4

LAWS OF MARYLAND

[Ch. 1

Replacement Volume and 1974 Supplement) be and it is
hereby repealed and re—enacted, with amendments, to read
as follows:

Article 49 — Interest and Usury

2.

(a) Except for loans made under § 7 and except on any
loan guaranteed or insured by FHA, VA or any other
instrumentality of the federal government a charge or
fee, commonly called "points" or mortgage origination
fee, and extracted by a lender from either the borrower
or any other person as additional compensation for the
loan of money, is specifically prohibited under this
article.

(b) In the event that charges or fees which, under
this article are deemed interest, are assessed at the
inception of a contract of indebtedness, the rate of
interest required in § 10 of this article shall be
determined in the same manner as if fees and charges had
not been assessed except that the principal of the loan
used in determining the rate of interest shall be the
face value of the loan less any fees or charges which are
interest.

(C) NOTWITHSTANDING THE PROVISIONS OF SUBSECTION
(A), A LENDER MAY CHARGE POINTS ON [[A CONVENTIONAL
LOAN]] A MORTGAGE LOAN WHICH IS NOT INSURED OR GUARANTEED
BY AN AGENCY OR INSTRUMENTALITY OF THE UNITED STATES
GOVERNMENT IF:

(1)    THE LOAN IS ELIGIBLE FOR PURCHASE BY AN
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES
GOVERNMENT, OR A SUBSIDIARY THEREOF, PURSUANT TO THE
EMERGENCY HOME PURCHASE ASSISTANCE ACT OF 1974 (PL93-449)
AND IS [[MADE UPON THE GOOD FAITH EXPECTATION THAT IT
WILL BE PURCHASED BY]] TENDERED IN GOOD FAITH FOR
PURCHASE PURSUANT TO A COMMITMENT OBTAINED BY THE LENDER
FROM SUCH AN AGENCY, INSTRUMENTALITY, OR SUBSIDIARY; AND

(2)     THE FEDERAL LAN, RULES, OR REGULATIONS
UNDER WHICH THE AGENCY, INSTRUMENTALITY, OR SUBSIDIARY IS
AUTHORIZED TO PURCHASE THE LOAN ALLOWS THE PAYMENT OF
POINTS, AND THE POINTS CHARGED AND THE INTEREST RATE ON
THE LOAN ARE NOT IN EXCESS OF THOSE ALLOWED UNDER THE
FEDERAL PROGRAM.

SECTION 2. AND BE IT FURTHER ENACTED. That Section
12—108 of Article - Commercial Law, of the Annotated Code

of Maryland (as enacted by Chapter_____(H.B. 26) of the

Acts of the 1975 General Assembly) be and it is hereby