In this subtitle the following words have the meanings indicated. “Borrower” means a person who borrows money under this subtitle. “Commercial loan” means a loan which is made: Solely to acquire or carry on a business or commercial enterprise; or To any business or commercial organization. “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. “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. “Lender” means a licensee or a person who makes a loan subject to this subtitle. “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. “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. “Loan” does not include: 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; 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 An installment sale agreement as defined in § 12–601 of this title. “Mobile home” has the meaning stated in § 11–501 of the Financial Institutions Article. “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. “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. “Simple interest” means interest charged on the principal amount loaned to the borrower. “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. “Tip” means a voluntary payment by a consumer to a lender or third party who provides or arranges a loan: Made at the time of the transaction in recognition of the lender’s or third party’s provision or arrangement of the loan; Made at the sole discretion of the consumer; and 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. “Tip” does not include any payment made by a consumer for expedited processing or disbursement or for a membership, registration, or subscription fee. “Usury” means the charging of interest by a lender in an amount which is greater than that allowed by this subtitle. “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.

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. 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. 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: For an amount over $25,000; or For an amount of $25,000 or less; and Not subject to Subtitle 3 of this title.

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.

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. 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. 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: 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; 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; 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; If the loan is for the purchase of consumer goods, the loan contract complies with § 12–117 of this subtitle; and The loan does not include a balloon payment, unless payment in full is due on demand or in one year or less. A lender may charge interest at any effective rate of simple interest 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; The loan is secured by a first mortgage or first deed of trust on any interest in residential real property; There is no prepayment penalty in connection with the loan; The loan is made and the mortgage or deed of trust is executed after the effective date of this section; 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: 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 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 The lender does not require payment of any interest in advance except any points permitted under this subtitle. 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. 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. The provisions of subparagraph (i) of this paragraph do not apply to: A purchase money loan; 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 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. 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. 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: 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; 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; 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; If the loan is for the purchase of consumer goods, the loan contract complies with § 12–117 of this subtitle; and The loan does not include a balloon payment, unless payment in full is due on demand or in 1 year or less. The rates permitted by this subsection may be charged only if: There is a written agreement signed by the borrower which sets forth the stated rate of interest charged by the lender; The loan is not secured by a first mortgage or first deed of trust on real property; The borrower is required to repay the loan in periodic installments, which may be regular, irregular, equal or unequal installments; 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; The loan is not secured by an instrument in which blanks are left to be filled after execution; The loan is not secured by a note, promise to pay, or security instrument which does not state: The principal amount of the loan; A schedule of payments or a description of the schedule; and The agreed amount or rate of interest, charges, and fees to be charged; The loan is not secured by real property; The loan is not secured by personal property for any loan under $700 in value or amount; and The loan is not fully secured by investment securities or savings accounts. 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. 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. A lender may charge interest at any rate not in excess of that permitted by federal law if the loan is: Secured by a mortgage or deed of trust; Insured or guaranteed in full or in part by the Federal Housing Administration, Veterans Administration, or any other federal agency or instrumentality; and Made in full compliance with applicable federal law. A lender may charge interest at any rate if the loan is: A loan made to a corporation; A commercial loan in excess of $15,000 not secured by residential real property; or A commercial loan in excess of $75,000 secured by residential real property. Commercial loans to individuals secured by residential real property shall comply with the provisions of § 12–407.1 of this article. 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. 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: The debit balance is payable on demand; and The debit balance is secured by securities as defined in § 11–101(s) of the Corporations and Associations Article.

Interest at a rate otherwise allowed by this subtitle is not usurious solely because of any one or more of the following: 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; Interest on a periodic payment of principal is computed to the due date; or Except for installment loans made under § 12-103(c) of this subtitle: Interest-drop calculations are made on sums not in excess of multiples of $100, without regard to interim partial payments; or Interest-drop calculations are made on periods not in excess of one year, without regard to interim partial payments.

In this section, “mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article. 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. 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: A service charge for investigation and the continued servicing of collateral for a commercial loan secured by inventory or accounts receivable; A service charge made by a broker or dealer dealing in investment securities if: Money is advanced on the security of pledged investment securities; and 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; 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: The delinquency has continued for at least 15 calendar days; and A delinquent or late charge has not already been charged for the same delinquency; and 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: May be imposed only on prepayments made within 3 years from the date the loan is made; and 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. 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. 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: Charges by the lender’s attorney for service rendered in connection with the preparation, closing, or disbursement of the loan; Charges for the payment of any property expense, tax, or governmental charge; and Charges for the payment of any premium and cost for insuring: The lender against loss or liability on or in connection with the loan; or The life or health of the borrower. 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.

This section does not apply to any loan: Described in § 12-103(e) of this subtitle; or Made under Title 18, Subtitle 10 of the Education Article. Before the execution of a loan contract under this title, the lender shall furnish to the borrower a written statement which sets forth: 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; The annual effective rate of simple interest charged, stated in percentage calculated to the nearest 0.2 percent; and 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. 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. 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. 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. 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: Payments credited to reducing the principal; Payments credited to interest as defined in this subtitle; and The remaining unpaid principal balance.

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. 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. 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. This section may not affect the rebuttable presumption that the loan was made for commercial purposes. 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.

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.

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. 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: 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 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. 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: 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; 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 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.

In this section the following words have the meanings indicated. “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. “Lending institution” means a bank, savings bank, or savings and loan association doing business in Maryland. “Water and sewer facilities assessment” means a fee or charge that is: 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 Paid to the lienholder of the lien recorded on the residential real property for public water and wastewater facilities. “Water and sewer facilities assessment” includes a front foot benefit fee or charge. 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. Interest on these funds shall be: 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; Computed on the average monthly balance in the escrow account; and Paid annually to the borrower by crediting the escrow account with the amount of interest due. The lending institution shall annually provide the borrower with a statement of the escrow balance. 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. 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. 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.

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. 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: Reduce the principal; or Pay interest or other loan charges. 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: Receiving a refund of the excess amount; Applying the excess amount to the payment of principal and interest; or Leaving the excess amount in the escrow account. A refund of any excess amount shall be made: Within 60 days after the receipt by the lender of the borrower’s request for a refund; or 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. 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. 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. 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. 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. Interest may be charged by a lender or a servicer of a loan under subparagraph (ii) of this paragraph only if: 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; The need for the advance was not caused by an error of the lender or servicer in servicing the loan; The lender or servicer provides notice to the borrower that the advance was made and that interest will be charged on the advance; 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; 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 The borrower is permitted to repay the advance as permitted by the federal Real Estate Settlement Procedures Act.

In this section the following terms have the meanings indicated. “Escrow account” has the meaning stated in § 12-109 of this subtitle. “Lender” includes a lender and assignee of a lender. “Mortgage” includes a mortgage and a deed of trust. Funds in any escrow account shall be kept separate from and may not be commingled with the funds of the lender. A lender may place escrow funds received in connection with more than one mortgage into a single escrow account. 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. A lender may not impose a collection fee or service charge on the maintenance of an escrow account on a first mortgage.

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.

This section does not apply to a loan subject to § 12–114.1 of this subtitle. A private action for usury under this subtitle may not be brought more than 6 months after the loan is satisfied.

This section does not apply to a loan subject to § 12–114.1 of this subtitle. 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.

Except as provided in subsection (b) of this section, a lender may not refuse to lend money to any person solely because of: Geographic area or neighborhood; or Race, creed, color, age, sex, sexual orientation, gender identity, disability, marital status, handicap, or national origin. A lender may refuse to make a loan: On property outside a geographic area of the State in which the lender normally does business; To be used in a type of business or activity other than a type in connection with which the lender normally makes loans; or Because of a greater than normal risk, including one due to: The presence of an airport; An unusual drainage condition; or Any other situation which causes a greater than normal risk of loss in a particular area.

This section does not apply to a loan subject to § 12–114.1 of this subtitle. Any person who violates the usury provisions of this subtitle shall forfeit to the borrower the greater of: Three times the amount of interest and charges collected in excess of the interest and charges authorized by this subtitle; or The sum of $500. A claim or plea of usury is not valid if, within 30 days from the date the loan contract was executed, the lender: Notifies the borrower and any other party to the loan contract that the loan was usurious; and Agrees to modify it by substituting for the usurious rate of interest a legal rate of interest not exceeding the stated rate of interest. 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. 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.

In this section the following words have the meanings indicated. “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. “Covered loan” does not include: 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; 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 An installment sale agreement as defined in § 12–601 of this title. “Unlicensed person” means a person who is not: Licensed in the State to make a covered loan; and Exempt from licensing in the State. This section applies to a covered loan made to any person. An unlicensed person may not make a covered loan. 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. A person may not make a covered loan that violates the federal Military Lending Act. A covered loan made by an unlicensed person is void and unenforceable. 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. A covered loan is not void and unenforceable if: 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 A person corrects the error or mistake before the first payment is due under the loan. A covered loan that violates the federal Military Lending Act is void and unenforceable. With respect to a loan that is void and unenforceable under this section, a person may not: Collect or attempt to collect, directly or indirectly, any amount from the borrower; Enforce or attempt to enforce the contract against any property securing the loan; or Sell, assign, or otherwise transfer the loan to another person.

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: A lender may repossess goods securing a loan under an agreement if the borrower is in default in: The payment of any sum due under the agreement; The performance of any other condition which the agreement lawfully requires him to perform in order to obtain unencumbered title to the goods; or The performance of any promise the breach of which is expressly made a ground for repossessing the goods; and The lender may repossess goods only by: Legal process; or Self–help, without use of force. Nothing in this section authorizes a violation of criminal law. 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. 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. The notice required under subparagraph (i) of this paragraph may be served by the lender less than 30 days before repossession if: The mobile home: 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 Has been voluntarily surrendered by the borrower to the lender; and 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. The notice shall: State the default and any period at the end of which the goods will be repossessed; and Briefly state the rights of the borrower in case the goods are repossessed. The notice may be delivered to the borrower personally or sent to the borrower’s last known address by registered or certified mail. 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: The right of the borrower to redeem the goods, and the amount payable for them; The rights of the borrower as to a resale, and his liability for a deficiency; and The exact location where the goods are stored and the address where any payment is to be made or notice delivered. For 15 days after the lender gives the notice required by subsection (e) of this section, the lender shall retain any repossessed goods. During the period provided for in subsection (f) of this section, the borrower may: Redeem and take possession of the goods; and Resume the performance of the agreement. To redeem the goods, the borrower shall: 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; Tender performance of any other promise for the breach of which the goods were repossessed; and 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. 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. 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. 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: The unpaid balance at the time the goods were repossessed; The refund credit of unearned finance charges and insurance premiums, if any; The remaining net balance; The proceeds of the sale of the goods; The remaining deficiency balance, if any, or the amount due the buyer; All expenses incurred as a result of the sale; The purchaser’s name, address, and business; The number of bids sought and received; and 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. 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. 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. The proceeds of a sale to which this subsection applies shall be applied, in the following order, to: The actual and reasonable cost of the sale; The actual and reasonable cost of retaking and storing the goods; and The unpaid balance owing under the agreement at the time the goods are repossessed. The lender shall furnish to the buyer a written statement which shows the distribution of the proceeds. 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. 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.

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: The lender must give the following disclosures in writing to the borrower prior to the execution by the borrower of the new loan agreement: 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. Schedule of Monthly Payments Separate loan agreements              Consolidated loan agreement $ . . . . per month for                  $ . . . . per month for the next . . . .months                  the next . . . .months Then $ . . . . per month for . . . . months after that Total of Payments Separate loan agreements              Consolidated loan agreement $ . . . . total of payments                  $ . . . . total of payments for your existing loan                  for your consolidated . . . . for your new loan                 loan total of payments 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; 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; Except in the case of a demand loan, a loan may be refinanced only upon the borrower’s request; 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 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.

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.

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: The loan is secured by an interest in real property; Any such provision limits adjustments in the rate on an obligation as follows: 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. The rate may not be adjusted more frequently than once in a 6 month period. 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. 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). Notwithstanding subparagraph (i) of this paragraph, the lender may decrease the rate at any time and by any amount; 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; 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; 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; 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 No new closing costs, processing fees or similar fees are imposed on the borrower as a result of adjustments in rate.

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. 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: 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; The borrower’s ability to choose an attorney or title insurance company under § 12-120(c) of this subtitle; and A good faith estimate of the fee or fees to be charged to the borrower. If notice is required by this section: The notice shall be provided at the time of or within 3 days after the application for a loan, or earlier upon request; and A copy of the notice, signed by the applicant, shall accompany any executed application for a loan.

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. 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: 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; 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: Describes the services performed; Sets forth the time spent by the attorney and the hourly rate or other basis for determining the fee; States that the legal services are being performed on behalf of the lender and not on behalf of the borrower; and States that the services are being paid for by the borrower; The amount of the attorney’s fee is reasonable on the basis of the legal services performed; and The attorney’s fee is separately itemized on the loan settlement sheet and identified as a fee to the lender’s attorney. 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: 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 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. 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: Preparation of loan closing documents; Title insurance; Review of documents prepared by the borrower’s attorney; or Attendance at settlement by the lender’s attorney.

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. 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. A lender’s inspection fee may be charged if the inspection is needed to ascertain completion of: Construction of a new home; or Repairs, alterations, or other work required by the lender. 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.

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.

In this section, “binder” means a binder or other temporary contract of insurance as provided under § 12-106 of the Insurance Article. A lender shall comply with this section if the lender: Makes any loan secured by a first mortgage or a first deed of trust on any interest in owner-occupied residential real property; and As a condition of making the loan, requires the borrower to purchase property insurance or credit loss insurance. 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: The name and address of the insured borrower; The name and address of the lender; A description of the insured residential real property; 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; 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 The amount of coverage. This section does not prohibit a lender from refusing to honor a binder in cases where: The lender receives notice of the cancellation of the binder by the insurer; or At the expiration of 30 days of the date the binder was given, the insurer has failed to issue the policy of insurance.

In this section the following words have the meanings indicated. “Flood insurance coverage” means flood insurance against losses caused by flooding that are covered under a policy issued by: The federal government; or An insurer. “Improvements” means buildings or structures erected upon or affixed to real property that enhance the value of the real property. “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”. “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. “Replacement cost” does not include the value of land. 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. 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. In determining the replacement cost of the improvements on any real property, the lender may: Accept the value placed on the improvements by the insurer; or Use the value placed on the improvements by the lender’s appraisal of the improvements. A lender may not require that the insurance be purchased through a particular insurance producer or insurance company. A violation of this section shall entitle the borrower to: Seek an injunction to prohibit the lender who has engaged or is engaging in the violation from continuing or engaging in the violation; Reasonable attorney’s fees; and Damages directly resulting from the violation. A violation of this section does not affect the validity of the first mortgage or first deed of trust securing the loan.

In this section the following words have the meanings indicated. “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. “Credit health insurance” has the meaning stated in § 13–101 of the Insurance Article. “Credit involuntary unemployment benefit insurance” has the meaning stated in § 13–101 of the Insurance Article. “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. “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. “Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article. “Premium” has the meaning stated in § 1–101 of the Insurance Article. “Single premium coverage” means insurance for which the total premium is payable in one lump sum at or before the time coverage commences. 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: Credit health insurance; Credit involuntary unemployment benefit insurance; or Credit life insurance. 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.

In this section the following words have the meanings indicated. “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. “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. “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: 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 Is offered or extended to the borrower. “Lender” means a person subject to the licensing requirements of Title 11, Subtitle 5 of the Financial Institutions Article. “Lender” does not include a person exempt from licensure under § 11–502 of the Financial Institutions Article. “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. “Loan application” does not include the use of an account or line of credit to obtain a loan within a previously established credit limit. 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. The financing agreement shall provide: The term and principal amount of the loan; An explanation of the type of mortgage loan being offered; 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; The points, if any, to be paid by the borrower or the seller, or both; and The term during which the financing agreement remains in effect. 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. 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. 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: The effective fixed interest rate or initial interest rate that will be applied to the loan; and A restatement of all the remaining unchanged provisions of the financing agreement. 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. 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. 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. 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. This section may not be construed to exempt a lender from the provisions of §§ 12–119 through 12–122 of this subtitle.

This section applies only to a loan that: Is secured by a mortgage or deed of trust on the borrower’s primary residence; and Is not a commercial loan. 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. 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: 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 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. As used in subsection (c) of this section, the following terms have the meanings indicated. “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. “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. “Precomputed interest charge” means interest as computed by an add on, discount, or other similar method.

In this section the following words have the meanings indicated. “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. “Mortgage loan” has the meaning stated in § 11–501 of the Financial Institutions Article. “Mortgage loan” does not include a reverse mortgage loan. 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. Due regard to a borrower’s ability to repay a mortgage loan must include: Consideration of the borrower’s debt to income ratio, including existing debts and other obligations; and 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. Acceptable third–party written documentation includes: The borrower’s Internal Revenue Service form W–2; A copy of the borrower’s income tax return; Payroll receipts; The records of a financial institution; or Other third–party documents that provide reasonably reliable evidence of the borrower’s income or assets. This subsection does not apply to a mortgage loan: 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 That refinances an existing mortgage loan if the refinance mortgage loan is: Offered under the federal Homeowner Affordability and Stability Plan; and Made available by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.

A lender may not accept a tip from a consumer or give a consumer the option to provide a tip. A lender may not directly or indirectly suggest that providing a tip will influence: The lender’s willingness to provide a loan to a consumer at any time; or The terms of any loan offered to the consumer by that lender. 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. A lender shall prominently disclose that it is prohibited from accepting a tip from a consumer.