5/09/2022

Maryland Mortgage Laws

 



Home Loans In Maryland

 Mortgage licensee may not allow any note, or loan contract, mortgage, or evidence of indebtedness 

secured by a secondary mortgage or deed of trust to:

 




Be signed or executed at any place for which the person does not have a license except at attorney 

or title company offices.

Be signed or executed at any place for which the originator's lender has a branch office.

Be signed or executed at any place for which the person does not have a license

Be signed or executed at the lender's principal office.

A licensee may not allow any note, or loan contract, mortgage, or evidence of indebtedness 

secured by a secondary mortgage or deed of trust to be signed or executed 

at any place for which the person does not have a license, 

except at the office of (1) the attorney for the borrower or for the licensee; 

or (2) a title insurance company, title company or 

an attorney for a title insurance company or a title company.

 

 

Lenders may not require borrowers or title insurance companies 

to perform a title search as a settlement condition if:

 

Borrower notifies lender within seven (7) business days after loan application 

of name and address of borrowers choice.

Borrower notifies lender within seven (7) days after loan application of

 name and address of borrowers choice.

Borrower notifies lender within three (3) days after loan application of name 

and address of borrowers choice.

Borrower notifies lender within five (5) days after loan application of name 

and address of borrowers choice.

A lender may not require a borrower or title insurance company to perform a title search,

 examination of title or closing as a settlement condition if the 

borrower notifies the lender within 7 days after the loan application of the name 

and business address of the borrower's choice.

 

Any lender, his officer or employee and any other person 

who willfully violates state and federal law is 

guilty of a misdemeanor and on conviction is:

 

Subject to a fine not exceeding $1,000 per violation.

Subject to a fine not exceeding $5,000 or imprisonment not exceeding one year or both.

Subject to a fine not exceeding $1,000 or imprisonment not exceeding one year or both.

Subject to criminal penalties and imprisonment up to five years.

A person who violates any State or Federal law in the state of Maryland

 is guilty of a misdemeanor and on conviction is subject to imprisonment 

not exceeding one year or a fine not exceeding $1,000 or both.

 

 

Lender inspection fees are permitted under the following circumstances:

 

To support real estate appraiser's independent estimate of value.

To establish existence of real property for documentation when using local tax base to establish value.

To verify that a house is actually located on the property.

To determine completion of new home construction and to verify 

completion of repairs required by lender as a condition of approval.

Lenders are not allowed to impose inspection fees except when needed to determine 

completion of: (1) construction of a new home; or (2) repairs, 

alterations or other work required by the lender.

 

 Loan Origination fees are permitted in Maryland subject to

 certain restrictions which include:

 

$1,000 or 10% of net proceeds of a commercial loan of $75,000 or 

less or $500 of 10% of net proceeds of any other loan made.

$500 or 10% of net proceeds of a residential mortgage loan of $75,000 

or less or $250 or 10% of net proceeds of any other loan made.

$500 or 10% of net proceeds of a commercial loan of $75,000 or less 

or $250 or 10% of net proceeds of any other loan made plus commission, finder's fees, points.

$500 or 10% of net proceeds of a commercial loan of $75,000 or less or $250

 or 10% of net proceeds of any other loan made.

A lender may collect a loan origination fee for making a loan subject to the following restrictions: 

(1) the aggregate amount of the loan origination fee imposed by a lender - 

when combined with any finder's fee imposed by a mortgage broker

 may not exceed: (a) $500 or 10% of the net proceeds of a 

commercial loan of $75,000 or less; or (b) $250 or 10% of the net proceeds of any other loan; 

(2) a lender may not collect from the borrower any other commission, 

finder's fee or points for obtaining, procuring or placing a loan; 

(3) Origination fees are not permitted on secondary market purchase loans 

compliant to Federal Agency investors including but not limited to 

GNMA, FNMA, FHLMC, the Federal Reserve Bank and the Farmers Home Administration.


When the Commissioner investigates complaints brought by

 parties aggrieved by the licensee, the licensee will:

 

Pay to the Commissioner a per-day fee set by the Commissioner for each of the

 Commissioner's employees engaged in the investigation.

Pay to the Commissioner full reimbursement for State employees engaged in the investigation.

Pay to the Commissioner an upfront fee of $2500 plus a per-diem fee set by the

 Commissioner for each of the Commissioner's employees engaged in the investigation.

Pay a flat fee of $5,000 to the Commissioner to cover costs of the state's investigation and examination.

Any person aggrieved by the conduct of a licensee in connection with a

 mortgage loan may file a written compliant with the Commissioner 

who shall investigate the compliant. A licensee shall pay to the 

Commissioner a per-day fee set by the Commissioner 

for each of the Commissioner's employees engaged in any examination or investigation conducted.

 

 

Upon issuance of a "Cease and Desist Order" by the Commissioner, 

the licensee may be required to:

 

Terminate employment of the employee who committed the violation thereby 

eliminating the source of the violation.

To cease and desist from violation and take affirmative action to correct the violation 

including the restitution of money or property to any person aggrieved by the violation.

Terminate employment of the employee who committed the violation, thereby relieving the lender of liability.

To cease and desist from the violation and any further similar violations.

Upon issuance of a "Cease and Desist Order" by the Commissioner, 

the licensee may be required to cease and desist from the violation 

and any further similar violations and take affirmative action to correct

 the violation including the restitution of money or property to any person aggrieved by the violation.

 

 

Any unlicensed person who is not exempt from licensing 

who makes or assists a borrower in obtaining a mortgage loan

 in violation of Maryland mortgage law may collect:

 

The principal amount of the loan only and must reimburse the borrower 

all fees and charges collected by the unlicensed person 

plus rebate 15% of interest charges previously collected.

The principal amount of the loan and any interest, costs, finder's fees, broker fees, 

or other charges with respect to the loan.

Any interest, costs, broker fees, or other charges with respect to the loan.

The principal amount of the loan and may not collect any interest, costs, 

finder's fees, broker fees, or other charges with respect to the loan.

Any unlicensed person who is not exempt from licensing and 

who assists a borrower in obtaining a mortgage loan may 

collect only the principal amount of the loan and may not collect any interest, 

costs, finder's fees, brokers fees or other charges with respect to the loan.

 

 

Exempted institutions employing Registered Mortgage Originators are:

 

Relieved of any responsibility required by federal or state rules, 

laws, or regulations governing mortgage lending in the State.

Compliant to federal and state mortgage rules, laws, or regulations 

and receive exemptions from certain penalties established by the Commissioner's Office.

Relieved of responsibility required by state rules, laws,

 or regulations governing mortgage lending in the State; 

but not relieved from Federal regulation and statutes.

Not relieved of any responsibility required by federal or state rules, laws, 

or regulations governing mortgage lending in the State.

The employment of a mortgage originator licensed under Subtitle 6 

Mortgage Originator Law by a mortgage lender does not relieve the 

mortgage lender of a responsibility for ensuring that their employees follow all rules, 

regulations and laws governing mortgage lending in Maryland.

 

 

Any Mortgage Loan Originator who willfully violates 

Maryland regulation/law is guilty of a felony and:

 

On conviction is subject to a fine not exceeding $25,000 plus full restitution to

 aggrieved party or imprisonment not exceeding 10 years.

On conviction is subject to a fine not exceeding $25,000 or imprisonment not exceeding 5 years or both.

On conviction is subject to a fine not exceeding $50,000 or imprisonment not exceeding 5 years or both.

On conviction is subject to a fine not exceeding $50,000 or imprisonment not exceeding 10 years or both.

Any mortgage loan originator who willfully violates any provision, rule or regulation

 of mortgage lending law in Maryland is guilty of a felony and, on conviction, 

is subject to a fine not exceeding $25,000 or imprisonment not exceeding 5 years or both.

 

In cases where lenders are allowed by law to collect a delinquent charge, 

the borrower must, among other things, have been delinquent for a least:

 

30 calendar days

28 business days

15 business days

15 calendar days 

If a loan contract provides for a delinquent (or late charge),

 this may be collected and will not constitute interest. 

A delinquent charge of the greater of $2 or 5 percent of the 

total amount of any delinquent or late periodic installment of 

principal and interest may be levied if 1) the delinquency 

continued for at least 15 calendar days; and 

2) a delinquent or late charge has not already been charged for the same delinquency.

 

 

Under Title 12, Subtitle 1 (§ 12-103) of Maryland Commercial Law, 

when a loan is secured by a certificate of deposit held by the borrower, 

a lender may charge interest in excess of the rate payable on the 

certificate of deposit. However, the rate set by the lender 

cannot exceed the rate payable on the certificate by more than:

 

1.5 percentage points

1 percentage point

0.5 percentage point

2 percentage points

Under Title 12, Subtitle 1 (§ 12-103) of Maryland Commercial Law, 

when a loan is secured by the pledge of collateral which is a 

certificate of deposit held by the borrower, the lender may charge interest 

at a rate not to exceed 2 percent in excess of the

 rate of interest payable on the certificate of deposit.

 

 

A lending institution which lends money secured by a first mortgage 

on any interest in residential real property and creates an 

escrow account in connection with that loan 

pays interest to the borrower on the funds in the escrow account:

 

Every 6 months

Every month

Every 12 months

Every week

A lending institution which lends money secured by a first mortgage 

or first deed of trust on any interest in residential real property 

and creates or is the assignee of an escrow account in connection 

with that loan will pay interest to the borrower on the funds in the 

escrow account at the greater of: (i) a rate of 3 percent per annum simple interest;

 or (ii) the rate of interest regularly paid by the lending institution 

on regular passbook savings accounts. 

Interest on these funds will be (i) computed on the average monthly balance 

in the escrow account; 

and (ii) paid annually to the borrower by crediting the escrow account 

with the amount of interest due. 

In addition, the lending institution will annually provide the 

borrower with a statement of the escrow balance.

 

 

A lender who receives scheduled monthly periodic 

payments on more than five loans secured by an interest in real property

 must provide the borrower, at given intervals,

 a written statement informing the borrower of the following except for:

 

The payments received to cover insurance policies

The payments received towards reducing the principal

The principal balance which remains to be paid

The payments received towards the interest due

Under Title 12, Subtitle 1 (§ 12-106) of Maryland Commercial Law, 

at least annually and, on request of the borrower, 

at any other reasonable time or interval, a lender who 

receives scheduled monthly periodic payments 

on more than five loans secured by an interest in real property 

will furnish to the borrower a written statement informing 

the borrower of the amount of: 

1) the payments credited to reducing the principal; 

2) the payments credited to interest as defined in this subtitle; 

and 3) the remaining unpaid principal balance.

 

 

In the case of a commercial loan not secured by residential real property,

 lenders may charge interest at any rate under 

Title 12, Subtitle 1 (§ 12-103) of Maryland Commercial Law

 provided the loan is in excess of:

 

$15,000

$25,000

$75,000

$55,000

Under Title 12, Subtitle 1 (§ 12-103) of Maryland Commercial Law, 

lenders may charge interest at any rate if a loan is: 

1) a loan made to a corporation; 

2) a commercial loan in excess of $15,000 

not secured by residential real property; 

or 3) a commercial loan in excess of $75,000 secured by residential real property. 

Commercial loans to individuals secured by residential

 real property must comply with the provisions of § 12-407.1.

 

Under the Equal Credit Opportunity Act, when a 

creditor fails to comply with any requirements, 

an aggrieved applicant may institute a civil action for preventive relief. 

This could include the following except for:

 

An application for a permanent injunction

An application for a restraining order

An application for a cease and desist order

An application for a temporary injunction

Under the Equal Credit Opportunity Act, when a creditor fails to comply

 with any requirements, an aggrieved applicant may institute 

a civil action for preventive relief, including an application 

for a permanent or temporary injunction, restraining order, or other action. 

However, an applicant may not request a cease and desist order.



When an applicant is otherwise credit worthy and

 is not applying for a joint account, a creditor may 

request the credit rating of an applicant's spouse in the 

following circumstances except when the:

 

Applicant does not have a prior credit history.

Applicant designates their spouse as an authorized purchaser

Credit rating of the spouse is more credit worthy than that of the applicant.

Applicant lists credit references in the name of their spouse

A creditor may not request for or consider the credit rating of an 

applicant's spouse where the applicant is otherwise credit worthy 

and is not applying for a joint account unless 

1) the applicant lists credit references in the name of spouse or former spouse 

or 2) has no individual prior credit history 

or 3) the creditor permits the applicant to designate the applicant's spouse 

as an authorized purchaser on the account.

 

 

Any creditor who fails to comply with any requirement imposed under the 

Equal Opportunity Act may be liable for punitive damages

 in the case of a class action. However, the total recovery

 in such action will not exceed the lesser of:

 

$100,000 or 5 percent of the net worth of the creditor

$100,000 or 1 percent of the net worth of the creditor.

$10,000 or 1 percent of the net worth of the creditor

$50,000 or 0.5 percent of the net worth of the creditor

Any creditor who fails to comply with any requirement imposed 

under this subtitle may be liable for punitive damages in the case of a 

class action in such amount as the court may allow, except that as to each member 

of the class no minimum recovery will be applicable, 

and the total recovery in such action will not exceed the lesser of $100,000 

or 1 percent of the net worth of the creditor. 

In determining the amount of award in any class action, 

the court will consider, among other relevant factors, 

the amount of any actual damages awarded, 

the frequency and persistence of failures of compliance by the creditor, 

the resources of the creditor, 

the number of persons adversely affected, a

nd the extent to which the creditor's failure of compliance was intentional.

 

 

With respect to any aspect of a credit transaction, a creditor may legally refuse to:

 

Consider the credit rating of an applicant's spouse if an applicant is unable to

 provide a personal credit history

Recognize the legal name of a married person

Consider child support as a valid source of income if its amount, length of time received and regularity of receipt cannot be verified

Consider both applicants' income when both parties of a marriage apply for a joint account

With respect to any aspect of a credit transaction, a creditor is not allowed to: 

1) refuse to consider both applicants' income when both parties of a 

marriage party apply for a joint account; 

2) refuse to consider alimony or child support awarded by a court 

and received by the applicant as a valid source of income, 

where that source can be verified as to its amount, 

length of time received, and regularity of receipt; 

3) refuse to extend credit to any person solely because of marital status 

or change in marital status; 

4) refuse to issue separate accounts to married persons where 

each would be credit worthy if unmarried; 

5) request the credit rating of an applicant's spouse where 

the applicant is otherwise credit worthy and is not applying for a

 joint account unless the applicant lists credit references 

in the name of spouse or former spouse or has no individual prior credit history 

or the creditor permits the applicant to designate the applicant's spouse 

as an authorized purchaser .

 

 

If, following a hearing, the Commissioner finds that a 

creditor has engaged in any prohibited practice, 

the creditor will be ordered to cease and desist for that practice. 

Such order will become final in the following circumstances except:

 

After the court has affirmed the order, if an appeal is filed

After the court has dismissed the appeal, if an appeal is filed

After the expiration of the time allowed by the Administrative Procedure Act, even if an appeal if filed

After the expiration of the time allowed by the Administrative Procedures Act, if no appeal is filed

If, after a hearing, the Commissioner finds that the creditor has 

engaged or is engaging in any act or practice prohibited by this subtitle, 

the Commissioner will order the creditor to cease and desist 

from the act or practice as per the Administrative Procedures Act.

 If no appeal is filed, the order will become final after 

expiration of the time allowed by the Administrative Procedures Act 

for appeals from the Commissioner's orders.

 If an appeal is filed, the order will become final after the

 final decision of the court affirming the order or dismissing the appeal. 

When the Commissioner gives written notice of a complaint

 to a credit grantor, the credit grantor must be given at least:

 

5 days' notice prior to the hearing

7 days' notice prior to the hearing

10 days' notice prior to the hearing

3 days' notice prior to the hearing

The Commissioner will give to the credit grantor against whom a 

complaint is filed written notice of the complaint and the time and place of any hearing. 

The notice will be in writing and must be sent by certified mail, 

return receipt requested, to the credit grantor's principal 

place of business at least 10 days prior to the date of the hearing.

 

Under Title 14, Subtitle 17 of Maryland Commercial Law, 

following the receipt by the lender or credit grantor of a request, 

the applicant will have the right to receive a statement of reasons within:

 

Three days

Fifteen days

Thirty days

Ten days

The written statement required by § 14-1702 of this subtitle shall disclose to the applicant 

(1) the applicant's right to a statement of reasons within 30 days after receipt

 by the lender or credit grantor of a request made within 

60 days after notification, made under § 14-1702(a) of this subtitle; 

(2) the identity of the person or office from which the statement 

of reasons may be obtained; 

and (3) the right of the applicant to have the statement of reasons confirmed in writing on written request.

 

A person found to have counterfeited letters of credit would be 

guilty of a felony and, on conviction, would be subject to:

 

Imprisonment for up to 10 years or a fine not exceeding $100,000 or both

Imprisonment for up to 10 years or a fine not exceeding $10,000 or both

Imprisonment for up to 5 years or a fine not exceeding $10,000 or both

Imprisonment for up to 10 years or a fine not exceeding $ 1,000 or both.

A person found to have counterfeited letters of credit, bonds, checks, deeds, drafts, 

endorsements or assignments of a bond, drafts, checks, or promissory notes, 

entries in account books or ledgers, negotiable instruments, powers of attorney, 

promissory notes, releases or discharges for money or property, titles to motor vehicles, 

waivers or releases of mechanics' lien or wills or codicils would be guilty of a felony 

and on conviction would be subject to imprisonment not exceeding 

10 years or a fine not exceeding $ 1,000 or both.

 

 

Following receipt of a completed application for credit, 

a lender must notify the applicant of the action taken on the application within:

 

7 days

21 days

30 daysYou should have checked this.

15 days

Following receipt of a completed application for credit, a lender must notify the applicant of the action taken on the application within 30 days.

 

 

The practice by which payments on a loan are allocated between the outstanding principal balance and interest and where payments are applied first to the accumulated interest and any remainder is subtracted from the outstanding principal balance is known as the:

 

Interest and principal method

US rule method

Principal and interest method

Actuarial method

The actuarial method is the method of allocating payments made on a loan between the outstanding principal balance of the loan and interest, by which a payment is applied first to the accumulated interest, and any remainder is subtracted from the outstanding principal balance of the loan.

f a fee is to be paid from loan proceeds, the lender must comply with:

 

Disclosure requirements of the law by advising borrower of the fee at settlement.

Disclosure requirements of the law by advising borrower in writing of the fee at time of interest rate lock.

Disclosure requirements of the law by advising borrower in writing, of borrower's right to refund if he or she exercises right of rescission.

Disclosure requirements of the law by advising borrower in writing of the fee at time of mortgage commitment.

If the Finder's Fee is to be paid from the loan proceeds, the lender must comply with disclosure requirements of the law by advising the borrower in writing of the borrower's right to a refund if they exercise their right of rescission.

 

The State of Maryland dictates that the separate Finders Fee Disclosure be signed by the broker and delivered to the applicant within:

 

Ten business days of application date

Ten calendar days of application date

Three business days of application date

Three calendar days of application date

Broker's must provide a dated and broker-signed copy of the Finder's Fee Agreement to the borrower within 10 business days after the date the loan application is completed.

 

 

The Maryland Finders Fee Law was legislated to 

protect consumers by:

 

Adding additional mandated disclosures to the application package that the applicant is required to sign.

Monitoring and eliminating repetitive and excessive fees; 

and by removing financial incentive for mortgage brokers 

engaged in loan flipping.

Requiring brokers to disclose the fee to the consumer more than once to ensure the consumer understands.`

Requiring brokers to register and lock borrower interest rates with Lenders immediately upon execution of the rate lock disclosure.

Maryland's Finder's Fee Law reduces abusive loan flipping and excessive fees charged by brokers to consumers.

 

 Terms of the proposed Finder's Fee agreement must 

be disclosed to the borrower:

 

Before the mortgage broker begins work to 

secure a loan or advance of money on the borrower's behalf.

At time of application or within three business 

days of receipt of application.

Seventy-two hours prior to mortgage settlement.

Before the mortgage broker locks the interest rate with a lender.

The Finder's Fee agreement will be separate from any other disclosure. 

The terms of the proposed agreement must 

be disclosed to the borrower before the mortgage broker begins work on the loan.

 The agreement shall specify the amount of the fee 

and must contain a representation that the

 mortgage broker is acting as a broker 

and not as a mortgage lender in the transaction.

 

Brokers are restricted from specific relationships 

with the lenders in which they place loans.

 Subject to this restriction, 

which of the following statements is not true?

 

A mortgage broker may not be a director, officer, or employee of any lender where he places a loan

A mortgage broker may not charge a finder's fee in any transaction in which the mortgage broker or an owner, 

part owner, partner, director, officer, or employee 

of the mortgage broker is a principal in a related firm.

A mortgage broker may not be a partner 

(silent or otherwise) of any lender where he places a loan.

A mortgage broker may not charge a loan origination fee 

in any transaction in which the mortgage broker or an owner, 

part owner, partner, director, officer, 

or employee of the mortgage broker 

serves any similar position at the lender.

A mortgage broker may not charge a finder's fee 

in any transaction in which the mortgage broker 

or an owner, part owner, partner, director, officer, 

or employee of the mortgage broker is the lender or an owner, 

part owner, partner, director, officer or employee of the lender.

A finder's fee under Maryland State law is defined as:

 

A fee paid to anyone that "finds" or recovers something.

Any compensation or commission directly or indirectly imposed by a broker.

Any fee paid directly to the borrower for the purpose of securing a loan from a Lender.

Any compensation or commission directly or indirectly imposed by a broker and paid by or on behalf of the borrower for the broker's services.

A Finder's Fee means any compensation or commission directly or indirectly imposed by a broker and paid by or on behalf of the borrower for the broker's services in procuring, arranging, or otherwise assisting a borrower in obtaining a loan or advance of money.

 

Maryland's Finders Fee Law limits a mortgage broker's 

finder's fee on subsequent loans on the same property

 in a twenty-four month period to:

 

Six percent of the amount by which the subsequent loan exceeds the initial loan.

Eight percent of the total loan amount.

Six percent of the total loan amount.

Eight percent of the amount by which the subsequent loan exceeds the initial loan.

Maryland's Finder's Fee Law limits a mortgage broker's 

finder's fee to eight percent of the total loan amount brokered, 

and limits the fee on subsequent loans on the 

same property in a twenty-four month period to 

eight percent of the amount by which the subsequent 

loan exceeds the initial loan.

 

 

The State of Maryland dictates that the separate 

Finders Fee Disclosure be signed by the broker and 

delivered to the applicant within:

 

Three calendar days of application date

Ten calendar days of application date

Three business days of application date

Ten business days of application date

Broker's must provide a dated and broker-signed copy of the Finder's Fee Agreement to the borrower 

within 10 business days after the date the 

loan application is completed.

 

 

Borrowers are entitled to a refund of any finders fee paid to mortgage broker if:

 

The loan is not properly disclosed or re-disclosed under RESPA and/or Maryland Mortgage Law.

Loan transaction is not made to borrower or 

borrower exercised right to rescind the loan 

transaction under the Truth-in-Lending Act of 

similar state and federal laws..

The borrower requests a transfer of all loan information and documentation to a different broker prior to approval.

The borrower withdraws the mortgage application prior to settlement.

Borrowers are entitled to a refund of any finder's fee paid to a mortgage broker if: 

(1) the loan transaction is not made to the borrower; 

or (2) the Borrower exercised their right to rescind the 

loan transaction under the Truth-in-Lending Act 

of similar state and federal laws.

 

A finders fee may not be charged without:

 

A separate written agreement between the broker and the lender.

A separate written agreement between the broker and the borrower.

A separate written agreement between the broker, the lender, and the borrower.

A separate written agreement between the lender and the borrower.

A Finder's Fee may not be charged without a 

separate written agreement between the broker 

and the borrower. 

This disclosure will be separate from any other disclosure. 

The terms of the proposed agreement 

must be disclosed to the borrower 

before the mortgage broker begins work on the loan. 

The agreement shall specify the amount of the fee 

and must contain a representation that the 

mortgage broker is acting as a broker 

and not as a mortgage lender in the transaction.

 


Any lender, his officer or employee and any other person who willfully violates state and federal law is guilty of a misdemeanor and on conviction is:

 

Subject to criminal penalties and imprisonment up to five years.

Subject to a fine not exceeding $1,000 or imprisonment not exceeding one year or both.

Subject to a fine not exceeding $1,000 per violation.

Subject to a fine not exceeding $5,000 or imprisonment not exceeding one year or both.

A person who violates any State or Federal law in 

the state of Maryland is guilty of a misdemeanor 

and on conviction is subject to imprisonment 

not exceeding one year or a fine not exceeding 

$1,000 or both.

 

 

When calculating a refund following the prepayment 

of a loan, the credit grantor, at its option, 

may round the annual percentage rate 

of the unearned portion of the  

precomputed interest charge to the nearest:

 

0.25 percent.

0.20 percent

0.10 percent

0.15 percent

When calculating a refund following the 

prepayment of a loan, the credit grantor, 

at its option, may round the annual percentage rate 

of the unearned portion of the precomputed 

interest charge to the nearest 1/4 (0.25) of 1 percent.

 

 

Exempted institutions employing 

Registered Mortgage Originators are:

 

Relieved of responsibility required by state rules, laws, or regulations governing mortgage lending in the State; but not relieved from Federal regulation and statutes.

Compliant to federal and state mortgage rules, laws, or regulations and receive exemptions from certain penalties established by the Commissioner's Office.

Not relieved of any responsibility required by 

federal or state rules, laws, 

or regulations governing mortgage lending in the State.

Relieved of any responsibility required by federal or state rules, laws, or regulations governing mortgage lending in the State.

The employment of a mortgage originator licensed 

under Subtitle 6 Mortgage Originator Law 

by a mortgage lender does not relieve the 

mortgage lender of a responsibility for ensuring 

that their employees follow all rules, 

regulations and laws governing mortgage lending in Maryland.

 

The Maryland Finders Fee Law was legislated 

to protect consumers by:

 

Requiring brokers to register and lock borrower 

interest rates with Lenders immediately upon 

execution of the rate lock disclosure.

Adding additional mandated disclosures to the application package that the applicant is required to sign.

Requiring brokers to disclose the fee to the consumer 

more than once to ensure the consumer understands.`

Monitoring and eliminating repetitive and excessive fees; 

and by removing financial incentive for mortgage brokers engaged in loan flipping.

Maryland's Finder's Fee Law reduces 

abusive loan flipping and excessive fees

 charged by brokers to consumers.

 


When an applicant is otherwise credit worthy 

and is not applying for a joint account, 

a creditor may request the credit rating of an 

applicant's spouse in the following circumstances 

except when the:

 

Applicant designates their spouse as an authorized purchaser

Applicant does not have a prior credit history

Applicant lists credit references in the name of their spouse

Credit rating of the spouse is more credit worthy than that of the applicant

A creditor may not request for or consider the 

credit rating of an applicant's spouse where the applicant is otherwise credit worthy and is not applying for a 

joint account unless 

1) the applicant lists credit references in the name of spouse or former spouse 

or 2) has no individual prior credit history 

or 3) the creditor permits the applicant to designate 

the applicant's spouse as an authorized purchaser on the account.

 

 

When the Commissioner investigates complaints 

brought by parties aggrieved by the licensee, 

the licensee will:

 

Pay to the Commissioner an upfront fee of $2500 

plus a per-diem fee set by the Commissioner for each of the Commissioner's employees engaged in the investigation.

Pay a flat fee of $5,000 to the Commissioner to 

cover costs of the state's investigation and examination.

Pay to the Commissioner a per-day fee set by the

 Commissioner for each of the Commissioner's 

employees engaged in the investigation.

Pay to the Commissioner full reimbursement for State employees engaged in the investigation

Any person aggrieved by the conduct of

 a licensee in connection with a mortgage loan 

may file a written compliant with the Commissioner who shall investigate the compliant. 

A licensee shall pay to the Commissioner 

a per-day fee set by the Commissioner for each of the Commissioner's employees engaged in any examination or investigation conducted.

 

If, following a hearing, the Commissioner 

finds that a creditor has engaged in any prohibited 

practice, the creditor will be ordered to cease and desist 

for that practice. 

Such order will become final in the 

following circumstances except:

 

After the expiration of the time allowed by 

the Administrative Procedures Act, if no appeal is filed

After the court has dismissed the appeal, if an appeal is filed

After the court has affirmed the order, if an appeal is filed

After the expiration of the time allowed by the 

Administrative Procedure Act, even if an appeal if filed

If, after a hearing, the Commissioner finds

 that the creditor has engaged or is engaging in 

any act or practice prohibited by this subtitle,

 the Commissioner will order the creditor to 

cease and desist from the act or practice as per

 the Administrative Procedures Act. 

If no appeal is filed, the order will become final

 after expiration of the time allowed by the Administrative Procedures Act for appeals from the Commissioner's orders.

 If an appeal is filed, 

the order will become final after the final decision of the court affirming the order or dismissing the appeal.

 

A finder's fee under Maryland State law is defined as:

 

Any compensation or commission directly 

or indirectly imposed by a broker and paid by or on 

behalf of the borrower for the broker's services.

Any compensation or commission directly or indirectly imposed by a broker.

A fee paid to anyone that "finds" or recovers something.

Any fee paid directly to the borrower for the purpose of securing a loan from a Lender.

A Finder's Fee means any compensation or 

commission directly or indirectly imposed by a 

broker and paid by or on behalf of the borrower for the broker's 

services in procuring, arranging, or otherwise assisting 

a borrower in obtaining a loan or advance of money.

 


A person who takes a mortgage loan application 

or offers or negotiates terms of a mortgage loan 

for compensation or gain is:

 

A mortgage loan originator.

A mortgage loan correspondent.

A table-funder.

Any employee of a financial institution.

A mortgage loan originator is an individual 

who for compensation or gain, or in the expectation of compensation or gain, takes a loan application 

or offers or negotiates terms of a mortgage loan. 

A mortgage loan correspondent originates 

and closes loans in their own name using funds provided by wholesale table-funders. 

A wholesale table-funder provides funding for

 closing mortgage through correspondents

 and obtains title through assignments.

 


Once the mortgage license is issued, business licensees and originators are required to:

 

Post the license in the President's office and 

make available upon request.

Post a list of all approved mortgage originators 

under the license beside the license.

Display the mortgage license with it's 

"unique identifier" in conspicuous places that 

consumers may view.

File the license and have available for review 


by the Department of Financial Regulation 

when they conduct the on-site examination.

Every mortgage licensee shall display the license

 with their unique identifier assigned by NMLSR 

in a conspicuous place; include their 

unique identifier in all mortgage loan documents, 


advertisements and any form required by regulation;

 and transact business with exact name as issued 

on the license.

 


With respect to any aspect of a credit transaction, 

a creditor may legally refuse to:

 

Recognize the legal name of a married person

Consider child support as a valid source of income 

if its amount, length of time received and 

regularity of receipt cannot be verified

Consider the credit rating of an applicant's 


spouse if an applicant is unable to provide a

 personal credit history

Consider both applicants' income when 

both parties of a marriage apply for a joint account

With respect to any aspect of a credit transaction, 

a creditor is not allowed to: 

1) refuse to consider both applicants' income 

when both parties of a marriage party apply for a

 joint account; 

2) refuse to consider alimony or child support

 awarded by a court and received by the applicant

 as a valid source of income, 

where that source can be verified as to its amount, 

length of time received, and regularity of receipt; 

3) refuse to extend credit to any person solely 

because of marital status or change in marital status; 

4) refuse to issue separate accounts to 

married persons where each would be 

credit worthy if unmarried; 

5) request the credit rating of an 

applicant's spouse where the applicant 

is otherwise credit worthy and is 

not applying for a joint account 

unless the applicant lists credit references 

in the name of spouse or former spouse 

or has no individual prior credit history 

or the creditor permits the applicant to 

designate the applicant's spouse as an authorized purchaser .

 


Adverse action may refer to any of the following except:

 

The imposition of a late-payment chargeYou correctly checked this.

A change in the terms of an existing credit arrangement

The denial of credit

The revocation of credit

The expression 'adverse action' may refer to either 1) a denial or revocation of credit or 2) a change in the terms of an existing credit arrangement or 3) a refusal to grant credit in substantially the amount or on substantially the terms requested. A late-payment charge is not considered an adverse action.

 

Question 14

Brokers are restricted from specific relationships with the lenders in which they place loans. Subject to this restriction, which of the following statements is not true?

 

A mortgage broker may not be a partner (silent or otherwise) of any lender where he places a loan.

A mortgage broker may not charge a loan origination fee in any transaction in which the mortgage broker or an owner, part owner, partner, director, officer, or employee of the mortgage broker serves any similar position at the lender.

A mortgage broker may not be a director, officer, or employee of any lender where he places a loan.

A mortgage broker may not charge a finder's fee in any transaction in which the mortgage broker or an owner, part owner, partner, director, officer, or employee of the mortgage broker is a principal in a related firm.You correctly checked this.

A mortgage broker may not charge a finder's fee in any transaction in which the mortgage broker or an owner, part owner, partner, director, officer, or employee of the mortgage broker is the lender or an owner, part owner, partner, director, officer or employee of the lender.

 

 

Loan Origination fees are permitted in Maryland subject to certain restrictions which include:

 

$500 or 10% of net proceeds of a commercial loan of $75,000 or less or $250 or 10% of net proceeds of any other loan made.You should have checked this.

$500 or 10% of net proceeds of a residential mortgage loan of $75,000 or less or $250 or 10% of net proceeds of any other loan made.

$500 or 10% of net proceeds of a commercial loan of $75,000 or less or $250 or 10% of net proceeds of any other loan made plus commission, finder's fees, points.

$1,000 or 10% of net proceeds of a commercial loan of $75,000 or less or $500 of 10% of net proceeds of any other loan made.

A lender may collect a loan origination fee for making a loan subject to the following restrictions: (1) the aggregate amount of the loan origination fee imposed by a lender - when combined with any finder's fee imposed by a mortgage broker may not exceed: (a) $500 or 10% of the net proceeds of a commercial loan of $75,000 or less; or (b) $250 or 10% of the net proceeds of any other loan; (2) a lender may not collect from the borrower any other commission, finder's fee or points for obtaining, procuring or placing a loan; (3) Origination fees are not permitted on secondary market purchase loans compliant to Federal Agency investors including but not limited to GNMA, FNMA, FHLMC, the Federal Reserve Bank and the Farmers Home Administration.

 

 

With respect to any aspect of a credit transaction, a creditor may legally refuse to:

 

Issue separate accounts to a married couple where each would be credit worthy if unmarried

Extend credit to any person solely because of marital status or change in marital status

Evaluate a credit application if an applicant refuses to divulge information about their birth-control practices

Consider the credit rating of an applicant's spouse if the applicant chooses to designate his spouse as an authorized purchaser on the accountYou correctly checked this.

With respect to any aspect of a credit transaction, a creditor is not allowed to request the credit rating of an applicant's spouse where the applicant is otherwise credit worthy and is not applying for a joint account unless the applicant lists credit references in the name of spouse or former spouse or has no individual prior credit history or the creditor permits the applicant to designate the applicant's spouse as an authorized purchaser on the account. This means that the creditor is not legally obliged to allow an applicant to name a spouse as an authorized purchaser of an account. The creditor may therefore legally refuse to consider the credit rating of an applicant's spouse.

 

Question 17

Under Maryland Mortgage Lender Law, subsidiaries and affiliates of financial institutions must:

 

Do nothing, they are exempt from licensing in Maryland.

Register with NMLS only.

License in Maryland when they maintain the principal office in Maryland.You should have checked this.

Meet special minimum net worth and insurance requirements as a condition of licensing.

The Maryland Mortgage Lender law requires subsidiaries and affiliates of (1) any bank, trust company, savings bank, savings and loan association, or credit union incorporated of chartered under the laws of Maryland or the United States that maintains its principal office in Maryland; (2) any out-of-state bank; (3) any institution incorporated under federal law as a savings association or savings bank that does not maintain its principal office in Maryland but has a branch that accepts deposits in Maryland to file with the Commissioner, prior to making mortgage loans, information sufficient to identity the entity.

 

 

The practice by which payments on a loan are allocated between the outstanding principal balance and interest and where payments are applied first to the accumulated interest and any remainder is subtracted from the outstanding principal balance is known as the:

 

Interest and principal method

Principal and interest method

US rule method

Actuarial methodYou correctly checked this.

The actuarial method is the method of allocating payments made on a loan between the outstanding principal balance of the loan and interest, by which a payment is applied first to the accumulated interest, and any remainder is subtracted from the outstanding principal balance of the loan

A lending institution which lends money secured by a first mortgage on any interest in residential real property and creates an escrow account in connection with that loan will pay interest to the borrower on the funds in the escrow account:

 

Every 12 monthsYou correctly checked this.

Every week

Every month

Every 6 months

A lending institution which lends money secured by a first mortgage or first deed of trust on any interest in residential real property and creates or is the assignee of an escrow account in connection with that loan will pay interest to the borrower on the funds in the escrow account at the greater of: (i) a rate of 3 percent per annum simple interest; or (ii) the rate of interest regularly paid by the lending institution on regular passbook savings accounts. Interest on these funds will be (i) computed on the average monthly balance in the escrow account; and (ii) paid annually to the borrower by crediting the escrow account with the amount of interest due. In addition, the lending institution will annually provide the borrower with a statement of the escrow balance.

 

When investigating a complaint for violation of any provisions of the Maryland Commercial Law Code, the Commissioner will investigate the complaint and may hold a hearing on it in accordance with the:

 

Administrative Procedures Code

Administrative Procedures ActYou correctly checked this.

Administrative Provisions Code

Administrative Provisions Act

When investigating a complaint for violation of any provisions of the Maryland Commercial Law Code, the Commissioner will investigate the complaint and may hold a hearing on it in accordance with the Administrative Procedures Act. The Commissioner will give to the creditor complained against at least 10 days' written notice of the complaint and the time and place of any hearing. The notice will be in writing and sent by registered or certified mail to the creditor's principal place of business

Following receipt of a completed application for credit, a lender must notify the applicant of the action taken on the application within:

 

30 daysYou correctly checked this.

21 days

7 days

15 days

Following receipt of a completed application for credit, a lender must notify the applicant of the action taken on the application within 30 days.

 

Lender inspection fees are permitted under the following circumstances:

 

To establish existence of real property for documentation when using local tax base to establish value.

To determine completion of new home construction and to verify completion of repairs required by lender as a condition of approval.You correctly checked this.

To verify that a house is actually located on the property.

To support real estate appraiser's independent estimate of value.

Lenders are not allowed to impose inspection fees except when needed to determine completion of: (1) construction of a new home; or (2) repairs, alterations or other work required by the lender.

Under Title 12, Subtitle 10 of Maryland Commercial Law, when a charge is made to a borrower for premiums for insuring them under an insurance policy, then, in the event of prepayment in full, the credit grantor will refund or credit to the borrower any unearned premiums paid by the borrower provided that the refund or credit is in excess of:

 

$5You correctly checked this.

$1

$10

$15

If a charge is made to a consumer borrower for premiums for insuring the borrower under an insurance policy pursuant to Title 12, Subtitle 10 of Maryland Commercial Law, then, in the event of prepayment in full, the credit grantor will refund or credit to the borrower any unearned premiums paid by the borrower, provided that no refund or credit of less than $5 will be required.

Under Title 12, Subtitle 1 (§ 12-103) of Maryland Commercial Law, when a loan is secured by a certificate of deposit held by the borrower, a lender may charge interest in excess of the rate payable on the certificate of deposit. However, the rate set by the lender cannot exceed the rate payable on the certificate by more than:

 

0.5 percentage point

1 percentage point

2 percentage pointsYou correctly checked this.

1.5 percentage points

Under Title 12, Subtitle 1 (§ 12-103) of Maryland Commercial Law, when a loan is secured by the pledge of collateral which is a certificate of deposit held by the borrower, the lender may charge interest at a rate not to exceed 2 percent in excess of the rate of interest payable on the certificate of deposit.

 

Upon issuance of a "Cease and Desist Order" by the Commissioner, the licensee may be required to:

 

Terminate employment of the employee who committed the violation, thereby relieving the lender of liability.

To cease and desist from the violation and any further similar violations.

Terminate employment of the employee who committed the violation thereby eliminating the source of the violation.

To cease and desist from violation and take affirmative action to correct the violation including the restitution of money or property to any person aggrieved by the violation.You correctly checked this.

Upon issuance of a "Cease and Desist Order" by the Commissioner, the licensee may be required to cease and desist from the violation and any further similar violations and take affirmative action to correct the violation including the restitution of money or property to any person aggrieved by the violation.

Under the Equal Credit Opportunity Act, when a creditor fails to comply with any requirements, an aggrieved applicant may institute a civil action for preventive relief. This could include the following except for:

 

An application for a permanent injunction

An application for a cease and desist orderYou should have checked this.

An application for a temporary injunction

An application for a restraining order

Under the Equal Credit Opportunity Act, when a creditor fails to comply with any requirements, an aggrieved applicant may institute a civil action for preventive relief, including an application for a permanent or temporary injunction, restraining order, or other action. However, an applicant may not request a cease and desist order.

Score: 0%

Question 27

Any unlicensed person who is not exempt from licensing who makes or assists a borrower in obtaining a mortgage loan in violation of Maryland mortgage law may collect:

 

The principal amount of the loan and any interest, costs, finder's fees, broker fees, or other charges with respect to the loan.

The principal amount of the loan only and must reimburse the borrower all fees and charges collected by the unlicensed person plus rebate 15% of interest charges previously collected.

Any interest, costs, broker fees, or other charges with respect to the loan.

The principal amount of the loan and may not collect any interest, costs, finder's fees, broker fees, or other charges with respect to the loan.You correctly checked this.

Any unlicensed person who is not exempt from licensing and who assists a borrower in obtaining a mortgage loan may collect only the principal amount of the loan and may not collect any interest, costs, finder's fees, brokers fees or other charges with respect to the loan.

 

Question 28

Under Title 14, Subtitle 17 of Maryland Commercial Law, following the receipt by the lender or credit grantor of a request, the applicant will have the right to receive a statement of reasons within:

 

Thirty daysYou correctly checked this.

Fifteen days

Three days

Ten days

The written statement required by § 14-1702 of this subtitle shall disclose to the applicant (1) the applicant's right to a statement of reasons within 30 days after receipt by the lender or credit grantor of a request made within 60 days after notification, made under § 14-1702(a) of this subtitle; (2) the identity of the person or office from which the statement of reasons may be obtained; and (3) the right of the applicant to have the statement of reasons confirmed in writing on written request.

 

Question 29

Lenders may not require a particular attorney or title insurance company if:

 

Borrower notifies lender of their choice within 7 days after application and lender doesn't reject the choice.You correctly checked this.

Borrower notifies lender of their choice 7 days prior to closing and lender doesn't reject the choice.

Borrower notifies lender of their choice within 15 days after application and lender doesn't reject the choice.

Realtor names the settlement agent in the purchase agreement.

A lender may not require as a condition of settlement that a borrower employ a particular attorney or title insurance company to perform a title search, examination of title or closing if: (1) the borrower notifies the lender, within 7 days after application for the loan, of the name and business address of the borrower's choice of attorney or title insurance company; (2) the lender doesn't reject the borrower's choice of attorney or title insurance company for good cause within 7 days after the receipt of the attorney fee disclosure. Lenders are not prohibited from requiring a borrower to pay for preparation of loan closing documents, title insurance, review of documents prepared by the borrower's attorney or attendance at settlement by the lender's attorney.

 

Question 30

Maryland's Finders Fee Law limits a mortgage broker's finder's fee on subsequent loans on the same property in a twenty-four month period to:

 

Six percent of the amount by which the subsequent loan exceeds the initial loan.

Eight percent of the total loan amount.

Six percent of the total loan amount.

Eight percent of the amount by which the subsequent loan exceeds the initial loan.You correctly checked this.

Maryland's Finder's Fee Law limits a mortgage broker's finder's fee to eight percent of the total loan amount brokered, and limits the fee on subsequent loans on the same property in a twenty-four month period to eight percent of the amount by which the subsequent loan exceeds the initial loan.

 

Question 31

On conviction of a misappropriation or conversion penalty, licensees are subject to:

 

To a fine not to exceed $100,000 or imprisonment not exceeding 25 years or both.

To a fine not to exceed $100,000 or imprisonment not exceeding 15 years or both.You should have checked this.

To a fine not exceeding $50,000 or imprisonment not exceeding 10 years or both.

To a fine not exceeding $25,000 or imprisonment not exceeding 5 years or both.

Any mortgage lender or employee or agent of a mortgage lender who willfully misappropriates or intentionally and fraudulently converts borrower fund in excess of $300 to their own use is guilty of a felony and, on conviction, is subject to a fine not exceeding $100,000 or imprisonment not exceeding 15 years or both.

In the mortgage industry, a general definition of a finder's fee is:

 

An amount of money given to the person who brings sellers and lenders together.

A fee paid to anyone that "finds" or recovers something.

An amount of money, usually calculated as a percentage, given to the person who brings buyers, sellers and lenders together.You correctly checked this.

An amount of money, usually calculated as a pre-determined or arranged one-time fee, given to the person who brings buyers, sellers and lenders together.

A general definition of a finder's fee is any amount of money, usually calculated as a percentage, that is given to the person who brings buyers, sellers and lenders together.

 

Question 33

The State of Maryland dictates that the separate Finders Fee Disclosure be signed by the broker and delivered to the applicant within:

 

Three calendar days of application date

Ten calendar days of application date

Ten business days of application dateYou correctly checked this.

Three business days of application date

Broker's must provide a dated and broker-signed copy of the Finder's Fee Agreement to the borrower within 10 business days after the date the loan application is completed.

 

Question 34

The state of Maryland prohibits mortgage licensing for:

 

An applicant who is a registered mortgage originator in another state.

An applicant who has been pardoned for a conviction.

Any federal crime for which the maximum punishment authorized by law exceeds one-year of imprisonment.You correctly checked this.

An applicant who complies to Maryland mortgage laws.

The state of Maryland prohibits mortgage licensing if the applicant had any federal crime for which the maximum punishment authorized by law exceeds one-year of imprisonment.

 

Question 35

A person who provides funding for closing mortgage loans through mortgage loan correspondents and obtains title through assignments at settlement is :

 

Wholesale Table-FunderYou should have checked this.

Mortgage Broker

Mortgage loan correspondent.

Mortgage Lender

A wholesale table-funder provides funding for closing mortgage through correspondents and obtains title through assignments. A mortgage loan correspondent originates and closes loans in their own name using funds provided by wholesale table-funders. A mortgage broker means a person who (1) for a fee or other valuable consideration assists a borrower in obtaining a loan; and (2) is not named as a lender in the agreement, note, deed of trust or other evidence of the indebtedness. A mortgage lender means any person who (1) is a mortgage broker; (2) makes a loan to any person; or (3) engages in whole or in part in the business of servicing mortgage loans for others or collect or otherwise receives payments on mortgage loans directly from borrower for distribution to any other person.