EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0831*
SENATE BILL 831
I2 5lr3384
By: Senator Charles
Introduced and read first time: January 28, 2025
Assigned to: Finance
A BILL ENTITLED
AN ACT concerning 1
Credit Regulation – Reverse Mortgage Loans – Escrow Accounts 2
FOR the purpose of requiring a lender for a reverse mortgage loan to establish a certain 3
escrow account for the payment of certain eligible homeowner expenses, deduct a 4
certain amount of funds from each loan distribution to a borrower, deposit the 5
deducted funds into the escrow account, and deliver on–time payments from the 6
escrow account to the appropriate collection entity for eligible homeowner expenses; 7
and generally relating to reverse mortgage loans and the payment of eligible 8
homeowner expenses. 9
BY renumbering 10
Article – Commercial Law 11
Section 12–1208 12
to be Section 12–1209 13
Annotated Code of Maryland 14
(2013 Replacement Volume and 2024 Supplement) 15
BY repealing and reenacting, without amendments, 16
Article – Commercial Law 17
Section 12–1201(a), (c), (f), and (h) 18
Annotated Code of Maryland 19
(2013 Replacement Volume and 2024 Supplement) 20
BY adding to 21
Article – Commercial Law 22
Section 12–1208 23
Annotated Code of Maryland 24
(2013 Replacement Volume and 2024 Supplement) 25
2 SENATE BILL 831
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That Section(s) 12–1208 of Article – Commercial Law of the Annotated Code of Maryland 2
be renumbered to be Section(s) 12–1209. 3
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 4
as follows: 5
Article – Commercial Law 6
12–1201. 7
(a) In this subtitle the following words have the meanings indicated. 8
(c) “Borrower” means an individual who makes a loan application for or receives 9
a reverse mortgage loan. 10
(f) “Lender” means a person who makes a reverse mortgage loan. 11
(h) “Reverse mortgage loan” means a nonrecourse loan that: 12
(1) Is secured by the borrower’s principal dwelling; 13
(2) Provides the borrower with purchase money proceeds, a lump sum 14
payment, periodic cash advances, a line of credit, or any combination of those payment 15
plans based on the equity in or value of the borrower’s principal dwelling; and 16
(3) Requires no payment of principal or interest until the full loan becomes 17
due and payable. 18
12–1208. 19
(A) (1) A LENDER SHALL ESTABLI SH AN ESCROW ACCOUNT FOR A 20
REVERSE MORTGAGE LOA N TO BE USED FOR THE PAYMENT OF: 21
(I) PROPERTY TAXES ; 22
(II) INSURANCE PREMIUMS FO R AN INSURANCE PRODUCT 23
REQUIRED UNDER § 12–1206(A)(2) OF THIS SUBTITLE; 24
(III) GROUND RENTS ; 25
(IV) WATER AND SEWER FACIL ITIES ASSESSMENTS ; AND 26
(V) HOMEOWNERS ASSOCIATIO N OR OTHER COMMON 27
OWNERSHIP COMMUNITY CHARGES. 28
SENATE BILL 831 3
(2) AN ESCROW ACCOUNT REQ UIRED UNDER PARAGRAP H (1) OF THIS 1
SUBSECTION SHALL : 2
(I) BE ESTABLISHED IN ACC ORDANCE WITH § 12–1026 OF THIS 3
TITLE; AND 4
(II) ALLOW FOR MONTHLY COL LECTION AND DEPOSIT OF 5
FUNDS. 6
(B) A LENDER SHALL : 7
(1) DEDUCT FROM EACH DIST RIBUTION OF FUNDS TO THE 8
BORROWER UNDER THE TERMS OF THE LOAN AND DEPOSIT INTO AN ESCRO W 9
ACCOUNT ESTABLISHED UNDER SUBSECTION (A) OF THIS SECTION AN AMOUNT OF 10
FUNDS THAT IS: 11
(I) PROPORTIONAL TO THE P LANNED DISTRIBUTION 12
SCHEDULE OF FUNDS UNDER THE TERMS OF T HE LOAN; AND 13
(II) SUFFICIENT TO COVER T HE ESTIMATED COSTS OF THE 14
ELIGIBLE HOMEOWNER EXPENSES DESCRIBED U NDER SUBSECTION (A)(1) OF THIS 15
SECTION; 16
(2) DELIVER AN ON–TIME PAYMENT OF EACH ELIGIBLE HOMEOWNER 17
EXPENSE DESCRIBED UN DER SUBSECTION (A)(1) OF THIS SECTION FROM THE 18
APPROPRIATE ESCROW A CCOUNT ESTABLISHED U NDER SUBSECTION (A) OF THIS 19
SECTION TO THE COLLECTION EN TITY FOR EACH ELIGIB LE EXPENSE. 20
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 21
October 1, 2025. 22