EXPLANATION: CAPITALS INDICATE MATTER ADDE D TO EXISTING 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.
*sb0307*
SENATE BILL 307
I1 3lr2401
CF HB 282
By: Senator Klausmeier
Introduced and read first time: January 27, 2023
Assigned to: Finance
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: March 24, 2023
CHAPTER ______
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 2 SENATE BILL 307
Annotated Code of Maryland 1
(2020 Replacement Volume and 2022 Supplement) 2
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 3
That the Laws of Maryland read as follows: 4
Article – Financial Institutions 5
11–501. 6
(a) In this subtitle the following words have the meanings indicated. 7
(Q) “SPONSOR” HAS THE MEANING STAT ED IN § 11–601 OF THIS TITLE. 8
[(q)] (R) “State” means the State of Maryland. 9
11–511.2. 10
(A) A LICENSEE WHO IS THE SPONSOR OF A MORTGAGE LOAN ORIGIN ATOR 11
SHALL AT ALL TIMES R EASONABLY AND ADEQUA TELY SUPERVISE THE A CTIVITIES 12
OF THE MORTGAGE LOAN ORIGINATOR THAT ARE CONDUCTED WITHIN THE SCOPE 13
OF THE MORTGAGE LOAN ORIGINATOR’S EMPLOYMENT OR EXCL USIVE 14
ENGAGEMENT . 15
(B) THE COMMISSIONER SHALL AD OPT REGULATIONS NECE SSARY TO 16
CARRY OUT THIS SECTI ON. 17
11–601. 18
(a) In this subtitle the following words have the meanings indicated. 19
(h) “Independent contractor” means [a person] AN INDIVIDUAL whose 20
compensation is paid without a deduction for federal or State income tax. 21
(X) “SPONSOR” MEANS A MORTGAGE LEN DER, OR A PERSON EXEMPT F ROM 22
LICENSING TO ACT AS A MORTGAGE LENDER , WHO EMPLOYS OR EXCLU SIVELY 23
ENGAGES AN INDIVIDUA L TO ACT AS A MORTGA GE LOAN ORIGINATOR I N THE STATE. 24
[(x)] (Y) “Unique identifier” means a number or other identifier assigned by 25
NMLS. 26
11–602. 27
(a) (1) The SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , THE 28
licensing provisions of this subtitle [do not] apply to independent contractors. 29
SENATE BILL 307 3
(2) [Independent contractors are subject to the licensing provisions of 1
Subtitle 5 of this title unless exempt from licensing under that subtitle] AN INDEPENDENT 2
CONTRACTOR MAY BE IS SUED A LICENSE AND A CT AS A MORTGAGE LOA N 3
ORIGINATOR IF THE IN DEPENDENT CONTRACTOR IS NOT: 4
(I) A LICENSED INSURANCE P RODUCER IN GOOD STAN DING 5
UNDER § 10–103 OF THE INSURANCE ARTICLE; AND 6
(II) NOT ENGAGED BY MORE THAN ONE SPONSOR IN THE STATE. 7
11–603. 8
(a) A license issued under this subtitle authorizes the licensee to act as a 9
mortgage loan originator only when acting within the scope of employment OR EXCLUSIVE 10
ENGAGEMENT with: 11
(1) A mortgage lender; or 12
(2) A person who is exempt from licensing as a mortgage lender. 13
(b) A licensee may not: 14
(1) Maintain more than one license under this subtitle; or 15
(2) Be employed OR ENGAGED by more than one mortgage lender or 16
person who is exempt from licensing as a mortgage lender. 17
(c) (1) (i) Each license provided for through NMLS shall include the 18
following information: 19
1. The name of the licensee; 20
2. The name of the licensee’s [employer] SPONSOR; and 21
3. The unique identifier of the licensee. 22
(ii) The unique identifier of the licensee shall constitute the license 23
number for the license. 24
(2) An individual may not act as a mortgage loan originator under a name 25
or for [an employer] A SPONSOR that is different from the name and [employer] SPONSOR 26
that appear on the license unless the 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 4 SENATE BILL 307
(ii) Pays to the Commissioner a license amendment fee set by the 1
Commissioner for each notice provided under this paragraph; and 2
(iii) In the case of a new [employer] SPONSOR, amends the 3
sponsorship information on NMLS by submitting the amendment, in the form required by 4
the Commissioner, to indicate that the licensee is an employee OR INDEPENDENT 5
CONTRACTOR of the new [employer] SPONSOR. 6
(3) If a licensee ceases to be employed OR EXCLUSIVELY ENGAG ED by a 7
licensed mortgage lender or by a person exempt from licensing as a mortgage lender, the 8
licensee shall notify the Commissioner within 10 business days, and the license shall be 9
placed into nonactive status through NMLS. 10
(4) During the time that a license is in nonactive status, it is a violation of 11
this subtitle for the licensee to engage in any activity for which a license is required under 12
this subtitle. 13
(5) The license shall remain in nonactive status until the licensee: 14
(i) Notifies the Commissioner, in the form and in accordance with 15
the process that the Commissioner requires, that the licensee has obtained employment OR 16
HAS BEEN EXCLUSIVELY ENGAGED with a licensed mortgage lender or with a person 17
exempt from licensing as a mortgage lender; and 18
(ii) Has complied with the requirements set forth in paragraph (2) of 19
this subsection. 20
(d) A license may be issued under this subtitle to an individual who is not 21
employed OR EXCLUSIVE LY ENGAGED by a licensed mortgage lender or a person exempt 22
from licensing as a mortgage lender provided the license is placed into and remains in 23
nonactive status until the licensee: 24
(1) Notifies the Commissioner, in the form and in accordance with the 25
process that the Commissioner requires, that the licensee has obtained employment OR 26
EXCLUSIVE ENGAGEMENT with a licensed mortgage lender or with a person exempt from 27
licensing as a mortgage lender; and 28
(2) Has complied with the requirements set forth in subsection (c)(2) of this 29
section. 30
(e) A license may be issued under this subtitle to an individual who is employed 31
OR EXCLUSIVELY ENGAG ED by a mortgage lender, or a person exempt from licensing as 32
a mortgage lender, that has its principal office located outside the State if the mortgage 33
lender or the person exempt from licensing as a mortgage lender maintains a resident agent 34
within the State. 35 SENATE BILL 307 5
(f) This section does not apply to an affiliated insurance producer–mortgage loan 1
originator licensed under § 11–603.1 of this subtitle. 2
11–603.1. 3
(a) In this section, “affiliated insurance producer–mortgage loan originator” 4
means an individual who: 5
(1) Originates mortgage loans only on behalf of a single financial 6
institution that is: 7
(i) Described in § 11–502(b)(1) of this title; and 8
(ii) Approved by the Commissioner under subsection (b) of this 9
section; 10
(2) Is a licensed insurance producer in good standing under § 10–103 of the 11
Insurance Article; and 12
(3) Holds an appointment as an insurance producer for an insurer that 13
controls, is controlled by, or is under common control with: 14
(i) The financial institution described in item (1) of this subsection; 15
or 16
(ii) A mortgage lender licensee that: 17
1. Is approved by the Commissioner under subsection (c) of 18
this section; and 19
2. Originates loans only on behalf of the financial institution 20
described in item (1) of this subsection under an exclusive contract with the financial 21
institution. 22
(b) The Commissioner shall approve a financial institution described in 23
subsection (a)(1) of this section based on the following criteria: 24
(1) The financial institution is in good standing with its primary state or 25
federal regulator; and 26
(2) The financial institution is in material compliance with applicable state 27
and federal law. 28
(l) (1) An individual may not act as an affiliated insurance 29
producer–mortgage loan originator under a name or for [an employer] A SPONSOR that is 30 6 SENATE BILL 307
different from the name and [employer] SPONSOR that appear on the license unless the 1
licensee: 2
(i) Notifies the Commissioner, in the form and in accordance with 3
the process that the Commissioner requires, in advance of a change in the licensee’s name 4
or the licensee’s [employer] SPONSOR; 5
(ii) Pays to the Commissioner a license amendment fee set by the 6
Commissioner for each notice provided under item (i) of this paragraph; and 7
(iii) In the case of a new [employer] SPONSOR, amends the 8
sponsorship information on NMLS by submitting the amendment in the form required by 9
the Commissioner to indicate that the licensee is an employee OR INDEPENDENT 10
CONTRACTOR of the new [employer] SPONSOR. 11
(2) If a licensee ceases to be employed OR EXCLUSIVELY ENGAG ED by a 12
financial institution approved by the Commissioner under subsection (b) of this section, the 13
licensee shall notify the Commissioner within 10 business days, and the license shall be 14
placed into nonactive status through NMLS. 15
(3) During the time that a license is in nonactive status, it is a violation of 16
this subtitle for the licensee to engage in any activity for which a license is required under 17
this subtitle. 18
(4) The license shall remain in nonactive status until the licensee: 19
(i) Notifies the Commissioner, in the form and in accordance with 20
the process that the Commissioner requires, that the licensee has obtained employment OR 21
HAS BEEN EXCLUSIVELY ENGAGED with a financial institution that is approved by the 22
Commissioner under subsection (b) of this section; and 23
(ii) Has complied with the requirements set forth in paragraph (1) of 24
this subsection. 25
(m) The Commissioner may issue a license under this subtitle to an individual 26
who is not employed OR EXCLUSIVELY E NGAGED by a financial institution approved by 27
the Commissioner under subsection (b) of this section, provided that the license is placed 28
into and remains in nonactive status until the licensee: 29
(1) Notifies the Commissioner, in the form and in accordance with the 30
process that the Commissioner requires, that the licensee has obtained employment OR 31
EXCLUSIVE ENGAGEMENT with a financial institution approved by the Commissioner 32
under subsection (b) of this section; and 33
(2) Has complied with the requirements set forth in subsection (l)(1) of this 34
section. 35 SENATE BILL 307 7
11–606. 1
(a) To qualify for an initial license, an applicant shall complete at least 20 hours 2
of prelicensing education that shall include: 3
(1) 3 hours of instruction on federal law and regulations relating to 4
mortgage origination; 5
(2) 3 hours of instruction on ethics, including instruction on fraud, 6
consumer protection, and fair lending issues; and 7
(3) 2 hours of training related to lending standards and loan terms for 8
nontraditional mortgage products. 9
(e) This section does not preclude any prelicensing education course, as approved 10
by [the Nationwide Mortgage Licensing System and Registry] NMLS, that is provided by 11
the [employer] SPONSOR of the applicant or an entity that is affiliated with the applicant 12
by an agency contract, or any subsidiary or affiliate of the [employer] SPONSOR or 13
AFFILIATED entity. 14
11–606.1. 15
(a) To qualify for an initial license, an applicant shall pass a qualified written test 16
developed by [the Nationwide Mortgage Licensing System and Registry] NMLS and 17
administered by a test provider approved by [the Nationwide Mortgage Licensing System 18
and Registry] NMLS. 19
(g) This section does not prohibit a test provider approved by [the Nationwide 20
Mortgage Licensing System and Registry] NMLS from providing a test at the location of 21
the [employer] SPONSOR of the applicant or any subsidiary or affiliate of the [employer] 22
SPONSOR of the applicant, or any entity with which the applicant holds an exclusive 23
arrangement to conduct the business of a mortgage loan originator. 24
11–612. 25
(a) Before applying for renewal of a license, a licensee shall complete at least 8 26
hours of continuing education, which shall include: 27
(1) 3 hours of instruction on federal law and regulations relating to 28
mortgage origination; 29
(2) 2 hours of instruction on ethics, including instruction on fraud, 30
consumer protection, and fair lending issues; and 31
8 SENATE BILL 307
(3) 2 hours of training related to lending standards for the nontraditional 1
mortgage product marketplace. 2
(g) This section does not preclude any continuing education course, as approved 3
by [the Nationwide Mortgage Licensing System and Registry] NMLS, that is provided by 4
the [employer] SPONSOR of the mortgage loan originator or an entity that is affiliated with 5
the mortgage loan originator by an agency contract, or any subsidiary or affiliate of the 6
[employer] SPONSOR or AFFILIATED entity. 7
11–618. 8
The employment OR EXCLUSIVE ENGAGEM ENT of a mortgage loan originator 9
licensed under this subtitle by a mortgage lender does not relieve the mortgage lender of a 10
responsibility under this subtitle or under Subtitle 5 of this title, a rule or regulation 11
adopted under this subtitle or under Subtitle 5 of this title, or a law governing mortgage 12
lending in the State. 13
11–619. 14
(a) Each mortgage loan originator shall be covered by a surety bond in accordance 15
with this section. 16
(b) (1) A mortgage loan originator who is an employee OR INDEPENDENT 17
CONTRACTOR of a person subject to licensure under Subtitle 5 of this title may use the 18
surety bond of that person to meet the mortgage loan originator’s surety bond requirement. 19
(2) A mortgage loan originator who is an employee OR INDEPENDENT 20
CONTRACTOR of a person exempt from licensure under Subtitle 5 of this title may use a 21
surety bond of the person to meet the mortgage loan originator’s surety bond requirement, 22
provided the surety bond meets the requirements, based on mortgage loan volume, under 23
§ 11–508 of this title. 24
(c) A licensee who is an affiliated insurance producer–mortgage loan originator 25
shall be deemed in compliance with this section if the licensee: 26
(1) Holds a surety bond that would satisfy the surety bond requirements 27
under § 11–508 of this title if the affiliated insurance producer–mortgage loan originator 28
were a licensee under Subtitle 5 of this title; or 29
(2) Is covered under a blanket surety bond held by the financial institution 30
or mortgage lender licensee identified in § 11–603.1(a)(3) of this subtitle if the blanket 31
surety bond: 32
(i) Covers all affiliated insurance producer–mortgage loan 33
originators; and 34
SENATE BILL 307 9
(ii) Is in the amount of $1,000,000 or another amount as required by 1
the Commissioner by regulation. 2
11–620. 3
(a) (1) Except as otherwise provided in 12 U.S.C. § 5111, the requirements 4
under any federal law and Title 4, Subtitles 1 through 5 of the General Provisions Article 5
regarding the privacy or confidentiality of information or material provided to [the 6
Nationwide Mortgage Licensing System and Registry] NMLS, and any privilege arising 7
under federal or state law, including the rules of any federal or state court with respect to 8
that information or material, shall continue to apply to that information or material after 9
the information or material has been disclosed to [the Nationwide Mortgage Licensing 10
System and Registry] NMLS. 11
(2) The information and material may be shared with all state and federal 12
regulatory officials having mortgage industry oversight authority without the loss of 13
privilege or the loss of confidentiality protections provided by federal law or Title 4, 14
Subtitles 1 through 5 of the General Provisions Article. 15
(b) The Commissioner may enter into information sharing agreements with other 16
governmental agencies, the Conference of State Bank Supervisors, the American 17
Association of Residential Mortgage Regulators, or other associations representing 18
governmental agencies. 19
(c) Information or material that is subject to a privilege or confidentiality under 20
subsection (a) of this section may not be subject to: 21
(1) Disclosure under any federal or state law governing the disclosure to 22
the public of information held by an officer or agency of the federal government or a state 23
that has received the information or material; or 24
(2) Subpoena, discovery, or admission into evidence, in any private civil 25
action or administrative process, unless with respect to any privilege held by [the 26
Nationwide Mortgage Licensing System and Registry] NMLS the person to whom the 27
information or material pertains waives, in whole or in part, that privilege. 28
(d) Any provisions of Title 4, Subtitles 1 through 5 of the General Provisions 29
Article relating to the disclosure of any information or material described in subsection (a) 30
of this section that are inconsistent with subsection (a) of this section shall be superseded 31
by the requirements of this section. 32
(e) This section does not apply to information or material relating to the 33
employment AND ENGAGEMENT history of, and publicly adjudicated disciplinary and 34
enforcement actions against, mortgage loan originators that is included in [the Nationwide 35
Mortgage Licensing System and Registry] NMLS and designated for access by the public. 36
10 SENATE BILL 307
11–621. 1
Nonfederally insured credit unions that [employ] SPONSOR mortgage loan 2
originators shall register these employees OR INDEPENDENT CONTR ACTORS with [the 3
Nationwide Mortgage Licensing System and Registry] NMLS by providing the information 4
concerning the employees’ OR INDEPENDENT CONTR ACTORS’ identity set forth in 12 5
U.S.C. § 5106(a)(2). 6
SECTION 2. AND BE IT FURTHER ENACTED, That this Act is not intended to 7
conflict with or be interpreted to supersede any provision of the Labor and Employment 8
Article, including any standards established under that article for protecting employees 9
from abusive labor practices. 10
SECTION 3. AND BE IT FURTHER ENACTED, That, on or before December 31, 11
2024, the Commissioner of Financial Regulation shall submit a report to the Senate 12
Finance Committee and the House Economic Matters Committee, in accordance with § 13
2–1257 of the State Government Article, on: 14
(1) the number of complaints received by the Office of Financial Regulation 15
from consumers who receive mortgage loan origination services from independent 16
contractors between October 1, 2023, and November 1, 2024; and 17
(2) the number of violations of law or regulations or other concerns 18
regarding the supervision by sponsors of mortgage loan originators providing services as 19
independent contractors cited by Office of Financial Regulation examiners during 20
examinations of sponsors conducted between October 1, 2023, and November 1, 2024. 21
SECTION 3. 4. AND BE IT FURTHER ENACTED, That this Act shall take effect 22
October 1, 2023. 23
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.