Advocacy Victory: Maryland OFR Rescinds Mortgage Trust Licensing Policies Following Enactment of MBA-Supported Legislation

Last week the Maryland Office of Financial Regulation (OFR) announced that it rescinded its previous guidance that required the licensing of passive mortgage trusts following advocacy from the Mortgage Bankers Association (MBA) and the Maryland Mortgage Bankers and Brokers Association (MMBBA).

“Effective immediately, OFR rescinds its prior guidance issued on January 10, 2025, and all related advisories (issued on January 31, 2025, and February 18, 2025) and enforcement deadlines concerning licensing requirements for Mortgage Trusts. OFR is also formally withdrawing the previous emergency and proposed regulations relating to Mortgage Trust licensure, Maryland Register, Volume 52, Issue 11, Page 535 (Issued May 30, 2025).”

In January OFR had issued guidance and emergency regulations to facilitate compliance with the Maryland Appellate Court’s April 2024 ruling in the case of the Estate of Brown v. Ward. The guidance and regulations raised urgent issues for entities involved in the secondary mortgage market because OFR’s interpretation significantly expanded on the Appellate Court’s opinion.

The Brown v. Ward case was limited to an assignee of a home equity line of credit and whether it needed a license to have the legal authority to bring a foreclosure action. The Appellate Court agreed that a license was required, but the OFR unnecessarily expanded the regulation to cover purchasers/assignees of closed-end credit such as passive trusts of residential mortgages loans, which under the order would also need to be licensed.

MBA and MMBBA had strongly urged the OFR not to expand its rules beyond the Appellate Court’s decision and warned of the “harmful and immediate” consequences to the Maryland mortgage market and consumers. The industry’s predictions of detrimental impact to Maryland borrowers proved prescient as purchasers of Maryland loans swiftly announced that they would either raise costs for them or cease their purchases.

MBA and the MMBBA collaborated with industry partners to achieve enactment of legislation that created the necessary exemptions to the states licensing law amidst the brief 90-day legislation session. The new law enabled the OFR’s announcement last week. This significant advocacy victory was aided by Mortgage Action Alliance members in Maryland who provided important momentum to the effort by responding to an urgent Call to Action.

“There was a lot at stake in Maryland on this issue, and MBA is grateful to the industry coalition that quickly came together to work on a solution,” said William Kooper, MBA’s Vice President of State Government Affairs and Industry Relations. “That coordinated and sustained advocacy collaboration, along with the many MAA volunteers who wrote to their reps in Annapolis, was the difference between success and failure.”

Additionally, OFR responded to MBA’s request following enactment of the new law to clarify that commercial lenders making loans exclusively for business purposes under Maryland’s installment loan statutes, as defined by Md. Code Ann., Fin. Inst. § 11-301, are not subject to OFR’s licensing requirements under mortgage lending and installment licensing provisions.

Note: OFR said stakeholders reviewing the statute on Westlaw should take care to view the House version of the bill, HB1516, rather than an earlier version of the proposed law from the cross-filed bill, SB1026.

The new law also establishes a working group to provide recommendations to the Maryland Legislature by December 31st regarding the issue of trust licensing. MBA and MMBBA will continue to engage through any opportunity provided by the group.