Maryland Legal Alert for Financial Services

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Maryland Legal Alert - November 2008

NOVEMBER DEADLINES FOR FINANCIAL INSTITUTIONS

Please remember that the deadlines for eligible institutions to (1) opt out of the Temporary Liquidity Guarantee Program (November 12); and (2) apply to the Treasury Department's Capital Purchase Program (November 14) are quickly approaching. See our October 23, Special Maryland Legal Alert for more information. Additionally, the FDIC has issued an interim rule for the TLGP. Comments are due November 13, 2008. And, on October 31, the Treasury Department issued additional information and application documents for publicly traded eligible institutions interested in applying to the Capital Purchase Program. Additional documentation is not yet available for non-public eligible institutions. Such institutions, if interested in the Capital Purchase Program, should contact their primary regulatory authority about applying. If you have any questions about these programs and their impact on your business, please contact Andrew Bulgin.

NEW COMMISSIONER REGULATIONS ARE COMING AT BREAKNECK SPEED - NEW DISCLOSURES REQUIRED FOR ALL MORTGAGE LOANS (INCLUDING HELOCs AND HOME EQUITY LOANS) STARTING TODAY

Keeping up with new issuances by the Commissioner of Financial Regulation has been daunting. Never in our careers have there been more regulations and advisories issued in a 6-month period. For a current list of what has been happening, click here. Just in October 2008 alone, the following regulations were made final or proposed.

Final - Effective November 3, 2008: New regulations requiring reporting of certain wrongdoings and imposing new mortgage disclosure requirements apply to all “regulated persons,” defined very broadly to include any entity or individual that is subject to the regulatory authority of the Maryland Commissioner of Financial Regulation under either the Financial Institutions Article or the Commercial Law Article of the Maryland Code.

The reporting regulation requires a report within 30 days of a person discovering, or having reason to believe, that an act of fraud, theft, or forgery has been committed by a person subject to the Commissioner's regulatory authority. A conviction of any felony, or of a misdemeanor involving fraud, theft, or forgery, by certain persons must be reported more quickly. The Commissioner has developed a “Reporting Form for Fraud, Other Violations of Law, and Convictions” for reporting purposes. The regulation prohibits disclosing the existence of the report to the person who is the subject of the report. The regulation also requires reporting to law enforcement under certain circumstances. This reporting requirement does not apply to banks, savings banks, or trust companies that have deposit-taking branches in Maryland. However, it does apply to affiliates and subsidiaries of those entities. Federally-chartered entities should consult with counsel concerning federal preemption.

The mortgage loan disclosure regulation requires 3 possible disclosures depending upon the terms of the loan the applicant is seeking (and the terms of the loan the lender expects to provide). The regulation provides the text for each disclosure. It also provides that the disclosures should be together on one or more pages with no other information. The lender may add check blocks to the form that can be marked to indicate which disclosures apply. The disclosures must be printed in at least 10-point font type and provided to the applicant within 10 business days after the “initial application” but not less than 72 hours before loan “settlement.” If any changes to the terms of a loan would require additional or modified disclosures, delivery of “final” disclosures must be made at least 72 hours before loan “settlement.” We can assist with the implementation of this disclosure requirement (please contact Margie Corwin).
Final - Effective November 3, 2008: Changes to existing regulations for Maryland Mortgage Lender Licensees (lenders and brokers) and for Maryland Mortgage Originators Licensees (broker employees) impose a new duty of good faith and fair dealing. Further, there are new rules regarding the promotion and risk management for nontraditional and higher-priced mortgage loans. The Commissioner has developed a new Net Tangible Benefit Worksheet to comply with these requirements. Additional changes to these regulations address how to meet certain experience and educational requirements. These regulations are a must read for all licensees.

Proposed: Regulations were proposed for compliance with the law, passed last April 2008, that requires the inclusion in residential mortgages and deeds of trust, of information regarding mortgage lender/broker/originator licensees or regarding exemptions from licensing. Comments on these proposed regulations will be accepted through November 10, 2008. Until these regulations are final (which could occur in December), there is no requirement to include this information on recorded mortgages or deeds of trust.

Proposed: Regulations were proposed for compliance with the law, passed last April 2008, that requires, among other actions, the giving of a Notice of Intention to Foreclose and a Notice of filing a foreclosure action, and providing the Commissioner with certain information. These regulations, when final (which could occur in December) will supersede the emergency regulations issued earlier this year regarding the same subjects. Comments on these proposed regulations will be accepted through November 10, 2008.

Proposed: Regulations were proposed to address certain changes in the licensing of mortgage lenders, brokers, and originators, including significant increases in licensing and renewal fees. These changes primarily are intended to address the requirements of the federal SAFE Mortgage Licensing Act, signed into law July 30, 2008. The Commissioner has issued Volume 1 of an eNewsletter called “Mortgage Licensing Update” intending to keep licensees updated on these developments.

Breathless? So are we, but we also are ready to advise and assist with compliance as to all these regulations. For more information, please contact Chris Rahl.

 

© 2008 Gordon Feinblatt, LLC. MARYLAND LEGAL ALERT is intended for informational purposes only and is not legal advice to any person, entity or firm. The material included in MARYLAND LEGAL ALERT is obtained from a variety of public sources.