HARRY HUGHES, Governor

3619

FOR the purpose of prohibiting a lender of a loan secured by
residential real property from entering into a loan
agreement which permits the lender to increase or decrease
the applicable rate of interest or finance charges during
the term of the obligation unless certain conditions are
met; requiring the borrower to be given a certain notice
regarding a change in the applicable rate of interest or
periodic payment amount; and generally relating to
disclosures of adjustable rate mortgages.

BY repealing and reenacting, without amendments,

Article - Commercial Law

Section 12-103(b)

Annotated Code of Maryland

(1983 Replacement Volume and 1985 Supplement)

BY repealing and reenacting, with amendments,

Article - Commercial Law

Section 12-118

Annotated Code of Maryland

(1983 Replacement Volume and 1985 Supplement)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

Article - Commercial Law

12-103.

(b) (1) A lender may charge interest at any effective rate
of simple interest on the unpaid principal balance of a loan if:

(i) There is a written agreement signed by the
borrower which sets forth the stated rate of interest charged by
the lender;

(ii) The loan is secured by a first mortgage or
first deed of trust on any interest in residential real property;

(iii) There is no prepayment penalty in
connection with the loan;

(iv) The loan is made and the mortgage or deed
of trust is executed after the effective date of this section;

(v) The loan is not a renewal of a loan which
was made by the lender to the borrower before the effective date
of this section and which was secured by a mortgage or deed of
trust on the same property; and