§ 12-125. Financing agreements

   (a) Definitions. --

   (1) In this section the following words have the meanings indicated.

   (2) "Borrower" means a person who makes an application for a loan secured by a first mortgage or first deed of trust on a 1- to 4-family home to be occupied by the borrower as the borrower's primary residence.

   (3) "Commitment" means a written, specific, binding agreement between a borrower and a lender which sets forth the terms of a loan being extended to the borrower.

   (4) "Financing agreement" means a written agreement between a borrower and a lender which sets forth the terms of a purchase money loan or a refinancing of an existing loan that:

      (i) Results in or is secured by a first mortgage or a first deed of trust on a 1- to 4-family home to be occupied by the borrower; and

      (ii) Is offered or extended to the borrower.

   (5) (i) "Lender" means a person subject to the licensing requirements of Title 11, Subtitle 5 of the Financial Institutions Article.

      (ii) "Lender" does not include a person exempt from licensure under § 11-502 of the Financial Institutions Article.

   (6) (i) "Loan application" means any oral or written request for an extension of credit that is made in accordance with procedures established by a lender for the purpose of inducing the lender to seek to procure or make a mortgage loan.

      (ii) "Loan application" does not include the use of an account or line of credit to obtain a loan within a previously established credit limit.

(b) In general. --

   (1) A lender who offers to make or procure a loan secured by a first mortgage or first deed of trust on a 1- to 4-family home to be occupied by the borrower shall provide the borrower with a financing agreement executed by the lender within 10 business days after the date the loan application is completed.

   (2) The financing agreement shall provide:

      (i) The term and principal amount of the loan;

      (ii) An explanation of the type of mortgage loan being offered;

      (iii) The rate of interest that will apply to the loan and, if the rate is subject to change or is a variable rate or is subject to final determination at a future date based on some objective standard, a specific statement of those facts;

      (iv) The points, if any, to be paid by the borrower or the seller, or both; and

      (v) The term during which the financing agreement remains in effect.

   (3) If all the provisions of the financing agreement are not subject to future determination, change, or alteration during its term, the financing agreement shall constitute the final binding agreement between the parties as to the items covered by the financing agreement.

(c) Commitment. --

   (1) If any of the provisions of the financing agreement are subject to change or determination after its execution, the lender shall provide the borrower with a commitment, executed by the lender, at least 72 hours before the time of settlement agreed to by the parties, providing:

      (i) The effective fixed interest rate or initial interest rate that will be applied to the loan; and

      (ii) A restatement of all the remaining unchanged provisions of the financing agreement.

   (2) Subsequent to execution of the financing agreement, the borrower may waive in writing the 72-hour advance presentation requirement and accept the commitment at settlement only if compliance with the 72-hour requirement is shown by the lender to be infeasible.

(d) Penalties. -- If a lender fails to comply with the requirements of this section, the lender shall be subject to the penalties set forth in § 11-523 of the Financial Institutions Article.

(e) Civil liability. -- A borrower aggrieved by any violation of this section shall be entitled to bring a civil suit for damages, including reasonable attorney's fees, against the lender.

(f) Construction. -- This section may not be construed to exempt a lender from the provisions of § 12-119 through 12-122 of this subtitle.

HISTORY: 1989, ch. 476, § 1.