Code of Maryland Regulations
Title 09 - MARYLAND DEPARTMENT OF LABOR
Subtitle 03 - COMMISSIONER OF FINANCIAL REGULATION
Chapter 09.03.06 - Mortgage Lending
Section 09.03.06.20 - Duty of Care

Universal Citation: MD Code Reg 09.03.06.20

Current through Register Vol. 51, No. 19, September 20, 2024

A. Good Faith and Fair Dealing. A licensee has a duty of good faith and fair dealing in communications, transactions, and course of dealings with a borrower in connection with the advertisement, solicitation, making, servicing, purchase, or sale of any mortgage loan, including, but not limited to:

(1) The duty to recommend to a borrower or induce a borrower to enter into only a mortgage loan refinancing that has a net tangible benefit to a borrower, considering all of the circumstances, including the terms of a loan, the cost of a loan, and the borrower's circumstances;

(2) The duty to provide to a borrower who is offered a higher-priced mortgage loan information about the non-higher-priced mortgage loans that the licensee can make available and for which the borrower may qualify; and

(3) The duty when servicing mortgage loans to:
(a) Promptly provide borrowers with an accurate accounting of the debt owed when borrowers request an accounting;

(b) Make borrowers in default aware of loss mitigation options and services offered by the licensee;

(c) Provide trained personnel and telephone facilities sufficient to promptly answer and respond to borrower inquiries regarding their mortgage loans; and

(d) Pursue loss mitigation when possible.

B. Method to Determine Net Tangible Benefit.

(1) When determining whether a refinance of a mortgage loan will provide a net tangible benefit to the borrower, a licensee shall make a reasonable inquiry of the borrower to determine what net tangible benefit, if any, the borrower will receive from a mortgage loan. Net tangible benefits may include, but are not limited to:
(a) Obtaining a lower interest rate;

(b) Obtaining a lower monthly payment, including principal, interest, taxes, and insurance;

(c) Obtaining a shorter amortization schedule;

(d) Changing from an adjustable rate to a fixed rate;

(e) Eliminating a negative amortization feature;

(f) Eliminating a balloon payment feature;

(g) Receiving cash-out from the new loan in an amount greater than all closing costs incurred in connection with the loan;

(h) Avoiding foreclosure;

(i) Eliminating private mortgage insurance; and

(j) Consolidating other existing loans into a new mortgage loan.

(2) A licensee is considered to have conducted a reasonable inquiry of whether a refinance of a mortgage loan provides a net tangible benefit to a borrower if the mortgage lender has the borrower complete and sign a net tangible benefit worksheet on the form prescribed by the Commissioner, or a form that is substantially similar to the form prescribed by the Commissioner.

Disclaimer: These regulations may not be the most recent version. Maryland may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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