Md. Code Regs. 05.03.01.11

Current through Register Vol. 51, No. 24, December 2, 2024

Section 05.03.01.11 - General Loan Terms and Requirements

A. Interest Rates.

(1) The initial preferred interest rate for a loan shall be:

(a) Not higher than the prevailing private market rate as determined by the Program; and

(b) A rate, which may be as low as 0 percent, set by the Program in relation to the borrower's financial capacity as determined by the Program.

(2) The initial preferred interest rate may be adjustable in accordance with Regulation .13 of this chapter.

(3) For purchase and rehabilitation loans, during the rehabilitation period, the Program may in the discretion of the Program charge interest at a rate lower than the initial interest rate.

B. Loan Term. On the stated date for the borrower to begin repayment of the loan, the maximum loan term may not exceed the lesser of:

(1) 40 years; or

(2) If an appraisal is required for the loan, the estimated remaining economic life of the property.

C. Borrower's Contribution.

(1) The Program may require the borrower to make a minimum contribution to the transaction, as determined by the Department.

(2) The minimum contribution requirement described in §C(1) of this regulation applies only to purchase loans, not to refinancing loans.

D. Security for Loans.

(1) A loan shall be secured by a mortgage on the property in the form required by the Department, which shall be recorded in the land records of the county in which the property is located. A loan shall be secured by a first mortgage unless it is permitted to be secured by a second mortgage under Regulations .04B and .07C of this chapter.

(2) The mortgage securing the Program loan may not be subordinate to any other liens, including but not limited to mortgage liens other than mortgage liens permitted under Regulations .04B and .07C of this chapter, tax liens, or judgment liens.

E. Late Charges. A late charge, as permitted by law, may be imposed.

F. Prepayment Penalty. A prepayment penalty may not be charged.

G. Change of Ownership.

(1) The loan shall become due and payable upon the sale or transfer of the real property securing the loan unless the transfer is:

(a) To a spouse, divorced spouse, or a child who resides at the mortgaged property;

(b) Any other transfer which lenders are required by federal law to permit; or

(c) To an assuming transferee who would otherwise be eligible for a Program loan.

(2) For a loan made under Regulation .07 of this chapter:

(a) The loan shall be due and payable upon the sale or transfer of the real property securing the loan, under partial release provisions set by the Program if applicable; and

(b) The real property securing the loan shall be sold to a household of limited income.

H. Loan Payments During Rehabilitation. During the rehabilitation period for the loan, which is to be determined by the Program, the borrower may be charged interest only.

Md. Code Regs. 05.03.01.11

Regulations .11 amended effective September 1, 1974 (1:2 Md. R. 112)
Regulations .11 amended effective July 23, 1975 (2:16 Md. R. 1138)
Regulations .11 amended as an emergency provision effective January 25, 1989 (16:3 Md. R. 334); emergency status expired July 25, 1989; adopted permanently effective August 7, 1989 (16:15 Md. R. 1650)
Regulations .11 under a new chapter, Preferred Interest Rate Loan Program, adopted effective July 22, 1991 (18:14 Md. R. 1609)