Code of Maryland Regulations
Title 09 - MARYLAND DEPARTMENT OF LABOR
Subtitle 03 - COMMISSIONER OF FINANCIAL REGULATION
Chapter 09.03.09 - Mortgage Loan Originators
Section 09.03.09.04 - Duty of Care
Universal Citation: MD Code Reg 09.03.09.04
Current through Register Vol. 51, No. 19, September 20, 2024
A. Good Faith and Fair Dealing. A mortgage loan originator has a duty of good faith and fair dealing in communications and transactions with a borrower, 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; and
(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.
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 mortgage
loan originator shall make a reasonable inquiry of a 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
mortgage loan originator 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 loan originator has the borrower complete and sign a
net tangible benefit worksheet on the form prescribed by the Commissioner for
that purpose, 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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