Maryland Credit Grantor Closed End Credit Provisions
Commercial Law Article
Title 12. Credit Regulations
Subtitle 10. Credit Grantor Closed End Credit Provisions
(a) In this subtitle the following words have the meanings indicated.
(b) (1) "Balloon payment" means any scheduled payment on an installment loan that is more than 2 times the average of all other payments scheduled to repay the installment loan.
(2) "Balloon payment" does not include a down payment.
(c) "Borrower" means a corporation, partnership, association, government, or governmental subdivision or agency, trust, individual, or other entity receiving a loan or other extension of credit under this subtitle.
(d) "Closed end credit" means the extension of credit by a credit grantor to a borrower under an arrangement or agreement which is not a revolving credit plan as defined in Subtitle 9 of this title.
(e) "Commercial loan" and "extension of credit for a commercial purpose" mean an extension of credit made:
(1) Solely to acquire an interest in or to carry on a business or commercial enterprise; or
(2) To any business or commercial organization.
(f) "Consumer borrower" means an individual receiving a loan or other extension of credit under this subtitle for personal, household, or family purposes or an individual receiving a commercial loan or other extension of credit for any commercial purpose not in excess of $75,000, secured by residential real property.
(g) (1) "Credit grantor" means any individual, corporation, business trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity making a loan or other extension of credit under this subtitle which is incorporated, chartered, or licensed pursuant to State or federal law, the lending operations of which are subject to supervision, examination, and regulation by a State or federal agency or which is licensed under Title 12, Subtitle 4 of the Financial Institutions Article or is a retailer.
(2) "Credit grantor" includes:
(i) Any bank, trust company, depository institution, or savings bank having a branch in this State;
(ii) A person not required to be licensed under this subtitle, who is exempt from the licensing provisions of Title 11, Subtitle 5 of the Financial Institutions Article, who makes a loan or extension of credit under this subtitle secured by a secondary mortgage on residential real property; and
(iii) Any person who acquires or obtains the assignment of an agreement for an extension of credit made under this subtitle.
(h) "Debt cancellation agreement" means an agreement between a credit grantor and a borrower which provides for cancellation of the remaining loan balance in the event of theft or total destruction of the collateral for the loan after application of the proceeds of any insurance maintained on the collateral for the loan.
(i) "Installment loan" means a loan repayable in scheduled periodic payments of principal and interest.
(j) "Loan" means any single extension of closed end credit, whether repayable in installments, on demand, or otherwise and whether extended in one or more advances.
(k) "Mechanical repair contract" has the meaning stated in Title 15, Subtitle 3 of the Transportation Article.
(l) "Remaining loan balance", when used in reference to a debt cancellation agreement, does not include:
(1) Any delinquent payments;
(2) Past due charges;
(3) Late payment charges;
(4) Unearned interest;
(5) Unearned rental payments; or
(6) By agreement of the parties, the amount of any primary insurance deductible.
(m) "Residential real property" means owner-occupied real property having a dwelling on it designated principally as a residence with accommodations for not more than four families.
(a) Any credit grantor may, subject to the other provisions of this subtitle, offer and extend closed end credit to a borrower.
(b) In connection with closed end credit offered and extended under this subtitle, a credit grantor may charge and collect the interest and other charges permitted by this subtitle and may take any security as collateral as may be acceptable to the credit grantor.
(a) A credit grantor may charge and collect interest on a loan at any daily, weekly, monthly, annual, or other periodic percentage rate as the agreement, the note, or other evidence of the loan provides if the effective rate of simple interest is not in excess of 24 percent per year. The rate of interest chargeable on a loan must be expressed in the agreement as a simple interest rate or rates.
(b) (1) Interest may be calculated by way of simple interest or by any other method as the agreement, note, or other evidence of the loan provides. If the interest is precomputed, it may be calculated on the assumption that all scheduled payments will be made when due.
(2) For purposes of this section, a year may be any period of from 360 to 366 days, including or disregarding the effect of leap year, as the credit grantor may determine.
(c) (1) If an installment loan under this subtitle made to a consumer borrower is secured by collateral other than a lien on residential real property, the credit grantor may not require a schedule of repayment under which a consumer borrower may be required to pay a balloon payment at maturity.
(2) If an installment loan under this subtitle made to a consumer borrower is secured by a secondary lien on residential real property, the credit grantor may require a schedule of repayment providing for a balloon payment at maturity. On request, the consumer borrower is permitted to postpone payment of the balloon payment once for a period not to exceed 6 months. The borrower must continue to make installment payments in the amount required prior to maturity during the extension period. The credit grantor may not impose any charges or fees as a result of allowing an extension period.
(a) If the agreement, note, or other evidence of the loan permits, the periodic percentage rate of interest charged and collected on the loan may, if the interest is not precomputed, vary in accordance with an index that is made readily available to and verifiable by the borrower and is beyond the control of the credit grantor.
(b) The periodic percentage rate, as varied, may be made applicable to any outstanding indebtedness on the loan on and after the effective date of the variation.
(c) This section does not limit the authority of a credit grantor to charge and collect interest on a loan in the manner and at the rate authorized in any other section of this subtitle.
(d) The periodic percentage rate, as varied, may not exceed the maximum rate permitted pursuant to § 12-1003(a) of this subtitle.
In addition to interest at a periodic percentage rate or rates permitted by §§ 12-1003 and 12-1004 of this subtitle, a credit grantor may charge and collect:
(a) (1) Subject to the limitations in this section, loan fees, points, finder's fees, and other charges; however, all such charges, when combined with any finder's fee imposed by a mortgage broker under § 12-804 of this title, may not exceed 10 percent of the original extension of credit;
(2) In the case of a loan to a consumer borrower, no loan fees, points, finder's fees, or other charges may be charged and collected unless:
(i) The agreement, note, or other evidence of the loan so provides and the borrower agrees in writing to pay those charges;
(ii) The loan is secured by a lien on residential real property; however, all such charges, when combined with any finder's fee imposed by a mortgage broker under § 12-804 of this title, may not exceed 10 percent of the original extension of credit; and
(iii) The charges are disclosed to the borrower in accordance with the federal Truth in Lending Act; and
(3) The limitations imposed by paragraphs (1) and (2) of this subsection do not apply to a credit extension:
(i) Secured by a first lien on residential real property; or
(ii) Made for a bona fide commercial purpose in excess of $75,000.
(b) Reasonable fees for services rendered or for reimbursement of expenses incurred in good faith by the credit grantor or its agents in connection with the loan, including:
(1) Commitment fees;
(2) Official fees and taxes;
(3) Premiums or other charges for any guarantee or insurance protecting the credit grantor against the borrower's default or other credit loss;
(4) Costs incurred by reason of examination of title, inspection, recording, and other formal acts necessary or appropriate to the security of the loan;
(5) Filing fees;
(6) Attorney's fees; and
(7) Travel expenses.
(c) (1) The cost to the borrower of an optional debt cancellation agreement, provided that the cost of the debt cancellation agreement is separately itemized in the financing agreement.
(2) This cost is in addition to the charges permitted under subsections (a), (b), and (d) of this section.
(d) In the case of a loan to a consumer borrower, a fee permitted under subsection (b) of this section may not be charged and collected unless:
(1) The agreement, note, or other evidence of the loan permits;
(2) The fee is an actual and verifiable expense of the credit grantor not retained by him; and
(3) Limited to charges for:
(i) Attorney's fees for services rendered in connection with the preparation, closing, or disbursement of the loan;
(ii) Any expense, tax, or charge paid to a governmental agency;
(iii) Examination of title, appraisal, or other costs necessary or appropriate to the security of the loan; and
(iv) Premiums for any insurance coverage permitted under this subtitle.
(e) For purposes of this subtitle, fees and charges permitted under this section are not interest with respect to a loan.
A credit grantor may at any time permit a borrower to defer scheduled payments of a loan and may, in connection with the deferral and by agreement of the credit grantor and borrower:
(1) Charge and collect deferral charges; and
(2) Require payment by the borrower of the additional cost to the credit grantor of premiums for continuing in force, until the end of the period of deferral, any insurance coverage provided in connection with the loan.
(a) (1) In this section the following words have the meanings indicated.
(2) "Covered loan" means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership Equity Protection Act set forth in 15 U.S.C. § 1602(aa), as modified from time to time by Regulation Z, 12 C.F.R. Part 226, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(aa), as modified from time to time by Regulation Z, 12 C.F.R. Part 226.
(3) "Credit health insurance" has the meaning stated in § 13-101 of the Insurance Article.
(4) "Credit involuntary unemployment benefit insurance" has the meaning stated in § 13-101 of the Insurance Article.
(5) (i) "Credit life insurance" means insurance on the life of a borrower that provides indemnity for repayment of a specific loan or credit transaction on the death of the borrower.
(ii) "Credit life insurance" does not include life insurance payable to a beneficiary designated by the borrower other than the obligee of a specific loan or credit transaction.
(6) "Mortgage loan" has the meaning stated in § 11-501 of the Financial Institutions Article.
(7) "Premium" has the meaning stated in § 1-101 of the Insurance Article.
(8) "Single premium coverage" means insurance for which the total premium is payable in one lump sum at or before the time coverage commences.
(b) In connection with a loan to a consumer borrower:
(1) The purchase of credit life insurance, credit health insurance, credit involuntary unemployment benefit insurance, and similar insurance coverages is optional with the consumer borrower; and
(2) Subject to § 12-1007.1 of this subtitle, the purchase of property insurance, title insurance, and credit loss insurance from an insurer of the borrower's choice may be required if the loan is secured.
(3) (i) Except as provided in this subsection, a credit grantor making a covered loan may not finance as a part of the covered loan transaction single premium coverage for:
1. Credit health insurance;
2. Credit involuntary unemployment benefit insurance; or
3. Credit life insurance.
(ii) Nothing in this subsection shall prohibit the financing of any insurance coverage in connection with a mobile home or its premises, as those terms are defined in § 8A-101 of the Real Property Article.
(c) The provisions of this section do not alter or modify rights, privileges, or restrictions heretofore existing between the credit grantor and a borrower other than a consumer borrower.
(d) Premiums for any insurance coverage permitted by this section are not interest with respect to a loan.
(e) The offer and placement of insurance under this section shall be subject to the provisions of the Insurance Article.
(f) (1) In this subsection, "property insurance coverage" means property insurance against losses caused by perils that commonly are covered in insurance policies described with terms similar to "standard fire" or "standard fire with extended coverage".
(2) (i) A credit grantor may not require a borrower, as a condition to receiving or maintaining a loan secured by a first lien, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement value of the improvements on the real property.
(ii) In determining the replacement value of the improvements on any property, the lender may:
1. Accept the value placed on the improvements by the insurer; or
2. Use the value placed on the improvements that is determined by the lender's appraisal of the real property.
(3) A violation of this subsection shall entitle the borrower to seek:
(i) An injunction to prohibit the credit grantor who has engaged or is engaging in the violation from continuing or engaging in the violation;
(ii) Reasonable attorney's fees; and
(iii) Damages directly resulting from the violation.
(4) A violation of this subsection does not affect the validity of the first lien securing the loan.
(a) In this section, "binder" means a binder or other temporary contract of insurance as provided under § 12-106 of the Insurance Article.
(b) A credit grantor shall comply with this section if the credit grantor:
(1) Makes any loan secured by a first lien on any interest in owner-occupied residential real property; and
(2) As a condition of making the loan, requires the consumer borrower to purchase property insurance or credit loss insurance.
(c) A credit grantor who makes a loan subject to this section shall accept as evidence of insurance a written binder issued by any authorized insurer or its insurance producer if the binder includes or is accompanied by:
(1) The name and address of the insured consumer borrower;
(2) The name and address of the credit grantor;
(3) A description of the insured residential real property;
(4) A provision that the binder may not be canceled within the term of the binder unless the credit grantor and the insured consumer borrower receive written notice of the cancellation at least 10 days prior to the cancellation;
(5) Except in the case of the renewal of a policy subsequent to the closing of the loan, a paid receipt for the full amount of the applicable premium; and
(6) The amount of coverage.
(d) This section does not prohibit a credit grantor from refusing to honor a binder in cases where:
(1) The credit grantor receives notice of the cancellation of the binder by the insurer; or
(2) At the expiration of 30 days of the date the binder was given, the insurer has failed to issue the policy of insurance.
(a) If the agreement governing a loan permits, a credit grantor may:
(1) For a nonconsumer borrower, charge a higher periodic percentage rate or rates of interest on the amount of outstanding unpaid payments or portions of payments under the loan which are in default; and
(2) For any borrower, impose:
(i) A late or delinquency charge on payment or portions of payments; and
(ii) If payment is made with a check that is dishonored on the second presentment, a charge not to exceed $15.
(b) In the case of a loan to a consumer borrower, no late or delinquency charge may be charged unless the agreement, note, or other evidence of the loan permits. No more than 1 late or delinquency charge may be imposed for any single payment or portion of payment, regardless of the period during which it remains in default.
(c) For the purposes of subsection (b) of this section, all payments by the borrower shall be applied to satisfaction of scheduled payments in the order in which they become due.
(d) Charges permitted under this section may not be considered interest or finance charges under the agreement.
(a) A consumer borrower may prepay a loan in full at any time.
(b) If interest charged pursuant to § 12-1003 of this subtitle in respect of a loan to a consumer borrower has been precomputed, then, in the event of prepayment of the entire loan, the credit grantor shall refund or credit to the borrower the unearned portion of the precomputed interest charge. This refund or credit shall be in an amount not less than the amount which would be refunded or credited if the unearned precomputed interest charge were calculated in accordance with the actuarial method, except that the borrower may not be entitled to a refund or credit of less than $5. The unearned portion of the precomputed interest charge is, at the option of the credit grantor, either:
(1) That portion of the precomputed interest charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions of payment periods, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each period, or portion of a period, had the loan not been prepaid, by applying to the unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deferred. The credit grantor, at its option, may round this annual percentage rate to the nearest 1/4 of 1 percent; or
(2) The total precomputed interest charge less the earned precomputed interest charge. The earned precomputed interest charge shall be determined by applying an annual percentage rate based on the total precomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.
(c) (1) As used in subsection (b) of this section, the following terms have the meanings indicated.
(2) "Actuarial method" means 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.
(3) "Precomputed interest charge" means interest as computed by an add on, discount, or other similar method.
(4) "Payment period" means the time period within which scheduled payments on a loan are due as provided in the agreement, note, or other evidence of the loan.
(d) If a charge is made to a consumer borrower for premiums for insuring the borrower under an insurance policy pursuant to § 12-1007 of this subtitle, then, in the event of prepayment in full, the credit grantor shall refund or credit to the borrower any unearned premiums paid by the borrower, provided that no refund or credit of less than $5 shall be required.
(e) In connection with any prepayment of any loan by a consumer borrower, the credit grantor may not impose any prepayment charge.
(f) The terms of prepayment of any loan made to a borrower other than a consumer borrower shall be those agreed to by the credit grantor and the borrower.
(a) Except as provided under subsection (c) of this section, a consumer borrower may, with the consent of the credit grantor, refinance the entire outstanding and unpaid amount of a loan, and the credit grantor may charge and collect a refinancing charge in connection with any refinancing in an amount agreed to by the credit grantor and the borrower.
(b) For purposes of this section, "the entire outstanding and unpaid amount of a loan" is:
(1) If the interest and charges in respect of the loan were not precomputed, the total of the unpaid balance and the accrued and unpaid interest and charges on the date of refinancing; or
(2) If the interest and charges on the loan were precomputed, the total of the unpaid balance and the accrued and unpaid charges on the date of refinancing, less the amount which the credit grantor would have been required to refund or credit upon prepayment on the date of refinancing under § 12-1009 of this subtitle governing refunds upon prepayment.
(c) A credit grantor may not impose any refinancing charges on the refinancing of an installment loan more often than once during any 12-month period of the loan if the loan is:
(1) Made by the credit grantor;
(2) Secured by a secondary lien on residential real property; and
(3) Made to cure a default on the loan being refinanced where the default has been in existence for more than 30 days.
(a) If a consumer borrower defaults under the terms of a loan and the credit grantor refers the borrower's account to an attorney who is not a salaried employee of the credit grantor for collection, the credit grantor may, if the agreement, note, or other evidence of the loan permits, charge and collect from the borrower a reasonable attorney's fee.
(b) If the agreement, note, or other evidence of the loan permits, the credit grantor may recover from the borrower all court and other collection costs actually incurred by the credit grantor relating to the borrower's default.
(a) (1) This subtitle does not prohibit a credit grantor from including in the loan amount the cost to the borrower of a mechanical repair contract sold in connection with a motor vehicle, provided that the cost of the mechanical repair contract is separately itemized in the financing agreement.
(2) The cost of a mechanical repair contract sold in connection with a motor vehicle may be included in the loan amount whether or not the motor vehicle is covered by an original manufacturer's warranty.
(3) A credit grantor may not require a buyer of a motor vehicle, as a condition of receiving a loan, to enter a mechanical repair contract.
(b) This subtitle does not prohibit a credit grantor, in connection with a loan to a nonconsumer borrower, from:
(1) Extending or deferring all or any portion of any scheduled payment under the loan;
(2) Permitting prepayment or refinancing of the loan in whole or in part;
(3) Charging and collecting any charges in connection with the matters referred to in paragraphs (1) and (2) of this subsection; or
(4) Charging and collecting late or delinquency charges, attorney's fees, or collection charges.
(c) (1) This subtitle does not prohibit a credit grantor, in connection with a sale, from including in the loan amount the amounts actually paid or to be paid by the credit grantor pursuant to an agreement with the borrower, on behalf of the borrower to discharge any amount financed under an outstanding loan agreement or installment sale agreement or the unpaid portion of the early termination obligation under any lease or other obligation of the lessee, with respect to a motor vehicle or other property traded in.
(2) A credit grantor who is a seller of goods or services may not be deemed to be making loans for purposes of § 11-301(b)(6)(i) of the Financial Institutions Article merely by engaging in activities described in paragraph (1) of this subsection.
(a) Unless otherwise provided under the express terms of the agreement, note, or other evidence of the extension of closed end credit, the provisions of Subtitle 1, 3, 4, 5, 6, or 9 of this title do not apply to an extension of closed end credit if:
(1) The agreement, note, or other evidence of the extension of credit is made before October 1, 1993; and
(2) The extension of credit is made under this subtitle before October 1, 1993.
(b) For the purposes of subsection (a) of this section, an extension of credit is made under this subtitle if:
(1) The credit grantor has made a written election to do so in the agreement, note, or other evidence of the extension of credit; or
(2) The agreement, note, or other evidence of the extension of credit is made pursuant to the provisions of this subtitle.
(c) For the purposes of subsection (a) of this section, if there is no written election to extend credit under this subtitle, the burden of proof is on the credit grantor to show the agreement, note, or other evidence of the extension of credit was made pursuant to this subtitle.
(d) Any agreement, note, or other evidence of an extension of credit made before October 1, 1993 is not subject to § 12-1013.2 of this subtitle.
(a) (1) On or after October 1, 1993, a credit grantor may at its option elect to make a loan to any borrower either pursuant to this subtitle or as otherwise permitted by applicable law.
(2) In order to make a loan under this subtitle, a credit grantor shall make a written election to that effect in the agreement, note, or other evidence of the loan.
(b) (1) If a credit grantor elects in accordance with this section to make a loan under this subtitle, the provisions of Subtitle 1, 3, 4, 5, 6, or 9 of this title do not apply to the loan.
(2) If a person fails to elect in accordance with this section to extend closed end credit under this subtitle, the provisions of this subtitle do not apply.
(a) (1) Except as provided under paragraph (2) of this subsection, the credit grantor shall deliver a copy of the agreement, note, or other evidence of the loan to the borrower no later than the time of consummation of the loan.
(2) If consummation of the loan does not occur in a face-to-face transaction between the credit grantor and the borrower, the credit grantor may delay delivering a copy of the agreement, note, or other evidence of the loan to the borrower until the due date of the first payment.
(b) If there is more than one borrower, a copy of the agreement, note, or other evidence of the loan may be delivered to any borrower who is primarily liable on the loan.
(c) Written acknowledgment by a borrower of delivery made in accordance with this section of a copy of the agreement, note, or other evidence of the loan is conclusive proof of the delivery as between the borrower and any assignee of the agreement, note, or other evidence of the loan without actual knowledge to the contrary.
(a) If any provision of this subtitle is held invalid, such invalidity shall not affect any other provisions of this subtitle which can be given effect without the invalid provision.
(b) Notwithstanding any provisions of this title, a loan under this subtitle is subject only to the disclosure requirements of this subtitle, and, to the extent applicable, of the federal Truth in Lending Act and regulations promulgated thereunder.
(a) A credit grantor making a loan or an extension of credit under this subtitle is subject to the licensing, investigatory, enforcement and penalty provisions of Title 11, Subtitle 3 of the Financial Institutions Article unless the credit grantor or the loan or extension of credit is exempt under Title 11, Subtitle 3 of the Financial Institutions Article.
(b) In addition to any license which may be required by subsection (a) of this section, a credit grantor making a loan or extension of credit under this subtitle secured by any lien on residential real property is subject to the licensing, investigatory, enforcement and penalty provisions of Title 11, Subtitle 5 of the Financial Institutions Article unless the credit grantor or the loan or extension of credit is exempt under Title 11, Subtitle 5 of the Financial Institutions Article.
(c) If a license is required by this section, it shall be issued by the Commissioner of Financial Regulation.
(d) (1) An extension of credit made under this subtitle prior to October 1, 1994 by a home improvement contractor may not be deemed unenforceable or violative of this section because the contractor was not licensed under Title 11, Subtitle 3 of the Financial Institutions Article.
(2) Paragraph (1) of this subsection does not apply to any person engaged in the business of making loans at the time the credit was extended.
(a) If a written complaint for violation of any provision of this subtitle, including the disclosure requirements of this subtitle and the federal Truth in Lending Act and regulations promulgated thereunder, or any other law of this State that regulates loans or other extensions of credit is filed with the Commissioner of Financial Regulation, the Commissioner may investigate the complaint and hold a hearing on it in accordance with § 11-413 of the Financial Institutions Article.
(b) (1) The Commissioner shall give to the credit grantor against whom a complaint is filed at least 10 days' written notice of the complaint and the time and place of any hearing. The notice shall be in writing and sent by registered or certified mail to the credit grantor's principal place of business.
(2) Before a hearing under this section may be scheduled, the Commissioner shall:
(i) Send a written notice to the complaining party that describes the provisions in paragraph (3) of this subsection concerning preclusion; and
(ii) Obtain from the complaining party a written:
1. Election to proceed with a hearing in accordance with this section; and
2. Waiver of any right to pursue any cause of action or remedy as to the matters addressed in the complaint or the hearing.
(3) (i) If a complaining party provides a written election and waiver as described in paragraph (2)(ii) of this subsection, the complaining party shall be precluded from raising or asserting against the credit grantor in any subsequent forum any claim, defense, setoff, recoupment, penalty for violation, or right of any kind based on the matters addressed in the complaint or the hearing.
(ii) The preclusion in subparagraph (i) of this paragraph does not apply to an appeal from the order of the Commissioner resulting from the hearing.
(4) If a complaining party fails to provide a written election and waiver as described in paragraph (2) (ii) of this subsection, the Commissioner shall not schedule a hearing on the complaint.
(c) (1) If, after the hearing, the Commissioner finds that the credit grantor has engaged or is engaging in any act or practice prohibited by this subtitle, the Commissioner shall order the credit grantor to cease and desist from the act or practice.
(2) (i) If the Commissioner finds that the act or practice described in paragraph (1) of this subsection resulted in the credit grantor collecting an amount from the complaining party not permitted under this subtitle, the Commissioner may direct the credit grantor to make a refund to the complaining party.
(ii) The Commissioner may direct a refund only up to the amount collected by the credit grantor from the complaining party that:
1. Exceeds the amount expressly permitted under this subtitle; or
2. The credit grantor is expressly not permitted to collect.
(3) (i) If an order issued under this section directs the credit grantor to make a refund as authorized in paragraph (2) of this subsection, the credit grantor may make the refund before the order becomes final.
(ii) If a credit grantor makes the refund directed by the Commissioner's order, the order for the refund shall not become final and shall be withdrawn by the Commissioner.
(iii) Any order withdrawn by the Commissioner may not be considered evidence of the Commissioner's interpretation of this subtitle.
(4) The order of the Commissioner shall comply with the Administrative Procedure Act.
(d) (1) If no appeal is filed, the order becomes final after expiration of the time allowed by the Administrative Procedure Act for appeals from the Commissioner's orders.
(2) If an appeal is filed, the order becomes final after final decision of the court affirming the order or dismissing the appeal.
(e) For purposes of this section, "complaining party" means an individual who files a written complaint with the Commissioner of Financial Regulation pursuant to this section.
Any credit grantor or his officer or employee who willfully violates any provision of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000 or imprisonment not exceeding 1 year, or both.
(a) (1) In this subsection, "notice" means the first to occur of the following:
(i) When the credit grantor receives a written notice from the borrower notifying the credit grantor of an error or violation;
(ii) When the credit grantor receives a written notice from the Commissioner of Financial Regulation or the appropriate regulatory authority notifying the credit grantor of an error or violation; or
(iii) When the credit grantor receives service of process in a civil action for an error or violation instituted by the borrower in a court of competent jurisdiction.
(2) Except for a bona fide error of computation, if a credit grantor violates any provision of this subtitle the credit grantor may collect only the principal amount of the loan and may not collect any interest, costs, fees, or other charges with respect to the loan.
(3) The penalty provided under paragraph (2) of this subsection does not apply where a credit grantor:
(i) Unintentionally and in good faith fails to comply with § 12-1003, § 12-1004, § 12-1005, § 12-1008, § 12-1011, § 12-1013.2, § 12-1023(d), § 12-1024, § 12-1025, § 12-1026, § 12-1027, or § 12-1028 of this subtitle; and
(ii) Corrects the error or violation and makes the borrower whole for all losses, including reasonable attorney's fees and interests, where appropriate, within 10 days after the credit grantor receives notice of the error or violation.
(4) The burden shall be on the credit grantor to show that the credit grantor's failure to comply with § 12-1003, § 12-1004, § 12-1005, § 12-1008, § 12-1011, § 12-1013.2, § 12-1023(d), § 12-1024, § 12-1025, § 12-1026, § 12-1027, or § 12-1028 of this subtitle was unintentional and in good faith.
(b) In addition, a credit grantor who knowingly violates any provision of this subtitle shall forfeit to the borrower 3 times the amount of interest, fees, and charges collected in excess of that authorized by this subtitle.
An action for violation of this subtitle may not be brought more than 6 months after the loan is satisfied.
A credit grantor is not liable for any failure to comply with a provision of this subtitle if, within 60 days after discovering an error and prior to institution of an action under this subtitle or the receipt of written notice from the borrower, the credit grantor notifies the borrower of the error and makes whatever adjustments are necessary to correct the error.
(a) (1) A credit grantor may repossess tangible personal property securing a loan under an agreement, note, or other evidence of the loan if the consumer borrower is in default.
(2) The credit grantor may repossess tangible personal property from a consumer borrower only by:
(i) Legal process; or
(ii) Self-help, without use of force.
(b) Nothing in this section authorizes a violation of criminal law.
(c) (1) At least 10 days before a credit grantor repossesses any tangible personal property, the credit grantor may serve a written notice on the consumer borrower of the intention to repossess the tangible personal property.
(2) The notice shall:
(i) State the default and any period at the end of which the tangible personal property will be repossessed; and
(ii) Briefly state the rights of the consumer borrower in case the tangible personal property is repossessed.
(d) The notice may be delivered to the consumer borrower personally or sent to him at his last known address by registered or certified mail.
(e) Within 5 days after the credit grantor repossesses the tangible personal property the credit grantor shall deliver to the consumer borrower personally or send to him at his last known address by registered or certified mail, a written notice which briefly states:
(1) The right of the consumer borrower to redeem the tangible personal property, and the amount payable for it;
(2) The rights of the consumer borrower as to a resale, and his liability for a deficiency; and
(3) The exact location where the tangible personal property is stored and the address where any payment is to be made.
(f) For 15 days after the credit grantor gives the notice required by subsection (e) of this section, the credit grantor shall retain any repossessed property.
(g) During the period provided for in subsection (f) of this section, the consumer borrower may:
(1) Redeem and take possession of the property; and
(2) Resume the performance of the agreement.
(h) To redeem the property, the consumer borrower shall:
(1) Tender the amount due under the agreement at the time of redemption, without giving effect to any provision which allows acceleration of any installment otherwise payable after that time;
(2) Tender performance of any other promise for the breach of which the property was repossessed; and
(3) If the discretionary notice provided for in subsection (c) of this section was given, pay the actual and reasonable expenses of retaking and storing the property.
(i) (1) Notwithstanding subsections (g) and (h) of this section, the credit grantor shall have the right to require the consumer borrower to tender payment of the entire balance due under the agreement if:
(i) The date of the default in the payments due under the agreement that led to the present repossession occurred within 18 months after the last repossession; or
(ii) The consumer borrower was guilty of fraudulent conduct, intentionally and wrongfully concealed, removed, damaged, or destroyed the property, or attempted to do so, and the property was repossessed because of that conduct.
(2) Under paragraph (1) of this subsection, the payment by the consumer borrower of the entire balance due under the agreement shall:
(i) Constitute redemption by the consumer borrower; and
(ii) Entitle the consumer borrower to take possession of the property.
(j) (1) (i) Subject to subsection (l) of this section, the credit grantor shall sell the property that was repossessed at:
1. Subject to paragraph (2) of this subsection, a private sale; or
2. A public auction.
(ii) At least 10 days before the sale, the credit grantor shall notify the consumer borrower in writing of the time and place of the sale, by certified mail, return receipt requested, sent to the consumer borrower's last known address.
(iii) Any sale of repossessed property must be accomplished in a commercially reasonable manner.
(2) In all cases of a private sale of repossessed goods under this section, a full accounting shall be made to the borrower in writing and the seller shall retain a copy of this accounting for at least 24 months. This accounting shall contain the following information:
(i) The unpaid balance at the time the goods were repossessed;
(ii) The refund credit of unearned finance charges and insurance premiums, if any;
(iii) The remaining net balance;
(iv) The proceeds of the sale of the goods;
(v) The remaining deficiency balance, if any, or the amount due the buyer;
(vi) All expenses incurred as a result of the sale;
(vii) The purchaser's name, address, and business address;
(viii) The number of bids sought and received; and
(ix) Any statement as to the condition of the goods at the time of repossession which would cause their value to be increased or decreased above or below the market value for goods of like kind and quality.
(3) The Commissioner of Financial Regulation may make a determination concerning any private sale that the sale was not accomplished in a commercially reasonable manner. Upon that determination, the Commissioner may enter an order disallowing any claim for a deficiency balance.
(k) (1) The provisions of this subsection apply to a public sale of property which secured a loan in excess of $2,000 at the time the loan was made.
(2) The proceeds of a sale to which this subsection applies shall be applied, in the following order, to:
(i) The actual and reasonable cost of the sale;
(ii) The actual and reasonable cost of retaking and storing the property; and
(iii) The unpaid balance owing under the agreement at the time the property was repossessed.
(3) The credit grantor shall furnish to the consumer borrower a written statement which shows the distribution of the proceeds.
(4) If the provisions of this section, including the requirement of furnishing a notice following repossession, are not followed, the credit grantor shall not be entitled to any deficiency judgment to which he would be entitled under the loan agreement.
(l) (1) (i) In this subsection, "consumer goods" means tangible personal property used or bought for use primarily for personal, family, or household purposes that is:
1. Movable at the time a security interest attaches; or
2. A fixture.
(ii) "Consumer goods" does not include money, documents, instruments, accounts, chattel paper, or general intangibles.
(2) This subsection applies to tangible personal property securing a loan that:
(i) Has been repossessed by the credit grantor; or
(ii) Is in actual or constructive possession of the credit grantor where the perfection of the security interest in the property depends on the possession of the property.
(3) In the case of a purchase money security interest in consumer goods, if a consumer borrower has paid 60 percent of the cash price or 60 percent of the loan in the case of another security interest in consumer goods and, after default, has not signed a statement renouncing or modifying the consumer borrower's rights under this subsection, a credit grantor who has repossessed the consumer goods must take reasonable action within 90 days after the repossession to commence disposal of them in the manner provided under subsection (j) of this section.
(4) (i) In any other case involving tangible personal property securing a loan, a credit grantor may, after default, propose to retain the property in full satisfaction of the obligations of the borrower under the loan.
(ii) If, as authorized by subparagraph (i) of this paragraph, a credit grantor proposes to retain property in full satisfaction of the obligations of the borrower under the loan, the credit grantor shall send written notice of the proposal to:
1. The consumer borrower; and
2. Except in the case of consumer goods, any other person who has a security interest in the property and who:
A. Has duly filed a financing statement indexed in the name of the consumer borrower in this State; or
B. Is known by the credit grantor to have a security interest in the property.
(iii) 1. If the consumer borrower or other person entitled to receive notification objects in writing within 30 days from the sending of the notification, the credit grantor must take reasonable action to dispose of the property in the manner provided under subsection (j) of this section.
2. In the absence of written objection, the credit grantor may retain the property in full satisfaction of the outstanding unpaid indebtedness under the loan.
(5) If despite complying with the requirements of this section there is no sale of tangible personal property securing a loan under subsection (j) of this section:
(i) The credit grantor may retain the property without obligation to account to the borrower; and
(ii) If the property is retained, all obligations of the borrower under the loan shall be discharged.
(a) (1) In this section the following words have the meanings indicated.
(2) "Borrower" means a consumer borrower who makes an application for a loan secured by a first mortgage or first deed of trust on residential real property to be occupied by the borrower as the borrower's primary residence.
(3) "Commitment" means a written, specific, binding agreement between a borrower and a lender which sets forth the terms of a loan being extended to the borrower.
(4) "Financing agreement" means a written agreement between a borrower and a lender which sets forth the terms of a purchase money loan or a refinancing of an existing loan that:
(i) Results in or is secured by a first mortgage or a first deed of trust on residential real property to be occupied by the borrower; and
(ii) Is offered or extended to the borrower.
(5) (i) "Lender" means a credit grantor subject to the licensing requirements of Title 11, Subtitle 5 of the Financial Institutions Article.
(ii) "Lender" does not include a credit grantor exempt from licensing under § 11-502 of the Financial Institutions Article.
(6) (i) "Loan application" means any oral or written request for an extension of credit that is made in accordance with procedures established by a lender for the purpose of inducing the lender to seek to procure or make a mortgage loan.
(ii) "Loan application" does not include the use of an account or line of credit to obtain a loan within a previously established credit limit.
(b) (1) A lender who offers to make or procure a loan secured by a first mortgage or first deed of trust on residential real property to be occupied by the borrower shall provide the borrower with a financing agreement executed by the lender within 10 business days after the date the loan application is completed.
(2) The financing agreement shall provide:
(i) The term and principal amount of the loan;
(ii) An explanation of the type of mortgage loan being offered;
(iii) The rate of interest that will apply to the loan and, if the rate is subject to change or is a variable rate or is subject to final determination at a future date based on some objective standard, a specific statement of those facts;
(iv) The points, if any, to be paid by the borrower or the seller, or both; and
(v) The term during which the financing agreement remains in effect.
(3) If all the provisions of the financing agreement are not subject to future determination, change, or alteration during its term, the financing agreement shall constitute the final binding agreement between the parties as to the items covered by the financing agreement.
(c) (1) If any of the provisions of the financing agreement are subject to change or determination after its execution, the lender shall provide the borrower with a commitment, executed by the lender, at least 72 hours before the time of settlement agreed to by the parties, providing:
(i) The effective fixed interest rate or initial interest rate that will be applied to the loan; and
(ii) A restatement of all the remaining unchanged provisions of the financing agreement.
(2) Subsequent to execution of the financing agreement, the borrower may waive in writing the 72-hour advance presentation requirement and accept the commitment at settlement only if compliance with the 72-hour requirement is shown by the lender to be infeasible.
(d) If a lender fails to comply with the requirements of this section, the lender shall be subject to the penalties set forth in § 11-523 of the Financial Institutions Article.
(e) (1) A borrower aggrieved by any violation of this section shall be entitled to bring a civil suit for damages, including reasonable attorney's fees, against the lender.
(2) The penalties set out under § 12-1018 of this subtitle do not apply to any violation of this section.
(f) This section may not be construed to exempt a lender from the provisions of §§ 12-1027 and 12-1028 of this subtitle.
(a) This section applies only to a loan made by a credit grantor under this subtitle to a consumer borrower.
(b) (1) Paragraph (2) of this subsection applies only to a loan or an extension of credit primarily for personal, household, or family purposes.
(2) An agreement, note, or other evidence of a loan may not contain:
(i) An assignment or order for the payment of wages, whether earned or to be earned, or of any chose in action covering lost wages;
(ii) An acceleration clause under which any part or all of the unpaid balance of the loan not yet matured may be declared due and payable because the credit grantor deems itself insecure;
(iii) A confession of judgment or any power of attorney authorizing the credit grantor to appear in court to confess judgment against the borrower or a surety or guarantor of the borrower, or any other waiver of the right to notice and an opportunity to be heard in the event of suit or process thereon; or
(iv) A provision by which a person acting on behalf of a holder of the agreement, note, or other evidence of the loan is treated as an agent of the borrower in connection with its formation or execution.
(3) Except as expressly allowed by law, an agreement, note, or other evidence of a loan may not contain a provision by which the borrower waives any right accruing to the borrower under this subtitle.
(4) (i) Any clause or provision in an agreement, note, or other evidence of a loan that is in violation of this subsection shall be unenforceable.
(ii) Subject to subparagraph (iii) of this paragraph, the penalties set out under §§ 12-1017 and 12-1018 of this subtitle do not apply unless the credit grantor attempts to enforce a provision prohibited under this subsection.
(iii) The penalties set out under §§ 12-1017 and 12-1018 of this subtitle do not apply to the enforcement by a credit grantor of a provision otherwise prohibited under this subsection where the enforcement was initiated by the credit grantor prior to October 1, 1993.
(c) Unless a borrower has notice of an assignment of an agreement, note, or other evidence of a loan, any payments made by the borrower to the last known holder of the agreement, note, or other evidence of the loan shall discharge the borrower's obligation to the extent of the payments.
(d) Upon receipt of a cash payment from a borrower, a credit grantor shall give the borrower a written receipt for the payment.
(a) Any statement or characterization that indicates the borrower intends to obtain a loan solely to acquire an interest in or to carry on a business or commercial enterprise may be relied upon by a credit grantor in making the loan, unless the credit grantor knows or should know that the statement or characterization is false or misleading.
(b) As a condition to making a loan, a credit grantor may not require a borrower to make any false or misleading statement or characterization that the loan is a commercial loan or for a commercial purpose if the credit grantor knows or should know it is not a commercial loan or for a commercial purpose.
(c) The borrower has the burden of proving that a credit grantor knew or should have known that a statement or characterization described in subsection (a) or (b) of this section was false or misleading when made and that the loan was not a commercial loan or for a commercial purpose.
(d) Unless a credit grantor knew or should have known that a statement or characterization described in subsection (a) or (b) of this section was false or misleading when made, a credit grantor shall have no liability under this subtitle if a loan is actually used by the borrower other than as a commercial loan or for a commercial purpose.
(a) (1) Except as provided in paragraph (2) of this subsection, this section applies only to a loan made by a credit grantor to a consumer borrower.
(2) This section does not apply to a loan to which § 3-105.1 of the Real Property Article applies.
(b) Within a reasonable time after a loan to a consumer borrower has been repaid in full and all other obligations under the agreement, note, or other evidence of the loan have been fulfilled, a credit grantor shall:
(1) (i) Indelibly mark with the word "paid" or "canceled" and return to the consumer borrower each agreement, note, or other evidence of the loan; or
(ii) Furnish the consumer borrower with a written statement that identifies the loan transaction and states that the loan has been paid in full; and
(2) Release any recorded mortgage, deed of trust, security agreement, or other lien securing the loan.
(c) The release shall be:
(1) In writing; and
(2) Prepared at the expense of the credit grantor.
(d) (1) If the credit grantor does not record the release, the credit grantor shall furnish the consumer borrower with the release in a recordable form.
(2) If the credit grantor records the release, the credit grantor shall furnish the consumer borrower with a copy of the release.
(e) (1) If a fee is collected by a credit grantor for the recording of a release:
(i) The release shall be recorded by the credit grantor; and
(ii) Any portion of the fee not paid to a governmental entity for recording the release shall be refunded to the borrower.
(2) If a fee is not collected by a credit grantor for the recording of a release, the credit grantor is not obligated to record the release.
(a) A credit grantor who receives scheduled monthly periodic payments on more than five loans secured by any interest in residential real property or tangible personal property shall furnish to the consumer borrower a written statement informing the consumer borrower of the amount of:
(1) If the interest and charges on the loan were precomputed:
(i) Payments credited to reducing the outstanding unpaid balance of the loan, either in terms of a total dollar figure or individually itemized; and
(ii) The remaining outstanding unpaid balance of the loan; or
(2) If the interest and charges on the loan were not precomputed:
(i) Payments credited to reducing the outstanding unpaid principal balance of the loan, either in terms of a total dollar figure or individually itemized;
(ii) Payments credited to interest and fees, either in terms of a total dollar figure or individually itemized; and
(iii) The remaining outstanding unpaid principal balance of the loan.
(b) At the option of the credit grantor, each written statement shall contain the information required in subsection (a)(1)(i) and (2)(i) and (ii) of this section either from the date the loan was made or, if previous written statements have been furnished to the consumer borrower, from the date of the last written statement.
(c) The written statement shall be furnished to the consumer borrower:
(1) In the case of loans secured by any interest in residential real property, at least annually; and
(2) In the case of loans secured by any interest in residential real property or tangible personal property, within a reasonable time after receipt of a written request of a consumer borrower provided the request is made at a reasonable time or interval since the furnishing of the last written statement.
(d) A credit grantor may charge a fee of up to $5 for each written statement requested by a consumer borrower.
(a) (1) In this section the following words have the meanings indicated.
(2) "Lending institution" means a bank, savings bank, or savings and loan association doing business in Maryland.
(3) "Escrow account" means an expense or escrow account which tends to protect the security of a loan by the accumulation of funds for the payment of taxes, insurance premiums, or other expenses.
(b) (1) A lending institution that makes a loan to a consumer borrower secured by a first mortgage or first deed of trust on residential real property and creates or is the assignee of an escrow account in connection with that loan shall pay interest to the consumer 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.
(2) Interest on these funds shall 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.
(3) The lending institution shall annually provide the consumer borrower with a statement of the escrow balance.
(4) The provisions of this subsection do not apply to a lending institution that provides for the payment of taxes, insurance, or other expenses under the direct reduction method by which these expenses, when paid by the lending institution, are added to the outstanding principal balance of the loan.
(5) (i) This subsection does not apply if the loan:
1. Is purchased by an out-of-state lender through the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation; and
2. The out-of-state lender elects to service the loan as a condition of purchase.
(ii) Notwithstanding subparagraph (i) of this paragraph, this subsection shall apply if the out-of-state lender:
1. Sells the loan to a Maryland lender; or
2. Places the loan with a Maryland lender for servicing.
(c) (1) Except upon foreclosure, release, or as provided in paragraph (2) of this subsection, funds in any escrow account maintained by a credit grantor on behalf of a consumer borrower for use in paying taxes, insurance premiums, and ground rents may not be used:
(i) To reduce the principal; or
(ii) To pay interest or other loan charges.
(2) If there is periodically a balance in the escrow account maintained by a credit grantor on behalf of a consumer borrower which exceeds the amount stated in the agreement, note, or other evidence of the loan, the consumer borrower shall be given at least annually the option of:
(i) Receiving a refund of the excess amount;
(ii) Applying the excess amount to the payment of principal and interest; or
(iii) Leaving the excess amount in the escrow account.
(3) A refund of any excess amount shall be made:
(i) Within 60 days after the receipt by the credit grantor of the consumer borrower's request for a refund; or
(ii) If the consumer borrower has not notified the credit grantor of the option chosen by the consumer borrower, within 60 days after the date the credit grantor mailed notice of an excess amount.
(d) (1) Funds in any escrow account shall be kept separate from and may not be commingled with the funds of the credit grantor.
(2) A credit grantor may place escrow funds received in connection with more than one loan into a single escrow account.
(3) In the event of the bankruptcy of the credit grantor, any escrow funds placed in any escrow account may not be considered to be part of the bankrupt estate of the credit grantor.
(e) A credit grantor may not impose a collection fee or service charge on the maintenance of an escrow account on a first mortgage or first deed of trust.
(a) In this section, "lender's inspection fee" means a fee imposed by a credit grantor to pay for a visual inspection of residential real property.
(b) Except as provided in subsection (c) of this section, a credit grantor may not impose a lender's inspection fee in connection with a loan made to a consumer borrower that is secured by residential real property.
(c) A lender's inspection fee may be imposed on a consumer borrower if the inspection is needed to ascertain completion of:
(1) Construction of a new home; or
(2) Repairs, alterations, or other work required by the credit grantor.
(d) This section does not apply to an appraisal of the value of real property by a credit grantor or to fees imposed in connection with an appraisal.
(a) This section applies only to a loan to a consumer borrower secured by a first mortgage or first deed of trust on residential real property used as the consumer borrower's primary residence.
(b) A credit grantor may require a consumer borrower to pay for services rendered by the credit grantor's attorney only if the attorney's fee:
(1) Is limited to legal services attributable to processing and closing the loan and not to unrelated services performed by the attorney for the credit grantor;
(2) If in excess of $100, is supported by a statement provided to the borrower at or prior to settlement that:
(i) Describes the services performed;
(ii) Sets forth the time spent by the attorney and the hourly rate or other basis for determining the fee;
(iii) States that the legal services are being performed on behalf of the credit grantor and not on behalf of the consumer borrower; and
(iv) States that the services are being paid for by the consumer borrower;
(3) Is reasonable on the basis of the legal services performed; and
(4) Is separately itemized on the loan settlement sheet and identified as a fee to the credit grantor's attorney.
(c) (1) A credit grantor may not require as a condition of settlement that a consumer borrower employ a particular attorney or title insurance company to perform a title search, examination of title, or closing if:
(i) The consumer borrower notifies the credit grantor, 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 to perform the title search, examination of title, or closing; and
(ii) The credit grantor does not reject the consumer borrower's choice of attorney or title insurance company for good cause within 7 days after the receipt of the notice under item (i) of this paragraph.
(2) Subject to the requirements of subsection (b) of this section, this subsection may not be construed to prohibit a credit grantor from requiring a consumer borrower to pay for:
(i) Preparation of loan closing documents;
(ii) Title insurance;
(iii) Review of documents prepared by the borrower's attorney; or
(iv) Attendance at settlement by the credit grantor's attorney.
(d) (1) Any credit grantor that imposes fees on a consumer borrower for settlement services, or document review services, performed by an attorney designated by the credit grantor, or who conditions settlement on the employment of a particular attorney or title insurance company, shall provide a prospective consumer borrower with a written notice stating:
(i) The credit grantor's requirements concerning selection of an attorney, title insurance company, or other person to perform settlement services relating to the purchase of the residential real property;
(ii) The consumer borrower's ability to choose an attorney or title insurance company under subsection (c) of this section; and
(iii) A good faith estimate of the fee or fees to be charged to the borrower.
(2) (i) The notice required under this subsection shall be provided at the time of or within 3 business days after the application for a loan, or earlier upon request.
(ii) A copy of the notice, signed by the applicant, shall accompany any executed application for a loan.
(a) (1) In this section the following words have the meanings indicated.
(2) "Covered loan" means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership and Equity Protection Act set forth in 15 U.S.C. § 1602(aa), as modified from time to time by Regulation Z, 12 C.F.R. Part 226, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(aa), as modified from time to time by Regulation Z, 12 C.F.R. Part 226.
(3) "Home buyer education or housing counseling" means instruction on preparing for home ownership, shopping for a home, obtaining a mortgage, loan closing, and life as a homeowner.
(b) (1) A credit grantor may not make a covered loan without giving due regard to the borrower's ability to repay the loan in accordance with its terms.
(2) A borrower is presumed to be able to repay a loan if at the time the loan is made the borrower's total scheduled monthly payment obligations, including the required loan payment, do not exceed 45 percent of the borrower's monthly gross income.
(3) This subsection does not apply to a loan to a borrower whose monthly gross income is greater than 120 percent of the median family income for the metropolitan statistical area in which the residential real property securing the loan is located.
(c) (1) In this subsection, "loan application" has the meaning stated in § 12-1022 of this subtitle.
(2) At the time a borrower completes a loan application for a covered loan, the credit grantor shall provide the borrower with:
(i) A written recommendation that the borrower seek home buyer education or housing counseling; and
(ii) A list of agencies and organizations approved by the county in which the residential real property securing the covered loan is located to provide home buyer education or housing counseling.
MD Maryland Official State Statutes
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