New Maryland Law Protects Divorcing Parties From High Mortgage Rates

As of October 1, 2025, a new Maryland law (HB 1018) will protect divorcing parties from having to refinance their mortgage as a result of separating their property and assets during a divorce.

Before October 1, 2025, when Maryland couples divorced, the loaning entities which held the mortgage(s) on the marital home could require the party remaining on the mortgage to refinance before they could remove their spouse’s name from the loan. Now, with the new law, the loaning entities have to allow the party remaining in the property to assume the existing mortgage at the same interest rate as originally listed on the loan so long as the following factors are met:

1. The assumption of the mortgage is in relation to divorce proceedings which occurred on or after October 1, 2025;
2. The loaning institution determines that the party remaining on the loan qualifies financially on their own AND
3. The loan is a “conventional home mortgage loan”.

What is a “conventional home mortgage loan”?

A conventional home mortgage loan is a mortgage loan that is obtained through a private (not government-backed) lending institution for personal and/or family use. Conventional loans (for the purpose of this law) also do not include mortgage loans obtained through national banks or federal credit unions. The national banks include Bank of America, Chase Bank, Wells Fargo, among others.

Why does this matter?

As of October 2025, the average interest rate for a mortgage in Maryland is approximately 6.5%. Therefore, if this new law was not passed, a person in the process of a divorce would likely be required by the loaning institution to refinance the loan before they are able to assume the liability of the loan without their recently divorced partner. However, because of the new law, so long as the requirements above are met, a person can maintain the interest rate they previously had, which is likely lower than 6.5%. This can save someone a lot of money on their mortgage payments, especially at a time when their financial situation is likely changing due to a divorce.

Why your legal counsel matters?

Dividing your real property, liabilities, and other assets in a Maryland divorce requires more than just familiarity with the law. It demands a deep understanding of financial strategy, tax implications, and how to structure settlements that protect both your short- and long-term interests. That’s why the attorneys at Leffler, Bayoumi & Oliver take a comprehensive approach to every case. We understand that every divorce involves more than just legal questions; it’s also about your future security.

Our team takes the time to craft solutions that fit your goals and safeguard your financial well-being. Reach out today to learn how we can guide you through this process with clarity and confidence.