As many of you already know, a significant portion of my work involves assisting individuals going through separation and divorce with their mortgage needs. I have been focusing my business on this work for the last twenty years and have probably seen more separation agreements than any other mortgage originator in the country!

Divorce, Separation, & Refinancing

Much of what I did was focused on refinancing the marital home to remove one person from the mortgage and deed and provide the leaving spouse with their equity buyout. All that changed in 2022 when interest rates began to rise. In most cases, it was financially impossible to refinance a 3% mortgage into a 6.5% mortgage and also increase the loan amount. Many people attempted to see if they could assume the existing mortgage and preserve the original loan terms rather than refinancing at much higher prevailing rates.

Mortgage Assumption

The problem was that almost all of the mortgages were not assumable. Some lenders made exceptions, but mortgage assumption was not something you could count on when negotiating financial divorce settlements.

Maryland Senate Bill 689/House Bill 1018

But now there is a solution. Maryland Governor Wes Moore has signed into law Senate Bill 689/House Bill 1018, which goes into effect on October 1, 2025. Beginning on that date, any new conventional home mortgage originated in Maryland must include a provision allowing one borrower to assume the mortgage interest of the other in connection with a Judgement of Absolute Divorce, provided the borrower meets the lender’s underwriting standards. And most importantly, this law also applies retroactively to existing loans entered into before the effective date.

Like all new laws, there are parts of it that are unclear, and we will continue to monitor developments and provide updates. Please don’t hesitate to contact me with any questions.