Maryland Legal Alert for Financial Services
Mortgage Assumption Guidance from Commissioner
As we reported in our September Maryland Legal Alert, many of our clients have been asking about Maryland law changes involving mortgage assumptions that took effect on October 1, 2025. The Maryland Legislature passed HB 1018 (enacted as Chapter 202) during the 2025 legislative session. The new law imposes several disclosure requirements (both for new loans on and after the October 1, 2025 effective date and for existing loans that are covered by the new law). The new law applies to non-government-backed mortgage loans that are “conventional home mortgage loans” under Maryland law that are secured by a dwelling. New disclosures are required describing that a covered loan may be assumed under certain circumstances (in connection with the granting of a decree of absolute divorce). Lenders may verify that a divorced spouse borrower qualifies to repay the loan without the ex-spouse as a co-borrower.
The Maryland Banking Commissioner released an additional industry advisory on September 25, 2025. A prior industry advisory was released on August 19, 2025. The latest industry advisory addressed the timing of required application disclosures under the new law and indicated that the Commissioner “will consider a lender compliant with the disclosure requirement if the lender provides the written disclosure before receiving an applicant’s financial documentation (income, assets, and debts) needed to assess creditworthiness and ability to repay the loan.” The advisory further provided that the Commissioner “will also presume compliance if the disclosure is provided to the applicant within three business days of receipt of a complete application.”
For more information, contact Christopher R. Rahl.