Code of Maryland Regulations
Title 05 - DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
Subtitle 04 - SPECIAL LOAN PROGRAMS
Chapter 05.04.09 - Group Home Financing Program
Section 05.04.09.16 - Loan Payments

(1) Loan funds may not be disbursed if there is any arrearage of interest payments or escrows required by the loan.

(2) Loan proceeds designated to finance modification or construction costs shall be held in escrow by the Department and disbursed at the discretion of the Department either upon completion of the modification or construction, or in accordance with a payment schedule approved by the Department.

(3) Payments of construction draws shall be by joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director.

(4) Except as provided in §C of this regulation, payments shall be made for work completed only. Payments may not be made for materials delivered to the site but not installed in the project.

(5) Payment of construction draws shall be requested by the borrower. Loan funds may be disbursed to the borrower upon request, except for final draws or as otherwise provided for in §F(1), (2), or (3) of this regulation.

(1) Progress payments may not be made until the borrower has delivered satisfactory evidence, such as receipt or bills, of the amount of the payment requested.

(2) Progress payments may not be made without an inspection to verify completion of the work, except at the discretion of the Department.

(3) If a request for payment is refused, the Program shall notify the borrower. The determination of the Program as to percentage of work completed is final.

(1) Final payment shall be made as set forth in §E(2)-(5) of this regulation.

(2) The borrower shall submit to the Program a certificate of completion, executed by the borrower and contractor, certifying that all work has been completed in accordance with the contract documents.

(3) Upon final inspection and receipt and approval of the certificate of completion, final payment shall be processed.

(4) If, in the opinion of the Department, the contractor has satisfied the contract and the borrower refuses to request or release the final payment, then the Program may follow the procedures described below:

(5) If the Program receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, and all loan funds have not yet been disbursed, the Department shall retain an amount equal to the lesser of all funds not yet disbursed and the amount sufficient to satisfy the claims until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established.

(1) The Program shall retain until final payment 10 percent of the construction costs for all projects for which the borrower is responsible for project inspections.

(2) The Program, at its discretion, may elect to retain until final payment 10 percent of the construction costs for any other project, taking into consideration:

(3) The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the Department.

(1) After final payment is made, the Department shall reconcile all receipts and disbursements.

(2) Funds remaining in the loan amount shall be disbursed to the borrower or applied to the principal balance of the loan, as determined by the Department.

(3) A shortage due to overpayment shall be remitted by the borrower. If reimbursement of the overpayment is not made by the borrower within 60 days of receipt of the letter, the Department shall pursue any appropriate legal remedies for collection.