EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
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HOUSE BILL 282
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By: Delegate Queen
Introduced and read first time: January 25, 2023
Assigned to: Economic Matters
A BILL ENTITLED
AN ACT concerning 1
Financial Institutions – Mortgage Loan Originators – Independent Contractors 2
FOR the purpose of altering certain provisions of law relating to the licensing of mortgage 3
loan originators to provide for the licensing of certain independent contractors as 4
mortgage loan originators under certain circumstances; requiring licensed mortgage 5
lenders to supervise certain activities of certain mortgage loan originators in a 6
certain manner; and generally relating to the financial institutions and the licensing 7
of mortgage loan originators. 8
BY repealing and reenacting, without amendments, 9
Article – Financial Institutions 10
Section 11–501(a), 11–601(a), 11–603.1(a) and (b), 11–606(a), and 11–612(a) 11
Annotated Code of Maryland 12
(2020 Replacement Volume and 2022 Supplement) 13
BY adding to 14
Article – Financial Institutions 15
Section 11–501(q), 11–511.2, and 11–601(x) 16
Annotated Code of Maryland 17
(2020 Replacement Volume and 2022 Supplement) 18
BY repealing and reenacting, with amendments, 19
Article – Financial Institutions 20
Section 11–501(q), 11–601(h) and (x), 11–602(a), 11–603, 11–603.1(l) and (m), 21
11–606(e), 11–606.1(a) and (g), 11–612(g), and 11–618 through 11–621 22
Annotated Code of Maryland 23
(2020 Replacement Volume and 2022 Supplement) 24
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 25
That the Laws of Maryland read as follows: 26
2 HOUSE BILL 282
Article – Financial Institutions 1
11–501. 2
(a) In this subtitle the following words have the meanings indicated. 3
(Q) “SPONSOR” HAS THE MEANING STATED IN § 11–601 OF THIS TITLE. 4
[(q)] (R) “State” means the State of Maryland. 5
11–511.2. 6
(A) A LICENSEE WHO IS THE SPONSOR OF A MORTGAG E LOAN ORIGINATOR 7
SHALL AT ALL TIMES R EASONABLY AND ADEQUA TELY SUPERVISE THE A CTIVITIES 8
OF THE MORTGAGE LOAN ORIGINATOR THAT ARE CONDUCTED WITHIN THE SCOPE 9
OF THE MORTGAGE LOAN ORIGINATOR’S EMPLOYMENT OR EXCLUS IVE 10
ENGAGEMENT . 11
(B) THE COMMISSIONER SHALL AD OPT REGULATIONS NECE SSARY TO 12
CARRY OUT THIS SECTI ON. 13
11–601. 14
(a) In this subtitle the following words have the meanings indicated. 15
(h) “Independent contractor” means [a person] AN INDIVIDUAL whose 16
compensation is paid without a deduction for federal or State income tax. 17
(X) “SPONSOR” MEANS A MORTGAGE LEN DER, OR A PERSON EXEMPT F ROM 18
LICENSING TO ACT AS A MORTGAGE LENDER , WHO EMPLOYS OR EXCLUSIVE LY 19
ENGAGES AN INDIVIDUA L TO ACT AS A MORTGA GE LOAN ORIGINATOR IN THE STATE. 20
[(x)] (Y) “Unique identifier” means a number or other identifier assigned by 21
NMLS. 22
11–602. 23
(a) (1) The licensing provisions of this subtitle [do not] apply to independent 24
contractors. 25
(2) [Independent contractors are subject to the licensing provisions of 26
Subtitle 5 of this title unless exempt from licensing under that subtitle] AN INDEPENDENT 27
CONTRACTOR MAY BE ISSUED A LICENSE AND ACT AS A MORTGAGE LO AN 28
ORIGINATOR IF THE INDEPENDENT CONT RACTOR IS NOT ENGAGED BY MORE THAN 29
ONE SPONSOR IN THE STATE. 30 HOUSE BILL 282 3
11–603. 1
(a) A license issued under this subtitle authorizes the licensee to act as a 2
mortgage loan originator only when acting within the scope of employment OR EXCLUSIVE 3
ENGAGEMENT with: 4
(1) A mortgage lender; or 5
(2) A person who is exempt from licensing as a mortgage lender. 6
(b) A licensee may not: 7
(1) Maintain more than one license under this subtitle; or 8
(2) Be employed OR ENGAGED by more than one mortgage lender or 9
person who is exempt from licensing as a mortgage lender. 10
(c) (1) (i) Each license provided for through NMLS shall include the 11
following information: 12
1. The name of the licensee; 13
2. The name of the licensee’s [employer] SPONSOR; and 14
3. The unique identifier of the licensee. 15
(ii) The unique identifier of the licensee shall constitute the license 16
number for the license. 17
(2) An individual may not act as a mortgage loan originator under a name 18
or for [an employer] A SPONSOR that is different from the name and [employer] SPONSOR 19
that appear on the license unless the licensee: 20
(i) Notifies the Commissioner, in the form and in accordance with 21
the process that the Commissioner requires, in advance of a change in the licensee’s name 22
or the licensee’s [employer] SPONSOR; 23
(ii) Pays to the Commissioner a license amendment fee set by the 24
Commissioner for each notice provided under this paragraph; and 25
(iii) In the case of a new [employer] SPONSOR, amends the 26
sponsorship information on NMLS by submitting the amendment, in the form required by 27
the Commissioner, to indicate that the licensee is an employee OR INDEPENDENT 28
CONTRACTOR of the new [employer] SPONSOR. 29
4 HOUSE BILL 282
(3) If a licensee ceases to be employed OR EXCLUSIVELY ENGAG ED by a 1
licensed mortgage lender or by a person exempt from licensing as a mortgage lender, the 2
licensee shall notify the Commissioner within 10 business days, and the license shall be 3
placed into nonactive status through NMLS. 4
(4) During the time that a license is in nonactive status, it is a violation of 5
this subtitle for the licensee to engage in any activity for which a license is required under 6
this subtitle. 7
(5) The license shall remain in nonactive status until the licensee: 8
(i) Notifies the Commissioner, in the form and in accordance with 9
the process that the Commissioner requires, that the licensee has obtained employment OR 10
HAS BEEN EXCLUSIVELY ENGAGED with a licensed mortgage lender or with a person 11
exempt from licensing as a mortgage lender; and 12
(ii) Has complied with the requirements set forth in paragraph (2) of 13
this subsection. 14
(d) A license may be issued under this subtitle to an individual who is not 15
employed OR EXCLUSIVELY ENGAG ED by a licensed mortgage lender or a person exempt 16
from licensing as a mortgage lender provided the license is placed into and remains in 17
nonactive status until the licensee: 18
(1) Notifies the Commissioner, in the form and in accordance with the 19
process that the Commissioner requires, that the licensee has obtained employment OR 20
EXCLUSIVE ENGAGEMENT with a licensed mortgage lender or with a person exempt from 21
licensing as a mortgage lender; and 22
(2) Has complied with the requirements set forth in subsection (c)(2) of this 23
section. 24
(e) A license may be issued under this subtitle to an individual who is employed 25
OR EXCLUSIVELY ENGAGED by a mortgage lender, or a person exempt from licensing as 26
a mortgage lender, that has its principal office located outside the State if the mortgage 27
lender or the person exempt from licensing as a mortgage lender maintains a resident agent 28
within the State. 29
(f) This section does not apply to an affiliated insurance producer–mortgage loan 30
originator licensed under § 11–603.1 of this subtitle. 31
11–603.1. 32
(a) In this section, “affiliated insurance producer–mortgage loan originator” 33
means an individual who: 34
HOUSE BILL 282 5
(1) Originates mortgage loans only on behalf of a single financial 1
institution that is: 2
(i) Described in § 11–502(b)(1) of this title; and 3
(ii) Approved by the Commissioner under subsection (b) of this 4
section; 5
(2) Is a licensed insurance producer in good standing under § 10–103 of the 6
Insurance Article; and 7
(3) Holds an appointment as an insurance producer for an insurer that 8
controls, is controlled by, or is under common control with: 9
(i) The financial institution described in item (1) of this subsection; 10
or 11
(ii) A mortgage lender licensee that: 12
1. Is approved by the Commissioner under subsection (c) of 13
this section; and 14
2. Originates loans only on behalf of the financial institution 15
described in item (1) of this subsection under an exclusive contract with the financial 16
institution. 17
(b) The Commissioner shall approve a financial institution described in 18
subsection (a)(1) of this section based on the following criteria: 19
(1) The financial institution is in good standing with its primary state or 20
federal regulator; and 21
(2) The financial institution is in material compliance with applicable state 22
and federal law. 23
(l) (1) An individual may not act as an affiliated insurance 24
producer–mortgage loan originator under a name or for [an employer] A SPONSOR that is 25
different from the name and [employer] SPONSOR that appear on the license unless the 26
licensee: 27
(i) Notifies the Commissioner, in the form and in accordance with 28
the process that the Commissioner requires, in advance of a change in the licensee’s name 29
or the licensee’s [employer] SPONSOR; 30
(ii) Pays to the Commissioner a license amendment fee set by the 31
Commissioner for each notice provided under item (i) of this paragraph; and 32
6 HOUSE BILL 282
(iii) In the case of a new [employer] SPONSOR, amends the 1
sponsorship information on NMLS by submitting the amendment in the form required by 2
the Commissioner to indicate that the licensee is an employee OR INDEPENDENT 3
CONTRACTOR of the new [employer] SPONSOR. 4
(2) If a licensee ceases to be employed OR EXCLUSIVELY ENGAG ED by a 5
financial institution approved by the Commissioner under subsection (b) of this section, the 6
licensee shall notify the Commissioner within 10 business days, and the license shall be 7
placed into nonactive status through NMLS. 8
(3) During the time that a license is in nonactive status, it is a violation of 9
this subtitle for the licensee to engage in any activity for which a license is required under 10
this subtitle. 11
(4) The license shall remain in nonactive status until the licensee: 12
(i) Notifies the Commissioner, in the form and in accordance with 13
the process that the Commissioner requires, that the licensee has obtained employment OR 14
HAS BEEN EXCLUSIVELY ENGAGED with a financial institution that is approved by the 15
Commissioner under subsection (b) of this section; and 16
(ii) Has complied with the requirements set forth in paragraph (1) of 17
this subsection. 18
(m) The Commissioner may issue a license under this subtitle to an individual 19
who is not employed OR EXCLUSIVELY ENGAG ED by a financial institution approved by 20
the Commissioner under subsection (b) of this section, provided that the license is placed 21
into and remains in nonactive status until the licensee: 22
(1) Notifies the Commissioner, in the form and in accordance with the 23
process that the Commissioner requires, that the licensee has obtained employment OR 24
EXCLUSIVE ENGAGEMENT with a financial institution approved by the Commissioner 25
under subsection (b) of this section; and 26
(2) Has complied with the requirements set forth in subsection (l)(1) of this 27
section. 28
11–606. 29
(a) To qualify for an initial license, an applicant shall complete at least 20 hours 30
of prelicensing education that shall include: 31
(1) 3 hours of instruction on federal law and regulations relating to 32
mortgage origination; 33
HOUSE BILL 282 7
(2) 3 hours of instruction on ethics, including instruction on fraud, 1
consumer protection, and fair lending issues; and 2
(3) 2 hours of training related to lending standards and loan terms for 3
nontraditional mortgage products. 4
(e) This section does not preclude any prelicensing education course, as approved 5
by [the Nationwide Mortgage Licensing System and Registry] NMLS, that is provided by 6
the [employer] SPONSOR of the applicant or an entity that is affiliated with the applicant 7
by an agency contract, or any subsidiary or affiliate of the [employer] SPONSOR or 8
AFFILIATED entity. 9
11–606.1. 10
(a) To qualify for an initial license, an applicant shall pass a qualified written test 11
developed by [the Nationwide Mortgage Licensing System and Registry] NMLS and 12
administered by a test provider approved by [the Nationwide Mortgage Licensing System 13
and Registry] NMLS. 14
(g) This section does not prohibit a test provider approved by [the Nationwide 15
Mortgage Licensing System and Registry] NMLS from providing a test at the location of 16
the [employer] SPONSOR of the applicant or any subsidiary or affiliate of the [employer] 17
SPONSOR of the applicant, or any entity with which the applicant holds an exclusive 18
arrangement to conduct the business of a mortgage loan originator. 19
11–612. 20
(a) Before applying for renewal of a license, a licensee shall complete at least 8 21
hours of continuing education, which shall include: 22
(1) 3 hours of instruction on federal law and regulations relating to 23
mortgage origination; 24
(2) 2 hours of instruction on ethics, including instruction on fraud, 25
consumer protection, and fair lending issues; and 26
(3) 2 hours of training related to lending standards for the nontraditional 27
mortgage product marketplace. 28
(g) This section does not preclude any continuing education course, as approved 29
by [the Nationwide Mortgage Licensing System and Registry] NMLS, that is provided by 30
the [employer] SPONSOR of the mortgage loan originator or an entity that is affiliated with 31
the mortgage loan originator by an agency contract, or any subsidiary or affiliate of the 32
[employer] SPONSOR or AFFILIATED entity. 33
11–618. 34 8 HOUSE BILL 282
The employment OR EXCLUSIVE ENGAGEM ENT of a mortgage loan originator 1
licensed under this subtitle by a mortgage lender does not relieve the mortgage lender of a 2
responsibility under this subtitle or under Subtitle 5 of this title, a rule or regulation 3
adopted under this subtitle or under Subtitle 5 of this title, or a law governing mortgage 4
lending in the State. 5
11–619. 6
(a) Each mortgage loan originator shall be covered by a surety bond in accordance 7
with this section. 8
(b) (1) A mortgage loan originator who is an employee OR INDEPENDENT 9
CONTRACTOR of a person subject to licensure under Subtitle 5 of this title may use the 10
surety bond of that person to meet the mortgage loan originator’s surety bond requirement. 11
(2) A mortgage loan originator who is an employee OR INDEPENDENT 12
CONTRACTOR of a person exempt from licensure under Subtitle 5 of this title may use a 13
surety bond of the person to meet the mortgage loan originator’s surety bond requirement, 14
provided the surety bond meets the requirements, based on mortgage loan volume, under 15
§ 11–508 of this title. 16
(c) A licensee who is an affiliated insurance producer–mortgage loan originator 17
shall be deemed in compliance with this section if the licensee: 18
(1) Holds a surety bond that would satisfy the surety bond requirements 19
under § 11–508 of this title if the affiliated insurance producer–mortgage loan originator 20
were a licensee under Subtitle 5 of this title; or 21
(2) Is covered under a blanket surety bond held by the financial institution 22
or mortgage lender licensee identified in § 11–603.1(a)(3) of this subtitle if the blanket 23
surety bond: 24
(i) Covers all affiliated insurance producer–mortgage loan 25
originators; and 26
(ii) Is in the amount of $1,000,000 or another amount as required by 27
the Commissioner by regulation. 28
11–620. 29
(a) (1) Except as otherwise provided in 12 U.S.C. § 5111, the requirements 30
under any federal law and Title 4, Subtitles 1 through 5 of the General Provisions Article 31
regarding the privacy or confidentiality of information or material provided to [the 32
Nationwide Mortgage Licensing System and Registry] NMLS, and any privilege arising 33
under federal or state law, including the rules of any federal or state court with respect to 34 HOUSE BILL 282 9
that information or material, shall continue to apply to that information or material after 1
the information or material has been disclosed to [the Nationwide Mortgage Licensing 2
System and Registry] NMLS. 3
(2) The information and material may be shared with all state and federal 4
regulatory officials having mortgage industry oversight authority without the loss of 5
privilege or the loss of confidentiality protections provided by federal law or Title 4, 6
Subtitles 1 through 5 of the General Provisions Article. 7
(b) The Commissioner may enter into information sharing agreements with other 8
governmental agencies, the Conference of State Bank Supervisors, the American 9
Association of Residential Mortgage Regulators, or other associations representing 10
governmental agencies. 11
(c) Information or material that is subject to a privilege or confidentiality under 12
subsection (a) of this section may not be subject to: 13
(1) Disclosure under any federal or state law governing the disclosure to 14
the public of information held by an officer or agency of the federal government or a state 15
that has received the information or material; or 16
(2) Subpoena, discovery, or admission into evidence, in any private civil 17
action or administrative process, unless with respect to any privilege held by [the 18
Nationwide Mortgage Licensing System and Registry] NMLS the person to whom the 19
information or material pertains waives, in whole or in part, that privilege. 20
(d) Any provisions of Title 4, Subtitles 1 through 5 of the General Provisions 21
Article relating to the disclosure of any information or material described in subsection (a) 22
of this section that are inconsistent with subsection (a) of this section shall be superseded 23
by the requirements of this section. 24
(e) This section does not apply to information or material relating to the 25
employment AND ENGAGEMENT history of, and publicly adjudicated disciplinary and 26
enforcement actions against, mortgage loan originators that is included in [the Nationwide 27
Mortgage Licensing System and Registry] NMLS and designated for access by the public. 28
11–621. 29
Nonfederally insured credit unions that [employ] SPONSOR mortgage loan 30
originators shall register these employees OR INDEPENDENT CONTR ACTORS with [the 31
Nationwide Mortgage Licensing System and Registry] NMLS by providing the information 32
concerning the employees’ OR INDEPENDENT CONTR ACTORS’ identity set forth in 12 33
U.S.C. § 5106(a)(2). 34
SECTION 2. AND BE IT FURTHER ENACTED, That this Act is not intended to 35
conflict with or be interpreted to supersede any provision of the Labor and Employment 36 10 HOUSE BILL 282
Article, including any standards established under that article for protecting employees 1
from abusive labor practices. 2
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 3
October 1, 2023. 4