October 1 marks the effective date for several new laws in Maryland impacting credit unions.

Mandatory Assumption Provision in Conventional Mortgages

A new law requires banks, credit unions, and mortgage lenders to include an assumption provision in all conventional home mortgage loans. This provision allows a borrower to purchase the property interest of another co-borrower in the event of divorce, provided the remaining borrower qualifies under the lender’s underwriting standards.

• Disclosure Requirement: Lenders must provide written disclosure of this right to applicants prior to loan completion. Compliance will be recognized if disclosure is made before financial documentation is collected or within three business days of a complete application.
• Retroactive Application: Applies not only to new loans but also to conventional mortgages originated prior to October 1, 2025.
• Scope: Excludes loans insured or guaranteed by the federal government (FHA, VA, USDA).

This change requires lenders to update loan agreements, disclosures, and staff training to ensure compliance.

Filing Fee for Residential Mortgage Foreclosure

The filing fee that must accompany an order to docket (OTD) or a complaint to foreclose a mortgage or deed of trust on residential property will increase from $300 to $450.

This adjustment impacts foreclosure proceedings directly and will require institutions initiating foreclosure actions to account for the higher upfront cost.

Fair Medical Debt Reporting Act

Under the Fair Medical Debt Reporting Act, consumer reporting agencies are prohibited from including certain medical debt information in consumer credit reports. Additionally, creditors and other users of consumer reports may not rely on medical debt information when making determinations about creditworthiness.

This law reflects a growing trend toward limiting the role of medical debt in credit decisions and underscores the need for lenders to update policies and procedures related to credit evaluations.