On April 22, the governor of Maryland approved HB 1516 / SB 1026, the Maryland Secondary Market Stability Act of 2025 (the “Act”), which exempts certain trust entities acquiring Maryland mortgage loans, including passive trusts, from the state’s mortgage lending and installment loan licensing requirements. The Act was codified in response to a Maryland appellate court’s decision in the Estate of Brown v. Ward (2024) case and subsequent guidance and revised guidance from the Maryland Office of Financial Regulation providing that assignees of residential mortgage loans, including passive trusts, were subject to certain licensing requirements. The Act defines a “passive trust” as an entity that acquires or takes assignment of mortgage loans without brokering, making or servicing them, and clarifies that servicing does not include transmitting or directing payments received by a mortgage servicer on behalf of the trust.

The Act also establishes the Maryland Licensing Workgroup to study and evaluate the state’s financial services licensing structure. The Workgroup will report its findings to the governor and legislature by Dec. 31 and may recommend changes to existing licensing systems. The bill includes retroactive language indicating that the new exemption is intended to clarify existing state law exemptions. The Act became effective immediately upon the governor’s signature.