Maryland Expands Licensing Framework for Insurance Producer-Mortgage Loan Originators
Maryland will broaden sponsorship eligibility and loosen employment restrictions for affiliated insurance producer-mortgage loan originators under legislation signed by Gov. Wes Moore.
House Bill 38 updates the state’s Financial Institutions Article to allow Commissioner-approved mortgage lenders and mortgage brokers to sponsor affiliated insurance producer-mortgage loan originators, or AIP-MLOs, in addition to qualifying financial institutions already permitted under current law.
The law takes effect Oct. 1.
Sponsorship Eligibility Expanded
Under the revised framework, approved mortgage lenders and brokers may sponsor AIP-MLOs if they are in good standing with the Maryland Office of Financial Regulation and are in material compliance with applicable state and federal law.
The legislation also changes existing statutory language by replacing references to an “employer” with a “sponsor,” reflecting that some AIP-MLOs may operate as independent contractors rather than traditional employees.
Maryland lawmakers said the bill is intended to modernize the licensing structure while preserving the current oversight framework for these loan originators.
Under prior law, an affiliated insurance producer-mortgage loan originator could originate loans only on behalf of a single approved financial institution and was generally tied to an exclusive relationship. The new law removes employment-based language and allows sponsorship by qualifying mortgage lenders, while continuing to tie AIP-MLO activity to the sponsor identified in the license application.
Existing Restrictions and Oversight Remain in Place
The legislation leaves intact several operational restrictions governing AIP-MLOs.
Sponsored licensees still may not handle borrower funds, receive finder’s fees, make mortgage loans directly, or service mortgage loans. Sponsoring entities also remain responsible for supervising licensees and are jointly and severally liable for claims arising from the licensee’s origination activities. Surety bond requirements also continue to apply.
According to the Maryland Department of Legislative Services, the Office of Financial Regulation has received few applications for AIP-MLO licenses in recent years. The state analysis noted that the number of licensed AIP-MLOs peaked at 27 in 2010 and that no applications have been received since 2020.
Why It Matters
The changes could provide additional flexibility for mortgage lenders, brokers, and insurance-affiliated originators operating in Maryland’s residential lending market.
By allowing sponsorship from a broader range of regulated entities and removing exclusivity requirements, the law may create new partnership structures between mortgage companies and licensed insurance professionals. At the same time, regulators preserved the supervisory and liability framework intended to maintain accountability for origination activity.
The legislation reflects a broader trend among states reassessing licensing structures as mortgage distribution models continue evolving.
