MARVIN MANDEL, Governor

393

REAL PROPERTY AND [[HOLDS]] CREATES OR IS THE ASSIGNEE OF
AN ESCROW ACCOUNT IN CONNECTION WITH THAT LOAN SHALL PAY
INTEREST TO THE BORROWER ON THE FUNDS IN THE ESCROW
ACCOUNT AT THE GREATER OF:

(i) A RATE OF 3 PERCENT PER ANNUM SIMPLE
INTEREST; OR

(ii) THE RATE OF INTEREST REGULARLY PAID BY
THE LENDING INSTITUTION ON REGULAR PASS BOOK SAVINGS
ACCOUNTS.

(2) INTEREST ON THESE FUNDS SHALL BE:

(i) COMPUTED ON THE AVERAGE MONTHLY BALANCE
IN THE ESCROW ACCOUNT; AND

(ii) PAID ANNUALLY TO THE BORROWER BY
CREDITING THE ESCROW ACCOUNT WITH THE AMOUNT OF INTEREST
DUE.

(C) DIRECT [[REDUCTIONS]] REDUCTIONS.

THE PROVISIONS OF THIS SECTION DO NOT APPLY TO A
LENDING INSTITUTION WHICH PROVIDES FOR THE PAYMENT OF
TAXES, INSURANCE, OR OTHER EXPENSES UNDER THE DIRECT
SEDUCTION METHOD BY WHICH THESE EXPENSES, WHEN PAID BY
THE LENDER, ARE ADDED TO THE OUTSTANDING PRINCIPAL
BALANCE OF THE LOAN.

REVISOR'S NOTE: This section is new language derived
without substantive change from Art. 49,
§13(b). Since its requirements are
independant of the provisions of present
§13(a) and (c) - now contained in §§ 12—103(b)
and 12—113 — it is set out here as a separate
section.

In subsection (a) (2) of this section, the
reference to "building and loan association"
is deleted as unnecessary in light of the more
Modern "savings and loan associations". In
this regard, see Title 6, Subtitle 2 of the
Corporation and Associations Article.

In subsection (b) (1) of this section, for
purposes of clarity, the words "first mortgage
or first deed of trust on any interest in
residential real property" are substituted for
"real property." Although the substituted
words are sore limiting in their scope, the
limitation is required by the clear language
of the Title to Ch. 420, Acts of 1974, which
enacted this section. "The title of a