Subtitle 19 HOMEBUYER EDUCATION AND COUNSELING
05.19.01 Required Notice of Housing Counseling Program and Services
Authority: Commercial Law Article, §12-1203, Annotated Code of Maryland
Notice of Final Action
[10-210-F]
On September 13, 2010, the Secretary of Housing and Community Development adopted new Regulations .01—.05 under a new chapter, COMAR 05.19.01 Required Notice of Housing Counseling Programs and Services under a new subtitle, COMAR 05.19 Homebuyer Education and Counseling. This action, which was proposed for adoption in 37:15 Md. R. 1002—1004 (July 16, 2010), has been adopted as proposed.
Effective Date: January 1, 2011.
RAYMOND A. SKINNER
Secretary of Housing and Community Development
Title 05
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
Subtitle 19 HOMEBUYER EDUCATION AND COUNSELING
05.19.01 Required Notice of Housing Counseling Programs and Services
Authority: Commercial Law Article, §12-1203, Annotated Code of Maryland
Notice of Proposed Action
[10-210-P]
The Secretary of Housing and Community Development proposes to adopt new Regulations .01 — .05 under a new chapter, COMAR 05.19.01 Required Notice of Housing Counseling Programs and Services under a new subtitle, COMAR 05.19 Homebuyer Education and Counseling.
Statement of Purpose
The purpose of this action is to adopt the notice of homebuyer education or housing counseling programs and the timing of the notice that lenders are required to provide to borrowers when a mortgage loan will be secured by owner–occupied residential real property under Commercial Law Article, §12-1203, Annotated Code of Maryland.
Comparison to Federal Standards
There is no corresponding federal standard to this proposed action.
Estimate of Economic Impact
I. Summary of Economic Impact. The required notice and the information to maintain the notice on homebuyer education and housing counseling programs is currently maintained by the Department and has been for several years. No additional resources are needed to update or maintain this information.
Revenue (R+/R-)II. Types of Economic Impact. / Expenditure (E+/E-) / Magnitude
A. On issuing agency: / NONE
B. On other State agencies: / NONE
C. On local governments: / NONE
Benefit (+)
Cost (-) / Magnitude
D. On regulated industries or trade groups: / (-) / Minimal
E. On other industries or trade groups:
(1) Donating businesses / NONE / Indeterminable
(2) Nonprofit organizations / (-) / Indeterminable
F. Direct and indirect effects on public: / (+) / Indeterminable
III. Assumptions. (Identified by Impact Letter and Number from Section II.)
D. Maryland lenders will be required to provide the borrowers the notice, but the cost to do so should be nominal. The notice will be only one page and any attachments should be less than five pages, which will keep copying costs to a minimum. Additionally, the timing of the notice will be identical to the timing of financing statements lenders are required to give borrowers under Commercial Law Article, Title 12, Annotated Code of Maryland. This will allow a lender to keep any changes in their current loan processing to a minimum. The impact is indeterminable but will be minimal.
E. Non profit entities that are listed in the notice and provide homebuyer education and housing counseling services, will likely experience some increase in demand. The amount of the increase is indeterminable but the Department expects that it will be minimal. To the extent that these organizations experience an increase in demand without an increase in funding to increase capacity may result in some additional cost to these entities if they accept additional clients.
F. The general public should benefit since more homeowners receiving loans will be aware of homebuyer education and housing counseling programs, and may elect to obtain these services. These homeowners will likely be more prepared to be homeowners and less likely to default on mortgage loans. Reducing foreclosures benefits the individual homeowner as well as the surrounding neighborhood. The amount of this benefit is indeterminable.
Economic Impact on Small Businesses
The proposed action has minimal or no economic impact on small businesses.
Impact on Individuals with Disabilities
The proposed action has no impact on individuals with disabilities.
Opportunity for Public Comment
Comments may be sent to John Papagni, Special Projects Manager, Division of Neighborhood Revitalization, Department of Housing and Community Development, 100 Community Place, Crownsville, MD21032, or call 410-209-5800, or email to , or fax to 410-685-8270. Comments will be accepted through August 16, 2010. A public hearing has not been scheduled.
.01 Definitions.
A. In this chapter, the following terms have the meanings indicated.
B. Terms Defined.
(1) “Borrower” has the meaning stated in Financial Institutions Article, §11–501, Annotated Code of Maryland.
(2) “Department” means the Department of Housing and Community Development, a principal department of the State.
(3) “Homebuyer education or housing counseling” means instruction on preparing for home ownership, shopping for a home, obtaining a mortgage, loan closing, and life as a homeowner.
(4) “Initial application” means when:
(a) An applicant requests that a mortgage loan be made or obtained on the applicant’s behalf; and
(b) The person to whom the request was made agrees to begin processing the loan application.
(5) “Lender” has the meaning stated in Commercial Law Article, §12–1201, Annotated Code of Maryland.
(6) “Mortgage loan” has the meaning stated in Financial Institutions Article, §11–501, Annotated Code of Maryland.
(7) “Owner-occupied residential real property” means real property that is a one- to four-family home occupied or to be occupied by the borrower as the borrower’s primary residence.
(8) “Secondary mortgage loan” has the meaning stated in Commercial Law Article, §12-1201, Annotated Code of Maryland.
.02 Application.
A. This chapter applies to any lender that makes a mortgage loan secured by owner–occupied residential real property located in the State.
B. This chapter does not apply to:
(1) Any mortgage loan in which the initial application was completed prior to January 1, 2011;
(2) A secondary mortgage loan;
(3) An open–end or revolving home equity line of credit;
(4) A construction loan;
(5) An individual who takes back a deferred purchase money mortgage in connection with the sale of residential real property owned by, and titled in the name of, the individual; or
(6) An individual who makes a mortgage loan to a borrower who is the individual’s spouse, child, child’s spouse, parent, sibling, grandparent, grandchild, or grandchild’s spouse.
.03 Notice of Housing Counseling Programs and Services.
A. Form. Unless the lender is otherwise required by federal or State law to refer a borrower to housing counseling, a lender shall provide a notice of homebuyer education or housing counseling in substantially the following form to a borrower to comply with the requirements set forth in Commercial Law Article, §12-1203, Annotated Code of Maryland:
IMPORTANT NOTICE REGARDING HOUSING COUNSELING
You are receiving this notice because you have applied for a Maryland residential mortgage loan secured by a first lien. In applying for and entering into a mortgage loan you will be required to sign complex legal documents. You should be certain that you understand the terms of the loan being offered to you in these documents before you commit in writing. If you do not pay the loan according to its terms, you could lose your home.
BE ADVISED: The State of Maryland recommends that all residential mortgage loan applicants receive homebuyer education or housing counseling from a nonprofit or government agency before signing any documents that commit them to a loan.
Free homebuyer education or housing counseling may be provided face-to-face or over the telephone. Set forth below is a list prepared by the Maryland Department of Housing and Community Development of nonprofit and government agencies that provide homebuyer education or housing counseling.
See attached List of Nonprofit and Government Agencies Offering Homebuyer Education or Housing Advice.
B. The notice required under §A of this regulation shall include an attachment provided by the Department on nonprofit homebuyer education and housing counseling programs and services provided by nonprofit and government organizations certified by the U.S. Department of Housing and Urban Development that are available to residents of the State.
.04 Timing of Notice.
A. The notice required under Regulation .03 of this chapter shall be provided to a borrower within 10 business days after initial application.
B. A lender may require borrower to complete a written application before agreeing to begin processing the loan, if that requirement is explained to the applicant.
C. A lender may not close on a mortgage loan unless the lender has provided the notice required under §A of this regulation.
.05 Maintaining and Providing Information.
The Department shall:
A. Maintain information about nonprofit homebuyer education and housing counseling programs and services provided by nonprofit and government organizations certified by the U.S. Department of Housing and Urban Development that are available to residents of the State;
B. Assemble the information into a form that can be used as the required attachment under Regulation .03B of this chapter; and
C. Provide the form to lenders and the general public at:
(1) The Department’s website addresses:
(a)
Default.aspx; and
(b)
aspx;
(2) The Department of Housing and Community Development, 100 Community Place, Crownsville, Maryland20736; and
(3) The Department of Labor, Licensing, and Regulation’s website address,
RAYMOND A. SKINNER
Secretary of Housing and Community Development
1
1532381.1 99692/059326 10/04/2010