When going through a divorce, dividing property can often be one of the most challenging parts of the process—especially when it comes to the marital home. A new Maryland law, House Bill 1018, aims to make that process easier by requiring lenders to allow one party to assume the mortgage on a jointly owned home, rather than requiring a refinance. The law goes into effect on October 1, 2025, and includes retroactive provisions that may apply to existing divorce judgments.
If you own property in Maryland, this change could directly impact your financial options. Here’s what you need to know.
How Mortgages Typically Work in Divorce
Post-divorce, one spouse often wants to remain in the family home – but if both parties are listed on the mortgage, the person keeping the home usually needs to refinance the mortgage to remove the other spouse’s liability in order to get that spouse’s name off the title.
That refinancing requirement can be a major obstacle, especially with mortgage interest rates at record highs – often double (or more than double) the interest rate on the original loan. The spouse retaining the home must then refinance at a time of financial (and emotional) upheaval while at the same time losing a favorable interest rate secured when the loan was originally issued.
Until now, Maryland law did not require lenders to allow assumptions of existing mortgages during a divorce (which remains true in Virginia and D.C.). While some loans were assumable, it was up to the lender and certainly not required. That’s where House Bill 1018 comes in.
What House Bill 1018 Changes
Maryland House Bill 1018 requires a conventional home mortgage loan to include a provision that allows an existing borrower on the loan to assume the mortgage – including the favorable interest rate – if such assumption is in conjunction with the entry of a final divorce decree, and the assuming borrower still qualifies for the loan.
This bill becomes effective October 1, 2025, however, specifically states that it will apply retroactively to any conventional home mortgage loan entered prior to the effective date of the legislation – as long as the final divorce decree is entered after October 1, 2025. This change is a significant departure from how lenders and courts typically handle post-divorce real estate arrangements.
Why It Matters for Divorcing Homeowners
The benefits of Maryland House Bill 1018 are wide-reaching, especially for those hoping to stay in the home but unable—or unwilling—to refinance.
1. More Affordable Outcomes
Mortgage assumption avoids the added costs of refinancing, such as closing fees, new title insurance, and appraisal expenses.
2. Favorable Interest Rates
Spouses who take over the mortgage through assumption may preserve a favorable interest rate and avoid new credit checks.
3. Smoother Settlements
This new tool can simplify property negotiations and reduce financial conflict, especially in high-asset or high-debt divorces.
However, assumptions aren’t automatic. The mortgage servicer must still process the assumption, and the non-assuming spouse should be released from liability. Proper legal documentation remains critical. This provision also applies only to conventional home mortgages, and not loans insured or guaranteed by the federal government.
Know Your Rights, Protect Your Future
Maryland House Bill 1018 marks a significant shift in how mortgage obligations are handled during divorce. For many, it means greater housing stability, financial flexibility, and relief from unnecessary refinancing hurdles. But the law’s application is nuanced, especially in cases involving property across jurisdictions.
If you are going through a divorce and own property in Maryland, please contact Michelle Bieber at 703.284.7270 or mbieber@beankinney.com.
This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.
