2013 Maryland Code
REAL PROPERTY
§ 7-112 - Priority of refinance mortgage over junior liens [Effective October 1, 2013].

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) (i) "Junior lien" means a mortgage, deed of trust, or other security instrument that is subordinate in priority to a first mortgage or deed of trust under § 3-203 of this article.

(2) (i) "Junior lien" means a mortgage, deed of trust, or other security instrument that is subordinate in priority to a first mortgage or deed of trust under § 3-203 of this article.

(ii) "Junior lien" does not include:

1. A judgment lien; or

2. A lien filed under the Maryland Contract Lien Act.

(3) "Refinance mortgage" means a mortgage, deed of trust, or other security instrument given to secure the refinancing of indebtedness secured by a first mortgage or deed of trust.

(4) "Residential property" means real property improved by four or fewer single family dwelling units that are designed principally and are intended for human habitation.

(b) In general. -- A mortgagor or grantor who refinances in full the unpaid indebtedness secured by a first mortgage or deed of trust encumbering or conveying an interest in residential property at an interest rate lower than provided for in the evidence of indebtedness secured by the first mortgage or deed of trust is not required to obtain permission from the holder of a junior lien if:

(1) The principal amount secured by the junior lien does not exceed $ 150,000; and

(2) The principal amount secured by the refinance mortgage does not exceed the unpaid outstanding principal balance secured by the first mortgage or deed of trust plus an amount to pay closing costs not exceeding $ 5,000.

(c) Lien priority on recordation. -- A refinance mortgage that meets the requirements of subsection (b) of this section shall have, on recordation, the same lien priority as the first mortgage or deed of trust that the refinance mortgage replaces.

(d) Required statement on instrument. -- A refinance mortgage that meets the requirements of subsection (b) of this section shall include the following statement in bold or capitalized letters: "This is a refinance of a deed of trust/mortgage/other security instrument recorded among the land records of ...............county/city, Maryland in liber no. .......folio ......., in the original principal amount of ............., and with the unpaid outstanding principal balance of .............. The interest rate provided for in the evidence of indebtedness secured by this refinance mortgage is lower than the applicable interest rate provided for in the evidence of indebtedness secured by the deed of trust/mortgage/other security instrument being refinanced."

(e) Priorities among junior liens. -- The priorities among two or more junior liens shall be governed by § 3-203 of this article.

(f) Construction of section. -- This section may not be construed to preempt or abrogate the operation or effect of, or ability of a court to apply the principles of, equitable subrogation or equitable subordination.