Office of the Commissioner of Financial Regulation


New Mortgage Lender Licensing Requirements for Federally Approved Seller/Servicers (Senate Bill 159) Advisory 05-03 - Advisory Notices


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June 1, 2005

Effective October 1, 2005, Chapter 132 of the Laws of Maryland 2005 will establish new mortgage licensing requirements for federally approved seller-servicers.

Currently, some entities that service mortgage loans for a lender or assignee of mortgage loans and/or collect or otherwise receive mortgage loan payments from borrowers for distribution to the lender or assignee are not subject to the licensing and bonding requirements of a mortgage lender. The exemption from the mortgage lender licensing provisions is contingent upon providing documentation that the mortgage lender is a federally approved seller-servicer. A federally approved seller-servicer is a mortgage lender that has been approved by: (1) the Federal Home Loan Mortgage Corporation; (2) the Federal National Mortgage Association; (3) the Government National Mortgage Association; (4) the U.S. Department of Housing and Urban Development; or (5) the U.S. Department of Veterans Affairs. As an exempt entity, federally approved servicers need only register annually with the Commissioner of Financial Regulation.

The new law repeals Md. Code Ann., Fin. Inst. §11-522. Entities that are federally approved seller-servicers will be required to be licensed as mortgage lenders beginning October 1, 2005. This means full compliance with the Maryland Mortgage Lender Law (Md. Code Ann., Fin. Inst. §11-501 et. seq.) The law provides that in the absence of an order by the Commissioner to the contrary, a federally approved seller-servicer claiming exemption status prior to October 1, 2005 may continue to service mortgage loans without being licensed until the Commissioner acts on the servicer's application for a license if the servicer applies by October 31, 2005.

Federally approved servicers are strongly encouraged to apply online for a mortgage lender license before the effective date. Please be advised that the surety bond amount will be based on the volume of business in the last 12 months prior to application. For further information, contact the office at (410) 230-6097 or logon to Commissioner of Financial Regulation website.