Code of Maryland Regulations
Title 05 - DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
Subtitle 04 - SPECIAL LOAN PROGRAMS
Chapter 05.04.01 - Maryland Housing Rehabilitation Program - Regular Rehabilitation Program
05.04.01.06 - Loan Terms and Conditions - General
05.04.01.06. Loan Terms and Conditions - General
A. Loans shall be made on terms conforming to the requirements in §§ B-K of this regulation.
B. Interest Rate.
(1) The interest rate to be paid on loans may be at preferred rates set by the Department from time to time, as required by the Act.
(2) The collective interest rate charged on all loans shall be at least sufficient to cover administrative costs of the program and reasonably expected losses due to defaults.
(3) The Department may establish different interest rates available on loans serving occupants who are families of:
(a) Limited income;
(b) Lower income; and
(c) Very low income.
(4) The interest rates charged on loans may not be more than private lending rates for comparable loans.
(5) Within the limits established in §§ B(3) and (4), above, the interest rate shall be the maximum interest rate based on an applicant's ability to repay.
C. Term. The term of each loan may not exceed 30 years from completion of construction, and shall be based on the amount of the loan, the expected life of the rehabilitated building, and an applicant's ability to repay.
D. Maximum Loan Amount.
(1) The maximum loan may not exceed an amount which, when added to any prior debts secured by or relating to the eligible building or property, or both, would equal 110 percent of the market value of the eligible building and property after rehabilitation as determined by the Department or the local administrator.
(2) For projects when 100 percent of the units are subject to a federal rent subsidy which is allocated to the project for the entire term of the loan, the 110 percent loan-to-value ratio requirement of § D(1), above, may be raised to 115 percent.
(3) If, in the determination of the Program Director, a loan increase is necessary to assure completion of the building and protect the Department's interest, an increase in the mortgage may be made to cover extraordinary and unforeseen construction problems provided the increase can be made within the limits on maximum loan amounts set forth in § D(1)-(2) of this regulation.
(4) Closing costs may be included in loans on owner-occupied dwellings, provided the loan does not exceed the limits on the maximum loan amount set forth in § D(1)-(2) of this regulation.
E. Payments. Payments shall be applied to escrow expenses, when applicable, interest, and principal, in that order.
F. Late Charge. Late charges, as permitted by law, may be charged.
G. Security for Loans.
(1) Loans of $5,000 or less shall be evidenced by a promissory note and such other documents as may be required by the Department.
(2) Except as provided in § G(3)-(4) of this regulation, loans in excess of $5,000 and loans providing for deferred payments shall be secured by a mortgage or deed of trust, in the form required by the Department, which shall be recorded in the land records of the county in which the property is located.
(3) A loan to a trust described in 42 U.S.C § 1396P(D)(4), may be secured by a mortgage or deed of trust on real property, or other security device acceptable to the Department.
(4) A loan in excess of $5,000 to a borrower in a housing cooperative unit may be secured by another security device acceptable to the Department.
H. Default. Remedies upon loan default shall be exercised in the discretion of the Department and may be one or more of the remedies provided for in the loan documents or by law, such as:
(1) Adjustments to the interest rate of the loan upward or downward;
(2) Suspension or debarment from the Department's programs;
(4) Accepting a deed instead of foreclosure;
(5) Appointment of a receiver; and
(6) Other legal action which protects the Department's interests.
I. Change of Ownership. A borrower may not sell, cease to own, assign, transfer, dispose of, or lease all or any part of the property except for residential leases of not more than 3 years duration, during the loan term, without the prior written consent of the Department, except as permitted by federal law.
J. Refinancing. The Department may not refinance existing debts related to an eligible building.
K. Land Installment Contracts. Purchases under a land installment contract are not eligible for a loan.(Regulations .06 amended effective February 11, 1985 (12:3 Md. R. 243)
Regulations .06A amended effective September 5, 1980 (7:18 Md. R. 1737)
Regulations .06A, amended effective June 16, 1978 (5:12 Md. R. 965)
Regulations .06A, amended effective March 23, 1979 (6:6 Md. R. 509)
Regulations .06A, B, amended effective October 5, 1979 (6:20 Md. R. 1627)
Regulations .06 adopted effective July 22, 1991 (18:14 Md. R. 1609)
Regulations .06 amended effective November 9, 1992 (19:22 Md. R. 1986); amended effective 43:13 Md. R. 712, eff. 7/4/2016)