MARVIN MANDEL, Governor                            1653

DEED OF TRUST OR RESIDENTIAL REAL [[PROPERTY]] [[ESTATE]]
PROPERTY OR ANY INTEREST THEREIN SHALL BE EXEMPT FROM
SECTION 3 OF THIS ARTICLE IF ALL OF THE FOLLOWING
CONDITIONS ARE SET:

[[(A)]] (1) THE INTEREST CHARGED IS NOT IN EXCESS
OF TEN PERCENT (10%) PER ANNUM SIMPLE INTEREST ON THE
UNPAID BALANCE UNDER AN AGREEMENT IN WRITING BETWEEN THE
LENDER AND THE BORROWER.

[[(B)]] (2) THE LOAN IS MADE AND THE MORTGAGE OR
DEED OF TRUST IS EXECUTED ON OR AFTER THE EFFECTIVE DATE
OF THIS ACT [[OR WHERE THERE IS ISSUED A WRITTEN
COMMITMENT ACCEPTED BY THE BORROWER ON OR AFTER THE
EFFECTIVE DATE OF THIS ACT.]].

[[(C)]] (3) THERE IS NO PREPAYMENT PENALTY IN
CONNECTION WITH THE LOAN.

[[(D)]] (4) THE LOAN HAS NOT BEEN MADE PRIOR TO THE
EFFECTIVE DATE OF THIS ACT, AND NO WRITTEN COMMITMENT HAS
BEEN ISSUED BY THE LENDER PRIOR TO THE EFFECTIVE DATE OF
THIS ACT AGREEING TO MAKE THE LOAN AT A RATE OF 8% OR
LESS. A WRITTEN COMMITMENT, WRITTEN OFFER TO LOAN, OR
ANY OTHER WRITTEN STATEMENT BY A LENDER WHICH CAN BE
REASONABLY CONSTRUED AS AN OFFER TO MAKE A LOAN AT ANY
SPECIFIED OR UNSPECIFIED INTEREST RATE IS DEEMED TO BE A
COMMITMENT TO HAKE THE LOAN AT 8[[%]] PER CENT, OR LESS,
IF SPECIFIED[[; PROVIDED THAT]] AND IF THE WRITTEN
COMMITMENT OR WRITTEN OFFER IS ISSUED PRIOR TO [[THE
EFFECTIVE DATE OF THIS ACT.]] APRIL 15, 1971.

[[(E) ANY FUNDS FOR PAYMENT OF TAXES, INSURANCE OR
OTHER EXPENSES SHALL BE BY THE "DIRECT REDUCTION METHOD".
UNDER THIS METHOD, PAYMENTS MADE BY THE MORTGAGEE TO
COVER FUTURE TAX, INSURANCE OR OTHER TYPES OF PAYMENTS
NECESSARY TO PROTECT THE INTERESTS OF THE MORTGAGOR SHALL
REDUCE THE OUTSTANDING AMOUNT OF THE LOAN AND DIRECTLY
REDUCE THE AMOUNT OF THE NEXT MONTH'S INTEREST PAYMENT.
IF THE MORTGAGOR PAYS ANNUAL TAXES, INSURANCE OR OTHER
PAYMENTS AS AGREED UPON BETWEEN THE MORTGAGOR AND
MORTGAGEE IN THEIR CONTRACT, THE AMOUNT OF THE PAYMENTS
SHALL BE ADDED TO THE OUTSTANDING AMOUNT OF THE LOAN. ]]

[[THIS]] (5) SECTION 13(A) DOES NOT APPLY AFTER JUNE
1, 1976.

[[(E)]] (B) BEGINNING JUNE 1, 1974, ANY BANK,
SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, OR BUILDING
AND LOAN ASSOCIATION (HEREAFTER REFERRED TO AS THE
"LENDING INSTITUTION") DOING BUSINESS IN MARYLAND [[AND
ORGANIZED UNDER AND REGULATED BY THE LAWS OF MARYLAND]]
WHICH LENDS MONEY TO A BORROWER SECURED BY REAL PROPERTY
AND WHICH LENDING INSTITUTION CREATES OR IS THE ASSIGNEE