# Montgomery County Code — Part II. Local Laws, Ordinances, Resolutions, Etc.

## Chapter 25B. Housing Policy.

### Article III. Closing Cost Assistance Program.

**Sec. 25B-10. Establishment and purpose.**

  (a)   There is a County Closing Cost Assistance Program.

  (b)   The purpose of the program is to provide financing for closing costs to eligible homebuyers who otherwise might lack the resources to purchase homes and help reverse physical decline in neighborhoods with low rates of home ownership by encouraging home ownership.

**Sec. 25B-11. Definitions.**

  In this Article the following words have the meanings indicated:

  (a)   Administering agency means an agency as defined in Section 25B-2(b) that is designated by executive regulation to implement the closing cost assistance program.

  (b)   Closing cost means money that an eligible homebuyer pays in connection with the acquisition of real estate, including:

    (1)   fees or premiums for title examination, title insurance, or similar expenses;

    (2)   fees for preparing or filing a deed, settlement statement, or other documents;

    (3)   payments owed at settlement for property taxes or hazard insurance coverage;

    (4)   escrows for future payments of taxes, hazard insurance, and other expenses;

    (5)   fees for notarizing deeds and other documents;

    (6)   appraisal fees;

    (7)   fees for credit reports;

    (8)   transfer and recordation taxes and fees;

    (9)   fees or premiums for mortgage insurance;

    (10)   loan application fees, discount points and origination fees, prepaid interest;

    (11)   down payments; or

    (12)   any other reasonable and customary fee associated with the acquisition of real property.

  (c)   Eligible homebuyer means a person:

    (1)   who is buying and will hold title to a single family residence in the County;

    (2)   whose income from all adult household members does not exceed the greater of:

      (A)   maximum income limits established by the County Executive for the County Opportunity Housing Program; or

      (B)   an amount adopted by executive regulation under this Article;

    (3)

      (A)   who has not owned an interest in a personal residence or other residential real property within the preceding 3 years; or

      (B)   who may have owned property jointly with a spouse during the preceding 3 years, but whose personal circumstances have resulted in a need to buy a personal residence without the former spouse because of a legal separation, divorce, or death; and

    (4)   who resides or works in the County.

  (d)   Fund means the Closing Cost Assistance Fund.

  (e)   Loan means a loan of money made by the County under this Article.

  (f)   Program means the Closing Cost Assistance Program.

  (g)   Single family residence means a residential dwelling unit located in the County, including a townhouse, condominium or cooperative apartment unit, that has a sales price that does not exceed the maximum sale price set by executive regulation under this Article, and will be used as the primary residence of the eligible homebuyer.

**Sec. 25B-12. Loans.**

  (a)   A loan made under the program must be used to finance closing costs for the purchase of a single family residence by an eligible homebuyer.

  (b)   The maximum loan amount must not exceed the lesser of:

    (1)   5 percent of the sale price of the single family residence; or

    (2)   $7,500.

  (c)   An eligible homebuyer must sign a promissory note for a loan. The Executive may require other security for a loan.

  (d)   A loan should include terms that the Executive considers necessary to make housing purchases affordable to eligible homebuyers. The Executive must establish by regulation an interest rate for loans based on a benchmark representing the County's cost of borrowing, such as the rate the County pays on a recent issue of County general obligation bonds.

  (e)   In approving a loan, the Executive must:

    (1)   consider the eligible homebuyer's financial resources, including savings available to pay the closing costs, in relation to the purchase price of the home and the down payment requirements of any other lender; and

    (2)   give a high priority to homebuyers of low income or who buy single family residences in areas with a low rate of homeownership, determined according to criteria in Executive regulations.

  (f)   The Executive must require that a loan becomes due and payable when the single family residence is sold or transferred or no longer serves as the eligible homebuyer's primary residence. The Executive may waive a requirement of this subsection if the requirement would impose financial hardship on an eligible homebuyer.

  (g)   If a borrower defaults on a loan, the Executive may modify the rate of interest, the time or amount of payment, or any other term of a loan to assure repayment of the loan and achieve the purpose of the program.

  (h)   A loan should comply with all applicable federal and State guidelines to enable sale of the underlying mortgage in the secondary market when the lender expects to sell the mortgage.

**Sec. 25B-13. Program administration.**

  (a)   The County Executive may:

    (1)   delegate any power or duty under this Article to any agency, as defined in Section 25B-2(b); and

    (2)   enter into an agreement with an agency to administer this program.

  (b)   The Executive may:

    (1)   charge application fees or other fees to loan applicants or lenders;

    (2)   adopt regulations to administer the program;

    (3)   attach specific terms to any loan as necessary to carry out the purpose of the program;

    (4)   establish additional eligibility standards for a loan, taking into account the applicant's ability to pay, the cost of the single family residence, and other relevant factors;

    (5)   establish regulations to determine which items or portion of the closing costs can be included in the loan;

    (6)   enter into contracts with third parties who would make or service a loan made under this Article;

    (7)   enter into any necessary agreement with the State Department of Housing and Community Development to receive a delegation of the State settlement expense loan program under State law in the County; and

    (8)   take any other action necessary or convenient for the effective operation of the program.

**Sec. 25B-14. Closing cost assistance fund.**

  A revolving fund is established to be used to make loans and to pay expenses of the program. All appropriations and other receipts for the program must be placed in the fund, and all payments for program expenses must originate in the fund. Unappropriated surplus in the fund may be transferred through the appropriation process.

**Sec. 25B-15. False statements or reports.**

  (a)   A person may not knowingly make or cause any false statement or report to be made in any document required to be furnished in relation to a loan.

  (b)   A person applying for a loan may not knowingly make or cause any false statement or report to be made for the purpose of influencing an action on a loan application.

  (c)   Any person who violates any provision of subsection (a) or (b) of this section is guilty of a Class A offense.

**Sec. 25B-16. Annual report.**

  By March 1 of each year, the County Executive must submit an annual report for the preceding calendar year describing implementation of the program, including the number and dollar value of loans made, income characteristics of loan recipients, and the number and dollar value of any loan defaults.