Office of the Commissioner of Financial Regulation


Collection Agencies and Mortgage Loan Servicing


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October 2, 2009

A Mortgage Lender License is Required to Service Maryland Mortgage Loans

As mortgage servicing capacity becomes further strained with the current economic downturn and associated rise in mortgage delinquencies, it has become evident that certain Maryland collection agencies are contemplating, or have begun, expanding their operations to include servicing Maryland mortgage loans.

PLEASE BE ADVISED: Any person servicing residential Maryland mortgage loans must be licensed under the Maryland Mortgage Lender Law ("MMLL"), unless otherwise exempt from licensing. Maryland Collection Agency Licensees are not exempt from licensing.

Under the MMLL "mortgage servicer" means a person who:

  1. Engages in whole or in part in the business of servicing mortgage loans for others; or
  2. Collects or otherwise receives payment on mortgage loans directly from borrowers for distribution to any other person.

Examples of servicing activities include, but are not limited to, collecting delinquent Maryland mortgage loans and operating call centers to negotiate terms of existing loans on behalf of a lender or another servicer.

In light of the foregoing, even licensed Maryland collection agencies must be licensed under the MMLL to act as Maryland mortgage servicers.

Penalties for Unlicensed Activity

Persons who violate the MMLL by engaging in unlicensed activity may be subject to administrative penalties of up to $5,000. Any person who willfully violates any provision of the MMLL or any rule or regulation adopted under it is guilty of a felony and on conviction is subject to a fine not exceeding $50,000 or imprisonment not exceeding 10 years or both.

Next Steps

The Collection Agency Licensing Board strongly encourages all collection agencies doing business that are considering engaging in any mortgage servicer-related activities in Maryland to review the MMLL carefully with their counsel to ensure compliance.

For comprehensive information on obtaining a license under the MMLL, please visit the Commissioner's website.