EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb0689*
SENATE BILL 689
I1, D4, N1 5lr1113
CF HB 1018
By: Senator Gile
Introduced and read first time: January 26, 2025
Assigned to: Finance
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: February 24, 2025
CHAPTER ______
AN ACT concerning 1
Financial Institutions – Conventional Home Mortgage Loans – 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 2 SENATE BILL 689
Section 11–501(a), (c), (k), (l), (n), and (r) and 11–601(a) and (q) 1
Annotated Code of Maryland 2
(2020 Replacement Volume and 2024 Supplement) 3
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 4
That the Laws of Maryland read as follows: 5
Article – Financial Institutions 6
5–514. 7
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 8
INDICATED. 9
(2) “CONVENTIONAL HOME MOR TGAGE LOAN ” HAS THE MEANING 10
STATED IN § 11–501 OF THIS ARTICLE. 11
(3) “DWELLING” HAS THE MEANING STAT ED IN § 11–501 OF THIS 12
ARTICLE. 13
(4) “SHARED APPRECIATION AGREEME NT” HAS THE MEANING 14
STATED IN § 11–501 OF THIS ARTICLE. 15
(B) (1) THIS SUBSECTION APPLI ES ONLY TO A CONVENT IONAL HOME 16
MORTGAGE LOAN THAT I S NOT ALREADY REQUIR ED BY LAW OR REGULAT ION BY THE 17
STATE OR FEDERAL GOVE RNMENT TO BE ASSUMAB LE IN CONNECTION WITH THE 18
GRANTING OF ABSOLUTE DIVORCE. 19
(2) A BANKING INSTITUTION SHALL INCLUDE IN ANY CONVENTIONAL 20
HOME MORTGAGE LOAN A PROVISION AUTHORIZIN G ANY OF THE EXISTIN G 21
BORROWERS TO PURCHAS E THE PROPERTY INTER EST OF ANOTHER BORRO WER ON 22
THE LOAN BY A SSUMING THE SELLER ’S PORTION OF THE MOR TGAGE IF: 23
(I) THE ASSUMPTION IS IN CONNECTION WITH THE GRANTING 24
OF A DECREE OF ABSOL UTE DIVORCE; AND 25
(II) THE BANKING INSTITUTI ON DETERMINES THAT T HE 26
ASSUMING BORROWER QU ALIFIES FOR THE LOAN . 27
(C) A BANKING INSTITUTION SHALL DI SCLOSE AN ASSUMPTION PROVISION 28
IN ANY CONVENTIONAL HOME MORTGAGE LOAN I N WRITING TO A LOAN APPLICANT 29
BEFORE THE COMPLETIO N OF THE LOAN APPLIC ATION. 30
6–606. 31
SENATE BILL 689 3
(a) [A] SUBJECT TO § 6–606.1 OF THIS SUBTITLE , A credit union may make a 1
loan to a member that is secured by real or leasehold property in accordance with written 2
real estate lending policies established by the board as provided in this section. 3
(b) A loan under this section shall be: 4
(1) Secured by a deed of trust or mortgage on real or leasehold property; 5
and 6
(2) Amortized over a period of 30 years or less. 7
(c) The Commissioner may review the lending policies of the credit union and 8
order changes. 9
(d) (1) This subsection does not apply to an extension of credit or loan made by 10
a credit union on or after October 1, 1994. 11
(2) A loan under this section that is secured by a first mortgage may be 12
made at any rate of interest that does not exceed the rate authorized by Title 12, Subtitle 13
1 of the Commercial Law Article for mortgage loans. 14
(3) A loan under this section that is secured by a second mortgage may be 15
made at any rate of interest that does not exceed the rate authorized by Title 12, Subtitle 16
4 of the Commercial Law Article. 17
6–606.1. 18
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 19
INDICATED. 20
(2) “CONVENTIONAL HOME MOR TGAGE LOAN ” HAS THE MEANING 21
STATED IN § 11–501 OF THIS ARTICLE. 22
(3) “DWELLING” HAS THE MEANING STAT ED IN § 11–501 OF THIS 23
ARTICLE. 24
(4) “SHARED APPRECIATION AGREEME NT” HAS THE MEANING 25
STATED IN § 11–501 OF THIS ARTICLE. 26
(B) (1) THIS SUBSECTION APPLI ES ONLY TO A CONVENT IONAL HOME 27
MORTGAGE LOAN THAT I S NOT ALREADY REQUIR ED BY LAW OR REGULAT ION BY THE 28
STATE OR FEDERAL GOVE RNMENT TO BE ASSUMAB LE IN CONNECTION WITH THE 29
GRANTING OF ABSOLUTE DIVORCE. 30
(2) A CREDIT UNION SHALL I NCLUDE IN ANY CONVEN TIONAL HOME 31
MORTGAGE LOAN A PROV ISION AUTHORIZING AN Y OF THE EXISTING BO RROWERS TO 32 4 SENATE BILL 689
PURCHASE THE PROPERT Y INTEREST OF ANOTHE R BORROWER ON THE LO AN BY 1
ASSUMING THE SELLER’S PORTION OF THE MOR TGAGE IF: 2
(I) THE ASSUMPTION IS IN CONNECTION WITH THE GRANTING 3
OF A DECREE OF ABSOL UTE DIVORCE; AND 4
(II) THE CREDIT UNION DETE RMINES THAT THE ASSU MING 5
BORROWER QUALIFIES F OR THE LOAN. 6
(C) A CREDIT UNION SHALL D ISCLOSE AN ASSUMPTION P ROVISION IN ANY 7
CONVENTIONAL HOME MO RTGAGE LOAN IN WRITI NG TO A LOAN APPLICA NT BEFORE 8
THE COMPLETION OF TH E LOAN APPLICATION . 9
11–501. 10
(a) In this subtitle the following words have the meanings indicated. 11
(B–1) (1) “CONVENTIONAL HOME MORTGAGE LOAN ” MEANS ANY LOAN 12
PRIMARILY FOR PERSON AL, FAMILY, OR HOUSEHOLD USE THA T IS SECURED BY A 13
MORTGAGE , DEED OF TRUST , OR OTHER EQUIVALENT CONSENSUAL SECURITY 14
INTEREST ON A DWELLI NG OR RESIDENTIAL RE AL ESTATE ON WHICH A DWELLING 15
IS CONSTRUCTED O R INTENDED TO BE CON STRUCTED. 16
(2) “CONVENTIONAL HOME MOR TGAGE LOAN” INCLUDES A LOAN IN 17
WHICH FUNDS ARE ADVA NCED THROUGH A SHARE D APPRECIATION AGREE MENT. 18
(3) “CONVENTIONAL HOME MOR TGAGE LOAN” DOES NOT INCLUDE A 19
LOAN THAT IS INSURED OR GUARANTEED BY TH E FEDERAL GOVERNMENT . 20
(c) (1) “Dwelling” means a residential structure or mobile home that contains 21
one to four family housing units or individual units of condominiums or cooperatives. 22
(2) “Dwelling” does not include a residential structure or mobile home 23
unless the residential structure or mobile home, or at least one unit contained in the 24
residential structure or mobile home, is owner–occupied. 25
(k) (1) “Mortgage lender” means any person who: 26
(i) Is a mortgage broker; 27
(ii) Makes a mortgage loan to any person; or 28
(iii) Is a mortgage servicer. 29
(2) “Mortgage lender” does not include: 30 SENATE BILL 689 5
(i) A financial institution that accepts deposits and is regulated 1
under Title 3, Title 4, Title 5, or Title 6 of this article; 2
(ii) The Federal Home Loan Mortgage Corporation; 3
(iii) The Federal National Mortgage Association; 4
(iv) The Government National Mortgage Association; 5
(v) Any person engaged exclusively in the acquisition of all or any 6
portion of a mortgage loan under any federal, State, or local governmental program of 7
mortgage loan purchases; or 8
(vi) An affiliated insurance producer–mortgage loan originator 9
licensed under § 11–603.1 of this title. 10
(l) (1) “Mortgage lending business” means the activities set forth in the 11
definition of “mortgage lender” in subsection (k) of this section which require that person 12
to be licensed under this subtitle. 13
(2) “Mortgage lending business” includes the making or procuring of 14
mortgage loans secured by a dwelling or residential real estate located outside Maryland. 15
(n) “Mortgage loan originator” has the meaning stated in § 11–601 of this title. 16
(r) “Shared appreciation agreement” means a writing evidencing a transaction or 17
any option, future, or any other derivative between a person and a consumer where the 18
consumer receives money or any other item of value in exchange for an interest or future 19
interest in a dwelling or residential real estate, or a future obligation to repay a sum on the 20
occurrence of an event such as: 21
(1) The transfer of ownership; 22
(2) A repayment maturity date; 23
(3) The death of the consumer; or 24
(4) Any other event contemplated by the writing. 25
11–522. 26
(A) (1) THIS SUBSECTION APPLI ES ONLY TO A CONVENT IONAL HOME 27
MORTGAGE LOAN THAT I S NOT ALREADY REQUI RED BY LAW OR REGULA TION BY THE 28
STATE OR FEDERAL GOVE RNMENT TO BE ASSUMAB LE IN CONNECTION WIT H THE 29
GRANTING OF ABSOLUTE DIVORCE. 30
6 SENATE BILL 689
(2) A MORTGAGE LENDER OR A MORTGAGE LENDING BUS INESS IN 1
THE STATE SHALL INCLUDE I N ANY CONVENTIONAL H OME MORTGAGE LOAN A 2
PROVISION AUTHORIZING A NY OF THE EXISTING B ORROWERS TO PURCHASE THE 3
PROPERTY INTEREST OF ANOTHER BORROWER ON THE LOAN BY ASSUMING THE 4
SELLER’S PORTION OF THE MOR TGAGE IF: 5
(I) THE ASSUMPTION IS IN CONNECTION WITH THE GRANTING 6
OF A DECREE OF ABSOL UTE DIVORCE; AND 7
(II) THE MORTGAGE LENDER O R MORTGAGE LENDING 8
BUSINESS DETERMINES THAT THE ASSUMING BO RROWER QUALIFIES FOR THE LOAN. 9
(B) A MORTGAGE LENDER OR A MORTGAGE LENDING BUS INESS IN THE 10
STATE SHALL DISCLOSE AN ASSUMPTION PROVIS ION IN ANY CONVENTIO NAL HOME 11
MORTGAGE LOAN IN WRI TING TO A LOAN APPLI CANT BEFORE THE COMP LETION OF 12
THE LOAN APPLICATION . 13
11–601. 14
(a) In this subtitle the following words have the meanings indicated. 15
(q) (1) “Mortgage loan originator” means an individual who for compensation 16
or gain, or in the expectation of compensation or gain: 17
(i) Takes a loan application; or 18
(ii) Offers or negotiates terms of a mortgage loan. 19
(2) “Mortgage loan originator” does not include an individual who: 20
(i) Acts solely as a mortgage loan processor or underwriter; 21
(ii) Performs only real estate brokerage activities and is licensed in 22
accordance with Title 17 of the Business Occupations and Professions Article, unless the 23
individual is compensated by a mortgage lender, mortgage broker, or other mortgage loan 24
originator or by any agent of a mortgage lender, mortgage broker, or other mortgage loan 25
originator; 26
(iii) Is involved solely in extensions of credit relating to timeshare 27
plans, as that term is defined in 11 U.S.C. § 101(53D); or 28
(iv) Is a retailer of mobile homes or an employee of the retailer if the 29
retailer or employee, as applicable, does not receive, directly or indirectly, compensation or 30
gain for engaging in activities described in paragraph (1) of this subsection that is in excess 31
of compensation or gain received in a comparable cash transaction. 32
SENATE BILL 689 7
SECTION 2. AND BE IT FURTHER ENACTED, That §§ 5 –514(b), 6–606.1(b), 1
and 11–522(a) of the Financial Institutions Article, as enacted by Section 1 of this Act, shall 2
be construed to apply retroactively and shall be applied to and interpreted to affect any 3
conventional home mortgage loan entered into prior to the effective date of this Act. Any 4
conventional home mortgage that exceeds the lending limits set by the Federal Housing 5
Finance Agency entered into before the effective date of this Act shall be deemed to include 6
a provision allowing for any of the existing borrowers to purchase the property interest of 7
another borrower on the loan by assuming the seller’s portion of the mortgage in accordance 8
with Section 1 of this Act. 9
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 10
October 1, 2025. 11
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.