Md. Code Regs. 05.04.06.08

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

Section 05.04.06.08 - Loan Terms and Requirements for Secured Loans

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.

Md. Code Regs. 05.04.06.08

Regulations .08 adopted as an emergency provision effective August 28, 1986 (13:20 Md. R. 2197); emergency status extended at 14:2 Md. R. 123; emergency status expired March 1, 1987
Regulations .08 adopted effective March 1, 1987 (14:4 Md. R. 414)
Regulations .08 adopted effective October 12, 1992 (19:20 Md. R. 1813)
Regulations .08, Residential Lead Paint Abatement Program, repealed and new Regulations .08, Lead Hazard Reduction Grant and Loan Program, adopted effective February 24, 1997 (24:4 Md. R. 290)
Regulation .08A, C amended effective March 7, 2011 (38:5 Md. R. 317)
Regulation .08C amended effective November 29, 1999 (26:24 Md. R. 1855)