October 2, 2009
A Mortgage Lender License is Required to Service Maryland Mortgage Loans
As mortgage servicing capacity becomes
further strained with the current economic downturn
and associated rise in mortgage delinquencies, it
has become evident that certain Maryland collection
agencies are contemplating, or have begun, expanding
their operations to include servicing Maryland mortgage loans.
PLEASE BE ADVISED: Any person servicing residential Maryland mortgage loans must
be licensed under the Maryland Mortgage Lender Law
("MMLL"), unless otherwise exempt from licensing.
Maryland Collection Agency Licensees are not exempt from licensing.
Under the MMLL "mortgage servicer" means a person who:
- Engages in whole or in part in the business
of servicing mortgage loans for others; or
- Collects or otherwise receives payment on mortgage
loans directly from borrowers for distribution to any other person.
Examples of servicing activities include,
but are not limited to, collecting delinquent Maryland
mortgage loans and operating call centers to negotiate
terms of existing loans on behalf of a lender or another servicer.
In light of the foregoing, even
licensed Maryland collection agencies must be licensed
under the MMLL to act as Maryland mortgage servicers.
Penalties for Unlicensed Activity
Persons who violate the MMLL by engaging
in unlicensed activity may be subject to administrative
penalties of up to $5,000. Any person who willfully
violates any provision of the MMLL or any rule or
regulation adopted under it is guilty of a felony
and on conviction is subject to a fine not exceeding
$50,000 or imprisonment not exceeding 10 years or both.
The Collection Agency Licensing Board
strongly encourages all collection agencies doing
business that are considering engaging in any mortgage
servicer-related activities in Maryland to review
the MMLL carefully with their counsel to ensure compliance.
For comprehensive information on obtaining
a license under the MMLL, please visit the Commissioner's