MD Implements New Regulations for Shared Appreciation Agreements
New regulations under the Maryland Mortgage Lender Law have become effective governing Shared Appreciation Agreements (SAAs) in Maryland.
Key changes introduced by the new regulations include:
- The regulations provide clear definitions for key terms related to SAAs.
- Lenders are now required to provide specific disclosures to borrowers, including:
- A Financing Agreement outlining the terms of the SAA.
- A Commitment to Borrowers within 10 business days of a completed application. This includes a mandatory disclosure form.
- The regulations establish specific procedures for calculating property value, actual appreciation, and the final payment amount.
- The regulations define the “ability to repay” standard for SAAs.
- Lenders are deemed to have considered a borrower’s ability to repay if the following conditions are met:
- The agreement does not require periodic payments before termination.
- The agreement has a term of at least five years.
- Lenders are deemed to have considered a borrower’s ability to repay if the following conditions are met:
- Lenders must use a specified method for calculating property values, appreciation, and the final payment amount.
These new regulations became effective on November 25, 2024.
Massachusetts also recently amended its law to include provisions regarding shared appreciation mortgages, WBK’s coverage can be found here.
