# COMAR Title 09 — Maryland Department of Labor

## Subtitle 03 — Commissioner of Financial Regulation

### Chapter 06 — Mortgage Lenders

#### Regulation .20 Duty of Care.

*COMAR 09.03.06.20*

A. Good Faith and Fair Dealing. A licensee has a duty of good faith and fair dealing in communications, transactions, and course of dealings with a borrower in connection with the advertisement, solicitation, making, servicing, purchase, or sale of any mortgage loan, including, but not limited to:

  (1) The duty to recommend to a borrower or induce a borrower to enter into only a mortgage loan refinancing that has a net tangible benefit to a borrower, considering all of the circumstances, including the terms of a loan, the cost of a loan, and the borrower's circumstances;

  (2) The duty to provide to a borrower who is offered a higher-priced mortgage loan information about the non-higher-priced mortgage loans that the licensee can make available and for which the borrower may qualify; and

  (3) The duty when servicing mortgage loans to:

    (a) Promptly provide borrowers with an accurate accounting of the debt owed when borrowers request an accounting;

    (b) Make borrowers in default aware of loss mitigation options and services offered by the licensee;

    (c) Provide trained personnel and telephone facilities sufficient to promptly answer and respond to borrower inquiries regarding their mortgage loans; and

    (d) Pursue loss mitigation when possible.

B. Method to Determine Net Tangible Benefit.

  (1) When determining whether a refinance of a mortgage loan will provide a net tangible benefit to the borrower, a licensee shall make a reasonable inquiry of the borrower to determine what net tangible benefit, if any, the borrower will receive from a mortgage loan. Net tangible benefits may include, but are not limited to:

    (a) Obtaining a lower interest rate;

    (b) Obtaining a lower monthly payment, including principal, interest, taxes, and insurance;

    (c) Obtaining a shorter amortization schedule;

    (d) Changing from an adjustable rate to a fixed rate;

    (e) Eliminating a negative amortization feature;

    (f) Eliminating a balloon payment feature;

    (g) Receiving cash-out from the new loan in an amount greater than all closing costs incurred in connection with the loan;

    (h) Avoiding foreclosure;

    (i) Eliminating private mortgage insurance; and

    (j) Consolidating other existing loans into a new mortgage loan.

  (2) A licensee is considered to have conducted a reasonable inquiry of whether a refinance of a mortgage loan provides a net tangible benefit to a borrower if the mortgage lender has the borrower complete and sign a net tangible benefit worksheet on the form prescribed by the Commissioner, or a form that is substantially similar to the form prescribed by the Commissioner.