Mortgage Laws
The law of mortgages in Maryland (MD) is governed mainly by the Maryland
Statutes. The following are important points to be kept in mind regarding
mortgage in the U.S. state of Maryland:
- The borrower employs the settlement attorney or title agent. The lender does not do it.
- A lender may not prohibit a borrower from engaging a licensed settlement agent chosen
by that borrower unless some good cause can be shown.
- Section 12-120(c) of the commercial law article states in its relevant
portion the borrower's obligation to pay lender's attorney fee, provision for
attorney of borrower's choice.
- A lender may not require as a condition of settlement for a borrower or
title insurance company to perform a title search, examination of a title,
or closing if the borrower notifies the lender, within 7 days after application
for the loan, of the name and business address of the borrower's choice.
- Lenders may foreclose i.e. redeem the right on a mortgage or deed of
trust upon default by using any one of the following three foreclosure processes:
- Judicial Foreclosure
- Assent To Decree Foreclosure
- Non-Judicial Foreclosure
- A Maryland predatory-lending law limiting the amount chargeable by banks
from borrowers in order to pay off a mortgage early cannot be applied in
case of national banks operating in the state of Maryland.
- The 'legal rate' of interest in Maryland is 6%, the 'general usury limit'
there is 24%. However, there are slight differences/variations and exceptions
of/to this law. 'Judgment rate' of interest is 10% i.e. judgments bear interest
at the rate of 10%. In some states there is this 'legal rate'. One may have
a contractual obligation that provides only for interest without any specific
term then it is the 'legal rate' which becomes applicable. The 'usury limit'
stated as the 'general usury limit' is the rate which may be charged by
one person or corporation to another. 'Judgment rate' is the rate borne/upheld
by final judgments.
- In accordance with Maryland Commercial Law Code 12-125, 1013 the Financing Agreement issued by the lenders must contain:
- Term of the loan and its principal amount,
- Explanation of the kind of mortgage loan that is offered,
- Rate of interest applying in case of the loan and whether the rate
is changeable or is variable or at a future date it is subject to final
determination as per some objective standard, a specific statement of
such facts,
- The points, if any, to be paid by the borrower or the seller.
- Term during which the Financing Agreement remains effective.
