Copyright, 2009 Maryland Licensing Laws for Mortgage Brokers October 7, 2009 Marjorie A. Corwin Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC 233 East Redwood Street Baltimore, Maryland

Today’s Presentation ■ What education is now required by Maryland for both the Mortgage Lender (company) license and the Mortgage Loan Originator (individual) license? ■ What Maryland laws and regulations apply to MLOs and their employers? ■ What will be covered on the new MLO continuing education test? ■ What are “hot” Maryland compliance issues?

Maryland Licensing Law Effective July 1, 2009, Maryland licensing law changed to comply with the federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)  Chapter 4 of the 2009 Laws of Maryland (introduced as Senate Bill 269)  Found at

Maryland Licensing Law Requires mortgage lenders, brokers, and servicers to be licensed (“company level” licensing) and Requires mortgage loan originators to be licensed (“individual level” licensing)

Minimum Requirements for Company License Commissioner may not issue ML (company) license unless she finds: 1)Sufficient financial responsibility, experience, and fitness to warrant belief that business will be conducted lawfully, fairly, and efficiently 2)3 years of experience in mortgage lending business 3)No felony conviction involving fraud, theft, or forgery within last 10 years 4)Net worth requirements 5)Surety bond requirements

Continuing Education for Company Renewal License Education is required in order to renew a Mortgage Lender (company level) license.

Minimum Requirements for MLO License Commissioner may not issue MLO (individual) license unless she finds: 1)No MLO license previously revoked 2)No felony within past 7 years (or any time as to certain felonies) 3)Demonstrates financial responsibility, character, and fitness 4)Pre-licensing education 5)Pass a test 6)Surety bond requirements

Pre-licensing Education Requirements 4) Pre-licensing MLO Education 20 hours After 1/1/10, it is believed that all courses and course providers must be approved by NMLS Offered in classroom or online or by any other means approved by NMLS Successful completion of non-State specific courses in another State will be accepted by Commissioner Keep records for 3 years

Pre-licensing Testing Requirements 5) Pre-licensing MLO Testing Developed by NMLS Must pass by at least 75% correct May retake the test only after waiting at least 30 days After failing test 3 times, must wait at least 6 months before retaking test

Maryland Laws  Financial Institutions Article (Fin. Inst.)  Commercial Law Article (Com. Law)  Real Property Article (Real Prop.)  Code of Maryland Regulations (COMAR)

Maryland Laws  Financial Institutions Article (Fin. Inst.)  Contains licensing laws for both company level (Fin. Inst. § et seq.) and individual level (Fin. Inst. § et seq.)  Establishes the authority of the Commissioner (Fin. Inst. §2-101 et seq.)

Maryland Laws  Commercial Law Article (Com. Law)  Contains finders/broker fee law (Com. Law § et seq.)  Contains “credit laws” which control loan terms (Com. Law §§ et seq., et seq., et seq., and et seq.)  Contains consumer protection laws (Com. Law §§ et seq. and et seq.)

Maryland Laws  Real Property Article (Real Prop.)  Contains laws that impact mortgages and deeds of trust (Real Prop. §§3-101 et seq., et seq., et seq., and et seq.)

Maryland Regulations  Code of Maryland Regulations (COMAR)

Maryland Regulations Subtitle 03 COMMISSIONER OF FINANCIAL REGULATION Credit Unions General Regulations Procedure for Handling Applications Retail Installment Sellers Code of Conduct—Mortgage Brokers and Mortgage Bankers - Repealed Mortgage Lenders Credit Reporting Agencies Debt Management Services - Repealed Mortgage Originators Credit and Other Regulation Recordation of Security Instruments for Residential Property Foreclosure Procedures for Residential PropertyCredit UnionsGeneral RegulationsProcedure for Handling ApplicationsRetail Installment SellersCode of Conduct—Mortgage Brokers and Mortgage BankersMortgage LendersCredit Reporting AgenciesDebt Management ServicesMortgage OriginatorsCredit and Other RegulationRecordation of Security Instruments for Residential PropertyForeclosure Procedures for Residential Property

Maryland Regulations Subtitle 03 COMMISSIONER OF FINANCIAL REGULATION Mortgage Lenders Mortgage Originators Credit and Other Regulation Recordation of Security Instruments for Residential Property Foreclosure Procedures for Residential PropertyMortgage LendersMortgage OriginatorsCredit and Other RegulationRecordation of Security Instruments for Residential PropertyForeclosure Procedures for Residential Property

SAFE Act Test: Maryland SAFE Mortgage Loan Originator Test – State Component Maryland Content Outline (45 scored test questions; 10 unscored test questions)

SAFE Act Test: Maryland I.DLLR, Division of Financial Regulation (5%) II.State Law and Regulation Definitions (10%) III.License Law and Regulation (25%) IV.Compliance (50%) V.Disciplinary Action (10%)

SAFE Act Test: Maryland I.DLLR, Division of Financial Regulation (5%) A. Regulatory authority (See Fin. Inst. §2-101 et seq. and § et seq.) B. Department/agency structure (Same) C. Responsibilities and limitations (Same)

SAFE Act Test: Maryland II.State Law and Regulation Definitions (10%) A. Financial Institutions Article (See Fin. Inst. §11-601; see also Fin. Inst. § ) B. Commercial Law Article (See Com. Law § , §12-101, §12-901, § , §13-301) C. Other State Law and Regulations (See COMAR and ; Real Prop. Titles 3 and 7)

SAFE Act Test: Maryland III.License Law and Regulation (25%) A. Persons required to be licensed B. Licensee qualifications and application process C. Grounds for denying a license D. License maintenance

SAFE Act Test: Maryland IV.Compliance (50%) A. Prohibited conduct and practices B. Required conduct C. Fees and charges D. Disclosures and agreements E. Advertising

SAFE Act Test: Maryland V.Disciplinary Action (10%) A. Notifications, hearings, and appeals B. Suspension, revocation, and rescission of licenses C. Penalties and fines D. Civil and criminal liability

Maryland Hot Topics

Most Common Broker Violations  No broker agreement.  Broker agreement was not provided within 10 business days.  Broker agreement not signed and/or dated.

Most Common Broker Violations  Exact broker fee not specified.  Overcharge on broker fees.  Broker charged fees not included in broker agreement.

Most Common Broker Violations  Broker fee on refinance loan on same property within 24 months.  More than one broker agreement issued.  Maryland Financing Agreement not properly provided.

Questions

Copyright, 2009 Thank you! Marjorie A. Corwin Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC 233 East Redwood Street Baltimore, Maryland