Ch. 404

1993 LAWS OF MARYLAND

(3)      THE LENDING INSTITUTION SHALL ANNUALLY PROVIDE THE
CONSUMER BORROWER WITH A STATEMENT OF THE ESCROW BALANCE.

(4)      THE PROVISIONS OF THIS SUBSECTION DO NOT APPLY TO A
LENDING INSTITUTION THAT PROVIDES FOR THE PAYMENT OF TAXES, INSURANCE,
OR OTHER EXPENSES UNDER THE DIRECT REDUCTION METHOD BY WHICH THESE
EXPENSES, WHEN PAID BY THE LENDING INSTITUTION, ARE ADDED TO THE
OUTSTANDING PRINCIPAL BALANCE OF THE LOAN.

(5)       (I) THIS SUBSECTION DOES NOT APPLY IF THE LOAN:

1.        IS PURCHASED BY AN OUT-OF-STATE LENDER THROUGH
THE FEDERAL NATIONAL MORTGAGE ASSOCIATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION, OR THE FEDERAL HOME LOAN MORTGAGE
CORPORATION; AND

2.        THE OUT-OF-STATE LENDER ELECTS TO SERVICE THE
LOAN AS A CONDITION OF PURCHASE.

(II) NOTWITHSTANDING SUBPARAGRAPH (I) OF THIS PARAGRAPH,
THIS SUBSECTION SHALL APPLY IF THE OUT-OF-STATE LENDER:                     

1.         SELLS THE LOAN TO A MARYLAND LENDER; OR

2.         PLACES THE LOAN WITH A MARYLAND LENDER FOR
SERVICING.

(C) (1) EXCEPT UPON FORECLOSURE, RELEASE, OR AS PROVIDED IN
PARAGRAPH (2) OF THIS SUBSECTION, FUNDS IN ANY ESCROW ACCOUNT
MAINTAINED BY A CREDIT GRANTOR ON BEHALF OF A CONSUMER BORROWER FOR
USE IN PAYING TAXES, INSURANCE PREMIUMS, AND GROUND RENTS MAY NOT BE
USED:

(I)       TO REDUCE THE PRINCIPAL; OR

(II)     TO PAY INTEREST OR OTHER LOAN CHARGES.

(2)      IF THERE IS PERIODICALLY A BALANCE IN THE ESCROW ACCOUNT
MAINTAINED BY A CREDIT GRANTOR ON BEHALF OF A CONSUMER BORROWER
WHICH EXCEEDS THE AMOUNT STATED IN THE AGREEMENT, NOTE, OR OTHER
EVIDENCE OF THE LOAN, THE CONSUMER BORROWER SHALL BE GIVEN AT LEAST
ANNUALLY THE OPTION OF:

(I)       RECEIVING A REFUND OF THE EXCESS AMOUNT;

(II)     APPLYING THE EXCESS AMOUNT TO THE PAYMENT OF
PRINCIPAL AND INTEREST; OR

(III)    LEAVING THE EXCESS AMOUNT IN THE ESCROW ACCOUNT.

(3)      A REFUND OF ANY EXCESS AMOUNT SHALL BE MADE:

(I) WITHIN 60 DAYS AFTER THE RECEIPT BY THE CREDIT
GRANTOR OF THE CONSUMER BORROWER'S REQUEST FOR A REFUND; OR

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