Title 11. Consumer Credit — Subtitle 6. Mortgage Loan Originators

The receipt, collection, distribution, and analysis of information usual and customary for the processing or underwriting of a mortgage loan; and

Communication with a consumer to obtain information necessary for the processing or underwriting of a mortgage loan, to the extent that the communication does not include offering or negotiating mortgage loan rates or terms, or counseling consumers about mortgage loan rates or terms.

“Depository institution” has the meaning stated in the Federal Deposit Insurance Act, 12 U.S.C. § 1813(c).

“Depository institution” includes credit unions.

Collects or receives payments, including payments of principal, interest, escrow amounts, and other amounts due on existing mortgage loan obligations owed to the note holder or mortgage loan servicer, at a time when the borrower is in default, or in reasonably foreseeable likelihood of default; and

Working with the borrower and the note holder or mortgage loan servicer, collects data and makes decisions to modify, either temporarily or permanently, the terms of the mortgage loan obligations described in item (1) of this subsection or to proceed with collection efforts through foreclosure or other processes.

“Mortgage loan originator” means an individual who for compensation or gain, or in the expectation of compensation or gain:

“Mortgage loan originator” does not include an individual who:

“Mortgage loan processor or underwriter” means an individual who performs clerical or support duties as an employee of, at the direction of, and subject to the supervision and instruction of a person licensed, or exempt from licensing, under Title 5 of this article.

“Mortgage loan processor or underwriter” does not include an individual who:

Is a mortgage loan originator;

Is an employee of:

Is registered with, and maintains a unique identifier through, NMLS.

The licensing provisions of this subtitle do not apply to independent contractors.

Independent contractors are subject to the licensing provisions of Subtitle 5 of this title unless exempt from licensing under that subtitle.

On obtaining an initial or renewal license on or after July 1, 2009; or

If the Commissioner has not joined NMLS as of July 1, 2009, on or after the date that the Commissioner joins, as instructed by the Commissioner by notice to the licensee.

A registered mortgage loan originator, when acting for an entity described in § 11–601(w) of this subtitle;

An individual who offers or negotiates the terms of a mortgage loan with or on behalf of an immediate family member of the individual;

An individual who offers or negotiates the terms of a mortgage loan secured by a dwelling that served as the individual’s residence;

A licensed attorney who negotiates the terms of a mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a mortgage lender, a mortgage broker, or a mortgage loan originator, or by an agent of a mortgage lender, mortgage broker, or mortgage loan originator; and

Subject to subsection (e) of this section, an individual loan servicer.

A mortgage lender; or

A person who is exempt from licensing as a mortgage lender.

Maintain more than one license under this subtitle; or

Be employed by more than one mortgage lender or person who is exempt from licensing as a mortgage lender.

An individual may not act as a mortgage loan originator under a name or for an employer that is different from the name and employer that appear on the license unless the licensee:

If a licensee ceases to be employed by a licensed mortgage lender or by a person exempt from licensing as a mortgage lender, the licensee shall notify the Commissioner within 10 business days, and the license shall be placed into nonactive status through NMLS.

During the time that a license is in nonactive status, it is a violation of this subtitle for the licensee to engage in any activity for which a license is required under this subtitle.

The license shall remain in nonactive status until the licensee:

Notifies the Commissioner, in the form and in accordance with the process that the Commissioner requires, that the licensee has obtained employment with a licensed mortgage lender or with a person exempt from licensing as a mortgage lender; and

Has complied with the requirements set forth in subsection (c)(2) of this section.

Originates mortgage loans made by:

Is a licensed insurance producer in good standing under § 10–103 of the Insurance Article; and

Holds an appointment as an insurance producer for an insurer that controls, is controlled by, or is under common control with:

The financial institution is in good standing with its primary state or federal regulator; and

The financial institution is in material compliance with applicable state and federal law.

The mortgage lender is in good standing with the Commissioner and any other regulator to which it is subject; and

The mortgage lender is in material compliance with applicable state and federal law.

The mortgage lender is in good standing with the Commissioner and any other regulator to which it is subject; and

The mortgage lender is in material compliance with applicable state and federal law.

An application for a license under this section shall be in the form approved by the Commissioner.

The application shall require the identification of:

An application for a license under this section shall be sponsored by:

Notwithstanding §§ 11–602(a) and 11–603 of this subtitle, and subject to the provisions of this section, a license issued under this section authorizes the licensee to act as a mortgage loan originator only on behalf of a sponsor that is:

This section may not be construed to authorize sponsorship other than for the purpose described in paragraph (1) of this subsection.

A financial institution approved by the Commissioner under subsection (b) of this section; or

A mortgage lender approved by the Commissioner under subsection (c) of this section.

Supervise the licensee, including providing direction through written instructions or electronic means and by periodically examining the licensee’s books, records, and other aspects of the licensee’s business;

Be held jointly and severally liable with the licensee for claims arising out of the licensee’s mortgage loan origination activities; and

Meet, or cause the licensee to meet, the surety bond requirements under § 11–619(c) of this subtitle.

Aid or assist a borrower to obtain a mortgage loan from:

Except for compensation based on the principal balance of a mortgage loan, be compensated by any person for mortgage loan origination activities on a basis that depends on the terms of the mortgage loan, including interest rate or fees;

Receive a finder’s fee, as defined in § 12–801 of the Commercial Law Article;

Handle borrower or other third party funds in connection with the origination or closing of a mortgage loan;

Refer a borrower to any other licensee under Subtitle 5 of this title; or

Make or service a mortgage loan.

Made payable to the financial institution or the mortgage lender;

From an applicant for a mortgage loan; and

In connection with an application for a mortgage loan to cover costs for:

An individual may not act as an affiliated insurance producer–mortgage loan originator unless the licensee:

If a licensee ceases to be sponsored by any financial institution approved by the Commissioner under subsection (b) of this section or any mortgage lender approved by the Commissioner under subsection (c) or (d) of this section, the licensee shall notify the Commissioner within 10 business days, and the license shall be placed into nonactive status through NMLS.

During the time that a license is in nonactive status, it is a violation of this subtitle for the licensee to engage in any activity for which a license is required under this subtitle.

The license shall remain in nonactive status until the licensee:

Notifies the Commissioner, in the form and in accordance with the process that the Commissioner requires, that the licensee has obtained sponsorship from:

Has complied with the requirements set forth in subsection (m)(1) of this section.

To apply for a license, an applicant shall:

The applicant shall comply with all conditions and provisions of the application for a license.

A nonrefundable investigation fee set by the Commissioner; and

A nonrefundable license fee set by the Commissioner.

Fingerprints for submission to the Federal Bureau of Investigation, and any other governmental agency or entity authorized to receive this information for a state, national, or international criminal history background check; and

Personal history and experience in a form prescribed by the Nationwide Multistate Licensing System, including the submission of authorization for the Nationwide Multistate Licensing System and the Commissioner to obtain:

An acknowledged receipt of the application for a criminal history records check or criminal history background check of the applicant or licensee.

The applicant has never had a mortgage loan originator license revoked in any governmental jurisdiction;

The applicant has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court:

The applicant has demonstrated financial responsibility, character, and general fitness sufficient to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently;

The applicant has completed the prelicensing education requirement under § 11–606 of this subtitle and any prelicensing education requirements established by the Commissioner by regulation;

The applicant has passed a test that meets the requirements established under § 11–606.1 of this subtitle and any prelicensing testing requirements established by the Commissioner by regulation; and

The applicant has met the surety bond requirement under § 11–619 of this subtitle.

Debts arising from medical expenses, including judgments;

Except for delinquent child support payments, debts, including judgments, arising from divorce proceedings or divorce settlements;

Foreclosures on the applicant’s principal residence;

The applicant’s credit score as reported by any consumer reporting agency, as defined in 15 U.S.C. § 1681a; or

The applicant’s involvement in a bankruptcy proceeding under Title 11 of the United States Code.

3 hours of instruction on federal law and regulations relating to mortgage origination;

3 hours of instruction on ethics, including instruction on fraud, consumer protection, and fair lending issues; and

2 hours of training related to lending standards and loan terms for nontraditional mortgage products.

All prelicensing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System.

Review and approval of a prelicensing education course shall include review and approval of the course provider by the Nationwide Multistate Licensing System.

Ethics;

Federal law and regulations relating to mortgage origination;

State law and regulations relating to mortgage origination; and

Federal and State law and regulations relating to fraud, consumer protection, the nontraditional mortgage product marketplace, and fair lending issues.

A licensee who fails to renew and maintain a valid license for a period of 5 years or longer shall retake the test and achieve a passing grade as set forth in subsection (c) of this section before obtaining a new license.

Calculation of the time period during which an individual is unlicensed under paragraph (1) of this subsection shall exclude any time during which the individual is a registered mortgage loan originator.

The Commissioner’s notice shall itemize the steps which the applicant must take to complete the application; and

The application may not be approved until after the applicant supplies or completes all items and steps identified in the Commissioner’s notice.

If the applicant fails to qualify for a license under this subtitle; or

For any reason that a license may be revoked or suspended under this subtitle or a mortgage lender license may be suspended or revoked under § 11–517 of this title.

Within 10 days, shall notify the applicant, in writing, of the denial; and

Shall keep the license fee and the investigation fee.

Issue a written decision containing the specific factual findings and conclusions of law on which the denial was based;

Send a copy of the written decision by certified mail to the applicant; and

Advise the applicant by certified mail of the applicant’s right to a hearing to be held in accordance with the Administrative Procedure Act.

Begin on the first day the license is issued; and

Expire on December 31 of the year:

Subject to subsections (d) and (e) of this section, meets the minimum standards for the issuance of a license and otherwise is entitled to be licensed;

Pays to the Commissioner a renewal fee set by the Commissioner; and

Submits to the Commissioner:

May comply with the following requirements for renewal of the license on or before December 31, 2010:

Is deemed to have satisfied the prelicensing educational course requirement under § 11–606 of this subtitle if the applicant completed 20 hours of continuing education courses approved by the Commissioner within 5 years prior to the expiration date of the applicant’s current license.

A licensee may surrender a license through NMLS in accordance with the process that the Commissioner requires.

If a license is surrendered voluntarily or is suspended or revoked, the Commissioner may not refund any part of the license fee regardless of the time remaining in the license term.

3 hours of instruction on federal law and regulations relating to mortgage origination;

2 hours of instruction on ethics, including instruction on fraud, consumer protection, and fair lending issues; and

2 hours of training related to lending standards for the nontraditional mortgage product marketplace.

All continuing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System.

Review and approval of a continuing education course shall include review and approval of the course provider by the Nationwide Multistate Licensing System.

Shall receive credit for a continuing education course only in the year in which the course is taken; and

May not take the same continuing education course to meet the annual requirement for continuing education.

Credited to the Fund; and

Used in accordance with § 2–120(d) of this article.

In this section the following words have the meanings indicated.

“Active service member” has the meaning stated in § 9–901 of the State Government Article.

“Eligible veteran” means a veteran who was discharged from active duty before the date on which the license application, renewal, or change of status is submitted.

Any person aggrieved by the conduct of a licensee under this subtitle in connection with a mortgage loan may file a written complaint with the Commissioner who shall investigate the complaint.

The Commissioner may make any other investigation of a licensee if the Commissioner has reasonable cause to believe that the licensee has violated any provision of this subtitle, of any regulation adopted under this subtitle, or of any other law regulating mortgage lending or mortgage origination in the State.

To the extent the Commissioner determines is necessary to enable the Commissioner to investigate and examine the mortgage loan origination activities of the affiliated insurance producer–mortgage loan originator; and

As specified in regulations adopted by the Commissioner.

Examine the books and records of a licensee or of any other person that the Commissioner believes has violated a provision of this subtitle, any rule or regulation adopted under this subtitle, or any other law regulating mortgage lending or mortgage origination in the State;

Subpoena documents or other evidence; and

Summon and examine under oath any person whose testimony the Commissioner requires.

If a person fails to comply with a subpoena or summons of the Commissioner under this subtitle or to testify concerning any matter about which the person may be interrogated under this subtitle, the Commissioner may file a petition for enforcement with the circuit court for a county.

On petition by the Commissioner, the court may order the person to attend and testify or produce evidence.

At any place in which the other business is conducted or solicited; or

In association or conjunction with the other business.

Makes any material misstatement in an application for a license;

Is convicted under the laws of the United States or of any state of a felony or a misdemeanor that is directly related to the fitness and qualification of the individual to act as a mortgage loan originator;

In connection with any mortgage loan or loan application transaction:

Violates any provision of this subtitle, any regulation adopted under this subtitle, or any other law regulating mortgage lending or mortgage origination in the State; or

Otherwise demonstrates unworthiness, bad faith, dishonesty, or any other quality that indicates that the business of the licensee has not been or will not be conducted honestly.

The nature of the crime;

The relationship of the crime to the activities authorized by the license;

With respect to a felony, the relevance of the conviction to the fitness and qualification of the licensee to engage in the mortgage lending or mortgage origination business;

The length of time since the conviction; and

The behavior and activities of the licensee since the conviction.

The Commissioner may enforce the provisions of this subtitle, regulations adopted under this subtitle, and the applicable provisions of Title 12 of the Commercial Law Article by:

If a violator fails to comply with an order issued under paragraph (1)(i) of this subsection, the Commissioner may impose a civil penalty not exceeding $25,000 for each violation from which the violator failed to cease and desist or for which the violator failed to take affirmative action to correct.

The seriousness of the violation;

The good faith of the violator;

The violator’s history of previous violations;

The deleterious effect of the violation on the public and mortgage industry;

The assets of the violator; and

Any other factors relevant to the determination of the civil penalty.

Been convicted of a felony; or

Had a mortgage loan originator license revoked in any governmental jurisdiction.

A mortgage loan originator who is an employee of a person subject to licensure under Subtitle 5 of this title may use the surety bond of that person to meet the mortgage loan originator’s surety bond requirement.

A mortgage loan originator who is an employee of a person exempt from licensure under Subtitle 5 of this title may use a surety bond of the person to meet the mortgage loan originator’s surety bond requirement, provided the surety bond meets the requirements, based on mortgage loan volume, under § 11–508 of this title.

Holds a surety bond that would satisfy the surety bond requirements under § 11–508 of this title if the affiliated insurance producer–mortgage loan originator were a licensee under Subtitle 5 of this title; or

Is covered under a blanket surety bond held by a financial institution identified in § 11–603.1(a)(1)(i) of this subtitle or a mortgage lender identified in § 11–603.1(a)(1)(ii) or (3)(ii) of this subtitle if the blanket surety bond:

Except as otherwise provided in 12 U.S.C. § 5111, the requirements under any federal law and Title 4, Subtitles 1 through 5 of the General Provisions Article regarding the privacy or confidentiality of information or material provided to the Nationwide Multistate Licensing System, and any privilege arising under federal or state law, including the rules of any federal or state court with respect to that information or material, shall continue to apply to that information or material after the information or material has been disclosed to the Nationwide Multistate Licensing System.

The information and material may be shared with all state and federal regulatory officials having mortgage industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by federal law or Title 4, Subtitles 1 through 5 of the General Provisions Article.

Disclosure under any federal or state law governing the disclosure to the public of information held by an officer or agency of the federal government or a state that has received the information or material; or

Subpoena, discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Multistate Licensing System the person to whom the information or material pertains waives, in whole or in part, that privilege.

Make a payment, threat, or promise, directly or indirectly, to another person for the purpose of influencing the person to violate any federal or State law, or any standard of professional practice recognized by the federal or State government; or

Make a payment, threat, or promise, directly or indirectly, to an appraiser of residential real estate for the purpose of influencing the independent judgment of the appraiser with respect to the value of the residential real estate, or engage in any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity, or impartiality, including:

Requesting another person to:

Withholding payment for an appraisal pending resolution of an action before a federal or State court or licensing board relating to the appraisal.