On May 12, the Maryland governor signed into law HB 38, amending the licensing framework for “affiliated insurance producer–mortgage loan originators” under the state’s Financial Institutions Article. The legislation makes two principal changes. First, it broadens the categories of entities eligible to sponsor an affiliated insurance producer–mortgage loan originator for licensing purposes. Under prior law, only financial institutions meeting certain criteria could serve as direct sponsors; the bill adds Commissioner-approved licensed mortgage lenders and mortgage brokers who can sponsor for licensure affiliated insurance producer–mortgage loan originators. To qualify, a sponsoring mortgage lender/broker must be in good standing with the Commissioner and any other applicable regulator and in material compliance with state and federal law. Second, the bill allows a licensee to originate loans made by multiple approved financial institutions or mortgage lenders, rather than being tied to one entity, removing the word “single” and the “exclusive contract” requirement from the statute.

Under the revised framework, a sponsored licensee remains subject to existing restrictions, including prohibitions on handling borrower funds, receiving finder’s fees, and making or servicing mortgage loans. Each sponsoring entity must supervise the licensee, bears joint and several liability for claims arising from the licensee’s origination activities, and must satisfy applicable surety bond requirements. The legislation takes effect October 1.