Maryland Legal Alert for Financial Services
Maryland Legal Alert - October 2010
In This Issue:
• INDEMNITY DEED OF TRUST: OFFICE OF LAND RECORDS FOR BALTIMORE COUNTY NOW REQUIRES SUBMISSION OF AFFIDAVIT WHEN FILING IDOT
• NEW POWER OF ATTORNEY LAW IS EFFECTIVE
• REMINDER: MODEL PRIVACY NOTICE SAFE HARBOR STARTS JANUARY 1, 2011
• NOTICE OF HOUSING COUNSELING BEGINS JANUARY 1, 2011
• NEW REVERSE MORTGAGE LENDING REQUIREMENTS
• UPCOMING CHANGES TO FEDERAL MORTGAGE LENDING REGULATIONS
• PEOPLE ARE CALLING ABOUT . . . COLLECTING APPRAISAL, CREDIT REPORT, AND OTHER THIRD-PARTY FEES AFTER OCTOBER 1
INDEMNITY DEED OF TRUST: OFFICE OF LAND RECORDS FOR BALTIMORE COUNTY NOW REQUIRES SUBMISSION OF AFFADAVIT WHEN FILING IDOTREGULATIONS
The recorder's office at the Land Records for Baltimore County, Maryland now requires the submission of an Affidavit when filing an Indemnity Deed of Trust. The party signing the affidavit must represent that: (i) the grantor of the IDOT is not the maker of the Note, (ii) the grantor has signed a guaranty, (iii) the IDOT secures the guaranty, and (iv) the grantor is not primarily liable for the indebtedness. The Affidavit must be executed by the lender's counsel, the settlement attorney or a party to the instrument. If you have any questions about the Affidavit, please contact Peter Rosenwald, II.
NEW POWER OF ATTORNEY LAW IS EFFECTIVE
Beginning October 1, 2010, Maryland has a new law governing powers of attorney. The more time we spend studying the law, the more questions seem to arise. On September 1, 2010, Carla Witzel and Margie Corwin presented a webinar on the subject for the Maryland Bankers Association. The slides from that webinar can be found here. We have prepared a “power of attorney implementation package” that includes, among other materials, a form power of attorney for financial purposes and a form Affidavit for the attorney-in-fact (agent). That package is available for a nominal fee. For more information, please contact Chris Rahl.
REMINDER: MODEL PRIVACY NOTICE SAFE HARBOR STARTS JANUARY 1, 2011
As we mentioned in our June 2010 Maryland Legal Alert, beginning January 1, 2011, the NEW Model Privacy Notice will serve as the only safe harbor for financial institutions under the Gramm-Leach-Bliley privacy rules governing financial institutions. Any notice sent in 2010 that uses the “old” model privacy notice provisions will remain effective (for safe harbor purposes) for one year after its issuance. For more information, please contact Chris Rahl.
NOTICE OF HOUSING COUNSELING BEGINS JANUARY 1, 2011
As reported in our 2010 Maryland Laws Update, beginning on January 1, 2011, each lender making a first mortgage loan primarily for personal, family or household purposes that will be secured by owner-occupied real property located in Maryland must provide the borrower with a new written notice about housing counseling. On September 13, the Maryland Secretary of Housing and Community Development adopted final regulations to implement this notice requirement (to be codified at COMAR 05.19.01). The final regulations clarify that this notice must be provided “within 10 business days after initial application.” The final notice and the current list of counseling agencies can be found here. For more information, please contact Chris Rahl.
NEW REVERSE MORTGAGE LENDING REQUIREMENT
Also reported in our 2010 Maryland Laws Update, for the first time Maryland has a law specifically applicable to reverse mortgage loans. Lenders and brokers who offer only reverse mortgage loans subject to the Home Equity Conversion Mortgage (HECM) program already are, for the most part, in compliance with Maryland’s new law. However, there are a few additional requirements even for HECM loans, including a requirement that upon receiving an application for a reverse mortgage loan, the lender or broker must provide the prospective borrower with a checklist, written in 12-point type or larger, that advises the borrower to discuss certain specific issues with a counseling agency counselor. For more information, please contact Chris Rahl.
UPCOMING CHANGES TO FEDERAL MORTGAGE LENDING REGULATIONS
Changes to the operations of residential mortgage lenders and brokers continue at a fevered pitch. In addition to the new Maryland housing counseling notice and reverse mortgage checklist (described above), there are a number of new federal requirements that need attention. We have prepared a list of final federal rules and guidances that become effective over the next six months. For more information, please contact Chris Rahl.
As reported in our September 2010 Maryland Legal Alert, Maryland mortgage brokers need new express authorization from their customers in order to collect certain third-party fees, including appraisal and credit report fees. Mortgage brokers have been calling to have their agreements with consumers updated, so the brokers can continue to collect appraisal and credit report fees and, for the first time, collect fees for condominium documents and subordination agreement documents obtained by the mortgage broker. In most cases, the change is an “easy fix.” For more information, please contact Chris Rahl.