In this subtitle the following words have the meanings indicated. “Adjusted annual income” means gross income from all sources with adjustments, as determined by the Department, made for unusual or temporary income items and long-term unusual expenses such as medical, rehabilitation, or special education expenses. “Adjusted annual income” includes: wages; investment income; Social Security payments; retirement payments; disability payments; and unemployment insurance payments. “Fund” means the Homeownership Programs Fund under Subtitle 5 of this title. “Household of limited income” means one or more individuals whose aggregate adjusted annual income does not exceed the upper income limits that the Secretary sets under § 4-807 of this subtitle. “Lot consolidation” means the acquisition of real property adjacent to and in connection with a residence financed by the Program to include the real property as part of the residence. “Median annual family income” means the median annual family income for the State, county, or area, whichever is greatest, as shown in the latest Census Bureau Report of the United States Department of Commerce. “Preferred interest rate” means an interest rate that the Department sets under § 4-806(c) of this subtitle. “Program” means the Maryland Home Financing Program. “Region” means an area of the State that the Department establishes comprising one or more counties. “Short-term loan” means a loan that, under the loan documents, is expected to be taken out by other financing within 7 years.

This subtitle applies only to loans that the Department makes under this subtitle or that were made before July 1, 1989, under the Maryland Home Financing Program, the Reverse Equity Loan Program, or the Homeowners’ Emergency Mortgage Assistance Program.

There is a Maryland Home Financing Program.

The purposes of the Program are to make, participate in making, and purchase: preferred interest rate loans to acquire, acquire and rehabilitate with or without demolition or lot consolidation, or refinance a primary residence by: households of limited income that will occupy single–unit primary residences; or owner–occupants of residential buildings with not more than four units, if each unit other than the owner’s will be occupied by a household of limited income; short–term construction loans to developers or nonprofit sponsors to construct or rehabilitate dwelling units that households of limited income can afford; short–term loans to nonprofit sponsors, as defined in Departmental regulations, to acquire and construct or acquire and rehabilitate, with or without demolition or lot consolidation, dwelling units that households of limited income can afford to buy under a purchase or lease–purchase contract; emergency assistance loans to households of limited income who, because of unemployment or other extraordinary hardship, cannot make current mortgage payments on their homes and risk forfeiting the title to their homes; reverse equity loans to elderly households of limited income for housing–related expenses or personal expenses that enable the owner to continue to occupy the home; and preferred interest rate loans to households that meet income standards set by the Department for the redemption of ground leases on their principal residence, including the transactional costs associated with the redemption.

The Department may: contract for services related to the Program; contract with private mortgage servicers to perform on behalf of the Department functions the servicers ordinarily perform, including foreclosure and employment of counsel; require payment of a nonrefundable application fee; purchase or commit to purchase from mortgage lenders notes or mortgages that meet the requirements of this subtitle, any regulations adopted under it, and appropriate Program directives; and without approval or execution by the Board of Public Works: assign a mortgage for value; release a mortgage; foreclose a mortgage; acquire property that secures a loan in default; encumber, sell, or otherwise dispose of property acquired in connection with a loan in default; sell a loan at a discount or on other terms acceptable to the Department; transfer to the Fund money received on the sale of a loan under item (vi) of this item; and repurchase or pay the cost of servicing a loan that has been sold under item (vi) of this item with money in the Fund and on terms acceptable to the Department.

The Department shall: manage the Program in a manner that: serves all areas of the State; and does not create or aggravate low-income concentrations that adversely affect communities; periodically set upper limits on adjusted annual income; use federal or State programs that complement or facilitate carrying out the Program; and adopt regulations to carry out the Program. The Department shall adopt policies to ensure that each loan made under the Program is made only to: a household that: when the loan is made, has an adjusted annual income at or below the applicable upper limit that the Secretary sets under § 4-807 of this subtitle; and cannot qualify for conventional or other available departmental financing to enable the owner to continue to occupy the home, or to acquire, acquire and rehabilitate with or without demolition or lot consolidation, or refinance a home; a developer that the Department reasonably believes can build or rehabilitate housing that a household of limited income can afford; and an owner-occupant of a residential building with not more than four units if each unit other than the owner’s will be occupied by a household of limited income. For each type of loan described in § 4–804 of this subtitle, the Department periodically shall set: appropriate terms, including deferred payments on principal and interest; and a preferred interest rate that may be as low as 0.0% or as high as is reasonable in light of the incomes of the proposed occupants. In setting these terms and interest rates, the Department shall take into account rates available in the conventional private housing market and the adjusted annual income and assets of prospective borrowers.

In setting upper limits on adjusted annual income, the Department shall consider factors including: the total income of each individual expected to live in the home; the size of the household; the cost of available housing facilities; the ability of the household to compete successfully in the conventional private housing market; and pertinent standards and definitions established for federal housing programs. Upper limits on adjusted annual income may vary for different: types of housing; types of financing offered by the Program; and regions. Within the upper limits on adjusted annual income, lower income limit ranges and lower interest rates may be established for loans to households with adjusted annual incomes in the lower ranges. Except for loans made under § 4–804(4) and (6) of this subtitle, the upper limits on adjusted annual income established under subsection (a) of this section may not exceed the median annual family income.

The Program shall be operated with the money in the Fund.

To apply for a loan under this subtitle, an applicant shall submit: a completed application in a form that the Department requires; a copy of the applicant’s latest State income tax return or other available verification of income, unless the application is for a loan under § 4-804(1)(i) or (2) of this subtitle; and any other information or documentation that the Department considers necessary to make a determination on the loan.

To qualify for a loan under § 4-804(1)(i), (4), or (5) of this subtitle, an applicant: shall be a member of a household of limited income; on closing of the loan, shall intend to reside in the home to be financed; may not own other property used as the applicant’s personal residence; and in the estimation of the Department, shall lack the financial resources to obtain a private conventional mortgage or to qualify for other departmental loan programs. To qualify for a loan under § 4-804(1)(ii) of this subtitle, an applicant: shall agree in writing to live as an owner-occupant in one of the units of a residential building with no more than four units; shall agree in writing to rent each unit other than the applicant’s unit to a household of limited income; and in the estimation of the Department, shall lack the financial resources to obtain a private conventional mortgage or qualify for other departmental loan programs. To qualify for a loan under § 4-804(2) of this subtitle, an applicant shall agree to sell or rent each dwelling unit constructed or rehabilitated with the proceeds of the loan to a household of limited income. To qualify for a loan under § 4–804(6) of this subtitle, an applicant shall: own and occupy the home as the applicant’s principal residence; and meet the income requirements set by the Department.

To qualify for an emergency assistance loan made under § 4-804(4) of this subtitle, an applicant: shall be unable to keep payments current on the applicant’s home mortgage because of unforeseeable adverse personal or economic circumstances; shall be at risk of forfeiting title to the applicant’s home; and reasonably may be expected to resume regular mortgage payments within 24 months after the first mortgage assistance payment is provided. For an emergency assistance loan under § 4-804(4) of this subtitle: the Department shall consider the amount of equity in the property; and the loan may not exceed an amount equal to 36 payments of principal and interest on all superior liens, plus: late fees; taxes; insurance payments; and other payments needed for the loan to be current.

To qualify for a reverse equity loan under § 4-804(5) of this subtitle, an applicant shall: be at least 62 years old when the loan closes; and need financial assistance with housing-related expenses or personal expenses that enable the owner to continue to occupy the home.

To qualify for a short-term construction loan under § 4-804(2) of this subtitle, a developer or nonprofit sponsor shall: provide construction costs, marketing data, and other information the Department requires; and have a commitment from the Department under § 4-815(j) of this subtitle for permanent financing for the sale of each residence to be built or rehabilitated with the short-term construction loan. To qualify for a short-term loan under § 4-804(3) of this subtitle, a nonprofit sponsor: shall provide: information on the costs of the proposed undertaking; marketing data; and other information the Department requires; and shall have: a commitment from the Department for permanent financing for the sale of each residence built or rehabilitated with the short-term loan; or approval from the Department to rent the residence subject to a lease purchase agreement acceptable to the Department.

To qualify for a preferred interest rate loan to refinance an existing home under § 4-804(1) of this subtitle, an applicant shall: be unable to keep payments current on the applicant’s home mortgage because of exceptional adverse personal or economic circumstances; and risk forfeiting title to the applicant’s home.

As to each loan, the Department may set: the principal amount, subject to subsection (f) of this section; the term of the loan, not to exceed 40 years except in the case of a reverse equity loan made under subsection (b)(3) of this section; the interest rate, which may be adjustable under subsection (g) of this section; the principal repayment terms, subject to subsections (b) and (c) of this section; and other terms that the Department considers necessary to achieve the purposes of the Program. A loan may provide for immediate acceleration if the borrower violates § 4-816 of this subtitle or if the loan is in default. In the case of a preferred interest rate loan under § 4-804(1) of this subtitle, a loan may provide for full acceleration of principal after 5 years if the borrower: no longer qualifies as a household of limited income; and can qualify for conventional mortgage financing. In the case of a reverse equity loan made under § 4-804(5) of this subtitle, a loan may provide for: full or partial deferral on payment of interest and principal until sale, conveyance in accordance with a will or trust instrument, or other transfer of the mortgaged property or a beneficial interest in the property; and forgiveness of accrued interest in excess of the available equity in the mortgaged property when the conveyance occurs. In the case of an emergency assistance loan under § 4-804(4) of this subtitle, a loan may provide for full or partial deferral of payment of interest and principal until a stated date when the Department reasonably anticipates that the borrower will be able to make full or partial payments. A mortgage shall include the right of the Department to: foreclose the mortgage and take title to the foreclosed property or convey title to a buyer; and obtain a deficiency judgment. Repayment of a loan shall be secured by a recorded lien on the real property. The lien may be a subordinate lien. A lien securing an emergency assistance loan may be released if the release is in the interest of the Department. The Department may require a mortgage to be insured at the borrower’s expense by a federal, State, or private instrumentality. For a preferred interest loan under § 4–804(1) of this subtitle, the amount of the loan and any prior recorded liens outstanding may not exceed the value of the secured property, as determined by the Department when the loan is closed, plus settlement expenses. For a reverse equity loan under § 4–804(5) of this subtitle, the principal amount of the loan and any prior liens outstanding may not exceed the value of the secured property as determined by the Department from time to time. For a short–term loan under § 4–804(2) of this subtitle, the amount of the loan may not exceed the total commitments for permanent financing for buyers, including any commitments of federal, State, or local money to subsidize the cost of the dwelling units. For a preferred interest rate loan under § 4–804(6) of this subtitle, the Department may set the maximum amount of the loan, including the maximum amount that may be used for the transactional costs associated with the redemption. After full disclosure to the borrower when the loan is made, the Department may take as security an adjustable interest rate mortgage under which any rate adjustment must: follow written notice to the borrower; and be based on an increase or decrease in household income. On default, the Department may modify the interest rate, the time or amount of payment, or any other term of the loan to facilitate repayment of the loan and achieve the purposes of the Program. For a mortgage securing a loan under this subtitle, the Department may allow: the transfer of the mortgaged property or an interest in the property without monetary consideration: to a spouse, child, or other immediate family member; or in connection with the death of a borrower, a divorce decree, or a legal separation agreement; and assumption of the mortgage by a transferee described in item (1)(i) of this subsection for monetary consideration and by any other transferee with or without consideration if the transferee qualifies as a household of limited income and satisfies all other Program requirements. For the developer of housing that will be priced so as to be affordable to households of limited income, the Department may commit to reserve for a fixed period a fixed amount of Program money to be available to finance preferred interest rate mortgage loans for households of limited income who seek to purchase from the developer fully constructed or rehabilitated homes.

A person may not knowingly make or cause to be made any material misstatement of fact, including an understatement or overstatement of financial condition, in a statement or report that: is in or relates to a loan application under this subtitle; or affects a loan already made under this subtitle. A person who violates this section is guilty of a misdemeanor and on conviction is subject to imprisonment not exceeding 2 years or a fine not exceeding $5,000 or both.