Md. Code Regs. 09.03.06.16

Current through Register Vol. 51, No. 22, November 1, 2024

Section 09.03.06.16 - Bonds, Letters of Credit, and Trust Accounts

A. The required amount of a bond, letter of credit, or trust account established to meet the requirements of Financial Institutions Article, §11-508, Annotated Code of Maryland, shall be year following the expiration of the period for which it is issued subject to recalculation at the time a license is renewed.

B. The Commissioner shall use information provided by the licensee as well as the licensee's last four quarterly call reports filed with NMLS to recalculate the required amount of the bond, letter of credit, or trust account.

C. Restitution awarded and to be paid from a letter of credit or trust account shall be paid as follows:

(1) Awards resulting from individual complaints shall be paid in the order in which they are received by the Commissioner;

(2) Awards resulting from an examination by the Commissioner that will exceed the total available under the letter of credit or trust account shall be paid on a pro rata basis;

(3) Claims against a letter of credit or trust account shall be filed by a claimant with the Commissioner within 3 years after the occurrence from which the claim arises; and

(4) Notwithstanding §C(1) of this regulation, if the aggregate amount of all pending claims exceeds the amount of the letter of credit or trust account, the Commissioner may require a prorated distribution.

D. The Commissioner may require part or all of the funds in a letter of credit or trust account to remain on deposit if:

(1) There are unresolved pending claims against the account or letter of credit, which were timely filed; and

(2) The amount required by the Commissioner to be maintained is reasonably calculated to cover the payment of those claims.

E. Claims against a bond, letter of credit, or trust account

(1) Shall be filed by the claimant if against a:

(a) Surety bond, directly with the surety,

(b) Letter of credit or trust account, with the Commissioner.

(2) Shall be filed in accordance with §E(1) of this regulation within 1 year after the occurrence from which the claim arises;

(3) May may not include:

(1) Attorneys' fees,

(2) Damages for personal injury, or

(3) Punitive damages.

F. A surety under a bond issued under Financial Institutions Article, §11-508, Annotated Code of Maryland, shall:

(1) Pay directly to a claimant any meritorious claim; and

(2) Immediately notify the Commissioner when it pays a claim to a claimant.

Md. Code Regs. 09.03.06.16

Regulations .16, Mortgage Lenders, adopted effective February 19, 1990 (17:3 Md. R. 297); amended and recodified from .15 effective 46:19 Md. R. 813, eff. 10/4/2019