Bill would ease mortgage assumption after divorce; lenders raise retroactivity and implementation concerns

Delegate Andrew Pruske told the committee HB1018 would require mortgage lenders and servicers to include a provision in mortgage documents authorizing qualified borrowers to assume a conventional mortgage in select divorce decrees, and to disclose assumption options to applicants.

Proponents said the change could allow divorcing spouses to preserve low historic interest rates and housing stability for families, particularly parents with children and those at risk of displacement when refinancing would mean much higher payments.

"Preserving these existing terms can be the difference between maintaining home ownership or being displaced," Margo Cook, a certified divorce financial analyst, said in support, noting clients can face fees that make refinancing unaffordable.

Maryland Legal Aid provided examples of home retention cases where the non‑loanholder spouse could not effectuate payments or modifications because of loan‑holder name issues; the organization said the measure would reduce litigation and administrative delays that jeopardize homeownership.

The Maryland Mortgage Bankers & Brokers Association supported the bill's goal but cautioned the bill's retroactivity could impair contractual rights, citing long‑standing mortgage note language that makes loans due upon transfer. The association also urged a longer implementation window to allow lenders to update disclosures, forms and systems.

Stakeholders agreed to continue negotiating technical amendments to address retroactivity and implementation timelines while keeping borrower protections central to the proposal.