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