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SB 689

State Sovereignty Act of 2025

2025 Regular Session Introduced by Chris Rose and 2 co-sponsors

Conventional mortgage lenders must include and disclose an assumable option for one borrower to take over another’s share in a divorce, subject to underwriting.

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Bill Summary · SB 689

SB 689 — Financial Institutions: Conventional Home Mortgage Loans — Assumption and Required Disclosures

Status: Approved by the Governor — Chapter 203 (2025)
Introduced: February 21, 2025 (Sponsor: Sen. Gile)

Purpose / Intent

To ensure that conventional home mortgage loans include (and that applicants are told about) an assumability option that allows one co‑borrower to purchase the property interest of another co‑borrower in the event of an absolute divorce — subject to lender underwriting. The policy aims to preserve homeownership options for divorcing borrowers by making assumption procedures and disclosure standardized.

Key provisions

  • Definitions: A “conventional home mortgage loan” is a loan primarily for personal/family/household use secured by a mortgage/deed of trust on a dwelling or residential real estate (includes loans using shared appreciation agreements). Excludes loans insured or guaranteed by the federal government.
  • Assumption provision requirement:
    • Banking institutions, credit unions, and mortgage lenders must include in all conventional home mortgage loans a provision authorizing any existing borrower to purchase another borrower’s property interest by assuming that borrower’s portion of the mortgage if:
    • The assumption is connected to a decree of absolute divorce; and
    • The lender determines the assuming borrower qualifies under the lender’s underwriting criteria.
    • The requirement does not apply where State or federal law/regulation already requires a loan to be assumable in connection with divorce.
  • Required disclosure: Lenders must disclose the existence of the assumption provision in writing to a loan applicant before the completion of the loan application.
  • Retroactivity: The bill’s provisions apply retroactively to conventional home mortgage loans entered into before the bill’s effective date.

Who or what is affected

  • Primary beneficiaries: Borrowers (particularly co‑borrowers undergoing divorce) who wish to remain in or retain ownership of the home by assuming their ex‑spouse/ co‑borrower’s mortgage share.
  • Regulated entities: Banks, credit unions, mortgage lenders, and mortgage brokers/servicers (as defined in the Financial Institutions Article).
  • Secondary: Mortgage servicing/underwriting workflows and loan documentation templates.

Enforcement, fiscal and timeline notes

  • Enforcement is expected through existing supervisory/regulatory processes administered by the Office of Financial Regulation (OFR) and applicable licensing/regulatory authorities.
  • Fiscal impact: According to the Department of Legislative Services fiscal note, the bill does not materially affect State operations or finances; local government impact is none; small business impact is potentially minimal.
  • Legislative timeline: Introduced Feb 21, 2025; enacted as Chapter 203 and approved by the Governor in April 2025.

Compiled from official sources — confirm details with the bill’s official record.

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