§ 11-508. Surety bonds

   (a) Requirement. -- An applicant for a new license or for the renewal of a license shall file a surety bond with each original application and any renewal application for the license.

(b) Nature, characteristics, etc. -- The surety bond shall:

   (1) Run to the Commissioner and be for the benefit of any mortgage loan borrower who has been damaged by a violation committed by a licensee of any law or regulation governing the activities of mortgage lenders;

   (2) Be issued by a surety company authorized to do business in the State;

   (3) Be conditioned that the applicant shall comply with all Maryland laws regulating the activities of mortgage lenders and mortgage loan lending; and

   (4) Be approved by the Commissioner.

(c) Amount -- Applicants not conducting business for preceding 36 months. -- If an applicant has not conducted a mortgage lending business any time during the 36 months prior to the filing of an original application for a license, the applicant shall provide a sworn statement setting forth that fact.

(d) Amount -- Applicants conducting business in preceding 36 months. --

   (1) If an applicant has conducted a mortgage lending business any time during the 36 months prior to the filing of an original or renewal application, the applicant shall provide a sworn statement setting forth the aggregate principal amount of mortgage loans secured or to be secured by property located in Maryland and applied for and accepted or mortgage loans secured or to be secured by property located in Maryland and applied for, procured, and accepted by the mortgage lender during the 12 months immediately preceding the month in which the application is filed.

   (2) If an applicant has conducted a mortgage lending business any time during the 36 months prior to the filing of an original application, but during that time has not acted as a mortgage lender in Maryland, the applicant shall provide with the original application a sworn statement setting forth the aggregate principal amount of loans secured or to be secured by a dwelling or residential real estate located in states other than Maryland and applied for, procured, and accepted by the mortgage lender during the 12 months preceding the month in which the application is filed.

   (3) Except as provided in subsection (e) of this section, the applicant shall file with the original or renewal application:

      (i) Where the aggregate principal amount of loans set forth in the sworn statement was $ 3,000,000 or less, a surety bond in the amount of $ 50,000;

      (ii) Where the aggregate principal amount of loans set forth in the sworn statement was more than $ 3,000,000 but not more than $ 10,000,000, a surety bond in the amount of $ 100,000; and

      (iii) Where the aggregate principal amount of loans set forth in the sworn statement was more than $ 10,000,000, a surety bond in the amount of $ 150,000.

(e) Blanket surety bond. -- Notwithstanding any other provisions of this section, and subject to approval by the Commissioner, if an applicant files five or more original or renewal applications at the same time, the applicant may provide a blanket surety bond for all licensed offices in the amount of $ 750,000.

(f) Trust account. -- Subject to approval by the Commissioner, an applicant for license who files an application for a new license or for the renewal of a license may satisfy the bonding requirement under this section by establishing a trust account with or obtaining an irrevocable letter of credit from a financial institution insured by the Federal Deposit Insurance Corporation in an amount equal to the bond required under this section.

(g) Commissioner may adopt regulations. -- The Commissioner may adopt regulations reasonably necessary to assure that the proper surety bond amount established by this section is maintained by each licensee throughout each licensing term. The regulations may provide for periodic reporting, recalculation, and enforcement of required bond amounts.

HISTORY: 1989, ch. 476, § 3; 1997, ch. 588; 1998, chs. 760, 761; 2008, ch. 7, § 2; ch. 8, § 2; 2009, ch. 4.