Maryland Financial Institutions Section 11-506

Article - Financial Institutions

§ 11-506.

      (a)      To qualify for a license, an applicant shall satisfy the Commissioner that the applicant is of good moral character and has sufficient financial responsibility, business experience, and general fitness to:

            (1)      Engage in business as a mortgage lender;

            (2)      Warrant the belief that the business will be conducted lawfully, honestly, fairly, and efficiently; and

            (3)      Command the confidence of the public.

      (b)      (1)      Except as provided in subsection (c) of this section, to qualify for a license, the applicant shall satisfy the Commissioner that the applicant has at least 3 years of experience in the mortgage lending business.

            (2)      If the applicant is a sole proprietor, the applicant shall have the required experience.

            (3)      If the applicant is a joint venture, or general or limited partnership, at least one of the coventurers or general partners shall have the required experience.

            (4)      If the applicant is a business entity of any other kind, type, or classification, at least one of the principal officers or members shall have the required experience.

      (c)      (1)      The Commissioner may issue a license to an applicant who is a sole proprietor and who does not meet the experience requirement under subsection (b) of this section if:

                  (i)      The applicant:

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

                        2.      Holds an appointment as an insurance producer for an insurer that controls, is controlled by, or is under common control with a financial institution described in § 11-502(b)(1) of this subtitle;

                  (ii)      The applicant agrees to limit the applicant's activities to brokering mortgage loans made by the single financial institution identified under item (i)2 of this paragraph;

                  (iii)      The financial institution and affiliated insurer with which the applicant holds a current appointment are identified in the applicant's application;

                  (iv)      The Commissioner approves the selection of the financial institution based on the following criteria:

                        1.      The financial institution is in good standing with its primary State or federal regulator; and

                        2.      The financial institution is in material compliance with applicable State or federal law;

                  (v)      The applicant meets all other requirements for licensure as a mortgage lender under this subtitle;

                  (vi)      The applicant has successfully completed at least 20 hours of classroom instruction in residential mortgage lending courses as provided in regulations adopted by the Commissioner and achieved a passing grade on a written exam developed and administered by the person that conducts the classroom education course;

                  (vii)      An authorized representative of the financial institution identified under item (i)2 of this paragraph signs the license application; and

                  (viii)      The financial institution identified under item (i)2 of this paragraph agrees to:

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

                        2.      Be held jointly and severally liable with the applicant for claims arising out of the applicant's mortgage brokering activities.

            (2)      Except as provided in paragraph (3) of this subsection, a sole proprietor who is issued a license under this subsection may not:

                  (i)      Aid or assist a borrower to obtain a loan from a financial institution other than the financial institution identified in the application for the license;

                  (ii)      1.      Be compensated by any person for mortgage brokerage activities on a basis that depends on the loan amount, interest rate, fees, or other terms of the brokered loan; or

                        2.      Receive a finder's fee, as defined under Title 12, Subtitle 8 of the Commercial Law Article;

                  (iii)      Handle borrower or other third party funds in connection with the brokering or closing of mortgage loans;

                  (iv)      Refer a borrower to any other licensee under this subtitle; or

                  (v)      Make mortgage loans.

            (3)      A sole proprietor who is issued a license under this subsection may forward a check to the financial institution identified under paragraph (1)(i)2 of this subsection if:

                  (i)      The check is made payable to the financial institution from a borrower; and

                  (ii)      The check is in connection with an application for a mortgage loan to cover costs for:

                        1.      An appraisal;

                        2.      A credit report; or

                        3.      Processing an application.

      (d)      The Commissioner may deny an application for a license to any person who has been officially reprimanded or has committed any act that would be a ground for suspension or revocation of a license under this subtitle.



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