Maryland Legal Alert for Financial Services

Many of our clients have been asking about Maryland law changes involving mortgage assumptions. 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 industry advisory on August 19, 2025 highlighting the new law’s requirements.  

Disclosures that must be given include: (a) a new pre-application disclosure that describes that a loan may be assumable under certain circumstances; and (b) a similar disclosure within the loan terms. For new loans on or after the effective date of the new law, some lenders are addressing the pre-application disclosure by including a short disclosure within the actual loan application (so that the assumption disclosure is given before an applicant signs and submits a loan application). Other lenders are using a stand-alone pre-application disclosure that will be provided just before the loan application is completed. 

For new covered loans on and after the effective date, lenders will also need to change the assumption language in Loan Estimates and Closing Disclosures to disclose that a loan “may be assumable under certain circumstances.” In addition, for existing loans (originated prior to October 1, 2025), the new law requires that any covered loan include a provision disclosing that the loan may be assumable under certain circumstances. Many lenders are preparing to provide a blanket notice to existing borrowers with covered loans that briefly describes the new law and explains that loans may be assumable under the circumstances described in the notice. 

For more information, contact Christopher R. Rahl.

Christopher R. Rahl | 410-576-4222