Md. Code Regs. 05.03.06.07

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

Section 05.03.06.07 - Eligible Uses

A. Subject to the limitations of Regulation .08B of this chapter, the proceeds of a loan made under the Program may be used for payment of:

(1) Purchase price of the eligible residence;

(2) Down payment and settlement costs;

(3) Rehabilitation costs described in Regulation .07B of this chapter; or

(4) Costs associated with eligible refinancings, as described in §D of this regulation.

B. Eligible rehabilitation costs include:

(1) The reasonable cost of correcting major structural defects;

(2) The reasonable cost of repairing or replacing plumbing, HVAC, or electrical systems;

(3) The reasonable cost of correcting any violations of local planning, zoning, or building codes, or other applicable laws;

(4) The reasonable cost of inspections; and

(5) Other reasonable rehabilitation costs that are approved by the Program, including the cost of cosmetic repairs, energy conservation improvements, accessibility modifications, or major appliances.

C. The Administration, in its discretion, may make a loan under the Program to refinance an eligible residence, taking into consideration factors including the following:

(1) Critical financial or personal circumstances that require restructuring of prior home mortgage loans;

(2) Yield requirements of the Program;

(3) Promotion of community development which may be enhanced by refinancing to enable rehabilitation or sale for purposes of homeownership; or

(4) Borrower's ineligibility to continue home financing under other programs of the Administration due to an increase in a borrower's income.

D. Uses for proceeds of an eligible refinancing loan under the Program include:

(1) The payoff and release of the existing mortgage loan or loans, including:

(a) The remaining principal balance of the existing mortgage loan or loans, and

(b) Accrued and unpaid interest due on an existing mortgage loan or loans at the time the loan closes;

(2) Eligible rehabilitation costs, if applicable; and

(3) Any of the following fees, taxes, premiums, or costs which are unpaid and due or overdue at the time the loan closes, up to a limit of 20 percent of the amount of the loan:

(a) Late fees,

(b) Real property taxes,

(c) Insurance premiums,

(d) Fees or costs, such as condominium or homeowners association fees as approved by the Administration,

(e) Reasonable costs previously expended by a mortgage lien holder in connection with initiating foreclosure, if approved by the Administration, or

(f) Application fees and loan review fees.

Md. Code Regs. 05.03.06.07

Regulation .07A amended effective July 30, 2007 (34:15 Md. R. 1349)