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HOUSE BILL 38
I1, I2 6lr1409
(PRE–FILED)
By: Delegate Queen
Requested: October 28, 2025
Introduced and read first time: January 14, 2026
Assigned to: Economic Matters
Committee Report: Favorable with amendments
House action: Adopted
Read second time: February 19, 2026
CHAPTER ______
AN ACT concerning 1
Financial Institutions – Licensing of Affiliated Insurance Producer–Mortgage 2
Loan Originators – Alteration Alterations 3
FOR the purpose of altering the licensing requirements for an affiliated insurance 4
producer–mortgage loan originator; requiring the Commissioner of Financial 5
Regulation to approve a certain financial institution that meets certain criteria or 6
certain mortgage lender lenders that meets meet certain criteria as to sponsor an 7
affiliated insurance producer–mortgage loan originator under certain circumstances; 8
and generally relating to licensing of affiliated insurance producer –mortgage loan 9
originators. 10
BY repealing and reenacting, with amendments, 11
Article – Financial Institutions 12
Section 11–603.1 and 11–619 13
Annotated Code of Maryland 14
(2020 Replacement Volume and 2025 Supplement) 15
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 16
That the Laws of Maryland read as follows: 17
Article – Financial Institutions 18
11–603.1. 19
2 HOUSE BILL 38
(a) In this section, “affiliated insurance producer –mortgage loan originator” 1
means an individual who: 2
(1) Originates mortgage loans only on behalf of MADE BY [a]: 3
(I) A single financial institution that is: 4
[(i)] 1. Described in § 11–502(b)(1) of this title; and 5
[(ii)] 2. Approved by the Commissioner under subsection (b) of 6
this section; OR 7
(II) A SINGLE MORTGAGE LENDER AS DEFINED IN § 11–501 OF 8
THIS TITLE THAT IS: 9
1. NOT A FINANCIAL INSTITUTION; AND 10
2. APPROVED APPROVED BY THE COMMISSIONER 11
UNDER SUBSECTION (C) OF THIS SECTION; 12
(2) Is a licensed insurance producer in good standing under § 10–103 of the 13
Insurance Article; and 14
(3) Holds an appointment as an insurance producer for an insurer that 15
controls, is controlled by, or is under common control with: 16
(i) The A financial institution OR THE A MORTGAGE LENDER 17
described in item (1) of this subsection; or 18
(ii) A mortgage lender licensee that: 19
1. Is approved by the Commissioner under subsection [(c)] 20
(D) of this section; and 21
2. Originates loans only on behalf of the MADE BY A financial 22
institution OR THE A MORTGAGE LENDER described in item (1) of this subsection under 23
an exclusive contract with the financial institution OR THE MORTGAGE LENDER; AND 24
3. IS ACTING AS A MORTGAGE BROKER, AS DEFINED IN § 25
11–501 OF THIS TITLE. 26
(b) The Commissioner shall approve a financial institution described in 27
subsection [(a)(1)] (A)(1)(I) of this section based on the following criteria: 28
HOUSE BILL 38 3
(1) The financial institu tion is in good standing with its primary state or 1
federal regulator; and 2
(2) The financial institution is in material compliance with applicable state 3
and federal law. 4
(C) THE COMMISSIONER SHALL AP PROVE A MORTGAGE LEN DER 5
DESCRIBED IN SUBSECTION (A)(1)(II) OF THIS SECTION BASED ON THE FOLLOWING 6
CRITERIA: 7
(1) THE MORTGAGE LENDER I S IN GOOD STANDING W ITH THE 8
COMMISSIONER AND ANY OTHER REGULATOR TO WHICH IT IS SUBJECT; AND 9
(2) THE MORTGAGE LENDER I S IN MATERIAL COMPLI ANCE WITH 10
APPLICABLE STATE AND FEDERAL LAW. 11
[(c)] (D) The Commissioner shall approve a mortgage lender licensee described 12
in subsection (a)(3)(ii) of this section based on the following criteria: 13
(1) The mortgage lender licensee is in good standing with the 14
Commissioner and any other regulator to which it is subject; and 15
(2) The mortgage lender licensee is in material compliance with applicable 16
state and federal law. 17
[(d)] (E) Approval by the Commissioner of a financial inst itution under 18
subsection (b) of this section , A MORTGAGE LENDER UNDER SUBSECTION (C) OF THIS 19
SECTION, and a mortgage lender licensee under subsection [(c)] OR (D) of this section shall 20
be in writing. 21
[(e)] (F) (1) An application for a license under this section shall be in the form 22
approved by the Commissioner. 23
(2) The application shall require the identification of: 24
(i) The A financial institution OR A MORTGAGE LENDER described 25
in subsection [(a)(1)] (A)(1)(I) of this section OR THE MORTGAGE LENDER DESCRIBED 26
IN SUBSECTION (A)(1)(II) OF THIS SECTION; 27
(ii) If applicable, the A mortgage lender licensee described in 28
subsection (a)(3)(ii) of this section; and 29
(iii) The insurer with which the applicant holds an appointment. 30
4 HOUSE BILL 38
(3) An applica tion for a license under this section shall be signed 1
SPONSORED by an authorized representative of: 2
(i) The A financial institution OR THE A MORTGAGE LENDER 3
DESCRIBED IN SUBSECT ION (A)(1) OF THIS SECTION THAT IS identified in the 4
application; or 5
(ii) If a mortgage lender licensee DESCRIBED IN SUBSECT ION 6
(A)(3)(II) OF THIS SECTION is identified in the application, the mortgage lender licensee. 7
[(f)] (G) (1) Notwithstanding §§ 11–602(a) and 11–603 of this subtitle, and subject 8
to the provisions of this section, a license issued under this section authorizes the licensee 9
to act as a mortgage loan originator ONLY ON BEHALF OF A SPONSOR THAT IS: 10
(I) IDENTIFIED IN THE LICENSEE’S APPLICATION; AND 11
(II) 1. A MORTGAGE LENDER; OR 12
2. A PERSON THAT IS EXEMP T FROM LICENSING AS A 13
MORTGAGE LENDER. 14
(2) THIS SECTION MAY NOT BE CONSTRUED TO AUTH ORIZE 15
SPONSORSHIP OTHER THAN FOR THE PURPOSE D ESCRIBED IN PARAGRAPH (1) OF 16
THIS SUBSECTION. 17
[(g)] (H) An applicant for a license under this section and a licensee under this 18
section shall comply with all other requirements for [licensure] LICENSING as a mortgage 19
loan originator under this subtitle. 20
[(h)] (I) A licensee under this section shall limit the licensee’s activities to 21
originating mortgage loans only on behalf of MADE BY [a]: 22
(1) A single financial institution approved by the Commissioner under 23
subsection (b) of this section; OR 24
(2) A SINGLE MORTGAGE LENDER APPROVED BY THE COMMISSIONER 25
UNDER SUBSECTION (C) OF THIS SECTION. 26
[(i)] (J) The A financial institution OR THE A MORTGAGE LENDER identified 27
in THAT SPONSORS a licensee’s license application or, if a mortgage lender licensee is 28
identified in a licensee’s license application, the mortgage lender licensee shall: 29
(1) Supervise the licensee, including providing direction through written 30
instructions or electronic means and by periodically examining the licensee’s books, 31
records, and other aspects of the licensee’s business; 32
HOUSE BILL 38 5
(2) Be held jointly and severally liable with the licensee for claims arising 1
out of the licensee’s mortgage loan origination activities; and 2
(3) Meet, or cause the licensee to meet, the surety bond requirements under 3
§ 11–619(c) of this subtitle. 4
[(j)] (K) Except as provided in subsection [(k)] (L) of this section, a licensee 5
under this section may not: 6
(1) Aid or assist a borrower to obtain a mortgage loan from [a]: 7
(I) A financial institution other than the A financial institution 8
identified in the licensee’s license application; OR 9
(II) A MORTGAGE LENDER OTHE R THAN THE A MORTGAGE 10
LENDER IDENTIFIED IN THE LICENSEE’S APPLICATION; 11
(2) Except for compensation based on the principal balance of a mortga ge 12
loan, be compensated by any person for mortgage loan origination activities on a basis that 13
depends on the terms of the mortgage loan, including interest rate or fees; 14
(3) Receive a finder’s fee, as defined in § 12 –801 of the Commercial Law 15
Article; 16
(4) Handle borrower or other third party funds in connection with the 17
origination or closing of a mortgage loan; 18
(5) Refer a borrower to any other licensee under Subtitle 5 of this title; or 19
(6) Make or service a mortgage loan. 20
[(k)] (L) A licensee under this section may forward a check to the A financial 21
institution OR THE A MORTGAGE LENDER identified in the licensee’s license application 22
if the check is: 23
(1) Made payable to the financial institution OR THE MORTGAGE 24
LENDER; 25
(2) From an applicant for a mortgage loan; and 26
(3) In connection with an application for a mortgage loan to cover costs for: 27
(i) An appraisal; 28
(ii) A credit report; or 29
6 HOUSE BILL 38
(iii) Processing the application. 1
[(l)] (M) (1) An individual may not act as an affiliated insurance 2
producer–mortgage loan originator under a name or for [an employer] A SPONSOR that is 3
different from the name and [employer] SPONSOR that appear on the license unless the 4
licensee: 5
(i) Notifies the Commissioner, in the form and i n accordance with 6
the process that the Commissioner requires, in advance of a change in the licensee’s name 7
or the licensee’s [employer] SPONSOR; 8
(ii) Pays to the Commissioner a license amendment fee set by the 9
Commissioner for each notice provided under item (i) of this paragraph; and 10
(iii) In the case of a new [employer] SPONSOR, amends the 11
sponsorship information on NMLS by submitting the amendment in the form required by 12
the Commissioner to indicate that the licensee is [an employee of] SPONSORED BY the new 13
[employer] SPONSOR. 14
(2) If a licensee ceases to be [employed] SPONSORED by a ANY financial 15
institution approved by the Commissioner under subsection (b) of this section OR A ANY 16
MORTGAGE LENDER APPROVED BY THE COMMISSIONER UNDER SUBSECTION (C) OR 17
(D) OF THIS SECTION, the licensee shall notify the Commissioner within 10 business days, 18
and the license shall be placed into nonactive status through NMLS. 19
(3) During the time that a license is in nonactive status, it is a violation of 20
this subtitle for the licensee to engage in any activity for which a license is required under 21
this subtitle. 22
(4) The license shall remain in nonactive status until the licensee: 23
(i) Notifies the Commissioner, in the form and in accordance with 24
the process that the Commissioner requires, that the licensee has obtained [employment 25
with] SPONSORSHIP FROM a financial institution that is approved by the Commissioner 26
under subsection (b) of this section OR A MORTGAGE LENDER THAT IS APPROVED BY 27
THE COMMISSIONER UNDER SUBSECTION (C) OR (D) OF THIS SECTION; and 28
(ii) Has complied with the requirements set forth in paragraph (1) of 29
this subsection. 30
[(m)] (N) The Commissioner may issue a license under this subtitle to an 31
individual who is not [employed] SPONSORED by a financial institution approved by the 32
Commissioner under subsection (b) of this section OR A MORTGAGE LENDER APPROVED 33
HOUSE BILL 38 7
BY THE COMMISSIONER UNDER SUBSECTION (C) OR (D) OF THIS SECTION, provided 1
that the license is placed into and remains in nonactive status until the licensee: 2
(1) Notifies the Commissioner, in the form and in accordance with the 3
process that the Commissioner requires, that the licensee has obtained [employment with 4
a] SPONSORSHIP FROM: 5
(I) A financial institution approved by the Commissioner under 6
subsection (b) of this section; OR 7
(II) A MORTGAGE LENDER APPR OVED BY THE COMMISSIONER 8
UNDER SUBSECTION (C) OR (D) OF THIS SECTION; and 9
(2) Has complied with the requirements set forth in subsection [(l)(1)] 10
(M)(1) of this section. 11
11–619. 12
(a) Each mortgage loan originator shall be covered by a surety bond in accordance 13
with this section. 14
(b) (1) A mortgage loan originator who is an employee of a person subject to 15
licensure under Subtitle 5 of this title may use the surety bond of that person to meet the 16
mortgage loan originator’s surety bond requirement. 17
(2) A mortgage loan originator who is an employee of a person exempt from 18
licensure under Subtitle 5 of this title may use a surety bond of the person to meet the 19
mortgage loan originator’s surety bond requirement, provided the surety bond meets the 20
requirements, based on mortgage loan volume, under § 11–508 of this title. 21
(c) A licensee who is an affiliated insurance producer –mortgage loan originator 22
shall be deemed in compliance with this section if the licensee: 23
(1) Holds a surety bond that would satisfy the surety bond requirements 24
under § 11 –508 of this title if the affiliated insurance producer –mortgage loan originator 25
were a licensee under Subtitle 5 of this title; or 26
(2) Is covered under a blanket surety bond held by the A financial 27
institution, MORTGAGE LENDER , IDENTIFIED IN § 11–603.1(A)(1)(I) OF THIS 28
SUBTITLE or A mortgage lender licensee identified in § 11 –603.1(a)(3) § 29
11–603.1(A)(1)(II) OR (3)(II) of this subtitle if the blanket surety bond: 30
(i) Covers all affiliated insurance producer –mortgage loan 31
originators; and 32
8 HOUSE BILL 38
(ii) Is in the amount of $1,000,000 or another amount as required by 1
the Commissioner by regulation. 2
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 3
October 1, 2026. 4
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.