1. 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 21202 410-576-4041mcorwin@gfrlaw.com

2. 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?

3. 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 http://mlis.state.md.us/2009rs/billfile/sb0269.htm

4. 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)

5. 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

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

7. 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

8. 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

9. 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

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

11. Maryland Laws  Financial Institutions Article (Fin. Inst.)  Contains licensing laws for both company level (Fin. Inst. §11-501 et seq.) and individual level (Fin. Inst. §11-601 et seq.)  Establishes the authority of the Commissioner (Fin. Inst. §2-101 et seq.)

12. Maryland Laws  Commercial Law Article (Com. Law)  Contains finders/broker fee law (Com. Law §12-801 et seq.)  Contains “credit laws” which control loan terms (Com. Law §§12-101 et seq., 12-401 et seq., 12-901 et seq., and 12-1001 et seq.)  Contains consumer protection laws (Com. Law §§12-701 et seq. and 13-301 et seq.)

13. Maryland Laws  Real Property Article (Real Prop.)  Contains laws that impact mortgages and deeds of trust (Real Prop. §§3-101 et seq., 4- 101 et seq., 7-101 et seq., and 7-301 et seq.)

14. Maryland Regulations  Code of Maryland Regulations (COMAR) http://www.dsd.state.md.us/comar/comar.aspx

15. Maryland Regulations Subtitle 03 COMMISSIONER OF FINANCIAL REGULATION 09.03.01 Credit Unions 09.03.02 General Regulations 09.03.03 Procedure for Handling Applications 09.03.04 Retail Installment Sellers 09.03.05 Code of Conduct—Mortgage Brokers and Mortgage Bankers - Repealed 09.03.06 Mortgage Lenders 09.03.07 Credit Reporting Agencies 09.03.08 Debt Management Services - Repealed 09.03.09 Mortgage Originators 09.03.10 Credit and Other Regulation 09.03.11 Recordation of Security Instruments for Residential Property 09.03.12 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

16. Maryland Regulations Subtitle 03 COMMISSIONER OF FINANCIAL REGULATION 09.03.06 Mortgage Lenders 09.03.09 Mortgage Originators 09.03.10 Credit and Other Regulation 09.03.11 Recordation of Security Instruments for Residential Property 09.03.12 Foreclosure Procedures for Residential PropertyMortgage LendersMortgage OriginatorsCredit and Other RegulationRecordation of Security Instruments for Residential PropertyForeclosure Procedures for Residential Property

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

18. 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%)

19. SAFE Act Test: Maryland I.DLLR, Division of Financial Regulation (5%) A. Regulatory authority (See Fin. Inst. §2-101 et seq. and §11-601 et seq.) B. Department/agency structure (Same) C. Responsibilities and limitations (Same)

20. SAFE Act Test: Maryland II.State Law and Regulation Definitions (10%) A. Financial Institutions Article (See Fin. Inst. §11-601; see also Fin. Inst. §11-501 ) B. Commercial Law Article (See Com. Law §12- 801, §12-101, §12-901, §12-1001, §13-301) C. Other State Law and Regulations (See COMAR 09.03.09 and 09.03.06; Real Prop. Titles 3 and 7)

21. 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

22. 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

23. 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

24. Maryland Hot Topics

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

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

28. 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.

29. Questions

30. Copyright, 2009 Thank you! Marjorie A. Corwin Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC 233 East Redwood Street Baltimore, Maryland 21202 410-576-4041 mcorwin@gfrlaw.com