EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb1150*
HOUSE BILL 1150
I2, I1 3lr1371
By: Delegate Queen
Introduced and read first time: February 10, 2023
Assigned to: Economic Matters
A BILL ENTITLED
AN ACT concerning 1
Commercial Law and Financial Institutions – Credit Regulation – Shared 2
Appreciation Agreements 3
FOR the purpose of making certain shared appreciation agreements subject to the 4
Maryland Mortgage Lender Law and other provisions of law that regulate certain 5
loans of single extensions of closed end credit and revolving credit plans; authorizing 6
the Commissioner of Financial Regulation to adopt certain regulations regarding the 7
enforcement of and compliance with provisions of law that regulate shared 8
appreciation agreements; and generally relating to credit regulation and shared 9
appreciation agreements. 10
BY repealing and reenacting, without amendments, 11
Article – Commercial Law 12
Section 12–901(a) and 12–1001(a) 13
Annotated Code of Maryland 14
(2013 Replacement Volume and 2022 Supplement) 15
BY repealing and reenacting, with amendments, 16
Article – Commercial Law 17
Section 12–901(g) and (g–1) through (l), 12–913.1, 12–922, 12–1001(j) and (k–1) 18
through (m), and 12–1013 19
Annotated Code of Maryland 20
(2013 Replacement Volume and 2022 Supplement) 21
BY adding to 22
Article – Commercial Law 23
Section 12–901(n), 12–926, 12–1001(o), and 12–1030 24
Annotated Code of Maryland 25
(2013 Replacement Volume and 2022 Supplement) 26
BY repealing and reenacting, without amendments, 27 2 HOUSE BILL 1150
Article – Financial Institutions 1
Section 11–501(a) 2
Annotated Code of Maryland 3
(2020 Replacement Volume and 2022 Supplement) 4
BY repealing and reenacting, with amendments, 5
Article – Financial Institutions 6
Section 11–501(h–1) through (q) 7
Annotated Code of Maryland 8
(2020 Replacement Volume and 2022 Supplement) 9
BY adding to 10
Article – Financial Institutions 11
Section 11–501(r) 12
Annotated Code of Maryland 13
(2020 Replacement Volume and 2022 Supplement) 14
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15
That the Laws of Maryland read as follows: 16
Article – Commercial Law 17
12–901. 18
(a) In this subtitle the following words have the meanings indicated. 19
(g) (1) “Loan” means a cash advance to be paid to or for the account of the 20
borrower. 21
(2) “LOAN” INCLUDES AN ADVANCE MADE IN ACCORDANCE W ITH THE 22
TERMS OF A SHARED AP PRECIATION AGREEMENT . 23
[(g–1)] (H) “Mobile home” has the meaning stated in § 11–501 of the Financial 24
Institutions Article. 25
[(h)] (I) “Nonconsumer borrower” means any borrower other than a consumer 26
borrower. 27
[(i)] (J) (1) “Outstanding unpaid indebtedness” means on any day the total 28
amount of purchases and loans charged to the borrower’s account under the plan which is 29
outstanding and unpaid at the end of the day, after adding the aggregate amount of any 30
new purchases and loans charged to the account that day and deducting the aggregate 31
amount of any payments and credits applied to the account that day. 32
(2) If the agreement governing the plan permits, “outstanding unpaid 33
indebtedness” may include the amount of any interest, finance charges, and additional 34 HOUSE BILL 1150 3
charges, including late or delinquency charges, that have accrued in the account and are 1
unpaid at the end of the day. 2
[(j)] (K) “Purchase” means an extension of credit for a purchase of real or 3
personal, tangible or intangible property, or an extension of credit for services, licenses, 4
taxes, official fees, fines, private or governmental obligations, or any other thing of value, 5
including a charitable contribution. 6
[(k)] (L) “Residential real property” means owner–occupied real property having 7
a dwelling on it designated principally as a residence with accommodations for not more 8
than four families. 9
[(l)] (M) “Revolving credit plan” or “plan” means a plan that contemplates the 10
extension of credit under an account governed by an agreement between a credit grantor 11
and a borrower under which: 12
(1) The credit grantor permits the borrower and, if the agreement 13
governing the plan permits, persons acting on behalf of or with authorization from the 14
borrower to make purchases or obtain loans from time to time; 15
(2) The amounts of purchases and loans are charged to the borrower’s 16
account; 17
(3) The borrower is required to pay the credit grantor the amounts of all 18
purchases and loans charged to the borrower’s account under the plan but has the privilege 19
of paying amounts due from time to time as agreed; and 20
(4) Interest or finance charges may be charged and collected by the credit 21
grantor from time to time on the amounts due under the plan. 22
(N) “SHARED APPRECIATION A GREEMENT” HAS THE MEANING STAT ED IN § 23
11–501 OF THE FINANCIAL INSTITUTIONS ARTICLE. 24
12–913.1. 25
(a) (1) On or after October 1, 1993, a credit grantor may at its option elect to 26
offer a plan to any borrower either pursuant to this subtitle or as otherwise permitted by 27
applicable law. 28
(2) In order for a plan to be established under and governed by this subtitle, 29
a credit grantor shall make a written election to that effect in the agreement governing the 30
plan. 31
(b) (1) If a credit grantor elects in accordance with this section to establish a 32
plan under this subtitle, the provisions of Subtitle 1, 3, 4, 5, 6, or 10 of this title do not apply 33
to the plan. 34
4 HOUSE BILL 1150
(2) If a person fails to elect in accordance with this section to establish a 1
plan under this subtitle, the provisions of this subtitle do not apply. 2
(C) NOTWITHSTANDING ANY O THER PROVISION OF TH IS TITLE, A LOAN 3
SHALL BE SUBJECT TO THE PROVISIONS OF TH IS SUBTITLE, WHETHER OR NOT 4
ELECTED, IF THE LOAN: 5
(1) IS A SHARED APPRECIATIO N AGREEMENT ; AND 6
(2) ALLOWS THE BORROWER T O REPAY ADVANCES AND HAVE ANY 7
REPAID AMOUNTS SUBSE QUENTLY RE ADVANCED TO THE BORR OWER. 8
12–922. 9
(a) (1) In this section the following words have the meanings indicated. 10
(2) “Borrower” means a consumer borrower who makes an application for 11
a loan secured by a first mortgage or first deed of trust on residential real property to be 12
occupied by the borrower as the borrower’s primary residence. 13
(3) “Commitment” means a written, specific, binding agreement between a 14
borrower and a lender which sets forth the terms of a loan being extended to the borrower. 15
(4) “Financing agreement” means a written agreement between a borrower 16
and a lender [which sets] THAT: 17
(I) SETS forth the terms of a purchase money loan or a refinancing 18
of an existing loan that: 19
[(i)] 1. Results in or is secured by a first mortgage or a first deed 20
of trust on residential real property to be occupied by the borrower; and 21
[(ii)] 2. Is offered or extended to the borrower; OR 22
(II) IS A SHARED APPRECIAT ION AGREEMENT . 23
(5) (i) “Lender” means a credit grantor subject to the licensing 24
requirements of Title 11, Subtitle 5 of the Financial Institutions Article. 25
(ii) “Lender” does not include a credit grantor exempt from licensing 26
under § 11–502 of the Financial Institutions Article. 27
(6) (i) “Loan application” means any oral or written request for an 28
extension of credit that is made in accordance with procedures established by a lender for 29
the purpose of inducing the lender to seek to procure or make a mortgage loan. 30
HOUSE BILL 1150 5
(ii) “Loan application” does not include the use of an account or line 1
of credit to obtain a loan within a previously established credit limit. 2
(b) (1) A lender who offers to make or procure a loan secured by a first 3
mortgage or first deed of trust on residential real property to be occupied by the borrower 4
shall provide the borrower with a financing agreement executed by the lender within 10 5
business days after the date the loan application is completed. 6
(2) The financing agreement shall provide: 7
(i) The term and principal amount of the loan; 8
(ii) An explanation of the type of mortgage loan being offered; 9
(iii) The rate of interest that will apply to the loan and, if the rate is 10
subject to change or is a variable rate or is subject to final determination at a future date 11
based on some objective standard, a specific statement of those facts; 12
(iv) The points, if any, to be paid by the borrower or the seller, or 13
both; and 14
(v) The term during which the financing agreement remains in 15
effect. 16
(3) If all the provisions of the financing agreement are not subject to future 17
determination, change, or alteration during its term, the financing agreement shall 18
constitute the final binding agreement between the parties as to the items covered by the 19
financing agreement. 20
(c) (1) If any of the provisions of the financing agreement are subject to change 21
or determination after its execution, the lender shall provide the borrower with a 22
commitment, executed by the lender, at least 72 hours before the time of settlement agreed 23
to by the parties, providing: 24
(i) The effective fixed interest rate or initial interest rate that will 25
be applied to the loan; and 26
(ii) A restatement of all the remaining unchanged provisions of the 27
financing agreement. 28
(2) Subsequent to execution of the financing agreement, the borrower may 29
waive in writing the 72–hour advance presentation requirement and accept the 30
commitment at settlement only if compliance with the 72–hour requirement is shown by 31
the lender to be infeasible. 32
(d) (1) A borrower aggrieved by any violation of this section shall be entitled 33
to bring a civil suit for damages, including reasonable attorney’s fees, against the lender. 34 6 HOUSE BILL 1150
(2) The penalties set out under § 12–918 of this subtitle do not apply to any 1
violation of this section. 2
12–926. 3
THE COMMISSIONER OF FINANCIAL REGULATION MAY ADOPT REGULATIONS 4
REGARDING THE ENFORC EMENT OF AND COMPLIANCE WITH THIS SUBTITLE AS TO 5
CREDIT GRANTORS WHO OFFER OR MAKE SHARED APPRECIATION AGREEME NTS 6
UNDER THIS SUBTITLE . 7
12–1001. 8
(a) In this subtitle the following words have the meanings indicated. 9
(j) (1) “Loan” means any single extension of closed end credit, whether 10
repayable in installments, on demand, or otherwise and whether extended in one or more 11
advances. 12
(2) “LOAN” INCLUDES AN ADVANCE MADE IN ACCORDANCE W ITH THE 13
TERMS OF A SHARED AP PRECIATION AGREEMENT . 14
[(k–1)] (L) “Mobile home” has the meaning stated in § 11–501 of the Financial 15
Institutions Article. 16
[(l)] (M) “Remaining loan balance”, when used in reference to a debt cancellation 17
agreement, does not include: 18
(1) Any delinquent or deferred payments; 19
(2) Past due charges; 20
(3) Late payment charges; 21
(4) Unearned interest; 22
(5) Unearned rental payments; 23
(6) The portion of any financed taxes or charges, including charges for 24
credit life insurance, credit health insurance, credit involuntary unemployment benefit 25
insurance, and mechanical repair contracts, actually refunded to the borrower or credited 26
as a reduction to the loan balance; or 27
(7) By agreement of the parties, the amount of any primary insurance 28
deductible. 29
HOUSE BILL 1150 7
[(m)] (N) “Residential real property” means owner–occupied real property having 1
a dwelling on it designated principally as a residence with accommodations for not more 2
than four families. 3
(O) “SHARED APPRECIATION A GREEMENT” HAS THE MEANING STAT ED IN § 4
11–501 OF THE FINANCIAL INSTITUTIONS ARTICLE. 5
12–1013. 6
(a) Unless otherwise provided under the express terms of the agreement, note, or 7
other evidence of the extension of closed end credit, the provisions of Subtitle 1, 3, 4, 5, 6, 8
or 9 of this title do not apply to an extension of closed end credit if: 9
(1) The agreement, note, or other evidence of the extension of credit is made 10
before October 1, 1993; and 11
(2) The extension of credit is made under this subtitle before October 1, 12
1993. 13
(b) For the purposes of subsection (a) of this section, an extension of credit is made 14
under this subtitle if: 15
(1) The credit grantor has made a written election to do so in the 16
agreement, note, or other evidence of the extension of credit; or 17
(2) The agreement, note, or other evidence of the extension of credit is made 18
pursuant to the provisions of this subtitle. 19
(c) For the purposes of subsection (a) of this section, if there is no written election 20
to extend credit under this subtitle, the burden of proof is on the credit grantor to show the 21
agreement, note, or other evidence of the extension of credit was made pursuant to this 22
subtitle. 23
(d) Any agreement, note, or other evidence of an extension of credit made before 24
October 1, 1993 is not subject to § 12–1013.2 of this subtitle. 25
(E) NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE, A LOAN 26
SHALL BE SUBJECT TO THE PROVISIONS OF TH IS SUBTITLE, WHETHER OR NOT 27
ELECTED, IF THE LOAN: 28
(1) IS A SHARED APPRECIAT ION AGREEMENT ; AND 29
(2) DOES NOT ALLOW THE BO RROWER TO REPAY ADVA NCES AND 30
HAVE ANY REPAID AMOU NTS SUBSEQUENTLY REA DVANCED TO THE BORRO WER. 31
12–1030. 32 8 HOUSE BILL 1150
THE COMMISSIONER OF FINANCIAL REGULATION MAY ADOPT REGULATIONS 1
REGARDING THE ENFORC EMENT OF AND COMPLIANCE WITH THIS SUBTITLE AS TO 2
CREDIT GRANTORS WHO OFFER OR MAKE SHARED APPRECIATION AGREEME NTS 3
UNDER THIS SUBTITLE . 4
Article – Financial Institutions 5
11–501. 6
(a) In this subtitle the following words have the meanings indicated. 7
[(h–1)] (I) “Mobile home” means a structure, including the plumbing, heating, air 8
conditioning, and electrical systems contained in the structure, that is: 9
(1) Transportable in one or more sections; 10
(2) Eight or more body feet in width and 30 or more body feet in length; 11
(3) Built on a permanent chassis; and 12
(4) Permanently attached to land or connected to utility, water, or sewage 13
facilities. 14
[(i)] (J) “Mortgage broker” means a person who: 15
(1) For a fee or other valuable consideration, whether received directly or 16
indirectly, aids or assists a borrower in obtaining a mortgage loan; and 17
(2) Is not named as a lender in the agreement, note, deed of trust, or other 18
evidence of the indebtedness. 19
[(j)] (K) (1) “Mortgage lender” means any person who: 20
(i) Is a mortgage broker; 21
(ii) Makes a mortgage loan to any person; or 22
(iii) Is a mortgage servicer. 23
(2) “Mortgage lender” does not include: 24
(i) A financial institution that accepts deposits and is regulated 25
under Title 3, Title 4, Title 5, or Title 6 of this article; 26
(ii) The Federal Home Loan Mortgage Corporation; 27 HOUSE BILL 1150 9
(iii) The Federal National Mortgage Association; 1
(iv) The Government National Mortgage Association; 2
(v) Any person engaged exclusively in the acquisition of all or any 3
portion of a mortgage loan under any federal, State, or local governmental program of 4
mortgage loan purchases; or 5
(vi) An affiliated insurance producer–mortgage loan originator 6
licensed under § 11–603.1 of this title. 7
[(k)] (L) (1) “Mortgage lending business” means the activities set forth in the 8
definition of “mortgage lender” in subsection [(j)] (K) of this section which require that 9
person to be licensed under this subtitle. 10
(2) “Mortgage lending business” includes the making or procuring of 11
mortgage loans secured by a dwelling or residential real estate located outside Maryland. 12
[(l)] (M) (1) “Mortgage loan” means any loan primarily for personal, family, 13
or household use that is secured by a mortgage, deed of trust, or other equivalent 14
consensual security interest on a dwelling or residential real estate on which a dwelling is 15
constructed or intended to be constructed. 16
(2) “MORTGAGE LOAN ” INCLUDES A LOAN IN WHICH FUNDS ARE 17
ADVANCED THROUGH A S HARED APPRECIATION A GREEMENT. 18
[(m)] (N) “Mortgage loan originator” has the meaning stated in § 11–601 of this 19
title. 20
[(n)] (O) “Mortgage servicer” means a person who: 21
(1) Engages in whole or in part in the business of servicing mortgage loans 22
for others; or 23
(2) Collects or otherwise receives payments on mortgage loans directly 24
from borrowers for distribution to any other person. 25
[(o)] (P) “Person” means a natural person, corporation, limited liability 26
company, partnership, business trust, statutory trust, or association. 27
[(p)] (Q) “Residential real estate” means any owner–occupied real property 28
located in Maryland on which a dwelling is constructed or intended to be constructed. 29
(R) “SHARED APPRECIATION A GREEMENT” MEANS A WRITING EVID ENCING 30
A TRANSACTION OR ANY OPTION, FUTURE, OR ANY OTHER DERIVAT IVE BETWEEN A 31 10 HOUSE BILL 1150
PERSON AND A CONSUME R WHERE THE CONSUMER RECEIVES MONEY OR ANY OTHER 1
ITEM OF VALUE IN EXC HANGE FOR A N INTEREST OR FUTURE I NTEREST IN A 2
DWELLING OR RESIDENTIAL REAL EST ATE, OR A FUTURE OBLIGATI ON TO REPAY A 3
SUM ON THE OCCURRENC E OF AN EVENT SUCH AS: 4
(1) THE TRANSFER OF OWNERSHI P; 5
(2) A REPAYMENT MATURITY D ATE; 6
(3) THE DEATH OF THE CONSUME R; OR 7
(4) ANY OTHER EVENT CONTEMPLATED BY THE WRITING. 8
[(q)] (S) “State” means the State of Maryland. 9
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 10
1, 2023. 11