09.03.06.18

.18 Special Rules for Covered Loans.

A. Purpose and Scope.

(1) The General Assembly has determined that it is in the public interest to require lenders to comply with special rules with respect to certain mortgage loans.

(2) This regulation applies to all covered loans made under the provisions of Commercial Law Article, Title 12, Subtitle 1, 3, 4, or 10, Annotated Code of Maryland.

B. Definitions. In this regulation, the following terms have the meanings indicated:

(1) "Consumer report" has the meaning stated in Commercial Law Article, §14-1201, Annotated Code of Maryland.

(2) "Consumer reporting agency" has the meaning stated in Commercial Law Article, §14-1201, Annotated Code of Maryland.

(3) "Covered loan" means a mortgage loan made under Commercial Law Article, Title 12, Subtitle 1, 3, 4, or 10, Annotated Code of Maryland, that meets the criteria for a loan subject to the Federal Home Ownership Equity Protection Act set forth in 15 U.S.C. §1602(AA), as modified from time to time by Regulation Z, 12 CFR 226, except that the comparison percentages for the mortgage loan shall be 1 percentage point less than those specified in 15 U.S.C. §1602(AA), as modified from time to time by Regulation Z, 12 CFR 226.

(4) "Credit grantor" has the meaning stated in Commercial Law Article, §12-1001, Annotated Code of Maryland.

(5) Lender.

(a) "Lender" has the meanings stated in Commercial Law Article, §§12-101, 12-301, or 12-401, Annotated Code of Maryland, as the context may require.

(b) "Lender" includes a credit grantor under Commercial Law Article, Title 12, Subtitle 10, Annotated Code of Maryland.

(6) "Loan application" has the meaning stated in Commercial Law Article, §12-125(a), Annotated Code of Maryland.

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

C. Requirements.

(1) For purposes of Commercial Law Article, §§12-124.1(c), 12-311(e), 12-409.1(c), and 12-1029(c), Annotated Code of Maryland:

(a) A loan application is completed at the time of initial application; and

(b) In the case of loan applications received by a lender by mail, telephone, or other electronic means the requirement that the lender shall provide a written recommendation that the borrower seek home buyer education or housing counseling and a list of approved agencies and organizations is satisfied, if they are mailed or otherwise provided to the borrower at the time of the initial application or within 3 business days after completion of the initial application.

(2) Under Commercial Law Article, §§12-127(b), 12-311(d), 12-409.1(b), and 12-1029(b), Annotated Code of Maryland:

(a) If the residential real estate securing the covered loan of a borrower is not located in a metropolitan statistical area, the borrower's monthly gross income shall be compared to the nonmetropolitan median family income for the county in which the property is located, as reported in the most recent estimates made available by the United States Department of Housing and Urban Development as of the date of initial application for a covered loan;

(b) A borrower's total scheduled monthly payment obligations are the amounts required to be paid to satisfy the borrower's legally enforceable minimum monthly financial obligations as of the date of initial application for a covered loan;

(c) A borrower's total scheduled monthly payment obligations include secured and nonsecured debt, alimony, child support, and other similar legally enforceable financial obligations payable in two or more installments;

(d) A borrower's total scheduled monthly payment obligations do not include any debts that are consolidated with, or paid off by, a covered loan;

(e) A lender's consideration of a borrower's scheduled monthly payment obligations may be limited to information provided directly by the borrower and verified by a consumer report from a consumer reporting agency, unless information provided by the borrower or the consumer reporting agency reasonably leads to further investigation by the lender; and

(f) A lender shall retain information used to determine a borrower's ability to repay for at least 25 months after final payment is made or the covered loan is sold, whichever occurs first.