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