The purpose of this chapter is to provide for the implementation and monitoring of accounts to be maintained by title insurers or title insurance producers for the benefit of the Maryland Affordable Housing Trust. In this chapter, the following terms have the meanings indicated. Terms Defined. “Act” means Insurance Article, §22-103, Annotated Code of Maryland. “Beneficial owner” means a person, other than the buyer in a real estate transaction, for whose benefit a title insurer or title insurance producer is entrusted to hold trust money. “Buyer” means a buyer in a real estate transaction. “Commissioner” means the Maryland State Insurance Commissioner. “Financial institution” means: A financial institution located in the State; or Subject to approval of the Banking Board in the Maryland Department of Labor, a financial institution outside the State that complies with the requirements of Insurance Article, Title 22, Subtitle 1, Annotated Code of Maryland. Law Firm. “Law firm” means an association of attorneys who are admitted to practice before the Court of Appeals of the State, and who: Are primarily engaged in the practice of law; and Solicit, procure, or negotiate title insurance contracts only as an incident of the practice of law. “Law firm” includes a sole practitioner. “Law firm” does not include: An attorney or an association of attorneys who own, operate, or share an interest in a title agency; or An attorney who is employed by a title agency as a title insurance producer or title insurance broker. “MAHT account” means an account established with a financial institution for the benefit of the Maryland Affordable Housing Trust. “Maryland Affordable Housing Trust (MAHT)” means the fund created under Housing and Community Development Article, Annotated Code of Maryland. “Mortgage” includes a deed of trust. “Person” means an individual, joint venture, partnership, corporation, trust, foundation, association, limited liability company, or any other legal entity. Title Agency. “Title agency” means a business formed for the primary purpose of acting as a title insurance producer. “Title agency” includes a sole proprietor, partnership, corporation, or limited liability company. Title Insurance Producer. “Title insurance producer” means a person who, for compensation, in any manner solicits, procures, or negotiates title insurance contracts. “Title insurance producer” includes a person who provides escrow, closing, or settlement services which may result in the issuance of a title insurance contract. “Title insurance producer” does not include individuals employed and used by title insurance producers for the performance of clerical, stenographic, and similar office duties. “Trust money” means a deposit, payment, or other money that a person entrusts to a title insurer or a title insurance producer to hold for a buyer or beneficial owner in connection with a real estate escrow, settlement, closing, or title indemnification. Establishment. Each title insurer or title insurance producer expecting to make trust money deposits, as set forth in §B of this regulation, shall establish one or more MAHT accounts with a financial institution. The MAHT account: May provide all of the financial services which may be required by a title insurer or a title insurance producer; Shall be an interest-bearing account; and Shall be an account which: Is permitted to be held by a title insurer or title insurance producer under federal or State law; and Charges reasonable and customary service charges for commercial accounts. Trust Money Deposits. Except as provided in §B(3) of this regulation, a title insurer or title insurance producer shall deposit all trust monies, as defined in Regulation .02B of this chapter, into a MAHT account as provided in §B(2) of this regulation. Trust money from a particular transaction shall be deposited into a MAHT account only if, in the reasonable judgement of the title insurer or the title insurance producer, the money (if deposited into a separate MAHT interest bearing account) would earn: $50 or less in interest; or More than $50 in interest, if the reasonable and customary charges of the financial institution are anticipated to be more than the interest which would be earned on the trust money if separately deposited into a MAHT interest bearing account. A law firm is not required to deposit trust monies into a MAHT account, but shall deposit those monies as may be required by any other applicable law, including the attorney trust accounts provisions of Business Occupations and Professions Article, Annotated Code of Maryland. Account Terms. The terms of a MAHT account require that: The financial institution in which the MAHT account is maintained pays the interest earned on the MAHT account, less the reasonable and customary service charges of the financial institution, at least quarterly, to MAHT; At the time of payment of interest earned to MAHT, the financial institution provides an itemized statement for each MAHT account maintained in that financial institution, which statement shall set forth: The interest earned on each MAHT account, and If requested by MAHT, an itemized statement of each service charge assessed against the MAHT account. Service Charges. Reasonable and customary charges for commercial accounts may be deducted from interest on the MAHT account, except charges for: Deposits of dishonored items; Presentations against insufficient funds; Overdrafts; Certified checks; Account reconciliations; and Wire transfers. If the aggregate service charges assessed against a title insurer or title insurance producer on all of its MAHT accounts held in a single financial institution exceed the aggregate interest earned on those MAHT accounts, the title insurer or title insurance producer is liable for payment of those service charges to the extent they exceed the earned interest. The Commissioner or MAHT may authorize a title insurer or title insurance producer to close all of its MAHT accounts or not open a MAHT account or accounts if the title insurer or title insurance producer: Demonstrates that it will cost or has cost more in reasonable and customary service charges for commercial accounts to maintain a MAHT account than will be or has been generated in interest by the MAHT account; and Agrees to open a MAHT account or accounts if the condition described in §B(3)(a) of this regulation is no longer applicable. These regulations do not preclude a financial institution from electing to waive service charges on a MAHT account. Trust money which is not required to be deposited into a MAHT account may be deposited into any other deposit or investment vehicle: Specified by the buyer or beneficial owner; or Agreed upon by the buyer or beneficial owner and the title insurer or title insurance producer. An agreement referred to in §A of this regulation between a buyer or beneficial owner and a title insurer or title insurance producer shall be in writing and either be: In a separate agreement; or If part of another agreement between the parties, in conspicuous type and initialed by the buyer or beneficial owner. Filing. Each title insurer or title insurance producer who maintains a separate MAHT account shall file an annual report with the Commissioner and MAHT. Forms. The annual report shall be prepared on a form approved by the Commissioner and shall include the following information: A list of all MAHT accounts and other bank accounts maintained by the title insurer or title insurance producer in which trust money was deposited at any time during the year, which list shall include the: Name of the account holder; Names of all persons who have access to the account; Financial institution in which the account is maintained; Account number; and Purpose of the account; Gross and net interest earned on each account; A list of the types and amounts charged for services provided to each account, together with the total amount charged for services for each account; and Any other information the Commissioner considers necessary. Date of Filing. A title insurer or title insurance producer shall file the annual report with the Commissioner and MAHT on or before March 31 for the immediately preceding year ending December 31. Review. The Commissioner and MAHT shall review the annual reports submitted by a title insurer or title insurance producer that maintains a separate MAHT account. Audit. The Commissioner may audit a title insurer or title insurance producer for compliance with this chapter. The Commissioner may examine, and a title insurer or title insurance producer shall produce for examination, any record or document of a title insurer or title insurance producer, including: Books; Records; Financial statements; Banking statements; or Documents related to a real estate escrow, settlement, closing, or title indemnification. Each title insurer or title insurance producer shall permit the Commissioner to investigate, review, and copy records or documents of a financial institution pertaining to an account of a title insurer or title insurance producer. Delegation. The Commissioner may delegate the authority to audit a title insurer or title insurance producer to MAHT for compliance with this chapter. If the Commissioner delegates its audit authority to MAHT, MAHT may audit the transactional files and related financial records of a title insurer or title insurance producer in connection with the sale or financing of real estate. If the Commissioner delegates its audit authority to MAHT, MAHT shall conduct the audit and report its findings to the Commissioner. The Commissioner may take appropriate action based upon the findings reported in the audit. Cost. The expense incurred in connection with an audit performed under this chapter shall be paid by MAHT. The Commissioner may impose on a title insurer or title insurance producer any penalty, sanction, or other form of legal enforcement which the Commissioner has the authority to impose for failure to comply with the provisions of this chapter. The Commissioner may not charge a title insurer or a title insurer's producer with a violation of ethical or legal responsibilities when placing trust funds in accounts where the interest earned is paid to the Maryland Affordable Housing Trust in accordance with this chapter. Insurance Article, §§2-109 and 22-103, Annotated Code of Maryland Effective date: March 11, 1996 (23:5 Md. R. 379) Regulation .02B amended effective May 19, 1997 (24:10 Md. R. 709) Regulation .04B amended effective May 19, 1997 (24:10 Md. R. 709) Regulation .06B amended effective May 19, 1997 (24:10 Md. R. 709) Regulation .07C, D amended effective May 19, 1997 (24:10 Md. R. 709) Regulation .08 amended effective May 19, 1997 (24:10 Md. R. 709) Chapter recodified from COMAR 09.31.06 to COMAR 31.16.03 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .01 amended effective December 14, 2009 (36:25 Md. R. 1957) Regulation .02B amended effective December 14, 2009 (36:25 Md. R. 1957) Regulation .03 amended effective December 14, 2009 (36:25 Md. R. 1957) Regulation .04B amended effective December 14, 2009 (36:25 Md. R. 1957) Regulation .05 amended effective December 14, 2009 (36:25 Md. R. 1957) Regulation .06 amended effective December 14, 2009 (36:25 Md. R. 1957) Regulation .07 amended effective December 14, 2009 (36:25 Md. R. 1957) Regulation .08 amended effective December 14, 2009 (36:25 Md. R. 1957)