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Bill would require conventional mortgage lenders to allow assumption in divorce cases; industry seeks timing and retroactivity changes
Summary
HB1018 would require certain conventional mortgage loans to include assumability language and require lenders to disclose assumption provisions prior to application in divorce cases; housing advocates supported the change but mortgage bankers asked for limitations on retroactivity and a longer implementation window.
House Bill 1018 would require lenders and mortgage servicers to include or make available language authorizing certain borrowers to assume conventional home mortgage loans in cases of absolute divorce and to disclose the possibility of assumption to loan applicants.
Sponsor Delegate Andrew Pruski framed the bill as a tool to keep households in place during divorce and to preserve low‑interest mortgages acquired under previous market conditions. "This could mean the difference for people to stay in their home or being uprooted during a tumultuous time," Pruski said.
Supporters including Maryland Legal Aid and housing advocates said the change would avoid litigated disputes and practical barriers when a spouse remains in the home but is not listed on the mortgage. William Steinwiddle of Maryland Legal Aid described cases where ex‑spouses refused to sign required documents and where homeowners who had assumed possession were unable to make mortgage payments because servicers would not accept payment from someone who was not on the note.
Financial professionals and mortgage trade groups supported the bill in principle but asked for amendments. The Maryland Mortgage Bankers and Brokers Association supported the bill’s intent but warned that retroactive application could raise constitutional contract‑impairment and operational concerns. The association asked for a longer implementation period to revise loan forms, disclosures and servicing systems; the association noted that sale and servicing of mortgages on the secondary market complicate retroactive changes.
Industry requests also included clarifications about whether the bill applies to loans purchased by private investors or only to loans still held by originating lenders, and whether heirs in death cases are treated similarly. Sponsor materials noted conforming loans (Fannie Mae/Freddie Mac) currently have limits and some agency loan types (FHA, VA, USDA) are already assumable.
Ending: Supporters argued assumption rules would preserve housing stability for divorcing residents; lenders asked for a narrower retroactivity approach and time to implement operational changes. The committee heard testimony and recommended technical amendments by industry and advocates; no final vote is recorded in the provided transcript.
