09.03.06.02

.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) "Advertisement" means a statement in any medium used or intended to induce any person to apply for a mortgage loan.

(2) "Annual percentage rate (APR)", under §B(13) of this regulation, has the meaning stated in 12 CFR Part 226.

(3) Applicant.

(a) "Applicant" means a borrower who has not received a commitment from a licensee to make the loan requested.

(b) "Applicant" does not include a person whose request for a mortgage loan has been denied.

(4) "Average prime offer rate" means an annual percentage rate that is derived from average interest rates, points, and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage transactions that have low-risk pricing characteristics. The Board of Governors of the Federal Reserve publishes average prime offer rates for a broad range of types of transactions in a table updated at least weekly as well as the methodology the Board uses to derive these rates.

(5) "Borrower" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(6) Broker.

(a) This section defines whether a person is acting as a broker or a lender in a particular transaction.

(b) For purposes of all Maryland laws and regulations applicable to mortgage lenders, a person is acting as a broker if:

(i) The person procures a mortgage loan or arranges or otherwise assists a borrower in obtaining a mortgage loan; and

(ii) The creditor identified in the loan documents is a different entity than that person.

(c) There is no broker in a transaction solely because the lender contracts with a third party for processing or underwriting services if:

(i) The entity contracting to perform the underwriting or processing did not generate the loan application; and

(ii) The loan is closed in the name of the lender which did generate the loan application.

(7) "Commissioner" has the meaning stated in Financial Institutions Article, §1-101, Annotated Code of Maryland.

(8) "Commitment" has the meaning stated in Commercial Law Article, §12-125(a)(3), Annotated Code of Maryland.

(9) Dwelling.

(a) "Dwelling" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(10) "Escrow account" has the meaning stated in Commercial Law Article, §12-109(a)(3), Annotated Code of Maryland.

(11) "Financing agreement" has the meaning stated in Commercial Law Article, §12-125(a)(4), Annotated Code of Maryland.

(12) "Fully indexed rate" means the index rate, as defined in the mortgage loan documents, prevailing at the time the mortgage loan is approved by the lender, plus the margin that will apply after the expiration of an introductory interest rate.

(13) Higher-Priced Mortgage Loan.

(a) "Higher-priced mortgage loan" means a mortgage loan for which the annual percentage rate exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set by:

(i) 1.5 or more percentage points for loans secured by a first lien on residential real estate; or

(ii) 3.5 or more percentage points for loans secured by a subordinate lien on residential real estate.

(b) Notwithstanding §B(13)(a) of this regulation, the calculation set forth therein for determining whether a loan is a higher-priced mortgage loan shall adjust as may be necessary to be consistent with the final rule codified at 12 CFR §226.35, as it may be amended from time to time.

(c) "Higher-priced mortgage loan" does not include a:

(i) Transaction to finance the initial construction of a dwelling on residential real estate;

(ii) Temporary loan with a term of 12 months or less, such as a loan to purchase residential real estate where the borrower plans to sell current residential real estate within 12 months;

(iii) Reverse mortgage transaction subject to 12 CFR §226.33; or

(iv) Home equity line of credit subject to 12 CFR §226.5b.

(14) Initial Application.

(a) "Initial application" means when:

(i) An applicant requests that a mortgage loan be made or obtained on the applicant's behalf; and

(ii) The person to whom the request was made agrees to begin processing the loan application.

(b) A person may require an applicant to complete a written application before agreeing to begin processing the loan, if that requirement is explained to the applicant.

(15) Lender.

(a) "Lender" means a person who makes a mortgage loan.

(b) "Lender", as used in these regulations, does not include a person acting as a:

(i) Mortgage broker; or

(ii) Mortgage servicer.

(16) "License" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(17) "Licensee" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(18) "Loan" as used in these regulations, unless the context indicates otherwise, means a mortgage loan.

(19) "Loan application" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(20) "Mortgage lender" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(21) "Mortgage loan" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(22) "Mortgage loan originator" has the meaning stated in Financial Institutions Article, §11-601, Annotated Code of Maryland.

(23) "NMLSR" means the Nationwide Mortgage Licensing System and Registry established by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.

(24) "Person" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(25) "Processing", when used in the context of processing a loan application, means the:

(a) Collection of data, documents, and other materials which a lender or broker requires in order to evaluate whether a loan will be granted or denied;

(b) Preparation of all materials necessary for closing a loan; and

(c) Scheduling of the closing of a loan.

(26) "Residential real estate" has the meaning stated in Financial Institutions Article, §11-501, Annotated Code of Maryland.

(27) "Underwriting" means the evaluation of information and materials about the loan, the applicant, and the property which will secure the loan, to determine whether the loan will be made or denied.