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Chapter 09. Mortgage Loan Originators

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Regulation .01 Scope.Copy Citation

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This chapter governs the conduct of any individual employed as a mortgage loan originator with respect to residential real estate located in this State.

Regulation .02 Definitions.Copy Citation

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A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Applicant” means an individual applying for a license.
(2)
“Average prime offer rate” has the meaning stated in 12 CFR Part 1026, as may be amended from time to time.
(3)
“Commissioner” has the meaning stated in Financial Institutions Article, §1-101, Annotated Code of Maryland.
(4)
“Continuing education” or “course” means an educational program related to mortgage lending or brokering which contributes directly to the enhancement of professional competence of a mortgage loan originator to engage in the mortgage lending business, as defined in Financial Institutions Article, §11-501, Annotated Code of Maryland.
(5)
“Dwelling” has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.
(6)
“Higher-priced mortgage loan” has the meaning stated in 12 CFR Part 1026 as may be amended from time to time.
(7)
“License” has the meaning stated in Financial Institutions Article, §11-601, Annotated Code of Maryland.
(8)
“Licensed location” means any location listed by the licensee in NMLS.
(9)
“Licensee” has the meaning stated in Financial Institutions Article, §11-601, Annotated Code of Maryland.
(10)
“Mortgage lending business” has the meaning state in Financial Institutions Article, §11-501, Annotated Code of Maryland.
(11)
“Mortgage loan” has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.
(12)
“Mortgage loan originator” has the meaning stated in Financial Institutions Article, §11-601, Annotated Code of Maryland.
(13)
“NMLSR” has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.
(14)
“Residential real estate” has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

Regulation .03 Education and Testing Requirements.Copy Citation

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A.
Prelicensing Education. To qualify for a license, a mortgage loan originator shall have:
(1)
Successfully completed at least 20 hours of prelicensing education as required by Financial Institutions Article, §11-606, Annotated Code of Maryland, which shall include at least the following subjects in the number of hours indicated:
(a)
Federal law and regulations relating to mortgage origination — 3 hours;
(b)
Ethics, including instruction on fraud, consumer protection, and fair lending issues — 3 hours;
(c)
Lending standards and loan terms for the nontraditional mortgage product market — 2 hours;
(d)
Maryland law and regulations relating to mortgage lending and origination — 3 hours;
(e)
Maryland finder's fee law as stated in Commercial Law Article, §12-801 et seq., Annotated Code of Maryland — 2 hours; and
(f)
Undefined or elective instruction on mortgage origination — 7 hours; and
(2)
Achieved a passing grade on a written examination as required by Financial Institutions Article, §11-606.1, Annotated Code of Maryland.
B.
Continuing Education. To renew a license, a mortgage loan originator shall have successfully completed in the 12 months immediately preceding the current renewal period at least 8 hours of continuing education in approved courses, as required by Financial Institutions Article, §11-612, Annotated Code of Maryland, which shall include at least the following subjects in the number of hours indicated:
(1)
Federal law and regulations relating to mortgage origination — 3 hours;
(2)
Ethics, including instruction on fraud, consumer protection, and fair lending issues — 2 hours;
(3)
Lending standards and loan terms for the nontraditional mortgage product market — 2 hours; and
(4)
Maryland law and regulations relating to mortgage lending and origination — 1 hour.
C.
Reporting, Verification, and Record Keeping.
(1)
A mortgage loan originator, when applying for an initial license or for a renewal license, shall provide to the NMLSR and to the Commissioner such information or certification as they may respectively require as proof of satisfactory completion of the education and testing requirements of this regulation.
(2)
The Commissioner may require verification, on a random or other basis, of satisfactory completion of the requirements of this regulation.
(3)
A licensee shall retain evidence acceptable to the Commissioner to verify satisfactory completion of the requirements of this regulation for at least 3 years after issuance of the license to which it applies.
D.
Denial, Nonrenewal, Suspension, or Revocation of License. Subject to the notice and hearing requirements of Financial Institutions Article, §11-616, Annotated Code of Maryland, failure to comply with the requirements of this regulation is grounds for:
(1)
Denial of a license under Financial Institutions Article, §11-607(e), Annotated Code of Maryland; or
(2)
Suspension or revocation of a license or other sanctions pursuant to Financial Institutions Article, §11-615, Annotated Code of Maryland.

Regulation .04 Duty of Care.Copy Citation

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A.
Good Faith and Fair Dealing. A mortgage loan originator has a duty of good faith and fair dealing in communications and transactions with a borrower, 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; and
(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.
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 mortgage loan originator shall make a reasonable inquiry of a 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 mortgage loan originator 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 loan originator has the borrower complete and sign a net tangible benefit worksheet on the form prescribed by the Commissioner for that purpose, or a form that is substantially similar to the form prescribed by the Commissioner.

Regulation .05 Applications.Copy Citation

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A.
The Commissioner shall approve or deny an application for an initial license, a renewal license, or a license amendment within 60 days after the Commissioner receives a completed application, including a surety bond and all required fees.
B.
If the Commissioner notifies an applicant that an application for an initial license, a renewal license, or a license amendment is incomplete, the Commissioner shall itemize the steps which the applicant must take to complete the application.
C.
The application for an initial license, a renewal license, or a license amendment may not be approved until after the applicant completes all steps identified in the Commissioner’s notice.
D.
If an application for an initial license, a renewal license, or a license amendment is incomplete when submitted and remains incomplete, the Commissioner may cease processing and deem the incomplete application withdrawn, provided that the Commissioner has previously notified the applicant of the basis for incompleteness in accordance with §B of this regulation, and gives the applicant not less than 15 days to correct the incompleteness.

Regulation .06 Fees.Copy Citation

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A.
Application Investigation Fee. The nonrefundable investigation fee required by Financial Institutions Article, §11-604(c)(1), Annotated Code of Maryland, is $1.
B.
Initial License Fee.
(1)
The license fee required by Financial Institutions Article, §11-606(b)(2), Annotated Code of Maryland, is $225 for a 1-year license term.
(2)
In addition to the initial license fee set forth in §B(1) of this regulation, an applicant for a license shall pay to NMLSR the license application processing fee and any other fees that NMLSR imposes in connection with the application.
C.
Renewal Fee.
(1)
The renewal fee required by Financial Institutions Article, §11-609(b)(2), Annotated Code of Maryland, is $225 for a 1-year renewal term.
(2)
In addition to the renewal fee set forth in §C(1) of this regulation, an applicant for a renewal shall pay to NMLSR the renewal application processing fee and any other fees that NMLSR imposes in connection with the application.
C-1.
Licensing Fees for Affiliated Insurance Producer-Mortgage Loan Originator Subject to Financial Institutions Article, §11-603.1, Annotated Code of Maryland.
(1)
Application Investigation Fee. The nonrefundable investigation fee required by Financial Institutions Article, §11-604(c)(1), Annotated Code of Maryland, is $1.
(2)
Initial License Fee.
(a)
The license fee required by Financial Institutions Article, §11-604(b)(2), Annotated Code of Maryland, is $700 for a 1-year Affiliated Insurance Producer-Mortgage Loan Originator license term.
(b)
In addition to the initial license fee set forth in §B(2)(a) of this regulation, an applicant for a license shall pay to NMLSR the license application processing fee and any other fees that NMLSR imposes in connection with the application.
(3)
Renewal Fee.
(a)
The renewal fee required by Financial Institutions Article, §11-609(b)(2), Annotated Code of Maryland, is $700 for a 1-year renewal term.
(b)
In addition to the renewal fee set forth in §B(3)(a) of this regulation, an applicant for a renewal shall pay to NMLSR the renewal application processing fee and any other fees that NMLSR imposes in connection with the application.
D.
Investigation Fee. The fee for each of the Commissioner's employees engaged in investigations performed by the Commissioner as authorized by Financial Institutions Article, §11-613(b), Annotated Code of Maryland, is $250 per day.
E.
License Amendment Fee. The license amendment fee required by Financial Institutions Article, §11-603(c)(2), Annotated Code of Maryland, is $20.

Regulation .07 Locations.Copy Citation

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A.
A mortgage loan originator may not conduct mortgage lending business at any location different from a licensed location that is listed for the mortgage loan originator or the mortgage loan originator's employer on NMLS.
B.
Notwithstanding §A of this regulation, a mortgage loan originator may take a loan application or offer or negotiate terms of a mortgage loan at a location other than the licensed location of the mortgage loan originator or the mortgage loan originator's employer if neither the mortgage loan originator nor the mortgage loan originator's employer:
(1)
Owns or leases the location for the purpose of conducting mortgage lending business;
(2)
Indicates or suggests by use of signage that the mortgage loan originator or the mortgage loan originator's employer utilizes the location for taking mortgage loan applications or offering or negotiating terms of mortgage loans;
(3)
Advertises that the mortgage loan originator or the mortgage loan originator's employer takes mortgage loan applications or offers or negotiates terms of mortgage loans at the location;
(4)
Maintains work space, telephone service, or internet service at the location in the name of the mortgage loan originator or the mortgage loan originator's employer for the purpose of conducting mortgage lending business;
(5)
Receives mail relating to the mortgage lending business at the location; or
(6)
Stores books or records relating to the mortgage lending business at the location.

Regulation .08 Loan Origination Under Expired License.Copy Citation

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A.
A person may not take or receive a mortgage loan application or offer or negotiate the terms of a mortgage loan without a license.
B.
Notwithstanding §A of this regulation, a mortgage loan originator operating under an expired license resulting from a failure to timely renew may offer or negotiate the terms of a mortgage loan if:
(1)
The application for the mortgage loan was taken or received before the deadline for renewal of the license; and
(2)
The licensee’s employer does not employ any other mortgage loan originator licensed by the Commissioner.

Regulation .09 Advertising and Solicitation.Copy Citation

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A.
A mortgage loan originator may not publish, or cause to be published, any advertisement, or make or cause to be made any representation, that:
(1)
Contains any false, misleading, or deceptive statements regarding the making, brokering, or servicing of mortgage loans; or
(2)
Misrepresents terms, availability, rates, or charges incident to a mortgage loan.
B.
Licensee Name and Address.
(1)
A mortgage loan originator may not advertise under any name or address other than the name and address which appear on its license.
(2)
Notwithstanding §B(1) of this regulation:
(a)
An advertisement need not disclose any address of the advertiser; and
(b)
A mortgage loan originator may advertise under any name:
(i)
By which the mortgage loan originator is commonly known; and
(ii)
Which is shown in the mortgage loan originator’s NMLSR record.
(3)
In any advertisement, a mortgage loan originator must disclose:
(a)
The name or approved trade name of the mortgage loan originator’s employer; and
(b)
The mortgage loan originator’s NMLSR Unique Identifier.
(4)
Notwithstanding §B(3) of this regulation, a mortgage loan originator who utilizes social media for advertising purposes need not disclose the name of the mortgage loan originator’s employer or the NMLSR Unique Identifier of the mortgage loan originator in each statement published through a social media platform, provided that such information is disclosed prominently on the mortgage loan originator’s home page within that social media platform.
Chapter annotations
Authority: Business Regulation Article, §2-105; Financial Institutions Article, §§ 2-105. 1, 11-602, 11-603. 1, 11-605, 11-606, 11-609, 11-612, 11-612.1,
and 11-613(b); Annotated Code of Maryland
History: Effective date: March 13, 2006 (33:5 Md. R. 519)
History: Regulation .01 amended effective March 15, 2010 (37:5 Md. R. 427)
History: Regulation .02B amended effective November 3, 2008 (35:22 Md. R. 1957); January 1, 2009 (35:26 Md. R. 2247)
History: Regulation .02B amended as an emergency provision effective July 1, 2009 (36:15 Md. R. 1159); emergency status extended at 37:3 Md. R. 170; emergency status expired effective March 15, 2010
History: Regulation .02B amended effective March 15, 2010 (37:5 Md. R. 427)
History: Regulation .03 amended effective November 3, 2008 (35:22 Md. R. 1957)
History: Regulation .03 amended as an emergency provision effective July 1, 2009 (36:15 Md. R. 1159); emergency status extended at 37:3 Md. R. 170; emergency status expired effective March 15, 2010
History: Regulation .03 amended effective March 15, 2010 (37:5 Md. R. 427)
History: Regulation .04 adopted effective November 3, 2008 (35:22 Md. R. 1957)
History: Regulation .04 amended effective March 15, 2010 (37:5 Md. R. 427)
History: Regulation .05 adopted effective November 3, 2008 (35:22 Md. R. 1957)
History: Regulation .05 repealed and new Regulation .05 adopted as an emergency provision effective July 1, 2009 (36:15 Md. R. 1159); emergency status extended at 37:3 Md. R. 170; emergency status expired effective March 15, 2010
History: Regulation .05 repealed and new Regulation .05 adopted effective March 15, 2010 (37:5 Md. R. 427)
History: Regulation .06 adopted effective January 1, 2009 (35:26 Md. R. 2247)
History: Regulation .06 repealed and new Regulation .06 adopted as an emergency provision effective July 1, 2009 (36:15 Md. R. 1159); emergency status extended at 37:3 Md. R. 170; emergency status expired effective March 15, 2010
History: Regulation .06 repealed and new Regulation .06 adopted effective March 15, 2010 (37:5 Md. R. 427)
History: Regulation .06C adopted as an emergency provision effective September 30, 2010 (37:18 Md. R. 1211); emergency status expired March 28, 2011
History: Regulation .07 adopted effective January 1, 2009 (35:26 Md. R. 2247)
History: Regulation .07 amended as an emergency provision effective July 1, 2009 (36:15 Md. R. 1159); emergency status extended at 37:3 Md. R. 170; emergency status expired effective March 15, 2010
History: Regulation .07 amended effective July 1, 2016 (43:11 Md. R. 633)
History: Regulation .07C-1 adopted effective March 15, 2010 (37:5 Md. R. 427)
History: Chapter revised effective July 31, 2017 (44:15 Md. R. 759)
History: Regulation .02B amended effective February 3, 2025 (52:2 Md. R. 67)
History: Regulation .07 amended effective February 3, 2025 (52:2 Md. R. 67)