Third Party Fee Collection

Don't get caught in the unfortunate position of not being allowed to collect credit report and appraisal fees from your borrowers.

Thanks to the work of the Maryland Association of Mortgage Professionals (MAMP), the types of third party fees that Maryland mortgage brokers may collect from borrowers has expanded.

Under this new Maryland law, in addition to charging borrowers for the actual costs of credit reports and appraisals—which have been authorized charges for many years—mortgage brokers also may charge the actual costs of any condominium document or subordination agreement document obtained by the mortgage broker.

BUT THERE IS A CATCH! The law allows mortgage brokers to charge these third party fees, including the credit report and appraisal fees, only if those items are obtained at the written request of the borrower. The borrower's request might be included in the written broker agreement required by Maryland law or might be in a separate written document, but if it is not provided, the broker must forego collecting these third-party costs from the borrower.

The law also allows a mortgage broker to collect charges for the actual cost of any other good or service that is required in order to complete the loan application process and that, at the written request of the borrower, is paid by the broker to a third-party service provider. You may only do this to the extent (another catch) permitted by regulations issued by the Commissioner of Financial Regulation. No such regulations have yet been published. In light of this law, mortgage brokers should review their form agreements to be sure they comply with applicable law (many form agreements fail miserably) and allow the broker to collect the fees as intended by the parties.

720 Light St., Baltimore, MD 21230
TEL: (410) 752-6262 | FAX: (410) 752-8295
EMAIL: MAMP@assnhqtrs.com