# Commercial Law (GCL)

## Title 12. Credit Regulations

### Subtitle 9. Credit Grantor Revolving Credit Provisions

#### Section 12-901

(a) In this subtitle the following words have the meanings indicated.

(b) "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.

(c) "Commercial loan" and "extension of credit for a commercial purpose" mean an extension of credit made:

  (1) Solely to acquire an interest in or to carry on a business or commercial enterprise; or

  (2) To any business or commercial organization.

(d) "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.

(e) "Credit device" means any card, plate, check, draft, identification code, or other means of identification contemplated by the agreement governing the plan.

(f)

  (1) "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.

  (2) "Credit grantor" includes:

    (i) Any bank, trust company, depository institution, or savings bank having a branch in this State;

    (ii) 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

    (iii) Any person who acquires or obtains the assignment of a revolving credit plan made under this subtitle.

(g)

  (1) "Loan" means a cash advance to be paid to or for the account of the borrower.

  (2) "Loan" includes an advance made in accordance with the terms of a shared appreciation agreement.

(h) "Mobile home" has the meaning stated in Sec. 11-501 of the Financial Institutions Article.

(i) "Nonconsumer borrower" means any borrower other than a consumer borrower.

(j)

  (1) "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.

  (2) 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.

(k) "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.

(l) "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.

(m) "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:

  (1) 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;

  (2) The amounts of purchases and loans are charged to the borrower's account;

  (3) 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

  (4) Interest or finance charges may be charged and collected by the credit grantor from time to time on the amounts due under the plan.

(n) "Shared appreciation agreement" has the meaning stated in Sec. 11-501 of the Financial Institutions Article.

#### Section 12-902

(a) Any credit grantor may, subject to the other provisions of this subtitle:

  (1) 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;

  (2)

    (i) Take any security as collateral as may be acceptable to the credit grantor.

    (ii) If real property is taken as security, the credit grantor shall record the entire line of credit when the credit plan is established.

(b) 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:

  (1) A merchant;

  (2) 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;

  (3) Any other person or entity; or

  (4) A government or governmental subdivision or agency.

#### Section 12-903

(a)

  (1) 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.

  (2) 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.

  (3) 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:

    (i) All such fees, when combined with any finder's fee imposed by a mortgage broker under Sec. 12-804 of this title, may not exceed 10 percent of the maximum amount of credit made available to the borrower under the plan;

    (ii) The documents evidencing the plan specifically enumerate any such fees;

    (iii) The borrower agrees in writing to pay those fees; and

    (iv) The fees are disclosed to the borrower in accordance with the federal Truth in Lending Act.

(b) 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.

(c) 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.

(d)

  (1) Notwithstanding subsections (a) and (b) of this section:

    (i) 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

    (ii) 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.

  (2) 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 Sec. 12-905(a) of this subtitle.

#### Section 12-904

(a) 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:

  (1) Is made readily available to and verifiable by the borrower;

  (2) Is beyond the control of the credit grantor; and

  (3) May be within the control of the borrower.

(b) 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.

(c) The periodic percentage rate, as varied, may not exceed the maximum rate permitted pursuant to Sec. 12-903(a)(1) of this subtitle.

(d) If a formula used under subsection (a)(3) of this section measures credit risk, the periodic percentage rate of interest or finance charges:

  (1) Shall be lower for any consumer borrower measured as more creditworthy under the formula; and

  (2) If the formula considers delinquency or arrearages, may not be raised unless a consumer borrower is at least 2 months in arrears in payment.

#### Section 12-905

(a) 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:

  (1) 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:

    (i) An annual charge in any amount the agreement provides for the privileges made available to the consumer borrower under the plan;

    (ii) A transaction charge or charges in such amount or amounts as the agreement may provide for each separate purchase under the plan; or

    (iii) 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.

  (2) If the plan is offered by any other credit grantor, the credit grantor may impose any or all of the following fees:

    (i) An annual charge in any amount the agreement provides for the privileges made available to the consumer borrower under the plan;

    (ii) 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

    (iii) 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.

  (3) 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:

    (i) An over the limit fee assessed on a credit card account; and

    (ii) Fees for ancillary and administrative services requested by the member, including:

      (1) Researching account records;

      (2) Providing duplicate statements and other documents; and

      (3) Expedited issuance of a duplicate or original credit card or device.

(b)

  (1) 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:

    (i) Attorney's fees for services rendered in connection with the preparation, closing, or disbursement of the loan;

    (ii) Any expense, tax, or charge paid to a governmental agency;

    (iii) Examination of title, appraisal, or other costs necessary or appropriate to the security of the loan; and

    (iv) Premiums for any insurance coverage permitted under this subtitle.

  (2) The additional fees or charges permitted under this subsection may be imposed, charged, and collected at any time.

(c) 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.

(d) If a plan is established for a nonconsumer borrower, the nonconsumer borrower and credit grantor may agree upon any terms concerning charges and fees.

(e)

  (1) 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.

  (2) 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.

(f)

  (1) 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:

    (i) An application fee not to exceed $35; and

    (ii) An annual charge not to exceed $35 for the privileges made available to the consumer borrower under the plan.

  (2) If an application to the plan is approved, the credit grantor shall credit the application fee:

    (i) To the initial annual charge; and

    (ii) If there is no annual charge, to the interest or finance charges under the plan.

  (3) If an application to the plan is rejected, the credit grantor shall return the application fee to the applicant.

  (4) Within 45 days after the receipt of the application, the credit grantor shall:

    (i) Accept the application; or

    (ii) Reject the application and return the application fee to the applicant.

  (5) 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.

  (6) The application shall state the amount of:

    (i) The minimum required security; and

    (ii) The application fee.

  (7) The agreement shall state the amount of the annual charge.

  (8) 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:

    (i) A rate of 4 percent per annum simple interest; or

    (ii) 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.

#### Section 12-906

(a) 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.

(b) Subsection (a) of this section applies to all terms, including:

  (1) The terms governing the periodic percentage rate used to calculate interest or finance charges;

  (2) The method of computing the outstanding unpaid indebtedness to which the periodic percentage rate is applied;

  (3) The amounts of other charges; and

  (4) The applicable repayment schedule.

#### Section 12-907

(a) 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.

(b) The account charges referred to in subsection (a) of this section include:

  (1) Check charges;

  (2) Monthly maintenance charges;

  (3) Checkbook charges;

  (4) Charges for checks drawn in excess of an available line of credit; or

  (5) Any similar charges.

(c) 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.

#### Section 12-908

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.

#### Section 12-909

(a) In connection with a plan established for a consumer borrower:

  (1) The purchase of credit life, credit accident and health, credit disability, involuntary unemployment benefit, and similar coverages is optional with the consumer borrower; and

  (2) Subject to Sec. 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.

(b) The provisions of this section do not alter or modify rights, privileges, or restrictions heretofore existing between the credit grantor and a nonconsumer borrower.

(c) Premiums for any insurance coverage permitted by this section are not interest or finance charges under the plan.

(d) The offering and placement of insurance under this section shall be subject to the provisions of the Insurance Article.

(e)

  (1)

    (i) In this subsection the following words have the meanings indicated.

    (ii) "Improvements" means buildings or structures erected upon or affixed to real property that enhance the value of the real property.

    (iii) "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".

    (iv)

      (1) "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.

      (2) "Replacement cost" does not include the value of land.

  (2)

    (i) 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.

    (ii) In determining the replacement cost of the improvements on any real property, the credit grantor may:

      (1) Accept the value placed on the improvements by the insurer; or

      (2) Use the value placed on the improvements by the credit grantor's appraisal of the improvements.

  (3) A violation of this subsection shall entitle the borrower to:

    (i) Seek an injunction to prohibit the credit grantor who has engaged or is engaging in the violation from continuing or engaging in the violation;

    (ii) Reasonable attorney's fees; and

    (iii) Damages directly resulting from the violation.

  (4) A violation of this subsection does not affect the validity of the lien securing the loan.

#### Section 12-909.1

(a) In this section, "binder" means a binder or other temporary contract of insurance as provided under Sec. 12-106 of the Insurance Article.

(b) A credit grantor shall comply with this section if the credit grantor:

  (1) Makes any loan secured by a first lien on any interest in owner-occupied residential real property; and

  (2) As a condition of making the loan, requires the consumer borrower to purchase property insurance or credit loss insurance.

(c) 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:

  (1) The name and address of the insured consumer borrower;

  (2) The name and address of the credit grantor;

  (3) A description of the insured residential real property;

  (4) 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;

  (5) 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

  (6) The amount of coverage.

(d) This section does not prohibit a credit grantor from refusing to honor a binder in cases where:

  (1) The credit grantor receives notice of the cancellation of the binder by the insurer; or

  (2) At the expiration of 30 days of the date the binder was given, the insurer has failed to issue the policy of insurance.

#### Section 12-910

(a) If the agreement governing a revolving credit plan permits, a credit grantor may:

  (1) 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

  (2) For any borrower, impose:

    (i) A late or delinquency charge on payments or portions of payments; and

    (ii) If payment is made with a check that is dishonored on the second presentment, a charge not to exceed $15.

(b)

  (1) 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.

  (2) 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.

  (3) Charges permitted by this section may not be considered interest or finance charges under the plan.

#### Section 12-911

(a) 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.

(b) 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.

#### Section 12-912

(a) 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:

  (1) The terms governing the periodic percentage rate used to calculate interest or finance charges;

  (2) The method of computing the outstanding unpaid indebtedness to which the rate is applied;

  (3) The amounts of other charges; and

  (4) The applicable repayment schedule.

(b)

  (1) 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 Sec. 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:

    (i) A clear statement comparing the original terms and the terms under the amended agreement; and

    (ii) Any other pertinent information required by the provisions of this section.

  (2) 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.

(c)

  (1) Subject to the provisions of this paragraph, an amendment made under this section shall become effective as to a particular borrower on:

    (i) The first day of the billing cycle during which the effective date of the amendment occurs; or

    (ii) Any later date specified in the notice of amendment.

  (2) 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.

  (3) 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.

  (4) Any borrower who gives timely notice of refusal may use the account pursuant to its original, unamended terms for:

    (i)

      (1) The duration of the time for which a fee was paid for use of the plan through the borrower's credit device; or

      (2) Any longer period of time as determined by the credit grantor; or

    (ii) 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.

  (5) 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.

  (6) 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:

    (i) 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;

    (ii) Enumerates the borrower's rights under paragraphs (4) and (5) of this subsection upon timely notice of refusal by the borrower; and

    (iii) Includes the address to which the borrower may send notice of a refusal.

  (7) 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.

(d)

  (1) 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:

    (i) 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

    (ii) Sends a notice of agreement to the credit grantor in which the borrower expressly agrees to the amendment.

  (2) 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:

    (i) 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

    (ii) Sends a notice of agreement to the credit grantor in which the borrower expressly agrees to the amendment.

  (3) 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:

    (i) Make any purchase or obtain any loan under the plan after the date specified in the notice of amendment; or

    (ii) Send a notice of agreement to the credit grantor in which the borrower expressly agrees to the amendment.

(e) 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.

(f) 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.

(g) 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.

#### Section 12-913

(a) 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:

  (1) The plan is established before October 1, 1993; and

  (2) The extension of credit is made under this subtitle before October 1, 1993.

(b) For the purposes of subsection (a) of this section, an extension of credit is made under this subtitle if:

  (1) The credit grantor has made a written election to do so in the agreement governing the plan; or

  (2) The agreement governing the plan is offered pursuant to the provisions of this subtitle.

(c) 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.

(d) Any plan established before October 1, 1993 is not subject to Sec. 12-913.2 of this subtitle.

#### Section 12-913.1

(a)

  (1) 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.

  (2) 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.

(b)

  (1) 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.

  (2) 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.

(c) 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:

  (1) Is a shared appreciation agreement; and

  (2) Allows the borrower to repay advances and have any repaid amounts subsequently readvanced to the borrower.

#### Section 12-913.2

(a) 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.

(b) 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.

(c) 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.

#### Section 12-914

(a) 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.

(b) 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.

#### Section 12-915

(a) 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.

(b) 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.

(c) If a license is required by this section, it shall be issued by the Commissioner of Financial Regulation.

(d)

  (1) 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.

  (2) 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.

#### Section 12-916

(a) 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 Sec. 11-413 of the Financial Institutions Article.

(b)

  (1) 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.

  (2) Before a hearing under this section may be scheduled, the Commissioner shall:

    (i) Send a written notice to the complaining party that describes the provisions in paragraph (3) of this subsection concerning preclusion; and

    (ii) Obtain from the complaining party a written:

      (1) Election to proceed with a hearing in accordance with this section; and

      (2) Waiver of any right to pursue any cause of action or remedy as to the matters addressed in the complaint or the hearing.

  (3)

    (i) 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.

    (ii) The preclusion in subparagraph (i) of this paragraph does not apply to an appeal from the order of the Commissioner resulting from the hearing.

  (4) 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.

(c)

  (1) 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.

  (2)

    (i) 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.

    (ii) The Commissioner may direct a refund only up to the amount collected by the credit grantor from the complaining party that:

      (1) Exceeds the amount expressly permitted under this subtitle; or

      (2) The credit grantor is expressly not permitted to collect.

  (3)

    (i) 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.

    (ii) 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.

    (iii) Any order withdrawn by the Commissioner may not be considered evidence of the Commissioner's interpretation of this subtitle.

  (4) The order of the Commissioner shall comply with the Administrative Procedure Act.

(d)

  (1) 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.

  (2) If an appeal is filed, the order becomes final after final decision of the court affirming the order or dismissing the appeal.

(e) 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.

#### Section 12-917

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.

#### Section 12-918

(a)

  (1) In this subsection, "notice" means the first to occur of the following:

    (i) When the credit grantor receives a written notice from the borrower notifying the credit grantor of an error or violation;

    (ii) 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

    (iii) 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.

  (2) 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.

  (3) The penalty provided under paragraph (2) of this subsection does not apply where a credit grantor:

    (i) Unintentionally and in good faith fails to comply with Sec. 12-903, Sec. 12-904, Sec. 12-905, Sec. 12-910, Sec. 12-911, Sec. 12-913.2, Sec. 12-923(d), or Sec. 12-924 of this subtitle; and

    (ii) 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.

  (4) The burden shall be on the credit grantor to show that the credit grantor's failure to comply with Sec. 12-903, Sec. 12-904, Sec. 12-905, Sec. 12-910, Sec. 12-911, Sec. 12-913.2, Sec. 12-923(d), or Sec. 12-924 of this subtitle was unintentional and in good faith.

(b) 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.

#### Section 12-918.1

(a) In this section, "Commissioner" means the Commissioner of Financial Regulation.

(b) Except as provided in subsection (c) of this section, the penalty provided under Sec. 12-918(a)(2) of this subtitle does not apply if a credit grantor:

  (1) Performed or omitted to perform an act in conformity with or in reliance on:

    (i) A written opinion of the Attorney General of Maryland or a regulation adopted by the Commissioner;

    (ii) A written opinion by the Commissioner or Deputy Commissioner; or

    (iii) An interpretation by the Commissioner in a written notice or examination report; or

  (2) Used a form or procedure that has been approved in writing by the Commissioner and the Attorney General.

(c) The provisions of subsection (b) of this section do not apply to an act or omission to act that occurs after:

  (1) 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

  (2) Approval for a form or procedure is amended, rescinded, or determined to be invalid for any reason by any judicial or other authority.

(d) This section may not be construed to:

  (1) Limit the imposition of any civil or criminal penalty for a knowing or willful violation of this subtitle; or

  (2) Limit the power of the Commissioner or the courts to order a refund to a borrower of moneys collected in violation of this subtitle.

#### Section 12-919

An action for violation of this subtitle may not be brought more than 6 months after the credit extension is repaid in full.

#### Section 12-920

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.

#### Section 12-921

(a)

  (1) A credit grantor may repossess tangible personal property securing a plan under an agreement if the consumer borrower is in default.

  (2) The credit grantor may repossess tangible personal property from a consumer borrower only by:

    (i) Legal process; or

    (ii) Self-help, without use of force.

(b) Nothing in this section authorizes a violation of criminal law.

(c)

  (1) 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.

  (2)

    (i) 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.

    (ii) The notice required under subparagraph (i) of this paragraph may be served by the credit grantor less than 30 days before repossession if:

      (1) The mobile home:

      (A) Is vacant and abandoned, based on a determination by the credit grantor that at least three of the circumstances listed in Sec. 7-105.18(d) of the Real Property Article have been met; or

      (B) Has been voluntarily surrendered by the borrower to the credit grantor; and

      (2) 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.

  (3) The notice shall:

    (i) State the default and any period at the end of which the tangible personal property will be repossessed; and

    (ii) Briefly state the rights of the consumer borrower in case the tangible personal property is repossessed.

(d) The notice may be delivered to the consumer borrower personally or sent to the borrower's last known address by registered or certified mail.

(e) 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:

  (1) The right of the consumer borrower to redeem the tangible personal property, and the amount payable for it;

  (2) The rights of the consumer borrower as to a resale, and his liability for a deficiency; and

  (3) The exact location where the tangible personal property is stored and the address where any payment is to be made.

(f) 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.

(g) During the period provided for in subsection (f) of this section, the consumer borrower may:

  (1) Redeem and take possession of the property; and

  (2) Resume the performance of the agreement.

(h) To redeem the property, the consumer borrower shall:

  (1) 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;

  (2) Tender performance of any other promise for the breach of which the property was repossessed; and

  (3) 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.

(i) 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.

(j)

  (1)

    (i) Subject to subsection (l) of this section, the credit grantor shall sell the property that was repossessed at:

      (1) Subject to paragraph (2) of this subsection, a private sale; or

      (2) A public auction.

    (ii) 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.

    (iii) Any sale of repossessed property must be accomplished in a commercially reasonable manner.

  (2) 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:

    (i) The unpaid balance at the time the goods were repossessed;

    (ii) The refund credit of unearned finance charges and insurance premiums, if any;

    (iii) The remaining net balance;

    (iv) The proceeds of the sale of the goods;

    (v) The remaining deficiency balance, if any, or the amount due the buyer;

    (vi) All expenses incurred as a result of the sale;

    (vii) The purchaser's name, address, and business;

    (viii) The number of bids sought and received; and

    (ix) 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.

  (3) 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.

(k)

  (1) 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.

  (2) The proceeds of a sale to which this subsection applies shall be applied, in the following order, to:

    (i) The actual and reasonable cost of the sale;

    (ii) The actual and reasonable cost of retaking and storing the property; and

    (iii) The unpaid balance owing under the agreement at the time the property was repossessed.

  (3) The credit grantor shall furnish to the consumer borrower a written statement which shows the distribution of the proceeds.

  (4) 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.

(l)

  (1)

    (i) In this subsection, "consumer goods" means tangible personal property used or bought for use primarily for personal, family, or household purposes that is:

      (1) Movable at the time a security interest attaches; or

      (2) A fixture.

    (ii) "Consumer goods" does not include money, documents, instruments, accounts, chattel paper, or general intangibles.

  (2) This subsection applies to tangible personal property securing a plan that:

    (i) Has been repossessed by the credit grantor; or

    (ii) 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.

  (3) 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.

  (4)

    (i) 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.

    (ii) 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:

      (1) The consumer borrower; and

      (2) Except in the case of consumer goods, any other person who has a security interest in the property and who:

      (A) Has duly filed a financing statement indexed in the name of the consumer borrower in this State; or

      (B) Is known by the credit grantor to have a security interest in the property.

    (iii)

      (1) 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.

      (2) In the absence of written objection, the credit grantor may retain the property in full satisfaction of the outstanding unpaid indebtedness under the plan.

  (5) 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:

    (i) The credit grantor may retain the property without obligation to account to the borrower; and

    (ii) If the property is retained, all obligations of the borrower under the plan shall be discharged.

#### Section 12-922

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "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.

  (3) "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.

  (4) "Financing agreement" means a written agreement between a borrower and a lender that:

    (i) Sets forth the terms of a purchase money loan or a refinancing of an existing loan that:

      (1) 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

      (2) Is offered or extended to the borrower; or

    (ii) Is a shared appreciation agreement.

  (5)

    (i) "Lender" means a credit grantor subject to the licensing requirements of Title 11, Subtitle 5 of the Financial Institutions Article.

    (ii) "Lender" does not include a credit grantor exempt from licensing under Sec. 11-502 of the Financial Institutions Article.

  (6)

    (i) "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.

    (ii) "Loan application" does not include the use of an account or line of credit to obtain a loan within a previously established credit limit.

(b)

  (1) 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.

  (2) The financing agreement shall provide:

    (i) The term and principal amount of the loan;

    (ii) An explanation of the type of mortgage loan being offered;

    (iii) 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;

    (iv) The points, if any, to be paid by the borrower or the seller, or both; and

    (v) The term during which the financing agreement remains in effect.

  (3) 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.

(c)

  (1) 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:

    (i) The effective fixed interest rate or initial interest rate that will be applied to the loan; and

    (ii) A restatement of all the remaining unchanged provisions of the financing agreement.

  (2) 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.

(d)

  (1) 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.

  (2) The penalties set out under Sec. 12-918 of this subtitle do not apply to any violation of this section.

#### Section 12-923

(a) This section applies only to a plan established by a credit grantor under this subtitle for a consumer borrower.

(b)

  (1) Paragraph (2) of this subsection applies only to a loan or an extension of credit primarily for personal, household, or family purposes.

  (2) An agreement governing a revolving credit plan or any instrument which evidences or secures an extension of credit under the plan may not contain:

    (i) An assignment or order for the payment of wages, whether earned or to be earned, or of any chose in action covering lost wages;

    (ii) 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;

    (iii) 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

    (iv) 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.

  (3) 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.

  (4)

    (i) 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.

    (ii) Subject to subparagraph (iii) of this paragraph, the penalties set out under Sec.Sec. 12-917 and 12-918 of this subtitle do not apply unless the credit grantor attempts to enforce a provision prohibited under this subsection.

    (iii) The penalties set out under Sec.Sec. 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.

(c) 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.

(d) Upon receipt of a cash payment from a borrower, a credit grantor shall give the borrower a written receipt for the payment.

#### Section 12-923.1

(a) 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.

(b) 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.

(c) 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.

(d) 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.

#### Section 12-924

(a)

  (1) 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.

  (2) This section does not apply to a loan to which Sec. 3-105.1 of the Real Property Article applies.

(b) 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:

  (1) The outstanding unpaid indebtedness under a plan has been paid in full;

  (2) There are no further obligations of the credit grantor or the consumer borrower under the plan; and

  (3) The account under the plan is closed.

(c) The release shall be:

  (1) In writing; and

  (2) Prepared at the expense of the credit grantor.

(d)

  (1) If the credit grantor does not record the release, the credit grantor shall furnish the consumer borrower with the release in a recordable form.

  (2) If the credit grantor records the release, the credit grantor shall furnish the consumer borrower with a copy of the release.

(e)

  (1) If a fee is collected by a credit grantor for the recording of a release:

    (i) The release shall be recorded by the credit grantor; and

    (ii) Any portion of the fee not paid to a governmental entity for recording the release shall be refunded to the borrower.

  (2) 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.

#### Section 12-925

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "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.

  (3)

    (i) "Mortgage loan" has the meaning stated in Sec. 11-501 of the Financial Institutions Article.

    (ii) "Mortgage loan" does not include a reverse mortgage loan.

(b) 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.

(c)

  (1) Due regard to a borrower's ability to repay a mortgage loan must include:

    (i) Consideration of the borrower's debt to income ratio, including existing debts and other obligations; and

    (ii) 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.

  (2) Acceptable third-party written documentation includes:

    (i) The borrower's Internal Revenue Service form W-2;

    (ii) A copy of the borrower's income tax return;

    (iii) Payroll receipts;

    (iv) The records of a financial institution; or

    (v) Other third-party documents that provide reasonably reliable evidence of the borrower's income or assets.

  (3) This subsection does not apply to a mortgage loan:

    (i) 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

    (ii) That refinances an existing mortgage loan if the refinance mortgage loan is:

      (1) Offered under the federal Homeowner Affordability and Stability Plan; and

      (2) Made available by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.

#### Section 12-926

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.

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Md. Code Ann., Com. Law (as displayed at mgaleg.maryland.gov, October 16, 2026)