Can Maryland discipline a secondary mortgage loan licensee for violating mortgage-broker conduct rules when the licensee makes a first-lien mortgage loan?

Plain-English summary

Maryland licenses mortgage bankers and brokers under one statute (Title 12, Subtitle 5 of the Financial Institutions Article), with detailed conduct rules, and licenses secondary mortgage lenders separately under the Secondary Mortgage Loan Law (SMLL), which expressly exempts SMLL licensees from Subtitle 5. The Commissioner of Consumer Credit asked whether that exemption meant an SMLL licensee could dodge Subtitle 5's rules entirely by making first-lien (first mortgage) loans instead of second-lien loans. The Attorney General concluded the Commissioner cannot directly enforce Subtitle 5 or its Code of Conduct against an SMLL licensee, since the statute's exemption is unqualified. But the opinion found the Commissioner likely has separate authority, under the SMLL's own broad rulemaking grant and its catch-all "unworthiness, bad faith, dishonesty" disciplinary ground, to adopt regulations requiring SMLL licensees to follow many of the same practices, closing what the opinion called a serious gap in the licensing scheme, though it said that rulemaking authority is not free from doubt and recommended the General Assembly fix the gap directly by statute.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Can Maryland's Commissioner of Consumer Credit punish a secondary mortgage lender under the mortgage broker rules if it also makes first mortgage loans?
Not directly, according to the opinion. It concluded that because SMLL licensees are expressly and unconditionally exempted from Subtitle 5 and its Code of Conduct, the Commissioner cannot enforce those specific provisions against an SMLL licensee, even for conduct in a first-lien mortgage transaction.

Is there any way to hold an SMLL licensee to similar standards on first mortgage loans?
Possibly, through separate rulemaking. The opinion found the Commissioner likely has authority under the SMLL's own broad rulemaking grant, combined with the SMLL's catch-all disciplinary ground for "unworthiness, bad faith, dishonesty," to adopt regulations requiring SMLL licensees to follow many of the same practices as mortgage brokers, though the opinion called this authority "not free from doubt."

Why didn't a prior Court of Appeals case about secondary mortgage loans settle this question?
The opinion distinguished that case (Schmidt v. Beneficial Finance) as dealing with a private borrower's suit over conflicting interest-rate ceilings, not a regulatory agency's power to enforce licensing requirements against entities exempt from the relevant statute, so it did not control the enforcement question here.

Did the opinion think the current law adequately covers this gap?
No. It described the current exemption structure as creating a "regulatory vacuum" and recommended that the Commissioner ask the General Assembly to eliminate the SMLL exemption from the mortgage-broker statute so that lenders would simply need the proper license for the type of lending they actually do.

Background and statutory framework

Maryland regulates mortgage bankers and brokers under FI Title 12, Subtitle 5, which requires a $50,000 bond and imposes a detailed regulatory "Code of Conduct" adopted by the Bank Commissioner. Subtitle 5 expressly exempts several categories of lenders from its coverage, including any licensee under the Secondary Mortgage Loan Law. Secondary mortgage lenders are instead licensed separately, under FI Title 12, Subtitle 3, by the Commissioner of Consumer Credit, who has power to discipline an SMLL licensee for fraud, dishonesty, statutory violations, or (under a catch-all provision) "otherwise demonstrat[ing] unworthiness, bad faith, dishonesty" in a way that shows the business is not conducted "honestly, fairly, equitably, and efficiently."

The problem arose because SMLL licensees are not limited to second-lien loans; they may also make first mortgage loans under separate credit-grantor statutes. Because Subtitle 5's exemption for SMLL licensees is broad and unqualified, unlike a narrower exemption elsewhere in the code that applies only to licensing (not to substantive conduct rules), the opinion concluded the General Assembly meant to exempt SMLL licensees from all of Subtitle 5, not just its licensing requirement. Applying the basic administrative-law principle that an agency can only act within its granted statutory authority, the opinion found the Commissioner therefore cannot use Subtitle 5 or its Code of Conduct as the direct legal basis for discipline against an SMLL licensee, even when that licensee's misconduct occurs in a first-lien mortgage transaction.

The opinion then considered whether Schmidt v. Beneficial Finance, an existing Court of Appeals decision about secondary mortgage loans, changed the analysis, and concluded it did not: Schmidt was a private borrower's suit turning on which of two conflicting interest-rate ceilings applied to a specific loan, not a case about a regulatory agency's power to enforce requirements against an entity statutorily exempt from them.

Turning to whether some other legal hook could reach the same conduct, the opinion found the SMLL's own broad grant of joint rulemaking authority to the Commissioner and the Bank Commissioner, paired with the SMLL's catch-all "unworthiness, bad faith, dishonesty" disciplinary ground (which is not limited to secondary-mortgage transactions specifically), likely lets the Commissioner adopt regulations spelling out that certain first-lien-transaction practices count as "unfair" conduct under that catch-all. The opinion drew an analogy to federal precedent upholding the FTC's authority to define "unfair" trade practices by rule under a similarly broad statutory mandate. Even so, the opinion called this reading of the Commissioner's authority "expansive" and flagged inconsistencies in the licensing scheme, like a lower bond requirement for SMLL licensees than for Subtitle 5 licensees despite SMLL licensees being able to do everything a Subtitle 5 licensee can and more, as reasons the courts might ultimately read the Commissioner's power more narrowly. For that reason, the opinion recommended that the Commissioner seek a straightforward legislative fix eliminating the SMLL exemption from Subtitle 5, rather than relying solely on the rulemaking route.

Citations and references

Statutes:

• FI §12-504(c)(3)(i)
• FI §12-507
• COMAR 09.03.05
• FI §12-502(a)(6)
• FI §12-303
• FI Title 12, Subtitle 3
• FI Title 12, Subtitle 5
• CL Title 12, Subtitle 1
• CL Title 12, Subtitle 4
• CL Title 12, Subtitles 9 and 10
• FI §12-302(g)
• FI §12-301(b)
• FI §12-316
• FI §12-316(4)
• FI §12-316(2)
• CL §12-404(b)
• FI Title 11, Subtitle 2
• §501(a) of the federal Depository Institutions and Monetary Decontrol Act of 1980
• 12 U.S.C. §1735f-7(a)
• 15 U.S.C. §45(a)(2)
• 15 U.S.C. §46(g)
• FI §12-306(c)
• FI §12-501(a)(5)
• FI §12-505(b)(1)
• Chapter 530, Laws of Maryland 1988
• 16 C.F.R. Part 444
• 16 C.F.R. Part 433

Cases:

• Sullivan v. Board of License Comm'rs, 293 Md. 113, 442 A.2d 558 (1981)
• Department of Natural Resources v. Linchester, 274 Md. 211, 222-23, 334 A.2d 514 (1975)
• Schmidt v. Beneficial Finance, 285 Md. 148, 400 A.2d 1124 (1979)
• National Petroleum Refiners Ass'n v. FTC, 482 F.2d 672 (D.C. Cir. 1973)
• American Financial Services Ass'n v. FTC, 767 F.2d 957, 971 (D.C. Cir. 1985)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1988/Volume73_1988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

SECONDARY MORTGAGE LOAN LAW

Mortgage Bankers/Mortgage Brokers—Applicability of Code of Conduct to Secondary Mortgage Loan Law Licensees—Scope of Commissioner's Rulemaking Authority.

February 9, 1988

The Honorable Alan T. Fell
Commissioner of Consumer Credit

You have requested our opinion on whether the Commissioner of Consumer Credit has the authority to apply the statutory and regulatory requirements governing mortgage brokers and mortgage bankers to a licensee under the Secondary Mortgage Loan Law ("SMLL"), when that licensee is engaged in making or brokering first lien mortgage loans. Mortgage bankers and brokers are subject to various requirements in Title 12, Subtitle 5 of the Financial Institutions Article ("FI" Article) and the Code of Conduct issued under Subtitle 5.1 Specifically, your questions are as follows:
1. May the Commissioner of Consumer Credit directly enforce Subtitle 5 and the Code of Conduct against an SMLL licensee, for an offense committed in connection with a first mortgage loan transaction?

2. May the Commissioner of Consumer Credit adopt regulations similar to the substantive provisions of Subtitle 5 and the Code of Conduct, applicable to SMLL licensees making first lien mortgage loans?
For the reasons stated below, we conclude as follows:
1. The Commissioner of Consumer Credit has no authority to enforce against an SMLL licensee provisions that govern Subtitle 5 licensees, even when the SMLL licensee makes a first lien mortgage loan.
2. The Commissioner of Consumer Credit may well have authority under the SMLL to require, by regulation, that SMLL licensees conform to many of the same requirements to which Subtitle 5 licensees are subject. However, the Commissioner's authority to do so is not free from doubt, and we recommend that the General Assembly consider a legislative change that would deal with the problem more surely.

                                      I
                 Regulation of Subtitle 5 Licensees

The Bank Commissioner has power to license and regulate mortgage bankers and mortgage brokers under FI Title 12, Subtitle 5. Some of the requirements applicable to Subtitle 5 licensees are set out in the statute, for example, a $50,000 bonding requirement. FI §12-504(c)(3)(i). Others are left to a regulatory "code of conduct," which the Bank Commissioner is expressly empowered to adopt. FI §12-507. The Code of Conduct, originally issued in 1980 and amended since then, prescribes detailed rules to which a Subtitle 5 licensee must adhere in dealing with prospective mortgage borrowers. COMAR 09.03.05. Subtitle 5 licensees are also subject to the restrictions set forth in Title 12, Subtitle 1 of the Commercial Law Article ("CL" Article).
Subtitle 5 applies to, among other things, first lien mortgage lending or brokering. However, certain entities are exempted from the provisions of Subtitle 5, including any SMLL licensee. See FI §12-502(a)(6).2

                                      II
                   Regulation of SMLL Licensees

Secondary mortgage lenders are licensed and regulated by the Commissioner of Consumer Credit under FI Title 12, Subtitle 3. Pursuant to FI §12-303, the Commissioner of Consumer Credit has adopted regulations, applicable to SMLL licensees, that provide for the preservation of certain records by the licensee, truth in lending disclosures to borrowers, and a formula for calculating interest rates for secondary mortgage loans. COMAR 09.03.02.
A "secondary mortgage loan" includes any loan secured by a lien on residential real property that is subordinate to one or more prior liens. FI §12-302(g). The SMLL licensing provisions apply to any person who makes more than three secondary mortgage loans in a calendar year.
SMLL licensees are subject to the credit provisions of the SMLL, codified at CL Title 12, Subtitle 4. However, they may also make mortgage loans, including first mortgage loans, under CL Title 12, Subtitles 9 and 10, known as the Maryland credit grantor statutes.
The Commissioner of Consumer Credit has broad regulatory authority over SMLL licensees:

  The Commissioner of Consumer Credit and the Bank Commissioner jointly may adopt rules and regulations to carry out the provisions of this subtitle.

FI §12-303.3
In addition, the Commissioner of Consumer Credit is authorized to suspend or revoke an SMLL license upon a finding that the licensee has:

     (1) Made any material misstatement in an application for a license;
     (2) In connection with any secondary mortgage loan transaction:
         (i) Committed any fraud;
         (ii) Engaged in any dishonest activities; or
         (iii) Misrepresented or failed to disclose any material facts to anyone entitled to that information;
  (3) Violated any provision of the Maryland Secondary Mortgage Loan Law or of any rule or regulation adopted under it; or
    (4) Otherwise demonstrated unworthiness, bad faith, dishonesty, or any other quality that indicates that the business of the licensee has not been or will not be conducted honestly, fairly, equitably, and efficiently.

FI §12-316.

                              III
                Enforcement of Subtitle 5
          Requirements Against SMLL Licensees

Administrative agencies derive all power to act from statutory authority granted by the General Assembly. A regulatory agency may not adopt or enforce regulations concerning subject matter that is outside the scope of that authority. See Sullivan v. Board of License Comm'rs, 293 Md. 113, 442 A.2d 558 (1981); Department of Natural Resources v. Linchester, 274 Md. 211, 222-23, 334 A.2d 514 (1975). This office has described as a "fundamental premise" that "the actions of an administrative agency must be consistent with the statute that grants it the authority to act." 70 Opinions of the Attorney General 135 (1985). See also, e.g., 71 Opinions of the Attorney General 136 (1986), 66 Opinions of the Attorney General 151 (1981), and 54 Opinions of the Attorney General 281 (1969) (all advising that agency actions were beyond the agency's statutory authority).
Your first question is whether the Commissioner may charge an SMLL licensee with a violation of Subtitle 5 or the regulatory Code of Conduct issued under it, in connection with a first lien mortgage transaction.
No statute provides that Subtitle 5 and regulations under it may serve as the basis for sanctions under the SMLL. To the contrary, the express, unqualified exemption in FI §12-502(a) indicates that these provisions do not apply to an SMLL licensee. In contrast, FI §12-302, which sets forth exemptions from the SMLL, exempts certain entities from the licensing provisions only.
Under the circumstances, we conclude that the General Assembly intended the exemptions in FI §12-502(a) to encompass all of the provisions of Subtitle 5. The Commissioner of Consumer Credit may not enforce laws or regulations that simply do not apply to SMLL licensees.
We do not believe that Schmidt v. Beneficial Finance, 285 Md. 148, 400 A.2d 1124 (1979), requires a different conclusion. In Schmidt, a borrower sought to avoid repayment of a secondary mortgage loan that he had received from Beneficial Finance. The suit was grounded upon the uncontested fact that Beneficial had charged an interest rate in excess of the maximum permitted under CL §12-404(b). At the time the loan was made, Beneficial was licensed by the Commissioner of Consumer Credit under the Consumer Loan Law, now codified at FI Title 11, Subtitle 2. Beneficial therefore was exempt from the licensing requirement for secondary mortgage lenders, who then were licensed and regulated by the Bank Commissioner.
The issue was whether Beneficial could make a loan secured by a second mortgage under the Consumer Loan Law's credit regulations as an alternative to the SMLL's credit regulations. At the time, a lender could charge a higher interest rate for loans under the Consumer Loan Law than under the SMLL. Beneficial's interest charge complied with the higher maximum permitted under the Consumer Loan Law.
The Court of Appeals held that any secondary mortgage loan was subject to the credit regulations for secondary mortgage lending, despite the fact that the more general Consumer Loan Law did not purport to limit loans made under that statute to those not secured by secondary mortgage liens. Thus, the Court held, Beneficial could not collect the loan. In so holding, the Court addressed an argument raised by Beneficial about the statutory exemption from the SMLL licensing provisions, which Beneficial enjoyed by virtue of its consumer loan license. Beneficial argued that the SMLL licensing exemption meant that it was also exempt from the credit provisions of the SMLL and any applicable rules adopted by the Bank Commissioner. The argument focused on the possibility that Beneficial might be subjected to regulations adopted by the Bank Commissioner when it was licensed and regulated by a different authority, the Commissioner of Consumer Credit: "Beneficial thinks that it is 'inconceivable that the legislature could have intended such a collision of regulatory authority without expressly providing a resolution for the conflict.' " 285 Md. at 159. The Court of Appeals summarily dismissed this argument: "If there be a conflict, the resolution is obvious, when a secondary mortgage loan is made, the Secondary Mortgage Loan Law and regulations promulgated thereunder prevail." Id.
Nevertheless, we do not read Schmidt to mean that the Commissioner of Consumer Credit may directly enforce Subtitle 5 or the Code of Conduct applicable to Subtitle 5 licensees.
First, the issue in Schmidt was the applicability of two facially conflicting statutory interest rate ceilings. Undoubtedly, the Commissioner of Consumer Credit may discipline an SMLL licensee for violating credit strictures set out in the Commercial Law Article and generally applicable to first lien mortgage transactions, in other words, to impose discipline for violating a law applicable to any lender.4 It does not follow from the Court's dictum that an SMLL licensee who makes a first mortgage loan is subject to all regulations issued under a statute from which the licensee is exempt.
Second, the Schmidt case was brought by a consumer borrower seeking a private remedy. It simply did not deal with a regulatory agency's power to enforce its requirements against those exempt from licensure under its statute.
For the reasons set forth earlier, we conclude that the Commissioner of Consumer Credit may not directly enforce the provisions of FI Title 12, Subtitle 5, or the Code of Conduct, which are applicable only to Subtitle 5 licensees, against SMLL licensees.

                                       IV
       Rulemaking to Define SMLL "Unfair" Practices

FI §12-303 provides the following grant of rulemaking authority: "The Commissioner of Consumer Credit and the Bank Commissioner jointly may adopt rules and regulations to carry out the provisions of this subtitle [the SMLL licensing provisions]." One such provision is FI §12-316(4), which authorizes the Commissioner of Consumer Credit to discipline an SMLL licensee if the licensee "[otherwise demonstrates unworthiness, bad faith, dishonesty, or any other quality that indicates that the business that the licensee has not been or will not be conducted honestly, fairly, equitably, and efficiently." (Emphasis added.) This basis for discipline, unlike FI §12-316(2), is not limited to secondary mortgage loan transactions. The introductory word "otherwise" indicates that the Commissioner has the power to discipline dishonest or unfair acts in any aspect of "the business of the licensee," including first mortgage transactions.

Thus, if an SMLL licensee commits fraud or exhibits bad faith in dealing with a first lien mortgage borrower, FI §12-316(4) permits the Commissioner of Consumer Credit to charge the offender and impose sanctions. To take another example, if a licensee were convicted of some crime involving moral turpitude, the Commissioner of Consumer Credit could apply sanctions under the theory that the licensee had demonstrated "dishonesty."
In our view, the Commissioner of Consumer Credit also has the power, under the grant of rulemaking authority in FI §12-303, to specify the business practices that constitute a violation of FI §12-316(4).5 The Commissioner's power to adopt rules that would define the conduct prohibited under FI §12-316(4) has not been tested or approved by the courts. However, analogous federal precedent supports the exercise of this rulemaking power.
The Federal Trade Commission has the power to "prevent persons, partnerships, or corporations ... from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce." 15 U.S.C. §45(a)(2). The FTC also has the power "to make rules and regulations for the purpose of carrying out the provisions of [the FTC Act]." 15 U.S.C. §46(g). Putting these two grants of authority together, the FTC adopted a rule in 1971 that the failure to post octane numbers on gasoline pumps at service stations would be an unfair method of competition. Those affected by the rule challenged the FTC's authority. In National Petroleum Refiners Ass'n v. FTC, 482 F.2d 672 (D.C. Cir. 1973), the court sustained the Commission's exercise of its rulemaking power. The court stressed the need to "interpret liberally broad grants of rule-making authority like the one we construe here ...." 482 F.2d at 680. See also 62 Opinions of the Attorney General 535 (1977) (rulemaking authority of Consumer Protection Division regarding "unfair" trade practices to be construed liberally).
Moreover, the FTC's construction of its mandate to prevent "unfair" practices provides a body of law to which the Commissioner might refer in considering rules to spell out the prohibition in FI §12-316(4). The FTC has articulated the following standard for identifying practices that are unfair to consumers:

   To justify a finding of unfairness the injury must satisfy three tests. It must be substantial; it must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and it must be an injury that consumers themselves could not reasonably have avoided.

American Financial Services Ass'n v. FTC, 767 F.2d 957, 971 (D.C. Cir. 1985). This methodology for weighing consumer injury led the FTC to conclude that the use by creditors of certain remedies amounted to an unfair practice.6
Hence, it is at least possible that the Commissioner of Consumer Credit might likewise find that many of the requirements of the Code of Conduct applicable to Subtitle 5 licensees must be adhered to by SMLL licensees as well, in order to avoid unfair practices in the conduct of their first mortgage transactions. If the Commissioner were to reach that conclusion after following required rulemaking procedures and weighing the record, the resulting rule would be a proper implementation of the Commissioner's authority under FI §12-303.
We acknowledge that our view of the Commissioner's rulemaking power is an expansive one. However, we think it reasonable to suppose that the General Assembly meant to grant the Commissioner the power to deal with what would otherwise be a serious loophole in its overall scheme of licensing.7 We do not lightly suppose that the General Assembly intended, when it exempted SMLL licensees from the requirements of Subtitle 5, that they be free to make first mortgage loans without regulation of their business practices. Indeed, taken to its logical extreme, this loophole would permit a person to obtain an SMLL license and thereby avoid the direct application of Subtitle 5 requirements, even if the SMLL licensee intended to make or broker first lien mortgage loans only.
We also recognize that our construction is not free from doubt. The licensing scheme is, in some respects, inescapably anomalous. By way of illustration, it would seem to us inconsistent for the statutes to require a $50,000 bond for a Subtitle 5 license but only a $10,000 bond for an SMLL license, when the latter entitles the holder to do everything a Subtitle 5 licensee can do, and more. However, the bonding requirements under the two statutes are just that. Further, it is beyond dispute that an SMLL licensee is not required to post any bond whatsoever covering first lien mortgage transactions. See FI §12-306(c). In short, an SMLL licensee might persuade a court that the exemption in FI §12-502(a)(6) creates precisely the regulatory vacuum that we seek to avoid, a vacuum that can only be dealt with by new legislation.
Indeed, our construction of the SMLL in any event is not as complete, effective, simple, or certain as legislative action to correct the problem. At a minimum, the uncertainties discussed in this opinion make it difficult to predict how the courts would address the issue.
A legislative response need not be a complex one. The elimination of the exemption for SMLL licensees from FI §12-502 would result in a requirement for lenders to obtain the proper license for the type of lending in which they engage. Moreover, the lines of regulatory and enforcement authority would be clarified without elaborate changes to the statutes or current regulations.8 Accordingly, we recommend that you consider requesting the enactment of legislation to eliminate the exemption that has created the problems reflected in your inquiry.9

                                      V
                                Conclusion

  In summary, it is our opinion that:
1. The Commissioner of Consumer Credit has no authority to enforce against an SMLL licensee provisions that govern Subtitle 5 licensees, even when the SMLL licensee makes a first lien mortgage loan.

2. The Commissioner of Consumer Credit may well have authority under the SMLL to require, by regulation, that SMLL licensees conform to many of the same requirements to which Subtitle 5 licensees are subject. However, the Commissioner's authority to do so is not free from doubt, and we recommend that the General Assembly consider a legislative change that would deal with the problem more surely.

        J. Joseph Curran, Jr., Attorney General
        J. Steven Lovejoy, Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice

Editor's Note: Under Chapter 530 (House Bill 1484) of the Laws of Maryland 1988, an SMLL licensee "who acts as a mortgage banker or mortgage broker shall be subject to the provisions of" Subtitle 5, with certain exceptions. See FI §12-505(b)(1).

1
To avoid endless repetition of the phrase "mortgage bankers and mortgage brokers," we shall refer to "Subtitle 5 licensees" in the rest of this opinion. Licensees under the Secondary Mortgage Loan Law will be termed "SMLL licensees."
2
Also exempt are: any bank, trust company or savings bank, savings and loan association, credit union, insurance company, and notably, any licensee under the Maryland Consumer Loan Law.
3
The reference to the Bank Commissioner reflects the fact that, at one time, some SMLL licensees were regulated by that office. Cf. FI §12-301(b). Since 1984, either through statutory amendments or administrative transfer, all SMLL licensees have been licensed and regulated by the Commissioner of Consumer Credit. Because the Bank Commissioner no longer licenses any SMLL licensees, in practice the Commissioner of Consumer Credit now alone determines whether to exercise this grant of rulemaking authority.
4
First lien mortgage loans are governed generally by CL Title 12, Subtitles 1 or 9 and 10. However, interest rate ceilings and related restrictions for most first lien mortgage loans have been preempted by §501(a) of the federal Depository Institutions and Monetary Decontrol Act of 1980. 12 U.S.C. §1735f-7(a).
5
See note 3 above.
6
The FTC Credit Practices Rule, 16 C.F.R. Part 444, prohibits or restricts confession of judgment clauses, waiver of exemptions, wage assignments, security interests in household goods, cosigner liability, and pyramiding of late charges. See also 16 C.F.R. Part 433 (consumer credit contracts to contain clause preventing application of holder in due course doctrine).
7
The legislative history does not contain any discussion pertinent to this issue.
8
Although other changes in the statute to address these problems might be devised, no other solution is as complete. For example, the General Assembly could change the language in FI §12-502(a) to exempt certain entities only from the licensing provisions of the subtitle. However, that would not address the circumstance that the bond required for secondary mortgage loan licensees does not cover first lien mortgage transactions. FI §12-306(c).
9
Virtually the same problems exist with respect to Consumer Loan Law licensees, which are also exempt from Subtitle 5. FI §12-501(a)(5).