Office of the Commissioner of Financial Regulation


New Licensing Requirements for Mortgage Originators Advisory 05-05 - Advisory Notices


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August 23, 2005

Chapter 590 Laws of Md. (2005) - House Bill 1040

Effective October 1, 2005, Chapter 590 will establish new licensing requirements for mortgage originators. The law requires mortgage broker loan officers and under certain circumstances, mortgage lender loan officers to become licensed with the Maryland Commissioner of Financial Regulation not later than January 1, 2007.

In the new law, "mortgage originator" is an individual who: (1) either is employed by a mortgage lender that is a mortgage broker under FI 11-501(i) or has a net branch office out of which the individual works; (2) directly contacts prospective borrowers for the purpose of negotiating with or advising the prospective borrowers regarding mortgage loan terms and availability; (3) receives compensation on a percentage basis; and (4) is authorized to accept a loan application on behalf of the mortgage lender.
  • If you are an employee of a mortgage lender (that makes mortgage loans), no license is required unless you work out of a net branch and meet the other criteria of a "mortgage originator".
  • If you are an employee of a mortgage broker and meet the other criteria of a "mortgage originator", you will need a license.

As general awareness of the new law has grown, the Office of the Commissioner has begun to receive a number of questions from the industry. Some of these frequently asked questions and their answers are provided as general information. You may access the Q & A fact sheet at the Office of the Commissioner website. A copy of House Bill 1040 (available in Adobe Acrobat format) can also be found at the above website.

As a reminder, license renewal for mortgage lenders is approaching. When applying online for renewal, you will be asked to identify your business as a net branch, if applicable. Renewal information will be available October 1, 2005.

This Advisory Notice is not a comprehensive analysis of Chapter 590; and all mortgage lenders and their employees who may be "mortgage originators" are urged to carefully review the new law with their counsel to assure full compliance. Chapter 590 is codified as Financial Institutions Article, Title 11, Subtitle 6, Annotated Code of Md.

New Licensing Requirements for Mortgage Originators Frequently Asked Questions (FAQs)