Code of Maryland Regulations
Title 05 - DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
Subtitle 03 - HOMEOWNERSHIP PROGRAMS
Chapter 05.03.08 - Energy-Efficient Homes Construction Loan Program
Section 05.03.08.05 - Loan Terms and Requirements

Universal Citation: MD Code Reg 05.03.08.05

Current through Register Vol. 52, No. 6, March 21, 2025

A. Proceeds of the loan may be used for the:

(1) Acquisition of a project;

(2) Construction and development costs of a project; and

(3) Closing and settlement costs associated with the financing and acquisition of the project.

B. The Department shall establish interest rates for each loan based on the underwriting of each project.

C. The maximum interest rate on a loan shall be a rate which does not impair the financial viability of the project or the capability of the borrower to construct a low-energy home or net-zero home.

D. The Department may establish lower interest rates for projects that achieve greater energy savings.

E. The maximum loan, when added to any superior debts, may not exceed the greater of the:

(1) Amount of permanent financing approved for the project; or

(2) 100 percent of the market value of the eligible building and property after construction as determined by the Department.

F. Repayment. Terms for repayment of principal and interest shall be established based on the underwriting for each project and in a manner which does not impair the financial viability of the project or the capability of the borrower to construct a project.

G. A program loan shall be evidenced by a promissory note and secured by a mortgage or deed of trust to be recorded in the land records of the county in which the project is located.

H. Loan funds shall be disbursed in accordance with a draw schedule approved by the Department, which may include releasing funds upon successful inspections.

I. The borrower shall agree not to sell, cease to own, assign, transfer, or dispose of all or any part of the project or the borrower's interest in it, during the loan term, without the prior written consent of the Department.

J. Insurance.

(1) The borrower shall maintain property, fire, and extended coverage insurance on the buildings comprising a project both during and after construction, which shall name the Department as a loss payee, additional insured, and mortgagee, as applicable.

(2) If the project is located on real property which is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the project shall be covered by a flood plain insurance policy.

(3) For all secured loans the borrower shall provide a standard American Land Title Association (ALTA) Loan policy or other form of title policy approved by the Department.

K. Taxes and assessments against the property which are due and payable shall be paid at or before closing.

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