In January 2025, the Maryland Office of Financial Regulation (the “OFR”) issued a guidance stating that assignees of residential mortgage loans, including certain passive trusts, were required to hold a Maryland mortgage lender license and, in certain circumstances, an installment loan license (previously discussed here). In response to this, the Maryland House and Senate passed separate but identical bills known as the Maryland Secondary Market Stability Act of 2025 (the “Act”). The Act was signed into law by Maryland Governor Wes Moore on April 22, and became effective immediately.
The Act addressed the OFR guidance on licensing for secondary market assignees by enacting an exemption from both the Maryland Mortgage Lender Law and the Maryland Installment Loan Law for “passive trusts.” The Act defines a “passive trust” as a trust that acquires or is assigned a mortgage loan but does not (i) make mortgage loans, (ii) act as a mortgage broker or a mortgage servicer, or (iii) engage in the servicing of mortgage loans. The original bills introduced in response to the OFR guidance would have exempted any assignee of mortgage loans or installment loans from licensing, including a trust, but the final Act more narrowly exempts only passive trusts.
Putting It Into Practice: The OFR’s guidance can now be considered abrogated, at least to the extent that it applied to passive trusts. However, secondary market purchasers of loans that do not use passive trusts to acquire or take assignment of residential mortgage loans in Maryland must become licensed as Maryland mortgage lenders by July 6, 2025. In addition, it is worth noting that the Act does not apply to loans made under the Maryland Consumer Loan Law, which provides that an assignee of a loan made under that law must hold a consumer loan license in order to enforce the loan.