A reader who is a professional finder wants to know if Maryland law requires finders to register with the state government.
Short answer: no, but state and federal laws establish requirements that mortgage brokers, a specific type of finder, must meet.
Finders are people in the business of bringing together lenders and borrowers, buyers and sellers of property or heirs to stocks, bonds or other assets who have not claimed the assets and may not know they exist. Mortgage brokers help a borrower to obtain a loan but are not listed as lenders on the loan documents. Both categories of finders charge fees.
The registration question arises because our neighbor, Pennsylvania, requires professional finders to obtain a registration certificate from the state Treasury Department. The law does not apply to casual finders, such as people who may pick up and return a lost wallet.
Pennsylvania limits the amount professional finders can charge to 15 percent of the value of the unclaimed property.
In Maryland, state laws cover mortgage brokers, professional finders who work with borrowers to help them qualify for mortgages. Such brokers must be licensed through the Nationwide Multistate Licensing System and Registry.
Maryland law allows mortgage brokers to charge a finder’s fee up to 8 percent of the amount of the loan, and allows brokers also to charge borrowers for appraisals, credit reports and other goods or services required to complete a loan application.
State law allows the fee to be paid out of the proceeds of the loan, but requires mortgage brokers to disclose their fees up front and have the borrower sign a written agreement to pay the fee.
The General Assembly amended the state law on finder’s fees for mortgage brokers in 2017 to provide that, effective Oct. 1, a mortgage broker obtaining a loan on the same property more than once within 24 months will be limited to charging no more than a total of 8 percent of the initial loan amount when combining the finder’s fee charged on that loan and any other finder’s fees collected during the 24-month period.
Maryland’s Finder’s Fee Act applies only to mortgage brokers, not to lenders, the Fourth Circuit Court of Appeals held in a 2014 decision.
Borrowers had challenged finder’s fees charged by Prosperity Mortgage Co. Because Prosperity was partly owned by Wells Fargo, the borrowers claimed that Prosperity was acting as a mortgage broker, bringing them together with Wells Fargo, which provided Prosperity with a line of credit to make mortgage loans.
The court’s decision meant that a mortgage lender could not be held liable under the state law for violating fee limits or other provisions of the act, if the lender was not acting as a mortgage broker.