Md. Code Regs. 09.03.06.04

Current through Register Vol. 51, No. 21, October 18, 2024

Section 09.03.06.04 - Licensing and Application Requirements

A. Scope.

(1) If otherwise required to be licensed under Financial Institutions Article, §11-502, Annotated Code of Maryland, a person is not exempt because the person:

(a) Is an out-of-State deposit-taking financial institution;

(b) Does not have offices in Maryland;

(c) Does not have tax situs in Maryland; or

(d) Is not required to register as a foreign corporation doing business in Maryland.

(2) Repealed.

(3) For purposes of Financial Institutions Article, §11-506(b)(1), Annotated Code of Maryland, an individual is considered to have at least 3 years of experience in the mortgage lending business if:

(a) The individual has received compensation in connection with a minimum of 12 closed mortgage loans per year for each of the 3 years; or

(b) The individual has worked in the mortgage lending business at least an average of 20 hours per week for each of the 3 years.

(4) The Commissioner may consider the totality of an individual's particular duties and activities while engaged in the mortgage lending business to determine whether the individual has at least 3 years of experience.

(5) For purposes of Financial Institutions Article, §11-506(b)(4), Annotated Code of Maryland, a "principal officer" includes:

(a) An individual who owns, directly or indirectly, 10 percent or more of the business entity;

(b) An individual who serves on the board of directors or board of managers;

(c) An elected or appointed senior officer, including President, Executive Vice President, Senior Vice President, Treasurer, Secretary, Chief Executive Officer, Chief Operating Officer, Chief Legal Officer, Chief Credit Officer, and Chief Compliance Officer; or

(d) An individual, regardless of title, who has the power to direct the management or policies of the mortgage lending business.

B. Unlicensed Mortgage Lender. A licensee may not broker a loan to, or accept a loan referral from, a person the licensee knows is not licensed by the Commissioner, unless the licensee reasonably and in good faith believes that the person is properly licensed or exempt from the licensing requirement.

C. Renewals.

(1) A licensee may renew a license by filing a completed renewal application before the expiration of its current license.

(2) A person who fails to comply with §C(1) of this regulation shall file an application for a new license with all application and investigation fees, unless the renewal application is filed with the Commissioner within 30 days after the date on which the current license expired.

D. Change of Location. If a licensee changes the location of a licensed office and commences business at the new location without obtaining approval by the Commissioner, an application for a new license shall be filed with all application and investigation fees.

E. Bond Termination.

(1) If a licensee's bond, letter of credit, or trust account is cancelled, expired, or closed and no substitute bond or authorized security is in place:

(a) Upon notice of the termination from the bond surety, or issuer of the letter of credit or trust account, the licensee shall immediately cease doing any business as a mortgage lender; and

(b) The mortgage lender's license is suspended.

(2) If the termination remains in effect for more than 30 days, an application for a new license shall be filed with all application and investigation fees.

F. Loan Processing Under Expired License.

(1) If a licensee files an application for license renewal with the Commissioner at least 2 calendar weeks before the license expires and the Commissioner has not approved the application before the license expires, the licensee may continue to process and close loans until the Commissioner takes final action on the application in accordance with State Government Article, §10-226(b), Annotated Code of Maryland.

(2) If a licensee files an application for license renewal with the Commissioner less than 2 calendar weeks before the license expires and the Commissioner has not approved the application before the license expires, the licensee shall cease processing and closing loans when the license expires.

G. Complaint Resolution.

(1) A licensee shall designate a person as being responsible for, and authorized to make, decisions regarding the resolution of complaints received from the Commissioner.

(2) A licensee shall provide to the Commissioner the name of the person designated under §G(1) of this regulation as part of an application for:

(a) A new license; and

(b) A license renewal.

(3) A person designated under §G(1) of this regulation shall have:

(a) The necessary skills and knowledge of the mortgage industry to be able to adequately respond to consumer complaints; and

(b) Authority to resolve the complaint, or shall report directly to an individual with such authority.

(4) A licensee shall notify the Commissioner through NMLS of any change in the person designated under §G(1) of this regulation within 10 business days of the change.

H. Designation of Mortgage-Related Activity.

(1) A licensee shall designate on its original license application and on any license renewal application whether it will act, under its license, as one or more of the following:

(a) A lender;

(b) A mortgage broker; or

(c) A mortgage servicer.

(2) Notification.

(a) A licensee shall notify the Commissioner in writing through NMLS if, after the issuance or the renewal of its license, the licensee begins conducting a new activity that the licensee did not designate under §H(1) of this regulation.

(b) A licensee shall deliver the notification through NMLS to the Commissioner within 10 business days after beginning the new activity.

I. NMLS.

(1) Fingerprinting and Criminal Background Checks. Notwithstanding any provision of Financial Institutions Article, Annotated Code of Maryland, in connection with an initial application for a license, and at any other time that the Commissioner requests, an applicant or licensee shall provide fingerprints for use by the Federal Bureau of Investigation to conduct criminal history record checks

(a) The NMLSR is able to accept fingerprints for submission to the Federal Bureau of Investigation and any other governmental agency or entity authorized to receive this information for a state, national, or international criminal history background check; and

(b) The Commissioner has developed and implemented procedures to allow the NMLSR to accept fingerprints for submission to the Federal Bureau of Investigation and any other governmental agency or entity authorized to receive this information for a state, national, or international criminal history background check.

(2) Principal Executive Office.

(a) A person applying for an initial or a renewal license through NMLS shall comply with NMLS procedures by obtaining a license from the Commissioner for the applicant's principal executive office location by filing NMLS form MU-1.

(b) A person holding a license for its principal executive office subject to NMLS form MU-1 may apply to the Commissioner for one or more licenses for additional locations by filing NMLS form MU-3.

J. Applications.

(1) The Commissioner shall approve or deny an application for an initial license, a renewal license, or a license amendment within 60 days after the Commissioner receives a completed application, including, if applicable, a surety bond and all required fees.

(2) If the Commissioner notifies an applicant that an application for an initial license, a renewal license, or a license amendment is incomplete, the Commissioner shall itemize the steps that the applicant must take to complete the application.

(3) The application for an initial license, a renewal license, or a license amendment may not be approved until after the applicant completes all steps identified in the Commissioner's notice.

(4) If an application for an initial license, a renewal license, or license amendment is incomplete when submitted and remains incomplete, the Commissioner may cease processing and deem the incomplete application withdrawn, provided that the Commissioner has previously notified the applicant of the basis for incompleteness in accordance with §J(2) of this regulation, and given the applicant not less than 15 days to correct the incompleteness.

K. Trade Names.

(1) Prior to a licensee's use of a trade name to engage in mortgage lending business in Maryland, the licensee shall:

(a) Register the trade name with the Maryland Department of Assessments and Taxation; and

(b) Obtain the approval of the Commissioner for the use of the trade name by:

(i) Designating on an original license application or license renewal application through NMLS, any trade name under which the licensee will engage in mortgage lending business in Maryland; and

(ii) Specifying on an original license application or license renewal application through NMLS, which licensed locations will utilize the trade name.

(2) At all times subsequent to obtaining the approval of the Commissioner for the use of the trade name, a licensee shall maintain registration of the trade name in accordance with the requirements of Corporations and Associations Article, §1-406, Annotated Code of Maryland, and accompanying regulations.

(3) A licensee shall immediately notify the Commissioner if the licensee amends, cancels, or otherwise fails to renew the registration of a trade name which the Commissioner has approved previously.

Md. Code Regs. 09.03.06.04

Regulations .04, Code of Conduct_Mortgage Lenders, adopted as an emergency provision effective July 1, 1989 (16:14 Md. R. 1564); emergency status extended at 16:26 Md. R. 2782 (Emergency provisions are temporary and not printed in COMAR)
Regulations .04, Mortgage Lenders, adopted effective February 19, 1990 (17:3 Md. R. 297)
Regulation .04B amended as an emergency provision effective February 19, 2008 (35:6 Md. R. 695); emergency status extended at 35:18 Md. R. 1599; emergency action expired August 24, 2008
Regulation .04B amended effective August 25, 2008 (35:17: Md. R. 1485); November 3, 2008 (35:22 Md. R. 1956); March 15, 2010 (37:5 Md. R. 427); amended and recodified from .03 effective 46:19 Md. R. 813, eff. 10/4/2019; amended effective 48:20 Md. R. 851, eff. 10/4/2021