Today, American Heritage Lending sent a regulatory update to its consumers regarding the state’s recent enactment of new legislation requiring all originators, owners, and assignees of real estate mortgages to hold a Maryland mortgage lender license.
As a result, American Heritage Lending (AHL) has suspended the ability to lock new consumer loans in Maryland, effective immediately.
On Jan. 10, the Maryland Office of Financial Regulation (OFR) issued guidance to clarify the licensing requirements under Maryland law for those engaged in mortgage lending, including mortgage trusts and their assignees. OFR applied the guidance to all consumer mortgage loans. DSCR and other business-purpose loans remain fully available in Maryland.
“This change presents a significant challenge to the mortgage industry, as many investors and buyers of loans are not individually licensed in every state where they purchase loans,” the email to AHL’s consumers states. “As a result, several major purchasers of QM and Non-QM consumer loans have suspended their operations in Maryland.”
Although AHL has suspended the ability to lock new consumer loans in Maryland, the company will continue to honor its existing pipeline with all Maryland loans required to fund by February 28, 2025.
Newfi, on the other hand, is continuing to purchase Non-QM loans in Maryland on a non-delegated and delegated basis from sellers licensed in Maryland, according to the company’s LinkedIn post. The sales team at Newfi is taking advantage of the opportunity as competitors are unable to continue funding consumer loans for Maryland customers.
Newfi Executive Vice President John Wise posted to LinkedIn, “If you are doing Non-QM business in Maryland and need a reliable take-out partner, or just someone to fund your Non-QM loans because your existing partner can't, please reach out to me today to get approved.”
Partner and Attorney of Alston & Bird, Stephen Ornstein, shared his thoughts with NMP, saying "This was a radical departure of the regulatory framework in Maryland. I mean Maryland does license, trust and auto deals automobile deals, but not in residential mortgage deals."
The enforcement on the new licensing requirement begins April 10, 2025, allowing mortgage lenders and their stakeholders a four month grace period to comply. However, Ornstein explains that it takes about three months to get the mortgage lender license under ordinary circumstances.
Given the sudden notice, he said, if many of those stakeholders attempt to get licensed all at once, a backlog could take longer.
Additionally, Ornstein said that Maryland regulators should issue further clarifications regarding foreclosures. "What do you do with the existing loans? And you know, can you foreclose on them? And I think our view is, unless it's a licensed entity, you can't. And then, you know, going forward, you know the logistical issue of getting trust license."
This story will be updated as developments occur.
