Maryland Legal Alert for Financial Services
Maryland Legal Alert June 2012
• RESIDENTIAL MORTGAGE LOAN ORIGINATORS: BANK SECRECY ACT COMPLIANCE
• 2012 MARYLAND LEGISLATION – SOME LAWS HAVE JULY 1 EFFECTIVE DATES
• RELATING TO REAL ESTATE
• DAVID S. MUSGRAVE JOINS GORDON FEINBLATT LLC
RESIDENTIAL MORTGAGE LOAN ORIGINATORS: BANK SECRECY ACT COMPLIANCE
As reported in our March 2012 edition of Maryland Legal Alert, residential mortgage loan originators (RMLO) need to comply with new Bank Secrecy Act regulations by August 13, 2012. The regulations, published in the February 14, 2012 Federal Register, require each RMLO to write and implement an anti-money laundering (AML) program and to begin filing suspicious activity reports (SARs) when appropriate circumstances arise. We will continue to counsel clients on these requirements and plan to develop a product that will facilitate compliance with the regulations by small to midsized RMLOs. Please contact Margie Corwin if you have questions or would like assistance in developing policies and procedures by the August 13, 2012 deadline. In the meantime, you may find Margie's recent presentation on the subject helpful.
2012 MARYLAND LEGISLATION – SOME LAWS HAVE JULY 1 EFFECTIVE DATES
Our annual Maryland Laws Update will be published soon. Again this year, that written publication will provide insights on the many new laws that impact financial service providers. In the meantime, we briefly describe a few laws that will become effective July 1.
Licensing of Mortgage Lenders and Mortgage Loan Originators
SB546 – Chapter 254 (effective July 1, 2012)
Chapter 254 addresses operational issues that have arisen in connection with mortgage industry licensing. The new law: makes all fees submitted with original and renewal mortgage lender and mortgage loan originator license applications nonrefundable; clarifies that a mortgage lender licensee (which includes brokers) must provide proof of satisfying the applicable minimum net worth requirement every year not later than 90 days after the end of the licensee's fiscal year; establishes that a new mortgage lender license issued on or after November 1 will not expire until December 31 of the year following the year in which the license was first issued; allows mortgage lender licenses to be renewed beginning 60 (rather than 30) days before expiration; imposes on a company, even though exempt from mortgage lender licensing, the obligation to file quarterly call reports through the Nationwide Mortgage Licensing System & Registry (NMLS) if that company has Maryland-licensed mortgage loan originators (MLO); establishes a process for changing MLO sponsorship information through NMLS; and creates a process for affiliated insurance producer-mortgage loan originators to update and change their licensing status. All existing mortgage lender and mortgage loan originator licensees should review this law to ensure continued compliance with the Maryland Commissioner of Financial Regulation's requirements.
Penalties for Taking Homestead Property Tax Credit When Ineligible
HB1081 – Chapter 701 (effective July 1, 2012, for tax years beginning after June 30, 2012)
Maryland allows certain homeowners to apply for and claim a property tax credit on their principal residences in Maryland under a Homestead Property Tax Credit Program. Chapter 701 is part of an effort to ensure that only homeowners eligible for this property tax credit actually receive it. Chapter 701 expressly authorizes collection of all property tax otherwise due (without the benefit of the credit) from a person who was granted a homestead property tax credit when not qualifying for that credit, plus, if that person willfully misrepresented the facts about qualifying for the homestead property tax credit, a penalty equal to 25% of the tax credit received. Both the delinquent taxes and the penalty will be added to the property tax bill and will become a priority lien on the property. The priority lien for the penalty may be released if the property is sold in a foreclosure action. While collection of unpaid property taxes otherwise due is permitted for all tax years, the new penalty applies prospectively, for tax years beginning July 1, 2012 and later.
Indemnity Deeds of Trust – Recordation Taxes
SB1302 – Chapter 2 of Special Section 1 (effective July 1, 2012)
An indemnity deed of trust or mortgage (IDOT) creates a lien on real property to secure the grantor's obligations under a guaranty. Prior to Chapter 2, IDOTs given in connection with loans have been exempt from recordation tax in most Maryland counties. Chapter 2, enacted during the first 2012 Special Session, imposes recordation tax on IDOTs when the debt secured is $1,000,000 or more. Chapter 2 applies to IDOTs recorded on or after July 1, 2012.
Our Real Estate Group recently published an excellent synopsis of 2012 Maryland laws relevant to the real estate world. The Group's publication provides more gloss on the laws mentioned above, as well as additional laws becoming effective post-July 1. If you are interested in reading more, see the June 2012 issue of Relating to Real Estate. Please contact Ed Levin with any questions.
DAVID S. MUSGRAVE JOINS GORDON FEINBLATT LLC
Please join us in welcoming David S. Musgrave to Gordon Feinblatt. David brings a wealth of skill and experience to our clients in the financial services industry, particularly related to creditors' rights.