Md. Code Regs. 05.03.02.09

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

Section 05.03.02.09 - Default

A. Mortgage loans which are in default may be foreclosed, restructured, forborne, or otherwise treated, as described in B-----G of this regulation.

B. Foreclosure.

(1) Mortgage loans which are in default may be:

(a) Foreclosed by the Administration or its agent in the manner provided by law for foreclosures of private mortgages; or

(b) Assigned by the Administration to the mortgage insurer.

(2) The Administration may take title in its name to any property foreclosed by it.

(3) The Administration may convey title to the property to bona fide purchasers. This conveyance is not subject to the provisions of the State Finance and Procurement Article, Annotated Code of Maryland.

C. Deed in Lieu. Instead of foreclosing or assigning a loan under §B(1) of this regulation, the Administration may accept voluntary conveyance of the property securing the loan in exchange for cancellation of the debt.

D. Loan Restructuring. The Administration may permit plans of repayment of mortgage loans which do not require a direct monthly reduction of principal, a fixed rate of interest, level payments, or amortization of principal over the term of the mortgage loan, provided that the plan does not impair payment of the bonds or other obligations of the Administration with respect to the bonds, and subject to the requirements of the mortgage insurer, the Code, and the applicable bond certificates.

E. Forbearance. The Administration may forebear on collection of payment due on mortgage loans, provided this forbearance is not materially adverse to the Administration's bond holders and does not impair the mortgage insurance.

F. Short Sale. The Administration may permit a borrower to sell the property and pay less than the full amount of the mortgage debt if the Administration, in its sole discretion, determines that loan loss will be minimized by this action.

G. In General.

(1) The Administration may take any other action permitted under the Act.

(2) The ability to take action as described in this regulation may be governed by agreements with mortgage insurers and the regulations governing MHF.

Md. Code Regs. 05.03.02.09

Regulations .09 adopted as an emergency provision effective April 23, 1980 (7:10 Md. R. 949); adopted permanently effective September 5, 1980 (7:18 Md. R. 1737)
Regulations .09 adopted effective July 30, 1984 (11:15 Md. R. 1329)
Regulations .09 adopted effective September 30, 1991 (18:19 Md. R. 2098)