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Office of the Commissioner of Financial Regulation

 

Mortgage Brokers 05-06 - Advisory Notices

 

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August 5, 2005

In the course of conducting compliance examinations, the Commissioner has uncovered a significant number of violations of the Maryland Finder's Fee Law. In enforcing the statute, the Commissioner has required brokers to make a refund of all or part of their broker fee to affected consumers. In Fiscal Year 2005, refunds in excess of $1,200,000.00 were required. You should be aware that under statutory provisions you may be required to refund three times (3X) the amount of the broker fee collected. The following items should serve as guidance to brokers who wish to be in compliance with the law.

  • The agreement to collect a broker fee from the borrower must be in writing.
  • The amount of the broker fee must be specified. Phrases such as "not to exceed", "up to" and "from x to x" are unacceptable.
  • The broker fee agreement must be separate and distinct from any other document.
  • The broker fee agreement must be dated and signed by both the broker and the borrower within 10 business days after the application is complete.
  • The amount of the broker fee collected may not exceed the fee specified in the contract.
  • The broker fee includes all fees retained by the broker including loan origination fee, loan discount points, processing, etc.

NOTE: This office strongly recommends that brokers review all statutory requirements with their counsel in order to ensure compliance.