text> </level> <level label="B"> <text>Is known by the credit grantor to have a security interest in the property.</text> </level> </level> <level label="iii"> <level label="1"> <text>If the consumer borrower or other person entitled to receive notification objects in writing within 30 days from the sending of the notification, the credit grantor must take reasonable action to dispose of the property in the manner provided under subsection (j) of this section.</text> </level> <level label="2"> <text>In the absence of written objection, the credit grantor may retain the property in full satisfaction of the outstanding unpaid indebtedness under the plan.</text> </level> </level> </level> <level label="5"> <text>If despite complying with the requirements of this section there is no sale of tangible personal property securing a plan under subsection (j) of this section:</text> <level label="i"> <text>The credit grantor may retain the property without obligation to account to the borrower; and</text> </level> <level label="ii"> <text>If the property is retained, all obligations of the borrower under the plan shall be discharged.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-922" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Borrower” means a consumer borrower who makes an application for a loan secured by a first mortgage or first deed of trust on residential real property to be occupied by the borrower as the borrower’s primary residence.</text> </level> <level label="3"> <text>“Commitment” means a written, specific, binding agreement between a borrower and a lender which sets forth the terms of a loan being extended to the borrower.</text> </level> <level label="4"> <text>“Financing agreement” means a written agreement between a borrower and a lender that:</text> <level label="i"> <text>Sets forth the terms of a purchase money loan or a refinancing of an existing loan that:</text> <level label="1"> <text>Results in or is secured by a first mortgage or a first deed of trust on residential real property to be occupied by the borrower; and</text> </level> <level label="2"> <text>Is offered or extended to the borrower; or</text> </level> </level> <level label="ii"> <text>Is a shared appreciation agreement.</text> </level> </level> <level label="5"> <level label="i"> <text>“Lender” means a credit grantor subject to the licensing requirements of Title 11, Subtitle 5 of the Financial Institutions Article.</text> </level> <level label="ii"> <text>“Lender” does not include a credit grantor exempt from licensing under § 11–502 of the Financial Institutions Article.</text> </level> </level> <level label="6"> <level label="i"> <text>“Loan application” means any oral or written request for an extension of credit that is made in accordance with procedures established by a lender for the purpose of inducing the lender to seek to procure or make a mortgage loan.</text> </level> <level label="ii"> <text>“Loan application” does not include the use of an account or line of credit to obtain a loan within a previously established credit limit.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>A lender who offers to make or procure a loan secured by a first mortgage or first deed of trust on residential real property to be occupied by the borrower shall provide the borrower with a financing agreement executed by the lender within 10 business days after the date the loan application is completed.</text> </level> <level label="2"> <text>The financing agreement shall provide:</text> <level label="i"> <text>The term and principal amount of the loan;</text> </level> <level label="ii"> <text>An explanation of the type of mortgage loan being offered;</text> </level> <level label="iii"> <text>The rate of interest that will apply to the loan and, if the rate is subject to change or is a variable rate or is subject to final determination at a future date based on some objective standard, a specific statement of those facts;</text> </level> <level label="iv"> <text>The points, if any, to be paid by the borrower or the seller, or both; and</text> </level> <level label="v"> <text>The term during which the financing agreement remains in effect.</text> </level> </level> <level label="3"> <text>If all the provisions of the financing agreement are not subject to future determination, change, or alteration during its term, the financing agreement shall constitute the final binding agreement between the parties as to the items covered by the financing agreement.</text> </level> </level> <level label="c"> <level label="1"> <text>If any of the provisions of the financing agreement are subject to change or determination after its execution, the lender shall provide the borrower with a commitment, executed by the lender, at least 72 hours before the time of settlement agreed to by the parties, providing:</text> <level label="i"> <text>The effective fixed interest rate or initial interest rate that will be applied to the loan; and</text> </level> <level label="ii"> <text>A restatement of all the remaining unchanged provisions of the financing agreement.</text> </level> </level> <level label="2"> <text>Subsequent to execution of the financing agreement, the borrower may waive in writing the 72–hour advance presentation requirement and accept the commitment at settlement only if compliance with the 72–hour requirement is shown by the lender to be infeasible.</text> </level> </level> <level label="d"> <level label="1"> <text>A borrower aggrieved by any violation of this section shall be entitled to bring a civil suit for damages, including reasonable attorney’s fees, against the lender.</text> </level> <level label="2"> <text>The penalties set out under § 12–918 of this subtitle do not apply to any violation of this section.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-923" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>This section applies only to a plan established by a credit grantor under this subtitle for a consumer borrower.</text> </level> <level label="b"> <level label="1"> <text>Paragraph (2) of this subsection applies only to a loan or an extension of credit primarily for personal, household, or family purposes.</text> </level> <level label="2"> <text>An agreement governing a revolving credit plan or any instrument which evidences or secures an extension of credit under the plan may not contain:</text> <level label="i"> <text>An assignment or order for the payment of wages, whether earned or to be earned, or of any chose in action covering lost wages;</text> </level> <level label="ii"> <text>An acceleration clause under which any part or all of the unpaid balance of any extension of credit not yet matured may be declared due and payable because the credit grantor deems itself insecure;</text> </level> <level label="iii"> <text>A confession of judgment or any power of attorney authorizing the credit grantor to appear in court to confess judgment against the borrower or a surety or guarantor of the borrower, or any other waiver of the right to notice and an opportunity to be heard in the event of suit or process thereon; or</text> </level> <level label="iv"> <text>A provision by which a person acting on behalf of a holder of the agreement is treated as an agent of the borrower in connection with its formation or execution.</text> </level> </level> <level label="3"> <text>Except as expressly allowed by law, an agreement governing a revolving credit plan or any instrument which evidences or secures an extension of credit under the plan may not contain a provision by which the borrower waives any right accruing to the borrower under this subtitle.</text> </level> <level label="4"> <level label="i"> <text>Any clause or provision in an agreement governing the plan or in any instrument which evidences or secures an extension of credit under a plan that is in violation of this subsection shall be unenforceable.</text> </level> <level label="ii"> <text>Subject to subparagraph (iii) of this paragraph, the penalties set out under §§ 12-917 and 12-918 of this subtitle do not apply unless the credit grantor attempts to enforce a provision prohibited under this subsection.</text> </level> <level label="iii"> <text>The penalties set out under §§ 12-917 and 12-918 of this subtitle do not apply to the enforcement by a credit grantor of a provision otherwise prohibited under this subsection where the enforcement was initiated by the credit grantor prior to October 1, 1993.</text> </level> </level> </level> <level label="c"> <text>Unless a borrower has notice of an assignment of the account established under the plan, any payments made by the borrower to the last known holder of the account shall discharge the borrower’s obligation to the extent of the payments.</text> </level> <level label="d"> <text>Upon receipt of a cash payment from a borrower, a credit grantor shall give the borrower a written receipt for the payment.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-923.1" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <text>Any statement or characterization that indicates the borrower intends to use a plan to obtain loans or other extensions of credit solely to acquire an interest in or to carry on a business or commercial enterprise may be relied upon by a credit grantor in establishing a plan, unless the credit grantor knows or should know that the statement or characterization is false or misleading.</text> </level> <level label="b"> <text>As a condition to the establishment of a plan, a credit grantor may not require a borrower to make any false or misleading statement or characterization that loans or other extensions of credit to be obtained under a plan are commercial loans or for a commercial purpose if the credit grantor knows or should know they are not commercial loans or for a commercial purpose.</text> </level> <level label="c"> <text>The borrower has the burden of proving that a credit grantor knew or should have known that a statement or characterization described in subsection (a) or (b) of this section was false or misleading when made and that loans or other extensions of credit obtained under a plan were not commercial loans or extensions of credit for a commercial purpose.</text> </level> <level label="d"> <text>Unless a credit grantor knew or should have known that a statement or characterization described in subsection (a) or (b) of this section was false or misleading when made, a credit grantor shall have no liability under this subtitle if loans or other extensions of credit under a plan are actually used by the borrower other than as commercial loans or other extensions of credit for a commercial purpose.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-924" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, this section applies only to a plan between a credit grantor and a consumer borrower under which a credit grantor has taken any property as security for credit extended under the plan.</text> </level> <level label="2"> <text>This section does not apply to a loan to which § 3-105.1 of the Real Property Article applies.</text> </level> </level> <level label="b"> <text>A credit grantor shall release any recorded mortgage, deed of trust, security agreement, or other lien securing the extension of credit within a reasonable time after:</text> <level label="1"> <text>The outstanding unpaid indebtedness under a plan has been paid in full;</text> </level> <level label="2"> <text>There are no further obligations of the credit grantor or the consumer borrower under the plan; and</text> </level> <level label="3"> <text>The account under the plan is closed.</text> </level> </level> <level label="c"> <text>The release shall be:</text> <level label="1"> <text>In writing; and</text> </level> <level label="2"> <text>Prepared at the expense of the credit grantor.</text> </level> </level> <level label="d"> <level label="1"> <text>If the credit grantor does not record the release, the credit grantor shall furnish the consumer borrower with the release in a recordable form.</text> </level> <level label="2"> <text>If the credit grantor records the release, the credit grantor shall furnish the consumer borrower with a copy of the release.</text> </level> </level> <level label="e"> <level label="1"> <text>If a fee is collected by a credit grantor for the recording of a release:</text> <level label="i"> <text>The release shall be recorded by the credit grantor; and</text> </level> <level label="ii"> <text>Any portion of the fee not paid to a governmental entity for recording the release shall be refunded to the borrower.</text> </level> </level> <level label="2"> <text>If a fee is not collected by a credit grantor for the recording of a release, the credit grantor is not obligated to record the release.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-925" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Fully indexed rate” means the index rate, as defined in the mortgage loan documents, prevailing at the time the mortgage loan is approved by the credit grantor, plus the margin that will apply after the expiration of an introductory interest rate.</text> </level> <level label="3"> <level label="i"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="ii"> <text>“Mortgage loan” does not include a reverse mortgage loan.</text> </level> </level> </level> <level label="b"> <text>A credit grantor may not make a mortgage loan without giving due regard to the borrower’s ability to repay the mortgage loan in accordance with its terms, including the fully indexed rate of the mortgage loan, if applicable, and property taxes and homeowner’s insurance whether or not an escrow account is established for the collection and payment of these expenses.</text> </level> <level label="c"> <level label="1"> <text>Due regard to a borrower’s ability to repay a mortgage loan must include:</text> <level label="i"> <text>Consideration of the borrower’s debt to income ratio, including existing debts and other obligations; and</text> </level> <level label="ii"> <text>Verification of the borrower’s gross monthly income and assets by review of third–party written documentation reasonably believed by the credit grantor to be accurate and complete.</text> </level> </level> <level label="2"> <text>Acceptable third–party written documentation includes:</text> <level label="i"> <text>The borrower’s Internal Revenue Service form W–2;</text> </level> <level label="ii"> <text>A copy of the borrower’s income tax return;</text> </level> <level label="iii"> <text>Payroll receipts;</text> </level> <level label="iv"> <text>The records of a financial institution; or</text> </level> <level label="v"> <text>Other third–party documents that provide reasonably reliable evidence of the borrower’s income or assets.</text> </level> </level> <level label="3"> <text>This subsection does not apply to a mortgage loan:</text> <level label="i"> <text>Approved for government guaranty by the Federal Housing Administration, the Veterans Administration, the United States Department of Agriculture, the Maryland Department of Housing and Community Development, or the Community Development Administration; or</text> </level> <level label="ii"> <text>That refinances an existing mortgage loan if the refinance mortgage loan is:</text> <level label="1"> <text>Offered under the federal Homeowner Affordability and Stability Plan; and</text> </level> <level label="2"> <text>Made available by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.</text> </level> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-926" title_number="12" title_name="Credit Regulations" subtitle_number="9" subtitle_name="Credit Grantor Revolving Credit Provisions"> <text>The Commissioner of Financial Regulation may adopt regulations regarding the enforcement of and compliance with this subtitle as to credit grantors who offer or make shared appreciation agreements under this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1001" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <level label="1"> <text>“Balloon payment” means any scheduled payment on an installment loan that is more than 2 times the average of all other payments scheduled to repay the installment loan.</text> </level> <level label="2"> <text>“Balloon payment” does not include a down payment.</text> </level> </level> <level label="c"> <text>“Borrower” means a corporation, partnership, association, government, or governmental subdivision or agency, trust, individual, or other entity receiving a loan or other extension of credit under this subtitle.</text> </level> <level label="d"> <text>“Closed end credit” means the extension of credit by a credit grantor to a borrower under an arrangement or agreement which is not a revolving credit plan as defined in Subtitle 9 of this title.</text> </level> <level label="e"> <text>“Commercial loan” and “extension of credit for a commercial purpose” mean an extension of credit made:</text> <level label="1"> <text>Solely to acquire an interest in or to carry on a business or commercial enterprise; or</text> </level> <level label="2"> <text>To any business or commercial organization.</text> </level> </level> <level label="f"> <text>“Consumer borrower” means an individual receiving a loan or other extension of credit under this subtitle for personal, household, or family purposes or an individual receiving a commercial loan or other extension of credit for any commercial purpose not in excess of $75,000, secured by residential real property.</text> </level> <level label="g"> <level label="1"> <text>“Credit grantor” means any individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity making a loan or other extension of credit under this subtitle which is incorporated, chartered, or licensed pursuant to State or federal law, the lending operations of which are subject to supervision, examination, and regulation by a State or federal agency or which is licensed under Title 12, Subtitle 4 of the Financial Institutions Article or is a retailer.</text> </level> <level label="2"> <text>“Credit grantor” includes:</text> <level label="i"> <text>Any bank, trust company, depository institution, or savings bank having a branch in this State;</text> </level> <level label="ii"> <text>A person not required to be licensed under this subtitle, who is exempt from the licensing provisions of Title 11, Subtitle 5 of the Financial Institutions Article, who makes a loan or extension of credit under this subtitle secured by a secondary mortgage on residential real property; and</text> </level> <level label="iii"> <text>Any person who acquires or obtains the assignment of an agreement for an extension of credit made under this subtitle.</text> </level> </level> </level> <level label="h"> <text>“Debt cancellation agreement” means an agreement between a credit grantor and a borrower which provides for cancellation of the remaining loan balance in the event of theft or total destruction of the collateral for the loan minus the proceeds of any insurance maintained on the collateral for the loan or, if the borrower does not have insurance, the actual cash value of the collateral at the time of loss, determined as provided in the agreement.</text> </level> <level label="i"> <text>“Installment loan” means a loan repayable in scheduled periodic payments of principal and interest.</text> </level> <level label="j"> <level label="1"> <text>“Loan” means any single extension of closed end credit, whether repayable in installments, on demand, or otherwise and whether extended in one or more advances.</text> </level> <level label="2"> <text>“Loan” includes an advance made in accordance with the terms of a shared appreciation agreement.</text> </level> </level> <level label="k"> <text>“Mechanical repair contract” has the meaning stated in Title 15, Subtitle 3 of the Transportation Article.</text> </level> <level label="l"> <text>“Mobile home” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="m"> <text>“Remaining loan balance”, when used in reference to a debt cancellation agreement, does not include:</text> <level label="1"> <text>Any delinquent or deferred payments;</text> </level> <level label="2"> <text>Past due charges;</text> </level> <level label="3"> <text>Late payment charges;</text> </level> <level label="4"> <text>Unearned interest;</text> </level> <level label="5"> <text>Unearned rental payments;</text> </level> <level label="6"> <text>The portion of any financed taxes or charges, including charges for credit life insurance, credit health insurance, credit involuntary unemployment benefit insurance, and mechanical repair contracts, actually refunded to the borrower or credited as a reduction to the loan balance; or</text> </level> <level label="7"> <text>By agreement of the parties, the amount of any primary insurance deductible.</text> </level> </level> <level label="n"> <text>“Residential real property” means owner–occupied real property having a dwelling on it designated principally as a residence with accommodations for not more than four families.</text> </level> <level label="o"> <text>“Shared appreciation agreement” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1002" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>Any credit grantor may, subject to the other provisions of this subtitle, offer and extend closed end credit to a borrower.</text> </level> <level label="b"> <text>In connection with closed end credit offered and extended under this subtitle, a credit grantor may charge and collect the interest and other charges permitted by this subtitle and may take any security as collateral as may be acceptable to the credit grantor.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1003" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>A credit grantor may charge and collect interest on a loan at any daily, weekly, monthly, annual, or other periodic percentage rate as the agreement, the note, or other evidence of the loan provides if the effective rate of simple interest is not in excess of 24 percent per year. The rate of interest chargeable on a loan must be expressed in the agreement as a simple interest rate or rates.</text> </level> <level label="b"> <level label="1"> <text>Interest may be calculated by way of simple interest or by any other method as the agreement, note, or other evidence of the loan provides. If the interest is precomputed, it may be calculated on the assumption that all scheduled payments will be made when due.</text> </level> <level label="2"> <text>For purposes of this section, a year may be any period of from 360 to 366 days, including or disregarding the effect of leap year, as the credit grantor may determine.</text> </level> </level> <level label="c"> <level label="1"> <level label="i"> <text>Except as provided in paragraph (2) of this subsection, if an installment loan under this subtitle made to a consumer borrower is secured by collateral other than a lien on residential real property, the credit grantor may not require a schedule of repayment under which a consumer borrower may be required to pay a balloon payment at maturity.</text> </level> <level label="ii"> <text>If an installment loan under this subtitle made to a consumer borrower is secured by a secondary lien on residential real property, the credit grantor may require a schedule of repayment providing for a balloon payment at maturity. On request, the consumer borrower is permitted to postpone payment of the balloon payment once for a period not to exceed 6 months. The borrower must continue to make installment payments in the amount required prior to maturity during the extension period. The credit grantor may not impose any charges or fees as a result of allowing an extension period.</text> </level> </level> <level label="2"> <level label="i"> <level label="1"> <text>In this paragraph the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Motorcycle” has the meaning stated in § 11–136 of the Transportation Article.</text> </level> <level label="3"> <text>“Passenger car” has the meaning stated in § 11–144.2 of the Transportation Article.</text> </level> </level> <level label="ii"> <text>A credit grantor may require a schedule of repayment under which a consumer borrower may be required to pay a balloon payment at maturity if:</text> <level label="1"> <text>The installment loan is secured by a lien on a motor vehicle that is a motorcycle or passenger car; and</text> </level> <level label="2"> <text>The amount of the installment loan exceeds:</text> </level> <level label="A"> <text>$10,000, if the motor vehicle is a motorcycle; and</text> </level> <level label="B"> <text>$30,000, if the motor vehicle is a passenger car.</text> </level> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1004" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>If the agreement, note, or other evidence of the loan permits, the periodic percentage rate of interest charged and collected on the loan may, if the interest is not precomputed, vary in accordance with an index that is made readily available to and verifiable by the borrower and is beyond the control of the credit grantor.</text> </level> <level label="b"> <text>The periodic percentage rate, as varied, may be made applicable to any outstanding indebtedness on the loan on and after the effective date of the variation.</text> </level> <level label="c"> <text>This section does not limit the authority of a credit grantor to charge and collect interest on a loan in the manner and at the rate authorized in any other section of this subtitle.</text> </level> <level label="d"> <text>The periodic percentage rate, as varied, may not exceed the maximum rate permitted pursuant to § 12-1003(a) of this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1005" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <text>In addition to interest at a periodic percentage rate or rates permitted by §§ 12-1003 and 12-1004 of this subtitle, a credit grantor may charge and collect:</text> <level label="a"> <level label="1"> <text>Subject to the limitations in this section, loan fees, points, finder’s fees, and other charges; however, all such charges, when combined with any finder’s fee imposed by a mortgage broker under § 12-804 of this title, may not exceed 10 percent of the original extension of credit;</text> </level> <level label="2"> <text>In the case of a loan to a consumer borrower, no loan fees, points, finder’s fees, or other charges may be charged and collected unless:</text> <level label="i"> <text>The agreement, note, or other evidence of the loan so provides and the borrower agrees in writing to pay those charges;</text> </level> <level label="ii"> <text>The loan is secured by a lien on residential real property; however, all such charges, when combined with any finder’s fee imposed by a mortgage broker under § 12-804 of this title, may not exceed 10 percent of the original extension of credit; and</text> </level> <level label="iii"> <text>The charges are disclosed to the borrower in accordance with the federal Truth in Lending Act; and</text> </level> </level> <level label="3"> <text>The limitations imposed by paragraphs (1) and (2) of this subsection do not apply to a credit extension:</text> <level label="i"> <text>Secured by a first lien on residential real property; or</text> </level> <level label="ii"> <text>Made for a bona fide commercial purpose in excess of $75,000.</text> </level> </level> </level> <level label="b"> <text>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:</text> <level label="1"> <text>Commitment fees;</text> </level> <level label="2"> <text>Official fees and taxes;</text> </level> <level label="3"> <text>Premiums or other charges for any guarantee or insurance protecting the credit grantor against the borrower’s default or other credit loss;</text> </level> <level label="4"> <text>Costs incurred by reason of examination of title, inspection, recording, and other formal acts necessary or appropriate to the security of the loan;</text> </level> <level label="5"> <text>Filing fees;</text> </level> <level label="6"> <text>Attorney’s fees; and</text> </level> <level label="7"> <text>Travel expenses.</text> </level> </level> <level label="c"> <level label="1"> <text>The cost to the borrower of an optional debt cancellation agreement, provided that the cost of the debt cancellation agreement is separately itemized in the financing agreement.</text> </level> <level label="2"> <text>This cost is in addition to the charges permitted under subsections (a), (b), and (d) of this section.</text> </level> </level> <level label="d"> <level label="1"> <text>In the case of a loan to a consumer borrower, a fee permitted under subsection (b) of this section may not be charged and collected unless:</text> <level label="i"> <text>The agreement, note, or other evidence of the loan permits;</text> </level> <level label="ii"> <text>The fee is an actual and verifiable expense of the credit grantor not retained by him; and</text> </level> <level label="iii"> <text>Limited to charges for:</text> <level label="1"> <text>Attorney’s fees for services rendered in connection with the preparation, closing, or disbursement of the loan;</text> </level> <level label="2"> <text>Any expense, tax, or charge paid to a governmental agency;</text> </level> <level label="3"> <text>Examination of title, appraisal, or other costs necessary or appropriate to the security of the loan; and</text> </level> <level label="4"> <text>Premiums for any insurance coverage permitted under this subtitle.</text> </level> </level> </level> <level label="2"> <text>Notwithstanding § 12–1009(e) of this subtitle, fees and charges permitted under this subsection may be imposed, charged, and collected at any time.</text> </level> </level> <level label="e"> <text>For purposes of this subtitle, fees and charges permitted under this section are not interest with respect to a loan.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1006" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <text>A credit grantor may at any time permit a borrower to defer scheduled payments of a loan and may, in connection with the deferral and by agreement of the credit grantor and borrower:</text> <level label="1"> <text>Charge and collect deferral charges; and</text> </level> <level label="2"> <text>Require payment by the borrower of the additional cost to the credit grantor of premiums for continuing in force, until the end of the period of deferral, any insurance coverage provided in connection with the loan.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1007" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Covered loan” means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership and Equity Protection Act set forth in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026.</text> </level> <level label="3"> <text>“Credit health insurance” has the meaning stated in § 13–101 of the Insurance Article.</text> </level> <level label="4"> <text>“Credit involuntary unemployment benefit insurance” has the meaning stated in § 13–101 of the Insurance Article.</text> </level> <level label="5"> <level label="i"> <text>“Credit life insurance” means insurance on the life of a borrower that provides indemnity for repayment of a specific loan or credit transaction on the death of the borrower.</text> </level> <level label="ii"> <text>“Credit life insurance” does not include life insurance payable to a beneficiary designated by the borrower other than the obligee of a specific loan or credit transaction.</text> </level> </level> <level label="6"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="7"> <text>“Premium” has the meaning stated in § 1–101 of the Insurance Article.</text> </level> <level label="8"> <text>“Single premium coverage” means insurance for which the total premium is payable in one lump sum at or before the time coverage commences.</text> </level> </level> <level label="b"> <text>In connection with a loan to a consumer borrower:</text> <level label="1"> <text>The purchase of credit life insurance, credit health insurance, credit involuntary unemployment benefit insurance, and similar insurance coverages is optional with the consumer borrower; and</text> </level> <level label="2"> <text>Subject to § 12-1007.1 of this subtitle, the purchase of property insurance, title insurance, and credit loss insurance from an insurer of the borrower’s choice may be required if the loan is secured.</text> </level> <level label="3"> <level label="i"> <text>Except as provided in this subsection, a credit grantor making a covered loan may not finance as a part of the covered loan transaction single premium coverage for:</text> <level label="1"> <text>Credit health insurance;</text> </level> <level label="2"> <text>Credit involuntary unemployment benefit insurance; or</text> </level> <level label="3"> <text>Credit life insurance.</text> </level> </level> <level label="ii"> <text>Nothing in this subsection shall prohibit the financing of any insurance coverage in connection with a mobile home or its premises, as those terms are defined in § 8A-101 of the Real Property Article.</text> </level> </level> </level> <level label="c"> <text>The provisions of this section do not alter or modify rights, privileges, or restrictions heretofore existing between the credit grantor and a borrower other than a consumer borrower.</text> </level> <level label="d"> <text>Premiums for any insurance coverage permitted by this section are not interest with respect to a loan.</text> </level> <level label="e"> <text>The offer and placement of insurance under this section shall be subject to the provisions of the Insurance Article.</text> </level> <level label="f"> <level label="1"> <level label="i"> <text>In this subsection the following words have the meanings indicated.</text> </level> <level label="ii"> <text>“Improvements” means buildings or structures erected upon or affixed to real property that enhance the value of the real property.</text> </level> <level label="iii"> <text>“Property insurance coverage” means property insurance against losses caused by perils that commonly are covered in insurance policies described with terms similar to “standard fire” or “standard fire with extended coverage”.</text> </level> <level label="iv"> <level label="1"> <text>“Replacement cost” means the amount needed to repair damage to or rebuild improvements on real property to restore the improvements to their pre-loss condition.</text> </level> <level label="2"> <text>“Replacement cost” does not include the value of land.</text> </level> </level> </level> <level label="2"> <level label="i"> <text>A credit grantor may not require a borrower, as a condition to receiving or maintaining a loan secured by a lien, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement cost of the improvements on the real property.</text> </level> <level label="ii"> <text>In determining the replacement cost of the improvements on any real property, the credit grantor may:</text> <level label="1"> <text>Accept the value placed on the improvements by the insurer; or</text> </level> <level label="2"> <text>Use the value placed on the improvements by the credit grantor’s appraisal of the improvements.</text> </level> </level> </level> <level label="3"> <text>A violation of this subsection shall entitle the borrower to seek:</text> <level label="i"> <text>An injunction to prohibit the credit grantor who has engaged or is engaging in the violation from continuing or engaging in the violation;</text> </level> <level label="ii"> <text>Reasonable attorney’s fees; and</text> </level> <level label="iii"> <text>Damages directly resulting from the violation.</text> </level> </level> <level label="4"> <text>A violation of this subsection does not affect the validity of the lien securing the loan.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1007.1" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>In this section, “binder” means a binder or other temporary contract of insurance as provided under § 12-106 of the Insurance Article.</text> </level> <level label="b"> <text>A credit grantor shall comply with this section if the credit grantor:</text> <level label="1"> <text>Makes any loan secured by a first lien on any interest in owner-occupied residential real property; and</text> </level> <level label="2"> <text>As a condition of making the loan, requires the consumer borrower to purchase property insurance or credit loss insurance.</text> </level> </level> <level label="c"> <text>A credit grantor who makes a loan subject to this section shall accept as evidence of insurance a written binder issued by any authorized insurer or its insurance producer if the binder includes or is accompanied by:</text> <level label="1"> <text>The name and address of the insured consumer borrower;</text> </level> <level label="2"> <text>The name and address of the credit grantor;</text> </level> <level label="3"> <text>A description of the insured residential real property;</text> </level> <level label="4"> <text>A provision that the binder may not be canceled within the term of the binder unless the credit grantor and the insured consumer borrower receive written notice of the cancellation at least 10 days prior to the cancellation;</text> </level> <level label="5"> <text>Except in the case of the renewal of a policy subsequent to the closing of the loan, a paid receipt for the full amount of the applicable premium; and</text> </level> <level label="6"> <text>The amount of coverage.</text> </level> </level> <level label="d"> <text>This section does not prohibit a credit grantor from refusing to honor a binder in cases where:</text> <level label="1"> <text>The credit grantor receives notice of the cancellation of the binder by the insurer; or</text> </level> <level label="2"> <text>At the expiration of 30 days of the date the binder was given, the insurer has failed to issue the policy of insurance.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1008" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>If the agreement governing a loan permits, a credit grantor may:</text> <level label="1"> <text>For a nonconsumer borrower, charge a higher periodic percentage rate or rates of interest on the amount of outstanding unpaid payments or portions of payments under the loan which are in default; and</text> </level> <level label="2"> <text>For any borrower, impose:</text> <level label="i"> <text>A late or delinquency charge on payment or portions of payments; and</text> </level> <level label="ii"> <text>If payment is made with a check that is dishonored on the second presentment, a charge not to exceed $15.</text> </level> </level> </level> <level label="b"> <text>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 payment or portion of payment, regardless of the period during which it remains in default.</text> </level> <level label="c"> <text>For the purposes of subsection (b) of this section, all payments by the borrower shall be applied to satisfaction of scheduled payments in the order in which they become due.</text> </level> <level label="d"> <text>Charges permitted under this section may not be considered interest or finance charges under the agreement.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1009" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>A consumer borrower may prepay a loan in full at any time.</text> </level> <level label="b"> <text>If interest charged pursuant to § 12–1003 of this subtitle in respect of a loan to a consumer borrower has been precomputed, then, in the event of prepayment of the entire loan, the credit grantor shall refund or credit to the borrower the unearned portion of the precomputed interest charge. This refund or credit shall be in an amount not less than the amount which would be refunded or credited if the unearned precomputed interest charge were calculated in accordance with the actuarial method, except that the borrower may not be entitled to a refund or credit of less than $5. The unearned portion of the precomputed interest charge is, at the option of the credit grantor, either:</text> <level label="1"> <text>That portion of the precomputed interest charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions of payment periods, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each period, or portion of a period, had the loan not been prepaid, by applying to the unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deferred. The credit grantor, at its option, may round this annual percentage rate to the nearest 1/4 of 1 percent; or</text> </level> <level label="2"> <text>The total precomputed interest charge less the earned precomputed interest charge. The earned precomputed interest charge shall be determined by applying an annual percentage rate based on the total precomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.</text> </level> </level> <level label="c"> <level label="1"> <text>As used in subsection (b) of this section, the following terms have the meanings indicated.</text> </level> <level label="2"> <text>“Actuarial method” means the method of allocating payments made on a loan between the outstanding principal balance of the loan and interest, by which a payment is applied first to the accumulated interest, and any remainder is subtracted from the outstanding principal balance of the loan.</text> </level> <level label="3"> <text>“Payment period” means the time period within which scheduled payments on a loan are due as provided in the agreement, note, or other evidence of the loan.</text> </level> <level label="4"> <text>“Precomputed interest charge” means interest as computed by an add on, discount, or other similar method.</text> </level> </level> <level label="d"> <text>If a charge is made to a consumer borrower for premiums for insuring the borrower under an insurance policy pursuant to § 12–1007 of this subtitle, then, in the event of prepayment in full, the credit grantor shall refund or credit to the borrower any unearned premiums paid by the borrower, provided that no refund or credit of less than $5 shall be required.</text> </level> <level label="e"> <text>Except as provided in § 12–1005(d) of this subtitle, in connection with any prepayment of any loan by a consumer borrower, the credit grantor may not impose any prepayment charge.</text> </level> <level label="f"> <text>The terms of prepayment of any loan made to a borrower other than a consumer borrower shall be those agreed to by the credit grantor and the borrower.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1010" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>Except as provided under subsection (c) of this section, a consumer borrower may, with the consent of the credit grantor, refinance the entire outstanding and unpaid amount of a loan, and the credit grantor may charge and collect a refinancing charge in connection with any refinancing in an amount agreed to by the credit grantor and the borrower.</text> </level> <level label="b"> <text>For purposes of this section, “the entire outstanding and unpaid amount of a loan” is:</text> <level label="1"> <text>If the interest and charges in respect of the loan were not precomputed, the total of the unpaid balance and the accrued and unpaid interest and charges on the date of refinancing; or</text> </level> <level label="2"> <text>If the interest and charges on the loan were precomputed, the total of the unpaid balance and the accrued and unpaid charges on the date of refinancing, less the amount which the credit grantor would have been required to refund or credit upon prepayment on the date of refinancing under § 12-1009 of this subtitle governing refunds upon prepayment.</text> </level> </level> <level label="c"> <text>A credit grantor may not impose any refinancing charges on the refinancing of an installment loan more often than once during any 12-month period of the loan if the loan is:</text> <level label="1"> <text>Made by the credit grantor;</text> </level> <level label="2"> <text>Secured by a secondary lien on residential real property; and</text> </level> <level label="3"> <text>Made to cure a default on the loan being refinanced where the default has been in existence for more than 30 days.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1011" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>If a consumer borrower defaults under the terms of a loan and the credit grantor refers the borrower’s account to an attorney who is not a salaried employee of the credit grantor for collection, the credit grantor may, if the agreement, note, or other evidence of the loan permits, charge and collect from the borrower a reasonable attorney’s fee.</text> </level> <level label="b"> <text>If the agreement, note, or other evidence of the loan permits, the credit grantor may recover from the borrower all court and other collection costs actually incurred by the credit grantor relating to the borrower’s default.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1012" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>This subtitle does not prohibit a credit grantor from including in the loan amount the cost to the borrower of a mechanical repair contract sold in connection with a motor vehicle, provided that the cost of the mechanical repair contract is separately itemized in the financing agreement.</text> </level> <level label="2"> <text>The cost of a mechanical repair contract sold in connection with a motor vehicle may be included in the loan amount whether or not the motor vehicle is covered by an original manufacturer’s warranty.</text> </level> <level label="3"> <text>A credit grantor may not require a buyer of a motor vehicle, as a condition of receiving a loan, to enter a mechanical repair contract.</text> </level> </level> <level label="b"> <text>This subtitle does not prohibit a credit grantor, in connection with a loan to a nonconsumer borrower, from:</text> <level label="1"> <text>Extending or deferring all or any portion of any scheduled payment under the loan;</text> </level> <level label="2"> <text>Permitting prepayment or refinancing of the loan in whole or in part;</text> </level> <level label="3"> <text>Charging and collecting any charges in connection with the matters referred to in paragraphs (1) and (2) of this subsection; or</text> </level> <level label="4"> <text>Charging and collecting late or delinquency charges, attorney’s fees, or collection charges.</text> </level> </level> <level label="c"> <level label="1"> <text>This subtitle does not prohibit a credit grantor, in connection with a sale, from including in the loan amount the amounts actually paid or to be paid by the credit grantor pursuant to an agreement with the borrower, on behalf of the borrower to discharge any amount financed under an outstanding loan agreement or installment sale agreement or the unpaid portion of the early termination obligation under any lease or other obligation of the lessee, with respect to a motor vehicle or other property traded in.</text> </level> <level label="2"> <text>A credit grantor who is a seller of goods or services may not be deemed to be making loans for purposes of § 11-301(b)(6)(i) of the Financial Institutions Article merely by engaging in activities described in paragraph (1) of this subsection.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1013" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>Unless otherwise provided under the express terms of the agreement, note, or other evidence of the extension of closed end credit, the provisions of Subtitle 1, 3, 4, 5, 6, or 9 of this title do not apply to an extension of closed end credit if:</text> <level label="1"> <text>The agreement, note, or other evidence of the extension of credit is made before October 1, 1993; and</text> </level> <level label="2"> <text>The extension of credit is made under this subtitle before October 1, 1993.</text> </level> </level> <level label="b"> <text>For the purposes of subsection (a) of this section, an extension of credit is made under this subtitle if:</text> <level label="1"> <text>The credit grantor has made a written election to do so in the agreement, note, or other evidence of the extension of credit; or</text> </level> <level label="2"> <text>The agreement, note, or other evidence of the extension of credit is made pursuant to the provisions of this subtitle.</text> </level> </level> <level label="c"> <text>For the purposes of subsection (a) of this section, if there is no written election to extend credit under this subtitle, the burden of proof is on the credit grantor to show the agreement, note, or other evidence of the extension of credit was made pursuant to this subtitle.</text> </level> <level label="d"> <text>Any agreement, note, or other evidence of an extension of credit made before October 1, 1993 is not subject to § 12–1013.2 of this subtitle.</text> </level> <level label="e"> <text>Notwithstanding any other provision of this title, a loan shall be subject to the provisions of this subtitle, whether or not elected, if the loan:</text> <level label="1"> <text>Is a shared appreciation agreement; and</text> </level> <level label="2"> <text>Does not allow the borrower to repay advances and have any repaid amounts subsequently readvanced to the borrower.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1013.1" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>On or after October 1, 1993, a credit grantor may at its option elect to make a loan to any borrower either pursuant to this subtitle or as otherwise permitted by applicable law.</text> </level> <level label="2"> <text>In order to make a loan under this subtitle, a credit grantor shall make a written election to that effect in the agreement, note, or other evidence of the loan.</text> </level> </level> <level label="b"> <level label="1"> <text>If a credit grantor elects in accordance with this section to make a loan under this subtitle, the provisions of Subtitle 1, 3, 4, 5, 6, or 9 of this title do not apply to the loan.</text> </level> <level label="2"> <text>If a person fails to elect in accordance with this section to extend closed end credit under this subtitle, the provisions of this subtitle do not apply.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1013.2" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>Except as provided under paragraph (2) of this subsection, the credit grantor shall deliver a copy of the agreement, note, or other evidence of the loan to the borrower no later than the time of consummation of the loan.</text> </level> <level label="2"> <text>If consummation of the loan does not occur in a face-to-face transaction between the credit grantor and the borrower, the credit grantor may delay delivering a copy of the agreement, note, or other evidence of the loan to the borrower until the due date of the first payment.</text> </level> </level> <level label="b"> <text>If there is more than one borrower, a copy of the agreement, note, or other evidence of the loan may be delivered to any borrower who is primarily liable on the loan.</text> </level> <level label="c"> <text>Written acknowledgment by a borrower of delivery made in accordance with this section of a copy of the agreement, note, or other evidence of the loan is conclusive proof of the delivery as between the borrower and any assignee of the agreement, note, or other evidence of the loan without actual knowledge to the contrary.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1014" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>If any provision of this subtitle is held invalid, such invalidity shall not affect any other provisions of this subtitle which can be given effect without the invalid provision.</text> </level> <level label="b"> <text>Notwithstanding any provisions of this title, a loan under this subtitle is subject only to the disclosure requirements of this subtitle, and, to the extent applicable, of the federal Truth in Lending Act and regulations promulgated thereunder.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1015" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>A credit grantor making a loan or an extension of credit under this subtitle is subject to the licensing, investigatory, enforcement and penalty provisions of Title 11, Subtitle 3 of the Financial Institutions Article unless the credit grantor or the loan or extension of credit is exempt under Title 11, Subtitle 3 of the Financial Institutions Article.</text> </level> <level label="b"> <text>In addition to any license which may be required by subsection (a) of this section, a credit grantor making a loan or extension of credit under this subtitle secured by any lien on residential real property is subject to the licensing, investigatory, enforcement and penalty provisions of Title 11, Subtitle 5 of the Financial Institutions Article unless the credit grantor or the loan or extension of credit is exempt under Title 11, Subtitle 5 of the Financial Institutions Article.</text> </level> <level label="c"> <text>If a license is required by this section, it shall be issued by the Commissioner of Financial Regulation.</text> </level> <level label="d"> <level label="1"> <text>An extension of credit made under this subtitle prior to October 1, 1994 by a home improvement contractor may not be deemed unenforceable or violative of this section because the contractor was not licensed under Title 11, Subtitle 3 of the Financial Institutions Article.</text> </level> <level label="2"> <text>Paragraph (1) of this subsection does not apply to any person engaged in the business of making loans at the time the credit was extended.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1016" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>If a written complaint for violation of any provision of this subtitle, including the disclosure requirements of this subtitle and the federal Truth in Lending Act and regulations promulgated thereunder, or any other law of this State that regulates loans or other extensions of credit is filed with the Commissioner of Financial Regulation, the Commissioner may investigate the complaint and hold a hearing on it in accordance with § 11–413 of the Financial Institutions Article.</text> </level> <level label="b"> <level label="1"> <text>The Commissioner shall give to the credit grantor against whom a complaint is filed at least 10 days’ written notice of the complaint and the time and place of any hearing. The notice shall be in writing and sent by registered or certified mail to the credit grantor’s principal place of business.</text> </level> <level label="2"> <text>Before a hearing under this section may be scheduled, the Commissioner shall:</text> <level label="i"> <text>Send a written notice to the complaining party that describes the provisions in paragraph (3) of this subsection concerning preclusion; and</text> </level> <level label="ii"> <text>Obtain from the complaining party a written:</text> <level label="1"> <text>Election to proceed with a hearing in accordance with this section; and</text> </level> <level label="2"> <text>Waiver of any right to pursue any cause of action or remedy as to the matters addressed in the complaint or the hearing.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>If a complaining party provides a written election and waiver as described in paragraph (2)(ii) of this subsection, the complaining party shall be precluded from raising or asserting against the credit grantor in any subsequent forum any claim, defense, setoff, recoupment, penalty for violation, or right of any kind based on the matters addressed in the complaint or the hearing.</text> </level> <level label="ii"> <text>The preclusion in subparagraph (i) of this paragraph does not apply to an appeal from the order of the Commissioner resulting from the hearing.</text> </level> </level> <level label="4"> <text>If a complaining party fails to provide a written election and waiver as described in paragraph (2)(ii) of this subsection, the Commissioner shall not schedule a hearing on the complaint.</text> </level> </level> <level label="c"> <level label="1"> <text>If, after the hearing, the Commissioner finds that the credit grantor has engaged or is engaging in any act or practice prohibited by this subtitle, the Commissioner shall order the credit grantor to cease and desist from the act or practice.</text> </level> <level label="2"> <level label="i"> <text>If the Commissioner finds that the act or practice described in paragraph (1) of this subsection resulted in the credit grantor collecting an amount from the complaining party not permitted under this subtitle, the Commissioner may direct the credit grantor to make a refund to the complaining party.</text> </level> <level label="ii"> <text>The Commissioner may direct a refund only up to the amount collected by the credit grantor from the complaining party that:</text> <level label="1"> <text>Exceeds the amount expressly permitted under this subtitle; or</text> </level> <level label="2"> <text>The credit grantor is expressly not permitted to collect.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>If an order issued under this section directs the credit grantor to make a refund as authorized in paragraph (2) of this subsection, the credit grantor may make the refund before the order becomes final.</text> </level> <level label="ii"> <text>If a credit grantor makes the refund directed by the Commissioner’s order, the order for the refund shall not become final and shall be withdrawn by the Commissioner.</text> </level> <level label="iii"> <text>Any order withdrawn by the Commissioner may not be considered evidence of the Commissioner’s interpretation of this subtitle.</text> </level> </level> <level label="4"> <text>The order of the Commissioner shall comply with the Administrative Procedure Act.</text> </level> </level> <level label="d"> <level label="1"> <text>If no appeal is filed, the order becomes final after expiration of the time allowed by the Administrative Procedure Act for appeals from the Commissioner’s orders.</text> </level> <level label="2"> <text>If an appeal is filed, the order becomes final after final decision of the court affirming the order or dismissing the appeal.</text> </level> </level> <level label="e"> <text>For purposes of this section, “complaining party” means an individual who files a written complaint with the Commissioner of Financial Regulation pursuant to this section.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1017" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <text>Any credit grantor or his officer or employee who willfully violates any provision of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000 or imprisonment not exceeding 1 year, or both.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1018" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>In this subsection, “notice” means the first to occur of the following:</text> <level label="i"> <text>When the credit grantor receives a written notice from the borrower notifying the credit grantor of an error or violation;</text> </level> <level label="ii"> <text>When the credit grantor receives a written notice from the Commissioner of Financial Regulation or the appropriate regulatory authority notifying the credit grantor of an error or violation; or</text> </level> <level label="iii"> <text>When the credit grantor receives service of process in a civil action for an error or violation instituted by the borrower in a court of competent jurisdiction.</text> </level> </level> <level label="2"> <text>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, fees, or other charges with respect to the loan.</text> </level> <level label="3"> <text>The penalty provided under paragraph (2) of this subsection does not apply where a credit grantor:</text> <level label="i"> <text>Unintentionally and in good faith fails to comply with § 12-1003, § 12-1004, § 12-1005, § 12-1008, § 12-1011, § 12-1013.2, § 12-1023(d), § 12-1024, § 12-1025, § 12-1026, § 12-1027, or § 12-1028 of this subtitle; and</text> </level> <level label="ii"> <text>Corrects the error or violation and makes the borrower whole for all losses, including reasonable attorney’s fees and interests, where appropriate, within 10 days after the credit grantor receives notice of the error or violation.</text> </level> </level> <level label="4"> <text>The burden shall be on the credit grantor to show that the credit grantor’s failure to comply with § 12-1003, § 12-1004, § 12-1005, § 12-1008, § 12-1011, § 12-1013.2, § 12-1023(d), § 12-1024, § 12-1025, § 12-1026, § 12-1027, or § 12-1028 of this subtitle was unintentional and in good faith.</text> </level> </level> <level label="b"> <text>In addition, a credit grantor who knowingly violates any provision of this subtitle shall forfeit to the borrower 3 times the amount of interest, fees, and charges collected in excess of that authorized by this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1018.1" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>In this section, “Commissioner” means the Commissioner of Financial Regulation.</text> </level> <level label="b"> <text>Except as provided in subsection (c) of this section, the penalty provided under § 12–1018(a)(2) of this subtitle does not apply if a credit grantor:</text> <level label="1"> <text>Performed or omitted to perform an act in conformity with or in reliance upon:</text> <level label="i"> <text>A written opinion of the Attorney General of Maryland or a regulation adopted by the Commissioner;</text> </level> <level label="ii"> <text>A written opinion by the Commissioner or the Deputy Commissioner; or</text> </level> <level label="iii"> <text>An interpretation by the Commissioner in a written notice or examination report; or</text> </level> </level> <level label="2"> <text>Used a form or procedure that has been approved in writing by the Commissioner and the Attorney General.</text> </level> </level> <level label="c"> <text>The provisions of subsection (b) of this section do not apply to an act or omission to act that occurs after:</text> <level label="1"> <text>The opinion, regulation, or interpretation relied on is amended, repealed, or determined to be invalid for any reason by any judicial or other authority; or</text> </level> <level label="2"> <text>Approval for a form or procedure is amended, rescinded, or determined to be invalid for any reason by any judicial or other authority.</text> </level> </level> <level label="d"> <text>This section may not be construed to:</text> <level label="1"> <text>Limit the imposition of any civil or criminal penalty for a knowing or willful violation of this subtitle; or</text> </level> <level label="2"> <text>Limit the power of the Commissioner or the courts to order a refund to a borrower of moneys collected in violation of this subtitle.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1019" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <text>An action for violation of this subtitle may not be brought more than 6 months after the loan is satisfied.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1020" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <text>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.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1021" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>A credit grantor may repossess tangible personal property securing a loan under an agreement, note, or other evidence of the loan if the consumer borrower is in default.</text> </level> <level label="2"> <text>The credit grantor may repossess tangible personal property from a consumer borrower only by:</text> <level label="i"> <text>Legal process; or</text> </level> <level label="ii"> <text>Self-help, without use of force.</text> </level> </level> </level> <level label="b"> <text>Nothing in this section authorizes a violation of criminal law.</text> </level> <level label="c"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, at least 10 days before a credit grantor repossesses any tangible personal property, the credit grantor may serve a written notice on the consumer borrower of the intention of the credit grantor to repossess the tangible personal property.</text> </level> <level label="2"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, at least 30 days before a credit grantor repossesses a mobile home that is primarily for personal, family, or household use, the credit grantor shall serve on the borrower a written notice of the credit grantor’s intention to repossess the mobile home.</text> </level> <level label="ii"> <text>The notice required under subparagraph (i) of this paragraph may be served by the credit grantor less than 30 days before repossession if:</text> <level label="1"> <text>The mobile home:</text> </level> <level label="A"> <text>Is vacant and abandoned, based on a determination by the credit grantor that at least three of the circumstances listed in § 7–105.18(d) of the Real Property Article have been met; or</text> </level> <level label="B"> <text>Has been voluntarily surrendered by the borrower to the credit grantor; and</text> </level> <level label="2"> <text>The notice is accompanied by a certification from the credit grantor identifying the circumstances demonstrating that the mobile home is vacant and abandoned or that the mobile home has been surrendered.</text> </level> </level> </level> <level label="3"> <text>The notice shall:</text> <level label="i"> <text>State the default and any period at the end of which the tangible personal property will be repossessed; and</text> </level> <level label="ii"> <text>Briefly state the rights of the consumer borrower in case the tangible personal property is repossessed.</text> </level> </level> </level> <level label="d"> <text>The notice may be delivered to the consumer borrower personally or sent to the consumer borrower’s last known address by registered or certified mail.</text> </level> <level label="e"> <text>Within 5 days after the credit grantor repossesses the tangible personal property the credit grantor shall deliver to the consumer borrower personally or send to him at his last known address by registered or certified mail, a written notice which briefly states:</text> <level label="1"> <text>The right of the consumer borrower to redeem the tangible personal property, and the amount payable for it;</text> </level> <level label="2"> <text>The rights of the consumer borrower as to a resale, and his liability for a deficiency; and</text> </level> <level label="3"> <text>The exact location where the tangible personal property is stored and the address where any payment is to be made.</text> </level> </level> <level label="f"> <text>For 15 days after the credit grantor gives the notice required by subsection (e) of this section, the credit grantor shall retain any repossessed property.</text> </level> <level label="g"> <text>During the period provided for in subsection (f) of this section, the consumer borrower may:</text> <level label="1"> <text>Redeem and take possession of the property; and</text> </level> <level label="2"> <text>Resume the performance of the agreement.</text> </level> </level> <level label="h"> <text>To redeem the property, the consumer borrower shall:</text> <level label="1"> <text>Tender the amount due under the agreement at the time of redemption, without giving effect to any provision which allows acceleration of any installment otherwise payable after that time;</text> </level> <level label="2"> <text>Tender performance of any other promise for the breach of which the property was repossessed; and</text> </level> <level label="3"> <text>If the discretionary notice provided for in subsection (c) of this section was given, pay the actual and reasonable expenses of retaking and storing the property.</text> </level> </level> <level label="i"> <level label="1"> <text>Notwithstanding subsections (g) and (h) of this section, the credit grantor shall have the right to require the consumer borrower to tender payment of the entire balance due under the agreement if:</text> <level label="i"> <text>The date of the default in the payments due under the agreement that led to the present repossession occurred within 18 months after the last repossession; or</text> </level> <level label="ii"> <text>The consumer borrower was guilty of fraudulent conduct, intentionally and wrongfully concealed, removed, damaged, or destroyed the property, or attempted to do so, and the property was repossessed because of that conduct.</text> </level> </level> <level label="2"> <text>Under paragraph (1) of this subsection, the payment by the consumer borrower of the entire balance due under the agreement shall:</text> <level label="i"> <text>Constitute redemption by the consumer borrower; and</text> </level> <level label="ii"> <text>Entitle the consumer borrower to take possession of the property.</text> </level> </level> </level> <level label="j"> <level label="1"> <level label="i"> <text>Subject to subsection (l) of this section, the credit grantor shall sell the property that was repossessed at:</text> <level label="1"> <text>Subject to paragraph (2) of this subsection, a private sale; or</text> </level> <level label="2"> <text>A public auction.</text> </level> </level> <level label="ii"> <text>At least 10 days before the sale, the credit grantor shall notify the consumer borrower in writing of the time and place of the sale, by certified mail, return receipt requested, sent to the consumer borrower’s last known address.</text> </level> <level label="iii"> <text>Any sale of repossessed property must be accomplished in a commercially reasonable manner.</text> </level> </level> <level label="2"> <text>In all cases of a private sale of repossessed goods under this section, a full accounting shall be made to the borrower in writing and the seller shall retain a copy of this accounting for at least 24 months. This accounting shall contain the following information:</text> <level label="i"> <text>The unpaid balance at the time the goods were repossessed;</text> </level> <level label="ii"> <text>The refund credit of unearned finance charges and insurance premiums, if any;</text> </level> <level label="iii"> <text>The remaining net balance;</text> </level> <level label="iv"> <text>The proceeds of the sale of the goods;</text> </level> <level label="v"> <text>The remaining deficiency balance, if any, or the amount due the buyer;</text> </level> <level label="vi"> <text>All expenses incurred as a result of the sale;</text> </level> <level label="vii"> <text>The purchaser’s name, address, and business address;</text> </level> <level label="viii"> <text>The number of bids sought and received; and</text> </level> <level label="ix"> <text>Any statement as to the condition of the goods at the time of repossession which would cause their value to be increased or decreased above or below the market value for goods of like kind and quality.</text> </level> </level> <level label="3"> <text>The Commissioner of Financial Regulation may make a determination concerning any private sale that the sale was not accomplished in a commercially reasonable manner. Upon that determination, the Commissioner may enter an order disallowing any claim for a deficiency balance.</text> </level> </level> <level label="k"> <level label="1"> <text>The provisions of this subsection apply to a public sale of property which secured a loan in excess of $2,000 at the time the loan was made.</text> </level> <level label="2"> <text>The proceeds of a sale to which this subsection applies shall be applied, in the following order, to:</text> <level label="i"> <text>The actual and reasonable cost of the sale;</text> </level> <level label="ii"> <text>The actual and reasonable cost of retaking and storing the property; and</text> </level> <level label="iii"> <text>The unpaid balance owing under the agreement at the time the property was repossessed.</text> </level> </level> <level label="3"> <text>The credit grantor shall furnish to the consumer borrower a written statement which shows the distribution of the proceeds.</text> </level> <level label="4"> <text>If the provisions of this section, including the requirement of furnishing a notice following repossession, are not followed, the credit grantor shall not be entitled to any deficiency judgment to which he would be entitled under the loan agreement.</text> </level> </level> <level label="l"> <level label="1"> <level label="i"> <text>In this subsection, “consumer goods” means tangible personal property used or bought for use primarily for personal, family, or household purposes that is:</text> <level label="1"> <text>Movable at the time a security interest attaches; or</text> </level> <level label="2"> <text>A fixture.</text> </level> </level> <level label="ii"> <text>“Consumer goods” does not include money, documents, instruments, accounts, chattel paper, or general intangibles.</text> </level> </level> <level label="2"> <text>This subsection applies to tangible personal property securing a loan that:</text> <level label="i"> <text>Has been repossessed by the credit grantor; or</text> </level> <level label="ii"> <text>Is in actual or constructive possession of the credit grantor where the perfection of the security interest in the property depends on the possession of the property.</text> </level> </level> <level label="3"> <text>In the case of a purchase money security interest in consumer goods, if a consumer borrower has paid 60 percent of the cash price or 60 percent of the loan in the case of another security interest in consumer goods and, after default, has not signed a statement renouncing or modifying the consumer borrower’s rights under this subsection, a credit grantor who has repossessed the consumer goods must take reasonable action within 90 days after the repossession to commence disposal of them in the manner provided under subsection (j) of this section.</text> </level> <level label="4"> <level label="i"> <text>In any other case involving tangible personal property securing a loan, a credit grantor may, after default, propose to retain the property in full satisfaction of the obligations of the borrower under the loan.</text> </level> <level label="ii"> <text>If, as authorized by subparagraph (i) of this paragraph, a credit grantor proposes to retain property in full satisfaction of the obligations of the borrower under the loan, the credit grantor shall send written notice of the proposal to:</text> <level label="1"> <text>The consumer borrower; and</text> </level> <level label="2"> <text>Except in the case of consumer goods, any other person who has a security interest in the property and who:</text> </level> <level label="A"> <text>Has duly filed a financing statement indexed in the name of the consumer borrower in this State; or</text> </level> <level label="B"> <text>Is known by the credit grantor to have a security interest in the property.</text> </level> </level> <level label="iii"> <level label="1"> <text>If the consumer borrower or other person entitled to receive notification objects in writing within 30 days from the sending of the notification, the credit grantor must take reasonable action to dispose of the property in the manner provided under subsection (j) of this section.</text> </level> <level label="2"> <text>In the absence of written objection, the credit grantor may retain the property in full satisfaction of the outstanding unpaid indebtedness under the loan.</text> </level> </level> </level> <level label="5"> <text>If despite complying with the requirements of this section there is no sale of tangible personal property securing a loan under subsection (j) of this section:</text> <level label="i"> <text>The credit grantor may retain the property without obligation to account to the borrower; and</text> </level> <level label="ii"> <text>If the property is retained, all obligations of the borrower under the loan shall be discharged.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1022" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Borrower” means a consumer borrower who makes an application for a loan secured by a first mortgage or first deed of trust on residential real property to be occupied by the borrower as the borrower’s primary residence.</text> </level> <level label="3"> <text>“Commitment” means a written, specific, binding agreement between a borrower and a lender which sets forth the terms of a loan being extended to the borrower.</text> </level> <level label="4"> <text>“Financing agreement” means a written agreement between a borrower and a lender which sets forth the terms of a purchase money loan or a refinancing of an existing loan that:</text> <level label="i"> <text>Results in or is secured by a first mortgage or a first deed of trust on residential real property to be occupied by the borrower; and</text> </level> <level label="ii"> <text>Is offered or extended to the borrower.</text> </level> </level> <level label="5"> <level label="i"> <text>“Lender” means a credit grantor subject to the licensing requirements of Title 11, Subtitle 5 of the Financial Institutions Article.</text> </level> <level label="ii"> <text>“Lender” does not include a credit grantor exempt from licensing under § 11–502 of the Financial Institutions Article.</text> </level> </level> <level label="6"> <level label="i"> <text>“Loan application” means any oral or written request for an extension of credit that is made in accordance with procedures established by a lender for the purpose of inducing the lender to seek to procure or make a mortgage loan.</text> </level> <level label="ii"> <text>“Loan application” does not include the use of an account or line of credit to obtain a loan within a previously established credit limit.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>A lender who offers to make or procure a loan secured by a first mortgage or first deed of trust on residential real property to be occupied by the borrower shall provide the borrower with a financing agreement executed by the lender within 10 business days after the date the loan application is completed.</text> </level> <level label="2"> <text>The financing agreement shall provide:</text> <level label="i"> <text>The term and principal amount of the loan;</text> </level> <level label="ii"> <text>An explanation of the type of mortgage loan being offered;</text> </level> <level label="iii"> <text>The rate of interest that will apply to the loan and, if the rate is subject to change or is a variable rate or is subject to final determination at a future date based on some objective standard, a specific statement of those facts;</text> </level> <level label="iv"> <text>The points, if any, to be paid by the borrower or the seller, or both; and</text> </level> <level label="v"> <text>The term during which the financing agreement remains in effect.</text> </level> </level> <level label="3"> <text>If all the provisions of the financing agreement are not subject to future determination, change, or alteration during its term, the financing agreement shall constitute the final binding agreement between the parties as to the items covered by the financing agreement.</text> </level> <level label="4"> <text>A disclosure provided by a lender to a borrower in compliance with 12 C.F.R. § 1026.37 shall satisfy the requirements of this subsection.</text> </level> </level> <level label="c"> <level label="1"> <text>If any of the provisions of the financing agreement are subject to change or determination after its execution, the lender shall provide the borrower with a commitment, executed by the lender, at least 72 hours before the time of settlement agreed to by the parties, providing:</text> <level label="i"> <text>The effective fixed interest rate or initial interest rate that will be applied to the loan; and</text> </level> <level label="ii"> <text>A restatement of all the remaining unchanged provisions of the financing agreement.</text> </level> </level> <level label="2"> <text>Subsequent to execution of the financing agreement, the borrower may waive in writing the 72–hour advance presentation requirement and accept the commitment at settlement only if compliance with the 72–hour requirement is shown by the lender to be infeasible.</text> </level> <level label="3"> <text>A disclosure provided by a lender to a borrower in compliance with 12 C.F.R. § 1026.38 shall satisfy the requirements of this subsection.</text> </level> </level> <level label="d"> <text>If a lender fails to comply with the requirements of this section, the lender shall be subject to the penalties set forth in § 11–523 of the Financial Institutions Article.</text> </level> <level label="e"> <level label="1"> <text>A borrower aggrieved by any violation of this section shall be entitled to bring a civil suit for damages, including reasonable attorney’s fees, against the lender.</text> </level> <level label="2"> <text>The penalties set out under § 12–1018 of this subtitle do not apply to any violation of this section.</text> </level> </level> <level label="f"> <text>This section may not be construed to exempt a lender from the provisions of §§ 12–1027 and 12–1028 of this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1023" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>This section applies only to a loan made by a credit grantor under this subtitle to a consumer borrower.</text> </level> <level label="b"> <level label="1"> <text>Paragraph (2) of this subsection applies only to a loan or an extension of credit primarily for personal, household, or family purposes.</text> </level> <level label="2"> <text>An agreement, note, or other evidence of a loan may not contain:</text> <level label="i"> <text>An assignment or order for the payment of wages, whether earned or to be earned, or of any chose in action covering lost wages;</text> </level> <level label="ii"> <text>An acceleration clause under which any part or all of the unpaid balance of the loan not yet matured may be declared due and payable because the credit grantor deems itself insecure;</text> </level> <level label="iii"> <text>A confession of judgment or any power of attorney authorizing the credit grantor to appear in court to confess judgment against the borrower or a surety or guarantor of the borrower, or any other waiver of the right to notice and an opportunity to be heard in the event of suit or process thereon; or</text> </level> <level label="iv"> <text>A provision by which a person acting on behalf of a holder of the agreement, note, or other evidence of the loan is treated as an agent of the borrower in connection with its formation or execution.</text> </level> </level> <level label="3"> <text>Except as expressly allowed by law, an agreement, note, or other evidence of a loan may not contain a provision by which the borrower waives any right accruing to the borrower under this subtitle.</text> </level> <level label="4"> <level label="i"> <text>Any clause or provision in an agreement, note, or other evidence of a loan that is in violation of this subsection shall be unenforceable.</text> </level> <level label="ii"> <text>Subject to subparagraph (iii) of this paragraph, the penalties set out under §§ 12-1017 and 12-1018 of this subtitle do not apply unless the credit grantor attempts to enforce a provision prohibited under this subsection.</text> </level> <level label="iii"> <text>The penalties set out under §§ 12-1017 and 12-1018 of this subtitle do not apply to the enforcement by a credit grantor of a provision otherwise prohibited under this subsection where the enforcement was initiated by the credit grantor prior to October 1, 1993.</text> </level> </level> </level> <level label="c"> <text>Unless a borrower has notice of an assignment of an agreement, note, or other evidence of a loan, any payments made by the borrower to the last known holder of the agreement, note, or other evidence of the loan shall discharge the borrower’s obligation to the extent of the payments.</text> </level> <level label="d"> <text>Upon receipt of a cash payment from a borrower, a credit grantor shall give the borrower a written receipt for the payment.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1023.1" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>Any statement or characterization that indicates the borrower intends to obtain a loan solely to acquire an interest in or to carry on a business or commercial enterprise may be relied upon by a credit grantor in making the loan, unless the credit grantor knows or should know that the statement or characterization is false or misleading.</text> </level> <level label="b"> <text>As a condition to making a loan, a credit grantor may not require a borrower to make any false or misleading statement or characterization that the loan is a commercial loan or for a commercial purpose if the credit grantor knows or should know it is not a commercial loan or for a commercial purpose.</text> </level> <level label="c"> <text>The borrower has the burden of proving that a credit grantor knew or should have known that a statement or characterization described in subsection (a) or (b) of this section was false or misleading when made and that the loan was not a commercial loan or for a commercial purpose.</text> </level> <level label="d"> <text>Unless a credit grantor knew or should have known that a statement or characterization described in subsection (a) or (b) of this section was false or misleading when made, a credit grantor shall have no liability under this subtitle if a loan is actually used by the borrower other than as a commercial loan or for a commercial purpose.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1024" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, this section applies only to a loan made by a credit grantor to a consumer borrower.</text> </level> <level label="2"> <text>This section does not apply to a loan to which § 3–105.1 of the Real Property Article applies.</text> </level> </level> <level label="b"> <text>Within a reasonable time after a loan to a consumer borrower has been repaid in full and all other obligations under the agreement, note, or other evidence of the loan have been fulfilled, a credit grantor shall:</text> <level label="1"> <level label="i"> <text>Indelibly mark with the word “paid” or “canceled” and return to the consumer borrower each agreement, note, or other evidence of the loan; or</text> </level> <level label="ii"> <text>Furnish the consumer borrower with a written statement that identifies the loan transaction and states that the loan has been paid in full; and</text> </level> </level> <level label="2"> <text>Release any recorded mortgage, deed of trust, security agreement, or other lien securing the loan.</text> </level> </level> <level label="c"> <level label="1"> <text>The release shall be:</text> <level label="i"> <text>In writing; and</text> </level> <level label="ii"> <text>Prepared at the expense of the credit grantor.</text> </level> </level> <level label="2"> <text>If the release required by this section pertains to a motor vehicle, the release shall be filed electronically with the Motor Vehicle Administration in accordance with § 13–108.1 of the Transportation Article within 5 business days after the credit grantor has received full payment.</text> </level> </level> <level label="d"> <level label="1"> <text>If the credit grantor does not record the release, the credit grantor shall furnish the consumer borrower with the release in a recordable form.</text> </level> <level label="2"> <text>If the credit grantor records the release, the credit grantor shall furnish the consumer borrower with a copy of the release.</text> </level> </level> <level label="e"> <level label="1"> <text>If a fee is collected by a credit grantor for the recording of a release:</text> <level label="i"> <text>The release shall be recorded by the credit grantor; and</text> </level> <level label="ii"> <text>Any portion of the fee not paid to a governmental entity for recording the release shall be refunded to the borrower.</text> </level> </level> <level label="2"> <text>If a fee is not collected by a credit grantor for the recording of a release, the credit grantor is not obligated to record the release.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1025" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>A credit grantor who receives scheduled monthly periodic payments on more than five loans secured by any interest in residential real property or tangible personal property shall furnish to the consumer borrower a written statement informing the consumer borrower of the amount of:</text> <level label="1"> <text>If the interest and charges on the loan were precomputed:</text> <level label="i"> <text>Payments credited to reducing the outstanding unpaid balance of the loan, either in terms of a total dollar figure or individually itemized; and</text> </level> <level label="ii"> <text>The remaining outstanding unpaid balance of the loan; or</text> </level> </level> <level label="2"> <text>If the interest and charges on the loan were not precomputed:</text> <level label="i"> <text>Payments credited to reducing the outstanding unpaid principal balance of the loan, either in terms of a total dollar figure or individually itemized;</text> </level> <level label="ii"> <text>Payments credited to interest and fees, either in terms of a total dollar figure or individually itemized; and</text> </level> <level label="iii"> <text>The remaining outstanding unpaid principal balance of the loan.</text> </level> </level> </level> <level label="b"> <text>At the option of the credit grantor, each written statement shall contain the information required in subsection (a)(1)(i) and (2)(i) and (ii) of this section either from the date the loan was made or, if previous written statements have been furnished to the consumer borrower, from the date of the last written statement.</text> </level> <level label="c"> <text>The written statement shall be furnished to the consumer borrower:</text> <level label="1"> <text>In the case of loans secured by any interest in residential real property, at least annually; and</text> </level> <level label="2"> <text>In the case of loans secured by any interest in residential real property or tangible personal property, within a reasonable time after receipt of a written request of a consumer borrower provided the request is made at a reasonable time or interval since the furnishing of the last written statement.</text> </level> </level> <level label="d"> <text>A credit grantor may charge a fee of up to $5 for each written statement requested by a consumer borrower.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1026" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Escrow account” means an expense or escrow account which tends to protect the security of a loan by the accumulation of funds for the payment of taxes, insurance premiums, water and sewer facilities assessments, or other expenses.</text> </level> <level label="3"> <text>“Lending institution” means a bank, savings bank, or savings and loan association doing business in Maryland.</text> </level> <level label="4"> <level label="i"> <text>“Water and sewer facilities assessment” means a fee or charge that is:</text> <level label="1"> <text>Assessed on an owner of residential real property that is served by public water or wastewater facilities for which deferred water or sewer charges have been established by a recorded covenant or declaration to cover or defray the cost of installing or maintaining during construction all or part of the public water or wastewater facilities constructed by the developer; and</text> </level> <level label="2"> <text>Paid to the lienholder of the lien recorded on the residential real property for public water and wastewater facilities.</text> </level> </level> <level label="ii"> <text>“Water and sewer facilities assessment” includes a front foot benefit fee or charge.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>A lending institution that makes a loan to a consumer borrower secured by a first mortgage or first deed of trust on residential real property and creates or is the assignee of an escrow account in connection with that loan shall pay interest to the consumer borrower on the funds in the escrow account at an annual rate not less than the weekly average yield on United States Treasury securities adjusted to a constant maturity of 1 year, as published by the Federal Reserve in “Selected Interest Rates (Daily) – H.15”, as of the first business day of the calendar year.</text> </level> <level label="2"> <text>Interest on these funds shall be:</text> <level label="i"> <text>Adjusted, if applicable, as of the first day of each calendar year to reflect the rate to be paid during that year, as determined under paragraph (1) of this subsection;</text> </level> <level label="ii"> <text>Computed on the average monthly balance in the escrow account; and</text> </level> <level label="iii"> <text>Paid annually to the borrower by crediting the escrow account with the amount of interest due.</text> </level> </level> <level label="3"> <text>The lending institution shall annually provide the consumer borrower with a statement of the escrow balance.</text> </level> <level label="4"> <text>The provisions of this subsection do not apply to a lending institution that provides for the payment of taxes, insurance, water and sewer facilities assessments, or other expenses under the direct reduction method by which these expenses, when paid by the lending institution, are added to the outstanding principal balance of the loan.</text> </level> <level label="5"> <level label="i"> <text>This subsection does not apply if the loan:</text> <level label="1"> <text>Is purchased by an out–of–state lender through the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation; and</text> </level> <level label="2"> <text>The out–of–state lender elects to service the loan as a condition of purchase.</text> </level> </level> <level label="ii"> <text>Notwithstanding subparagraph (i) of this paragraph, this subsection shall apply if the out–of–state lender:</text> <level label="1"> <text>Sells the loan to a Maryland lender; or</text> </level> <level label="2"> <text>Places the loan with a Maryland lender for servicing.</text> </level> </level> </level> </level> <level label="c"> <level label="1"> <text>Except upon foreclosure, release, or as provided in paragraph (2) of this subsection, funds in any escrow account maintained by a credit grantor on behalf of a consumer borrower for use in paying taxes, insurance premiums, ground rents, and water and sewer facilities assessments may not be used:</text> <level label="i"> <text>To reduce the principal; or</text> </level> <level label="ii"> <text>To pay interest or other loan charges.</text> </level> </level> <level label="2"> <text>If there is periodically a balance in the escrow account maintained by a credit grantor on behalf of a consumer borrower which exceeds the amount stated in the agreement, note, or other evidence of the loan, the consumer borrower shall be given at least annually the option of:</text> <level label="i"> <text>Receiving a refund of the excess amount;</text> </level> <level label="ii"> <text>Applying the excess amount to the payment of principal and interest; or</text> </level> <level label="iii"> <text>Leaving the excess amount in the escrow account.</text> </level> </level> <level label="3"> <text>A refund of any excess amount shall be made:</text> <level label="i"> <text>Within 60 days after the receipt by the credit grantor of the consumer borrower’s request for a refund; or</text> </level> <level label="ii"> <text>If the consumer borrower has not notified the credit grantor of the option chosen by the consumer borrower, within 60 days after the date the credit grantor mailed notice of an excess amount.</text> </level> </level> <level label="4"> <level label="i"> <text>Subject to subparagraph (iii) of this paragraph, if, after recalculating the amount that is required to be maintained in escrow under a first mortgage or first deed of trust on residential real property, a credit grantor or a servicer of a loan determines that the amount that a consumer borrower is required to pay must increase, the credit grantor or servicer may not include, for a 1–year period after the determination is made, the amount of the increase in escrow payments in any calculation of the amount of interest or any fee due under the loan.</text> </level> <level label="ii"> <text>This paragraph may not be construed to limit the ability of a credit grantor or a servicer of a loan to impose a late fee for any escrow payment that is due and not timely paid.</text> </level> <level label="iii"> <level label="1"> <text>In this subparagraph, “other expenses” does not include money required by a credit grantor or a servicer of a loan for an escrow account cushion as permitted by the federal Real Estate Settlement Procedures Act.</text> </level> <level label="2"> <text>A credit grantor or a servicer of a loan may charge interest to a consumer borrower on the amount of funds the credit grantor or servicer advances to pay taxes, insurance premiums, or other expenses owed by the consumer borrower in order to protect the security of the loan.</text> </level> <level label="3"> <text>Interest may be charged by a credit grantor or a servicer of a loan under subsubparagraph 2 of this subparagraph only if:</text> </level> <level label="A"> <text>The credit grantor or servicer advances its own funds because funds of the consumer borrower were not available to pay the taxes, insurance premiums, or other expenses owed by the consumer borrower;</text> </level> <level label="B"> <text>The need for the advance was not caused by an error of the credit grantor or servicer in servicing the loan;</text> </level> <level label="C"> <text>The credit grantor or servicer provides notice to the consumer borrower that the advance was made and that interest will be charged on the advance;</text> </level> <level label="D"> <text>Interest does not begin to accrue until 60 days after notice has been provided to the consumer borrower in accordance with item C of this subsubparagraph;</text> </level> <level label="E"> <text>Interest is charged only on the amount of funds actually advanced by the credit grantor or servicer after the credit grantor or servicer has used all available funds of the consumer borrower to pay taxes, insurance premiums, or other expenses owed by the consumer borrower; and</text> </level> <level label="F"> <text>The consumer borrower is permitted to repay the advance as permitted by the federal Real Estate Settlement Procedures Act.</text> </level> </level> </level> </level> <level label="d"> <level label="1"> <text>Funds in any escrow account shall be kept separate from and may not be commingled with the funds of the credit grantor.</text> </level> <level label="2"> <text>A credit grantor may place escrow funds received in connection with more than one loan into a single escrow account.</text> </level> <level label="3"> <text>In the event of the bankruptcy of the credit grantor, any escrow funds placed in any escrow account may not be considered to be part of the bankrupt estate of the credit grantor.</text> </level> </level> <level label="e"> <text>A credit grantor may not impose a collection fee or service charge on the maintenance of an escrow account on a first mortgage or first deed of trust.</text> </level> <level label="f"> <text>On request of a consumer borrower, a lending institution that makes a loan to the consumer borrower secured by a first mortgage or first deed of trust on residential real property may, at the option of the lending institution, create an escrow account in connection with that loan solely for the payment of water and sewer facilities assessments.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1027" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>In this section, “lender’s inspection fee” means a fee imposed by a credit grantor to pay for a visual inspection of residential real property.</text> </level> <level label="b"> <text>Except as provided in subsection (c) of this section, a credit grantor may not impose a lender’s inspection fee in connection with a loan made to a consumer borrower that is secured by residential real property.</text> </level> <level label="c"> <text>A lender’s inspection fee may be imposed on a consumer borrower if the inspection is needed to ascertain completion of:</text> <level label="1"> <text>Construction of a new home; or</text> </level> <level label="2"> <text>Repairs, alterations, or other work required by the credit grantor.</text> </level> </level> <level label="d"> <text>This section does not apply to an appraisal of the value of real property by a credit grantor or to fees imposed in connection with an appraisal.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1028" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <text>This section applies only to a loan to a consumer borrower secured by a first mortgage or first deed of trust on residential real property used as the consumer borrower’s primary residence.</text> </level> <level label="b"> <text>A credit grantor may require a consumer borrower to pay for services rendered by the credit grantor’s attorney only if the attorney’s fee:</text> <level label="1"> <text>Is limited to legal services attributable to processing and closing the loan and not to unrelated services performed by the attorney for the credit grantor;</text> </level> <level label="2"> <text>If in excess of $100, is supported by a statement provided to the borrower at or prior to settlement that:</text> <level label="i"> <text>Describes the services performed;</text> </level> <level label="ii"> <text>Sets forth the time spent by the attorney and the hourly rate or other basis for determining the fee;</text> </level> <level label="iii"> <text>States that the legal services are being performed on behalf of the credit grantor and not on behalf of the consumer borrower; and</text> </level> <level label="iv"> <text>States that the services are being paid for by the consumer borrower;</text> </level> </level> <level label="3"> <text>Is reasonable on the basis of the legal services performed; and</text> </level> <level label="4"> <text>Is separately itemized on the loan settlement sheet and identified as a fee to the credit grantor’s attorney.</text> </level> </level> <level label="c"> <level label="1"> <text>A credit grantor may not require as a condition of settlement that a consumer borrower employ a particular attorney or title insurance company to perform a title search, examination of title, or closing if:</text> <level label="i"> <text>The consumer borrower notifies the credit grantor, within 7 days after application for the loan, of the name and business address of the borrower’s choice of attorney or title insurance company to perform the title search, examination of title, or closing; and</text> </level> <level label="ii"> <text>The credit grantor does not reject the consumer borrower’s choice of attorney or title insurance company for good cause within 7 days after the receipt of the notice under item (i) of this paragraph.</text> </level> </level> <level label="2"> <text>Subject to the requirements of subsection (b) of this section, this subsection may not be construed to prohibit a credit grantor from requiring a consumer borrower to pay for:</text> <level label="i"> <text>Preparation of loan closing documents;</text> </level> <level label="ii"> <text>Title insurance;</text> </level> <level label="iii"> <text>Review of documents prepared by the borrower’s attorney; or</text> </level> <level label="iv"> <text>Attendance at settlement by the credit grantor’s attorney.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>Any credit grantor that imposes fees on a consumer borrower for settlement services, or document review services, performed by an attorney designated by the credit grantor, or who conditions settlement on the employment of a particular attorney or title insurance company, shall provide a prospective consumer borrower with a written notice stating:</text> <level label="i"> <text>The credit grantor’s requirements concerning selection of an attorney, title insurance company, or other person to perform settlement services relating to the purchase of the residential real property;</text> </level> <level label="ii"> <text>The consumer borrower’s ability to choose an attorney or title insurance company under subsection (c) of this section; and</text> </level> <level label="iii"> <text>A good faith estimate of the fee or fees to be charged to the borrower.</text> </level> </level> <level label="2"> <level label="i"> <text>The notice required under this subsection shall be provided at the time of or within 3 business days after the application for a loan, or earlier upon request.</text> </level> <level label="ii"> <text>A copy of the notice, signed by the applicant, shall accompany any executed application for a loan.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1029" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Fully indexed rate” means the index rate, as defined in the mortgage loan documents, prevailing at the time the mortgage loan is approved by the credit grantor, plus the margin that will apply after the expiration of an introductory interest rate.</text> </level> <level label="3"> <level label="i"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="ii"> <text>“Mortgage loan” does not include a reverse mortgage loan.</text> </level> </level> </level> <level label="b"> <text>A credit grantor may not make a mortgage loan without giving due regard to the borrower’s ability to repay the mortgage loan in accordance with its terms, including the fully indexed rate of the mortgage loan, if applicable, and property taxes and homeowner’s insurance whether or not an escrow account is established for the collection and payment of these expenses.</text> </level> <level label="c"> <level label="1"> <text>Due regard to a borrower’s ability to repay a mortgage loan must include:</text> <level label="i"> <text>Consideration of the borrower’s debt to income ratio, including existing debts and other obligations; and</text> </level> <level label="ii"> <text>Verification of the borrower’s gross monthly income and assets by review of third–party written documentation reasonably believed by the credit grantor to be accurate and complete.</text> </level> </level> <level label="2"> <text>Acceptable third–party written documentation includes:</text> <level label="i"> <text>The borrower’s Internal Revenue Service form W–2;</text> </level> <level label="ii"> <text>A copy of the borrower’s income tax return;</text> </level> <level label="iii"> <text>Payroll receipts;</text> </level> <level label="iv"> <text>The records of a financial institution; or</text> </level> <level label="v"> <text>Other third–party documents that provide reasonably reliable evidence of the borrower’s income or assets.</text> </level> </level> <level label="3"> <text>This subsection does not apply to a mortgage loan:</text> <level label="i"> <text>Approved for government guaranty by the Federal Housing Administration, the Veterans Administration, the United States Department of Agriculture, the Maryland Department of Housing and Community Development, or the Community Development Administration; or</text> </level> <level label="ii"> <text>That refinances an existing mortgage loan if the refinance mortgage loan is:</text> <level label="1"> <text>Offered under the federal Homeowner Affordability and Stability Plan; and</text> </level> <level label="2"> <text>Made available by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.</text> </level> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1030" title_number="12" title_name="Credit Regulations" subtitle_number="10" subtitle_name="Credit Grantor Closed End Credit Provisions"> <text>The Commissioner of Financial Regulation may adopt regulations regarding the enforcement of and compliance with this subtitle as to credit grantors who offer or make shared appreciation agreements under this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1101" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <level label="1"> <text>“Advertisement” means a commercial message in any medium that aids, promotes, or assists, directly or indirectly, a rental–purchase agreement.</text> </level> <level label="2"> <text>“Advertisement” does not include in–store merchandising ads.</text> </level> </level> <level label="c"> <text>“Cash price” means the price at which the lessor would have sold rental property covered by a rental–purchase agreement to the consumer unconditionally for cash on the date of consummation.</text> </level> <level label="d"> <text>“Consumer” means an individual who rents personal property under a rental–purchase agreement primarily for personal, family, or household purposes.</text> </level> <level label="e"> <text>“Consummation” means the time at which a consumer enters into a rental–purchase agreement.</text> </level> <level label="f"> <text>“Cost of lease services” means the difference between the final purchase price of rental property and the cash price of rental property.</text> </level> <level label="g"> <text>“Lessor” means a person who regularly provides the use of personal property through rental–purchase agreements to consumers and to whom rental payments are initially payable on the face of a rental–purchase agreement.</text> </level> <level label="h"> <text>“Rental property” means personal property that is the subject of a rental–purchase agreement.</text> </level> <level label="i"> <text>“Rental–purchase agreement” means an agreement that:</text> <level label="1"> <text>Is for the use of personal property by an individual primarily for personal, family, or household purposes;</text> </level> <level label="2"> <text>Is for an initial period of 4 months or less;</text> </level> <level label="3"> <text>Is automatically renewable for a weekly or monthly period with each rental payment after the initial period; and</text> </level> <level label="4"> <text>Allows but does not obligate the consumer to become the owner of the property.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1102" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>A rental-purchase agreement that complies with this subtitle may not be deemed to be:</text> <level label="1"> <text>A “retail sale”, as defined in § 12-601(s) of this title;</text> </level> <level label="2"> <text>An “installment sale agreement”, as defined in § 12-601(m) of this title; or</text> </level> <level label="3"> <text>A “security interest”, as defined in § 1-201(37) of this article.</text> </level> </level> <level label="b"> <text>This subtitle does not apply to:</text> <level label="1"> <text>A rental-purchase agreement made primarily for business, commercial, or agricultural purposes, or made with governmental agencies, instrumentalities, or organizations;</text> </level> <level label="2"> <text>A rental of a safe deposit box;</text> </level> <level label="3"> <text>A lease or bailment of personal property that:</text> <level label="i"> <text>Is incidental to the rental of real property; and</text> </level> <level label="ii"> <text>Provides that the consumer has no option to purchase the rented real property; or</text> </level> </level> <level label="4"> <text>A lease of an automobile.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1103" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <level label="1"> <text>A lessor shall disclose to a consumer the information required under this subtitle.</text> </level> <level label="2"> <text>In a transaction involving more than 1 lessor, only 1 lessor need make the disclosures required under this subtitle, but all lessors shall be bound by the disclosures made.</text> </level> </level> <level label="b"> <text>A lessor shall make the disclosures required under this subtitle before consummation of the rental–purchase agreement.</text> </level> <level label="c"> <text>A lessor shall:</text> <level label="1"> <text>Make the disclosures required under this subtitle in a written form that is simple and understandable and is written or typed in a size not less than 10 point type;</text> </level> <level label="2"> <text>Make the disclosures required under this subtitle in English or in any other language used by the lessor in advertisements related to the rental–purchase transaction;</text> </level> <level label="3"> <text>Make the disclosures required under this subtitle on the face of the rental–purchase agreement and summary of costs chart above the consumer’s signature lines; and</text> </level> <level label="4"> <text>Deliver a copy of the rental–purchase agreement and the summary of costs chart to the consumer.</text> </level> </level> <level label="d"> <text>If a disclosure becomes inaccurate as a result of any act, occurrence, or agreement by the consumer after delivery of the rental property, the resulting inaccuracy is not a violation of this subtitle.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1104" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>The lessor shall disclose in each rental–purchase agreement, as applicable:</text> <level label="1"> <text>The total number, total amount, and timing of all rental payments necessary to acquire ownership of the rental property;</text> </level> <level label="2"> <text>A statement that the consumer will not own the rental property until the consumer has paid the total of payments necessary to acquire ownership;</text> </level> <level label="3"> <text>A brief description of the rental property sufficient to identify the rental property to the consumer and the lessor, including an identification number and a statement indicating whether the rental property is new or used;</text> </level> <level label="4"> <level label="i"> <text>A statement of the cash price of the rental property; or</text> </level> <level label="ii"> <text>If a single rental–purchase agreement involves a lease of 2 or more items of rental property as a set, a statement of the aggregate cash price of all items;</text> </level> </level> <level label="5"> <text>The cost of lease services of the rental property;</text> </level> <level label="6"> <text>The total of initial payments paid or required to be paid at or before consummation of the rental–purchase agreement or delivery of the rental property, whichever is later;</text> </level> <level label="7"> <text>A statement that the total of rental payments does not include other charges, such as reinstatement fees, damage fees, or pickup fees;</text> </level> <level label="8"> <text>A statement that the consumer has the right to exercise an early purchase option and the price, formula, or method for determining the early purchase option price;</text> </level> <level label="9"> <text>A statement that the consumer must pay the early purchase option price for the rental property if, and when, the rental property is lost, stolen, damaged, or destroyed;</text> </level> <level label="10"> <level label="i"> <text>A statement identifying the lessor as the party responsible for maintaining or servicing the rental property while it is being rented;</text> </level> <level label="ii"> <text>A description of that responsibility; and</text> </level> <level label="iii"> <text>A statement that if any part of a manufacturer’s express warranty covers the rental property at the time the consumer acquires ownership of the rental property, it shall be transferred to the consumer, if allowed by the terms of the warranty;</text> </level> </level> <level label="11"> <text>The date of consummation and the identities of the lessor and consumer;</text> </level> <level label="12"> <text>A statement that the consumer may terminate the rental–purchase agreement without penalty by voluntarily surrendering or returning the rental property in good repair, normal wear and tear excepted, upon expiration of any rental term and payment of any past due rental payments;</text> </level> <level label="13"> <text>Notice of the consumer’s right to reinstate an agreement as provided in § 12–1106 of this subtitle; and</text> </level> <level label="14"> <text>Any other charges, including reinstatement fees, damage fees, and pickup fees.</text> </level> </level> <level label="b"> <text>The lessor shall disclose in each summary of costs chart, as applicable:</text> <level label="1"> <text>The cash price of the rental property;</text> </level> <level label="2"> <text>The timing of the payments for the rental property;</text> </level> <level label="3"> <text>The total purchase price if the payment schedule under item (2) of this subsection is completed according to the schedule; and</text> </level> <level label="4"> <text>The cost of lease services of the rental property.</text> </level> </level> <level label="c"> <text>A lessor shall place on property which is to be leased as a part of a rental–purchase agreement and is displayed in the lessor’s place of business a tag which shall indicate:</text> <level label="1"> <text>The number and amount of individual renewal payments necessary to purchase the property;</text> </level> <level label="2"> <text>The total amount necessary to purchase the property; and</text> </level> <level label="3"> <text>Whether the property is new or used.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1105" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <text>A rental-purchase agreement may not contain:</text> <level label="1"> <text>A confession of judgment;</text> </level> <level label="2"> <text>A negotiable instrument;</text> </level> <level label="3"> <text>A security interest or any other claim of a property interest in any goods except the rental property delivered by the lessor pursuant to the rental-purchase agreement;</text> </level> <level label="4"> <text>A wage assignment;</text> </level> <level label="5"> <text>A waiver by the consumer of claims or defenses; or</text> </level> <level label="6"> <text>A provision authorizing the lessor or a person acting on the lessor’s behalf to enter upon the consumer’s premises or to commit any breach of the peace in the repossession of rental property.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1106" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>A consumer who fails to make a timely rental payment may reinstate the rental-purchase agreement, without losing any rights or options that exist under the rental-purchase agreement, if within 5 days of the renewal date, for a consumer who renews on a monthly basis, or within 2 days of the renewal date, for a consumer who renews on a weekly basis, the consumer pays:</text> <level label="1"> <text>All past due rental charges;</text> </level> <level label="2"> <text>If the rental property has been picked up or repossessed, the reasonable costs of pickup and redelivery; and</text> </level> <level label="3"> <text>Any applicable reinstatement fee, which may not exceed $5.</text> </level> </level> <level label="b"> <text>A consumer who has paid less than two-thirds of the total of payments necessary to acquire ownership of the rental property and who has returned or voluntarily surrendered the rental property without judicial process during the applicable reinstatement period under subsection (a) of this section or who has made the property available for pickup at the request of the lessor, whichever occurs last, may reinstate the rental-purchase agreement prior to a date not less than 21 days after the date of the return of the rental property.</text> </level> <level label="c"> <text>A consumer who has paid two-thirds or more of the total of payments necessary to acquire ownership of the rental property and who has returned or voluntarily surrendered the rental property without judicial process during the applicable period set forth in subsection (a) of this section or who has made the property available for pickup at the request of the lessor, whichever occurs last, may reinstate the rental-purchase agreement prior to a date not less than 45 days after the date of the return of the rental property.</text> </level> <level label="d"> <text>Nothing in this section shall prevent a lessor from repossessing the property during the reinstatement period, but a repossession may not affect the consumer’s right to reinstate. After reinstatement, the lessor shall provide the consumer with the same rental property or a substitute property of comparable quality and condition.</text> </level> <level label="e"> <level label="1"> <text>A lessor may repossess property under a rental-purchase agreement if the consumer is in default of:</text> <level label="i"> <text>Any sum due under the agreement; or</text> </level> <level label="ii"> <text>The performance of any promise the breach of which is expressly made a ground for repossessing the property.</text> </level> </level> <level label="2"> <text>A lessor may repossess property only by legal process or self-help without the use of force. Nothing in this section authorizes a violation of criminal law.</text> </level> <level label="3"> <text>At the time of repossession of the property, the lessor shall deliver to the consumer a written notice which states the right of the buyer to reinstate the rental-purchase agreement, the last date by which the consumer may reinstate the agreement, and the amount payable for reinstatement.</text> </level> <level label="4"> <text>The consumer may reinstate the rental-purchase agreement within 15 days after the date of repossession by paying:</text> <level label="i"> <text>All past due rental charges;</text> </level> <level label="ii"> <text>The reasonable costs of pickup and redelivery; and</text> </level> <level label="iii"> <text>A reinstatement fee of $5.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1106.1" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <text>A lessor shall maintain a copy of the rental–purchase agreement for 3 years after the final payment on a rental–purchase agreement.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1107" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>A lessor shall provide the consumer with a written receipt for each payment under a rental–purchase agreement made in person by cash or money order, or, if the payment is made in any other form, on request.</text> </level> <level label="b"> <text>The written receipt shall contain the:</text> <level label="1"> <text>Total amount paid;</text> </level> <level label="2"> <text>Total amount due that week or month; and</text> </level> <level label="3"> <text>Total remaining rental payments necessary to acquire ownership of the item.</text> </level> </level> <level label="c"> <text>The lessor shall provide the consumer with a written statement of account within 3 days after the consumer’s request.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1108" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>When a rental-purchase agreement is satisfied and replaced by a new rental-purchase agreement between the lessor and consumer, the lessor and consumer shall negotiate a new rental-purchase agreement requiring new disclosures.</text> </level> <level label="b"> <text>The following do not require the negotiation of a new rental-purchase agreement:</text> <level label="1"> <text>The addition or return of rental property under a multiple-item agreement or the substitution of the rental property, if in either case the average payment allocable to a payment period is not changed by more than 25 percent;</text> </level> <level label="2"> <text>A deferral or extension of 1 or more rental payments, or portions of a rental payment;</text> </level> <level label="3"> <text>A reduction in charges in the rental-purchase agreement; or</text> </level> <level label="4"> <text>A rental-purchase agreement involved in a court proceeding.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1109" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>An advertisement for a rental-purchase agreement that refers to or states the dollar amount of any payment and the right to acquire ownership for any 1 specific item shall clearly and conspicuously state, as applicable:</text> <level label="1"> <text>That the transaction advertised is a rental-purchase agreement;</text> </level> <level label="2"> <text>The total cost and the number of payments necessary to acquire ownership; and</text> </level> <level label="3"> <text>That the consumer acquires no ownership right if the total amount necessary to acquire ownership is not paid.</text> </level> </level> <level label="b"> <text>Any owner, employee, or agent of any medium in which an advertisement appears or through which it is disseminated may not be liable for violations under this section.</text> </level> <level label="c"> <text>The requirements under subsection (a) of this section do not apply to an advertisement that:</text> <level label="1"> <text>Does not refer to or state the amount of any payment; or</text> </level> <level label="2"> <text>Is published in the yellow pages of a telephone directory or in any similar directory of business.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1110" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>A person who willfully and intentionally violates any provision of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not to exceed $500 per violation.</text> </level> <level label="b"> <text>For a violation of a provision of this subtitle, a consumer under a rental-purchase agreement may recover from the lessor committing the violation, or may set off by way of a counterclaim in an action brought by the lessor or its assignee, an amount equal to:</text> <level label="1"> <text>Actual damages; and</text> </level> <level label="2"> <text>$500 plus reasonable attorney’s fees and court costs.</text> </level> </level> <level label="c"> <text>A lessor or its assignee may not be held liable under this subtitle if the lessor or its assignee proves by a preponderance of the evidence:</text> <level label="1"> <text>That the violation was unintentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adopted to avoid that type of error; and</text> </level> <level label="2"> <text>That the lessor or its assignee corrected the error and refunded any money excessively charged due to the error, within 30 days after discovering or receiving notice of the error.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1110.1" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>A lessor may not bring a court action to recover property subject to a rental–purchase agreement until 15 days after the consumer has been sent notice of a default.</text> </level> <level label="b"> <text>Notice of default sent by certified mail to the consumer’s last known address constitutes notice.</text> </level> <level label="c"> <text>The notice shall include any amount the consumer must pay to reinstate the rental–purchase agreement, if applicable.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1111" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <level label="a"> <text>The following is an example of a form which shall be used to satisfy the disclosure requirements of §§ 12–1103(c) and 12–1104(a) of this subtitle:</text> <text>“Rental–Purchase Agreement </text> <text>(1.) Lessor(s): Lessee(s):</text> <text>Name ____________________________ Name ______________________________</text> <text>Address __________________________ Address ____________________________</text> <text>Telepohon no. _____________________ Telephone no. ______________________</text> <text>(2.) Description of Rental Property:</text> <text>Identification</text> <text>Item Quantity Number Condition</text> <text>______________ _______________ __________________ New _________________</text> <text>Used _________________</text> <text>Cash Price: ___________________________</text> <text>(3.) Total Initial Payment</text> <text>Rental Payment: $______________</text> <text>Delivery Charge: $______________</text> <text>Tax $______________</text> <text>Other (specify): $______________</text> <text>Total: $______________</text> <text>(4.) Rental Payments:</text> <text>Total Weekly Rental Payment: _________________ (includes tax)</text> <text>Total Monthly Rental Payment: _________________ (includes tax)</text> <text>(5.) Other Charges:</text> <text>In Home Pick–up Fee: $___________ </text> <text>Reinstatement Fee: $___________ </text> <text>Other (specify): $___________ </text> <text>(6.) Total Cost To Acquire Ownership:</text> <text>If you renew this rental agreement each week/month, for __________</text> <text>weeks/months, you will pay a total of $____________ to own the rental property. This amount includes your total initial payment but does not include other charges such as damage, reinstatement or pick–up fees for which you may be liable.</text> <text>(7.) Cost of Lease Services:</text> <text>The cost of lease services is the difference between the final purchase price of the rental property and the cash price of the rental property. The cost of lease services for the rental property is $__________.</text> <text>(8.) No Ownership Until Total Paid:</text> <text>You will not acquire ownership of the rental property until you pay the total rental payments necessary to acquire ownership, or unless you exercise an early purchase option. </text> <text>(9.) Early Purchase Option:</text> <text>You may purchase the rental property at any time after your first rental payment. </text> <text>(Describe formula or method here)</text> <text>(10.) Maintenance:</text> <text>We (lessor) are responsible for maintaining the rental property in good working condition while it is being rented. We will provide all necessary service, repair or replacement (specify if in home or in store) if you notify us by phone or mail that service is needed. We will not be responsible for repairs done by anyone other than us. </text> <text>(11.) Warranty:</text> <text>If allowed by the manufacturer, the manufacturer’s express warranty covering the rental property rented under this agreement will be transferred to you if, and at the time, you acquire ownership of the rental property. </text> <text>(12.) Damages:</text> <text>You (lessee) are entirely responsible for loss, damages, theft or destruction of the rental property while it is in your possession. Your liability for such damage will not exceed the early purchase option price of the rental property as of the date it is lost, stolen, damaged or destroyed. </text> <text>(13.) Termination:</text> <text>You (lessee) may terminate this agreement without penalty at the end of any weekly or monthly term by returning the rental property to us in good condition. You will be liable for any unpaid rental payments due upon the date of return.</text> <text>(14.) Reinstatement:</text> <text>If you (lessee) fail to make a timely payment, you may reinstate the agreement without penalty, if: </text> </level> <level label="1"> <text>) You pay all past due rental charges and a reinstatement fee within 2 days (weekly renters) or 5 days (monthly renters) of your renewal date; or</text> </level> <level label="2"> <text>) You return or voluntarily surrender the rental property within 2 days (weekly renters) or 5 days (monthly renters) of your renewal date. If you choose to reinstate the agreement after returning the rental property, you will have up to 21 days (or longer depending on how long you have rented the rental property) to pay all past due rental charges, a reinstatement fee and a reasonable redelivery fee if we deliver the rental property.</text> <text>I have read the above disclosures before signing this rental–purchase agreement. </text> <text>Lessee(s): ______________________________ Date: ___________________</text> <text>______________________________ .”</text> </level> <level label="b"> <text>The following is an example of a form which shall be used to satisfy the disclosure requirements of §§ 12–1103(c) and 12–1104(b) of this subtitle:</text> <text>Summary of Costs of Your Rental–Purchase Agreement</text> <text>Cash Price Scheduled Final Purchase Cost of Lease</text> <text>Payments Price Services</text> <text>The price of the The amount you The amount you The cost of your</text> <text>rental property if pay per will have paid rental–purchase.</text> <text>purchased in– week/month. after all payments</text> <text>store at the time made all payments</text> <text>of consummation. as scheduled.</text> <text>$ __________ $ __________ $ __________ $ __________</text> <text>Timing of Payments: Payment in the amount of $ ________________ is due on a (weekly/bi–weekly/semi–monthly/monthly) basis.</text> <text>Early Payment Option: You have the right to purchase the rental property prior to the date listed above for (enter formula).</text> <text>Termination: You have the right to terminate this rental–purchase agreement at the end of any term by surrendering the rental property to the lessor.</text> <text>The disclosures above are part of the terms and conditions of your rental–purchase agreement with (company name). Lessee(s): _________________________________ Date: ________________________ _________________________________</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1111.1" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <text>The Attorney General’s Web site shall include the sample forms in § 12–1111 of this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1112" title_number="12" title_name="Credit Regulations" subtitle_number="11" subtitle_name="Maryland Rental-Purchase Agreement Act"> <text>This subtitle may be cited as the Maryland Rental-Purchase Agreement Act.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1201" title_number="12" title_name="Credit Regulations" subtitle_number="12" subtitle_name="Reverse Mortgage Loans Act"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Arranger of financing” means a person that:</text> <level label="1"> <text>For a fee or other valuable consideration, whether received directly or indirectly, aids or assists a borrower in obtaining a reverse mortgage loan; and</text> </level> <level label="2"> <text>Is not named as the lender in the reverse mortgage loan agreement.</text> </level> </level> <level label="c"> <text>“Borrower” means an individual who makes a loan application for or receives a reverse mortgage loan.</text> </level> <level label="d"> <text>“Counseling agency” means an entity approved by the U.S. Department of Housing and Urban Development to provide counseling regarding reverse mortgage loans.</text> </level> <level label="e"> <text>“Dwelling” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="f"> <text>“Lender” means a person who makes a reverse mortgage loan.</text> </level> <level label="g"> <text>“Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> <level label="h"> <text>“Reverse mortgage loan” means a nonrecourse loan that:</text> <level label="1"> <text>Is secured by the borrower’s principal dwelling;</text> </level> <level label="2"> <text>Provides the borrower with purchase money proceeds, a lump sum payment, periodic cash advances, a line of credit, or any combination of those payment plans based on the equity in or value of the borrower’s principal dwelling; and</text> </level> <level label="3"> <text>Requires no payment of principal or interest until the full loan becomes due and payable.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1202" title_number="12" title_name="Credit Regulations" subtitle_number="12" subtitle_name="Reverse Mortgage Loans Act"> <level label="a"> <text>The provisions of this subtitle:</text> <level label="1"> <text>Apply to a reverse mortgage loan secured by a borrower’s principal dwelling in the State; and</text> </level> <level label="2"> <text>Are in addition to any other applicable provisions of law.</text> </level> </level> <level label="b"> <text>If a provision of this subtitle conflicts with any provision of this title, the provision of this subtitle applies.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1203" title_number="12" title_name="Credit Regulations" subtitle_number="12" subtitle_name="Reverse Mortgage Loans Act"> <text>This subtitle does not require a lender that offers to make a reverse mortgage loan to offer a reverse mortgage loan:</text> <level label="1"> <text>With any one or more particular payment plans; or</text> </level> <level label="2"> <text>To a prospective borrower who holds title to a dwelling in other than fee simple interest.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1204" title_number="12" title_name="Credit Regulations" subtitle_number="12" subtitle_name="Reverse Mortgage Loans Act"> <level label="a"> <text>Except as otherwise provided in this subtitle, a lender that offers or makes a reverse mortgage loan secured by a dwelling in the State shall conform to the requirements of 12 U.S.C. § 1715z–20, and any regulations and guidance adopted under 12 U.S.C. § 1715z–20, regardless of whether the reverse mortgage loan is insured under 12 U.S.C. § 1715z–20.</text> </level> <level label="b"> <text>Except as otherwise provided in this subtitle, an arranger of financing that aids or assists, or offers to aid or assist, a borrower in obtaining a reverse mortgage loan secured by a dwelling in the State shall conform to the requirements of 12 U.S.C. § 1715z–20, and any regulations and guidance adopted under 12 U.S.C. § 1715z–20, regardless of whether the reverse mortgage loan is insured under 12 U.S.C. § 1715z–20.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1205" title_number="12" title_name="Credit Regulations" subtitle_number="12" subtitle_name="Reverse Mortgage Loans Act"> <level label="a"> <text>A reverse mortgage loan that is not insured under 12 U.S.C. § 1715z–20 is not subject to the provisions in 12 U.S.C. § 1715z–20, or in any regulations or guidance adopted under 12 U.S.C. § 1715z–20, that:</text> <level label="1"> <text>Limit origination fees to $6,000 as adjusted under 12 U.S.C. § 1715z–20(r);</text> </level> <level label="2"> <text>Impose maximum claim amounts or other loan limit restrictions; or</text> </level> <level label="3"> <text>Require government insurance for the loan.</text> </level> </level> <level label="b"> <text>A lender or an arranger of financing is not subject to the federal regulatory approval requirements of 24 C.F.R., Part 202 when making or arranging a reverse mortgage loan that is not insured under 12 U.S.C. § 1715z–20.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1206" title_number="12" title_name="Credit Regulations" subtitle_number="12" subtitle_name="Reverse Mortgage Loans Act"> <level label="a"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, a lender or an arranger of financing may not require a borrower to purchase an annuity, a long–term care policy, or other financial or insurance product as a condition to obtaining a reverse mortgage loan.</text> </level> <level label="2"> <text>A lender or an arranger of financing may require a borrower to purchase title insurance, hazard, flood, or other peril insurance, and any other financial or insurance product that is required for reverse mortgage loans insured under 12 U.S.C. § 1715z–20.</text> </level> </level> <level label="b"> <text>A lender or an arranger of financing may not refer a borrower to any person for the purchase of an annuity or any other financial or insurance product before the later of:</text> <level label="1"> <text>The closing of the reverse mortgage loan; or</text> </level> <level label="2"> <text>The expiration of the borrower’s right to rescind the reverse mortgage loan agreement.</text> </level> </level> <level label="c"> <text>This section does not prohibit a lender or an arranger of financing from offering to a borrower, or referring a borrower to a person for the purchase of:</text> <level label="1"> <text>Title insurance;</text> </level> <level label="2"> <text>Hazard, flood, or other peril insurance; or</text> </level> <level label="3"> <text>Other products that are customary under a reverse mortgage loan.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1207" title_number="12" title_name="Credit Regulations" subtitle_number="12" subtitle_name="Reverse Mortgage Loans Act"> <level label="a"> <text>On receiving an application for a reverse mortgage loan, a lender or an arranger of financing shall provide a prospective borrower with a written checklist, written in 12 point type or larger, advising the borrower to discuss the following issues with a counseling agency counselor:</text> <level label="1"> <text>How unexpected medical or other events that cause the borrower to move out of the borrower’s home earlier than anticipated will impact the total annual cost of the reverse mortgage loan;</text> </level> <level label="2"> <text>The extent to which the borrower’s financial needs would be better met by options other than a reverse mortgage loan, including less costly home equity lines of credit, property tax deferral programs, or governmental aid programs;</text> </level> <level label="3"> <text>Whether the borrower intends to use the proceeds of the reverse mortgage loan to purchase an annuity or other financial or insurance product and the consequences of doing so;</text> </level> <level label="4"> <text>The effect of repayment of the reverse mortgage loan on other residents of the home securing the reverse mortgage loan after all borrowers have died or permanently left the home;</text> </level> <level label="5"> <text>The borrower’s ability to finance routine or catastrophic home repairs, especially if maintenance is a factor that may determine when the reverse mortgage loan becomes payable;</text> </level> <level label="6"> <text>The impact that the reverse mortgage loan may have on the borrower’s tax obligations and eligibility for government assistance programs, and the effect that losing equity in the home securing the reverse mortgage loan will have on the borrower’s estate and heirs; and</text> </level> <level label="7"> <text>The ability of the borrower to finance alternative living accommodations, such as assisted living or long–term care, after the borrower’s equity is depleted.</text> </level> </level> <level label="b"> <text>If an individual obtains counseling on reverse mortgage loans from a counseling agency before applying for a reverse mortgage loan, the counseling agency shall provide the individual with the written checklist required under subsection (a) of this section.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1208" title_number="12" title_name="Credit Regulations" subtitle_number="12" subtitle_name="Reverse Mortgage Loans Act"> <level label="a"> <text>Except as otherwise provided in this section:</text> <level label="1"> <text>A lender or arranger of financing for a reverse mortgage loan insured under 12 U.S.C. § 1715z–20 that violates this subtitle is subject to the penalties provided in 12 U.S.C. § 1715z–20, and in any regulations and guidance adopted under 12 U.S.C. § 1715z–20; and</text> </level> <level label="2"> <text>A lender or arranger of financing for a reverse mortgage loan not insured under 12 U.S.C. § 1715z–20 that violates this subtitle:</text> <level label="i"> <text>Engages in an unfair or deceptive trade practice within the meaning of Title 13 of this article; and</text> </level> <level label="ii"> <text>Is subject to the enforcement and penalty provisions contained in Title 13 of this article, except § 13–411.</text> </level> </level> </level> <level label="b"> <text>A violation of this subtitle does not constitute a violation of any other subtitle of this title.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1301" title_number="12" title_name="Credit Regulations" subtitle_number="13" subtitle_name="Mortgage Loans -- Notice of Housing Counseling Programs and Services"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Borrower” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="c"> <text>“Home buyer education or housing counseling” means instruction on preparing for home ownership, shopping for a home, obtaining a mortgage, loan closing, and life as a homeowner.</text> </level> <level label="d"> <text>“Lender” means a person that makes a mortgage loan.</text> </level> <level label="e"> <text>“Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article.</text> </level> <level label="f"> <text>“Secondary mortgage loan” means a mortgage loan secured by residential real property that is subject to the lien of one or more prior mortgage loans.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1302" title_number="12" title_name="Credit Regulations" subtitle_number="13" subtitle_name="Mortgage Loans -- Notice of Housing Counseling Programs and Services"> <level label="a"> <text>This subtitle applies to any lender that makes a mortgage loan secured by owner–occupied residential real property located in the State.</text> </level> <level label="b"> <text>This subtitle does not apply to:</text> <level label="1"> <text>A secondary mortgage loan;</text> </level> <level label="2"> <text>An open–end or revolving home equity line of credit;</text> </level> <level label="3"> <text>A construction loan;</text> </level> <level label="4"> <text>An individual who takes back a deferred purchase money mortgage in connection with the sale of residential real property owned by, and titled in the name of, the individual; or</text> </level> <level label="5"> <text>An individual who makes a mortgage loan to a borrower who is the individual’s spouse, child, child’s spouse, parent, sibling, grandparent, grandchild, or grandchild’s spouse.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1303" title_number="12" title_name="Credit Regulations" subtitle_number="13" subtitle_name="Mortgage Loans -- Notice of Housing Counseling Programs and Services"> <level label="a"> <text>Unless the lender is otherwise required by federal or State law to refer the borrower to housing counseling, a lender shall provide to a borrower a written notice, in the form specified in regulations adopted by the Department of Housing and Community Development, in consultation with the Commissioner of Financial Regulation, that includes:</text> <level label="1"> <text>A statement recommending that the borrower complete home buyer education or housing counseling; and</text> </level> <level label="2"> <text>Information about home buyer education and housing counseling programs and services provided by nonprofit and government organizations certified by the U.S. Department of Housing and Urban Development that are available to residents of the State.</text> </level> </level> <level label="b"> <text>The Department of Housing and Community Development shall provide and maintain the information required under subsection (a)(2) of this section.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1304" title_number="12" title_name="Credit Regulations" subtitle_number="13" subtitle_name="Mortgage Loans -- Notice of Housing Counseling Programs and Services"> <text>A lender may not close on a mortgage loan unless the lender has provided to the borrower the notice required under § 12–1303 of this subtitle.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1401" title_number="12" title_name="Credit Regulations" subtitle_number="14" subtitle_name="Credit Card Processors"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <level label="1"> <text>“Credit card processor” means a person that processes credit card or electronic commerce transactions on behalf of a business entity for a fee.</text> </level> <level label="2"> <text>“Credit card processor” includes:</text> <level label="i"> <text>A merchant services provider;</text> </level> <level label="ii"> <text>A financial institution;</text> </level> <level label="iii"> <text>An independent sales organization; and</text> </level> <level label="iv"> <text>Any subsidiary or affiliate of an entity listed in items (i) through (iii) of this paragraph.</text> </level> </level> </level> <level label="c"> <text>“Merchant processing agreement” means a contract between a credit card processor and a business entity under which the business entity agrees to pay the credit card processor for processing credit card or electronic commerce transactions on behalf of the business entity.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1402" title_number="12" title_name="Credit Regulations" subtitle_number="14" subtitle_name="Credit Card Processors"> <text>This subtitle does not apply to a merchant processing agreement between a credit card processor and a business entity:</text> <level label="1"> <text>That may be terminated without assessment of fees, fines, penalties, or liquidated damages; or</text> </level> <level label="2"> <text>If at the time of entry into the merchant processing agreement, the business entity employs 50 or more employees or reasonably estimates that it will generate more than $2,000,000 in credit card or electronic commerce transactions each year.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1403" title_number="12" title_name="Credit Regulations" subtitle_number="14" subtitle_name="Credit Card Processors"> <level label="a"> <text>If a business entity cancels a merchant processing agreement before the expiration of the initial term agreed on by the credit card processor and the business entity, the credit card processor may not assess or charge a fee, fine, or penalty that exceeds $500.</text> </level> <level label="b"> <text>If a business entity terminates the merchant processing agreement after the expiration of the initial term agreed on by a credit card processor and a business entity, the credit card processor may not assess a fee, fine, or penalty, unless a credit card processor and a business entity have entered into a separate renewal merchant processing agreement.</text> </level> <level label="c"> <text>Subject to subsection (d) of this section, a merchant processing agreement shall disclose clearly and conspicuously in bold, 12 point font the following information:</text> <level label="1"> <text>The amount of any early termination fee, fine, penalty, or liquidated damages that may be assessed by the credit card processor for termination of a merchant processing agreement before the expiration of the initial term;</text> </level> <level label="2"> <text>The expiration date of the merchant processing agreement;</text> </level> <level label="3"> <text>The renewal date of the merchant processing agreement; and</text> </level> <level label="4"> <text>The customer service contact information of the credit card processor, including telephone number, mailing address, and e–mail address.</text> </level> </level> <level label="d"> <text>The information required under subsection (c) of this section shall be:</text> <level label="1"> <text>Provided on the signature page of a merchant processing agreement; and</text> </level> <level label="2"> <text>Initialed separately by the business entity.</text> </level> </level> <level label="e"> <text>The credit card processor shall provide a copy of the merchant processing agreement in electronic or paper form to the business entity at the time the business entity signs the merchant processing agreement.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1404" title_number="12" title_name="Credit Regulations" subtitle_number="14" subtitle_name="Credit Card Processors"> <text>If a complaint about a violation of § 12–1403 of this subtitle is filed with the Commissioner of Financial Regulation, the Commissioner may investigate the complaint and use any of the investigative and enforcement powers provided under Title 2, Subtitle 1 of the Financial Institutions Article.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1501" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <level label="a"> <text>In this subtitle the following terms have the meanings indicated.</text> </level> <level label="b"> <text>“Bank” has the meaning stated in § 1–201 of this article.</text> </level> <level label="c"> <text>“Consumer–directed earned wage access” means delivery to a consumer of access to unpaid but earned wages:</text> <level label="1"> <text>That is provided to a consumer by a third party who does not have a relationship with the consumer’s employer;</text> </level> <level label="2"> <text>That is based on employment, income, or attendance data obtained directly from the consumer; and</text> </level> <level label="3"> <text>Where the consumer does not pay the provider interest.</text> </level> </level> <level label="d"> <text>“Consumer reporting agency” has the meaning stated in § 14–1201 of this article.</text> </level> <level label="e"> <text>“Earned wage” means salary, wages, compensation, or other income earned:</text> <level label="1"> <text>On an hourly, project–based, piecework, or other basis; or</text> </level> <level label="2"> <text>Through services rendered as an independent contractor.</text> </level> </level> <level label="f"> <text>“Earned wage access” means:</text> <level label="1"> <text>Consumer–directed earned wage access; or</text> </level> <level label="2"> <text>Employer–integrated earned wage access.</text> </level> </level> <level label="g"> <text>“Employer–integrated earned wage access” means delivery of unpaid but earned wages:</text> <level label="1"> <text>That are provided to a consumer directly by a person the employer has contracted to provide the service;</text> </level> <level label="2"> <text>That are determined based on employment, income, or attendance data obtained directly or indirectly from the consumer’s employer, including a payroll service provider; and</text> </level> <level label="3"> <text>Where the consumer does not pay the provider interest.</text> </level> </level> <level label="h"> <level label="1"> <text>“Fee” means:</text> <level label="i"> <text>A fee imposed by a provider for delivery or expedited delivery of earned wage access to a consumer; or</text> </level> <level label="ii"> <text>A subscription or membership fee imposed by a provider for a group of services that includes earned wage access.</text> </level> </level> <level label="2"> <text>“Fee” does not include a voluntary tip, gratuity, or other donation.</text> </level> </level> <level label="i"> <level label="1"> <text>“Interest” has the meaning stated in § 12–101 of this title.</text> </level> <level label="2"> <text>“Interest” does not include a fee imposed by an earned wage access provider licensed under Title 11, Subtitle 2 of the Financial Institutions Article.</text> </level> </level> <level label="j"> <level label="1"> <text>“Loan” has the meaning stated in § 12–101 of this title.</text> </level> <level label="2"> <text>“Loan” includes earned wage access, subject to the provisions of this subtitle.</text> </level> </level> <level label="k"> <text>“Payroll period” means a period of time during which a consumer earns wages that an employer owes to the employee at the end of the period.</text> </level> <level label="l"> <text>“Proceeds” means a payment to a consumer by a provider that is based on unpaid but earned wages.</text> </level> <level label="m"> <level label="1"> <text>“Provider” means a person who provides to consumers either consumer–directed earned wage access or employer–integrated earned wage access.</text> </level> <level label="2"> <text>“Provider” does not include:</text> <level label="i"> <text>A service provider, such as a payroll service provider, that may verify the available earnings of a consumer but that is not contractually obligated to fund any proceeds delivered as part of an earned wage access service; or</text> </level> <level label="ii"> <text>An employer that offers a portion of salary, wages, or other compensation directly to its employees or independent contractors before a normally scheduled pay date for a payroll period.</text> </level> </level> </level> <level label="n"> <text>“Tip” has the meaning stated in § 12–101 of this title.</text> </level> <level label="o"> <text>“Wages” has the meaning stated in § 12–101 of this title.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1502" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <level label="a"> <text>A person may not engage in the business of providing earned wage access unless the person is licensed under or is exempt from the licensing requirements of Title 11, Subtitle 2 of the Financial Institutions Article.</text> </level> <level label="b"> <text>Failure to obtain a consumer loan license shall subject a provider to the enforcement provisions of Title 11, Subtitle 2 of the Financial Institutions Article.</text> </level> <level label="c"> <text>An earned wage access provider licensed under Title 11, Subtitle 2 of the Financial Institutions Article and subject to this subtitle is exempt from other provisions of State law governing lending, credit, or debt, including the provisions of Subtitle 1, Subtitle 3, Subtitle 9, and Subtitle 10 of this title.</text> </level> <level label="d"> <text>Earned wage access services provided in accordance with this subtitle may not be considered:</text> <level label="1"> <text>A money transmission; or</text> </level> <level label="2"> <text>A violation of or noncompliance with State laws governing deductions from payroll, salary, wages, compensation, or other income or the purchase, sale, assignment, or order for unpaid but earned wages.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1503" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <level label="a"> <text>A provider of earned wage access shall:</text> <level label="1"> <text>Develop and implement policies and procedures to respond to questions raised by consumers;</text> </level> <level label="2"> <text>Address complaints from consumers in an expedient manner;</text> </level> <level label="3"> <text>Whenever the provider offers a consumer the option to receive earned wage access services for a fee, offer the consumer at least one reasonable option to obtain earned wage access at no cost to the consumer;</text> </level> <level label="4"> <text>Clearly explain to a consumer how to elect a no–cost option described in item (3) of this subsection;</text> </level> <level label="5"> <text>Before entering into an agreement with a consumer for the provision of earned wage access services:</text> <level label="i"> <text>Inform the consumer of the consumer’s rights under the agreement; and</text> </level> <level label="ii"> <text>Fully and clearly disclose all fees associated with the earned wage access services;</text> </level> </level> <level label="6"> <text>Inform a consumer of any material changes to the terms and conditions of the earned wage access services before implementing those changes for that consumer;</text> </level> <level label="7"> <text>Allow a consumer to cancel use of the provider’s earned wage access services at any time without incurring a cancellation fee imposed by the provider;</text> </level> <level label="8"> <text>Comply with all applicable local, state, and federal privacy and information security laws;</text> </level> <level label="9"> <text>Clearly and conspicuously disclose in the provider’s service contract with the consumer that the provider is prohibited by law from soliciting or retaining tips, gratuities, or other donations;</text> </level> <level label="10"> <text>Provide proceeds to a consumer by any means mutually agreed upon by the consumer and the provider; and</text> </level> <level label="11"> <text>Except as provided in subsection (b) of this section, if the provider will seek repayment of outstanding proceeds or payment of fees or other amounts owed or incurred from a consumer’s account at a bank in connection with earned wage access services covered by this subtitle, including by means of electric fund transfer:</text> <level label="i"> <text>Comply with the federal Electronic Fund Transfer Act and regulations adopted to implement the Act; and</text> </level> <level label="ii"> <text>Reimburse the consumer within 5 business days for the full amount of any overdraft or nonsufficient fund fees imposed on a consumer by the consumer’s bank that were caused by the provider attempting to seek repayment of any outstanding proceeds or payment of fees in connection with earned wage access services covered by this subtitle.</text> </level> </level> </level> <level label="b"> <text>Subsection (a)(11) of this section does not apply to a provider seeking repayment of outstanding proceeds or payment of fees or other amounts owed that were received or incurred by a consumer through fraudulent or other unlawful means.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1504" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <text>A provider of earned wage access may not:</text> <level label="1"> <text>Share with an employer any charges received from a consumer for earned wage access;</text> </level> <level label="2"> <text>Solicit or charge a tip;</text> </level> <level label="3"> <text>Condition a consumer’s ability to obtain earned wage access on the consumer’s ability or willingness to pay the provider a tip;</text> </level> <level label="4"> <text>Charge a consumer a late fee, interest, or other penalty for failure to pay any proceeds or fees;</text> </level> <level label="5"> <text>Report any information about a consumer’s failure to pay any proceeds or fees to any consumer reporting agency;</text> </level> <level label="6"> <text>Obtain a consumer’s credit report as a method of qualifying the consumer for earned wage access;</text> </level> <level label="7"> <text>Receive interest from a consumer; or</text> </level> <level label="8"> <text>Compel or attempt to compel payment by a consumer of any proceeds, fees, tips, gratuities, or other donations through:</text> <level label="i"> <text>A civil action against the consumer;</text> </level> <level label="ii"> <text>The use of a third party to pursue collection from the consumer on the provider’s behalf; or</text> </level> <level label="iii"> <text>The sale or assignment of outstanding amounts to a third–party collector or debt buyer for collection from the consumer.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1505" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <text>A provider of earned wage access may charge a fee for delivery or expedited delivery of earned wage access to a consumer not exceeding:</text> <level label="1"> <text>$5.00 for any advance of proceeds equal to or less than $75.00; or</text> </level> <level label="2"> <text>$7.50 for any advance of proceeds greater than $75.00.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1506" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <text>On or before July 1 each year, beginning in 2026, a provider of earned wage access shall submit a report to the Office of Financial Regulation that includes any information considered necessary by the Commissioner, as prescribed by regulation, to assess the size and status of the earned wage access market in the State.</text> </section> <section article="gcl" article_name="Commercial Law" number="12-1507" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <level label="a"> <text>A provider may not directly or indirectly print, publish, distribute, or broadcast any false, misleading, or deceptive statement regarding the fees, rates, terms, or conditions of earned wage access.</text> </level> <level label="b"> <level label="1"> <text>If fees or rates of fees are advertised by a licensee, the Commissioner may require the licensee to state the fees or rates of fees fully and clearly in any manner the Commissioner considers necessary to prevent misunderstanding by a prospective consumer.</text> </level> <level label="2"> <text>Subject to any condition which the Commissioner may impose to prevent a false impression regarding the scope or degree of protection provided by this subtitle, the Commissioner may authorize or require a licensee to refer to the fact that the licensee is under State supervision in the advertising materials of the licensee.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1508" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <level label="a"> <text>In granting or denying a consumer request for earned wage access, a licensee may not discriminate against any consumer on the basis of race, color, creed, national origin, sex, sexual orientation, gender identity, disability, marital status, or age.</text> </level> <level label="b"> <text>Denying a request for earned wage access by a consumer who is a minor is not discrimination on the basis of age.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1509" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <level label="a"> <text>A licensee or a person exempt from licensing under this subtitle is not subject to a penalty for a violation that arises because the licensee or person exempt from licensing in good faith:</text> <level label="1"> <text>Performed or omitted to perform an act in conformity with or in reliance on:</text> <level label="i"> <text>A written opinion of the Attorney General of Maryland or a regulation adopted by the Commissioner;</text> </level> <level label="ii"> <text>A written opinion by the Commissioner given on request of the licensee or person exempt from licensing; or</text> </level> <level label="iii"> <text>An interpretation by the Commissioner in a written notice or examination report; or</text> </level> </level> <level label="2"> <text>Used a form or procedure that has been approved in writing by the Commissioner and the Attorney General.</text> </level> </level> <level label="b"> <text>The provisions of subsection (a) of this section do not apply to an act or omission to act that occurs after:</text> <level label="1"> <text>The opinion, regulation, or interpretation relied on is amended, repealed, or determined to be invalid for any reason by any judicial or other authority; or</text> </level> <level label="2"> <text>Approval for a form or procedure is amended, rescinded, or determined to be invalid for any reason by any judicial or other authority.</text> </level> </level> <level label="c"> <text>This section may not be construed to:</text> <level label="1"> <text>Limit the imposition of any civil or criminal penalty for a knowing or willful violation of this subtitle; or</text> </level> <level label="2"> <text>Limit the power of the Commissioner or the courts to order a refund to a consumer of money collected in violation of this subtitle.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="12-1510" title_number="12" title_name="Credit Regulations" subtitle_number="15" subtitle_name="Earned Wage Access"> <text>The Commissioner may adopt regulations to carry out this subtitle.</text> </section>