HB1018 requires certain lenders in Maryland to include a specific assumption provision in conventional home mortgage loans that are not already required by law to be assumable upon divorce. The provision must allow one existing borrower to buy out another borrower’s interest by assuming that borrower’s share of the mortgage when the assumption is connected to a decree of absolute divorce, so long as the assuming borrower qualifies for the loan. The bill also requires lenders to disclose this assumption provision in writing to the loan applicant before the loan application is completed.
The bill applies this requirement across several categories of mortgage providers, including banking institutions, credit unions, mortgage lenders, and mortgage lending businesses. It also updates statutory definitions in the Financial Institutions Article to define “conventional home mortgage loan,” “dwelling,” and “shared appreciation agreement,” and it clarifies that the new assumption rules apply only to loans not already subject to federal or state assumability requirements. In addition, the bill applies the new rules retroactively to certain conventional home mortgages entered into before the effective date, including some loans above federal lending limits, for divorce-related assumptions occurring on or after the effective date.
Impact
HB1018 amends the Maryland Financial Institutions Article by adding new sections and revising existing provisions governing mortgage lending, credit union lending, and mortgage loan definitions. It creates a new legal requirement that covered lenders include divorce-related assumption language in conventional home mortgage loans and provide advance written disclosure of that term to applicants. The bill also retroactively deems certain preexisting conventional home mortgages to include the required assumption provision, affecting lenders, borrowers, and mortgage servicing practices statewide.
Sentiment
The available voting history suggests the bill moved with substantial support overall, with third reading passage in both chambers by wide margins. There is no committee transcript available, so there is little direct evidence of debate or stakeholder testimony in the provided record. The recorded votes indicate the measure was generally viewed favorably and did not generate strong opposition at final passage.
Contention
The main policy issue is whether lenders should be required to include a divorce-related mortgage assumption right in conventional home loans that are otherwise not assumable by law. Potential concerns would likely center on lender underwriting discretion, retroactive application to existing loans, and the administrative burden of revising loan documents and disclosures. The bill limits the requirement to cases where the assuming borrower qualifies for the loan, which appears intended to address lender risk while still protecting divorcing borrowers seeking to retain the home.