EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXIS TING LAW.
[Brackets] indicate matter deleted from existing law.
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SENATE BILL 689
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CF 5lr1858
By: Senator Gile
Introduced and read first time: January 26, 2025
Assigned to: Finance
A BILL ENTITLED
AN ACT concerning 1
Financial Institutions – Conventional Home Mortgage Loan s – Assumption and 2
Required Disclosures 3
FOR the purpose of requiring certain entities to include a certain provision in certain 4
conventional home mortgage loans authorizing a certain borrower to purchase the 5
property interest of a certain borrower in connection with a decree of absolute divorce 6
under certain circumstances; requiring certain entities to disclose a certain provision 7
in writing to a loan applicant prior to the completion of the loan application; applying 8
certain provisions of this Act retroactively; and generally relating to the assumption 9
of conventional home mortgage loans. 10
BY adding to 11
Article – Financial Institutions 12
Section 5–514, 6–606.1, 11–501(b–1), and 11–522 13
Annotated Code of Maryland 14
(2020 Replacement Volume and 2024 Supplement) 15
BY repealing and reenacting, with amendments, 16
Article – Financial Institutions 17
Section 6–606 18
Annotated Code of Maryland 19
(2020 Replacement Volume and 2024 Supplement) 20
BY repealing and reenacting, without amendments, 21
Article – Financial Institutions 22
Section 11–501(a), (c), (k), (l), (n), and (r) and 11–601(a) and (q) 23
Annotated Code of Maryland 24
(2020 Replacement Volume and 2024 Supplement) 25
SECTION 1. BE IT ENACTED BY TH E GENERAL ASSEMBLY OF MARYLAND, 26
That the Laws of Maryland read as follows: 27 2 SENATE BILL 689
Article – Financial Institutions 1
5–514. 2
(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS 3
INDICATED. 4
(2) “CONVENTIONAL HOME MORTGAGE LOAN” HAS THE MEANING 5
STATED IN § 11–501 OF THIS ARTICLE. 6
(3) “DWELLING” HAS THE MEANING STAT ED IN § 11–501 OF THIS 7
ARTICLE. 8
(4) “SHARED APPRECIATION A GREEMENT” HAS THE MEANING 9
STATED IN § 11–501 OF THIS ARTICLE. 10
(B) (1) THIS SUBSECTION APPLI ES ONLY TO A CONVENTIONAL HO ME 11
MORTGAGE LOAN THAT IS NOT ALREADY REQUI RED BY LAW OR REGULA TION BY THE 12
STATE OR FEDERAL GOVE RNMENT TO BE ASSUMAB LE IN CONNECTION WIT H THE 13
GRANTING OF ABSOLUTE DIVORCE. 14
(2) A BANKING INSTITUTION SHALL INCLUDE IN ANY CONVENTIONAL 15
HOME MORTGAGE LOAN A PROVISION AUTHORIZING ANY OF T HE EXISTING 16
BORROWERS TO PURCHAS E THE PROPERTY INTER EST OF ANOTHER BORRO WER ON 17
THE LOAN BY ASSUMING THE SELLER’S PORTION OF THE MOR TGAGE IF: 18
(I) THE ASSUMPTION IS IN CONNECTION WITH THE GRANTING 19
OF A DECREE OF ABSOLUTE D IVORCE; AND 20
(II) THE BANKING INSTITUTION DETERMIN ES THAT THE 21
ASSUMING BORROWER QU ALIFIES FOR THE LOAN . 22
(C) A BANKING INSTITUTION SHALL DISCLOSE AN ASSUMPTION PROVIS ION 23
IN ANY CONVENTIONAL HOME MORTGAGE LOAN I N WRITING TO A LOAN APPLICANT 24
BEFORE THE COMPLETION OF TH E LOAN APPLICATION . 25
6–606. 26
(a) [A] SUBJECT TO § 6–606.1 OF THIS SUBTITLE, A credit union may make a 27
loan to a member that is secured by real or leasehold property in accordance with written 28
real estate lending policies established by the board as provided in this section. 29
(b) A loan under this section shall be: 30 SENATE BILL 689 3
(1) Secured by a deed of trust or mortgage on real or leasehold property; 1
and 2
(2) Amortized over a period of 30 years or less. 3
(c) The Commissioner may review the lending policies of the credit union and 4
order changes. 5
(d) (1) This subsection does not apply to an extension of credit or loan made by 6
a credit union on or after October 1, 1994. 7
(2) A loan under this section that is secured by a first mortgage may be 8
made at any rate of interest that does not exceed the rate authorized by Title 12, Subtitle 9
1 of the Commercial Law Article for mortgage loans. 10
(3) A loan under this section that is secured by a second mortgage may be 11
made at any rate of interest that does not exceed the rate authorized by Title 12, Subtitle 12
4 of the Commercial Law Article. 13
6–606.1. 14
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 15
INDICATED. 16
(2) “CONVENTIONAL HOME MOR TGAGE LOAN ” HAS THE MEANING 17
STATED IN § 11–501 OF THIS ARTICLE. 18
(3) “DWELLING” HAS THE MEANING STAT ED IN § 11–501 OF THIS 19
ARTICLE. 20
(4) “SHARED APPRECIATION AGREEME NT” HAS THE MEANING 21
STATED IN § 11–501 OF THIS ARTICLE. 22
(B) (1) THIS SUBSECTION APPLI ES ONLY TO A CONVENT IONAL HOME 23
MORTGAGE LOAN THAT I S NOT ALREADY REQUIR ED BY LAW OR REGULAT ION BY THE 24
STATE OR FEDERAL GOVE RNMENT TO BE ASSUMAB LE IN CONNECTION WITH THE 25
GRANTING OF ABSOLUTE DIVORCE. 26
(2) A CREDIT UNION SHALL I NCLUDE IN ANY CONVENTIONAL H OME 27
MORTGAGE LOAN A PROVISION AUTHORIZ ING ANY OF THE EXIST ING BORROWERS TO 28
PURCHASE THE PROPERT Y INTEREST OF ANOTHE R BORROWER ON THE LO AN BY 29
ASSUMING THE SELLER’S PORTION OF THE MOR TGAGE IF: 30
4 SENATE BILL 689
(I) THE ASSUMPTION IS IN CONNECTION WITH THE GRANTING 1
OF A DECREE OF ABSOL UTE DIVORCE; AND 2
(II) THE CREDIT UNION DETERMINES THAT THE ASSUMING 3
BORROWER QUALIFIES F OR THE LOAN. 4
(C) A CREDIT UNION SHALL D ISCLOSE AN ASSUMPTION P ROVISION IN ANY 5
CONVENTIONAL HOME MO RTGAGE LOAN IN WRITI NG TO A LOAN APPLICA NT BEFORE 6
THE COMPLETION OF TH E LOAN APPLICATION . 7
11–501. 8
(a) In this subtitle the following words have the meanings indicated. 9
(B–1) (1) “CONVENTIONAL HOME MORTGAGE LOAN ” MEANS ANY LOAN 10
PRIMARILY FOR PERSON AL, FAMILY, OR HOUSEHOLD USE THA T IS SECURED BY A 11
MORTGAGE , DEED OF TRUST , OR OTHER EQUIVALENT CONSENSUAL SECURITY 12
INTEREST ON A DWELLI NG OR RESIDENTIAL RE AL ESTATE ON WHICH A DWELLING 13
IS CONSTRUCTED O R INTENDED TO BE CON STRUCTED. 14
(2) “CONVENTIONAL HOME MOR TGAGE LOAN” INCLUDES A LOAN IN 15
WHICH FUNDS ARE ADVA NCED THROUGH A SHARE D APPRECIATION AGREE MENT. 16
(3) “CONVENTIONAL HOME MOR TGAGE LOAN” DOES NOT INCLUDE A 17
LOAN THAT IS INSURED OR GUARANTEED BY TH E FEDERAL GOVERNMENT . 18
(c) (1) “Dwelling” means a residential structure or mobile home that contains 19
one to four family housing units or individual units of condominiums or cooperatives. 20
(2) “Dwelling” does not include a residential structure or mobile home 21
unless the residential structure or mobile home, or at least one unit contained in the 22
residential structure or mobile home, is owner–occupied. 23
(k) (1) “Mortgage lender” means any person who: 24
(i) Is a mortgage broker; 25
(ii) Makes a mortgage loan to any person; or 26
(iii) Is a mortgage servicer. 27
(2) “Mortgage lender” does not include: 28
(i) A financial institution that accepts deposits and is regulated 29
under Title 3, Title 4, Title 5, or Title 6 of this article; 30 SENATE BILL 689 5
(ii) The Federal Home Loan Mortgage Corporation; 1
(iii) The Federal National Mortgage Association; 2
(iv) The Government National Mortgage Association; 3
(v) Any person engaged exclusively in the acquisition of all or any 4
portion of a mortgage loan under any federal, State, or local governmental program of 5
mortgage loan purchases; or 6
(vi) An affiliated insurance producer–mortgage loan originator 7
licensed under § 11–603.1 of this title. 8
(l) (1) “Mortgage lending business” means the activities set forth in the 9
definition of “mortgage lender” in subsection (k) of this section which require that person 10
to be licensed under this subtitle. 11
(2) “Mortgage lending business” includes the making or procuring of 12
mortgage loans secured by a dwelling or residential real estate located outside Maryland. 13
(n) “Mortgage loan originator” has the meaning stated in § 11–601 of this title. 14
(r) “Shared appreciation agreement” means a writing evidencing a transaction or 15
any option, future, or any other derivative between a person and a consumer where the 16
consumer receives money or any other item of value in exchange for an interest or future 17
interest in a dwelling or residential real estate, or a future obligation to repay a sum on the 18
occurrence of an event such as: 19
(1) The transfer of ownership; 20
(2) A repayment maturity date; 21
(3) The death of the consumer; or 22
(4) Any other event contemplated by the writing. 23
11–522. 24
(A) (1) THIS SUBSECTION APPLI ES ONLY TO A CONVENT IONAL HOME 25
MORTGAGE LOAN THAT I S NOT ALREADY REQUIR ED BY LAW OR REGULATION BY THE 26
STATE OR FEDERAL GOVE RNMENT TO BE ASSUMAB LE IN CONNECTION WIT H THE 27
GRANTING OF ABSOLUTE DIVORCE. 28
(2) A MORTGAGE LENDER OR A MORTGAGE LENDING BUS INESS IN 29
THE STATE SHALL INCLUDE IN ANY CONVENTIONAL H OME MORTGAGE LOAN A 30 6 SENATE BILL 689
PROVISION AUTHORIZIN G ANY OF THE EXISTIN G BORROWERS TO PURCH ASE THE 1
PROPERTY INTEREST OF ANOTHER BORROWER ON THE LOAN BY ASSUMING THE 2
SELLER’S PORTION OF THE MOR TGAGE IF: 3
(I) THE ASSUMPTION IS IN CONNECTION WITH THE GRANTING 4
OF A DECREE OF ABSOL UTE DIVORCE; AND 5
(II) THE MORTGAGE LENDER OR M ORTGAGE LENDING 6
BUSINESS DETERMINES THAT THE ASSUMING BORROWER QU ALIFIES FOR THE LOAN . 7
(B) A MORTGAGE LENDER OR A MORTGAGE LENDING BUS INESS IN THE 8
STATE SHALL DISCLOSE AN ASSUMPTION PROVIS ION IN ANY CONVENTIO NAL HOME 9
MORTGAGE LOAN IN WRI TING TO A LOAN APPLI CANT BEFORE THE COMPLETION OF 10
THE LOAN APPLICATION . 11
11–601. 12
(a) In this subtitle the following words have the meanings indicated. 13
(q) (1) “Mortgage loan originator” means an individual who for compensation 14
or gain, or in the expectation of compensation or gain: 15
(i) Takes a loan application; or 16
(ii) Offers or negotiates terms of a mortgage loan. 17
(2) “Mortgage loan originator” does not include an individual who: 18
(i) Acts solely as a mortgage loan processor or underwriter; 19
(ii) Performs only real estate brokerage activities and is licensed in 20
accordance with Title 17 of the Business Occupations and Professions Article, unless the 21
individual is compensated by a mortgage lender, mortgage broker, or other mortgage loan 22
originator or by any agent of a mortgage lender, mortgage broker, or other mortgage loan 23
originator; 24
(iii) Is involved solely in extensions of credit relating to timeshare 25
plans, as that term is defined in 11 U.S.C. § 101(53D); or 26
(iv) Is a retailer of mobile homes or an employee of the retailer if the 27
retailer or employee, as applicable, does not receive, directly or indirectly, compensation or 28
gain for engaging in activities described in paragraph (1) of this subsection that is in excess 29
of compensation or gain received in a comparable cash transaction. 30
SECTION 2. AND BE IT FURTHER ENACTED, That §§ 5–514(b), 6–606.1(b), 31
and 11–522(a) of the Financial Institutions Article, as enacted by Section 1 of this Act, shall 32 SENATE BILL 689 7
be construed to apply retroactively and shall be applied to and interpreted to affect any 1
conventional home mortgage loan entered into prior to the effective date of this Act. Any 2
conventional home mortgage that exceeds the lending limits set by the Federal Housing 3
Finance Agency entered into before the effective date of this Act shall be deemed to include 4
a provision allowing for any of the existing borrowers to purchase the property interest of 5
another borrower on the loan by assuming the seller’s portion of the mortgage in accordance 6
with Section 1 of this Act. 7
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 8
October 1, 2025. 9