Maryland Substitutes Financing Agreement and Commitment Requirements

Effective July 1, 2017, Maryland repealed and reenacted with amendments an act affecting closed end credit loans in order to eliminate duplicative disclosures. In essence, the amendments streamline the loan process by substituting the financing agreement and commitment disclosures with the Loan Estimate and Closing Disclosures.

Previously, a financing agreement – a written agreement between a borrower and a lender which sets forth the terms of a purchase/refinance loan – was required to be given to the borrower within a prescribed time. However, the amendments enacted now permit for an alternative option. Should a Loan Estimate Disclosure (“LE”) be provided to the borrower in conjunction with the timing requirements set out in 12 C.F.R. Section 1026.37, the LE will act as an alternative satisfactory option for a financing agreement.

Commitment requirements have also been amended. A commitment is a written, binding agreement between a borrower and a lender which set forth the terms of the loan being extended to the borrower. This document is required to be given within a prescribed time if any of the terms in a financing agreement are subject to change after its execution. However, the amendments now permit an alternative option. Closing Disclosures provided to the borrower and in compliance with C.F.R. Section 1026.38 will act as an alternative satisfactory option for a commitment.

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  • Regulatory Compliance Consultant
  • Lexington, MA
  • 781-402-6457

Julio Suarez, JD, is a regulatory compliance consultant with Bankers Advisory. He is a graduate of the University of Central Florida and earned his juris doctor at the New England School of Law.

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