In re: Scarlett B. Bowman, Misc. No. 26, September Term, 2025.
MORTGAGE LOANS – MARYLAND MORTGAGE LENDER LAW – LICENSING REQUIREMENTS – MORTGAGE LENDERS
The Appellate Court of Maryland’s decision in Estate of Brown v. Ward, 261 Md. App. 385 (2024) had no effect on the Maryland Mortgage Lender Law, Md. Code Ann., Fin. Inst. §§ 11-501 – 11-524. In Brown, the Appellate Court held that passive trusts may be “credit grantors” and subject to licensure under a different statutory scheme. That holding does not implicate whether the Maryland Mortgage Lender Law’s licensing requirements for “mortgage lenders” include passive trusts.
MORTGAGE LOANS – MARYLAND MORTGAGE LENDER LAW – LICENSING REQUIREMENTS – PASSIVE TRUSTS
The unambiguous text of the Maryland Mortgage Lender Law did not require passive trusts to obtain a mortgage lender license before the effective date of the Maryland Secondary Market Stability Act of 2025, 2025 Md. Laws, Ch. 119. United States Bankruptcy Court for the District of Maryland Case No. 25-12629-NVA Argued: March 6, 2026
IN THE SUPREME COURT
OF MARYLAND
Misc. No. 26
September Term, 2025
______________________________________
IN RE: SCARLETT B. BOWMAN
Fader, C.J., Watts, Booth, Biran, Gould, Eaves, Killough,
JJ. ______________________________________
Opinion by Fader, C.J. ______________________________________
Filed: June 23, 2026
Pursuant to the Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic.
2026.06.23 09:00:49 -04'00' Gregory Hilton, Clerk The General Assembly enacted the Maryland Secondary Market Stability Act of
2025, 2025 Md. Laws, Ch. 119, to “clarify” that passive trusts to which mortgage loans are
assigned are not required to obtain a license under the Maryland Mortgage Lender Law,
Md. Code Ann., Fin. Inst. §§ 11-501 – 11-524 (2020 Repl.; 2025 Supp.). The central
question before us is whether passive trusts—trusts that hold assets (in this case, mortgage
loans) but that do not actively manage the assets or take on any administrative duties related
to them—were required to obtain such a license before the effective date of the Secondary
Market Stability Act. Our answer is that they were not.
The origins of the present dispute lie in a legislative change that the General
Assembly made in response to an executive agency’s interpretation of the Appellate Court
of Maryland’s opinion in Estate of Brown v. Ward, 261 Md. App. 385 (2024). In Brown,
the Appellate Court held that passive trusts are required to obtain a mortgage lender license
under a different licensing scheme than the Mortgage Lender Law when they meet the
definition of a “credit grantor” under that separate scheme and hold debt secured by real
property. Id. at 427. The Maryland Office of Financial Regulation (the “Office”)
concluded that the reasoning of the Brown decision extended to all mortgage loans, not just
those governed by the licensing scheme at issue in that case. As a result, in early 2025, the
Office promulgated emergency regulations to provide for the licensure of all assignees of
mortgage loans, including passive trusts. In response to the Office’s interpretation of
Brown and concern about the effect on the mortgage industry, the General Assembly
promptly enacted the Secondary Market Stability Act, which expressly exempts passive
trusts from the licensing requirements of the Mortgage Lender Law. This case comes to us by way of certified questions from the United States
Bankruptcy Court for the District of Maryland. In that court, debtor Scarlett Bowman filed
for bankruptcy. Ms. Bowman listed as an asset a piece of residential real property that is
subject to a note and deed of trust held by a creditor passive trust called Towd Point
Mortgage Trust 2016-4, U.S. Bank National Association (“Towd”).1 Towd filed a proof
of claim asserting the right to collect interest and fees on the mortgage loan, in addition to
principal. In response, relying on Brown and the Office’s guidance, Ms. Bowman asserted
that Towd had forfeited the right to collect interest and fees because it was not properly
licensed under the Mortgage Lender Law. Towd did not dispute that it was unlicensed, but
argued that no license was required. Because Ms. Bowman’s claim and Towd’s objection
raise questions of first impression under Maryland law, the Bankruptcy Court certified two
questions of law to this Court:
1. Because the [Maryland Secondary Market Stability] Act purports to “clarify” the licensing exemption after Brown, does that mean the General Assembly successfully restored the licensing exemption for passive trusts as if Brown had not been decided?
2. Assuming the Act merely exempts passive trusts from the licensing requirement as of the date it was enacted, are passive trusts precluded from collecting interest and fees for the period prior to the Act’s enactment given that no procedure exists for passive trusts to now obtain a license?
Section 12-604 of the Courts and Judicial Proceedings Article (2020 Repl.; 2025
Supp.) permits this Court to reformulate certified questions. Because we believe that it is
1 In this Court, Towd is designated as the appellant, and Ms. Bowman the appellee. 2 first necessary to address the predicate question of whether the Mortgage Lender Law
required passive trusts to be licensed before the Secondary Market Stability Act became
effective, we reformulate the certified questions as:
1. Did the Maryland Mortgage Lender Law require passive trusts to be licensed before the enactment of the Maryland Secondary Market Stability Act of 2025?
2. If so, did the provision of the Maryland Mortgage Lender Law exempting passive trusts from the licensure requirement, which was added by the Maryland Secondary Market Stability Act to “clarify” the licensing exemption after Brown, successfully restore the licensing exemption for passive trusts as if Brown had not been decided?
3. Assuming the Act merely exempts passive trusts from the licensing requirement as of the date it was enacted, are unlicensed passive trusts precluded from collecting interest and fees for the period prior to the Act’s enactment?
In response to the first question, we hold that the Mortgage Lender Law did not
require passive trusts to obtain licensure before the enactment of the Secondary Market
Stability Act. Brown did not hold otherwise. Accordingly, we answer the first question
“no,” and therefore do not need to reach the other questions. Because Brown did not alter
the Mortgage Lender Law’s licensure requirement, there was no exemption to be restored
to that statute by the Secondary Market Stability Act.
BACKGROUND A. Legal Background
Our resolution of the legal question before us requires some understanding of three
different Maryland laws regulating lenders: (1) the Maryland Mortgage Lender Law, Fin.
Inst. §§ 11-501 – 11-524; (2) the Credit Grantor Revolving Credit Provisions, or OPEC,
3 which, when expressly invoked, governs open-end credit agreements, Md. Code Ann.,
Com. Law §§ 12-901 – 12-926 (2013 Repl.; 2025 Supp.); and (3) the Credit Grantor Closed
End Credit Provisions, or CLEC, which, when expressly invoked, governs closed-end
credit agreements, id. §§ 12-1001 – 12-1030.
1. The Maryland Mortgage Lender Law
The Maryland Mortgage Lender Law, located at Subtitle 5 of Title 11 of the
Financial Institutions Article, “requires that a person obtain a license . . . to act as a
mortgage lender.” Thompkins v. Mountaineer Invs., LLC, 439 Md. 118, 124 n.3 (2014).
Under that Law, “[a] person may not act as a mortgage lender . . . unless the person is:
(1) A licensee; or (2) A person exempted from licensing under” the Law. Fin. Inst.
§ 11-504. The Mortgage Lender Law defines “mortgage lender” as “any person who: (i) Is
a mortgage broker; (ii) Makes a mortgage loan to any person; or (iii) Is a mortgage
servicer.” Id. § 11-501(k)(1). Licensees are persons “licensed under” the Law “to engage
in business as a mortgage lender.” Id. § 11-501(g).
To obtain a license, an applicant must demonstrate to the Commissioner of Financial
Regulation “good moral character” and “financial responsibility, business experience, and
general fitness” according to standards set forth in the statute and in regulations. Id.
§ 11-506(a); see also id. §§ 11-503 (authorizing the Commissioner to “adopt rules and
regulations to carry out the provisions of this subtitle[]”); 11-506(b) (requiring three years
of experience in the mortgage lending business); 11-508 (requiring applicants to file a
surety bond with the Commissioner); 11-508.1 (establishing lender net worth
4 requirements). We refer to licenses issued under the Mortgage Lender Law as Mortgage
Lender Licenses.
The Mortgage Lender Law provides that “[a]ny unlicensed person who is not
exempt from licensing” under the Law “who makes or assists a borrower in obtaining a
mortgage loan in violation of this subtitle may collect only the principal amount of the loan
and may not collect any interest, costs, finder’s fees, broker fees, or other charges with
respect to the loan.” Id. § 11-523(b).
The Mortgage Lender Law expressly exempts several categories of entities,
including banks, insurance companies, corporate instrumentalities of the United States
government, and real estate brokers. See id. § 11-502(b). As we will discuss further below,
following the enactment of the Maryland Secondary Mortgage Stability Act of 2025, the
Mortgage Lender Law now expressly exempts passive trusts. Id. § 11-502(b)(13).
2. OPEC and CLEC
OPEC and CLEC are related statutes, located at Subtitles 9 and 10, respectively, of
Title 12 of the Commercial Law Article. OPEC governs certain open-end credit
agreements, in which a borrower is authorized to borrow money as needed so long as the
amount owed does not exceed a specified limit. Patton v. Wells Fargo Fin. Md., Inc., 437
Md. 83, 88 (2014). CLEC governs certain closed-end credit agreements, in which the
borrower immediately receives loan proceeds and repays the principal, along with interest
and other charges, over time, usually in periodic installments, by a date certain. Id.
5 OPEC and CLEC apply to “credit grantors” who extend credit under those statutes.
See Com. Law §§ 12-902; 12-1002. A credit grantor includes any “legal or commercial
entity” that provides “a loan or other extension of credit” and is subject to state and federal
regulatory requirements. Id. §§ 12-901(f)(1); 12-1001(g)(1). Under both statutes, the term
credit grantor expressly includes assignees of a covered loan, or in the statutes’ words,
“[a]ny person who acquires or obtains the assignment of” a credit agreement under the
statutes. Id. §§ 12-901(f)(2)(iii); 12-1001(g)(2)(iii).
OPEC and CLEC apply to loans only if the credit grantor expressly makes a “written
election” for one of them to apply in the loan documents.2 Id. §§ 12-913.1; 12-1013.1.
OPEC and CLEC “do not apply” if the parties “fail[] to elect” them expressly. Id.
§§ 12-913.1(b)(2); 12-1013.1(b)(2). If a credit grantor elects to use either OPEC or CLEC,
then that statute applies to the exclusion of the other and several other credit regulatory
schemes.3 Id. §§ 12-913.1(b)(1); 12-1013.1(b)(1).
2 OPEC, but not CLEC, applies without a written election only if the loan “[i]s a shared appreciation agreement[]” and “[a]llows the borrower to repay advances and have any repaid amounts subsequently readvanced to the borrower.” Com. Law § 12-913.1(c). 3 If OPEC or CLEC are elected, “the provisions of Subtitle 1, 3, 4, 5, [or] 6 . . . of this title do not apply to the plan.” Com. Law §§ 12-913.1(b)(1); 12-1013.1(b)(1). Subtitle 1 is the Maryland Usury Law, Nationstar Mortgage LLC v. Kemp, 476 Md. 149, 158 (2021), which governs interest rates for consumer loans, see Com. Law §§ 12-101 – 12-128. Subtitle 3 consists of the Credit Provisions of the Maryland Consumer Loan Law. See id. §§ 12-301 – 12-319. Subtitle 4 contains the Maryland Secondary Mortgage Loan Law. See id. §§ 12-401 – 12-415. Subtitle 5 governs retail credit account agreements. See id. §§ 12-501 – 12-515. And Subtitle 6 regulates retail installment loan agreements. See id. §§ 12-601 – 12-636. 6 Where they are expressly invoked, OPEC and CLEC provide protections to
consumer borrowers both at the time a loan is made and throughout the life of the loan,
establish requirements for creditors, and create remedies for borrowers if a creditor fails to
comply with the statutory requirements. See Lyles v. Santander Consumer USA Inc., 478
Md. 588, 594 (2022) (discussing CLEC). The statutes permit a credit grantor to extend
credit under an open-end or closed-end credit agreement while limiting the interest rate and
fees the credit grantor may charge. Com. Law §§ 12-902 – 12-903; 12-1002 – 12-1003.
OPEC and CLEC each share two licensing requirements. The first, which applies
to any credit grantor who makes a loan or extension of credit under OPEC or CLEC,
requires compliance with “the licensing, investigatory, enforcement and penalty provisions
of Title 11, Subtitle 3 of the Financial Institutions Article unless the credit grantor or the
loan or extension of credit is exempt under” that Subtitle. Com. Law §§ 12-915(a);
12-1015(a). The license required under Subtitle 3 of Title 11 is “a license issued . . . under
this subtitle to make installment loans,” Fin. Inst. § 11-301(c), which include all loans made
under OPEC and CLEC, id. § 11-301(b); see id. §§ 11-206 (explaining how to apply for an
installment loan license); 11-303 (precluding any unlicensed person from engaging “in the
business of making installment loans[]”).
The second licensing requirement applies to a credit grantor who makes a loan or
extension of credit under OPEC or CLEC that is “secured by any lien on residential real
property[.]” Com. Law §§ 12-915(b); 12-1015(b). Such credit grantors must follow the
“licensing, investigatory, enforcement and penalty provisions” of the Mortgage Lender
7 Law, unless an exemption to that law applies to the credit grantor. Id. §§ 12-915(b);
12-1015(b). In other words, such credit grantors must obtain a Mortgage Lender License.
If a “credit grantor violates any provision of” OPEC or CLEC, and no exemptions
apply, the credit grantor may “collect only the principal amount” of the loan or credit
extended. Com. Law §§ 12-918(a)(2); 12-1018(a)(2). Such a credit grantor “may not
collect any interest, costs, fees, or other charges with respect to” the loan or extension of
credit. Id.
3. Estate of Brown v. Ward
The questions certified by the Bankruptcy Court require us to consider the Appellate
Court’s decision in Estate of Brown v. Ward, 261 Md. App. 385 (2024), the Office’s
interpretation of that decision, and the General Assembly’s response. We will review each
in some detail.
In Brown, Mr. Brown signed a home equity line of credit agreement secured by a
deed of trust that permitted the lender to foreclose on his real property if he defaulted on
the loan. Id. at 397-98. He later defaulted, was sued by the lender, declared bankruptcy,
and passed away. Id. at 399-400. Years after Mr. Brown’s death, a trust called FirstKey
Master Funding, 2021-A Collateral Trust, U.S. Bank Trust National Association as
Collateral Trust Trustee (“FirstKey”) sent a notice of intent to foreclose on the property to
Mr. Brown’s estate, describing itself as the “secured party” in the deed of trust. Id. at
400-01.
8 After foreclosure proceedings began, Mr. Brown’s estate alleged that FirstKey did
not have the right to foreclose. Id. at 403. As pertinent here, the estate argued that FirstKey
failed to obtain the requisite license under OPEC. Id. at 411. FirstKey conceded that it
was unlicensed but argued that, as an assignee and a foreign statutory trust, no license was
required. Id.
The Appellate Court agreed with the estate, concluding that OPEC required
licensure of assignees and passive trusts like FirstKey. Id. at 420. In reaching its decision,
the Appellate Court relied on this Court’s opinion in Nationstar Mortgage LLC v. Kemp,
476 Md. 149 (2021). There, we addressed whether a provision of the Maryland Usury Law
prohibiting a “lender” from charging certain property inspection fees applied to an assignee
of a home mortgage loan. Kemp, 476 Md. at 168, 172; see Com. Law § 12-121(b)
(forbidding “lenders” from imposing “a lender’s inspection fee”). Notably, the definition
of “lender” under the Usury Law—“a person who makes a loan under this subtitle”—did
not specify whether it applied to an assignee. Kemp, 476 Md. at 172-73 (quoting Com.
Law § 12-101(f)).
In Kemp, we concluded that the statutory definition of “lender” was “at best unclear”
concerning its application to assignees. 476 Md. at 174. We reasoned that the Usury Law
used the term “lender” in many provisions that apply over the lifetime of the loan,
suggesting that it could apply to both the originator of the loan and assignees who held the
loan over time. Id.; see Com. Law §§ 12-105(d) (prohibiting a “lender” from collecting
fees on prepaid mortgages); 12-106(c) (requiring a “lender” to provide annual payment
9 statements that contain the principal amount due); 12-109.1(e) (outlining how a “lender”
or “servicer” determines if a borrower must increase escrow payments for a first mortgage
or deed of trust); 12-115 (explaining how a “lender” may repossess goods that secured the
loan); 12-126(c) (requiring a “lender” to refund the borrower for any unearned
precomputed interest if the borrower prepays the loan). We resolved the ambiguity by
looking to common law principles of assignment. Kemp, 476 Md. at 155-58. We explained
that, under the common law, an assignee “generally has the same rights and responsibilities
as its assignor—no more, no less.” Id. at 156. Because the statute expressed no intention
to alter common law, id. at 177-78, and holding otherwise would weaken protections for
borrowers by subjecting them to additional fees proscribed by the statute, id. at 186-87, we
concluded that the definition of “lender” under the Maryland Usury Law includes
assignees, id. at 187.
Returning to Brown, the Appellate Court held that FirstKey was required to obtain
a Mortgage Lender License under OPEC. 261 Md. App. at 428-29. As noted above, OPEC
requires a lender to obtain a Mortgage Lender License if the lender meets the definition of
a credit grantor and the loan is secured by a lien on residential real property, “unless the
credit grantor or the loan or extension of credit is exempt” under the Mortgage Lender Law.
Com. Law § 12-915(b). FirstKey acknowledged that it met the statutory definition of a
credit grantor under OPEC. Brown, 261 Md. App. at 418-19. FirstKey noted, however,
that OPEC imposes the licensure requirement only on “a credit grantor making a loan or
extension of credit under this subtitle[,]” and it had not made a loan or an extension of
10 credit to Mr. Brown; rather, it had been assigned the loan. Id. at 419 (quoting Com. Law
§ 12-915(b)). Similarly, FirstKey argued that passive trusts are not required to be licensed
because they merely hold mortgages that were extended by others, and do not make loans
or extend credit themselves. Brown, 261 Md. App. at 419.
The Appellate Court rejected both arguments. The court observed that FirstKey
conceded that it met the definition of a credit grantor under OPEC. Id. at 418-19. And
because OPEC expressly defines “credit grantor” to include assignees, FirstKey’s status as
an assignee was no defense. Id. at 418-22. FirstKey’s status as a passive trust also provided
no defense because the Mortgage Lender Law did not contain an exemption for passive
trusts. Id. at 424-25. Moreover, like the Usury Law construed in Kemp, OPEC’s provisions
govern the lifetime of the loan, not just the origination. Id. at 421. To the Appellate Court,
excusing assignees or passive trusts from statutory requirements designed to protect
borrowers would create significant loopholes in OPEC’s ability to protect consumers. Id.
at 422.
Notably, the Appellate Court expressly disclaimed any opinion concerning whether
FirstKey would have been independently required to obtain a Mortgage Lender License
under the Mortgage Lender Law, which applies to “mortgage lenders,” rather than “credit
grantors.” Id. at 423-24. In its brief, FirstKey had argued that the Mortgage Lender Law
did not require it to be licensed because it was not a “mortgage lender” as defined in that
law, and because “the licensing requirements of the Maryland Mortgage Lender Law ‘do
not apply’ to any ‘foreign statutory trust.’” Id. at 424. The Appellate Court found that
11 argument to be irrelevant because the issue before it was not whether FirstKey was required
to be licensed under the Mortgage Lender Law, but whether it was required to be licensed
under OPEC. Id. Thus, “[t]he conclusion that a trust merely owning a defaulted mortgage
loan is not a ‘mortgage lender’ within the meaning of [the Mortgage Lender Law] does not
answer the question of whether a trust might be subject to the licensing requirements
imposed on a ‘credit grantor’ by [OPEC].”4 Id. at 425.
4. The Office’s Guidance and the Maryland Secondary Market Stability Act of 2025
Although Brown applied only to OPEC, and expressly disavowed any direct
application to the Mortgage Lender Law, the Office of Financial Regulation interpreted the
reasoning in Brown to apply to all mortgage loans. Accordingly, soon after the Appellate
Court decided Brown, the Office issued “formal guidance to clarify the applicability of
licensing requirements under Maryland law for persons engaged in mortgage lending,
4 The Appellate Court observed that even if it were to consider whether there was an independent obligation to be licensed under the Mortgage Lender Law, it did not find persuasive a line of federal cases on which FirstKey relied. Brown, 261 Md. App. at 424-25; see Suazo v. U.S. Bank Trust, NA, No. RDB-18-1451, 2019 WL 4673450, at *7-8 (D. Md. Sep. 25, 2019) (unreported). The court reasoned that although those cases held that foreign trusts are not “mortgage lenders” under the Mortgage Lender Law, they did not discuss OPEC. Brown, 261 Md. App. at 425. The court also pointed out that we found Suazo and the cases relying on it unpersuasive in our analysis of the Maryland Usury Law in Kemp. Brown, 261 Md. App. at 425-26; see Kemp, 476 Md. at 186 n.48 (“The court in Suazo and the related cases did not consider the Maryland common law concerning assignment of mortgages, the structure of the Maryland Usury Law, the fact that the addition of [Com. Law] § 12-101(f) was part of a non-substantive code revision of that law, or the consequence that its interpretation would exempt an assignee of a loan from most of the Usury Law. . . . Accordingly, we do not find Suazo or the cases that repeated its analysis to be persuasive.”). 12 including mortgage trusts and their assignees.” Md. Comm’r of Fin. Reg., Guidance on
Licensing Requirements for Mortgage Trusts and Notice of Emergency Regulations 1 (Jan.
10, 2025). The Office “promulgated emergency regulations” so that “mortgage trusts can
obtain appropriate licensure and satisfy statutory requirements without undue burden.” Id.
The emergency regulations “enabled mortgage trust licensing” by outlining the procedures
a passive trust should follow to obtain licensure, as the Office had not previously licensed
passive trusts.5 Id. at 3 (citation modified).
One month later, the Office alerted that “industry stakeholders have expressed
concerns that the licensing requirements create unique challenges for passive trusts and the
role they serve by providing liquidity to the mortgage market. Some industry members
have responded by suspending mortgage operations in Maryland, with others indicating
they may follow.” Md. Comm’r of Fin. Reg., Maryland Secondary Market Stability Act of
2025 and Extension of Enforcement Deadline 1 (Feb. 18, 2025). To address those
concerns, the Office explained, it had “collaborated with industry representatives to
develop proposed legislation, the Maryland Secondary Market Stability Act of 2025[.]” Id.
(emphasis omitted). The Office elaborated that the legislation “is designed to provide a
licensing exemption” for assignees, including passive trusts. Id.
5 Among other things, the regulations permitted passive trusts to designate a trustee to serve as the “qualifying individual” to obtain licensure. See 52:1 Md. Reg. 28-29 (Jan. 10, 2025) (proposed regulations); id. at 17 (granting emergency status to those regulations). 13 The primary sponsor of the Secondary Market Stability Act in the Maryland Senate,
Senator Pamela Beidle, argued that the Act “will help restore stability to the mortgage
market[.]” Testimony of Sen. Pamela Beidle, S.B. 1026, 447th Gen. Assemb., Reg. Sess.
at 1 (Mar. 11, 2025). Echoing the Office’s interpretation of Brown, Senator Beidle testified
that adoption of the Act would return the market “to the position in which it existed prior
to the Brown decision[]” by exempting passive trusts “from licensure[.]” Id.
The Office made similar points in its written testimony. See Testimony of Off. of
Fin. Reg., S.B. 1026, 447th Gen. Assemb., Reg. Sess. (Mar. 11, 2025). It contended that
Brown represented “a significant shift” in licensing requirements by requiring the licensure
of “passive trusts that hold mortgage loans[.]” Id. at 1. The Office expressed concerns
about both (1) the ongoing disruption of “mortgage and other consumer lending” in
Maryland, and (2) the unprecedented burden that would be placed on the Office to “oversee
the licensing and examination of thousands of passive trusts[.]” Id.
The General Assembly adopted the Secondary Market Stability Act as emergency
legislation, 2025 Md. Laws, Ch. 119 § 4, effective upon signature by the Governor, see
Himmighoefer v. Medallion Inds., Inc., 302 Md. 270, 275 (1985). The Act made three
pertinent changes relevant to a “passive trust,” which it defined as a trust that:
“(1) Acquires or is assigned mortgage loans in whole or in part; (2) Does not make
mortgage loans; (3) Is not a mortgage broker or a mortgage servicer; and (4) Is not engaged
in the servicing of mortgage loans, which does not include the act of transmitting or
14 directing payments received by a mortgage servicer.” 2025 Md. Laws, Ch. 119 § 1,
codified at Fin. Inst. § 11-501(p).
First, the Secondary Market Stability Act added “a passive trust” to the list of
entities exempt from the Mortgage Lender Law. 2025 Md. Laws, Ch. 119 § 1, codified at
Fin. Inst. § 11-502(b)(13). Second, it proclaimed that OPEC’s licensing requirement
applicable to credit grantors who make installment loans does not apply to passive trusts.
See 2025 Md. Laws, Ch. 119 § 1, codified at Fin. Inst. § 11-302(b)(8) (providing that
licensing requirement does not apply to entities exempt by Financial Institutions
§ 11-502(b)(13), which identifies passive trusts). Third, the Act added a new provision
stating that, apart from one exception, the entirety of Title 11 of the Financial Institutions
Article does not apply to “a person that acquires or is assigned” the following:
• “A mortgage, if the person does not otherwise make mortgages;”
• “A mortgage loan . . . if the person does not otherwise engage in the mortgage lending business[]”; or
• “An installment loan, if the person” relies on another to “service or collect” the loan and “[d]oes not otherwise make installment loans.”
2025 Md. Laws, Ch. 119 § 1, codified at Fin. Inst. § 11-102(b). The one exception
identified in § 11-102(b) is for § 11-219, a provision in the Maryland Consumer Loan Law
that states that “[a] licensee may not sell a loan account to any person who is not licensed
under this subtitle[]” and provides that a loan acquired by an unlicensed person “is not
enforceable.” Fin. Inst. § 11-219.
15 The Act also contains an uncodified § 3, which states that “the intent of Section 1
of this Act is to clarify existing exemptions under State law.” 2025 Md. Laws, Ch. 119
§ 3.
B. Factual Background
When answering a certified question, we “accept[] the facts provided by
the certifying court.” United Bank v. Buckingham, 472 Md. 407, 413 (2021). Those facts
are:
Scarlett Bowman owns a piece of residential property in Mount Airy, Maryland. In 2006, [Ms. Bowman] obtained a home mortgage loan evidenced by a note and deed of trust. On May 5, 2021, the Loan was assigned to Towd Point Mortgage Trust 2016-4, U.S. Bank National Association as Indenture Trustee. Towd filed a proof of claim in this bankruptcy case which claims, inter alia, interest and fees due under the Loan. Over the life of the Loan, Towd has applied payments toward interest, fees, and other charges in addition to principal.
[Ms. Bowman’s] objection challenges Towd’s authority to apply loan payments it collected to interest, fees, and other charges because Towd is not licensed under the Maryland Mortgage Lender Law, Md. Code Ann., Fin. Inst. §§ 11-501 – 11-524. It is not disputed that Towd did not obtain a license, but the parties disagree that a license was required.
(Citations and defined terms omitted).
DISCUSSION This Court may answer questions certified to it pursuant to the Maryland Uniform
Certification of Questions of Law Act. See Cts. & Jud. Proc. §§ 12-601 – 12-613. “The
court certifying a question of law to the Supreme Court of Maryland . . . shall issue a
certification order and forward it to” this Court. Id. § 12-605(a); see Md. Rule 8-305
(explaining how another court certifies questions to this Court). We “may answer a
16 question of law certified . . . by a court of the United States . . . if the answer may be
determinative of an issue in pending litigation in the certifying court and there is no
controlling appellate decision, constitutional provision, or statute of this State.” Cts. &
Jud. Proc. § 12-603.
In its certification order, the Bankruptcy Court stated that, “[a]t bottom of this
dispute is whether Towd was required to be licensed” under the Mortgage Lender Law
“before the [Secondary Market Stability] Act was signed into law.” We agree, and believe
that it is necessary to address that predicate question first.
I. THE LAW RELEVANT TO THE CERTIFIED QUESTIONS IS THE MARYLAND MORTGAGE LENDER LAW, WHICH BROWN DID NOT INTERPRET OR APPLY.
At the outset, it is important to clarify two points. First, as this case is presented
here, the Mortgage Lender Law is the law applicable to the certified questions. The basis
of Ms. Bowman’s objection to Towd’s claim is that Towd was not licensed under the
Mortgage Lender Law. And although the certification order mentions the possible
applicability of CLEC, the loan documentation provided to this Court does not contain a
“written election” of CLEC, and nothing else in the record before us suggests that CLEC
might be applicable. Com. Law § 12-1013.1(a)(2); see Patton v. Wells Fargo Fin. Md.,
437 Md. 83, 89 (2014) (“If the lender elects CLEC, it is to do so by written election in the
loan contract.”).
Ms. Bowman nonetheless asks us to go beyond the application of the Mortgage
Lender Law and opine on the effect of the Secondary Market Stability Act with respect to
17 both CLEC and OPEC. However, it does not appear that an opinion concerning CLEC or
OPEC “may be determinative of an issue in pending litigation in the certifying court[.]”
Cts. & Jud. Proc. § 12-603. Any such opinion would, therefore, exceed the authority
provided by the Uniform Certification of Questions of Law Act. Moreover, any such
opinion would constitute a “purely advisory opinion[]” on a question that does not appear
to be presented on these facts, which is “a long forbidden practice in this State.” Pizza di
Joey, LLC v. Mayor & City Council of Baltimore, 470 Md. 308, 340 (2020) (quoting
Hickory Point P’ship v. Anne Arundel County, 316 Md. 118, 129-30 (1989)). Accordingly,
our analysis is limited to the Mortgage Lender Law. The resolution of any open questions
about licensure requirements under OPEC or CLEC before or after the effective date of the
Secondary Market Stability Act will need to await a case presenting those questions.
Second, the Appellate Court’s decision in Brown did not purport to interpret or
apply the Mortgage Lender Law, nor did its holding have any necessary implications for
the interpretation of the Mortgage Lender Law. As discussed above, Brown turned on
OPEC’s requirement that credit grantors who make covered loans that are “secured by any
lien on residential real property” obtain a Mortgage Lender License, unless specifically
exempted from licensure under the Mortgage Lender Law. The Mortgage Lender Law is
fundamentally different than OPEC and it applies not to credit grantors, but to mortgage
lenders, as separately defined in that Law. The Appellate Court’s decision in Brown does
not analyze the Mortgage Lender Law or whether an assignee or passive trust can be a
mortgage lender under it.
18 To be sure, the OPEC licensing requirement for credit grantors who make loans
secured by real property intersects with the Mortgage Lender Law’s licensing requirement
in two ways. First, whether the requirement to obtain a license arises under OPEC or the
Mortgage Lender Law, the license itself is the same. Rather than create a new licensure
scheme, OPEC borrowed that of the Mortgage Lender Law. Com. Law § 12-915(b).
Second, OPEC also adopts by reference the express exemptions contained within the
Mortgage Lender Law. Id. But neither of those provisions collapses the distinctions
between the two requirements to obtain Mortgage Lender Licenses. The OPEC
requirement arises under that statutory scheme and turns on whether the entity at issue is a
credit grantor under OPEC. The Mortgage Lender Law requirement arises under its
different statutory scheme and turns on whether the entity at issue is a mortgage lender
under that Law. As we will discuss, those schemes and terms are not equivalent.
In sum, answering the certified questions requires us to determine whether passive
trusts are required to be licensed under the Maryland Mortgage Lender Law and only that
Law. The Appellate Court’s decision in Brown did not address or answer that question,
either directly or necessarily.
II. THE MORTGAGE LENDER LAW DID NOT REQUIRE PASSIVE TRUSTS TO OBTAIN A LICENSE BEFORE THE ENACTMENT OF THE SECONDARY MARKET STABILITY ACT.
Addressing a question of first impression, we must determine whether the Mortgage
Lender Law required licensure of a passive trust before the passage of the Secondary
19 Market Stability Act. If it did, the question then becomes whether the Secondary Market
Stability Act applied retroactively.
To interpret the Mortgage Lender Law, we employ our traditional tools of statutory
construction. “The goal of statutory construction is to discern and carry out the intent of
the Legislature.” Engage Armament LLC v. Montgomery County, 494 Md. 1, 35 (2026)
(quoting Westminster Mgmt., LLC v. Smith, 486 Md. 616, 644 (2024)). We begin with the
text, which we view wholistically and in its full context, employing available tools for
textual analysis. Id. “Presuming the General Assembly intends its enactments to operate
together as a consistent and harmonious body of law, we also seek to reconcile and
harmonize the parts of a statute, to the extent possible consistent with the statute’s object
and scope.” Id. (quoting Westminster Mgmt., 486 Md. at 644-45). If a statute is ambiguous
either inherently or in context, we search for legislative intent in other indicia, including
“the derivation of the statute, comments and explanations regarding it by authoritative
sources during the legislative process, and amendments proposed or added to it.” Id. at 36
(quoting Westminster Mgmt., 486 Md. at 645). “[I]n every case, the statute must be given
a reasonable interpretation, not one that is absurd, illogical, or incompatible with common
sense.” Id. (quoting Westminster Mgmt., 486 Md. at 646).
As relevant here, we find the plain language of the Mortgage Lender Law to be
unambiguous. It does not require licensure of passive trusts. The Law’s provisions
requiring licensure apply to “mortgage lenders,” defined to include any person who makes
a mortgage loan or is a mortgage broker or servicer. See Fin. Inst. §§ 11-501(k)(1)
20 (defining “mortgage lender”); 11-504 (prohibiting a person from acting as a mortgage
lender unless licensed or “exempted from licensing under this subtitle”). A passive trust,
as the term implies and as it is now defined in statute, does none of those things. The
General Assembly added a definition of “Passive trust” to the Mortgage Lender Law
through the Secondary Market Stability Act of 2025, defining it as a trust that:
(1) Acquires or is assigned mortgage loans in whole or in part;
(2) Does not make mortgage loans;
(3) Is not a mortgage broker or a mortgage servicer; and
(4) Is not engaged in the servicing of mortgage loans, which does not include the act of transmitting or directing payments received by a mortgage servicer.
Id. § 11-501(p). The General Assembly thus defines “passive trust” as an entity that holds
a mortgage loan but does none of the only three things that would make it a mortgage
lender. And unlike OPEC, which expressly includes assignees of a loan within the
definition of credit grantor, Com. Law § 12-901(f)(2)(iii), the Mortgage Lender Law does
not include assignees within the definition of a mortgage lender, Fin. Inst. § 11-501(k)(1).
Moreover, unlike OPEC, which includes provisions regulating the full lifecycle of
a loan, see Com. Law §§ 12-902 – 12-903, the Mortgage Lender Law does not, see, e.g.,
Fin. Inst. § 11-504 (regulating who can act as a mortgage lender); id. § 11-506 (outlining
qualifications to obtain a Mortgage Lender License). There is thus no disconnect between
the plain language of the licensure requirement and the General Assembly’s intent to
protect consumers. The penalty provisions of those statutory schemes also reflect that
fundamental difference between them. Both penalty provisions forbid the collection of 21 interest, costs, and fees for violations. However, the penalty provision of OPEC applies
when a “credit grantor violates any provision of this subtitle[,]” presumably including the
requirement to be licensed. Com. Law § 12-918(a)(2) (emphasis added). By contrast, the
penalty provision of the Mortgage Lender Law applies only to an “unlicensed person who
is not exempt from licensing . . . who makes or assists a borrower in obtaining a mortgage
loan in violation of this subtitle[.]” Fin. Inst. § 11-523(b).
In sum, the plain language of the Mortgage Lender Law requires a license only for
persons who engage in the activity of being a mortgage broker, making a mortgage loan,
or being a mortgage servicer. Fin. Inst. § 11-501(k)(1). That plain language does not
extend to an entity that merely holds a mortgage loan. And unlike the Usury Law analyzed
in Kemp or OPEC, no other provision of the Mortgage Lender Law’s statutory scheme
renders that language ambiguous. Based on its plain language, the Mortgage Lender Law
therefore does not, and before adoption of the Secondary Market Stability Act did not,
apply to assignees of mortgage loans that are passive trusts.
The subsequent statutory history of the Mortgage Lender Law also supports our
plain language interpretation. See Roman Cath. Archbishop of Washington v. Doe, 489
Md. 514, 567 (2025) (looking to a “statute’s relationship to . . . subsequent legislation”
because it may “assist this Court in narrowing the purpose and scope” of that statute
(quoting Blackstone v. Sharma, 461 Md. 87, 135 (2018))). In adding an express exemption
to the Mortgage Lender Law for passive trusts, and by defining passive trusts to be entities
that do not do any of the things that would make an entity a mortgage lender, the General
22 Assembly manifested its intent to “clarify existing exemptions under” the law, not change
it. 2025 Md. Laws, Ch. 119 § 3. Although not definitive, that is a strong indication that,
at least in 2025, the General Assembly did not believe the Mortgage Lender Law had
applied to passive trusts even before the Secondary Market Stability Act.
Ms. Bowman and amici argue that this plain language interpretation of the Mortgage
Lender Law conflicts with the common law principle on which we relied in Kemp and the
Appellate Court relied in Brown that “an assignee generally has the same rights and
responsibilities as its assignor[.]” See Kemp, 476 Md. at 156. However, in both Brown
and Kemp, the courts invoked common law principles to resolve ambiguities. See Brown,
261 Md. App. at 420 (concluding that the phrase “making a loan or extension of credit
under this subtitle” is ambiguous in the context of a statute defining credit grantor to
include assignees and containing provisions that apply both at loan origination and over
the lifetime of a loan); Kemp, 476 Md. at 172-74 (concluding that, “viewed in the context
of its usage throughout the Usury Law, the term [lender] is ambiguous[]”). Where the
General Assembly has unambiguously identified its intent in the plain language of the
statutory scheme, we will not resort to background common law principles to contradict
that intent. See Engage Armament, 494 Md. at 36 (explaining that if a statue is
unambiguous, “our inquiry generally ceases at that point and we apply the statute as
written[]” (quoting Westminster Mgmt., 486 Md. at 645)).
Ms. Bowman also relies on a separate provision of the Secondary Market Stability
Act, which added a new § 11-102 to the Financial Institutions Article, as follows:
23 (a) In this section, “installment loan” has the meaning stated in § 11-301 of this title.
(b) Except for § 11-219 of this title, this title does not apply to a person that acquires or is assigned in whole or in part:
(1) A mortgage, if the person does not otherwise make mortgages;
(2) A mortgage loan, as defined in § 11-501 of this title, if the person does not otherwise engage in the mortgage lending business, as defined in § 11-501 of this title; or
(3) An installment loan, if the person:
(i) Relies on another person to service or collect on the installment loan; and
(ii) Does not otherwise make installment loans.
Ms. Bowman’s argument focuses on the language excepting § 11-219 from the
general inapplicability of Title 11 to passive trusts. Section 11-219 provides, in full:
(a) A licensee may not sell a loan account to any person who is not licensed under this subtitle.
(b) A loan account that is acquired by a person who is not licensed under this subtitle is not enforceable.
In her brief, Ms. Bowman argues that the combination of §§ 11-102(b) and 11-219 means
that although passive trusts are not required to obtain licenses, licensed entities may not
assign loans to unlicensed individuals, and any loans so assigned are not enforceable.6
6 To the extent that Ms. Bowman argues that § 11-102(b) supports her argument that the Secondary Market Stability Act is not retroactive, we need not reach that question because we conclude that the Mortgage Lender Law did not require licensure for passive trusts before or after passage of that Act. 24 Ms. Bowman’s argument is premised on an understanding that § 11-219 applies to
all mortgage loans. We interpret the statute differently. Section 11-219 prohibits the sale
of a “loan account” to a person “not licensed under” Subtitle 2 of Title 11. That subtitle
contains the licensing provisions of the Maryland Consumer Loan Law, Fin. Inst.
§ 11-223(a), and it defines “loan” as “any loan or advance of money or credit subject to
Title 12, Subtitle 3 of the Commercial Law Article,” id. § 11-201(g). In turn, Title 12,
Subtitle 3 applies only to “a loan of $25,000 or less made for personal, family, or household
purposes.” Com. Law § 12-303(a)(1); see also id. § 12-303(b) (“A lender may not make a
loan subject to this subtitle unless the loan is in an original amount or value which does not
exceed $25,000.”). Reading these provisions together, § 11-219 does not apply to the
Mortgage Lender Law.
Ms. Bowman’s purported interpretation of the intersection between the new
§ 11-102(b) and § 11-219 is also manifestly inconsistent with the clear purpose of the
Secondary Market Stability Act, which was to allow passive trusts to hold mortgages
without requiring a license under the Mortgage Lender Law.
In sum, the Mortgage Lender Law did not require passive trusts to obtain a Mortgage
Lender License before or following the effective date of the Secondary Market Stability
Act. The Appellate Court’s decision in Brown was limited to licensure obligations under
OPEC and did not apply directly or necessarily to licensure obligations under the Mortgage
Lender Law.
25 CONCLUSION
As reformulated, the first certified question is: “Did the Maryland Mortgage Lender
Law require passive trusts to be licensed before the enactment of the Maryland Secondary
Market Stability Act of 2025?” We answer that question “no.”
The second question asks whether the Secondary Market Stability Act “successfully
restore[d] the licensing exemption for passive trusts as if Brown had not been decided.” At
least with respect to the Mortgage Lender Law, there was nothing to restore because the
licensing requirement in that Law never applied to passive trusts. The third question
assumes that the Secondary Market Stability Act exempts passive trusts from licensing
requirements only as of the date it was enacted. But that is not our conclusion.
Accordingly, we need not answer the second and third certified questions.
CERTIFIED QUESTIONS OF LAW ANSWERED AS SET FORTH ABOVE; COSTS TO BE DIVIDED EQUALLY BETWEEN THE PARTIES.