Code of Maryland Regulations › Title 09 - MARYLAND DEPARTMENT OF LABOR › Subtitle 03 - COMMISSIONER OF FINANCIAL REGULATION › Chapter 09.03.01 - Credit Unions › Section 09.03.01.08 - Real Estate Lending

Current through Register Vol. 51, No. 14, July 12, 2024
A.
				Definitions.
(1) "Appraisal" means an
				objective estimate of value established using a real estate appraisal policy
				approved by the board of directors in accordance with all applicable federal
				and State laws and regulations and in conformity with secondary market
				guidelines including but not limited to the Federal National Mortgage
				Association (FNMA) and/or Federal Home Loan Mortgage Corporation
				(FHLMC).
(2) "Appraiser" means an
				individual who performs appraisals under the authority of real estate appraisal
				policies and procedures approved by the Commissioner of Financial Regulation
				under Financial Institutions Article, §
										2-110,
				Annotated Code of Maryland.
(3)
				"Construction mortgage" means an interim loan covering residential construction
				and development costs in which funds are advanced at specific stages of
				construction with a portion held back until completion of the
				project.
(4) "Escrow account" means
				either a special limited-withdrawal share account or an accounts payable
				account used for the accumulation of funds to pay for not more than 1 year's
				taxes, ground rent, assessments, insurance premiums, or other charges that
				could affect the credit union's lien position.
(5) "Flood insurance" means insurance
				affording protection against loss or damage from flood and other hazards
				covered by a standard mortgage clause in favor of the credit union and
				subsequent purchasers of the mortgage.
(6) "Hazard insurance" means property
				insurance affording protection against loss or damage from fire and other
				hazards covered by a standard extended coverage endorsement with a standard
				mortgage clause in favor of the credit union and subsequent purchasers of the
				mortgage.
(7) "Insured or
				guaranteed loan" means a loan that is fully or partially insured or guaranteed
				by the federal government, State government, local government, or any agency of
				these governments.
(8) "Lender's
				title insurance" means insurance that protects:
(a) The credit union against loss due to
				clouds or defects in title to real property in an amount equal to the current
				principal balance of the loan; and
(b) Subsequent purchasers of the mortgage or
				deed of trust.
(9)
				"Market value" means the highest price that real property will bring in a
				competitive and open market under all conditions requisite to a fair sale, with
				the buyer and seller acting in a prudent and knowledgeable manner, and assuming
				the price is not affected by undue stimulus.
(10) "Net worth" means retained earnings as
				defined under generally accepted accounting principles. Retained earnings
				include, but are not limited to, undivided earnings, regular reserves, and any
				other appropriations designated by management or the Commissioner.
(11) "Permanent financing" means a
				longer-term mortgage loan greater than 10 years in maturity and covering
				development costs, construction costs, legal expenses, and other related costs.
				Permanent financing is also known as a take-out loan for a construction
				loan.
(12) "Principal residence"
				means a structure where the owner will be domiciled or will reside permanently
				within the time period established by the applicable federal loan programs or
				within 60 days after initial disbursement of the loan.
(13) "Private mortgage insurance" means
				mortgage insurance that is purchased for conventional loans on that amount of
				the loan that is in excess of 80 percent loan to value.
(14) Purchase Money Mortgage.
(a) "Purchase money mortgage" means the
				acquisition of property through the use of a first mortgage or first deed of
				trust.
(b) "Purchase money
				mortgage" does not include refinances or seasoned loans.
(15) "Refinance-cash out" means the repayment
				of an existing mortgage debt from the proceeds of a new mortgage that has the
				same borrower and the same security property, which:
(a) Is settled in accordance with existing
				underwriting guidelines; and
(b)
				May include:
(i) The unpaid principal balance
				of the existing first mortgage,
(ii) Closing costs,
(iii) Points,
(iv) The amount required to satisfy any
				outstanding subordinate mortgage liens, and
(v) Additional cash that the borrower may use
				for any purpose.
(16) "Refinance-no cash out" means the
				repayment of an existing mortgage debt from the proceeds of a new mortgage that
				has the same borrower and the same security property, which:
(a) Is settled in accordance with existing
				underwriting guidelines; and
(b)
				May include:
(i) The unpaid principal balance
				of the existing first mortgage,
(ii) Closing cost,
(iii) Points, and
(iv) The amount required to satisfy any
				outstanding subordinate mortgage liens.
(17) Residential Real Property.
(a) "Residential real property" means a
				structure designed for residential use by not more than four families, at least
				one unit of which shall be occupied by the owner of the structure.
(b) "Residential real property" includes a
				one- to four-family unit in a planned unit development or condominium project
				where certain portions of the secured property are owned in common with
				others.
(c) "Residential real
				property" does not include a unit in a cooperative project.
(18) "Secondary mortgage loan
				market" means a nationally recognized market, the most common of which has been
				created by the Federal National Mortgage Association (FNMA) and the Federal
				Home Loan Mortgage Corporation (FHLMC), where first mortgages are securitized
				or sold, or both, separately to investors.
(19) "Secondary residence" means one
				structure in addition to a principal residence:
(a) Where the owner resides for at least 2
				weeks every calendar year; or
(b)
				Which the owner will not rent to others for at least 2 weeks every calendar
				year.
(20) "Security
				instrument" means either a deed of trust or a mortgage that constitutes a
				lien.
(21) "Value" means the lower
				of the appraised market value or the purchase price.