On October 1, 2025, a new law took effect that makes it more feasible for parties to remain in the marital home after a divorce decree. Before this new law, a potential limitation on a spouse who wanted to maintain the marital home was the spouse’s ability to afford a higher interest rate or an increased monthly mortgage payment after refinancing the mortgage.
Now, one spouse who has a conventional home mortgage loan in both spouses’ names may assume the other spouse’s interest in the loan when the matter is in connection with a divorce decree. This benefits the spouse remaining on the loan by allowing them to keep the same interest rate and original loan terms, undoubtedly making it more affordable to maintain the marital home.
A Maryland divorce lawyer can help parties understand how this change may apply to their specific situation.
What the New Maryland Statute Allows
The Maryland legislature passed statutes that allow a seller to assume a mortgage in connection with a divorce decree, specifically when the lender is a banking institution, credit union, or mortgage lender or mortgage lending business.
The Maryland legislature intends for this law to apply retroactively, even to conventional home mortgage loans entered into before the law’s effective date.
Qualification Requirements and Lender Discretion
Though this new assumption of mortgage law may widen the possibilities for parties following their divorce, Maryland homeowners must note that to qualify to assume a spouse’s interest in the loan, the financial institution acting as the lender must determine that the assuming spouse qualifies for the loan. Notably, the new legislation does not specify the level of discretion that financial institutions have when assessing who qualifies for a loan.
Potential Limitations for National Banks
Additionally, Maryland may be limited in its authority to impose requirements on national banks or their subsidiaries acting as mortgage lenders, as national banks (e.g., JPMorgan Chase, Bank of America, Wells Fargo, and Citibank) are governed by federal law. So, this may limit the pool of Maryland homeowners who can benefit from the new assumption of mortgage legislation.
Looking Ahead
This new law is a great step toward making it easier to resolve a jointly titled home in a divorce with fewer financial implications, but time will tell what impact this new statute actually has. Consulting with a Maryland divorce lawyer may help divorcing homeowners evaluate whether assuming a mortgage is a realistic and beneficial option.
