Code of Maryland Regulations
Title 05 - DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
Subtitle 04 - SPECIAL LOAN PROGRAMS
Chapter 05.04.06 - Lead Hazard Reduction Grant and Loan Program
Section 05.04.06.08 - Loan Terms and Requirements for Secured Loans

Universal Citation: MD Code Reg 05.04.06.08

Current through Register Vol. 51, No. 6, March 22, 2024

A. Security for Loans.

(1) Amortizing loans of $5,000 or less shall be evidenced by a promissory note and other documents as may be required by the Department.

(2) All deferred payment loans and all amortizing loans in excess of $5,000 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 building is located.

(3) Loans to political subdivisions may be secured by a recorded mortgage or deed of trust on real property, or by another security device acceptable to the Department.

(4) The lien of the mortgage or deed of trust:
(a) May be subordinate to other liens or recorded mortgage liens if superior mortgagees provide any consents required under the superior mortgage loan documents or by the Program; and

(b) May not be subordinate to a tax lien.

B. Escrow Account. For an amortizing loan secured by a deed of trust, if there is no prior mortgage requiring the payment of expenses to a mortgagee, the Department may require the borrower to make monthly expense payments, in escrow, to the Department consisting of 1/12 of annual real estate taxes, ground rent, property insurance premiums, and, when appropriate, other items for which payments are required by the Department. Interest is not paid to borrowers on escrowed amounts except to the extent required by law.

C. Title Insurance. The Department, in its discretion, may require the borrower to provide a standard American Land Title Association (ALTA) Loan policy, with the Environmental Endorsement 8.1, or other form of title policy approved by the Department and the Office of the Attorney General for an amount equal to the maximum principal amount of the loan, insuring the Department, evidencing that title to the building on the date of closing is vested in the borrower, and containing only standard exceptions and encumbrances acceptable to the Department and the Office of the Attorney General.

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