<subtitle num="01" heading="General Provisions"> <chapter num="01" heading="Procedures for Hearings in Contested Cases"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter contains procedures for administrative hearings in contested cases. These procedures are required by the Maryland Administrative Procedure Act, State Government Article, §10-201 et seq., Annotated Code of Maryland, and apply to all contested cases within the Department.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Contested case” means a proceeding to determine:</text> <paragraph num="(a)"> <text>A right, duty, statutory entitlement, or privilege of a person that is required by statute or constitution to be determined only after an opportunity for an agency hearing; or</text> </paragraph> <paragraph num="(b)"> <text>The grant, denial, renewal, revocation, suspension, or amendment of a license that is required by statute or constitution to be determined only after an opportunity for an agency hearing.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Decision maker” means the person or persons with authority to decide a contested case or designated by the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(4)"> <text>“Party” means one whose legal rights, duties, statutory entitlements, or privileges will be affected by the outcome of a contested case.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Notice and Hearing."> <paragraph num="A."> <text>In a contested case all parties shall be afforded an opportunity for hearing after reasonable notice.</text> </paragraph> <paragraph num="B."> <text>The notice shall:</text> <paragraph num="(1)"> <text>State the time, place, and nature of the hearing;</text> </paragraph> <paragraph num="(2)"> <text>State the legal authority under which the hearing is to be held;</text> </paragraph> <paragraph num="(3)"> <text>Cite the particular sections of the statutes and regulations, including procedural regulations, that are pertinent; and</text> </paragraph> <paragraph num="(4)"> <text>State concisely and simply:</text> <paragraph num="(a)"> <text>The facts that are asserted, or</text> </paragraph> <paragraph num="(b)"> <text>If the facts cannot be stated in detail when the notice is given, the issues that are involved.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Hearing Officer."> <text>The decision maker may designate a hearing officer who shall conduct the hearing and submit in writing to the decision maker proposed findings of fact and proposed conclusions of law.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Representation."> <paragraph num="A."> <text>A party may appear in proper person or be represented by counsel.</text> </paragraph> <paragraph num="B."> <text>A corporation may be represented by an officer, agent, or attorney.</text> </paragraph> <paragraph num="C."> <text>Parties and their attorneys shall give written notice to the hearing officer of their names and addresses in advance of the hearing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Evidence."> <paragraph num="A."> <text>Probative evidence that reasonable and prudent individuals commonly accept in the conduct of their affairs may be admitted at a hearing and given probative effect.</text> </paragraph> <paragraph num="B."> <text>Incompetent, irrelevant, immaterial, or unduly repetitious evidence may be excluded.</text> </paragraph> <paragraph num="C."> <text>Documentary evidence may be submitted by parties before and at the hearings and for such period of time that the hearing officer may designate the record to remain open after the hearing.</text> </paragraph> <paragraph num="D."> <text>On a genuine issue in a contested case a party may call witnesses and cross examine opposing witnesses.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Hearing."> <paragraph num="A."> <text>The hearing shall be open to the public, unless otherwise provided by law.</text> </paragraph> <paragraph num="B."> <text>Upon written notice 7 days in advance of a hearing and upon payment of costs, a party may request that a hearing be transcribed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Ex Parte Communications."> <paragraph num="A."> <text>Persons other than advisory staff may not communicate ex parte with the hearing officer or decision maker.</text> </paragraph> <paragraph num="B."> <text>Ex parte communications received in violation of §A shall be placed in the record and disclosed to all parties who shall then have 10 days within which to rebut them.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Record."> <paragraph num="A."> <text>In the determination of a contested case, the decision maker may consider only evidence that is in the record.</text> </paragraph> <paragraph num="B."> <text>The record in a contested case shall include:</text> <paragraph num="(1)"> <text>Pleadings and motions;</text> </paragraph> <paragraph num="(2)"> <text>Documentary evidence;</text> </paragraph> <paragraph num="(3)"> <text>Statements;</text> </paragraph> <paragraph num="(4)"> <text>Transcripts;</text> </paragraph> <paragraph num="(5)"> <text>Staff memoranda, unless privileged;</text> </paragraph> <paragraph num="(6)"> <text>Proposed findings of fact, proposed conclusions of law, and exceptions to them;</text> </paragraph> <paragraph num="(7)"> <text>Preliminary and final decisions; and</text> </paragraph> <paragraph num="(8)"> <text>Other writing germane to the case and not otherwise privileged.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Decision."> <paragraph num="A."> <text>The decision maker may adopt, modify, or rewrite a hearing officer's proposed findings of fact and proposed conclusions of law.</text> </paragraph> <paragraph num="B."> <text>If a decision maker or a majority of them has not heard the evidence, a proposed decision, including findings of fact and conclusions of law, shall be served on each party. Parties adversely affected by the proposed decision shall be afforded the opportunity, within 10 days after receipt of the proposed decision, to file exceptions and present argument to the decision maker or the majority of them.</text> </paragraph> <paragraph num="C."> <text>Copies of the final decision and findings of fact and conclusions of law shall be delivered or mailed promptly to all parties or their attorneys.</text> </paragraph> <paragraph num="D."> <text>Instead of a decision, a contested case may be disposed of by agreed settlement, consent order, or default.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Time Periods."> <text>For good cause, the hearing officer or decision maker may extend or waive time periods provided in these regulations.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Appeal."> <paragraph num="A."> <text>Upon issuance of a final decision, an aggrieved party may proceed to exhaust any remaining administrative remedies or seek judicial review in accordance with applicable law.</text> </paragraph> <paragraph num="B."> <text>Upon notice of appeal the record shall be transmitted promptly to the appropriate appellate tribunal, and within the time period prescribed in the Maryland Rules of Procedure governing appeals from administrative agencies.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Interpretation."> <text>These regulations are meant to complement the Maryland Administrative Procedure Act. In the event of conflict the Act takes precedence over them.</text> </regulation> <annotations> <annotation type="Authority">State Government Article, §10-206, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 7, 1982 (8:26 Md. R. 2105)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.04.02 to COMAR 05.01.01</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07, Appeals to the Secretary, repealed and new</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13, Procedures for Hearing Contested Cases, adopted</annotation> <annotation type="History" subtype="Administrative History">effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective April 5, 1999 (26:7 Md. R. 536)</annotation> </annotations> </chapter> <chapter num="02" heading="Public Information Requests"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations set out the procedures for the filing of requests with any of the agencies, boards, commissions, councils, corporations, authorities, trusts, and divisions within the Department of Housing and Community Development for the inspection or copying of records under State Government Article, §§10-611—10-630, Annotated Code of Maryland. It is the policy of the Department to facilitate public access to the records of the Department, when this access is allowed by law, by minimizing costs and time delays to persons requesting information. In accordance with this policy, the Department will provide for the free flow of information to the public, whenever possible, without recourse to the procedures set forth in this chapter.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means State Government Article, §§10-611—10-630, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Applicant” means any person requesting disclosure of public records.</text> </paragraph> <paragraph num="(3)"> <text>“Department” means the Department of Housing and Community Development, and any of the agencies, boards, commissions, corporations, authorities, trusts, or divisions included within the Department of Housing and Community Development under Article 83B, §1-204, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Custodian” means the head of an organizational unit of the Department having personal custody and control of public records of that organizational unit of the Department</text> </paragraph> <paragraph num="(5)"> <text>“Official custodian” means the Secretary of Housing and Community Development, or the Secretary's designee, who is responsible for the maintenance, care, and keeping of the public records of the Department. Unless otherwise provided by law, the Secretary, or the Secretary's designee, is the official custodian of the Department's records.</text> </paragraph> <paragraph num="(6)"> <text>“Public records” has the meaning stated in State Government Article, §10-611(g), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(8)"> <text>“Working day” means each day except Saturdays, Sundays, and State holidays between the hours of 8:30 a.m. and 4:45 p.m.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Who May Request."> <text>A person may request to inspect or copy any public record that is in the custody and control of the Department and which, under the provisions of the Act, the Department is required to make available to the public.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Necessity for Written Request."> <paragraph num="A."> <text>The custodian may make public records available for inspection or copying, or both, by an applicant without a written request except as set forth below. Written requests shall be required in all instances when the public records requested may contain information relating to any of the following:</text> <paragraph num="(1)"> <text>Adoption records;</text> </paragraph> <paragraph num="(2)"> <text>Welfare records;</text> </paragraph> <paragraph num="(3)"> <text>Letters of reference;</text> </paragraph> <paragraph num="(4)"> <text>Circulation records;</text> </paragraph> <paragraph num="(5)"> <text>Gifts;</text> </paragraph> <paragraph num="(6)"> <text>Retirement records;</text> </paragraph> <paragraph num="(7)"> <text>Personnel records;</text> </paragraph> <paragraph num="(8)"> <text>Hospital records;</text> </paragraph> <paragraph num="(9)"> <text>Student records;</text> </paragraph> <paragraph num="(10)"> <text>Medical and psychological information;</text> </paragraph> <paragraph num="(11)"> <text>Sociological information;</text> </paragraph> <paragraph num="(12)"> <text>Commercial information;</text> </paragraph> <paragraph num="(13)"> <text>Public employee information;</text> </paragraph> <paragraph num="(14)"> <text>Financial information;</text> </paragraph> <paragraph num="(15)"> <text>Security of an information system;</text> </paragraph> <paragraph num="(16)"> <text>Licensing records;</text> </paragraph> <paragraph num="(17)"> <text>Interagency and intra-agency documents;</text> </paragraph> <paragraph num="(18)"> <text>Examinations;</text> </paragraph> <paragraph num="(19)"> <text>Research projects;</text> </paragraph> <paragraph num="(20)"> <text>Appraisals of real property;</text> </paragraph> <paragraph num="(21)"> <text>Information concerning investigations;</text> </paragraph> <paragraph num="(22)"> <text>Information which may cause substantial injury to the public interest;</text> </paragraph> <paragraph num="(23)"> <text>Privileged or confidential information; or</text> </paragraph> <paragraph num="(24)"> <text>Information protected by state or federal law, court rule, or court order.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A custodian may require a written request for other public records if in the custodian's discretion the request will facilitate the response to the request for records.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Contents of Written Request."> <text>A written request shall contain the applicant's name and address, be signed by the applicant, and shall reasonably identify by brief description the record sought.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Filing the Request."> <text>A written request for a record in the custody and control of the Department shall be addressed to the official custodian. The official custodian shall promptly direct the request to the custodian of the record.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Response to Request."> <paragraph num="A."> <text>If the custodian decides to grant a written request for inspection, he shall produce the record for inspection immediately or within a reasonable period, not to exceed 30 days from the date of receipt of the request when that period of time is needed to retrieve the information.</text> </paragraph> <paragraph num="B."> <text>If the custodian decides to deny the written request, he shall do so within 30 days of receipt of the written request and immediately upon deciding to deny the request, shall notify the applicant of the denial. Any reasonably severable portion of a record shall be provided after deletion of those portions which may be withheld from disclosure. Within 10 working days of the denial, the custodian shall give the applicant a written statement that gives the reasons and legal authority for the denial and contains a notice of the remedies for review of the denial.</text> </paragraph> <paragraph num="C."> <text>If a requested public record is not in the custody or control of the person to whom written application is made, that person shall, within 10 working days of the receipt of the request, so notify the applicant. If that person knows the name of the custodian of the record or the location or possible location of the record, this information shall also be given to the applicant.</text> </paragraph> <paragraph num="D."> <text>With the consent of the applicant, any time limit imposed by §§A—C may be extended for an additional period not to exceed 30 days.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Notification of Persons Who May be Affected by Disclosure."> <text>The custodian, unless prohibited by law, may notify a person who could be adversely affected by a disclosure of a record to the applicant who has made a request for inspection or copying of the record. The custodian may consider the views of the person before deciding whether to disclose the record to the applicant.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Repealed." /> <regulation prefix="Regulation" num=".10" heading="Repealed." /> <regulation prefix="Regulation" num=".11" heading="Records Destroyed or Lost."> <text>If the requested record has been destroyed or lost, the custodian to whom the application is made shall notify the applicant of this fact within 10 working days of receipt of the request, and shall explain in the response the reasons why the record cannot be produced.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Review of the Denial."> <paragraph num="A."> <text>If the written request is denied by the custodian, the applicant may request an administrative hearing on the denial within 30 days after receipt of the notification of the written denial.</text> </paragraph> <paragraph num="B."> <text>If a hearing is requested by the applicant, the hearing shall be conducted by a hearing officer designated by the Secretary and the hearing shall be governed by COMAR 05.01.01. After the hearing the hearing officer shall prepare a recommended decision which shall be submitted to the Secretary. The Secretary shall issue the final decision of the Department.</text> </paragraph> <paragraph num="C."> <text>If the administrative hearing results in a total or partial denial of the written request, the applicant may file an appropriate action in the circuit court under §10-623 of the Act.</text> </paragraph> <paragraph num="D."> <text>The applicant may file an action for judicial enforcement under §10-623 of the Act without exhausting the administrative remedy of §A, above.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Disclosure Against Public Interest."> <text>If, in the opinion of the Secretary, disclosure of any public record which is otherwise required to be disclosed under the Act would do substantial injury to the public interest, the Secretary may temporarily deny the request in writing, and apply within 10 working days of the denial to the appropriate circuit court for an order permitting the Secretary to continue to deny or restrict the disclosure. Notice of the application filed with the circuit court shall be served upon the applicant in the same manner provided for service of process by the Maryland Rules of Procedure.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Fees."> <paragraph num="A."> <text>The Department may charge reasonable fees in accordance with the following fee schedule:</text> <paragraph num="(1)"> <text>Copies. The fee for each copy is 25 cents per page when reproduction can be made by a photocopying machine within the Department. When records are not amenable to photocopying (for example, punch cards, magnetic tapes, blueprints and microfilm), the fee for reproducing the record will be based on the actual cost of reproduction.</text> </paragraph> <paragraph num="(2)"> <text>Certification of Copies. When a person requests that a copy of a record be certified as a true copy of the original public record, an additional cost of $1 per page will be charged.</text> </paragraph> <paragraph num="(3)"> <text>Searching or Record Preparation. There is no charge for the first 2 hours that are needed to search for a public record and prepare it for inspection. The custodian may charge a reasonable fee for time that an official or employee of the Department spends to search for records, or prepare records for inspection and copying.</text> </paragraph> <paragraph num="(4)"> <text>A charge may not be made when the amount of the fee is $1 or less.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Notwithstanding §A above, if the fees for copies, printouts, photographs, or certified copies of any record are specifically prescribed by a law other than the Act or this regulation the specific fee contained in that law shall determine the amount charged for that record.</text> </paragraph> <paragraph num="C."> <text>If the custodian is unable to copy a record within the Department, the custodian shall make arrangements for the prompt reproduction of the record at public or private facilities outside the Department. The custodian shall either collect from the applicant a fee which is sufficient to pay the actual cost of reproduction or direct the applicant to pay the cost of reproduction directly to the facility making the copy.</text> </paragraph> <paragraph num="D."> <text>Before searching for, preparing, or copying a record, the custodian shall estimate the cost of searching for, preparing and copying the record and obtain the agreement of the applicant that the cost shall be paid. The custodian may demand pre-payment of any estimated fee before searching for, preparing and copying the record. If such a payment is required, the time limitations contained elsewhere in these regulations may not commence until the payment is made.</text> </paragraph> <paragraph num="E."> <text>Upon request the official custodian may waive or reduce any fee charged pursuant to this regulation if the custodian determines that the waiver or reduction is in the public interest. The official custodian shall consider, among other relevant factors, the ability of the applicant to pay the cost or fee.</text> </paragraph> <paragraph num="F."> <text>If the applicant requests that copies be mailed or delivered to the applicant, the custodian may charge the applicant for the cost of postage or delivery to the applicant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Time of Inspection."> <text>An applicant may inspect any public record which he is entitled to inspect during the normal working hours of the Department.</text> </regulation> <regulation prefix="Regulation" num=".16" heading="Place of Inspection."> <text>The place of inspection shall be the place where the document is located unless the custodian determines that another place of inspection is more suitable.</text> </regulation> <annotations> <annotation type="Authority">State Government Article, §§10-613 and 10-621, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 7, 1982 (8:26 Md. R. 2105)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01, .07, .11, .12D, .13, .14, and .15 amended and .09</annotation> <annotation type="History" subtype="Administrative History">repealed effective June 18, 1984 (11:12 Md. R. 1062)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.04.03 to COMAR 05.01.02</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective April 5, 1999 (26:7 Md. R. 536)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D amended effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 repealed effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12A amended effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14A amended effective November 14, 1988 (15:23 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14A, D amended effective December 24, 2012 (39:25 Md. R. 1610)</annotation> </annotations> </chapter> <chapter num="03" heading="Petition for Declaratory Rulings"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations are promulgated pursuant to State Government Article, § 10-304, Annotated Code of Maryland, for the purpose of establishing procedures by which the public may petition the Department of Housing and Community Development for a declaratory ruling.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In these regulations, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(2)"> <text>“Secretary” means the Secretary of Housing and Community Development or the Secretary's designee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Who May File."> <text>Any interested person may file a petition for declaratory ruling with respect to the manner in which the Department would apply a regulation or order of the Department, or a statute that the Department enforces, to a person or property on the facts set forth in the petition.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Where to File."> <text>A petition shall be filed with the Secretary for the Secretary's consideration and disposition.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Form."> <text>The petition shall:</text> <paragraph num="A."> <text>Be in writing;</text> </paragraph> <paragraph num="B."> <text>Contain a detailed statement of the facts on which the petition is based;</text> </paragraph> <paragraph num="C."> <text>Fully set forth the regulations or statutes involved;</text> </paragraph> <paragraph num="D."> <text>Pose the question of whether, and in what manner, the regulations or statutes apply to the petitioner under the facts contained in the petition;</text> </paragraph> <paragraph num="E."> <text>Contain the name, address, and telephone number of the petitioner; and</text> </paragraph> <paragraph num="F."> <text>Contain a statement by the petitioner, under oath, that the facts contained in the petition are true.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Consideration and Disposition."> <text>The Secretary shall consider the petition and may issue the declaratory ruling requested. The Secretary may require argument on the petition. A declaratory ruling is binding upon the agency and the petitioner, to the extent permitted by law, on the facts alleged. Any declaratory ruling issued shall be in writing and shall state the reasons for the decision. A copy of the declaratory ruling shall be delivered to the petitioner.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Agency File."> <text>The Department shall maintain a file of all petitions submitted and the declaratory rulings issued. This file shall be available for public inspection to the extent permitted by law.</text> </regulation> <annotations> <annotation type="Authority">State Government Article, §10-304, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 14, 1988 (15:23 Md. R. 2656)</annotation> </annotations> </chapter> <chapter num="04" heading="Petition for Adoption of Regulations"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations are promulgated pursuant to State Government Article, § 10-122, Annotated Code of Maryland, for the purpose of establishing procedures by which the public may petition the Department of Housing and Community Development for the adoption of regulations.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In these regulations, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(2)"> <text>“Secretary” means the Secretary of Housing and Community Development or the Secretary's designee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Who May File."> <text>Any interested person may file a petition with the Secretary requesting the promulgation, amendment, or repeal of any regulation.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Form."> <text>The petition shall:</text> <paragraph num="A."> <text>Be in writing;</text> </paragraph> <paragraph num="B."> <text>Contain a clear and concise statement of the regulation, amendment, or repeal which is sought;</text> </paragraph> <paragraph num="C."> <text>Contain a statement of reasons in support of the proposed regulation change; and</text> </paragraph> <paragraph num="D."> <text>Contain the name, address, and telephone number of the petitioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Petition Filed."> <text>The petition shall be filed with the Secretary for the Secretary's consideration and disposition. The time period for response to a petition begins when the petition is received by the Secretary.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Disposition."> <text>Within 60 days after receipt of the petition, the Secretary shall either deny the petition in writing, stating the reasons for the denial, or initiate the procedures for adoption of the regulation as submitted or with appropriate modifications as determined by the Secretary to be in the best interest of the Department.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Agency File."> <text>The Department shall maintain a file of all petitions submitted and the responses. This file shall be available for public inspection to the extent permitted by law.</text> </regulation> <annotations> <annotation type="Authority">State Government Article, §10-122, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 14, 1988 (15:23 Md. R. 2656)</annotation> </annotations> </chapter> <chapter num="05" heading="Suspensions and Debarments"> <regulation prefix="Regulation" num=".01" heading="General."> <text>The purpose of this chapter is to promote the best interest of the State and the Department, and to protect the integrity of Departmental programs by establishing the Department's policy, as well as specifying grounds and setting forth procedures regarding suspensions and debarments.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>This chapter is in addition to other remedies which may be available to the Department by applicable laws and regulations. Therefore, the provisions of this chapter are intended to be cumulative to, and not exclusive of or as a substitute for, other provisions of applicable laws and regulations where any of the grounds for suspension and debarment may exist. Further, this chapter is in addition to, and does not supersede, any applicable federal or State laws and regulations. In the event of any conflict between the provisions of this chapter and applicable federal or State laws and regulations, the provisions of the federal or State laws and regulations shall control to the extent of that conflict.</text> </paragraph> <paragraph num="B."> <text>A proceeding under this chapter is not a contested case subject to those provisions of State Government Article, §10-201, et seq., Annotated Code of Maryland, for the adjudication of contested cases.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Attorney General” means the Attorney General of Maryland or the Attorney General's designee.</text> </paragraph> <paragraph num="(2)"> <text>“Conviction” includes an accepted plea of nolo contendere, or an accepted plea of guilty.</text> </paragraph> <paragraph num="(3)"> <text>“Debarment” means an administrative action taken by the Secretary disqualifying a person from participating in any program of the Department, including, but not limited to, acting as a developer, builder, contractor or subcontractor to a contractor, grantee, consultant, management company, borrower, owner, or acting as a supplier for work or services being performed for or by the Department, or in connection with a project or residence assisted, funded, financed, insured or otherwise sponsored in whole or in part by the Department, or any combination of these disqualifications.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State, including the agencies, boards, commissions, councils, corporations, authorities, trusts, divisions, and all other entities declared by law to be part of the Department.</text> </paragraph> <paragraph num="(5)"> <text>“Governmental entity” means the United States, any state, any governmental agency created by interstate compact, county, bi-county or multi-county governmental agency located within a state, municipality, or any unit of government of the United States, or of any state including any subunit within any of these units.</text> </paragraph> <paragraph num="(6)"> <text>“Person” means an individual, corporation, partnership, or other legal or business entity.</text> </paragraph> <paragraph num="(7)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(8)"> <text>“Suspension” means an administrative action taken by the Secretary disqualifying a person, on a temporary or limited basis, or pending a decision on debarment, from participating in a program of the Department, including, but not limited to, bidding or submitting proposals or acting as a developer, builder, contractor or subcontractor, grantee, consultant, management company, borrower, owner, or acting as a supplier for work or services being performed for or by the Department, or in connection with a project assisted, funded, financed, insured or otherwise sponsored in whole or in part by the Department, or some combination of these disqualifications.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Policy."> <text>It is the Department's policy that:</text> <paragraph num="A."> <text>If the grounds specified in Regulation .05 exist, a person may be debarred or suspended from participating in the Department's programs;</text> </paragraph> <paragraph num="B."> <text>The Department may not knowingly accept any person suspended or debarred under this chapter to perform work for the Department;</text> </paragraph> <paragraph num="C."> <text>Suspensions and debarments imposed under this chapter shall be accomplished in accordance with the procedures set forth in Regulation .06.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Grounds for Suspension and Debarment."> <paragraph num="A."> <text>A person may be suspended or debarred if that person has:</text> <paragraph num="(1)"> <text>Been rated unsatisfactory by the Department after participation in one or more programs of the Department as a result of failure to:</text> <paragraph num="(a)"> <text>Comply with the rules, regulations, or guidelines of the Department,</text> </paragraph> <paragraph num="(b)"> <text>Perform in accordance with the terms and provisions of any loan document, grant agreement, loan origination or servicing contract, contract for the provision of goods or services, or any other type of contract or agreement with the Department or other governmental entity,</text> </paragraph> <paragraph num="(c)"> <text>Maintain or make available for inspection full and complete records required or requested by the Department,</text> </paragraph> <paragraph num="(d)"> <text>Respond in a timely manner to reasonable requests or inquiries by the Department or other governmental entities or persons having jurisdiction, concerning any contract, loan, grant, subsidy, or other assistance, of the Department,</text> </paragraph> <paragraph num="(e)"> <text>Remedy errors, defects, or related matters determined to exist by the Department, in the exercise of its reasonable judgment, in a timely manner, or</text> </paragraph> <paragraph num="(f)"> <text>Comply with Executive Order 01.01.1989.18, dated November 28, 1989, which requires any recipient of State contracts, grants, loans or other funds to maintain a drug and alcohol free workplace, and any regulations issued in accordance with this, or any other State law, regulation, or program requirement concerning drug use or drug trafficking activities in the State;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Been placed on any disapproved or debarred list maintained by any governmental entity;</text> </paragraph> <paragraph num="(3)"> <text>Been, or currently is, the subject of an investigation by any federal, state or local governmental entity for alleged criminal or civil violations of laws or regulations enforced by these entities;</text> </paragraph> <paragraph num="(4)"> <text>Been convicted under the provisions of or entered into a consent decree or cease and desist order, or has admitted, in writing or under oath during the course of an official investigation or other proceeding, to acts or omissions which would constitute a violation of any federal, state, or local law, including the:</text> <paragraph num="(a)"> <text>Maryland Antitrust Act, Commercial Law Article, §§11-201—11-213, Annotated Code of Maryland, for acts arising out of the submission of bids or proposals for a contract with a governmental entity,</text> </paragraph> <paragraph num="(b)"> <text>Antitrust laws of another state or of the federal government for acts arising out of the submission of bids or proposals for a contract with a governmental entity,</text> </paragraph> <paragraph num="(c)"> <text>Provisions of Title 18 of the United States Code for violation of the Racketeer Influence and Corrupt Organizations Act, 18 U.S.C. §1961 et seq., or the Mail Fraud Act, 18 U.S.C. §1341 et seq., for acts arising out of the submission of bids or proposals for a contract with a governmental entity; or</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Acted in a manner which indicates a lack of moral or ethical integrity in carrying out the person's responsibilities, including but not limited to the following acts or omissions which shall constitute prima facie evidence of a lack of moral or ethical integrity:</text> <paragraph num="(a)"> <text>Failure to disclose relevant and material information on an application, certification, opinion representation grant, loan, or other agreement with the Department or any other governmental entity, or</text> </paragraph> <paragraph num="(b)"> <text>Knowingly or negligently causing or permitting false statements or misrepresentations of fact to be entered on an application provided by the Department, or any contract or certification, or agreement with the Department or any other governmental entity.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A person that is a business entity also may be debarred or suspended if:</text> <paragraph num="(1)"> <text>The Secretary finds the business entity has been formed or established in a manner intended to evade the purpose of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>Any of the individuals related to the business entity as follows are debarred or suspended:</text> <paragraph num="(a)"> <text>An officer of the entity;</text> </paragraph> <paragraph num="(b)"> <text>A director of the entity;</text> </paragraph> <paragraph num="(c)"> <text>A stockholder of the entity;</text> </paragraph> <paragraph num="(d)"> <text>A stockholder of a corporate general or limited partner of the entity;</text> </paragraph> <paragraph num="(e)"> <text>A general partner of the entity;</text> </paragraph> <paragraph num="(f)"> <text>A limited partner of the entity;</text> </paragraph> <paragraph num="(g)"> <text>A principal of the entity; or</text> </paragraph> <paragraph num="(h)"> <text>An individual who controls the business activities of the entity.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>If a person has been debarred under this chapter, the person's successors, assigns, subsidiaries, or affiliates also are considered debarred unless exempted in writing by the Secretary.</text> </paragraph> <paragraph num="D."> <text>The debarment or suspension of the business entity identified in §B(2)(a)—(h) of this regulation shall continue for the period of the individual's debarment or suspension.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Suspension and Debarment Procedures."> <paragraph num="A."> <text>When grounds for suspension or debarment as described in Regulation .05 exist, the Secretary shall notify the person by personal delivery or in writing by certified mail, return receipt requested, that suspension or debarment is under consideration and the basis for suspension or debarment. The person may be suspended pending the outcome of an administration review proceeding, in which case the notice shall so state, and suspension shall be effective upon mailing or personal delivery.</text> </paragraph> <paragraph num="B."> <text>The person may request an administrative review proceeding by notifying the Secretary in writing within 15 days from the date of receipt of the notice.</text> </paragraph> <paragraph num="C."> <text>If no administrative review proceeding is requested, the opportunity for review shall be considered to be waived and the Secretary shall determine whether to suspend or debar the person based on all information germane to the issue and available to the Secretary. The person shall be notified of the decision in writing by certified mail, return receipt requested.</text> </paragraph> <paragraph num="D."> <text>If an administrative review proceeding is requested, the Secretary shall conduct the proceeding within 30 days from the receipt of the person's request. The time for conducting the review may be extended up to 30 days upon written request to the Secretary or by the Secretary with notice to all parties.</text> </paragraph> <paragraph num="E."> <text>The person may be represented by counsel at the administrative review proceeding and may present any evidence or argument relevant to the proposed suspension or debarment. If counsel is to be present, the person shall notify the Secretary at least 5 days before the scheduled review proceeding date. The Secretary may request other persons to present evidence or argument as the Secretary may request.</text> </paragraph> <paragraph num="F."> <text>The Secretary may solicit information from any source which is relevant to the proposed suspension or debarment and shall consider all of the facts and circumstances upon which the request for suspension or debarment is based, including but not limited to:</text> <paragraph num="(1)"> <text>The nature of the acts involved;</text> </paragraph> <paragraph num="(2)"> <text>The duration of the person's involvement in the acts;</text> </paragraph> <paragraph num="(3)"> <text>The extent of the damage caused to the State by the person's acts;</text> </paragraph> <paragraph num="(4)"> <text>Whether and to what extent the person subsequently cooperated with the appropriate authorities;</text> </paragraph> <paragraph num="(5)"> <text>The conditions under which the person cooperated;</text> </paragraph> <paragraph num="(6)"> <text>The degree to which the person made restitution; and</text> </paragraph> <paragraph num="(7)"> <text>The time when the acts occurred and the conduct of the person since that time.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The Secretary shall conclude whether the best interests of the Department or the State would be served by suspending or debarring the person and shall, within 30 days after the administrative review proceeding, or, if there is no review proceeding as provided in §D, notify the person in writing that the person either is:</text> <paragraph num="(1)"> <text>Suspended, and the period of suspension;</text> </paragraph> <paragraph num="(2)"> <text>Debarred, and the period of debarment; or</text> </paragraph> <paragraph num="(3)"> <text>Not subject to debarment or suspension for the acts which were the subject of the administrative review proceeding, and that the person's suspension pending the outcome of the review proceeding, if suspended, has been rescinded as of the date of the Secretary's decision.</text> </paragraph> </paragraph> <paragraph num="H."> <text>If the sole basis for a suspension or debarment under this chapter is a conviction described in Regulation .05A(4) and that conviction is subsequently overturned, then the suspension or debarment shall terminate automatically without any further proceedings being required under this chapter.</text> </paragraph> <paragraph num="I."> <text>A person debarred under this chapter may request the Secretary to shorten or terminate the person's debarment. This request may not be made until after 1 year from the date of debarment, and not more than one request for reconsideration may be made during the term of debarment.</text> </paragraph> <paragraph num="J."> <text>Within 30 days after receipt of a request for reconsideration of debarment, or at the initiation of the Secretary, the Secretary shall conduct a review to determine whether the debarment should be shortened or terminated. The time for the review and determination may be extended by the Secretary for good cause shown.</text> </paragraph> <paragraph num="K."> <text>In making a determination upon a request for reconsideration, the Secretary may solicit information from any source which is relevant to the reconsideration request and shall consider the facts set forth in §F and any change in circumstances which has occurred since the debarment. Upon making this determination, the Secretary shall notify the debarred party in writing either that the debarment has been shortened or terminated or shall continue for the original term.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Miscellaneous."> <paragraph num="A."> <text>Debarment based on the grounds set forth in Regulation .05 may not exceed a period of 5 years.</text> </paragraph> <paragraph num="B."> <text>Suspension based on the grounds set forth in Regulation .05 may not exceed a period of 1 year.</text> </paragraph> <paragraph num="C."> <text>The Attorney General may conduct an investigation of the matters to be considered by the Secretary under this chapter and may present to the Secretary such evidence as the Attorney General considers appropriate.</text> </paragraph> <paragraph num="D."> <text>Actions designated to be undertaken by the Secretary may be undertaken by a designee of the Secretary under an express written delegation.</text> </paragraph> <paragraph num="E."> <text>Upon the final determination of any suspension or debarment proceeding under this chapter by the Secretary, the entire Departmental file concerning the suspension or debarment, including all records germane to the suspension or debarment, shall be delivered to the Office of the Attorney General for the Department and shall be maintained in a locked file marked “Confidential” under the custody and control of the Office of the Attorney General for a period of 3 years after the suspension or debarment, if any, is terminated.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §2-111, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 30, 1990 (17:8 Md. R. 975)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D adopted effective February 1, 1993 (20:2 Md. R. 110)</annotation> </annotations> </chapter> <chapter num="06" heading="State Economic Growth, Resource Protection, and Planning Policy Project Review"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>These regulations apply to major capital improvement projects and public works projects to be funded by the Department or a unit of the Department with State or federal funds.</text> </paragraph> <paragraph num="B."> <text>These regulations do not apply to any project for which:</text> <paragraph num="(1)"> <text>A valid building permit was issued before October 1, 1992;</text> </paragraph> <paragraph num="(2)"> <text>A state commitment for a grant, loan, loan guarantee, or insurance was issued before October 1, 1992;</text> </paragraph> <paragraph num="(3)"> <text>Final review under the National Environmental Policy Act or the Maryland Environmental Policy Act was completed by October 1, 1992; or</text> </paragraph> <paragraph num="(4)"> <text>Final review through the State Clearinghouse for Intergovernmental Assistance was completed before January 1, 1993.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Code” means the Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Interagency Economic Growth, Resource Protection, and Planning Committee” or “Committee” means the Interagency Economic Growth, Resource Protection, and Planning Committee established under Executive Order 01.01.1992.27.</text> </paragraph> <paragraph num="(4)"> <text>“Local jurisdiction” means any of the 23 counties of Maryland, the City of Baltimore, any municipal corporation in Maryland subject to the provisions of Article XI-E of the Maryland Constitution, and any duly authorized agency or instrumentality of the local jurisdiction.</text> </paragraph> <paragraph num="(5)"> <text>“Major capital improvement project” means a project:</text> <paragraph num="(a)"> <text>Identified as a capital project in the State Capital Budget; or</text> </paragraph> <paragraph num="(b)"> <text>That is a major capital improvement under a statute authorizing a program of the Department.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Project” means a major capital improvement project or a public works project.</text> </paragraph> <paragraph num="(7)"> <text>“Public works project” means a project expected to be owned by a public entity.</text> </paragraph> <paragraph num="(8)"> <text>“Secretary” means the Secretary of Housing and Community Development, or the Secretary's designee.</text> </paragraph> <paragraph num="(9)"> <text>“State Growth Policy” means the State Economic Growth, Resource Protection, and Planning Policy set forth in Regulation .03 of this chapter.</text> </paragraph> <paragraph num="(10)"> <text>“Unit” or “unit of the Department” means an administration, board, commission, trust, fund, agency, or program within the Department providing funding for a project.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="The State Economic Growth, Resource Protection, and Planning Policy."> <text>The State Economic Growth, Resource Protection, and Planning Policy is that:</text> <paragraph num="A."> <text>Development shall be concentrated in suitable areas;</text> </paragraph> <paragraph num="B."> <text>Sensitive areas shall be protected;</text> </paragraph> <paragraph num="C."> <text>In rural areas, growth shall be directed to existing population centers, and resource areas shall be protected;</text> </paragraph> <paragraph num="D."> <text>Stewardship of the Chesapeake Bay and the land shall be a universal ethic;</text> </paragraph> <paragraph num="E."> <text>Conservation of resources, including a reduction in resource consumption, shall be practiced;</text> </paragraph> <paragraph num="F."> <text>To encourage the achievement of the policies in §§A—E of this regulation, economic growth shall be encouraged and regulatory mechanisms shall be streamlined; and</text> </paragraph> <paragraph num="G."> <text>Funding mechanisms shall be addressed to achieve the policies of §§A—F of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Requirements."> <text>The Department may fund a project if it complies with this regulation or Regulation .05 of this chapter. The project shall be determined to be consistent generally with the State Growth Policy, and demonstrate specifically that the project:</text> <paragraph num="A."> <text>Is located:</text> <paragraph num="(1)"> <text>On a site suitable for infill development or redevelopment which:</text> <paragraph num="(a)"> <text>Is occupied by a structure to be rehabilitated,</text> </paragraph> <paragraph num="(b)"> <text>Was previously improved with a structure, or</text> </paragraph> <paragraph num="(c)"> <text>Is surrounded by development; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In an area:</text> <paragraph num="(a)"> <text>Designated for growth,</text> </paragraph> <paragraph num="(b)"> <text>Within an existing sewer service area or an area planned for service within 5 years under the adopted county water and sewerage plan, and</text> </paragraph> <paragraph num="(c)"> <text>With public facilities and services that are adequate under standards adopted by the local jurisdiction;</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>If in a rural area, is:</text> <paragraph num="(1)"> <text>Located in an existing population center or its designated growth area; and</text> </paragraph> <paragraph num="(2)"> <text>Sensitive to resource areas, including agricultural and forest lands;</text> </paragraph> </paragraph> <paragraph num="C."> <text>Is designed with sensitivity for sensitive areas, including:</text> <paragraph num="(1)"> <text>Streams and stream buffers;</text> </paragraph> <paragraph num="(2)"> <text>100-year flood plains;</text> </paragraph> <paragraph num="(3)"> <text>Habitats of threatened or endangered species; and</text> </paragraph> <paragraph num="(4)"> <text>Steep slopes; and</text> </paragraph> </paragraph> <paragraph num="D."> <text>Is consistent with the comprehensive plan of the local jurisdiction in which the project is located.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Extraordinary Projects."> <text>The Department may fund a project even if the project cannot meet the requirements in Regulation .04 of this chapter, if the project is determined to:</text> <paragraph num="A."> <text>Be warranted by extraordinary circumstances, defined as circumstances that:</text> <paragraph num="(1)"> <text>Require emergency action, or</text> </paragraph> <paragraph num="(2)"> <text>Provide a unique opportunity to promote the purposes of the unit and the State Growth Policy; and</text> </paragraph> </paragraph> <paragraph num="B."> <text>Have no reasonably feasible alternative, defined as an alternative that:</text> <paragraph num="(1)"> <text>Is capable of being carried out,</text> </paragraph> <paragraph num="(2)"> <text>Is readily identifiable by the unit,</text> </paragraph> <paragraph num="(3)"> <text>Is reasonably related to and will carry out the purposes of the State Growth Policy,</text> </paragraph> <paragraph num="(4)"> <text>Has reasonably ascertainable effects distinguishable from and less environmentally damaging than the project proposed,</text> </paragraph> <paragraph num="(5)"> <text>Is within the expertise of the unit or other State units,</text> </paragraph> <paragraph num="(6)"> <text>Can be implemented practically and effectively, not remotely or speculatively, and</text> </paragraph> <paragraph num="(7)"> <text>Is realistic and reasonably available within the time the unit intends to act.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Procedure."> <paragraph num="A."> <text>The determinations under Regulation .04 or .05 of this chapter shall be:</text> <paragraph num="(1)"> <text>Evidenced by a written project report signed by the unit and the Secretary's designee; and</text> </paragraph> <paragraph num="(2)"> <text>Finalized in accordance with the procedures set forth in this regulation and Regulation .07 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Filing.</text> <paragraph num="(1)"> <text>The Secretary's designee shall file with the State Office of Planning the project report required under §A(1) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>If the project report concludes that a project is an inconsistent project with extraordinary circumstances, the Secretary's designee shall submit with the report the documentation, if any, that the unit provided to any local jurisdiction directly affected by the project for comment on the project.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary's designee may withdraw a project report filed with the Office of Planning by filing a withdrawal with the Office at any time before the determination becomes final.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Finality Determination. The determination evidenced by the project report under §A(1) of this regulation becomes final and the unit may proceed with the project after:</text> <paragraph num="(1)"> <text>For a determination of consistency, the date:</text> <paragraph num="(a)"> <text>The Interagency Economic Growth, Resource Protection, and Planning Committee concurs in the determination; or</text> </paragraph> <paragraph num="(b)"> <text>That is the later of:</text> <paragraph num="(i)"> <text>15 days from the date the project report is filed with the Office of Planning, if no Committee member has requested review by the Committee, or</text> </paragraph> <paragraph num="(ii)"> <text>45 days from the date the Committee has failed to act if a Committee member has requested review by the Committee;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For a determination of inconsistency with extraordinary circumstances:</text> <paragraph num="(a)"> <text>The date the Committee concurs in the determination; or</text> </paragraph> <paragraph num="(b)"> <text>45 days from the date the project report is filed with the Office of Planning, if the Committee has failed to act; or</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>For a determination of consistency or of inconsistency with extraordinary circumstances in which the Committee does not concur and which the unit or the Committee refers to the Governor, the date the Governor determines the project is consistent or is inconsistent with extraordinary circumstances.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Secretary's Determination."> <text>Before issuance of a determination approving a project, the Secretary shall execute a written determination that the project complies with Regulation .04 or .05 of this chapter and that the determination has been finalized under Regulation .06 of this chapter.</text> </regulation> <annotations> <annotation type="Authority">State Finance and Procurement Article, §5-7A-02(a),Annotated Code of Maryland;Executive Order 01.01.1992.27C and F</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07 under COMAR 05.01.06 Assisted Housing Preservation Act Exemptions adopted as an emergency provision effective May 4, 1990 (17:11 Md. R. 1331); emergency status expired January 4, 1991</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—07 adopted effective December 20, 1993 (20:25 Md. R. 1940)</annotation> </annotations> </chapter> <chapter num="07" heading="Housing Finance Review Committee"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Committee” means the Housing Finance Review Committee established by Housing and Community Development Article, §4-208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Deputy Secretary” means the Deputy Secretary of the Department.</text> </paragraph> <paragraph num="(4)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Purpose."> <text>The purpose of the Housing Finance Review Committee is to review and make recommendations to the Secretary on certain lending and insurance programs of the Department.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Scope."> <paragraph num="A."> <text>The Housing Finance Review Committee reviews and makes recommendations for, but does not approve, certain loans by the Department's Division of Development Finance as well as mortgage insurance provided by the Maryland Housing Fund, an agency in the Division of Credit Assurance.</text> </paragraph> <paragraph num="B."> <text>In addition, the Committee reviews and recommends actions to the Secretary on all project financing and investment policies of the Community Development Administration, an agency in the Division of Development Finance.</text> </paragraph> <paragraph num="C."> <text>The Bond Advisory Board established under COMAR 05.01.08 reviews and makes recommendations to the Department regarding the issuance of securities, as well as the policies and procedures used by the Department in the issuance of securities.</text> </paragraph> <paragraph num="D."> <text>The Secretary, or a designee of the Secretary, shall approve each loan commitment, insurance policy, or bond financing of the Department, the Division of Credit Assurance, the Division of Development Finance, the Maryland Housing Fund, and the Community Development Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Composition of Committee."> <paragraph num="A."> <text>Upon recommendation of the Secretary, the Governor appoints seven individuals to serve as the Committee, consisting of:</text> <paragraph num="(1)"> <text>Three employees of the Department which shall include the Deputy Secretary;</text> </paragraph> <paragraph num="(2)"> <text>One employee of the executive branch of State government outside the Department; and</text> </paragraph> <paragraph num="(3)"> <text>Three members of the public:</text> <paragraph num="(a)"> <text>All of whom have interest and expertise in investment or commercial banking, lending, real estate development, mortgage insurance, community development, or affordable housing, and</text> </paragraph> <paragraph num="(b)"> <text>One of whom is the Chairman of the Maryland Housing Policy Commission or the designee of the Chairman appointed with the advice of the Secretary.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The public members serve for a term of 4 years with the first terms beginning on July 1, 1983, and subsequent terms in each 4-year succeeding period. A member appointed to fill a vacancy in an unexpired term or to succeed a member who is holding over serves for the remainder of the term only.</text> </paragraph> <paragraph num="C."> <text>The members serve without compensation, but the public members are entitled to reimbursement for expenses under the standard State travel regulations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Committee Procedures."> <paragraph num="A."> <text>The Deputy Secretary shall serve as the Chairman of the Committee. The Chairman is responsible for preparing and distributing the agenda for the Committee meetings.</text> </paragraph> <paragraph num="B."> <text>Committee meetings generally are held monthly at the time and place set by the Chairman. Meetings may be held by conference telephone call or in person at the election of the Chairman.</text> </paragraph> <paragraph num="C."> <text>The Deputy Secretary may elect to hold a premeeting to determine the agenda for the meetings and discuss with staff the recommendations expected to be made to the Committee.</text> </paragraph> <paragraph num="D."> <text>The minutes of the meetings of the Committee shall be maintained by the Office of the Secretary.</text> </paragraph> <paragraph num="E."> <text>Four members of the Committee constitute a quorum. A vote by the majority of a quorum of the Committee members present, in person, or by telephone, shall constitute an official recommendation of the Committee.</text> </paragraph> <paragraph num="F."> <text>Instead of a meeting, action of the Board may be set forth in a written determination signed by each member of the Board.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Committee Functions."> <text>The Committee shall review and make recommendations to the Secretary regarding:</text> <paragraph num="A."> <text>All loans in excess of $250,000 proposed to be made by the:</text> <paragraph num="(1)"> <text>Community Development Administration,</text> </paragraph> <paragraph num="(2)"> <text>Division of Development Finance, and</text> </paragraph> <paragraph num="(3)"> <text>Maryland Housing Fund;</text> </paragraph> </paragraph> <paragraph num="B."> <text>The investment policies of the:</text> <paragraph num="(1)"> <text>Community Development Administration, and</text> </paragraph> <paragraph num="(2)"> <text>Maryland Housing Fund; and</text> </paragraph> </paragraph> <paragraph num="C."> <text>The project financing policies of the:</text> <paragraph num="(1)"> <text>Community Development Administration, and</text> </paragraph> <paragraph num="(2)"> <text>Division of Development Finance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Project and Policy Approval."> <paragraph num="A."> <text>Except as set forth in §B of this regulation, the Secretary, or a designee of the Secretary, shall approve all loans and debt financing after receipt of the recommendation of the Committee.</text> </paragraph> <paragraph num="B."> <text>The Secretary may approve a specific loan request without receiving the recommendation of the Committee if the Secretary determines, in the sole discretion of the Secretary, that the request requires urgent action. A written determination of urgent action by the Secretary is final and cannot be appealed.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-111, 2-201, 2-202, 2-208, and 4-208, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 28, 1995 (22:17 Md. R. 1316)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective July 29, 1996 (23:15 Md. R. 1086); September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05F adopted effective April 5, 1999 (26:7 Md. R. 536)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective February 26, 2007 (34:4 Md. R. 398)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective February 26, 2007 (34:4 Md. R. 398)</annotation> </annotations> </chapter> <chapter num="08" heading="Revenue Bond Advisory Board"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>It is the purpose of the Revenue Bond Advisory Board to provide independent advice and expertise to the Department of Housing and Community Development on the issuance of revenue bonds by the Department, or any of its agencies, and the policies and procedures related to the issuance of those revenue bonds.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Board” means the Revenue Bond Advisory Board.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Deputy Secretary” means the Deputy Secretary of the Department.</text> </paragraph> <paragraph num="(4)"> <text>“Revenue bonds” or “bonds” means bonds, notes, or other securities issued by the Department or any of its agencies.</text> </paragraph> <paragraph num="(5)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Responsibilities of the Board."> <paragraph num="A."> <text>Before the earlier of the public distribution of a preliminary official statement or submission of a preliminary official statement to any rating agency for review, the Board shall review and make recommendations to the Department regarding the issuance of bonds, notes, or other securities by the Department or any of its agencies.</text> </paragraph> <paragraph num="B."> <text>The recommendation shall consider the following:</text> <paragraph num="(1)"> <text>The amount of bonds to be issued;</text> </paragraph> <paragraph num="(2)"> <text>The timing of the sale or issuance of the bonds; and</text> </paragraph> <paragraph num="(3)"> <text>Whether the sale should be undertaken on a competitive or negotiated basis.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Board shall review annually the process and procedures the Department and its agencies use for the issuance of revenue bonds, including any recommendations to the Secretary with respect to the role and responsibilities of Department staff, the underwriters, and the financial advisor in each of the following areas:</text> <paragraph num="(1)"> <text>Cash flow analysis, both consolidated and series specific, for determining the adequacy of debt service coverage;</text> </paragraph> <paragraph num="(2)"> <text>Cash flow and financial analysis for determining projected compliance of each issue with federal arbitrage restrictions;</text> </paragraph> <paragraph num="(3)"> <text>Federal arbitrage compliance and rebate calculations;</text> </paragraph> <paragraph num="(4)"> <text>Official statement preparation;</text> </paragraph> <paragraph num="(5)"> <text>Rating agency contact;</text> </paragraph> <paragraph num="(6)"> <text>Data base maintenance; and</text> </paragraph> <paragraph num="(7)"> <text>Bond proceeds investment decisions.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Unless expressly requested by the Secretary, the Board is not responsible for reviewing or determining the adequacy of financial analysis, for compliance with federal arbitrage provisions, or for reviewing or determining the adequacy of official statements or other disclosures in connection with the Department's bonds.</text> </paragraph> <paragraph num="E."> <text>The Board shall review and make recommendations to the Secretary on the criteria for the selection of financial advisors and underwriters who provide advice or services to the Department in connection with its bond issuance activities.</text> </paragraph> <paragraph num="F."> <text>The Board shall annually, or more frequently as may be desirable, review and report to the Secretary regarding the performance of the financial advisors and underwriters, as well as the performance of the housing finance staff of the Department.</text> </paragraph> <paragraph num="G."> <text>Following the issuance of every series of revenue bonds, the Board shall review the sale of the revenue bonds, including the bond rates achieved compared to bonds issued by comparable agencies from other states, and the costs of issuance of the revenue bonds. The Board shall report regularly to the Secretary on the results of these post bond sale analyses.</text> </paragraph> <paragraph num="H."> <text>The Board shall review and make recommendations on other plans, programs, policies, procedures, or practices of the Department and its agencies related to the issuance of revenue bonds as the Secretary may request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Composition and Tenure of the Board."> <paragraph num="A."> <text>The Secretary shall appoint seven persons to serve as the Board. The Board shall be composed of:</text> <paragraph num="(1)"> <text>Two representatives from the Department;</text> </paragraph> <paragraph num="(2)"> <text>Two executive branch representatives, with one from an executive agency of State government which issues revenue bonds;</text> </paragraph> <paragraph num="(3)"> <text>One representative from the Office of the Treasurer;</text> </paragraph> <paragraph num="(4)"> <text>One public member experienced in investment banking and the issuance of securities; and</text> </paragraph> <paragraph num="(5)"> <text>One public member experienced as an attorney in the issuance of revenue bonds.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The public members of the Board shall serve for a term of 4 years or until their successors are appointed, with the first terms beginning on July 1, 1995, and subsequent terms in each 4-year succeeding period. A member appointed to fill a vacancy in an unexpired term, or to succeed a member who is holding over, serves for the remainder of the term only.</text> </paragraph> <paragraph num="C."> <text>The members serve without compensation, but the public members are entitled to reimbursement for expenses under the standard State travel regulations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Operating Procedures."> <paragraph num="A."> <text>The Deputy Secretary shall serve as the Chairman of the Board. The Chairman is responsible for preparing and distributing the agenda for the Board meetings.</text> </paragraph> <paragraph num="B."> <text>Board meetings generally shall be held monthly at the time and place set by the Chairman. Meetings may be held by conference telephone call or in person at the election of the Chairman.</text> </paragraph> <paragraph num="C."> <text>The minutes of the meetings of the Board shall be maintained by the Office of the Secretary.</text> </paragraph> <paragraph num="D."> <text>Four members of the Board constitute a quorum. A vote by the majority of a quorum of the Committee members present, in person or by telephonic connection, shall constitute an official recommendation of the Board. Instead of a meeting, action of the Board may be set forth in a written determination signed by each member of the Board.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Approval of Bond Issuance."> <paragraph num="A."> <text>Except as set forth in §B of this regulation, the Secretary, or a designee of the Secretary, shall approve in writing the amount, time, and type of revenue bonds to be issued after receipt of the recommendation of the Board.</text> </paragraph> <paragraph num="B."> <text>The Secretary may determine to approve the issuance of revenue bonds without receiving the recommendation of the Board or to vary the amount, type, or timing of the revenue bond issue without further review or recommendation by the Board if the Secretary determines, in the sole discretion of the Secretary, that urgent action is required. A written determination of urgent action by the Secretary is final and may not be appealed.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-202 and 4-213, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 29, 1996 (23:15 Md. R. 1086)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective April 5, 1999 (26:7 Md. R. 536)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective April 5, 1999 (26:7 Md. R. 536)</annotation> </annotations> </chapter> <chapter num="09" heading="Rental Housing Loan Processing" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.09 adopted as an emergency provision effective August 24, 1995 (22:19 Md. R. 1453); emergency status extended at 23:7 Md. R. 547 (Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.10 adopted effective August 26, 1996 (23:17 Md. R. 1246)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E amended effective January 21, 2001 (29:1 Md. R. 20)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective March 13, 2006 (33:5 Md. R. 518)</annotation> </annotations> </chapter> </subtitle> <subtitle num="02" heading="Building and Material Codes"> <chapter num="01" heading="Model Performance Code" reason="Recodified to COMAR 09.12.50"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: April, 1973</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective December 30, 1985 (12:26 Md. R. 2542)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C adopted effective December 30, 1985 (12:26 Md. R. 2542)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective August 6, 1975 (2:17 Md. R. 1188); March 3, 1976 (3:5 Md. R. 295); June 29, 1979 (6:13 Md. R. 1124); March 1, 1983 (10:3 Md. R. 208); December 30, 1985 (12:26 Md. R. 2542)</annotation> <annotation type="History" subtype="Administrative History">Regulations .04 and .05 amended effective November 3, 1978 (5:22 Md. R. 1671)</annotation> <annotation type="History" subtype="Administrative History">Regulations .04E and .05C amended effective December 30, 1985 (12:26 Md. R. 2542)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective December 30, 1985 (12:26 Md. R. 2542)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective August 6, 1975 (2:17 Md. R. 1188) and November 3, 1978 (5:22 Md. R. 1671); repealed effective December 30, 1985 (12:26 Md. R. 2542)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.03 to COMAR 05.02.01</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective June 1, 1988 (15:11 Md. R. 1329); July 28, 1997 (24:15 Md. R. 1061); October 15, 2001 (28:1 Md. R. 25); September 20, 2004 (31:6 Md. R. 507); January 1, 2012 (38:24 Md. R. 1499); January 7, 2013 (39:26 Md. R. 1663)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 1, 2012 (38:24 Md. R. 1499); January 1, 2015 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D adopted effective January 1, 2012 (38:24 Md. R. 1499)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1 adopted effective July 28, 1997 (24:15 Md. R. 1061)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1B amended effective October 15, 2001 (28:1 Md. R. 25); September 20, 2004 (31:6 Md. R. 507); July 1, 2007 (34:7 Md. R. 696); January 1, 2010 (36:22 Md. R. 1722); January 1, 2012 (38:24 Md. R. 1499); January 7, 2013 (39:26 Md. R. 1663); January 1, 2015 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective June 1, 1988 (15:11 Md. R. 1329); July 22, 1991 (18:14 Md. R. 1609); July 28, 1997 (24:15 Md. R. 1061); October 15, 2001 (28:1 Md. R. 25)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective January 1, 2010 (36:22 Md. R. 1722); January 1, 2012 (38:24 Md. R. 1499); January 7, 2013 (39:26 Md. R. 1663); January 1, 2015 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D amended effective July 1, 2007 (34:7 Md. R. 696)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E amended effective June 1, 1988 (15:11 Md. R. 1329); October 15, 2001 (28:1 Md. R. 25); September 20, 2004 (31:6 Md. R. 507); July 1, 2007 (34:7 Md. R. 696); January 1, 2012 (38:24 Md. R. 1499); January 1, 2015 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D, E amended effective October 15, 2001 (28:1 Md. R. 25)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.02.01 to COMAR 09.12.50 effective March 25, 2019 (46:6 Md. R. 345)</annotation> </annotations> </chapter> <chapter num="02" heading="Maryland Accessibility Code" reason="Recodified to COMAR 09.12.53"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: April 16, 1975 (2:8 Md. R. 563)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.11 amended effective March 3, 1976 (3:5 Md. R. 295)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 5, 1980 (7:18 Md. R. 1736)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 1, 1985 (11:26 Md. R. 2277)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.07 to COMAR 05.02.02</annotation> <annotation type="History" subtype="Administrative History">Appendix A recodified as Regulation .07</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07, Maryland Building Code for the Handicapped, repealed and new Regulations .01—.12, Maryland Accessibility Code, adopted effective February 1, 1995 (21:24 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective January 1, 2012 (38:24 Md. R. 1499)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B, C amended effective January 1, 2012 (38:24 Md. R. 1499)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective March 18, 2002 (29:5 Md. R. 500)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective March 18, 2002 (29:5 Md. R. 500); June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective January 1, 2012 (38:24 Md. R. 1499)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12C adopted effective March 18, 2002 (29:5 Md. R. 500)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12.D, E adopted effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.02.02 to COMAR 09.12.53 effective March 25, 2019 (46:6 Md. R. 345)</annotation> </annotations> </chapter> <chapter num="03" heading="Minimum Livability Code" reason="Recodified to COMAR 09.12.54"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: April 6, 1987 (14:7 Md. R. 829)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.31 to COMAR 05.02.03</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 14, 2010 (37:1 Md. R. 14)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 repealed and new Regulations .01—.07 adopted effective September 17, 2012 (39:18 Md. R. 1196)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.02.03 to COMAR 09.12.54 effective March 25, 2019 (46:6 Md. R. 345)</annotation> </annotations> </chapter> <chapter num="04" heading="Industrialized Buildings and Manufactured Homes" reason="Recodified to COMAR 09.12.52"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: July 1, 1972</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.10 amended effective July 23, 1975 (2:16 Md. R. 1137)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective March 3, 1976 (3:5 Md. R. 295)</annotation> <annotation type="History" subtype="Administrative History">Regulations .11 —.14 adopted effective July 23, 1975 (2:16 Md. R. 1137)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective April 13, 1977 (4:8 Md. R. 632)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 adopted effective July 23, 1975 (2:16 Md. R. 1137)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective August 11, 1978 (5:16 Md. R. 1254)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B and C amended effective January 1, 1984 (10:20 Md. R. 1783)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective June 29, 1979 (6:13 Md. R. 1124); March 1, 1983 (10:3 Md. R. 208); February 1, 1986 (13:1 Md. R. 14)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective January 7, 1982 (8:26 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective February 1, 1986 (13:1 Md. R. 14)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08B amended effective March 1, 1983 (10:3 Md. R. 208)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12E amended effective March 6, 1981 (8:5 Md. R. 471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective July 9, 1990 (17:13 Md. R. 1610)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B—H amended effective January 1, 1984 (10:20 Md. R. 1783)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 adopted effective September 21, 1979 (6:19 Md. R. 1518)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.01 to COMAR 05.02.04</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective July 17, 2006 (33:14 Md. R. 1162)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective July 17, 2006 (33:14 Md. R. 1162)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective July 17, 2006 (33:14 Md. R. 1162)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10D amended effective July 1, 1993 (20:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12A amended effective July 17, 2006 (33:14 Md. R. 1162)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12C amended effective July 9, 1990 (20:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective July 17, 2006 (33:14 Md. R. 1162)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 repealed effective July 17, 2006 (33:14 Md. R. 1162)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17A amended effective July 17, 2006 (33:14 Md. R. 1162)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.02.04 to COMAR 09.12.52 effective March 25, 2019 (46:6 Md. R. 345)</annotation> </annotations> </chapter> <chapter num="05" heading="Maryland Guidelines for Statewide Building Energy Utilization" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 29, 1979 (6:13 Md. R. 1125)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.10 to COMAR 05.02.05</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective April 5, 1999 (26:7 Md. R. 537)</annotation> </annotations> </chapter> <chapter num="06" heading="Safety Glazing" reason="Recodified to COMAR 09.12.55"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: October 1, 1974 (1:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02—.05 repealed and new Regulation .02 adopted effective September 1, 1986 (13:12 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.06 to COMAR 05.02.06</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.02.06 to COMAR 09.12.55 effective March 25, 2019 (46:6 Md. R. 345)</annotation> </annotations> </chapter> <chapter num="07" heading="Maryland Building Performance Standards" reason="Recodified to COMAR 09.12.51"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: April 16, 1975 (2:8 Md. R. 563)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.11 amended effective March 3, 1976 (3:5 Md. R. 295)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 5, 1980 (7:18 Md. R. 1736)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 1, 1985 (11:26 Md. R. 2277)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.07 to COMAR 05.02.02</annotation> <annotation type="History" subtype="Administrative History">Appendix A recodified as Regulation .07</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07, Maryland Building Code for the Handicapped, repealed and new Regulations .01—.12, Maryland Accessibility Code, adopted effective February 1, 1995 (21:24 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective January 1, 2012 (38:24 Md. R. 1499)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B, C amended effective January 1, 2012 (38:24 Md. R. 1499)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective March 18, 2002 (29:5 Md. R. 500)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective March 18, 2002 (29:5 Md. R. 500); June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective January 1, 2012 (38:24 Md. R. 1499)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12C adopted effective March 18, 2002 (29:5 Md. R. 500)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12.D, E adopted effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.02.07 to COMAR 09.12.51 effective March 25, 2019 (46:6 Md. R. 345)</annotation> </annotations> </chapter> </subtitle> <subtitle num="03" heading="Homeownership Programs"> <chapter num="01" heading="Preferred Interest Rate Loan Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations set forth the policies, procedures, and authorizations for making preferred interest rate loans to households of limited income.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>The Preferred Interest Rate Loan Program is designed to provide:</text> <paragraph num="(1)"> <text>Financing for eligible homebuyers to purchase, or purchase and rehabilitate, a home;</text> </paragraph> <paragraph num="(2)"> <text>Refinancing to eligible homeowners who, because of certain exceptional adverse personal or economic circumstances, can no longer make the full mortgage payments on their homes and would otherwise have to forfeit title to their homes; and</text> </paragraph> <paragraph num="(3)"> <text>Short-term loans to nonprofit organizations and local governments for the acquisition and construction, acquisition and rehabilitation together with demolition or lot consolidation, or acquisition and rehabilitation, of residential units affordable for purchase by households of limited income.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Programs Operating Under the Maryland Home Financing Program.</text> <paragraph num="(1)"> <text>The Program is one of four loan programs operated under the Maryland Home Financing Program as authorized by Housing and Community Development Article, Title 4, Subtitle 8, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Other loan programs operating under the Maryland Home Financing Program include programs for making:</text> <paragraph num="(a)"> <text>Emergency mortgage assistance loans to certain households of limited income, who because of involuntary loss of income due to unemployment or other extraordinary hardship are unable to make current mortgage payments on their homes and are likely to forfeit title to their homes, as described in COMAR 05.03.03, as amended from time to time;</text> </paragraph> <paragraph num="(b)"> <text>Short-term construction loans to developers for the construction of or rehabilitation of residential units affordable to certain households of limited income; and</text> </paragraph> <paragraph num="(c)"> <text>Reverse equity mortgage loans to elderly households of limited income for housing-related expenses and personal expenses which enable the owner to continue to occupy the owner's home, as described in COMAR 05.03.05.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 8, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>Adjusted Annual Income.</text> <paragraph num="(a)"> <text>“Adjusted annual income” means 100 percent of the projected annual gross income, based on income from all members of the household 18 years old or older, who intend to reside in the eligible residence as their primary residence, except for a full-time high school or undergraduate student who is not a borrower.</text> </paragraph> <paragraph num="(b)"> <text>“Adjusted annual income” includes social security, retirement income, pensions, wages, overtime, bonuses, commissions, investment and interest income, rental income, disability or unemployment insurance, alimony and support payments, and all other income from any source, less:</text> <paragraph num="(i)"> <text>Abnormal expenses of a long-term unusual nature such as extraordinary unreimburseable medical, rehabilitation, or special education expenses;</text> </paragraph> <paragraph num="(ii)"> <text>Unusual or temporary one-time income items, such as judgments or gifts, as determined by the Program; and</text> </paragraph> <paragraph num="(iii)"> <text>Other income items as may be permitted by the Program.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Applicable codes and standards” means construction, health, safety, fire, occupancy, planning, zoning, and other codes and standards applicable in the State and the political subdivision where the property is located, and similar standards as may be established by the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Borrower” means an applicant who receives a loan through the Program.</text> </paragraph> <paragraph num="(5)"> <text>Closing Costs.</text> <paragraph num="(a)"> <text>“Closing costs” means costs incurred in connection with purchasing or purchasing and rehabilitating an eligible residence, as approved by the Program.</text> </paragraph> <paragraph num="(b)"> <text>“Closing costs” includes:</text> <paragraph num="(i)"> <text>Credit report fee;</text> </paragraph> <paragraph num="(ii)"> <text>Appraisal fee;</text> </paragraph> <paragraph num="(iii)"> <text>Home inspection fee;</text> </paragraph> <paragraph num="(iv)"> <text>Survey fee;</text> </paragraph> <paragraph num="(v)"> <text>Title examination fee;</text> </paragraph> <paragraph num="(vi)"> <text>Title insurance fee;</text> </paragraph> <paragraph num="(vii)"> <text>Application fee;</text> </paragraph> <paragraph num="(viii)"> <text>Required escrow payments;</text> </paragraph> <paragraph num="(ix)"> <text>Attorney's fee;</text> </paragraph> <paragraph num="(x)"> <text>Document preparation fee;</text> </paragraph> <paragraph num="(xi)"> <text>Recording fee; and</text> </paragraph> <paragraph num="(xii)"> <text>State and local transfer tax and recordation tax.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>If the loan refinances existing mortgage debt, closing costs may include, in the discretion of the Program, costs such as payments owed at the time of the loan closing for:</text> <paragraph num="(i)"> <text>Property taxes;</text> </paragraph> <paragraph num="(ii)"> <text>Hazard insurance premiums; or</text> </paragraph> <paragraph num="(iii)"> <text>Ground rent.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>“DDF” means the Division of Development Finance, a division of the Department.</text> </paragraph> <paragraph num="(7)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(8)"> <text>“Eligible residence” means residential property that meets the requirements of Regulation .04.</text> </paragraph> <paragraph num="(9)"> <text>“Household” means the individual or individuals who occupy or intend to occupy:</text> <paragraph num="(a)"> <text>The eligible residence, in the case of a one unit residence; or</text> </paragraph> <paragraph num="(b)"> <text>One of the units in the eligible residence, in the case of a two to four unit residence.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Household of limited income” means a household for which the adjusted annual income does not exceed the upper income limit or limits established by the Secretary in accordance with Housing and Community Development Article, §4-806(a)(2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Loan” means a loan made by the Department to a borrower through the Program, and secured by a lien on an eligible residence.</text> </paragraph> <paragraph num="(12)"> <text>“Lot consolidation” means acquisition of real property adjacent to and in connection with a residence financed by the Program for purposes of including the real property as part of the residence.</text> </paragraph> <paragraph num="(13)"> <text>“Manufactured home” means a structure designed to be used as a dwelling, which:</text> <paragraph num="(a)"> <text>Is a multisectional structure which has a single HUD certification, and was fabricated on or after June 15, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(b)"> <text>When installed on the site, meets a minimum floor area, depth, and length as required by the Program, in its sole discretion;</text> </paragraph> <paragraph num="(c)"> <text>Is installed permanently on an engineered foundation in conformance with the National Building Code published by the Building Officials and Code Administration International, Inc. which is incorporated by reference under COMAR 05.02.01, or the standards set by the American National Standards Institute, Inc. which are incorporated by reference under COMAR 05.02.02, and is not independently capable of movement;</text> </paragraph> <paragraph num="(d)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(e)"> <text>Is certified by:</text> <paragraph num="(i)"> <text>The United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended; or</text> </paragraph> <paragraph num="(ii)"> <text>The Department as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> <paragraph num="(g)"> <text>Is installed on real property the borrower owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(h)"> <text>Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks; and</text> </paragraph> <paragraph num="(i)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Mortgage” means a mortgage or deed of trust.</text> </paragraph> <paragraph num="(15)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity, no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in that entity.</text> </paragraph> <paragraph num="(16)"> <text>Program.</text> <paragraph num="(a)"> <text>“Program” means the Preferred Interest Rate Loan Program.</text> </paragraph> <paragraph num="(b)"> <text>“Program” may include staff administering the Program.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Purchase” means the acquisition of a:</text> <paragraph num="(a)"> <text>Lot improved by a residential structure; or</text> </paragraph> <paragraph num="(b)"> <text>Newly constructed residential structure on a lot already owned by the borrower.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Rehabilitation costs” means the costs for repairs and other rehabilitation work for an eligible residence as described in Regulations .06B and .07B of this chapter.</text> </paragraph> <paragraph num="(19)"> <text>“Secretary” means the Secretary of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(20)"> <text>“Work write-up” means a description of the structural, mechanical, electrical, and other work items needed for the rehabilitation of an eligible residence.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Residences."> <paragraph num="A."> <text>An eligible residence:</text> <paragraph num="(1)"> <text>Is comprised of one to four residential units;</text> </paragraph> <paragraph num="(2)"> <text>Is real property owned by the borrower in fee simple or under a freely transferable, perpetually renewable, ground lease which permits the lessee to transfer the leasehold interest without the consent of the lessor;</text> </paragraph> <paragraph num="(3)"> <text>Is located in the State;</text> </paragraph> <paragraph num="(4)"> <text>May be a detached home, modular home, townhouse, condominium, or a manufactured home as defined under Regulation .03B(13) of this chapter;</text> </paragraph> <paragraph num="(5)"> <text>May not be a residence which is treated as personal property for the purpose of establishing a security interest, such as a cooperative unit or a manufactured home not meeting the requirements for a manufactured home under Regulation .03B(13) of this chapter</text> </paragraph> <paragraph num="(6)"> <text>Meets all applicable codes and standards, except that if the loan includes proceeds for rehabilitation work, then the Program shall be satisfied that all applicable codes and standards will be met when the rehabilitation work is complete; and</text> </paragraph> <paragraph num="(7)"> <text>If new construction, is located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Other Liens. At the time of the loan closing, the eligible residence:</text> <paragraph num="(1)"> <text>May not be encumbered by a tax lien or judgment lien;</text> </paragraph> <paragraph num="(2)"> <text>May be encumbered by a superior lien under circumstances approved by the Program in its sole discretion to promote housing affordability; and</text> </paragraph> <paragraph num="(3)"> <text>May be encumbered by a lien subordinate to the lien securing the Program loan, under circumstances which promote housing affordability as determined by the Program in its sole discretion.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Except as provided in Regulation .07 of this chapter, an eligible residence comprised of one residential unit shall be occupied by the borrower as the borrower's primary residence.</text> </paragraph> <paragraph num="D."> <text>If the eligible residence is comprised of two to four residential units, each unit not occupied by the borrower shall be occupied by a household of limited income.</text> </paragraph> <paragraph num="E."> <text>Home Inspection.</text> <paragraph num="(1)"> <text>The Program may require a borrower to obtain a home inspection before closing.</text> </paragraph> <paragraph num="(2)"> <text>A home inspection under this section shall meet standards set by the Program and be conducted by a home inspector acceptable to the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Borrowers."> <paragraph num="A."> <text>In order to be eligible for a loan to finance the purchase, or the purchase and rehabilitation, of an eligible residence comprised of one residential unit, a borrower:</text> <paragraph num="(1)"> <text>Shall be all those persons who will hold title to the eligible residence;</text> </paragraph> <paragraph num="(2)"> <text>Shall be 18 years old or older, unless married to a joint borrower who is 18 years old or older;</text> </paragraph> <paragraph num="(3)"> <text>Shall be a member or members of a household of limited income;</text> </paragraph> <paragraph num="(4)"> <text>Shall intend to reside in the eligible residence;</text> </paragraph> <paragraph num="(5)"> <text>If the borrower owns a personal residence at the time of application and is purchasing another residence, shall:</text> <paragraph num="(a)"> <text>Have the existing residence under contract of sale at the time of the loan application and shall sell the residence before or simultaneous with the borrower's purchase of the property financed by the Program loan; and</text> </paragraph> <paragraph num="(b)"> <text>Provide evidence satisfactory to the Program that the borrower has a compelling need to purchase a new residence, because of a change in:</text> <paragraph num="(i)"> <text>Circumstances of employment such as a new place of work, or</text> </paragraph> <paragraph num="(ii)"> <text>Personal circumstances such as a divorce or an increase in the size of the household;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>May not own or hold any interest in any other real property except cemetery plots, recreational vehicle lots, a 5 percent or less interest in a time share unit (2.6 weeks), real property used in a trade or business, or a lot adjacent to the purchased property that is consolidated with the purchased property securing the Program loan;</text> </paragraph> <paragraph num="(7)"> <text>Shall satisfy the Program that the borrower does not have assets or resources, which are set forth in §C of this regulation, that could enable the borrower to qualify for conventional or other Departmental mortgage financing;</text> </paragraph> <paragraph num="(8)"> <text>Shall have the legal capacity to incur the obligations of the loan; and</text> </paragraph> <paragraph num="(9)"> <text>Shall agree to comply with the requirements established by the Program and with the terms of the loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In order for a borrower to be eligible for a loan to finance the purchase, or the purchase and rehabilitation, of an eligible residence comprised of two to four residential units, a borrower:</text> <paragraph num="(1)"> <text>Shall be all those persons who will hold title to the eligible residence;</text> </paragraph> <paragraph num="(2)"> <text>Shall be 18 years old or older, unless married to a joint borrower who is 18 years old or older;</text> </paragraph> <paragraph num="(3)"> <text>Shall intend to reside in one unit of the eligible residence;</text> </paragraph> <paragraph num="(4)"> <text>If the borrower owns a personal residence at the time of application and is purchasing another residence, shall:</text> <paragraph num="(a)"> <text>Have the existing residence under contract of sale at the time of the loan application and shall sell the residence before or simultaneous with the borrower's purchase of the property financed by the Program loan; and</text> </paragraph> <paragraph num="(b)"> <text>Provide evidence satisfactory to the Program that the borrower has a compelling need to purchase a new residence, because of a change in:</text> <paragraph num="(i)"> <text>Circumstances of employment such as a new place of work, or</text> </paragraph> <paragraph num="(ii)"> <text>Personal circumstances such as a divorce or an increase in the size of the household;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>May not own or hold any interest in any other real property except cemetery plots, recreational vehicle lots, a 5 percent or less interest in a time share unit (2.6 weeks), real property used in a trade or business, or a lot adjacent to the purchased property that is consolidated with the purchased property securing the Program loan;</text> </paragraph> <paragraph num="(6)"> <text>Shall satisfy the Program that the borrower does not have assets or resources, which are set forth in §C of this regulation, that could enable the borrower to qualify for conventional or other Departmental mortgage financing;</text> </paragraph> <paragraph num="(7)"> <text>Shall have the legal capacity to incur the obligations of the loan;</text> </paragraph> <paragraph num="(8)"> <text>Shall lease all units other than the borrower's unit only to households of limited income;</text> </paragraph> <paragraph num="(9)"> <text>Shall agree to require each lease to include a lease addendum, in a form specified by the Program, which at a minimum:</text> <paragraph num="(a)"> <text>Requires a tenant to be a household of limited income; and</text> </paragraph> <paragraph num="(b)"> <text>Requires a tenant to provide income tax returns or other evidence satisfactory to the Program of the tenant's household income, at the time the lease is made; and</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Shall agree to comply with the requirements established by the Program and with terms of the loan.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The assets in §A(7) and §B of this regulation:</text> <paragraph num="(1)"> <text>May include:</text> <paragraph num="(a)"> <text>Individual or joint savings accounts;</text> </paragraph> <paragraph num="(b)"> <text>Individual or joint checking accounts;</text> </paragraph> <paragraph num="(c)"> <text>Individual or joint certificates of deposit;</text> </paragraph> <paragraph num="(d)"> <text>Individual or joint money market or mutual fund accounts;</text> </paragraph> <paragraph num="(e)"> <text>Other individual or joint bank accounts;</text> </paragraph> <paragraph num="(f)"> <text>Proceeds derived or to be derived from the sale of real property or a mobile home or other personal property prior to loan closing;</text> </paragraph> <paragraph num="(g)"> <text>In trust for accounts;</text> </paragraph> <paragraph num="(h)"> <text>Any stocks or bonds;</text> </paragraph> <paragraph num="(i)"> <text>Funds from gift letters;</text> </paragraph> <paragraph num="(j)"> <text>Amounts used or borrowed from a life insurance policy, individual retirement account, or 401(k) account minus any penalty;</text> </paragraph> <paragraph num="(k)"> <text>Items paid outside of closing, such as appraisal, credit report fee, home inspection fee, and deposit on property; or</text> </paragraph> <paragraph num="(l)"> <text>Other asset items as determined by the Program policy;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>May not include:</text> <paragraph num="(a)"> <text>Cash surrender value of a life insurance policy, value of individual retirement accounts or 401(k) accounts, or value of other similar accounts as may be determined by the Program; or</text> </paragraph> <paragraph num="(b)"> <text>Proceeds from any Program approved secondary financing or grant.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>In order to be eligible for a loan that refinances existing mortgage debt, a borrower:</text> <paragraph num="(1)"> <text>Shall satisfy the requirements in §§A and C, or §§B and C of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>Shall be likely, in the estimation of the Department, to have to forfeit title to the eligible residence;</text> </paragraph> <paragraph num="(3)"> <text>Shall be unable to keep current the existing mortgage loan or loans on the eligible residence due to any of the following exceptional adverse personal or economic circumstances:</text> <paragraph num="(a)"> <text>Involuntary unemployment of a borrower,</text> </paragraph> <paragraph num="(b)"> <text>Onset of a borrower's disability or handicap,</text> </paragraph> <paragraph num="(c)"> <text>Divorce or separation, provided that the separated spouse or former spouse no longer holds title to the property,</text> </paragraph> <paragraph num="(d)"> <text>Death of a spouse or other co-borrower,</text> </paragraph> <paragraph num="(e)"> <text>Incarceration of a spouse or other co-borrower,</text> </paragraph> <paragraph num="(f)"> <text>Business reversal leading to sustained material loss of income, or</text> </paragraph> <paragraph num="(g)"> <text>Other similar circumstances of unforeseeable hardship as determined by the Program;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Is not expected, in the judgment of the Program, to recover from the adverse personal or economic circumstances which caused the applicant to be unable to keep mortgage payments current, but can afford to repay a Program loan that refinances existing mortgage debt;</text> </paragraph> <paragraph num="(5)"> <text>Can be better assisted, in the judgment of the Program, by a loan to refinance existing mortgage debt rather than by the short-term mortgage assistance available through the Emergency Mortgage Assistance Program, as described in COMAR 05.03.03;</text> </paragraph> <paragraph num="(6)"> <text>Shall hold title to the eligible residence free and clear of all other liens, except for a subordinate mortgage lien which satisfies the criteria of Regulation .04B(3); and</text> </paragraph> <paragraph num="(7)"> <text>Shall reside and intend to continue to reside in the eligible residence at the time of the loan closing.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Uses."> <paragraph num="A."> <text>The proceeds of a loan made to purchase an eligible residence may be used to pay for:</text> <paragraph num="(1)"> <text>The purchase price of the eligible residence; and</text> </paragraph> <paragraph num="(2)"> <text>Closing costs.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The proceeds of a loan made under Regulation .05A and B of this chapter to purchase and rehabilitate an eligible residence may be used to pay for:</text> <paragraph num="(1)"> <text>The purchase price of the eligible residence;</text> </paragraph> <paragraph num="(2)"> <text>Closing costs; plus</text> </paragraph> <paragraph num="(3)"> <text>Any of the following rehabilitation costs, which shall total $5,000 or more to be eligible for a loan under this regulation:</text> <paragraph num="(a)"> <text>The reasonable cost of correcting major structural defects,</text> </paragraph> <paragraph num="(b)"> <text>The reasonable cost of repairing or replacing plumbing, HVAC, or electrical systems,</text> </paragraph> <paragraph num="(c)"> <text>The reasonable cost of correcting any violations of local planning, zoning, or building codes, or other applicable laws,</text> </paragraph> <paragraph num="(d)"> <text>The reasonable costs of eliminating health and safety hazards including correcting or removing defective paint surfaces and lead-based paint problems; and</text> </paragraph> <paragraph num="(e)"> <text>The reasonable cost of demolition, construction, or lot consolidation as may be approved by the Program; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Any of the following costs:</text> <paragraph num="(a)"> <text>The reasonable cost of inspections performed in accordance with Regulation .08D of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Other reasonable rehabilitation costs as may be approved by the Program, such as the cost of developer fees, cosmetic repairs, energy conservation improvements, accessibility modifications, or major appliances.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The proceeds of a loan made to refinance an eligible residence may be used to pay for:</text> <paragraph num="(1)"> <text>The payoff and release of the existing mortgage loan or loans, including:</text> <paragraph num="(a)"> <text>The remaining principal balance of the existing mortgage loan or loans, and</text> </paragraph> <paragraph num="(b)"> <text>Unpaid interest due on an existing mortgage loan or loans at the time the Program loan closes;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The cost of buying out the equity interest of a co-owner;</text> </paragraph> <paragraph num="(3)"> <text>Any of the following fees, taxes, premiums, or costs which are unpaid and overdue at the time the Program loan closes, up to a limit of 20 percent of the amount of the loan:</text> <paragraph num="(a)"> <text>Late fees,</text> </paragraph> <paragraph num="(b)"> <text>Real property taxes,</text> </paragraph> <paragraph num="(c)"> <text>Insurance premiums,</text> </paragraph> <paragraph num="(d)"> <text>Fees or costs, such as condominium or homeowners association fees, as approved by the Program, or</text> </paragraph> <paragraph num="(e)"> <text>Reasonable costs previously expended by a mortgage lienholder in connection with initiating foreclosure proceedings, if approved by the Program;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Closing costs that are associated with the refinancing;</text> </paragraph> <paragraph num="(5)"> <text>Program fees such as application fees and loan review fees;</text> </paragraph> <paragraph num="(6)"> <text>Fees for financial counseling received in accordance with Regulation.14D of this chapter;</text> </paragraph> <paragraph num="(7)"> <text>In extraordinary individual cases, as determined in the discretion of the Director of DDF, the payoff and release of liens other than mortgage liens.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Short-term Acquisition, Construction, and Rehabilitation Loans."> <paragraph num="A."> <text>For short-term loans to finance the acquisition and construction, or acquisition and rehabilitation together with demolition or lot consolidation, or acquisition and rehabilitation, of residential units, an applicant shall:</text> <paragraph num="(1)"> <text>Be a nonprofit organization or a local government;</text> </paragraph> <paragraph num="(2)"> <text>Demonstrate to the satisfaction of the Program that it has successfully completed an acquisition and rehabilitation project or a similar project within the last 2 years;</text> </paragraph> <paragraph num="(3)"> <text>Agree to sell the residential unit to a household of limited income under a purchase or a lease purchase contract acceptable to the Program;</text> </paragraph> <paragraph num="(4)"> <text>Have a commitment from the Department for permanent financing under the Program for the sale of the residence acquired and constructed or rehabilitated with the loan; and</text> </paragraph> <paragraph num="(5)"> <text>Provide costs for acquisition, construction, rehabilitation, demolition, or lot consolidation, marketing data, and such other information as may be required by the Program;</text> </paragraph> </paragraph> <paragraph num="B."> <text>The proceeds of short-term loans to local governments and nonprofits to finance the acquisition and construction, acquisition and rehabilitation together with demolition or lot consolidation, or acquisition and rehabilitation, of residential units may be used for:</text> <paragraph num="(1)"> <text>The purchase price of the eligible residence;</text> </paragraph> <paragraph num="(2)"> <text>Closing costs;</text> </paragraph> <paragraph num="(3)"> <text>Any of the following reasonable rehabilitation and construction costs which shall total at least $5,000;</text> <paragraph num="(a)"> <text>Correcting major structural defects;</text> </paragraph> <paragraph num="(b)"> <text>Repairing or replacing plumbing, HVAC, or electrical systems;</text> </paragraph> <paragraph num="(c)"> <text>Correcting any violations of local planning, zoning, or building codes, or other applicable laws;</text> </paragraph> <paragraph num="(d)"> <text>Eliminating health and safety hazards including correcting or removing defective paint surfaces and lead-based paint problems; and</text> </paragraph> <paragraph num="(e)"> <text>Cost of demolition, construction, or lot consolidation as may be approved by the Program; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Any of the following costs:</text> <paragraph num="(a)"> <text>The reasonable cost of inspections performed in accordance with Regulation .08D of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Other reasonable rehabilitation costs as may be approved by the Program, such as the cost of developer fees, cosmetic repairs, energy conservation improvements, accessibility modifications, or major appliances.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Loans made under this regulation may not exceed the lesser of:</text> <paragraph num="(1)"> <text>The sum of:</text> <paragraph num="(a)"> <text>The sales price of the eligible residence; plus</text> </paragraph> <paragraph num="(b)"> <text>The rehabilitation costs permitted under §B of this regulation; plus</text> </paragraph> <paragraph num="(c)"> <text>Closing costs; minus</text> </paragraph> <paragraph num="(d)"> <text>Any contribution required by the Program; minus</text> </paragraph> <paragraph num="(e)"> <text>The amount of any prior permitted mortgage lien; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The sum of:</text> <paragraph num="(a)"> <text>The appraiser's estimate of the value of the property after the rehabilitation is completed; plus</text> </paragraph> <paragraph num="(b)"> <text>Closing costs; minus</text> </paragraph> <paragraph num="(c)"> <text>The applicant's contribution described in Regulation .11C of this chapter; minus</text> </paragraph> <paragraph num="(d)"> <text>Any prior permitted mortgage lien.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Rehabilitation Procedures—Standards and Inspections."> <paragraph num="A."> <text>Standards for Rehabilitation Work. The rehabilitated property shall satisfy:</text> <paragraph num="(1)"> <text>State and local planning, zoning, and building codes and other applicable laws; and</text> </paragraph> <paragraph num="(2)"> <text>Standards established by the Program.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Rehabilitation Work Write-Up.</text> <paragraph num="(1)"> <text>The work write-up describing the rehabilitation work to be done shall:</text> <paragraph num="(a)"> <text>Be prepared by the Department or an entity, such as a government agency, a nonprofit or for-profit corporation, or a licensed contractor, acceptable to the Program;</text> </paragraph> <paragraph num="(b)"> <text>Be approved by the Program; and</text> </paragraph> <paragraph num="(c)"> <text>Include only eligible rehabilitation costs as described in Regulation .06B or .07B of this chapter, as applicable.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All rehabilitation work shall be performed by State-licensed contractors in accordance with the work write-up.</text> </paragraph> <paragraph num="(3)"> <text>The contractor or contractors performing the work shall submit to the Program both a draw schedule and a plan for implementing the work write-up.</text> </paragraph> <paragraph num="(4)"> <text>The Program, in its discretion, may revise the draw schedule in §B(3), above.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Monitoring Generally. In monitoring loans and disbursements, the Program, in its sole discretion, shall determine the frequency and level of oversight by the Program during rehabilitation, taking into consideration:</text> <paragraph num="(1)"> <text>The capability of the borrower or the developer under Regulation .07 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The demonstrated experience and reliability of the contractor;</text> </paragraph> <paragraph num="(3)"> <text>The amount of the loan;</text> </paragraph> <paragraph num="(4)"> <text>The availability of local technical assistance; and</text> </paragraph> <paragraph num="(5)"> <text>Other factors considered relevant.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Inspections of Rehabilitation Work.</text> <paragraph num="(1)"> <text>For rehabilitation work under Regulation .05 of this chapter:</text> <paragraph num="(a)"> <text>The Program staff or those persons or entities, which may include the borrower, authorized by the Program, shall conduct inspections to:</text> <paragraph num="(i)"> <text>Determine the necessary scope of work, when required; and</text> </paragraph> <paragraph num="(ii)"> <text>Verify whether the contractor performing the work is entitled to a draw payment.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Inspection reports shall be made on a standard form prescribed by the Program.</text> </paragraph> <paragraph num="(c)"> <text>The Department may charge borrowers a fee for inspections of the rehabilitation work.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For rehabilitation work under Regulation .07 of this chapter:</text> <paragraph num="(a)"> <text>The Program may require that periodic inspections or a final home inspection be conducted to:</text> <paragraph num="(i)"> <text>Determine the necessary scope of work, if required; and</text> </paragraph> <paragraph num="(ii)"> <text>Verify whether the contractor performing the work is entitled to a draw payment or that all work has been completed;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Inspection reports shall be made on a standard form prescribed by the Program;</text> </paragraph> <paragraph num="(c)"> <text>Inspections shall meet standards set by the Program and be conducted by the Program or an inspector acceptable to the Program; and</text> </paragraph> <paragraph num="(d)"> <text>The Department may charge borrowers a fee for inspections of the rehabilitation work.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Rehabilitation Procedures—Payment."> <paragraph num="A."> <text>Completion of Work Required. Except as provided in §B of this regulation, payments shall be made only for work completed. Payments may not be made for material delivered to the site but not incorporated into the project.</text> </paragraph> <paragraph num="B."> <text>Advances.</text> <paragraph num="(1)"> <text>For loans under Regulation .05 of this chapter, there may be an advance or down payment in an amount which does not exceed 10 percent of the rehabilitation costs, if required by the contract for the rehabilitation.</text> </paragraph> <paragraph num="(2)"> <text>For loans under Regulation .07 of this chapter, the Program may advance to a nonprofit organization or local government 10—90 percent of the acquisition and rehabilitation costs. The percentage of costs advanced shall be in the sole discretion of the Department, taking into account experience managing construction or rehabilitation projects and disbursing funds.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Progress Payments.</text> <paragraph num="(1)"> <text>Progress payments may not be made until the borrower has delivered satisfactory evidence, such as receipts or bills, of the amount of the payment requested.</text> </paragraph> <paragraph num="(2)"> <text>Progress payments may not be made without an inspection to verify completion of the work, except at the discretion of the Program. At a minimum, however, the Program or its approved agents shall verify completion of the work before disbursing the final payment, as described in §G of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>If a request for payment is refused, the Program shall notify the borrower.</text> </paragraph> <paragraph num="(4)"> <text>The determination of the Program as to percentage of work completed is final. The Program shall give the borrower written notice of its determination of the percentage of work completed.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Joint Payee Checks. Payments of draws shall be made by a joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director.</text> </paragraph> <paragraph num="E."> <text>Effect of Arrearage. Loan funds may not be disbursed if there is any arrearage of interest payments or escrows required by the loan documents.</text> </paragraph> <paragraph num="F."> <text>Retainage.</text> <paragraph num="(1)"> <text>For all projects for which the borrower is responsible for project inspections, the Program shall retain loan proceeds equal to not more than 10 percent of the contract proposal costs until final payment.</text> </paragraph> <paragraph num="(2)"> <text>For any other project, the Program, at its discretion, may elect to retain loan proceeds equal to not more than 10 percent of the contract proposal costs until final payment, taking into consideration:</text> <paragraph num="(a)"> <text>The type of project;</text> </paragraph> <paragraph num="(b)"> <text>The contractor's experience; and</text> </paragraph> <paragraph num="(c)"> <text>Other factors the Program considers relevant.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the Department.</text> </paragraph> <paragraph num="(4)"> <text>In addition to standard retainage, if the Program receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, and all loan funds have not yet been disbursed, the Program shall retain an amount equal to the lesser of all funds not yet disbursed and the amount sufficient to satisfy the claims until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Final Payment. Final payment shall be made as follows:</text> <paragraph num="(1)"> <text>The borrower shall submit to the Program a certificate of completion, executed by the borrower and contractor, certifying that all work:</text> <paragraph num="(a)"> <text>Has been completed in accordance with the contract documents;</text> </paragraph> <paragraph num="(b)"> <text>Was performed in a workmanlike manner; and</text> </paragraph> <paragraph num="(c)"> <text>Was in accordance with all applicable planning, zoning, and building codes, and other applicable laws.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Upon final inspection and receipt and approval of the certificate of completion, final payment shall be processed.</text> </paragraph> <paragraph num="(3)"> <text>If, in the opinion of the Program, the contractor has satisfied the contract and the borrower has refused to request or release the final payment, then the Program may follow the procedure described below:</text> <paragraph num="(a)"> <text>The Program may require the borrower to explain in writing within 10 days why the Program should not make direct payment to the contractor;</text> </paragraph> <paragraph num="(b)"> <text>If the borrower responds within the 10-day period and requests a meeting, the Program Director shall hold a meeting at which the borrower shall present objections to requesting or releasing the final payment; and</text> </paragraph> <paragraph num="(c)"> <text>The Program, in its discretion, may then approve direct payment to the contractor or the borrower.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Closeout Procedures. After final payment is made, the Department shall reconcile all receipts and disbursements and prepare a close-out statement.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Maximum Loan Amounts."> <paragraph num="A."> <text>Secretarial Determination of Maximum Loan Amounts.</text> <paragraph num="(1)"> <text>The Secretary shall determine limits on loan amounts from time to time.</text> </paragraph> <paragraph num="(2)"> <text>In making the determinations in §A(1) of this regulation, the Secretary may consider factors including the following:</text> <paragraph num="(a)"> <text>Regional costs of housing;</text> </paragraph> <paragraph num="(b)"> <text>Costs of housing affordable to households of limited income; and</text> </paragraph> <paragraph num="(c)"> <text>Exceptional circumstances in individual cases.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Purchase Loans. A loan made to finance the purchase of an eligible residence may not exceed the sum of:</text> <paragraph num="(1)"> <text>100 percent of the sales price of the eligible residence, up to the appraised value of the property, plus</text> </paragraph> <paragraph num="(2)"> <text>Closing costs, minus</text> </paragraph> <paragraph num="(3)"> <text>The borrower's minimum cash contribution described in Regulation .11C of this chapter; minus</text> </paragraph> <paragraph num="(4)"> <text>Any prior permitted mortgage lien.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Purchase and Rehabilitation Loans. A loan made under Regulation .05A and B of this chapter to finance the purchase and rehabilitation of an eligible residence may not exceed the lesser of:</text> <paragraph num="(1)"> <text>The sum of:</text> <paragraph num="(a)"> <text>The sales price of the eligible residence; plus</text> </paragraph> <paragraph num="(b)"> <text>The rehabilitation costs permitted under Regulation .06B of this chapter; plus</text> </paragraph> <paragraph num="(c)"> <text>Closing costs; minus</text> </paragraph> <paragraph num="(d)"> <text>The borrower's contribution described in Regulation .11C of this chapter; minus</text> </paragraph> <paragraph num="(e)"> <text>Any prior permitted mortgage lien; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The sum of:</text> <paragraph num="(a)"> <text>The appraiser's estimate of the value of the property after the rehabilitation is completed; plus</text> </paragraph> <paragraph num="(b)"> <text>Closing costs; minus</text> </paragraph> <paragraph num="(c)"> <text>The borrower's contribution described in Regulation .11C of this chapter; minus</text> </paragraph> <paragraph num="(d)"> <text>Any prior permitted mortgage lien.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Subordinate Program Loans. The sum of a subordinate Program loan made under Regulation .04B of this chapter, plus the amount of the superior mortgage loan, may not exceed the sum of the appraised value plus closing costs, minus the borrower's contribution required under Regulation .11C of this chapter.</text> </paragraph> <paragraph num="E."> <text>Refinancing Loans. A loan made to refinance existing mortgage loans may not exceed the lesser of:</text> <paragraph num="(1)"> <text>The total refinancing costs permitted in accordance with Regulation .06C of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>The appraised value of the eligible residence, plus applicable closing costs.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="General Loan Terms and Requirements."> <paragraph num="A."> <text>Interest Rates.</text> <paragraph num="(1)"> <text>The initial preferred interest rate for a loan shall be:</text> <paragraph num="(a)"> <text>Not higher than the prevailing private market rate as determined by the Program; and</text> </paragraph> <paragraph num="(b)"> <text>A rate, which may be as low as 0 percent, set by the Program in relation to the borrower's financial capacity as determined by the Program.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The initial preferred interest rate may be adjustable in accordance with Regulation .13 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>For purchase and rehabilitation loans, during the rehabilitation period, the Program may in the discretion of the Program charge interest at a rate lower than the initial interest rate.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Loan Term. On the stated date for the borrower to begin repayment of the loan, the maximum loan term may not exceed the lesser of:</text> <paragraph num="(1)"> <text>40 years; or</text> </paragraph> <paragraph num="(2)"> <text>If an appraisal is required for the loan, the estimated remaining economic life of the property.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Borrower's Contribution.</text> <paragraph num="(1)"> <text>The Program may require the borrower to make a minimum contribution to the transaction, as determined by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The minimum contribution requirement described in §C(1) of this regulation applies only to purchase loans, not to refinancing loans.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Security for Loans.</text> <paragraph num="(1)"> <text>A loan shall be secured by a mortgage on the property in the form required by the Department, which shall be recorded in the land records of the county in which the property is located. A loan shall be secured by a first mortgage unless it is permitted to be secured by a second mortgage under Regulations .04B and .07C of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>The mortgage securing the Program loan may not be subordinate to any other liens, including but not limited to mortgage liens other than mortgage liens permitted under Regulations .04B and .07C of this chapter, tax liens, or judgment liens.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Late Charges. A late charge, as permitted by law, may be imposed.</text> </paragraph> <paragraph num="F."> <text>Prepayment Penalty. A prepayment penalty may not be charged.</text> </paragraph> <paragraph num="G."> <text>Change of Ownership.</text> <paragraph num="(1)"> <text>The loan shall become due and payable upon the sale or transfer of the real property securing the loan unless the transfer is:</text> <paragraph num="(a)"> <text>To a spouse, divorced spouse, or a child who resides at the mortgaged property;</text> </paragraph> <paragraph num="(b)"> <text>Any other transfer which lenders are required by federal law to permit; or</text> </paragraph> <paragraph num="(c)"> <text>To an assuming transferee who would otherwise be eligible for a Program loan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For a loan made under Regulation .07 of this chapter:</text> <paragraph num="(a)"> <text>The loan shall be due and payable upon the sale or transfer of the real property securing the loan, under partial release provisions set by the Program if applicable; and</text> </paragraph> <paragraph num="(b)"> <text>The real property securing the loan shall be sold to a household of limited income.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Loan Payments During Rehabilitation. During the rehabilitation period for the loan, which is to be determined by the Program, the borrower may be charged interest only.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Property Insurance Required."> <paragraph num="A."> <text>Hazard Insurance. The borrower shall maintain fire and extended coverage insurance at the borrower's expense in an amount equal to the lesser of the:</text> <paragraph num="(1)"> <text>Replacement value of the improvements, as determined by the appraisal required under this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>Sum of the loan, plus any superior mortgage lien permitted by the Program.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Flood Insurance. If the property is located in an area designated by either the Director of the Federal Emergency Management Agency or the Secretary of the Department of Housing and Urban Development as having special flood hazards, and for which flood insurance is available, the eligible residence shall be covered by a flood insurance policy in an amount equal to the lesser of the:</text> <paragraph num="(1)"> <text>Maximum amount of insurance available; or</text> </paragraph> <paragraph num="(2)"> <text>Amount of the loan.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Terms and Conditions.</text> <paragraph num="(1)"> <text>An insurance policy shall meet the minimum requirements in §C(2), below, plus any additional requirements which may be set by the Department.</text> </paragraph> <paragraph num="(2)"> <text>An insurance policy shall:</text> <paragraph num="(a)"> <text>Be written by a company:</text> <paragraph num="(i)"> <text>Acceptable to the Department, and</text> </paragraph> <paragraph num="(ii)"> <text>Which is reputable and financially sound, as determined by the Department;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Be in force upon the closing of the loan;</text> </paragraph> <paragraph num="(c)"> <text>Contain a standard mortgagee endorsement attached to or printed in the policy naming the Department as mortgagee;</text> </paragraph> <paragraph num="(d)"> <text>Provide for notification to the Department before termination; and</text> </paragraph> <paragraph num="(e)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Periodic Review of Household Income; Adjusting the Interest Rate."> <paragraph num="A."> <text>Applicability. This regulation applies to loans made to owners of one-to-four unit properties.</text> </paragraph> <paragraph num="B."> <text>Adjustable Interest Rates.</text> <paragraph num="(1)"> <text>The initial preferred interest rate on the loan may be adjustable.</text> </paragraph> <paragraph num="(2)"> <text>Loans subject to adjustment shall be made in accordance with the following provisions:</text> <paragraph num="(a)"> <text>The interest rate adjustment shall be based on increases or decreases in the borrower's household income;</text> </paragraph> <paragraph num="(b)"> <text>The manner of calculating interest rate adjustments and the frequency of the adjustments shall be fully disclosed to the borrower at the time the loan is made; and</text> </paragraph> <paragraph num="(c)"> <text>An interest rate adjustment shall take place only after written notice to the borrower.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Except for the reasons set forth in §C(4) of this regulation or Regulation .11A(3) of this chapter, the interest rate may not be adjusted:</text> <paragraph num="(a)"> <text>Below the initial preferred interest rate described in Regulation .11A of this chapter; or</text> </paragraph> <paragraph num="(b)"> <text>Above a rate determined by the Program to be the market interest rate at the time the loan is made.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The Program may establish an alternative interest rate for a borrower that is permitted to assume the loan under Regulation .11G of this chapter, but fails to provide the Program with evidence that the borrower meets the income limits in effect at the time the borrower acquires the property or an interest in the property.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Adjustable Rate Loans; Review of Income and Adjustment of Rate.</text> <paragraph num="(1)"> <text>The provisions of this section apply only to adjustable rate loans made under §B of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>A borrower's household income may be reviewed periodically as required or permitted under the loan documents, upon request of the borrower, or for a new owner permitted to assume the loan as described in §B(4) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>For the purposes of reviewing household income, the Program may require the borrower to submit, in a timely manner, copies of income tax returns and other pertinent information for all members of the borrower's household.</text> </paragraph> <paragraph num="(4)"> <text>If, upon review, the Program determines that the financial circumstances of the borrower have changed and the borrower is:</text> <paragraph num="(a)"> <text>Eligible for a decrease in the interest rate, then the:</text> <paragraph num="(i)"> <text>Program may decrease the interest rate to a lower rate which the Program has determined the borrower can afford, based on the decrease in the borrower's income, and</text> </paragraph> <paragraph num="(ii)"> <text>Decreased interest rate may not drop below the initial preferred interest rate described in Regulation .11A of this chapter, except that in extraordinary individual cases as determined by the Program, the interest rate may be decreased to a lower rate necessitated by the financial circumstances of the borrower;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>No longer eligible for the preferred interest rate stated in the borrower's loan documents, then the Program may:</text> <paragraph num="(i)"> <text>Increase the preferred interest rate to a higher rate which the Program has determined the borrower can afford, based on the increase in the borrower's income, except that the increased interest rate may not exceed the lower of the maximum rate, if any, set forth in the loan documents, or the current prevailing rate for private mortgages, as determined by the Program, or</text> </paragraph> <paragraph num="(ii)"> <text>Call the loan and declare it due and payable after the first 5 years of the loan if the loan documents so permit.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>The Program may increase the preferred rate to the maximum rate set forth in the loan documents, regardless of the prevailing rate for private mortgages, if:</text> <paragraph num="(a)"> <text>Upon the request of the Program, the borrower fails to provide a current Maryland or federal tax return or other evidence of financial circumstances satisfactory to the Program; or</text> </paragraph> <paragraph num="(b)"> <text>The borrower does not execute all of the legal documents required by the Program necessary to increase the preferred interest rate.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>If, after receiving notice of an adjustment to the loan's interest rate, the borrower believes the interest rate adjustment is unwarranted, then the borrower may request the Program to reconsider the adjustment.</text> </paragraph> <paragraph num="(7)"> <text>Within 30 days of the date of the notice in §C(5) of this regulation, the borrower requesting reconsideration of an adjustment to the loan's interest rate:</text> <paragraph num="(a)"> <text>Shall submit to the Program a written statement of reasons why the borrower believes the loan is eligible for a lower interest rate, which statement may be accompanied by any supporting documentation; and</text> </paragraph> <paragraph num="(b)"> <text>May request a personal interview in connection with the request to reconsider the interest rate adjustment.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>The Director of DDF shall designate a review committee composed of at least three employees of the Department, none of whom participate in original decisions about interest rate adjustments.</text> </paragraph> <paragraph num="(9)"> <text>The review committee shall make a recommendation to the Director of DDF for a request to reconsider an interest rate adjustment, following the procedure described below:</text> <paragraph num="(a)"> <text>The review committee shall review all requests by borrowers to reconsider an interest rate adjustment;</text> </paragraph> <paragraph num="(b)"> <text>The review committee shall conduct all personal interviews requested by borrowers, except that only two members of the review committee need to be present at each interview;</text> </paragraph> <paragraph num="(c)"> <text>If a borrower does not request an interview or fails to appear for an interview, then the review committee shall make its recommendation about the interest rate adjustment based on any written statements and documentation submitted by the borrower, in addition to any other relevant information available;</text> </paragraph> <paragraph num="(d)"> <text>If a personal interview takes place, then the review committee's recommendation about the interest rate adjustment shall take into account information provided in the interview.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>The Director of DDF may:</text> <paragraph num="(a)"> <text>Make the final decision about requests to reconsider interest rate adjustments; or</text> </paragraph> <paragraph num="(b)"> <text>Delegate the authority to make the final decisions to the Director or Deputy Director of Homeownership Programs, as long as the designee is not a member of the review committee.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Loan Processing."> <paragraph num="A."> <text>Applications.</text> <paragraph num="(1)"> <text>To apply for a loan, an applicant shall:</text> <paragraph num="(a)"> <text>Submit a completed application in the form that the Department requires;</text> </paragraph> <paragraph num="(b)"> <text>Supply a copy of the latest income tax return, if appropriate, for each member of the household, or other available verification of any existing household income; and</text> </paragraph> <paragraph num="(c)"> <text>Submit any other information or documentation reasonably requested by the Program in order to establish eligibility and qualifications for a loan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Application or Other Program Fees. The Program may require application fees and loan review fees.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Loan Closings.</text> <paragraph num="(1)"> <text>The Program shall establish procedures for closing loans either by the Department directly or by authorized agent.</text> </paragraph> <paragraph num="(2)"> <text>Loan closings shall be scheduled at a time and place acceptable to the Program and the borrower and conducted in a manner acceptable to the Department and the Office of the Attorney General.</text> </paragraph> <paragraph num="(3)"> <text>Title Insurance. The borrower shall provide at closing a standard American Land Title Association Loan Policy that is acceptable to the Program, insuring the Department for an amount equal to the borrower's loan. The title policy shall evidence that title to the home is vested in the borrower, or borrowers as the case may be, and contain only those exceptions and encumbrances acceptable to the Program.</text> </paragraph> <paragraph num="(4)"> <text>Charges and Fees. The borrower is responsible for paying closing costs. Payment may be made directly by the borrower or may be financed by the Program loan in accordance with Regulation .06 of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Appraisals.</text> <paragraph num="(1)"> <text>The Program may require an appraisal of the value of an eligible residence submitted by an appraiser, and in a form and manner acceptable to the Program.</text> </paragraph> <paragraph num="(2)"> <text>The appraisal may be required to estimate the remaining economic life of the property.</text> </paragraph> <paragraph num="(3)"> <text>If the loan is for purchase and rehabilitation of the eligible residence, the Program may require the appraisal to state the:</text> <paragraph num="(a)"> <text>Value of the property before rehabilitation work is done; and</text> </paragraph> <paragraph num="(b)"> <text>Estimated value of the property after rehabilitation work is completed.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Home Buyer Counseling.</text> <paragraph num="(1)"> <text>Each individual borrower receiving a loan may be required to participate in a homebuyer counseling program acceptable to the Department.</text> </paragraph> <paragraph num="(2)"> <text>Borrowers required to participate in a homebuyer counseling program may be required to pay a fee for the program, which fee may be included in the loan amount in accordance with Regulation .06C(5) of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Forward Commitments to Developers."> <paragraph num="A."> <text>For eligible developers of eligible homes, the Department may enter into forward commitments to reserve, for a fixed period of time, a fixed amount of Program funds. The Program funds reserved in the forward commitment shall be used to finance Program loans for eligible borrowers purchasing eligible homes constructed or rehabilitated by the developer.</text> </paragraph> <paragraph num="B."> <text>Eligible developers are:</text> <paragraph num="(1)"> <text>Nonprofit or for-profit organizations;</text> </paragraph> <paragraph num="(2)"> <text>Local governments; or</text> </paragraph> <paragraph num="(3)"> <text>Local government agencies.</text> </paragraph> </paragraph> <paragraph num="C."> <text>To be eligible for a commitment, homes to be financed with the funds reserved shall:</text> <paragraph num="(1)"> <text>Be priced to be affordable to eligible borrowers; and</text> </paragraph> <paragraph num="(2)"> <text>In the determination of the Department, avoid creating or aggravating a concentration of low income households that would adversely affect surrounding communities.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If homes to be included in this forward commitment are new construction, or will change the type of use or increase the intensity of the existing use of the property included in the commitment, the homes are eligible for a forward commitment only if the:</text> <paragraph num="(1)"> <text>Department has complied with COMAR 05.01.06.06; and</text> </paragraph> <paragraph num="(2)"> <text>Secretary has issued the written determination required under COMAR 05.01.06.07.</text> </paragraph> </paragraph> <paragraph num="E."> <text>To be eligible for a commitment, newly constructed homes to be included in a forward commitment shall be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>A developer seeking a forward commitment shall submit sufficient information and documentation to determine the extent, if any, to which the homes to be financed by the loans will change the type of use or increase the intensity of the existing use of the property included in the forward commitment.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Initiatives and Special Programs."> <paragraph num="A."> <text>The Department, in its discretion, may set aside Program funds for initiatives and special programs, whereby funds may be made available under special terms set by the Administration.</text> </paragraph> <paragraph num="B."> <text>Forward Commitments.</text> <paragraph num="(1)"> <text>The Department may enter into forward commitments with sponsors to reserve, for a fixed period of time, a fixed amount of Program funds for initiatives or special programs.</text> </paragraph> <paragraph num="(2)"> <text>The sponsor may be a nonprofit organization or a local government.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Power of the Department."> <paragraph num="A."> <text>The Department may:</text> <paragraph num="(1)"> <text>Assign a mortgage for value;</text> </paragraph> <paragraph num="(2)"> <text>Release a mortgage;</text> </paragraph> <paragraph num="(3)"> <text>Foreclose a mortgage;</text> </paragraph> <paragraph num="(4)"> <text>Acquire property securing a loan in default;</text> </paragraph> <paragraph num="(5)"> <text>Encumber, sell, or otherwise dispose of property acquired in connection with a loan in default; or</text> </paragraph> <paragraph num="(6)"> <text>Obtain and seek enforcement of a deficiency judgment.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In the event of default, as provided in the loan documents, or in the event of a prospective default, the Department, in its sole discretion, may:</text> <paragraph num="(1)"> <text>Modify the rate of interest;</text> </paragraph> <paragraph num="(2)"> <text>Modify the time or amount of payment;</text> </paragraph> <paragraph num="(3)"> <text>Modify the term of the loan;</text> </paragraph> <paragraph num="(4)"> <text>Modify the loan in any other way in order to promote repayment of the loan and achieve the purpose of the Program;</text> </paragraph> <paragraph num="(5)"> <text>Accelerate the loan and foreclose on the mortgage, or accept a deed instead of foreclosure;</text> </paragraph> <paragraph num="(6)"> <text>Accept a deed in lieu of foreclosure whereby the Department accepts a voluntary conveyance of the property securing the loan in exchange for cancellation of debt;</text> </paragraph> <paragraph num="(7)"> <text>Permit a short sale whereby the borrower sells the property and pays less than the full amount of the mortgage debt, if the Department determines that loan loss will be minimized as a result; or</text> </paragraph> <paragraph num="(8)"> <text>Take any other action permitted under the Act.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Program Operation and Administration."> <paragraph num="A."> <text>Loan Documentation. Loans shall be made using standard forms prescribed by the Program.</text> </paragraph> <paragraph num="B."> <text>Program Fund Allocations.</text> <paragraph num="(1)"> <text>The Secretary may reserve all or any portion of the Program funds at any time for any purpose.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary also may restrict the use of all or a portion of the unreserved Program funds so that funds are made available:</text> <paragraph num="(a)"> <text>For a particular purpose consistent with Program goals;</text> </paragraph> <paragraph num="(b)"> <text>For limited times or geographic areas;</text> </paragraph> <paragraph num="(c)"> <text>To meet certain economic or other emergencies; or</text> </paragraph> <paragraph num="(d)"> <text>To one of the other loan programs operated under the Maryland Home Financing Program described in Regulation .02B of this chapter, or to the Settlement Expense Loan Program described in COMAR 05.03.04.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>To the extent that Program funds are not reserved or restricted under §B(1) or (2) of this regulation, or encumbered under a forward commitment made under Regulation .15 or .16 of this chapter, the Program may make funds available to eligible loan applicants on a first-come, first-served basis. However, the Program is not obligated to make loans generally available or to make a specific loan.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Delegation of Authority. An action or decision required or permitted to be taken or made by the Department under the Act or these regulations, except for actions when the Secretary is designated, may be delegated by the Secretary.</text> </paragraph> <paragraph num="D."> <text>Operational Manuals. The Department may establish from time to time operational handbooks or manuals governing matters relating to the program, including descriptive statements of program procedures which do not affect directly the rights of, or the procedures available to, the public.</text> </paragraph> <paragraph num="E."> <text>Loan Servicing and Origination. The Department may enter into servicing agreements with mortgage loan servicers acceptable to the Department.</text> </paragraph> <paragraph num="F."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local programs in connection with a loan necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purpose of the Act.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Reconsideration. An applicant or developer dissatisfied with any decision of the Program may request reconsideration by writing to the Director of the Program. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="H."> <text>Agreements with Political Subdivisions. The Program may enter into agreements with political subdivisions to perform loan application intake services if the political subdivision meets the minimum criteria established by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="False Statements."> <text>A borrower who knowingly makes or causes to be made any material statement or material misstatement of fact, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-816, Annotated Code of Maryland.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-803—4-806; State Finance and Procurement Article, §§5-7B-01—5-7B-10; Annotated Code of MarylandExecutive Orders 01.01.1992.27C and 01.01.1998.04</annotation> <annotation type="History" subtype="Administrative History">Effective date: April, 1973</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.20 amended effective September 1, 1974 (1:2 Md. R. 112)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.20 amended effective July 23, 1975 (2:16 Md. R. 1138)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03F amended effective April 13, 1977 (4:8 Md. R. 632)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03H adopted effective April 13, 1977 (4:8 Md. R. 632)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D amended effective April 13, 1977 (4:8 Md. R. 632)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.04 to COMAR 05.03.01</annotation> <annotation type="History" subtype="Administrative History">Regulations .01, .03, .04, .07—.11, and .13—.15 amended and new Regulation .17 adopted as an emergency provision effective January 25, 1989 (16:3 Md. R. 334); emergency status expired July 25, 1989; adopted permanently effective August 7, 1989 (16:15 Md. R. 1650)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 8, 1990 (16:26 Md. R. 2786)</annotation> <annotation type="History" subtype="Administrative History">Chapter, Maryland Home Financing Program, repealed effective July 22, 1991 (18:14 Md. R. 1609)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.17 under a new chapter, Preferred Interest Rate Loan Program, adopted effective July 22, 1991 (18:14 Md. R. 1609)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective February 1, 1993 (20:2 Md. R. 110); January 21, 2002 (29:1 Md. R. 20)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A and G amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective January 2, 1994 (20:25 Md. R. 1941); January 21, 2001 (29:1 Md. R. 20)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective August 5, 2002 (29:15 Md. R. 1141)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective October 13, 2003 (30:20 Md. R. 1447)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15E amended effective October 13, 2003 (30:20 Md. R. 1447)</annotation> </annotations> </chapter> <chapter num="02" heading="Community Development Administration Residential Mortgage Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations govern the use of proceeds from the issuance of the Community Development Administration's mortgage revenue bonds or from other sources of financing. Proceeds of the bonds and other financing are used to provide mortgages at interest rates below rates prevailing in the unassisted private mortgage market.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>The Administration may purchase mortgage loans from lenders, make certain direct mortgage loans for eligible residences, or make forward commitments to make or to purchase permanent mortgage loans for eligible residences to be constructed or rehabilitated by developers.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>Terms appearing in the Act have the meanings defined there and, in addition, the meanings used in this chapter.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency within the Division of Development Finance of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Applicant” means an individual applying for a mortgage loan.</text> </paragraph> <paragraph num="(4)"> <text>“Authorized officer”, for purposes of executing the Program documents, means any of the following:</text> <paragraph num="(a)"> <text>The Director and any Deputy Director of the Administration;</text> </paragraph> <paragraph num="(b)"> <text>The Director of Single Family Housing Programs;</text> </paragraph> <paragraph num="(c)"> <text>The Deputy Director of Single Family Housing Programs; and</text> </paragraph> <paragraph num="(d)"> <text>The Assistant Director of Single Family Housing Programs.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Bond” means a bond, note, or other obligation of the Administration, the proceeds of which finance mortgage loans.</text> </paragraph> <paragraph num="(6)"> <text>“Bond certificate” means:</text> <paragraph num="(a)"> <text>A certificate, resolution, trust indenture, or other instrument authorizing the issuance and sale of bonds; or</text> </paragraph> <paragraph num="(b)"> <text>Any agreement governing any other source of financing.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Borrower” means the obligee on a mortgage loan from the Program.</text> </paragraph> <paragraph num="(8)"> <text>“Closing costs” means costs incurred in connection with purchasing or refinancing an eligible residence, including costs such as the:</text> <paragraph num="(a)"> <text>Credit report fee;</text> </paragraph> <paragraph num="(b)"> <text>Appraisal fee;</text> </paragraph> <paragraph num="(c)"> <text>Home inspection fee;</text> </paragraph> <paragraph num="(d)"> <text>Survey fee;</text> </paragraph> <paragraph num="(e)"> <text>Title examination fee;</text> </paragraph> <paragraph num="(f)"> <text>Loan origination fee;</text> </paragraph> <paragraph num="(g)"> <text>Title insurance fee;</text> </paragraph> <paragraph num="(h)"> <text>Application fee;</text> </paragraph> <paragraph num="(i)"> <text>Attorney's fee;</text> </paragraph> <paragraph num="(j)"> <text>Documentation and preparation fee;</text> </paragraph> <paragraph num="(k)"> <text>Recording fee;</text> </paragraph> <paragraph num="(l)"> <text>State and local transfer tax; and</text> </paragraph> <paragraph num="(m)"> <text>Recordation taxes.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Code” means the Internal Revenue Code of 1986, as amended, 26 U.S.C., or the Internal Revenue Code of 1954, as amended, as applicable, and any related income tax regulations.</text> </paragraph> <paragraph num="(10)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Developer” means an individual or entity that owns, acquires, constructs, or rehabilitates a project of eligible residences, the purchases of which are to be financed by mortgage loans.</text> </paragraph> <paragraph num="(12)"> <text>“Eligible residence” means residential real property which meets the requirements of Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(13)"> <text>“Household” means the individual or individuals who occupy or intend to occupy:</text> <paragraph num="(a)"> <text>The eligible residence, in the case of a one unit residence; or</text> </paragraph> <paragraph num="(b)"> <text>One of the units in the eligible residence, in the case of a two to four unit residence.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>Income.</text> <paragraph num="(a)"> <text>“Income” means, for purposes of determining whether an applicant's household is qualified as an eligible household, 100 percent of the anticipated annual gross income based on current rate of income from all members of the applicant's household, except as identified in Regulation .04D of this chapter, who intend to reside in an eligible residence as their principal residence.</text> </paragraph> <paragraph num="(b)"> <text>“Income” includes wages, overtime, bonuses, commissions, investment and interest income, unemployment insurance, alimony, child support, pensions, and all other income from any source, as required under the Code, less certain income of minors, unusual or temporary income items, and other items as may be permitted under the Code.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Loan documents” means documents evidencing or securing a mortgage loan or relating to the application for a mortgage loan, including the note, deed of trust, mortgage, and affidavits submitted in connection with the origination of the mortgage loan, and other documents as may be required by the Administration consistent with prevailing prudent lending practices, or to comply with federal and State law.</text> </paragraph> <paragraph num="(16)"> <text>“Manufactured home” means a structure designed to be used as a dwelling, which:</text> <paragraph num="(a)"> <text>Is a multisectional structure which has one HUD certification for each section shipped, and was fabricated on or after June 15, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(b)"> <text>When installed on the site, meets a minimum floor area, minimum depth, and minimum length as required by the Administration, in its sole discretion;</text> </paragraph> <paragraph num="(c)"> <text>Is installed permanently on an engineered foundation in conformance with the International Residential Code, which is incorporated by reference under COMAR 05.02.07, or the standards set by the American National Standards Institute, Inc., which are incorporated by reference under COMAR 05.02.02, and is not independently capable of movement;</text> </paragraph> <paragraph num="(d)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(e)"> <text>Is certified by:</text> <paragraph num="(i)"> <text>The United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, or</text> </paragraph> <paragraph num="(ii)"> <text>The Department of Housing and Community Development as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> <paragraph num="(g)"> <text>Is installed on real property the borrower owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(h)"> <text>Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks; and</text> </paragraph> <paragraph num="(i)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Master servicer” means a master servicer selected by the Administration in accordance with section .13F.</text> </paragraph> <paragraph num="(18)"> <text>“MBS” means mortgage-backed securities.</text> </paragraph> <paragraph num="(19)"> <text>“MHF” means the Maryland Housing Fund, an agency within the Division of Credit Assurance of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(20)"> <text>“Mortgage” means a written instrument including a deed of trust, evidencing or creating a lien against real property for the purpose of providing collateral to secure the repayment of a loan.</text> </paragraph> <paragraph num="(21)"> <text>“Mortgage insurer” means a mortgage pool insurer or provider of primary mortgage insurance, and includes private and governmental mortgage insurers or guarantors.</text> </paragraph> <paragraph num="(22)"> <text>“Mortgage lender” means:</text> <paragraph num="(a)"> <text>Any approved bank, trust company, savings institution, savings and loan association, national bank association, mortgage banker, licensed mortgage lender, insurance company, or other financial institution that:</text> <paragraph num="(i)"> <text>Maintains an office in the State,</text> </paragraph> <paragraph num="(ii)"> <text>Engages in making or originating residential mortgage loans,</text> </paragraph> <paragraph num="(iii)"> <text>Closes loans in its corporate name;</text> </paragraph> <paragraph num="(iv)"> <text>Is authorized to transact business in the State; and</text> </paragraph> <paragraph num="(v)"> <text>Meets other applicable Program criteria;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>With the prior approval of the Program, two related entities that:</text> <paragraph num="(i)"> <text>Each meets the requirements of §B(22)(a)(i), (ii), (iv), and (v) of this regulation;</text> </paragraph> <paragraph num="(ii)"> <text>Originate and close loans and assign to the Administration in a manner approved by the Administration in its sole discretion; and</text> </paragraph> <paragraph num="(iii)"> <text>Agree to execute additional documents and meet additional requirements as the Administration determines in its sole discretion; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The Maryland Home Financing Program.</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Mortgage loan” means a loan made under the Program and secured by a mortgage.</text> </paragraph> <paragraph num="(24)"> <text>“Prepaid expenses” means costs due at the time of closing which are required by the lender to be paid in connection with closing a mortgage loan such as property taxes, ground rent, hazard insurance, condominium or homeowners association fees, if applicable, and any mortgage insurance premiums.</text> </paragraph> <paragraph num="(25)"> <text>“Program” means the Administration's program for using the proceeds of the Administration's revenue bonds or other sources to:</text> <paragraph num="(a)"> <text>Finance mortgage loans secured by eligible residences:</text> <paragraph num="(i)"> <text>Purchased from lenders, or</text> </paragraph> <paragraph num="(ii)"> <text>Made directly by the Administration in accordance with Regulation .14 of this chapter; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Make forward commitments to developers to make or purchase mortgage loans for acquisition of existing, newly constructed, or substantially rehabilitated eligible residences.</text> </paragraph> </paragraph> <paragraph num="(26)"> <text>“Program documents” mean those documents evidencing or securing the obligations of mortgage lenders, loan servicers, or developers to the Administration under the Program.</text> </paragraph> <paragraph num="(27)"> <text>“Project” means an undertaking by a developer relating to existing, newly constructed, or substantially rehabilitated eligible residences, such that the undertaking qualifies as a “community development project” as defined in the Act.</text> </paragraph> <paragraph num="(28)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(29)"> <text>“Settlement costs” means closing costs and prepaid expenses.</text> </paragraph> <paragraph num="(30)"> <text>“Targeted area” means a:</text> <paragraph num="(a)"> <text>Geographically defined area of chronic economic distress as designated by the State and approved by the United States Department of the Treasury and the United States Department of Housing and Urban Development; or</text> </paragraph> <paragraph num="(b)"> <text>Qualified census tract whose population according to the most recent decennial census meets certain income limits set forth under the Code.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrower."> <paragraph num="A."> <text>To be eligible for a mortgage loan to be financed through the Program, a borrower is required to provide affidavits and other verification of compliance with ownership, occupancy, and financial requirements.</text> </paragraph> <paragraph num="B."> <text>Ownership and Occupancy Requirements.</text> <paragraph num="(1)"> <text>Principal Residence. Individuals taking title to an eligible residence are required to execute an affidavit stating that they intend to occupy the property as their principal residence within a reasonable time after closing of the loan.</text> </paragraph> <paragraph num="(2)"> <text>Prior Ownership Disqualification; Exceptions to Disqualification. Each individual taking title to an eligible residence:</text> <paragraph num="(a)"> <text>May not have had an ownership interest in their principal residence at any time during the 3 years preceding the date of the closing of the mortgage loan; or</text> </paragraph> <paragraph num="(b)"> <text>Is an honorably discharged veteran, as evidenced by proper documentation, exercising their one-time exemption to the first time homebuyer requirement under the Code.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The restriction in §B(2) of this regulation does not apply if the eligible residence being financed:</text> <paragraph num="(a)"> <text>Is located in a targeted area;</text> </paragraph> <paragraph num="(b)"> <text>Meets the following requirements:</text> <paragraph num="(i)"> <text>Is at least 20 years old,</text> </paragraph> <paragraph num="(ii)"> <text>Has rehabilitation expenses in excess of 25 percent of the purchase price, and</text> </paragraph> <paragraph num="(iii)"> <text>The external and internal walls and internal structural framework are retained to the extent required for a qualified rehabilitation loan under §143(k) of the Code;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Is financed with taxable mortgage revenue bonds, as determined by the Administration; or</text> </paragraph> <paragraph num="(d)"> <text>Is financed from other sources available to the Program, as determined by the Program.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Ownership of Other Real Estate. The borrower may not own any other real property at the time the mortgage loan closes except:</text> <paragraph num="(a)"> <text>A cemetery plot;</text> </paragraph> <paragraph num="(b)"> <text>A recreational vehicle lot;</text> </paragraph> <paragraph num="(c)"> <text>A 1/20th (2.6 weeks) or less interest time-sharing unit;</text> </paragraph> <paragraph num="(d)"> <text>A lot on which the residential housing unit to be financed with proceeds of the mortgage loan is to be built; or</text> </paragraph> <paragraph num="(e)"> <text>An existing principal residence of a borrower if it is subject to a contract of sale at the time of application and is conveyed before the mortgage loan is closed if the mortgage is financed with:</text> <paragraph num="(i)"> <text>Tax-exempt mortgage revenue bonds and the residence is located in a targeted area under the Code; or</text> </paragraph> <paragraph num="(ii)"> <text>Taxable mortgage revenue bonds or another source of financing available to the Program.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>Minimum Age. Each single applicant and at least one married applicant taking title to the residence shall be 18 years old or older.</text> </paragraph> <paragraph num="(6)"> <text>Form of Ownership. Individuals shall take title to the property in the form required by the Administration.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Purchase Contract Inspection Contingency. The Administration may require that a home inspection be conducted before closing by a home inspector acceptable to the purchaser and lender. The inspection may be required by the purchaser as a contingency to the purchase contract. The purchaser shall obtain the inspection report although the cost to the purchaser may be reimbursed by the seller.</text> </paragraph> <paragraph num="D."> <text>Financial Requirements.</text> <paragraph num="(1)"> <text>Borrower's Household Income.</text> <paragraph num="(a)"> <text>The total anticipated annual household income of all individuals, except those individuals identified in §D(1)(b) of this regulation, who intend to occupy an eligible residence which will secure a mortgage loan financed by the Administration may not, at the time the mortgage loan is closed, exceed the lesser of the:</text> <paragraph num="(i)"> <text>Maximum annual income limits as determined under federal law for the area in which the residence is located; or</text> </paragraph> <paragraph num="(ii)"> <text>Maximum income limits as determined by the Secretary from time to time.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Total anticipated annual household income does not include the income of full-time high school or undergraduate students who are dependent children, unless that individual is a mortgagor or guarantor.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Responsibility for Repayment. All of the individuals who take title to an eligible residence are required to execute the deed of trust subjecting their interest in the residence to the lien of the deed of trust.</text> </paragraph> <paragraph num="(3)"> <text>Ability to Repay. The borrower shall meet the mortgage insurer's underwriting criteria regarding creditworthiness and ability to repay the mortgage loan.</text> </paragraph> <paragraph num="(4)"> <text>Minimum Payment to Close. Payment made at closing by or on behalf of the borrower shall be the difference between the:</text> <paragraph num="(a)"> <text>Total expense of acquiring the residence including settlement costs and any down payment; and</text> </paragraph> <paragraph num="(b)"> <text>Principal amount of the mortgage loan as permitted under Regulation .06 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Maximum Assets.</text> <paragraph num="(a)"> <text>Purchase Loans. Borrowers with liquid assets equal to 20 percent or more of the sales contract price may not be eligible for a mortgage loan under the Program if those assets, in the estimation of the Administration, would enable the borrower to obtain financing in the current unassisted private lending market.</text> </paragraph> <paragraph num="(b)"> <text>Refinance Loans. Borrowers with liquid assets and equity in their residence may not be eligible for a mortgage loan under the Program if those assets, in the estimation of the Administration, would enable the borrower to obtain financing in the current unassisted private lending market.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Minimum Cash Contribution by Borrower. The borrower is required to contribute an amount acceptable to the mortgage insurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Residence."> <paragraph num="A."> <text>The Administration may purchase mortgage loans secured by eligible residences comprised of one to four residential units as described in this regulation.</text> </paragraph> <paragraph num="B."> <text>Loans Secured by Two to Four Unit Residences.</text> <paragraph num="(1)"> <text>The Administration may purchase a loan secured by a two to four unit residence only for special projects, initiatives, or programs approved by the Administration, in its sole discretion.</text> </paragraph> <paragraph num="(2)"> <text>In addition, a loan may be eligible for purchase only if:</text> <paragraph num="(a)"> <text>One of the units shall be occupied by the owner of the units; and</text> </paragraph> <paragraph num="(b)"> <text>The units shall have been first occupied at least 5 years before the mortgage is executed, unless the residence is a two-unit residence located in a targeted area and the borrower meets the federal income requirements set forth in §143(k)(7) of the Code.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Maximum Regional Purchase Price Limits. The cost to acquire an eligible residence, including all amounts paid by or on behalf of the borrower, excluding usual and reasonable settlement costs, may not exceed the lesser of:</text> <paragraph num="(1)"> <text>The maximum purchase price limit determined in accordance with federal law for each federally designated region of the State; or</text> </paragraph> <paragraph num="(2)"> <text>The appraised value of a residence.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Limit on Appraised Value. The appraised value of a residence may not exceed 125 percent of the maximum purchase price limit determined in accordance with federal law for each federally designated region of the State.</text> </paragraph> <paragraph num="E."> <text>Other Requirements.</text> <paragraph num="(1)"> <text>The eligible residence shall meet all applicable building, health, zoning, and other legal requirements at the time of purchase, or upon completion of rehabilitation that meets the requirements for a qualified rehabilitation loan under Regulation .04B(2) of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>If the residence is newly constructed, then the eligible residence shall be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>Section E(2) of this regulation does not apply to loans financed solely with the proceeds of revenue bonds issued under a transfer by a county to the Administration of the Maryland State ceiling under Financial Institutions Article, Title 13, Subtitle 8, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Eligible Units. Types of eligible units include detached units, modular units, town homes, condominiums, manufactured homes under the meaning stated in Regulation .03B(16) of this chapter, and other types of units acceptable to the Administration.</text> </paragraph> <paragraph num="G."> <text>Ineligible Units. The following types of housing units are not eligible:</text> <paragraph num="(1)"> <text>Stock ownership in cooperative housing projects, except as provided otherwise in Regulation .17B(3) of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>Manufactured homes that do not meet the definition under Regulation .03B(16) of this chapter.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Ineligible Business Use. A portion of the residence may not be used in a trade or business except with the prior consent of the Administration. The Code permits certain limited exceptions to the prohibition against business use. Therefore, if a borrower expects to use any portion of the residence in a trade or business, the Administration requires certification from the borrower regarding the nature and extent of any proposed business use in order to assure compliance with applicable federal law governing this use.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Maximum Mortgage Loan Amount."> <paragraph num="A."> <text>Maximum Mortgage Loan Calculation.</text> <paragraph num="(1)"> <text>The original principal amount of a mortgage loan to be made or purchased by the Administration, less any permitted cost set forth in §A(2) of this regulation, may not exceed the lowest of:</text> <paragraph num="(a)"> <text>The maximum purchase price determined from time to time in accordance with federal law for the region of the State in which the residence is located;</text> </paragraph> <paragraph num="(b)"> <text>A maximum mortgage loan amount determined under any applicable bond certificate; or</text> </paragraph> <paragraph num="(c)"> <text>A maximum mortgage loan amount determined by the Secretary from time to time.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Costs that may be subtracted from the original principal amount for the purposes of §A(1) of this regulation are:</text> <paragraph num="(a)"> <text>A financed mortgage insurance premium or guarantee fee;</text> </paragraph> <paragraph num="(b)"> <text>For a loan insured by FHA, additional costs permitted by FHA to be included in the insured loan amount; and</text> </paragraph> <paragraph num="(c)"> <text>Any other costs permitted by the Administration in its discretion, if allowed under the applicable bond documents.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>In making the determination in §A(1)(c) of this regulation, the Secretary may consider:</text> <paragraph num="(1)"> <text>Moderating disparities in federal regional cost limits published from time to time;</text> </paragraph> <paragraph num="(2)"> <text>Jurisdictional requests in connection with particular bond issues; and</text> </paragraph> <paragraph num="(3)"> <text>Whether to modify the maximum mortgage loan amount for loans financed from sources other than tax-exempt bonds.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Other Loan Terms and Conditions."> <paragraph num="A."> <text>Interest Rate. The interest rate or rates on mortgage loans shall be set from time to time by the Administration taking into account:</text> <paragraph num="(1)"> <text>The interest payable by the Administration on its bonds;</text> </paragraph> <paragraph num="(2)"> <text>Administrative expenses of the Program;</text> </paragraph> <paragraph num="(3)"> <text>Possible losses due to mortgage loan defaults;</text> </paragraph> <paragraph num="(4)"> <text>Maximum earnings on bond proceeds financing the loans as permitted under §§103 and 141—150 of the Code, as applicable;</text> </paragraph> <paragraph num="(5)"> <text>Minimum earnings on bond proceeds as required under Housing and Community Development Article, §4-248, Annotated Code of Maryland, and any applicable bond certificate;</text> </paragraph> <paragraph num="(6)"> <text>The income levels of the households being served; and</text> </paragraph> <paragraph num="(7)"> <text>Other matters the Administration considers relevant or appropriate.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Maturity Date. The maturity dates for mortgage loans shall be determined by taking into account the maturity dates of the Administration's bonds. In most cases a mortgage loan will have a term not to exceed 30 to 40 years. However, the term of a mortgage loan may not exceed the remaining economic life of the eligible residence.</text> </paragraph> <paragraph num="C."> <text>Lien Priority. The mortgage shall be either:</text> <paragraph num="(1)"> <text>A first mortgage lien on the eligible residence, subject only to permitted liens and encumbrances, which may include reservations, easements, and other imperfections of title acceptable to the mortgage insurer and the Administration; or</text> </paragraph> <paragraph num="(2)"> <text>A subordinate lien as permitted by the Administration, in its sole discretion.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Title Insurance. Each mortgage shall be the subject of a title insurance policy acceptable to the Administration in an amount not less than the original principal amount of the mortgage loan, insuring that the mortgage is a first mortgage lien or, if applicable under §C of this regulation, a subordinate lien as permitted by the Administration.</text> </paragraph> <paragraph num="E."> <text>Subordinate Liens. At the time a Program loan is made or purchased, a borrower may not place any subordinate liens on the property securing the mortgage loan without the prior consent of the Administration.</text> </paragraph> <paragraph num="F."> <text>Mortgage Insurance.</text> <paragraph num="(1)"> <text>Mortgage loans shall be the subject of such primary and pool mortgage insurance or other credit enhancement as required by any applicable bond certificate or as the Administration requires in its sole discretion.</text> </paragraph> <paragraph num="(2)"> <text>With the approval of the pool insurer, if any, the Administration may permit termination of primary mortgage insurance provided by MHF or a private mortgage insurer:</text> <paragraph num="(a)"> <text>If the borrower is not delinquent and if the unpaid principal amount of the mortgage loan is 78 percent or less of the original principal amount or as otherwise permitted by the Administration; or</text> </paragraph> <paragraph num="(b)"> <text>As otherwise required by State or federal law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Property Insurance. Fire and extended hazard insurance coverage shall meet the following requirements:</text> <paragraph num="(1)"> <text>Policies shall be written by insurance companies authorized to transact business in the State;</text> </paragraph> <paragraph num="(2)"> <text>Policies shall be in force at the time of the mortgage loan closing;</text> </paragraph> <paragraph num="(3)"> <text>The Administration shall be named as the mortgagee in a standard mortgagee clause or endorsement attached to or printed in the policy;</text> </paragraph> <paragraph num="(4)"> <text>The insurance shall be in an amount at least equal to the lesser of:</text> <paragraph num="(a)"> <text>The original principal balance of the mortgage loan, or</text> </paragraph> <paragraph num="(b)"> <text>100 percent of the replacement value of the improvements located on the property;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The insurance shall be payable in an amount equal to any partial or total loss not exceeding the full amount of insurance to prevent the borrower from being a coinsurer;</text> </paragraph> <paragraph num="(6)"> <text>The terms and coverage of all insurance policies shall be satisfactory to the Administration.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Loan Documents.</text> <paragraph num="(1)"> <text>The Administration may prescribe the form and the substance of the loan documents.</text> </paragraph> <paragraph num="(2)"> <text>The loan documents may provide for:</text> <paragraph num="(a)"> <text>A single monthly payment, due on the first day of the month, to be applied to interest, principal, and expenses, in the order determined by the Administration, which may be preceded by a period of monthly payments calculated in the amount of interest and expenses only, to be applied to interest, principal, and expenses in the order determined by the Administration;</text> </paragraph> <paragraph num="(b)"> <text>The monthly payment of expenses equal to 1/12 of annual real estate taxes, any ground rent, property insurance premiums, mortgage insurance premiums, condominium or homeowners association fees, unless otherwise directed by the Administration, and any other item required by the Administration;</text> </paragraph> <paragraph num="(c)"> <text>A late charge;</text> </paragraph> <paragraph num="(d)"> <text>Each loan to be due on transfer and not be assumable without the written consent of the Administration, which may be granted only if the transfer is not in violation of the Code;</text> </paragraph> <paragraph num="(e)"> <text>The Administration to increase the rate of interest as an alternative to acceleration of the indebtedness in the event of certain nonmonetary defaults related to covenants by the mortgagor required by provisions of the Code, to facilitate transfer of the loan out of the Program;</text> </paragraph> <paragraph num="(f)"> <text>Prepayment premiums if otherwise permitted by State law for private mortgages;</text> </paragraph> <paragraph num="(g)"> <text>A prohibition on subordinate liens without the consent of the Administration; and</text> </paragraph> <paragraph num="(h)"> <text>Other provisions necessary to protect the interests of the Administration, to further its purposes, and to ensure compliance by the Administration with the Act, any applicable provisions of the Code, and the applicable bond certificate.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Loans for Acquisition and Rehabilitation. The Administration, in its discretion, may make or purchase loans that finance a combination of acquisition and rehabilitation costs, if the loans meet the requirements of the Code, the Act, applicable bond documents, and any other applicable requirements.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Refinancing."> <paragraph num="A."> <text>Tax-Exempt Bond Refinancing. In order to comply with the Code, mortgage loans financed with tax-exempt mortgage revenue bonds may not be used to refinance an existing mortgage or a land installment contract except:</text> <paragraph num="(1)"> <text>In limited circumstances involving construction of a home on a lot owned by the borrower, or to refinance temporary bridge financing, or in connection with a qualified rehabilitation loan, in any case as may be approved by the Administration; or</text> </paragraph> <paragraph num="(2)"> <text>For refinance loans permitted by the Code, if any, and the applicable bond documents, to the extent offered by the Administration.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Financing from Taxable Bonds or Other Sources.</text> <paragraph num="(1)"> <text>Mortgage loans financed with taxable mortgage revenue bonds or other sources may be used to refinance an existing mortgage.</text> </paragraph> <paragraph num="(2)"> <text>A refinancing loan may be used to pay for:</text> <paragraph num="(a)"> <text>The payoff and release of existing mortgages and all liens; and</text> </paragraph> <paragraph num="(b)"> <text>Closing costs, settlement costs, real property taxes, homeowners and mortgage insurance premiums, homeowner association fees, and other closing expenses as determined by the Program.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A refinancing loan may not be used to provide money directly to the borrower or pay debts that are not secured by the residence.</text> </paragraph> <paragraph num="(4)"> <text>The Program may set terms and conditions for refinancing loans, including:</text> <paragraph num="(a)"> <text>A requirement that the borrower's current first mortgage have an interest rate subject to change or a balloon payment; or</text> </paragraph> <paragraph num="(b)"> <text>A maximum or minimum on the loan-to-value ratio, including all existing debt secured by the residence.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The Program may set interest rates for loans financed by taxable bonds or other sources that are higher than rates for tax-exempt mortgage loans.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Default."> <paragraph num="A."> <text>If a defaulted mortgage loan is owned directly by the Administration, the mortgage loan may be foreclosed, restructured, forborne, or otherwise treated, as described in §§B—G of this regulation.</text> </paragraph> <paragraph num="B."> <text>Foreclosure.</text> <paragraph num="(1)"> <text>Mortgage loans which are in default may be:</text> <paragraph num="(a)"> <text>Foreclosed by the Administration or its agent in the manner provided by law for foreclosures of private mortgages; or</text> </paragraph> <paragraph num="(b)"> <text>Assigned by the Administration to the mortgage insurer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Administration may take title in its name to any property foreclosed by it.</text> </paragraph> <paragraph num="(3)"> <text>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.</text> </paragraph> </paragraph> <paragraph num="C."> <text>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.</text> </paragraph> <paragraph num="D."> <text>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.</text> </paragraph> <paragraph num="E."> <text>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.</text> </paragraph> <paragraph num="F."> <text>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.</text> </paragraph> <paragraph num="G."> <text>In General.</text> <paragraph num="(1)"> <text>The Administration may take any other action permitted under the Act.</text> </paragraph> <paragraph num="(2)"> <text>The ability to take action as described in this regulation may be governed by agreements with mortgage insurers and the regulations governing MHF.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Transfers and Assumptions."> <paragraph num="A."> <text>Nonmonetary Transfers.</text> <paragraph num="(1)"> <text>The Administration may approve nonmonetary transfers of interest in property that is security for a mortgage loan made under the Program if the requirements of the Code and the applicable mortgage insurers can be satisfied.</text> </paragraph> <paragraph num="(2)"> <text>The transferee shall be required to execute appropriate affidavits, modification documents to the note and deed of trust, recapture tax notice, and other documents in the form provided by the Administration.</text> </paragraph> <paragraph num="(3)"> <text>The Administration reserves the right to disapprove transfers under circumstances where it appears that there was deception or sham on the part of the borrower in connection with the original mortgage loan in an attempt to avoid ineligibility under the requirements of Regulation .04 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Assumptions for Consideration. The Administration will permit an assumption of one of its mortgage loans only if the assumption meets the:</text> <paragraph num="(1)"> <text>Eligibility requirements for new mortgage loans contained in Regulations .04 and .05 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>Requirements of the applicable mortgage insurers.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Compliance with the Code. Transfers or assumptions of interests in property in accordance with §A or B of this regulation are subject to modification from time to time to comply with requirements of the Code.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Loan Purchase Program — Approval of Mortgage Lender."> <paragraph num="A."> <text>A mortgage lender may apply to be approved to participate as an eligible lender under the Program to originate mortgage loans for purchase by the Administration.</text> </paragraph> <paragraph num="B."> <text>An eligible mortgage lender shall certify at the time of application for approval, and shall update the certifications as required by the Administration, that the lender is:</text> <paragraph num="(1)"> <text>In compliance with all applicable State and federal laws and regulations governing the business of the mortgage lender and the making of residential mortgage loans for residential housing; and</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §F of this regulation, approved by the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC).</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Administration may approve eligible mortgage lenders that:</text> <paragraph num="(1)"> <text>Meet the Administration's standards in §B of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>In the estimation of the Administration, are reputable and financially sound;</text> </paragraph> <paragraph num="(3)"> <text>Provide all required documentation, information, and counsel opinions acceptable to the Administration as set forth in §D of this regulation;</text> </paragraph> <paragraph num="(4)"> <text>Execute all program documents for participating mortgage lenders in the form prescribed by the Administration; and</text> </paragraph> <paragraph num="(5)"> <text>Meet additional requirements of the Administration established from time to time.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A mortgage lender shall provide the Administration with:</text> <paragraph num="(1)"> <text>A counsel's opinion in form and substance satisfactory to the Administration; and</text> </paragraph> <paragraph num="(2)"> <text>Any financial data, documents, or other information that the Administration requires.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A mortgage lender approved by the Administration shall:</text> <paragraph num="(1)"> <text>Enter into a mortgage purchase agreement with the Administration, as amended from time to time, stating the general terms and conditions on which the Administration will purchase mortgage loans from the mortgage lender;</text> </paragraph> <paragraph num="(2)"> <text>At the request of the Administration, provide supplemental opinions, documents, and information in order to remain approved by the Administration for participation in the Program; and</text> </paragraph> <paragraph num="(3)"> <text>Meet any additional requirements of the Administration.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A mortgage lender that is not an FNMA or FHLMC approved seller of mortgage loans may be approved to sell mortgage loans to the Administration if the:</text> <paragraph num="(1)"> <text>Lender qualifies to participate under all other Program requirements;</text> </paragraph> <paragraph num="(2)"> <text>Lender meets any minimum origination requirements of the Administration; and</text> </paragraph> <paragraph num="(3)"> <text>Lender meets any additional requirements of the Administration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Loan Purchase Program—Purchasing Loans."> <paragraph num="A."> <text>Conditions Related to Particular Bond Issues.</text> <paragraph num="(1)"> <text>Conditional Obligation to Purchase.</text> <paragraph num="(a)"> <text>From time to time the Administration issues tax-exempt or taxable mortgage revenue bonds to finance mortgage loan purchases.</text> </paragraph> <paragraph num="(b)"> <text>Any obligations of the Administration to purchase any mortgage loans financed from the proceeds of its bonds are subject to:</text> <paragraph num="(i)"> <text>The successful sale and delivery by the Administration of bonds on terms and in an amount satisfactory to the Administration; and</text> </paragraph> <paragraph num="(ii)"> <text>Execution by the lender and the Administration of the participation agreement or other program document applicable to a particular bond issue, or issues, or as otherwise required by the Administration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Participation Agreement.</text> <paragraph num="(a)"> <text>The participation agreement or other program documents or directives set the specific terms and conditions of the mortgage loans to be made by the lender and purchased by the Administration.</text> </paragraph> <paragraph num="(b)"> <text>The participation agreement or other program documents or directives shall state the applicable interest rates that may be charged on the mortgage loans, and the maximum purchase prices of residences to be financed by mortgage loans which the Administration will purchase from the mortgage lender.</text> </paragraph> <paragraph num="(c)"> <text>The maximum return to a mortgage lender may be established by the Administration in the form of points, fees, and charges, including amounts which may be retained out of mortgage payments by the mortgage lender for servicing a mortgage loan.</text> </paragraph> <paragraph num="(d)"> <text>The participation agreement or other program documents or directives may contain requirements for:</text> <paragraph num="(i)"> <text>Allocations of proceeds to be reserved for purchase of mortgage loans for particular local jurisdictions for specified periods of time;</text> </paragraph> <paragraph num="(ii)"> <text>Additional requirements for or restrictions upon the terms and conditions of mortgage loans, the eligibility of borrowers, and the number, type, location, and use of eligible residences;</text> </paragraph> <paragraph num="(iii)"> <text>Electronic and other reporting, reconciliation, loan reservation, and other processes; and</text> </paragraph> <paragraph num="(iv)"> <text>Other terms and conditions that the Administration considers necessary or desirable.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Other program documents and directives referred to in §A(2) of this regulation may include notices to lenders through electronic means and the Department's internet site.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Purchase Procedure.</text> <paragraph num="(1)"> <text>Loan Review. Loans are subject to review by the Administration before purchase.</text> </paragraph> <paragraph num="(2)"> <text>Purchase Schedules. The Administration may establish a standard purchase schedule, and also an expedited purchase schedule, as an incentive to encourage efficient submission of loans in proper order for purchase.</text> </paragraph> <paragraph num="(3)"> <text>Repurchase. The mortgage purchase agreement may require that a mortgage lender repurchase any loan that the Administration determines was not in compliance with conditions for purchase of mortgage loans by the Administration, was delinquent in making the first payment, or has been inadequately serviced by the mortgage lender.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Loan Servicing."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>For new loans originated by mortgage lenders and purchased by the Administration, the Administration may:</text> <paragraph num="(a)"> <text>Require loans to be serviced by a master servicer or servicers selected by the Administration, or serviced by the Administration; or</text> </paragraph> <paragraph num="(b)"> <text>Permit mortgage lenders, or a related entity acceptable to the Administration in its discretion, to be approved to service the mortgage loans the lender originates on terms set by the Administration.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the Administration has permitted mortgage lenders to service certain mortgage loans as described in §A(1)(b) of this regulation, the Administration may permit the servicer to retain from mortgage loan receipts a monthly servicing fee determined by the Administration from time to time.</text> </paragraph> <paragraph num="(3)"> <text>Upon notice to the servicers, the Administration may require that loans held by the servicers be transferred to the master servicer or servicers selected by the Administration or transferred to the Administration.</text> </paragraph> <paragraph num="(4)"> <text>The provisions of §A(1)—(3) of this regulation are subject to the requirements of issuers of investment certificates secured by the mortgage loans, where applicable.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Servicing shall be performed in accordance with a mortgage agency agreement and servicing manual prepared by the Administration.</text> </paragraph> <paragraph num="C."> <text>To be approved initially by the Administration to service mortgage loans, a lender is required to:</text> <paragraph num="(1)"> <text>Enter into a mortgage agency agreement with the Administration, as amended from time to time, stating the general terms and conditions for servicing of mortgage loans for the Administration by the mortgage loan servicer;</text> </paragraph> <paragraph num="(2)"> <text>Be an FNMA approved mortgage loan servicer;</text> </paragraph> <paragraph num="(3)"> <text>In the estimation of the Administration, be reputable and financially sound;</text> </paragraph> <paragraph num="(4)"> <text>Submit all certifications, affidavits, financial information, and other information as required by the mortgage agency agreement;</text> </paragraph> <paragraph num="(5)"> <text>Agree to the establishment of separate insured trust or custodial accounts for the benefit of the Administration and its borrowers;</text> </paragraph> <paragraph num="(6)"> <text>Be subject to service of legal process in the State;</text> </paragraph> <paragraph num="(7)"> <text>Demonstrate delinquency rates that do not exceed rates acceptable to the Administration;</text> </paragraph> <paragraph num="(8)"> <text>Be a participating originating lender in the Program; and</text> </paragraph> <paragraph num="(9)"> <text>Not currently be suspended or debarred under COMAR 05.01.05.</text> </paragraph> </paragraph> <paragraph num="D."> <text>To remain approved by the Administration to service mortgage loans, a loan servicer is required to meet all the requirements of §C of this regulation, with the following exceptions and additional requirements:</text> <paragraph num="(1)"> <text>Update all certifications, affidavits, financial information, and other information as required by the mortgage agency agreement;</text> </paragraph> <paragraph num="(2)"> <text>Verify establishment of separate insured trust or custodial accounts for the benefit of the Administration and its borrowers;</text> </paragraph> <paragraph num="(3)"> <text>Be subject to service of legal process in the State;</text> </paragraph> <paragraph num="(4)"> <text>Maintain delinquency rates that do not exceed rates acceptable to the Administration, or institute a plan, as approved by the Administration, for reducing the delinquency rates for the Administration portfolio of loans to a level acceptable to the Administration;</text> </paragraph> <paragraph num="(5)"> <text>Maintain a servicing portfolio for the Administration that has at least the minimum number of loans determined by the Administration from time to time; and</text> </paragraph> <paragraph num="(6)"> <text>Satisfactorily perform its duties under its contractual obligations to the Administration.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Transfer of Servicing.</text> <paragraph num="(1)"> <text>A servicing portfolio of Administration mortgage loans may not be transferred by the loan servicer without the prior written approval of the Administration. Transfer to a related entity requires prior written approval by the Administration in its discretion. Merger with or acquisition of the servicer also requires the prior written approval of the Administration in order to continue servicing.</text> </paragraph> <paragraph num="(2)"> <text>If a servicer fails to meet the requirement of §D of this regulation, or if the servicer wishes to transfer its mortgage loan portfolio voluntarily, the Administration may:</text> <paragraph num="(a)"> <text>Require the servicer to transfer Administration loans to one or more master servicers designated by the Administration or to the Administration; or</text> </paragraph> <paragraph num="(b)"> <text>Permit a servicer to transfer loans to another approved servicer within a period of time set by the Administration, after which the loans shall be transferred to one or more master servicers designated by the Administration or to the Administration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Other Servicing.</text> <paragraph num="(1)"> <text>The Administration may select one or more master loan servicers or subservicers from time to time on terms within its discretion to service all or a portion of the loans the Administration purchases or the loans that secure the MBS purchased by the Administration.</text> </paragraph> <paragraph num="(2)"> <text>The Administration may service all or a portion of the loans the Administration purchases or the loans that secure the MBS purchased by the Administration.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Division of Credit Assurance. The Division of Credit Assurance of the Department shall carry out loan asset management for the Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Direct Mortgage Loans Made by the Administration — Processing of Mortgage Loans."> <paragraph num="A."> <text>The Administration may make a direct mortgage loan to a household with income at the limits established in Regulation .04D(1) of this chapter:</text> <paragraph num="(1)"> <text>For an eligible residence located in an eligible project as described in Regulations .15—.19 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>For a household that has a disabled member who will reside in the dwelling;</text> </paragraph> <paragraph num="(3)"> <text>For an emergency housing need as determined by the Secretary;</text> </paragraph> <paragraph num="(4)"> <text>For settlement and down payment costs; or</text> </paragraph> <paragraph num="(5)"> <text>That is made in conjunction with a loan funded with State appropriated funds if the State loan comprises at least 20 percent of the total amount loaned to the borrower.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Processing of a direct mortgage loan may be initiated by submission of a standard form of application prescribed by the Administration accompanied by:</text> <paragraph num="(1)"> <text>A nonrefundable application fee in an amount determined by the Administration from time to time to be used to offset the cost of processing and appraisal and credit report fees; and</text> </paragraph> <paragraph num="(2)"> <text>Any documents, affidavits, or information that the Administration requires.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Administration may prescribe procedures for evaluating applicants for direct mortgage loans.</text> </paragraph> <paragraph num="D."> <text>The Administration may prescribe procedures and requirements for closing mortgage loans, including the following:</text> <paragraph num="(1)"> <text>Only title insurance companies authorized to do business in the State, attorneys acting on behalf of these title insurance companies, or attorneys authorized by the Administration and the Office of the Attorney General may close mortgage loans;</text> </paragraph> <paragraph num="(2)"> <text>Reasonable and customary amounts for the following items may be collected from the borrower:</text> <paragraph num="(a)"> <text>Recording fees and recording and transfer taxes or other charges incident to recordation;</text> </paragraph> <paragraph num="(b)"> <text>Credit report and appraisal, which are normally covered by the application fee;</text> </paragraph> <paragraph num="(c)"> <text>Required survey charges;</text> </paragraph> <paragraph num="(d)"> <text>Title examination and title insurance; and</text> </paragraph> <paragraph num="(e)"> <text>Other charges or fees authorized by the Administration, including points or origination fees;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The mortgagor shall pay at closing a sum that, together with monthly expense payments, will pay all ground rents, taxes, assessments, insurance premiums, and condominium or homeowners association fees when due and payable;</text> </paragraph> <paragraph num="(4)"> <text>All taxes and assessments against the property that are due and payable shall be paid at or before closing;</text> </paragraph> <paragraph num="(5)"> <text>Before closing, the title insurance company shall issue its preliminary binder in favor of the Administration as mortgagee, with a title insurance policy being issued at closing in accordance with the binder.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Project Development—Commitments to Developers."> <paragraph num="A."> <text>With the approval of the Secretary, the Administration may provide forward commitments to developers for the financing of mortgage loans to families of limited income meeting the requirements of Housing and Community Development Article, §4-218, Annotated Code of Maryland, for the purchase of existing, newly constructed, or rehabilitated homes in community development projects. The Administration may finance these mortgages by making mortgage loans directly to eligible mortgagors, as described in Regulation .14 of this chapter, or by purchasing mortgage loans from an approved lender selected by the developer or the borrower, as described in Regulations .11—.13 of this chapter.</text> </paragraph> <paragraph num="B."> <text>If a project is approved, the Administration may issue a commitment letter to the eligible developer setting forth:</text> <paragraph num="(1)"> <text>The total principal amount of loans for eligible residences that the Administration will make or purchase within a project;</text> </paragraph> <paragraph num="(2)"> <text>Project conditions and requirements;</text> </paragraph> <paragraph num="(3)"> <text>Loan terms and conditions; and</text> </paragraph> <paragraph num="(4)"> <text>Any other restrictions applicable to the mortgage loans, such as the:</text> <paragraph num="(a)"> <text>Eligibility of mortgagors, and</text> </paragraph> <paragraph num="(b)"> <text>Number, type, location, and use of eligible residences in a project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Before issuance of the commitment letter, the developer shall have delivered to the Administration:</text> <paragraph num="(1)"> <text>Evidence, satisfactory to the Administration, of construction or rehabilitation financing for the project, if applicable;</text> </paragraph> <paragraph num="(2)"> <text>Evidence, satisfactory to the Administration, of ownership by the developer or rights to ownership of the land and buildings that are to be financed by the mortgage loans, except in cases of converting tenants to homeowners or similar projects approved by the Administration; and</text> </paragraph> <paragraph num="(3)"> <text>A certified copy of an approving ordinance or resolution, duly adopted by the legislative body of the municipality or county in which the project is located or the Board of Estimates in Baltimore City, approved by the county executive of the chartered county or the mayor of a municipality, if not a member of the city council, with the ordinance or resolution being in any form as long as it contains the following information:</text> <paragraph num="(a)"> <text>The identity of the developer,</text> </paragraph> <paragraph num="(b)"> <text>The location and nature of the project,</text> </paragraph> <paragraph num="(c)"> <text>Acknowledgment of the financing to be provided by the Administration, and</text> </paragraph> <paragraph num="(d)"> <text>Approval of the project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The developer shall agree in writing to purchase from the Administration any mortgage loan if any information or statement contained in any submission to the Administration by the developer is untrue or inaccurate in any material respect, including any information or statement that jeopardizes the tax-exempt status of interest on applicable bonds of the Administration or compliance of the loan with applicable State or federal law.</text> </paragraph> <paragraph num="E."> <text>The developer shall comply with the terms and conditions of a commitment letter or any other program document entered into between the developer and the Administration.</text> </paragraph> <paragraph num="F."> <text>The Administration, in its sole discretion, shall determine whether an eligible residence is eligible to be financed in a project under the program, taking into account such factors as the purchase price, the appraised value, the cost of other housing in the area, the square footage, whether it is subject to a homeowner's warranty or equivalent warranty acceptable to the Administration, and other appropriate factors.</text> </paragraph> <paragraph num="G."> <text>The commitment to the developer and any extensions of the commitment shall expire unless the eligible residences under construction or to be constructed are completed and sold, and the loans settled and purchased, within the time limits specified by the Administration. The time limit for a commitment may not exceed the time permissible under the applicable bond certificate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Project Development—Eligible Developers."> <text>To be eligible for a forward commitment, a developer:</text> <paragraph num="A."> <text>Shall demonstrate experience, acceptable to the Administration, in the development of eligible residences and satisfactory prior experience, if any, in the Program or other programs of the Administration;</text> </paragraph> <paragraph num="B."> <text>In the estimation of the Administration, shall be reputable and have the ability to satisfy its obligations under the program documents and these regulations;</text> </paragraph> <paragraph num="C."> <text>Shall be qualified to do business in Maryland;</text> </paragraph> <paragraph num="D."> <text>Shall hold all licenses or permits from the State, its agencies, and any local governmental unit having jurisdiction necessary to own, construct or rehabilitate, and operate a project, and, if no independent broker or brokers are retained, necessary to sell eligible residences in a project; and</text> </paragraph> <paragraph num="E."> <text>May not be suspended or debarred under COMAR 05.02.02, or be on the disapproved contractors' list maintained by the Department, the United States Department of Housing and Urban Development, the Maryland Department of General Services, or any other federal or state agency or instrumentality.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Project Development—Eligible Projects."> <paragraph num="A."> <text>Developments of eligible residences or portions of the developments may be approved as eligible projects. The Administration may limit the number of eligible residences it will finance in any development of which the project is a part. If a development consists of more than one section, this limitation may be applicable to each section separately, as well as to the development as a whole.</text> </paragraph> <paragraph num="B."> <text>Project Units.</text> <paragraph num="(1)"> <text>A project may be a scattered site project of units that are not located on contiguous properties.</text> </paragraph> <paragraph num="(2)"> <text>A project shall consist of at least two units.</text> </paragraph> <paragraph num="(3)"> <text>In the sole discretion of the Administration, cooperative units may be project units if the:</text> <paragraph num="(a)"> <text>Project consists of all of the cooperative units in the building or buildings owned by the cooperative housing corporation;</text> </paragraph> <paragraph num="(b)"> <text>Cooperative is in compliance with Corporations and Associations Code, Title 5, Subtitle 6B, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>Cooperative project is determined by the Secretary to be a community development project under the Act;</text> </paragraph> <paragraph num="(d)"> <text>Loans have such terms, and are secured, as required by the Administration and the mortgage insurer; and</text> </paragraph> <paragraph num="(e)"> <text>Administration, in its sole discretion, determines that the loans are permitted to be financed under the applicable bond documents.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Projects involving rehabilitation are eligible for a commitment if:</text> <paragraph num="(1)"> <text>The proposed rehabilitation will correct all code violations and bring the property to a standard acceptable to the Department;</text> </paragraph> <paragraph num="(2)"> <text>The structures to be rehabilitated are unoccupied at the time of commitment, except in cases of:</text> <paragraph num="(a)"> <text>Occupancy by tenants who are to become homeowners, or</text> </paragraph> <paragraph num="(b)"> <text>Adoption of a relocation plan acceptable to the Department; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Except in cases of tenant conversion to homeownership, the buildings to be rehabilitated are owned or to be owned by the developer.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If a project involves new construction or will change the type of use or increase the intensity of the existing use of the property, the project is eligible for a forward commitment only if the:</text> <paragraph num="(1)"> <text>Department has complied with COMAR 05.01.06.06; and</text> </paragraph> <paragraph num="(2)"> <text>Secretary has issued the written determination required under COMAR 05.01.06.07.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Regulations .03—.10 of this chapter apply to mortgage loans to finance acquisition of eligible residences located in eligible projects whether the mortgage loans are made directly by the Administration or purchased by the Administration from participating lenders.</text> </paragraph> <paragraph num="F."> <text>If the project consists of newly constructed homes, then the project shall be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="G."> <text>Section F of this regulation does not apply to loans financed solely with the proceeds of revenue bonds issued under a transfer by a county to the Administration of the Maryland State ceiling under Financial Institutions Article, Title 13, Subtitle 8, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Project Development—Project Application Process."> <paragraph num="A."> <text>Approval of a project shall be initiated by submission of an application on forms prescribed by the Administration.</text> </paragraph> <paragraph num="B."> <text>Preliminary Application. Developers may submit the following items for preliminary eligibility review by the Administration:</text> <paragraph num="(1)"> <text>Completed application form;</text> </paragraph> <paragraph num="(2)"> <text>Location map;</text> </paragraph> <paragraph num="(3)"> <text>Construction and sales schedule;</text> </paragraph> <paragraph num="(4)"> <text>Cost breakdown for the project;</text> </paragraph> <paragraph num="(5)"> <text>Marketing plan; and</text> </paragraph> <paragraph num="(6)"> <text>Sufficient information and documentation to determine the extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the land and buildings to be financed by the mortgage loans.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Final Applications.</text> <paragraph num="(1)"> <text>Final applications shall contain any information, documents, or items that the Administration requires in accordance with this section.</text> </paragraph> <paragraph num="(2)"> <text>In addition to items listed in §A of this regulation, the Administration may require an application to include the following:</text> <paragraph num="(a)"> <text>Appraisals satisfactory to the Administration;</text> </paragraph> <paragraph num="(b)"> <text>Certification of equal employment opportunity;</text> </paragraph> <paragraph num="(c)"> <text>Warranty certification;</text> </paragraph> <paragraph num="(d)"> <text>Subdivision and site plans;</text> </paragraph> <paragraph num="(e)"> <text>Plans and specifications for each model type to be built by the developers;</text> </paragraph> <paragraph num="(f)"> <text>Form of sales contract;</text> </paragraph> <paragraph num="(g)"> <text>Condominium or homeowners association documents, as applicable;</text> </paragraph> <paragraph num="(h)"> <text>Local government resolution of approval;</text> </paragraph> <paragraph num="(i)"> <text>Historical Trust clearance;</text> </paragraph> <paragraph num="(j)"> <text>A nonrefundable application fee in an amount as may be established by the Administration; and</text> </paragraph> <paragraph num="(k)"> <text>Other information and documentation as may be required by the Administration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The developer shall submit and satisfy all requirements of the application process set forth in this regulation.</text> </paragraph> <paragraph num="E."> <text>Factors which the Administration may consider in approving a project include, but are not limited to:</text> <paragraph num="(1)"> <text>Cost, unit size, type of building, quality of construction, energy efficiency, and location of the project;</text> </paragraph> <paragraph num="(2)"> <text>Geographic distribution of all projects for which mortgage loans have been or may be made available;</text> </paragraph> <paragraph num="(3)"> <text>Regional demand;</text> </paragraph> <paragraph num="(4)"> <text>The number and amount of mortgage loans requested;</text> </paragraph> <paragraph num="(5)"> <text>The incomes of the households to be served;</text> </paragraph> <paragraph num="(6)"> <text>The Administration's prior experience with the developer; and</text> </paragraph> <paragraph num="(7)"> <text>Other criteria that the Administration considers appropriate in furtherance of the public purpose of the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Administration Initiatives and Special Programs."> <paragraph num="A."> <text>The Administration, in its discretion, may set aside Program funds for initiatives and special programs, whereby funds may be made available under special terms set by the Administration.</text> </paragraph> <paragraph num="B."> <text>The Administration, in its discretion, may operate a program whereby Program loans are collateral for mortgage-backed securities, or other securities, certificates, or agreements, under the terms and conditions which the Administration and the issuer of the securities, or certificates, or other party to the agreements, may require.</text> </paragraph> <paragraph num="C."> <text>Subordinate Mortgage Loans.</text> <paragraph num="(1)"> <text>The Administration, in its discretion, may operate a program in which a borrower receiving a first mortgage loan through the Program also may receive a second and subordinate mortgage loan through the Program under terms set by the Administration.</text> </paragraph> <paragraph num="(2)"> <text>The purpose of such a program is to provide a governmental benefit to qualifying borrowers by providing additional financing when doing so will enhance the borrowers' opportunities for affordable housing.</text> </paragraph> <paragraph num="(3)"> <text>The borrower may be charged a higher rate of interest on the first mortgage loan than the rate charged on first mortgage loans to borrowers who do not receive the secondary mortgage loan.</text> </paragraph> <paragraph num="(4)"> <text>The Program may make loans that do not bear interest and are forgivable as to principal under terms set by the Administration.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Settlement Expense Grants.</text> <paragraph num="(1)"> <text>The Administration may make funds available for grants to Program borrowers to assist with settlement expenses upon terms set by the Administration.</text> </paragraph> <paragraph num="(2)"> <text>The loan to the borrower receiving a grant under §D(1) of this regulation may be at a higher interest rate than loans available without the grant.</text> </paragraph> <paragraph num="(3)"> <text>The Administration may require that the borrower execute Administration documentation to receive the grant.</text> </paragraph> <paragraph num="(4)"> <text>The purpose of such a program is to provide a governmental benefit to qualifying borrowers by providing down payment and settlement costs when doing so will enhance the borrowers' opportunities for affordable housing.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A mortgage lender, servicer, master servicer, developer, or mortgage insurer may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any mortgage lender, servicer, master servicer, developer or mortgage insurer in connection with any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>A mortgage lender, servicer, master servicer, developer, or mortgage insurer shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department's Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Administration and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Issuance of Bonds and Notes."> <paragraph num="A."> <text>Timing of Issuance. The Administration may obtain funds to make or purchase mortgage loans from any source authorized by law, particularly by issuing bonds or notes payable from revenues from the mortgage loans. The timing of any bond or note sale and the acceptability of the interest rate to be paid by the Administration are solely within the discretion of the Secretary.</text> </paragraph> <paragraph num="B."> <text>Restricted Bond Purchase. A mortgage lender, servicer, developer, or mortgage insurer, including any related person as defined in §144 of the Code, may not, under any arrangement, formal or informal or direct or indirect, purchase bonds or other obligations of the Administration in an amount related to the aggregate principal amount of the mortgage loans to be sold to the Administration by the mortgage lender, subject to a commitment to a developer, or to be insured by the mortgage insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Program Operation."> <paragraph num="A."> <text>Guidelines. The Administration may establish from time to time detailed Program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financing and servicing of mortgage loans or to the Program. Copies of these guidelines shall be available for examination at the offices of the applicable mortgage lenders, servicers, and developers and at the Administration's principal office. The Administration, upon request, shall make copies available to the public without charge.</text> </paragraph> <paragraph num="B."> <text>Fees. The Administration may charge any commitment fees, application fees, nonusage fees, or other fees, charges, or penalties to applicants, mortgage lenders, servicers, developers, or other individuals or entities that participate in the Program. The Administration may restrict the fees and charges that mortgage lenders, servicers, developers, or other Program participants obtain from mortgagors or applicants.</text> </paragraph> <paragraph num="C."> <text>Delegation. In addition to authorized officers identified in Regulation .03B(4) of this chapter, the Secretary may delegate to any other official or employee of the Department or Administration the authority to execute or approve any program documents or loan documents.</text> </paragraph> <paragraph num="D."> <text>Designation of Proceeds. The Secretary may from time to time designate use of any portion of the proceeds available under the program for any purpose of the program consistent with the Act and the applicable bond certificates.</text> </paragraph> <paragraph num="E."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations if in the written determination of the Secretary the waiver or variance is:</text> <paragraph num="(1)"> <text>Not inconsistent with the Act and is not contrary to the provisions of any applicable bond certificate and application of the regulations in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act; or</text> </paragraph> <paragraph num="(2)"> <text>Necessary to comply with the regulations of the Code or any federal agency.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Reconsideration. An applicant, developer, mortgage lender, or servicer dissatisfied with any decision of the Administration may request reconsideration by writing to the Director of the Program. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="G."> <text>Books and Records. Mortgage lenders, servicers, and developers shall maintain complete books, accounts, and records regarding all transactions under the Program. These shall be maintained and available for inspection by the Administration or other representatives of the State until at least 3 years after the termination of all contractual relationships with the Administration. The Administration may make any examination that it considers necessary to monitor compliance with the program documents or other documents, the Act, any applicable provisions of the Code, the applicable bond certificate, and these regulations.</text> </paragraph> <paragraph num="H."> <text>Requirements of the Code. The requirements of the Code, which shall be determined by the Administration in its sole discretion, shall take precedence over the requirements of this chapter in the event of any conflict or omission.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-237—4-240; State Finance and Procurement Article, §§5-7B-01—5-7B-10; Annotated Code of MarylandExecutive Orders 01.01.1992.27C and 01.01.1998.04</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.27 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)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended and Regulations .28—.55 adopted as an emergency provision effective December 3, 1981 (8:26 Md. R. 2097); emergency status extended at 9:10 Md. R. 1017; adopted permanently effective May 24, 1982 (9:10 Md. R. 1018)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01, .29, .39, .43 amended and new Regulations .56 and .57 adopted as an emergency provision effective September 17, 1982 (9:21 Md. R. 2102) (Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01, .39C, and .43 amended, and new Regulations .56 and .57 adopted effective March 14, 1983 (10:5 Md. R. 463)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective July 30, 1984 (11:15 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.27 adopted effective July 30, 1984 (11:15 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.12 to COMAR 05.03.02</annotation> <annotation type="History" subtype="Administrative History">Regulation .02T amended effective January 8, 1990 (16:26 Md. R. 2786)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective January 8, 1990 (16:26 Md. R. 2786)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.27 repealed and new Regulations .01—.21 adopted effective September 30, 1991 (18:19 Md. R. 2098)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2024); amended permanently effective July 1, 1996 (23:13 Md. R. 939)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2024); amended permanently effective July 1, 1996 (23:13 Md. R. 939)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 amended effective January 2, 1994 (20:25 Md. R. 1941)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18B amended effective January 2, 1994 (20:25 Md. R. 1941)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective July 27, 1998 (25:15 Md. R. 1190)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective October 14, 2002 (29:20 Md. R. 1586)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 31, 2003 (30:6 Md. R. 418); January 2, 2006 (32:26 Md. R. 1995); October 9, 2006 (33:20 Md. R. 1614); April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective October 9, 2006 (33:20 Md. R. 1614); April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05E amended effective January 21, 2002 (29:1 Md. R. 20); October 13, 2003 (30:20 Md. R. 1447)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective October 24, 2005 (32:21 Md. R. 1706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07F amended effective October 9, 2006 (33:20 Md. R. 1614); April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07H amended effective October 24, 2005 (32:21 Md. R. 1706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective October 9, 2006 (33:20 Md. R. 1614); April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective March 31, 2003 (30:6 Md. R. 418)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C, E amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11F amended effective January 2, 2006 (32:26 Md. R. 1995)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective October 14, 2002 (29:20 Md. R. 1586); April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective October 14, 2002 (29:20 Md. R. 1586); January 6, 2003 (29:26 Md. R. 2027)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13F amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14A amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17F adopted effective January 21, 2002 (29:1 Md. R. 20)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17F repealed and new Regulation .17F and G adopted effective October 13, 2003 (30:20 Md. R. 1447)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19B, C, and D amended effective April 29, 2013 (40:8 Md. R. 723)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19C adopted effective October 13, 2003 (30:12 Md. R. 1447)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19C amended effective May 23, 2005 (32:10 Md. R. 924)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19D adopted effective May 23, 2005 (32:10 Md. R. 924)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="03" heading="Emergency Mortgage Assistance Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making emergency assistance mortgage loans to households of limited income.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>The Program is designed to provide short-term financing for eligible homeowners who, because of an involuntary loss of income due to unemployment or other extraordinary hardship, are unable to make current mortgage payments on their homes and are likely to have to forfeit the title to their home.</text> </paragraph> <paragraph num="B."> <text>The Program is one of four loan programs operated under the Maryland Home Financing Program as authorized by the Act. Other loan programs operating under the Maryland Home Financing Program include programs for making:</text> <paragraph num="(1)"> <text>Preferred interest adjustable rate loans to certain households of limited income, for the purchase, purchase and rehabilitation, or refinancing of a primary residence as described in COMAR 05.03.01;</text> </paragraph> <paragraph num="(2)"> <text>Short-term construction loans to developers for the construction of, or rehabilitation of, residential units affordable to certain households of limited income; and</text> </paragraph> <paragraph num="(3)"> <text>Reverse equity mortgage loans to elderly households of limited income for housing-related expenses and personal expenses which enable the owner to continue to occupy the owner's home, as described in COMAR 05.03.05.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 8, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Adjusted annual income” means 100 percent of the projected annual gross income, based on the income from all members of the household 18 years old or older, including social security, retirement income, pensions, wages, overtime, bonuses, commissions, investment and interest income, rental income, disability or unemployment insurance, alimony and support payments, and all other income from any source, less:</text> <paragraph num="(a)"> <text>Abnormal expenses of a long-term unusual nature such as extraordinary unreimburseable medical, rehabilitation, or special education expenses; and</text> </paragraph> <paragraph num="(b)"> <text>Unusual or temporary one-time income items, such as judgments or gifts, as determined by the Program.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Borrower” means an applicant who receives a loan through the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Closing costs” mean:</text> <paragraph num="(a)"> <text>Fees or premiums for property and judgment reports, title examination, or other similar expenses;</text> </paragraph> <paragraph num="(b)"> <text>Fees for preparation of a deed, settlement statement, or other documents;</text> </paragraph> <paragraph num="(c)"> <text>Payments owed at the time of the loan closing for property taxes, hazard insurance premiums, or ground rent;</text> </paragraph> <paragraph num="(d)"> <text>Fees for notarizing deeds or other documents;</text> </paragraph> <paragraph num="(e)"> <text>Appraisal and survey fees;</text> </paragraph> <paragraph num="(f)"> <text>Recordation taxes and fees;</text> </paragraph> <paragraph num="(g)"> <text>Fees or premiums for mortgage insurance;</text> </paragraph> <paragraph num="(h)"> <text>Loan application fees;</text> </paragraph> <paragraph num="(i)"> <text>Fees for credit reports;</text> </paragraph> <paragraph num="(j)"> <text>Reasonable legal fees;</text> </paragraph> <paragraph num="(k)"> <text>Payoff of prior liens or mortgages; and</text> </paragraph> <paragraph num="(l)"> <text>Other closing costs as approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Controlled dangerous substance” means a controlled dangerous substance as that term is defined in Criminal Law Article,§5-101, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(6)"> <text>“Department” means the Maryland Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(7)"> <text>“Household” means the individual or individuals who occupy the eligible residence securing the loan.</text> </paragraph> <paragraph num="(8)"> <text>“Household of limited income” means a household for which the adjusted annual income does not exceed the upper income limit established by the Secretary in accordance with Housing and Community Development Article, §§4-806 and 4-807, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Loan” means a loan made by the Department to a borrower through the Program, and secured by a lien on the eligible residence as defined in Regulation .04.</text> </paragraph> <paragraph num="(10)"> <text>“Mortgage” means a mortgage or deed of trust.</text> </paragraph> <paragraph num="(11)"> <text>“Program” means the Emergency Mortgage Assistance Program.</text> </paragraph> <paragraph num="(12)"> <text>“Secretary” means the Secretary of the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Residences."> <paragraph num="A."> <text>An eligible residence:</text> <paragraph num="(1)"> <text>Shall be the primary residence of the borrower;</text> </paragraph> <paragraph num="(2)"> <text>Shall be a single family dwelling unit located in the State, including a townhouse or condominium;</text> </paragraph> <paragraph num="(3)"> <text>Shall be real property owned by the borrower in fee simple or under a freely transferable, perpetually renewable, ground lease which permits the lessee to transfer the leasehold interest without the consent of the lessor;</text> </paragraph> <paragraph num="(4)"> <text>May not be a cooperative or mobile home, which is treated as personalty for the purposes of establishing a security interest.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A manufactured housing unit may be an eligible residence if it:</text> <paragraph num="(1)"> <text>Is intended for residential use by a single household;</text> </paragraph> <paragraph num="(2)"> <text>Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(3)"> <text>Is not less than 24 feet in width and 40 feet in length;</text> </paragraph> <paragraph num="(4)"> <text>Is installed permanently on an engineered foundation in conformance with the BOCA National Building Code (1987), which is incorporated by reference under COMAR 05.02.02,and is not independently capable of movement;</text> </paragraph> <paragraph num="(5)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(6)"> <text>Is certified by the United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, or by the Department as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland, and complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> <paragraph num="(7)"> <text>Is installed on real property the borrower owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(8)"> <text>Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks; and</text> </paragraph> <paragraph num="(9)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An eligible residence may not be encumbered by:</text> <paragraph num="(1)"> <text>More than two other mortgage liens which collectively may secure a remaining mortgage debt of not more than 95 percent of the current value of the eligible residence, as determined by the Program;</text> </paragraph> <paragraph num="(2)"> <text>A mortgage lien that secures a line of credit loan; or</text> </paragraph> <paragraph num="(3)"> <text>Other liens, including a tax lien.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Borrowers."> <paragraph num="A."> <text>At the time of application, an eligible borrower:</text> <paragraph num="(1)"> <text>Shall be likely to have to forfeit title to an eligible residence defined in Regulation .04 if the borrower does not receive a loan through the Program;</text> </paragraph> <paragraph num="(2)"> <text>Shall be unable to keep payments on the borrower's home mortgage loan or loans current due to loss of income caused by one or more of the following unforeseeable adverse personal or economic circumstances:</text> <paragraph num="(a)"> <text>Involuntary unemployment of a borrower,</text> </paragraph> <paragraph num="(b)"> <text>Onset of a borrower's disability or handicap,</text> </paragraph> <paragraph num="(c)"> <text>Divorce from a co-borrower,</text> </paragraph> <paragraph num="(d)"> <text>Death of a spouse or other co-borrower,</text> </paragraph> <paragraph num="(e)"> <text>Incarceration of a spouse or other co-borrower,</text> </paragraph> <paragraph num="(f)"> <text>Business reversal leading to sustained material loss of income, or</text> </paragraph> <paragraph num="(g)"> <text>Other circumstances of unforeseeable hardship as determined by the Program;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>May not have an unforeseeable hardship which is caused by:</text> <paragraph num="(a)"> <text>Current or former distribution of controlled dangerous substances by the borrower;</text> </paragraph> <paragraph num="(b)"> <text>Current use or possession of controlled dangerous substances by the borrower; or</text> </paragraph> <paragraph num="(c)"> <text>Former use or possession of a controlled dangerous substance by a borrower who is not a recovering addict which means someone:</text> <paragraph num="(i)"> <text>Who has successfully completed a supervised drug rehabilitation program and is no longer engaged in the illegal use of drugs, or has otherwise been rehabilitated successfully and is no longer engaging in illegal drug use; or</text> </paragraph> <paragraph num="(ii)"> <text>Is participating in a supervised rehabilitation program and is no longer engaging in illegal drug use.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Reasonably may be expected by the Program to resume regular mortgage loan payments within 24 months after the Program loan closes.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The borrower's household shall be a household of limited income.</text> </paragraph> <paragraph num="C."> <text>An eligible borrower also shall meet the following requirements:</text> <paragraph num="(1)"> <text>Shall own and occupy an eligible residence as defined in Regulation .04 at the time of the loan application, and intend to continue to do so at the time of the loan closing;</text> </paragraph> <paragraph num="(2)"> <text>May not own or hold any interest in any other real property except cemetery plots, or real property used in a trade or business;</text> </paragraph> <paragraph num="(3)"> <text>Shall satisfy the following criteria in the estimation of the Program:</text> <paragraph num="(a)"> <text>Does not have the financial resources to obtain private conventional mortgage financing,</text> </paragraph> <paragraph num="(b)"> <text>Is not eligible for mortgage assistance under other Departmental loan programs or federal government programs, and</text> </paragraph> <paragraph num="(c)"> <text>Is not eligible for assistance available when the delinquent mortgage is insured by the Federal Housing Administration (FHA) under Title II of the National Housing Act;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Shall meet the underwriting standards of the Program, which shall include but not be limited to:</text> <paragraph num="(a)"> <text>Good credit history before loss of income from adverse personal or economic circumstances,</text> </paragraph> <paragraph num="(b)"> <text>Stable employment history,</text> </paragraph> <paragraph num="(c)"> <text>Past history of responsible financial management, evidenced in part by the level of debt at the time of application for the loan;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Shall have the legal capacity to incur the obligations of the loan; and</text> </paragraph> <paragraph num="(6)"> <text>Shall agree to comply with the requirements established by the Program and with the terms of the loan.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A loan applicant shall be eligible for a refinancing loan under the Department's preferred interest rate loan program if:</text> <paragraph num="(1)"> <text>The loan applicant is otherwise eligible for a loan under the program;</text> </paragraph> <paragraph num="(2)"> <text>In the judgment of the Director of the Program, the loan applicant cannot be expected to recover from the adverse personal or economic circumstances which caused the applicant to be unable to keep mortgage payments current;</text> </paragraph> <paragraph num="(3)"> <text>The loan applicant meets the underwriting criteria of the preferred interest rate loan program, including but not limited to the income limits, house value limits, and affordability standards; and</text> </paragraph> <paragraph num="(4)"> <text>In the judgment of the Program, a loan to refinance existing mortgage debt is preferable for assisting the loan applicant.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Uses."> <paragraph num="A."> <text>The proceeds of a loan made through the Program may be used to:</text> <paragraph num="(1)"> <text>Make up to 36 payments of principal and interest on the superior mortgage loan or loans as follows:</text> <paragraph num="(a)"> <text>Up to 12 of the payments may be payments which are overdue and unpaid at the time the loan made through the Program closes,</text> </paragraph> <paragraph num="(b)"> <text>Not more than 24 of the payments may be payments which become due after the loan through the Program closes, and</text> </paragraph> <paragraph num="(c)"> <text>Not more than a total of 36 of the payments of principal and interest may be made from the proceeds of the loan, whether the payments are as described in § A(1)(a) or (b), above, or a combination of them;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Pay any of the following fees, taxes, premiums, or costs which are unpaid and overdue at the time the loan closes, or which become due during the first 24 months after the loan closes if the total does not exceed 20 percent of the total loan amount:</text> <paragraph num="(a)"> <text>Late fees,</text> </paragraph> <paragraph num="(b)"> <text>Real property taxes,</text> </paragraph> <paragraph num="(c)"> <text>Insurance premiums, or</text> </paragraph> <paragraph num="(d)"> <text>Fees or costs such as homeowners' association dues, which the Program determines are necessary to bring or keep the superior mortgage loan or loans current;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Pay for any of the following costs associated with the Program loan:</text> <paragraph num="(a)"> <text>Closing costs as defined in Regulation .03B(4), above,</text> </paragraph> <paragraph num="(b)"> <text>Application fees, and</text> </paragraph> <paragraph num="(c)"> <text>Fees for financial counseling as described in Regulation .12, below.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Loan proceeds shall be disbursed by the Program directly to the mortgagees or such other parties as may be owed payments or fees. Loan proceeds may not be disbursed directly to the borrower.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="General Loan Terms and Requirements."> <paragraph num="A."> <text>Loan Amount. The loan amount may not exceed the lesser of:</text> <paragraph num="(1)"> <text>An amount which, when added to the outstanding balance of the superior mortgage lien or liens, does not exceed 100 percent of the value of the eligible residence as determined by the Program, except that in an extraordinary case, approved by written determination of the Director of the Program, the amount may be increased to an amount up to 110 percent of the value of the eligible residence;</text> </paragraph> <paragraph num="(2)"> <text>The maximum amount for which the borrower is eligible under Regulation .06A;</text> </paragraph> <paragraph num="(3)"> <text>The amount the borrower reasonably can be expected to be able to afford to repay, in the estimation of the Program; or</text> </paragraph> <paragraph num="(4)"> <text>The maximum loan amount for the Program, as determined by the Secretary from time to time.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Interest Rates. The Secretary, by written determination, shall set an interest rate or rates for Program loans, from time to time, taking into account rates available in the conventional housing market and the household income and assets of the borrowers to be served by the Program.</text> </paragraph> <paragraph num="C."> <text>Loan Term. On the stated date for the borrower to begin repayment of the loan, the maximum loan term shall be either 20 years, or, if an appraisal is required, the appraised estimated remaining economic life of the property, whichever is less.</text> </paragraph> <paragraph num="D."> <text>Security for Loans.</text> <paragraph num="(1)"> <text>A loan shall be secured by a mortgage on the property in the form required by the Department which shall be recorded in the land records of the county in which the property is located.</text> </paragraph> <paragraph num="(2)"> <text>The mortgage securing the Program loan may be subordinate to one or two other mortgage liens if the requirements of Regulation .04C(3) are fulfilled.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Late Charges. A late charge, as permitted by law, may be imposed.</text> </paragraph> <paragraph num="F."> <text>Prepayment Penalty. A prepayment penalty may not be charged.</text> </paragraph> <paragraph num="G."> <text>Insurance.</text> <paragraph num="(1)"> <text>Hazard Insurance. The borrower shall maintain fire and extended coverage insurance at the borrower's expense in an amount not less than the sum of the loan and any other indebtedness secured by the eligible residence, up to the value of the improvements located on the property.</text> </paragraph> <paragraph num="(2)"> <text>Flood Insurance. If the improvements are located in a 100-year plain, as designated by the United States Department of Housing and Urban Development, then the eligible residence shall be covered by a flood plain insurance policy in an amount equal to the lesser of the maximum amount of insurance available, or the sum of the loan and any other indebtedness secured by the residence.</text> </paragraph> <paragraph num="(3)"> <text>Terms and Conditions. Each insurance policy shall meet the following minimum requirements plus any additional requirements which may be set by the Department:</text> <paragraph num="(a)"> <text>Be written by companies acceptable to the Department;</text> </paragraph> <paragraph num="(b)"> <text>Be written by companies which are reputable and financially sound, as determined by the Department;</text> </paragraph> <paragraph num="(c)"> <text>Be in force upon the closing of the loan;</text> </paragraph> <paragraph num="(d)"> <text>Contain a standard mortgagee endorsement attached to or printed in the policy naming the Department as mortgagee;</text> </paragraph> <paragraph num="(e)"> <text>Name the Department as loss payee and additional insured;</text> </paragraph> <paragraph num="(f)"> <text>Provide for notification to the Department before termination; and</text> </paragraph> <paragraph num="(g)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Change of Ownership. The loan shall become due and payable upon the sale or transfer of the real property securing the loan unless the transfer is to a spouse, divorced spouse, or child who resides at the mortgaged property, or the transfer is otherwise in accordance with federal law.</text> </paragraph> <paragraph num="I."> <text>Appraisal. The Program may require an appraisal of the eligible residence submitted by an appraiser, and in a form and manner acceptable to the Program. The appraisal may be required to estimate the remaining economic life of the property.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Terms Governing Disbursement of Loan Proceeds and Repayment of the Loan."> <paragraph num="A."> <text>Disbursement of Loan Proceeds.</text> <paragraph num="(1)"> <text>For a period of up to 6 months from the date of the loan closing, the Program may disburse loan proceeds to the mortgagees or other parties as may be owed payments or fees based on the information provided in the borrower's application.</text> </paragraph> <paragraph num="(2)"> <text>After the initial 6-month period, the borrower may make additional requests for disbursement of loan proceeds to the mortgagees or other parties as may be owed payments or fees. Each request shall satisfy the following requirements:</text> <paragraph num="(a)"> <text>The request shall be for a period of not more than 6 months;</text> </paragraph> <paragraph num="(b)"> <text>The period of time for which loan disbursements are requested shall end not later than 24 months after the loan closing;</text> </paragraph> <paragraph num="(c)"> <text>The amount of the request may not cause the loan to exceed the maximum loan amount stated in the borrower's loan documents;</text> </paragraph> <paragraph num="(d)"> <text>The request shall be made on the form provided by the Program, and shall be submitted to the Program within the time period required by the Program;</text> </paragraph> <paragraph num="(e)"> <text>The request form shall be accompanied by updated information requested by the Program about the financial circumstances of the borrower's household. The information provided shall satisfy the Program that the borrower continues to be eligible for assistance under the Program.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Loan proceeds may not be disbursed by the Program on behalf of the borrower once 24 months have passed since the date of the loan closing.</text> </paragraph> <paragraph num="(4)"> <text>The Program, in its discretion, may reevaluate the borrower's financial circumstances at any time during the time that loan proceeds are being disbursed. If the borrower fails to provide information reasonably requested by the Program, or if the Program determines that the borrower is no longer eligible for assistance, then the Program may discontinue any further loan disbursements.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Repayment Terms.</text> <paragraph num="(1)"> <text>The Program shall establish a repayment plan for the borrower which shall be set forth in the loan documents at the time the loan closes. The repayment plan shall require the borrower to begin repayment of the loan 24 months after the loan closes.</text> </paragraph> <paragraph num="(2)"> <text>Payments of principal and interest shall be deferred until the date established for repayment to begin.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Applications."> <paragraph num="A."> <text>To apply for a loan, an applicant shall;</text> <paragraph num="(1)"> <text>Submit a completed application in such form as the Department may require;</text> </paragraph> <paragraph num="(2)"> <text>Supply a copy of the latest State income tax return, if appropriate, for each member of the household, or other available verification of any existing household income; and</text> </paragraph> <paragraph num="(3)"> <text>Submit any other information or documentation reasonably requested by the Program in order to establish eligibility and qualifications for a loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Application Fee. The Program may require an application fee for processing the loan application.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Loan Closings."> <paragraph num="A."> <text>The Program shall establish procedures for closing the loans either by the Department directly or by an authorized agent.</text> </paragraph> <paragraph num="B."> <text>Loan closings shall be scheduled at a time and place acceptable to the Program and the borrower, and conducted in a manner acceptable to the Department and the Office of the Attorney General.</text> </paragraph> <paragraph num="C."> <text>Title. The Program shall require a title binder or property and judgment report, which shall be updated for the closing. The binder or report shall be in a form, and prepared by a company, acceptable to the Program, and the contents of the binder or report shall be acceptable to the Program. The Program may require additional evidence that title to the eligible residence is vested in the borrower and is subject only to exceptions and encumbrances acceptable to the Program.</text> </paragraph> <paragraph num="D."> <text>Charges and Fees. The borrower is responsible for paying closing costs. Payment may be made directly by the borrower or may be financed by the Program loan in accordance with Regulation .06A(3), above.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Default."> <paragraph num="A."> <text>In the event of default, as provided in the legal documents, or in the event of a prospective default, the Department may:</text> <paragraph num="(1)"> <text>Modify the rate of interest;</text> </paragraph> <paragraph num="(2)"> <text>Defer payment of principal, interest, or both, or forgive interest;</text> </paragraph> <paragraph num="(3)"> <text>Modify the term of the loan;</text> </paragraph> <paragraph num="(4)"> <text>Modify the loan in any other way in order to promote repayment of the loan and achieve the purpose of the Program; or</text> </paragraph> <paragraph num="(5)"> <text>Accelerate the loan and foreclose on the mortgage or accept a deed in lieu of foreclosure.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The mortgage securing the program loan may be released if the Department, in its sole discretion, determines that it is in the best financial interests of the Department to do so.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Financial Counseling."> <paragraph num="A."> <text>Each borrower shall participate in a financial counseling program acceptable to the Department unless, in the written determination of the Program, a financial counseling program is not available for the borrower or the Program otherwise determines that financial counseling is not necessary.</text> </paragraph> <paragraph num="B."> <text>In order to be acceptable to the Department, a financial counseling program shall:</text> <paragraph num="(1)"> <text>Require financial counseling before the loan is approved and after the loan closes, to the extent determined necessary by the Program;</text> </paragraph> <paragraph num="(2)"> <text>Provide credit counseling, including counseling about budget planning;</text> </paragraph> <paragraph num="(3)"> <text>Provide mortgage delinquency counseling, including a plan to address alternatives to a program loan such as:</text> <paragraph num="(a)"> <text>A repayment plan with the mortgagee or mortgagees,</text> </paragraph> <paragraph num="(b)"> <text>A forbearance agreement,</text> </paragraph> <paragraph num="(c)"> <text>A refinancing of the existing mortgage debt,</text> </paragraph> <paragraph num="(d)"> <text>Assistance from federal and private programs, and</text> </paragraph> <paragraph num="(e)"> <text>Sale by the owner directly to a third party instead of foreclosure.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Program Operation and Administration."> <paragraph num="A."> <text>Forms and Documentation. The application and the loan documents shall be made upon standard forms prescribed by the Program.</text> </paragraph> <paragraph num="B."> <text>Program Fund Allocations.</text> <paragraph num="(1)"> <text>It is the intent of the Department that Program funds be distributed Statewide to eligible applicants and borrowers.</text> </paragraph> <paragraph num="(2)"> <text>Program funds shall be made available to eligible loan applicants on a first-come first-served basis.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary may reserve a portion of the Program funds to be used for emergency circumstances.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Delegation of Authority. Any action or decision required or permitted to be taken or made by the Department under the Act or these regulations, except for actions when the Secretary is designated, may be delegated by the Secretary.</text> </paragraph> <paragraph num="D."> <text>Operational Manuals. The Department may establish from time to time operational handbooks or manuals governing matters relating to the Program, including descriptive statements of Program procedures which do not affect directly the rights of, or the procedures available to, the public.</text> </paragraph> <paragraph num="E."> <text>Loan Servicing. The Department may enter into:</text> <paragraph num="(1)"> <text>Servicing agreements with mortgage loan servicers acceptable to the Department;</text> </paragraph> <paragraph num="(2)"> <text>Agreements with financial counseling agencies described in Regulation .12.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Power of the Department. The Department may do any of the following:</text> <paragraph num="(1)"> <text>Assign a mortgage for value;</text> </paragraph> <paragraph num="(2)"> <text>Release a mortgage;</text> </paragraph> <paragraph num="(3)"> <text>Foreclose a mortgage;</text> </paragraph> <paragraph num="(4)"> <text>Acquire property securing a loan in default;</text> </paragraph> <paragraph num="(5)"> <text>Encumber, sell, or otherwise dispose of property acquired in connection with a loan in default; or</text> </paragraph> <paragraph num="(6)"> <text>Obtain and seek enforcement of a deficiency judgment.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="A."> <text>Conformance to the requirements of any federal, State, or local programs in connection with a loan necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="B."> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purpose of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="False Statements."> <text>A borrower who knowingly makes or causes to be made any material statement or material misstatement of fact, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-816, Annotated Code of Maryland.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §4-806(a)(4), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 8, 1984 (11:20 Md. R. 1741)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.16 to COMAR 05.03.03</annotation> <annotation type="History" subtype="Administrative History">Chapter (Homeowners' Emergency Assistance Program) repealed effective</annotation> <annotation type="History" subtype="Administrative History">April 30, 1990 (17:8 Md. R. 975)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 (Emergency Mortgage Assistance Program) adopted</annotation> <annotation type="History" subtype="Administrative History">effective April 30, 1990 (17:8 Md. R. 975)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> </annotations> </chapter> <chapter num="04" heading="Downpayment and Settlement Expense Loan Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter prescribes the policies, procedures, and authorizations for making mortgage loans to pay for settlement expenses for purchasing a home.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objective of the Downpayment and Settlement Expense Loan Program is to provide financing for settlement expenses for eligible home buyers who lack the resources to purchase a home.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 3, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency within the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(3)"> <text>“Borrower” means an applicant who receives a loan through the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(5)"> <text>“Home buyer of eligible income” means a borrower whose household income does not exceed the upper income limits established from time to time by the Secretary in accordance with Housing and Community Development Article, §4-304, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Home buyer of low income” means a borrower whose household income does not exceed the income limits established from time to time by the Secretary in accordance with Housing and Community Development Article, §4-304, Annotated Code of Maryland, which income limits will be less than those established for the home buyer of eligible income.</text> </paragraph> <paragraph num="(7)"> <text>“Household” means an individual or individuals who occupy or intend to occupy:</text> <paragraph num="(a)"> <text>The eligible residence, in the case of a one unit residence; or</text> </paragraph> <paragraph num="(b)"> <text>One of the units in the eligible residence, in the case of a two to four unit residence.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Household income” means 100 percent of the projected annual gross income based on current rate of income from all members of the borrower's household, 18 years old or older, including wages, overtime, bonuses, commissions, investment and interest income, unemployment insurance, alimony, child support, pensions, and all other income from any source, less:</text> <paragraph num="(a)"> <text>Abnormal expenses of a long-term unusual nature, such as extraordinary medical, rehabilitation, or special education expenses, as determined by the Program; and</text> </paragraph> <paragraph num="(b)"> <text>Unusual or temporary income items, as determined by the Program.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Loan” means a loan made by the Department to a borrower from the Downpayment and Settlement Expense Loan Program fund.</text> </paragraph> <paragraph num="(10)"> <text>“Manufactured home” means a structure that:</text> <paragraph num="(a)"> <text>Is intended for residential use by a single household;</text> </paragraph> <paragraph num="(b)"> <text>Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(c)"> <text>Is not less than 24 feet in width and 40 feet in length;</text> </paragraph> <paragraph num="(d)"> <text>Is installed permanently on an engineered foundation in conformance with the BOCA National Building Code (1987), which is incorporated by reference under COMAR 05.02.01, or the standards set by the American National Standards Institute, Inc., which are incorporated by reference under COMAR 05.02.02, and is not independently capable of movement;</text> </paragraph> <paragraph num="(e)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(f)"> <text>Is certified by the United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, or by the Department as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland, and complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> <paragraph num="(g)"> <text>Is installed on real property the borrower owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(h)"> <text>Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks; and</text> </paragraph> <paragraph num="(i)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“MHF” means the Maryland Housing Fund, a Division of the Department.</text> </paragraph> <paragraph num="(12)"> <text>“Mortgage lender” means the Administration, the Department, or a bank, trust company, savings institution, savings and loan association, national bank association, mortgage banker, or other financial institution that maintains an office in the State and engages in making or originating residential mortgage loans, and that is licensed or otherwise authorized to make residential mortgage loans in the State pursuant to applicable State and federal law.</text> </paragraph> <paragraph num="(13)"> <text>“Program” means the Downpayment and Settlement Expense Loan Program.</text> </paragraph> <paragraph num="(14)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrowers."> <paragraph num="A."> <text>An eligible borrower:</text> <paragraph num="(1)"> <text>Shall be one or more members of a household who are purchasing, and shall hold title to, an eligible residence in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Shall be 18 years old or older, unless married to a joint borrower who is 18 years old or older;</text> </paragraph> <paragraph num="(3)"> <text>Shall be a home buyer of eligible income;</text> </paragraph> <paragraph num="(4)"> <text>Shall intend the borrower's primary residence to be the eligible residence for which settlement expenses are financed by the Program;</text> </paragraph> <paragraph num="(5)"> <text>May not have assets or resources, such as savings accounts, checking accounts, certificates of deposit, money market accounts, or other bank accounts, or proceeds from the sale of real property or a mobile home or other personal property, but not including individual retirement accounts or other similar accounts as approved by the Program, which could enable the borrower to pay for the settlement expenses and the minimum down payment required by the first mortgage lender, without assistance from the Program;</text> </paragraph> <paragraph num="(6)"> <text>Shall have legal capacity to incur the obligations of the loan;</text> </paragraph> <paragraph num="(7)"> <text>Shall agree to comply with the requirements established by the Program and with the terms of the loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the borrower's first mortgage is made or purchased by the Administration, then after the closing of the Program loan, the borrower may be required by the Administration to participate in a homeownership education program acceptable to the Administration and operated by an agency acceptable to the Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Residences."> <paragraph num="A."> <text>An eligible residence shall:</text> <paragraph num="(1)"> <text>Be a newly constructed or existing dwelling of not more than four residential units, one of which shall be occupied by the borrower;</text> </paragraph> <paragraph num="(2)"> <text>Be located in the State;</text> </paragraph> <paragraph num="(3)"> <text>Be real property that will be purchased by the borrower in fee simple or under a ground lease which permits the lessee to transfer the leasehold interest without the consent of the lessor;</text> </paragraph> <paragraph num="(4)"> <text>Have an acquisition cost that does not exceed the acquisition cost limits as may be established by the Secretary from time to time; and</text> </paragraph> <paragraph num="(5)"> <text>If new construction, be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An eligible residence may be a detached dwelling, a townhouse, a manufactured home, or a condominium, but not a cooperative unit.</text> </paragraph> <paragraph num="C."> <text>The first mortgage loan for the eligible residence shall be:</text> <paragraph num="(1)"> <text>Made by a mortgage lender as defined in Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Purchased by the Administration if it is made by a mortgage lender other than the Administration; and</text> </paragraph> <paragraph num="(3)"> <text>Insured or guaranteed by an insurer or guarantor acceptable to the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Loan Purposes."> <text>A loan may be used to pay up to 100 percent of the following types of settlement expenses:</text> <paragraph num="A."> <text>Fees or premiums for title examination, title insurance, or similar expenses;</text> </paragraph> <paragraph num="B."> <text>Fees for preparation of a deed, settlement statement, or other documents;</text> </paragraph> <paragraph num="C."> <text>Payments owed at the time of settlement for property taxes or hazard insurance coverage;</text> </paragraph> <paragraph num="D."> <text>Escrows for future payments of taxes and hazard insurance;</text> </paragraph> <paragraph num="E."> <text>Fees for notarizing deeds and other documents;</text> </paragraph> <paragraph num="F."> <text>Appraisal fees;</text> </paragraph> <paragraph num="G."> <text>Fees for credit reports;</text> </paragraph> <paragraph num="H."> <text>Transfer and recordation taxes and fees;</text> </paragraph> <paragraph num="I."> <text>Fees or premiums for mortgage insurance;</text> </paragraph> <paragraph num="J."> <text>Loan discount points and origination fees;</text> </paragraph> <paragraph num="K."> <text>Down payments;</text> </paragraph> <paragraph num="L."> <text>Up to 30 days' worth of prepaid interest;</text> </paragraph> <paragraph num="M."> <text>Home inspection fee; and</text> </paragraph> <paragraph num="N."> <text>Other settlement expenses as may be approved by the Program before the loan closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms and Requirements."> <paragraph num="A."> <text>Loan Amount.</text> <paragraph num="(1)"> <text>The Program shall determine limits on loan amounts from time to time.</text> </paragraph> <paragraph num="(2)"> <text>In making the determination under §A(1) of this regulation, the Program may consider factors including the following:</text> <paragraph num="(a)"> <text>Regional costs of affordable housing;</text> </paragraph> <paragraph num="(b)"> <text>The amount and payment terms of other financing available to borrowers; and</text> </paragraph> <paragraph num="(c)"> <text>Exceptional circumstances in individual cases or projects.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Equity Capital. The Program may require the borrower to contribute as equity capital a minimum amount of cash to the transaction, in an amount determined as a percent of the first mortgage loan amount.</text> </paragraph> <paragraph num="C."> <text>Loan Terms.</text> <paragraph num="(1)"> <text>Interest Rate. The Program shall establish, from time to time, for loans under the Program, either a single interest rate or a range of interest rates based on household income. The interest rate may be as low as zero percent.</text> </paragraph> <paragraph num="(2)"> <text>Term. The loan term may not exceed the term of the first mortgage.</text> </paragraph> <paragraph num="(3)"> <text>Payments.</text> <paragraph num="(a)"> <text>General. Monthly payments shall be applied to expenses, when applicable, interest, and principal, in that order.</text> </paragraph> <paragraph num="(b)"> <text>Deferred Loans. Payments of principal or interest, or both principal and interest, may be deferred until the earlier of:</text> <paragraph num="(i)"> <text>The sale or other transfer of the property;</text> </paragraph> <paragraph num="(ii)"> <text>The maturity date or prepayment of the first mortgage loan; or</text> </paragraph> <paragraph num="(iii)"> <text>A default under the Program loan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Late Charge. Late charges, as permitted by law, may be imposed.</text> </paragraph> <paragraph num="(5)"> <text>Prepayment Penalty. A prepayment penalty may not be charged.</text> </paragraph> <paragraph num="(6)"> <text>Security for Loans. Loans 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 property is located. The mortgage or deed of trust may be subordinate to not more than two other recorded mortgage liens.</text> </paragraph> <paragraph num="(7)"> <text>Insurance.</text> <paragraph num="(a)"> <text>Hazard Insurance. The borrower shall maintain fire and extended coverage insurance at the borrower's expense in an amount not less than the sum of the loan and any other indebtedness secured by the eligible residence, up to the value of the improvements. The hazard insurance policy shall:</text> <paragraph num="(i)"> <text>Be written by companies authorized to do business in Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>Be in force at the time of loan closing;</text> </paragraph> <paragraph num="(iii)"> <text>Name the Department as a loss payee as its interest may appear in a standard mortgagee endorsement attached to or printed in the policy; and</text> </paragraph> <paragraph num="(iv)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Flood Insurance. If the building is in a 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the:</text> <paragraph num="(i)"> <text>Eligible residence shall be covered by a flood plain insurance policy in an amount equal to the sum of the loan and any other indebtedness secured by the residence, naming the Department as beneficiary; and</text> </paragraph> <paragraph num="(ii)"> <text>Flood plain policy may not be terminated without prior notification to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>Change of Ownership. The loan shall become due and payable upon the sale or transfer of the real property securing the loan unless the:</text> <paragraph num="(a)"> <text>Department has consented in writing to the assumption of the loan by a purchaser who meets the requirements of an eligible borrower under Regulation .04 of this chapter, and such other terms as are satisfactory to the Program; or</text> </paragraph> <paragraph num="(b)"> <text>Transfer is to a spouse, divorced spouse, or child who resides at the mortgaged property, or the transfer is otherwise in accordance with federal law.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Tenant Income. The Secretary shall determine maximum household income levels for tenants occupying units in the eligible residence.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Fees."> <paragraph num="A."> <text>The Program may set a maximum fee that mortgage lenders can charge borrowers to process the application for a loan. The fee may be financed as part of the loan.</text> </paragraph> <paragraph num="B."> <text>At loan closing, the borrower may be charged not more than customary and usual amounts for settlement costs.</text> </paragraph> <paragraph num="C."> <text>In determining the settlement expenses which may be financed by a loan under the Program, the Program may set a maximum amount for legal fees, title searches, appraisals, and other services as the Program deems necessary.</text> </paragraph> <paragraph num="D."> <text>The Department may charge application fees to loan applicants or mortgage lenders.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Program Operation."> <paragraph num="A."> <text>The Program shall establish procedures to operate the Program.</text> </paragraph> <paragraph num="B."> <text>The Program may:</text> <paragraph num="(1)"> <text>Provide for a process by which mortgage lenders are certified to originate, sell, and service the loans;</text> </paragraph> <paragraph num="(2)"> <text>Enter into servicing agreements with mortgage lenders or other mortgage loan servicers acceptable to the Department;</text> </paragraph> <paragraph num="(3)"> <text>Prescribe the documentation required to establish an applicant's eligibility;</text> </paragraph> <paragraph num="(4)"> <text>Prescribe the form of legal documents to be used in closing the loans;</text> </paragraph> <paragraph num="(5)"> <text>Enter into agreements with local governments and nonprofit organizations to assist in the operation and funding of the Program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Program expects to give preference for the use of loan funds in the following ways:</text> <paragraph num="(1)"> <text>The Program may reserve a portion of loan funds for use in connection with other Departmental programs or particular housing developments, as approved by the Secretary, where the properties being purchased are one or two unit residences;</text> </paragraph> <paragraph num="(2)"> <text>The Program intends to give preference to applicants purchasing one and two unit residences;</text> </paragraph> <paragraph num="(3)"> <text>The Program shall give priority to homebuyers of low income by reserving at least 50 percent of the funds available for Program loans in each fiscal year for making loans to homebuyers of low income. Any reserve funds not applied for after 8 months of the fiscal year shall become available to all eligible borrowers.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Program shall establish procedures for the closing of loans either by the Department directly or by authorized agent.</text> </paragraph> <paragraph num="E."> <text>The Department may use Program funds for initiatives or special programs that promote affordable housing under the terms and conditions set by the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Default."> <text>In the event of default, as provided in the legal documents, the Department may:</text> <paragraph num="A."> <text>Modify the rate of interest;</text> </paragraph> <paragraph num="B."> <text>Defer payment of principal, interest, or both;</text> </paragraph> <paragraph num="C."> <text>Modify the term of the loan;</text> </paragraph> <paragraph num="D."> <text>Modify the loan in any other way in order to promote repayment of the loan and achieve the purposes of the Program; or</text> </paragraph> <paragraph num="E."> <text>Foreclose the loan or accept a deed instead of foreclosure.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="A."> <text>Conformance to the requirements of any federal, State, or local programs in connection with a loan necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="B."> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Program Administration."> <paragraph num="A."> <text>An action or decision required or permitted to be taken or made by the Department pursuant to the Act or these regulations, except for waiver under Regulation .11, may be taken by the Director of the Division of Housing Finance of the Department, or the Director's designees.</text> </paragraph> <paragraph num="B."> <text>The Department may establish from time to time operational handbooks or manuals governing matters relating to the Program including descriptive statements of program procedures which do not directly affect the rights of, or the procedures available to, the public.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="False Statements."> <text>A borrower who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-309, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Severability."> <text>The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if a judgment had not been entered.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.14 adopted as an emergency provision effective December 13, 1988 (15:27 Md. R. 3114); emergency status extended at 16:12 Md. R. 1331; emergency status expired October 31, 1989</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.14 adopted effective December 11, 1989 (16:24 Md. R. 2616)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2024); amended permanently effective July 1, 1996 (23:13 Md. R. 939)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2024); amended permanently effective July 1, 1996 (23:13 Md. R. 939)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 16, 2000 (27:20 Md. R.1838)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective October 13, 2003 (30:20 Md. R. 1447)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective December 1, 2008 (35:24 Md. R. 2075)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09E adopted effective December 1, 2008 (35:24 Md. R. 2075)</annotation> </annotations> </chapter> <chapter num="05" heading="Reverse Equity Mortgage Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making home equity mortgage loans, with principal and interest repayment deferred, to elderly homeowners of limited income.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objective of the Program is to provide an eligible borrower with a line of credit, secured by the borrower's home, which is based on the equity in the home and the age of the borrower. The loan proceeds are to be used for housing-related expenses and other personal expenses which enable the borrowers to continue to occupy their homes. In general, payment of principal or interest is not required until the borrower dies or moves out of the home, or until the home is sold, except that the Program has the right to foreclose in the event of a default. In general, the Program will look to the equity in the home for repayment of principal and interest. There are restrictions on the line of credit, including a limit on the amount the borrower can draw each year on the line of credit, and the Program's right to refuse to make disbursements to a defaulting borrower. In addition, because Program funding is appropriated annually by the legislature, there is no assurance that an approved line of credit can be drawn on by a borrower in any year, or that the borrower will ever be able to draw on the entire amount of the borrower's maximum line of credit.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 8, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Borrower” means an applicant who receives a loan through the Program.</text> </paragraph> <paragraph num="(3)"> <text>“Closing costs” may include:</text> <paragraph num="(a)"> <text>Fees or premiums for title examination, title insurance, or similar expenses;</text> </paragraph> <paragraph num="(b)"> <text>Fees for preparation of a deed, settlement statement, or other documents;</text> </paragraph> <paragraph num="(c)"> <text>Payments owed at the time of the loan closing for property taxes, hazard insurance premiums, or ground rent;</text> </paragraph> <paragraph num="(d)"> <text>Fees for notarizing deeds and other documents;</text> </paragraph> <paragraph num="(e)"> <text>Appraisal and survey fees;</text> </paragraph> <paragraph num="(f)"> <text>Recordation taxes and fees;</text> </paragraph> <paragraph num="(g)"> <text>Fees or premiums for mortgage insurance;</text> </paragraph> <paragraph num="(h)"> <text>Loan application fees;</text> </paragraph> <paragraph num="(i)"> <text>Reasonable legal fees;</text> </paragraph> <paragraph num="(j)"> <text>Payoff of prior liens or mortgages; and</text> </paragraph> <paragraph num="(k)"> <text>Other closing costs as approved by the Program.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Department” means the Maryland Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(5)"> <text>“Equity payment” means a loan disbursement made by the Department to a borrower.</text> </paragraph> <paragraph num="(6)"> <text>“Home”:</text> <paragraph num="(a)"> <text>Means the real property which secures the loan and otherwise fulfills the requirements of Regulation .05;</text> </paragraph> <paragraph num="(b)"> <text>Includes the residential dwelling unit, the lot upon which the residential dwelling unit sits, and the accompanying rights to occupy or use other real property in connection with ownership of the home.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Household” means the individual or individuals who occupy the home.</text> </paragraph> <paragraph num="(8)"> <text>“Household income” means 100 percent of the projected annual gross income, based on income for the year preceding the loan application, from all members of the borrower's household 18 years old or older, including social security, retirement income, pensions, wages, overtime, bonuses, commissions, investment and interest income, rental income, imputed income from non-income producing assets other than the borrower's home when the total value exceeds $20,000, disability or unemployment insurance, alimony and support payments, and all other income from any sources, less:</text> <paragraph num="(a)"> <text>Unreimbursable medical expenses, and health or long term care expenses that enable the borrower to remain in the home, including but not limited to:</text> <paragraph num="(i)"> <text>Adult day care,</text> </paragraph> <paragraph num="(ii)"> <text>Attendant care,</text> </paragraph> <paragraph num="(iii)"> <text>Durable medical equipment,</text> </paragraph> <paragraph num="(iv)"> <text>Health, supplemental medicare, or other long term care insurance premiums,</text> </paragraph> <paragraph num="(v)"> <text>Home health care,</text> </paragraph> <paragraph num="(vi)"> <text>Hospice care,</text> </paragraph> <paragraph num="(vii)"> <text>Housekeeping assistance,</text> </paragraph> <paragraph num="(viii)"> <text>Nursing home expenses for a temporary stay for a borrower,</text> </paragraph> <paragraph num="(ix)"> <text>Prescription drugs; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Unusual or temporary income items as approved by the Program.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Joint borrower” means a borrower who receives a loan along with one or more other borrowers, all of whom together own the home.</text> </paragraph> <paragraph num="(10)"> <text>“Loan” means a loan made by the Department to a borrower through the Program and secured by the home.</text> </paragraph> <paragraph num="(11)"> <text>“Manufactured home” means a structure that:</text> <paragraph num="(a)"> <text>Is intended for residential use by a single household;</text> </paragraph> <paragraph num="(b)"> <text>Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(c)"> <text>Is not less than 24 feet in width and 40 feet in length;</text> </paragraph> <paragraph num="(d)"> <text>Is installed permanently on an engineered foundation in conformance with the BOCA National Building Code (1990), which is incorporated by reference under COMAR 05.02.01, or the standards set by the American Standards Institute, Inc., which are incorporated by reference under COMAR 05.02.02, and is not independently capable of movement;</text> </paragraph> <paragraph num="(e)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(f)"> <text>Is certified by the United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, or by the Department as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland, and complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> <paragraph num="(g)"> <text>Is installed on real property the borrower owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(h)"> <text>Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks; and</text> </paragraph> <paragraph num="(i)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Program” means the Reverse Equity Mortgage Program.</text> </paragraph> <paragraph num="(13)"> <text>“Secretary” means the Secretary of the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrowers."> <paragraph num="A."> <text>Each individual borrower and each joint borrower, shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be at least 65 years old;</text> </paragraph> <paragraph num="(2)"> <text>Have a total household income which does not exceed the limits established by the Department from time to time;</text> </paragraph> <paragraph num="(3)"> <text>Have the legal capacity, or the necessary legal authority in the case of someone acting on behalf of the borrower, to incur the obligations of the loan; and</text> </paragraph> <paragraph num="(4)"> <text>Agree to comply with the terms of the loan and the requirements established by the Program.</text> </paragraph> </paragraph> <paragraph num="B."> <text>For at least 1 year before applying for the loan, the individual borrower or at least one joint borrower shall have continuously owned and occupied the home, except that the individual or joint borrower who has continuously owned the home but has been unable to occupy the home for health or safety reasons shall reasonably expect to reoccupy the home within 2 months after the loan closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Homes."> <paragraph num="A."> <text>The home shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be the primary residence of the individual borrower, or at least one of the joint borrowers; and</text> </paragraph> <paragraph num="(2)"> <text>Be real property owned by the individual borrower, or all of the joint borrowers, in fee simple or under a freely transferable, perpetually renewable, ground rent lease which permits the lessee to transfer the leasehold interest without the consent of the lessor.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The home shall be a residential dwelling unit located in Maryland. It may be a condominium acceptable to the Program, but not a cooperative unit. Manufactured homes may be eligible, subject to review by the Program of each particular application for a loan.</text> </paragraph> <paragraph num="C."> <text>Joint borrowers shall own the home as tenants by the entireties or as joint tenants with a right of survivorship.</text> </paragraph> <paragraph num="D."> <text>The mortgage or deed of trust:</text> <paragraph num="(1)"> <text>May be subordinate to one other mortgage lien which:</text> <paragraph num="(a)"> <text>Shall secure a remaining mortgage debt of not more than 25 percent of the equity in the home, equity being determined in accordance with Regulation .07B, and</text> </paragraph> <paragraph num="(b)"> <text>May not secure a line of credit loan;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>May not be subordinate to any other liens including a tax lien.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Uses."> <paragraph num="A."> <text>The proceeds of the loan may be used to pay the following costs and expenses:</text> <paragraph num="(1)"> <text>Necessary home repair, home maintenance, adaptation, or modification;</text> </paragraph> <paragraph num="(2)"> <text>Ongoing housing expenses, including:</text> <paragraph num="(a)"> <text>Payoff of the existing mortgage or mortgages,</text> </paragraph> <paragraph num="(b)"> <text>Property tax payments,</text> </paragraph> <paragraph num="(c)"> <text>Utility costs,</text> </paragraph> <paragraph num="(d)"> <text>Homeowner's insurance premiums including all types required under Regulation .07K,</text> </paragraph> <paragraph num="(e)"> <text>Ground rent, and</text> </paragraph> <paragraph num="(f)"> <text>Other housing expenses approved by the Program;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Health and long term care expenses that enable the borrower to remain at home, including but not limited to:</text> <paragraph num="(a)"> <text>Adult day care,</text> </paragraph> <paragraph num="(b)"> <text>Attendant care,</text> </paragraph> <paragraph num="(c)"> <text>Durable medical equipment,</text> </paragraph> <paragraph num="(d)"> <text>Health, supplemental Medicare or other long term care insurance premiums,</text> </paragraph> <paragraph num="(e)"> <text>Home health care,</text> </paragraph> <paragraph num="(f)"> <text>Hospice care,</text> </paragraph> <paragraph num="(g)"> <text>Housekeeping assistance,</text> </paragraph> <paragraph num="(h)"> <text>Nursing home expenses for a temporary stay for a borrower,</text> </paragraph> <paragraph num="(i)"> <text>Prescription drugs; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Other expenses, as approved by the Program, related to the borrower's maintaining independence in the home.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Proceeds of the loan may be used to pay closing costs. The Program may set a maximum amount that will be financed by the loan for legal fees, title searches, appraisals, and other services.</text> </paragraph> <paragraph num="C."> <text>The borrower shall certify at closing that all equity payments requested and received shall be used solely for the eligible uses as described in this regulation. The Program may also request certification concerning the use of the loan proceeds when the borrower requests equity payments and during the annual recertification process.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms and Requirements."> <paragraph num="A."> <text>Each loan shall be made subject to the requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>Equity in the Home. The equity in the home shall be determined by subtracting any existing indebtedness on the home from the value of the home. At the time of application, the value of the home may be established by using the current assessed value of the home, or, at the request and expense of the borrower and with Program approval, by using an appraisal submitted in a form and manner and by an appraiser acceptable to the Program.</text> </paragraph> <paragraph num="C."> <text>Line of Credit.</text> <paragraph num="(1)"> <text>Scale of Equity Percentages.</text> <paragraph num="(a)"> <text>The Secretary shall determine, from time to time, a scale of equity percentages representing the percentage of equity in the home which may be used to calculate the borrower's maximum line of credit. The scale of equity percentages shall vary inversely in relation to the age of the borrower.</text> </paragraph> <paragraph num="(b)"> <text>The scale of equity percentages determined in accordance with §C(1)(a) of this regulation is set forth in the table below:</text> </paragraph> <paragraph num="(c)"> <text>The scale of equity percentages may be adjusted from time to time by determination of the Secretary to:</text> <paragraph num="(i)"> <text>Respond to changes in property values;</text> </paragraph> <paragraph num="(ii)"> <text>Take into account Program experience in making loans and receiving repayments of loans; and</text> </paragraph> <paragraph num="(iii)"> <text>Take into account other factors relevant to the Program and considered appropriate by the Secretary to periodic adjustment of the scale.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Borrower's Maximum Line of Credit.</text> <paragraph num="(a)"> <text>A borrower's maximum line of credit shall be calculated by multiplying the equity in the home by the appropriate equity percentage.</text> </paragraph> <paragraph num="(b)"> <text>In the case of joint borrowers, the youngest borrower's age as of the date of the loan application shall be used to determine the appropriate equity percentage.</text> </paragraph> <paragraph num="(c)"> <text>The total amount of equity payments disbursed to the borrower, less any repayment of principal, may not exceed the borrower's maximum line of credit.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Program Maximum Line of Credit. The maximum line of credit available under the Program is $50,000. A borrower's maximum line of credit may not exceed this Program maximum line of credit.</text> </paragraph> <paragraph num="(4)"> <text>Borrower's Minimum Line of Credit. The Program may reject an application for a loan if the requested line of credit is less than $5,000.</text> </paragraph> <paragraph num="(5)"> <text>Increasing the Borrower's Maximum Line of Credit. The borrower may request an increase in the borrower's maximum line of credit if the borrower has drawn at least 90 percent of the existing line of credit and if the equity in the home has increased by at least $10,000. The new maximum line of credit shall be calculated in the manner set forth in §C(1), above, taking into account the current age of the individual borrower or youngest joint borrower. In order to determine the increase in equity, the Program may require from the borrower, at the Program's sole option, either evidence of the current tax assessment or an appraisal submitted in a form and manner and by an appraiser acceptable to the Program. The borrower shall pay the cost of the appraisal, a title and lien search, the costs associated with recording additional loan documents evidencing the increase in the line of credit, and increased insurance premiums. These costs may be financed by the loan upon approval from the Program.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Annual Maximum of Equity Payments.</text> <paragraph num="(1)"> <text>The Secretary shall determine from time to time the total amount of equity payments which can be disbursed to a borrower during the fiscal year, considering factors such as the availability of Program funds, the demand for new Program loans, and the demand for funds for other homeownership programs.</text> </paragraph> <paragraph num="(2)"> <text>The annual maximum of equity payments shall be $5,000, subject to revision by determination of the Secretary from time to time in accordance with the factors set forth in §D(1) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The annual maximum of equity payments shall be subject to:</text> <paragraph num="(a)"> <text>The availability of Program funds; and</text> </paragraph> <paragraph num="(b)"> <text>A borrower's maximum line of credit.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Emergency Equity Payments.</text> <paragraph num="(1)"> <text>The Program may increase the annual maximum of equity payments by not more than $5,000, subject to the borrower's maximum line of credit, in the case of a borrower whom the Program determines in its sole discretion:</text> <paragraph num="(a)"> <text>Is in imminent danger of losing title to the home or of having to vacate the home for medical or safety reasons;</text> </paragraph> <paragraph num="(b)"> <text>Has no other source of funds to alleviate the problem; and</text> </paragraph> <paragraph num="(c)"> <text>Whose problem can be alleviated by additional Program funds.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The borrower shall comply with the Program's terms and conditions, including payment of the cost of a title and lien search, the cost of recording additional loan documents, and increased insurance premiums. These costs may be financed by the loan upon approval from the Program.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Interest Rate. The Program shall establish, from time to time, the interest rate for the loans.</text> </paragraph> <paragraph num="G."> <text>Maturity of the Loan. The loan shall become due and payable at the earliest occurrence of:</text> <paragraph num="(1)"> <text>The death of an individual borrower, or in the case of joint borrowers, after the death of the last surviving borrower;</text> </paragraph> <paragraph num="(2)"> <text>Failure by an individual borrower or all of the joint borrowers to occupy the home as the principal residence during any continuous period exceeding 1 year, unless the borrower has received the prior written approval of the Program;</text> </paragraph> <paragraph num="(3)"> <text>Transfer of title to the home, including a transfer of any interest in the home, except that the borrower may lease a room or a portion of the home if the borrower continues to reside in the home and obtains the prior written approval of the Program; or</text> </paragraph> <paragraph num="(4)"> <text>Any of the events of default which are enumerated in the deed of trust or other loan documents executed by the borrower.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Payments.</text> <paragraph num="(1)"> <text>Payment on the loan is not required of a borrower until the loan matures as described in §G, above. Full or partial payment of principal or interest, or both, may be made at any time without penalty.</text> </paragraph> <paragraph num="(2)"> <text>All accrued principal and interest shall be paid at maturity to the extent of equity in the home at that time. At the sole option of the Program, the equity in the home at that time may be established by using:</text> <paragraph num="(a)"> <text>The sale price of the home, if applicable, less a reasonable real estate agent or broker commission not exceeding 7 percent;</text> </paragraph> <paragraph num="(b)"> <text>The current assessed value of the home; or</text> </paragraph> <paragraph num="(c)"> <text>An appraisal to be submitted in a form and manner and by an appraiser acceptable to the Program.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The borrower may not be personally liable for the loan, and in order to satisfy the debt, the Department shall look only to the equity in the home and may not seek payment from the borrower's personal assets or estate, other than from the home, except:</text> <paragraph num="(a)"> <text>In the case of borrower's fraud or misrepresentation;</text> </paragraph> <paragraph num="(b)"> <text>In the case of borrower's willful neglect or abuse of the home; or</text> </paragraph> <paragraph num="(c)"> <text>Under other conditions determined by the Program and set forth in the loan documents.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Outstanding Indebtedness. At least once a year, the borrower shall receive a statement of the outstanding indebtedness on the loan. The outstanding indebtedness shall be the total of equity payments disbursed to the borrower plus the simple interest accrued on the sums disbursed, less any repayments of principal or interest. Accrued interest and repayments of principal or interest shall be indicated on the statement.</text> </paragraph> <paragraph num="J."> <text>Security for Loans. Each loan shall be secured by a mortgage or deed of trust, in the form required by the Program, and recorded in the land records of the county in which the home is located. Subordinate liens may not be placed on the home without the prior written consent of the Program. The mortgage or deed of trust securing the loan may be subordinate to not more than one other recorded mortgage lien which:</text> <paragraph num="(1)"> <text>Shall secure a remaining mortgage debt of not more than 25 percent of the equity in the home, equity being determined in accordance with §B of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>May not secure a line of credit loan.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Insurance.</text> <paragraph num="(1)"> <text>Hazard Insurance. The borrower shall maintain fire and extended coverage insurance at the owner's expense in an amount not less than the replacement value of the home. The hazard insurance policy shall:</text> <paragraph num="(a)"> <text>Be written by companies authorized to transact business in Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of loan closing;</text> </paragraph> <paragraph num="(c)"> <text>Name the Department as loss payee as its interest may appear in the standard mortgagee endorsement attached to or printed in the policy; and</text> </paragraph> <paragraph num="(d)"> <text>Contain terms and coverage satisfactory to the Program.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Flood Insurance. If the home is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the:</text> <paragraph num="(a)"> <text>Home shall be covered by a flood plain insurance policy naming the Department as a beneficiary, in an amount equal to the borrower's maximum line of credit, up to the federal limit, plus any other indebtedness secured by the home; and</text> </paragraph> <paragraph num="(b)"> <text>Flood plain insurance policy may not be terminated without prior notification to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="L."> <text>Disbursements.</text> <paragraph num="(1)"> <text>The Program shall establish procedures for requesting equity payments, and shall establish limits for:</text> <paragraph num="(a)"> <text>Minimum and maximum dollar amounts for the initial and any succeeding equity payment requests during any fiscal year; and</text> </paragraph> <paragraph num="(b)"> <text>The maximum frequency of requests per year.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Equity payments will be made to the borrower only upon borrower's request, which shall be in accordance with Program procedures.</text> </paragraph> <paragraph num="(3)"> <text>The borrower is responsible for making payments for real estate taxes, insurance, ground rent, and any other fees or payments relating to the home. The borrower may use loan disbursements to make these payments. If any of these payments become delinquent, the Program, in its sole discretion and without any obligation to do so, may make immediate and direct payment of these expenses and increase the outstanding loan balance by the amount of the payment. In making this payment, the Program may override the borrower's maximum line of credit, the Program maximum line of credit, or the maximum in equity payments available to the borrower for that fiscal year. Any direct payment by the Program may not be construed as a waiver of the borrower's obligation, and the borrower's loan still may be declared in default.</text> </paragraph> <paragraph num="(4)"> <text>The borrower may not be entitled to disbursements of equity payments if there are any uncured defaults under the deed of trust or any other loan documents.</text> </paragraph> </paragraph> <paragraph num="M."> <text>Change of Ownership or Occupancy of the Home or of Borrower Eligibility. The Program shall establish policies and procedures to monitor the continued ownership and occupancy of the home and eligibility of the borrower for the loan, including an annual borrower recertification procedure. The Program may at its option terminate the right to any future borrowing against the line of credit or may accelerate the loan if:</text> <paragraph num="(1)"> <text>The borrower fails to meet the standards for occupancy or use of the loan proceeds;</text> </paragraph> <paragraph num="(2)"> <text>An interest in the home has been transferred, except that the borrower may lease a room or portion of the home if the borrower continues to reside in the home and obtains the prior written approval of the Program;</text> </paragraph> <paragraph num="(3)"> <text>There is an unpermitted lien or encumbrance on the home; or</text> </paragraph> <paragraph num="(4)"> <text>The borrower fails to respond to the recertification request within a reasonable time.</text> </paragraph> </paragraph> <paragraph num="N."> <text>Taxes, Insurance, and Other Assessments.</text> <paragraph num="(1)"> <text>Real estate taxes, ground rent, water and sewer fees, condominium or homeownership fees, insurance coverage required under §K, and other assessments shall be paid when due by the borrower. If the borrower fails to make the payments or to provide the Program with evidence of payment, the Program may at its option take one or more of the following actions:</text> <paragraph num="(a)"> <text>Make these payments directly as described in §L(3), above;</text> </paragraph> <paragraph num="(b)"> <text>Refuse to make further disbursements requested by the borrower; or</text> </paragraph> <paragraph num="(c)"> <text>Foreclose on the home.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Escrow Account. If there is no prior mortgage requiring the payment of expenses to a mortgagee, the Program may establish an escrow account for the borrower at the loan closing and may require the borrower to make monthly expense payments 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 Program. Instead of an escrow account, the Program may require evidence of payment of the taxes, insurance, and assessments described in §N(1), above.</text> </paragraph> </paragraph> <paragraph num="O."> <text>Maintaining the Home. The borrower shall maintain the home in good repair, and the Program shall have the right to inspect the home. If the Program determines that repairs are necessary, the Program shall have the right but not the obligation to cause the repairs to be made and to charge the cost of the repairs against the borrower's line of credit as an equity payment. In this event, the Program may override the borrower's maximum line of credit, the Program maximum line of credit, or the maximum of equity payments available to the borrower for that fiscal year. These actions by the Program may not be construed as a waiver of borrower's obligation to maintain the home, and the borrower's loan may still be declared in default.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Availability of Future Funding."> <text>The Department shall establish the maximum dollar amount of equity payments authorized for disbursement to each borrower for each fiscal year. Because Program funding is appropriated annually by the legislature, there is no assurance that an approved line of credit can be drawn on by the borrower in any year, or that the borrower will ever be able to draw on the entire amount of the borrower's maximum line of credit.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Loan Closing."> <paragraph num="A."> <text>Time and Place. The loan closing shall be scheduled at a time and place acceptable to the borrower and the Program and conducted in a manner acceptable to the Program.</text> </paragraph> <paragraph num="B."> <text>Title Insurance. The borrower shall provide at closing a standard American Land Title Association Loan Policy that is acceptable to the Program, insuring the Department for an amount equal to the borrower's maximum line of credit. The title policy shall evidence that title to the home is vested in the borrower, or the joint borrowers as the case may be, and contain only those exceptions and encumbrances acceptable to the Program.</text> </paragraph> <paragraph num="C."> <text>Charges and Fees. The borrower is responsible for paying closing costs. Payment may be made directly by the borrower or may be financed by the loan as described in Regulation .06B.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Program Administration."> <paragraph num="A."> <text>Forms and Documentation. The application and the loan documents shall be made upon standard forms prescribed by the Program.</text> </paragraph> <paragraph num="B."> <text>Application Fee. The Program may require an application fee for processing the loan.</text> </paragraph> <paragraph num="C."> <text>Program Fund Allocations. It is the intent of the Department that Program funds be distributed Statewide to eligible applicants and borrowers. At the discretion of the Department, the Program may:</text> <paragraph num="(1)"> <text>Make Program funds available on a first come, first served basis;</text> </paragraph> <paragraph num="(2)"> <text>Give priority to a loan applicant or borrower whom the Program, in its discretion, determines:</text> <paragraph num="(a)"> <text>Is in imminent danger of losing title to the home or having to vacate the home for medical or safety reasons,</text> </paragraph> <paragraph num="(b)"> <text>Has no alternative source of funds to alleviate the problem, and</text> </paragraph> <paragraph num="(c)"> <text>Whose problem can be alleviated by a Program loan;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Give priority, among eligible loan applicants, to those with less income or fewer assets, or both; or</text> </paragraph> <paragraph num="(4)"> <text>Use Program funds in a combination of §C(1)—(3), above.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Procedures. The Department shall establish procedures for operating the Program which may include:</text> <paragraph num="(1)"> <text>Internal operating procedures for making loans directly; or</text> </paragraph> <paragraph num="(2)"> <text>Procedures for directing financial institutions to make loans on behalf of the Department.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Delegation of Authority. An action or decision required or permitted to be taken or made by the Department pursuant to the Act or these regulations, except for actions where the Secretary is designated, may be taken by the Director of the Division of Housing Finance of the Department, or the Director's designee.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="False Statements."> <text>A borrower who knowingly makes or causes to be made any material misstatement or material omission of fact, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, in any statement or report in or regarding an application for a loan, a borrower recertification, or an equity payment request, or affecting an equity payment already made, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-816, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="A."> <text>Conformance to the requirements of any federal, State, or local programs in connection with a loan necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="B."> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Severability."> <text>The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-804, 4-806, and 4-807, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.11 adopted as an emergency provision effective May 16, 1989 (16:11 Md. R. 1212); emergency status expired November 15, 1989</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13 adopted effective December 11, 1989 (16:24 Md. R. 2616)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C and D amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> </annotations> </chapter> <chapter num="06" heading="Special Purpose Investment Fund Loan Program"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>These regulations prescribe the policies, procedures, and authorizations to make or purchase loans financed through the Special Purpose Investment Fund (SPIF) of the Community Development Administration.</text> </paragraph> <paragraph num="B."> <text>The Special Purpose Investment Fund was created and established by the Single Family Program General Bond Certificate to provide for investments by the Administration using funds that are not proceeds of bonds of the Administration.</text> </paragraph> <paragraph num="C."> <text>The Mortgage Yield Account was created as the initial account within the Fund to provide for the financing of mortgage loans to bear interest at rates that achieve yields required for attribution to other investments made under the General Bond Certificate. Other accounts may be established within the Fund in accordance with the General Bond Certificate and the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>These regulations apply to mortgage loans financed through the Mortgage Yield Account of the Fund. The loans:</text> <paragraph num="A."> <text>Are not subject to the Internal Revenue Code;</text> </paragraph> <paragraph num="B."> <text>Are mortgage investments under the General Bond Certificate as described in Regulation .03B(13) of this chapter or mortgage loans that otherwise meet the requirements of the General Bond Certificate;</text> </paragraph> <paragraph num="C."> <text>Are pledged to the bond holders under the General Bond Certificate;</text> </paragraph> <paragraph num="D."> <text>May be ineligible for financing with proceeds of the Administration's mortgage revenue bonds or through other mortgage programs of the Department;</text> </paragraph> <paragraph num="E."> <text>Enable borrowers to acquire, rehabilitate, and refinance owner-occupied residential housing of one to four units; and</text> </paragraph> <paragraph num="F."> <text>May be made for acquisition of residential housing of one to four units in a project in accordance with forward commitments to developers for permanent take-out financing under the SPIF program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development, Title 4, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency within the Division of Housing Finance of the Department.</text> </paragraph> <paragraph num="(3)"> <text>“Applicable codes and standards” means construction, health, safety, fire, occupancy, and other codes and standards in force in the political subdivision in which an eligible residence is located and which are applicable to that unit or to the construction of that unit.</text> </paragraph> <paragraph num="(4)"> <text>“Bonds” means mortgage revenue bonds of the Administration issued under the General Bond Certificate.</text> </paragraph> <paragraph num="(5)"> <text>“Closing costs” means:</text> <paragraph num="(a)"> <text>Financing costs such as points, if applicable, and fees for application, credit report, appraisal, survey, title examination, loan origination, and title insurance; and</text> </paragraph> <paragraph num="(b)"> <text>Title fees such as the attorney's fee, documentation and preparation fee, recording fee, State and local transfer tax, and documentary stamps.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(7)"> <text>“Developer” means an individual or entity that owns, acquires, constructs, or rehabilitates a project of eligible residences, the purchases of which are to be financed by mortgage investments.</text> </paragraph> <paragraph num="(8)"> <text>“Families of limited income” means individuals or households meeting income limits established for this Program by written determination of the Secretary from time to time.</text> </paragraph> <paragraph num="(9)"> <text>“Fund” means the Special Purpose Investment Fund authorized by the General Bond Certificate and held by the Trustee under the Certificate for the benefit of the bondholders.</text> </paragraph> <paragraph num="(10)"> <text>“General Bond Certificate” means the Community Development Administration, Single Family Program General Bond Certificate, dated May 1, 1980, as amended and supplemented from time to time.</text> </paragraph> <paragraph num="(11)"> <text>“Loan” means an eligible loan financed by the Administration under the Program.</text> </paragraph> <paragraph num="(12)"> <text>“Manufactured home” means a housing unit that:</text> <paragraph num="(a)"> <text>Is intended for residential use by a single household;</text> </paragraph> <paragraph num="(b)"> <text>Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(c)"> <text>Is not less than 24 feet in width and 40 feet in length;</text> </paragraph> <paragraph num="(d)"> <text>Is installed permanently on an engineered foundation in conformance with the BOCA National Building Code (1987), which is incorporated by reference under COMAR 05.02.01, or the standards set by the American National Standards Institute, Inc. which are incorporated by reference under COMAR 05.02.02, and is not independently capable of movement;</text> </paragraph> <paragraph num="(e)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(f)"> <text>Is certified by the United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, or by the Department as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland, and complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> <paragraph num="(g)"> <text>Is installed on real property the borrower owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(h)"> <text>Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks; and</text> </paragraph> <paragraph num="(i)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the loan.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Mortgage investment”, for purposes of the Program, means mortgage loans to families of limited incomes, either made directly by the Administration or purchased from mortgage lenders, for the financing of eligible properties of one to four dwelling units.</text> </paragraph> <paragraph num="(14)"> <text>“Mortgage Yield Account” means the account established within the Special Purpose Investment Fund for making mortgage investments and other investments in accordance with the General Bond Certificate.</text> </paragraph> <paragraph num="(15)"> <text>“Prepaid expenses” means costs due at the time of closing which are required to be paid in connection with closing a mortgage loan such as property taxes, ground rent, hazard insurance, condominium or homeowners association fees if applicable, and any mortgage insurance premiums.</text> </paragraph> <paragraph num="(16)"> <text>“Program” means the Administration's program to make or purchase mortgage investments with funds available in the Mortgage Yield Account of the Special Purpose Investment Fund.</text> </paragraph> <paragraph num="(17)"> <text>“Project” means a community development project within the meaning of the Act, that contains eligible existing, newly constructed, or rehabilitated one to four family residential housing units that include at least one owner-occupied unit.</text> </paragraph> <paragraph num="(18)"> <text>“Reservation of funds” means a commitment to a borrower, lender, or developer for a loan to be financed by the Fund.</text> </paragraph> <paragraph num="(19)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(20)"> <text>“Settlement costs” means closing costs and prepaid expenses.</text> </paragraph> <paragraph num="(21)"> <text>“Single family residence” means a residential housing unit intended for occupancy by one to four families meeting criteria specified for the Program.</text> </paragraph> <paragraph num="(22)"> <text>“Special Purpose Investment Fund” means the Fund created and established by §5.16(a) of the General Bond Certificate, and may include:</text> <paragraph num="(a)"> <text>A Mortgage Yield Account;</text> </paragraph> <paragraph num="(b)"> <text>An additional investment account; and</text> </paragraph> <paragraph num="(c)"> <text>Other accounts as may be created and established in accordance with the General Bond Certificate.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Purposes."> <paragraph num="A."> <text>The Administration may use funds available under the Program for any of the purposes set forth in this regulation.</text> </paragraph> <paragraph num="B."> <text>Preferred Uses.</text> <paragraph num="(1)"> <text>In the event of limited funds, the uses described in §§B(2)—(5) of this regulation may be given preference over the standard uses described in §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Designated Area Loans. Loans may be made for acquisition financing to borrowers purchasing residences in an area or neighborhood where the Secretary has determined home ownership should be encouraged through availability of Program loans.</text> </paragraph> <paragraph num="(3)"> <text>Accessory and Shared Housing. Acquisition financing may be provided for:</text> <paragraph num="(a)"> <text>Accessory housing that includes up to three dwelling units with complete, independent sleeping, cooking, and living facilities which are within, or attached to, or on the same parcel as, and subordinate to, but under the same ownership as a single family, owner-occupied dwelling, if a majority of all the units comprising the property are occupied by families of limited income; and</text> </paragraph> <paragraph num="(b)"> <text>Shared housing that provides sleeping facilities for up to four additional families and common, shared, or independent sanitary facilities and common or shared living, dining, and kitchen facilities, if a majority of the families occupying the property are of limited income.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Refinancing of Existing Mortgages. Program loans may be made to refinance mortgages in order to assist eligible homeowners in critical circumstances, or to achieve the mortgage yield requirements of the Program.</text> </paragraph> <paragraph num="(5)"> <text>Prior Homeownership. Loans may be made to certain persons ineligible under the Administration's tax-exempt, bond-financed lending program because of prior home ownership, but who otherwise meet the requirements of that program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Standard Uses. Loans may be made under the program to borrowers who meet Program requirements but are ineligible to receive loans under the more restrictive income and purchase price and other limits of the Administration's tax-exempt bond-financed lending Program.</text> </paragraph> <paragraph num="D."> <text>Second Mortgage Loans. Loans may be made under the Program for second mortgage loans if the borrower is receiving a first mortgage loan financed by the Administration.</text> </paragraph> <paragraph num="E."> <text>Other uses, as determined from time to time by the Secretary, may be made.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Borrower."> <text>An eligible borrower shall:</text> <paragraph num="A."> <text>Be one or more members of a household that owns or is purchasing, and shall hold title to, an eligible residence as set forth in Regulation .06 of this chapter;</text> </paragraph> <paragraph num="B."> <text>Be 18 years old or older, unless married to a joint borrower who is 18 years old or older;</text> </paragraph> <paragraph num="C."> <text>Meet income eligibility requirements as may be determined from time to time by the Secretary both for eligible borrowers and for tenants of multi-unit residences financed under the Program in accordance with Housing and Community Development Article, §4-218, Annotated Code of Maryland;</text> </paragraph> <paragraph num="D."> <text>Reside or intend to reside after purchase in an eligible property;</text> </paragraph> <paragraph num="E."> <text>Have legal capacity to incur the obligations of the loan; and</text> </paragraph> <paragraph num="F."> <text>Agree to comply with the loan terms and requirements established by the Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Property."> <paragraph num="A."> <text>Requirements. An eligible property shall:</text> <paragraph num="(1)"> <text>Contain one to four residential units, one of which is intended to be occupied by the borrower as the borrower's primary residence;</text> </paragraph> <paragraph num="(2)"> <text>Be real property owned by the borrower in fee simple or under a freely transferable, perpetually renewable, ground lease which permits the lessee to transfer the leasehold interest without the consent of the lessor;</text> </paragraph> <paragraph num="(3)"> <text>Have a purchase price that does not exceed the maximum program loan amount as described in Regulation .08 of this chapter, except in cases of additional financing provided by governmental or nonprofit organizations or other sources acceptable to the Administration;</text> </paragraph> <paragraph num="(4)"> <text>At the time of the loan closing, be unencumbered by any other lien except as may be acceptable to the Administration;</text> </paragraph> <paragraph num="(5)"> <text>Reasonably be expected to have an economic life equal to or greater than the term of the loan; and</text> </paragraph> <paragraph num="(6)"> <text>Meet all applicable codes and standards and other legal requirements at the time the mortgage investment is made or upon completion of rehabilitation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Requirements—Forward Commitments.</text> <paragraph num="(1)"> <text>An eligible property shall meet the requirements of §A of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>If a project involves new construction or will change the type of use or increase the intensity of the existing use of the property, a property shall be eligible for forward commitments of permanent take-out financing to developers only if:</text> <paragraph num="(a)"> <text>The Department has complied with COMAR 05.01.06.06; and</text> </paragraph> <paragraph num="(b)"> <text>The Secretary has issued the written determination required under COMAR 05.01.06.07.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Types of Units.</text> <paragraph num="(1)"> <text>An eligible property may be a:</text> <paragraph num="(a)"> <text>Modular home if it has the State seal of approval;</text> </paragraph> <paragraph num="(b)"> <text>Condominium unit approved by the mortgage insurer; or</text> </paragraph> <paragraph num="(c)"> <text>Manufactured home meeting the definition of Regulation .03B(11) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An eligible property may not be a:</text> <paragraph num="(a)"> <text>Unit in a cooperative housing project; or</text> </paragraph> <paragraph num="(b)"> <text>Mobile home that does not meet the definition of manufactured home under Regulation .03B(11) of this chapter.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Uses."> <paragraph num="A."> <text>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:</text> <paragraph num="(1)"> <text>Purchase price of the eligible residence;</text> </paragraph> <paragraph num="(2)"> <text>Down payment and settlement costs;</text> </paragraph> <paragraph num="(3)"> <text>Rehabilitation costs described in Regulation .07B of this chapter; or</text> </paragraph> <paragraph num="(4)"> <text>Costs associated with eligible refinancings, as described in §D of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Eligible rehabilitation costs include:</text> <paragraph num="(1)"> <text>The reasonable cost of correcting major structural defects;</text> </paragraph> <paragraph num="(2)"> <text>The reasonable cost of repairing or replacing plumbing, HVAC, or electrical systems;</text> </paragraph> <paragraph num="(3)"> <text>The reasonable cost of correcting any violations of local planning, zoning, or building codes, or other applicable laws;</text> </paragraph> <paragraph num="(4)"> <text>The reasonable cost of inspections; and</text> </paragraph> <paragraph num="(5)"> <text>Other reasonable rehabilitation costs that are approved by the Program, including the cost of cosmetic repairs, energy conservation improvements, accessibility modifications, or major appliances.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Administration, in its discretion, may make a loan under the Program to refinance an eligible residence, taking into consideration factors including the following:</text> <paragraph num="(1)"> <text>Critical financial or personal circumstances that require restructuring of prior home mortgage loans;</text> </paragraph> <paragraph num="(2)"> <text>Yield requirements of the Program;</text> </paragraph> <paragraph num="(3)"> <text>Promotion of community development which may be enhanced by refinancing to enable rehabilitation or sale for purposes of homeownership; or</text> </paragraph> <paragraph num="(4)"> <text>Borrower's ineligibility to continue home financing under other programs of the Administration due to an increase in a borrower's income.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Uses for proceeds of an eligible refinancing loan under the Program include:</text> <paragraph num="(1)"> <text>The payoff and release of the existing mortgage loan or loans, including:</text> <paragraph num="(a)"> <text>The remaining principal balance of the existing mortgage loan or loans, and</text> </paragraph> <paragraph num="(b)"> <text>Accrued and unpaid interest due on an existing mortgage loan or loans at the time the loan closes;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Eligible rehabilitation costs, if applicable; and</text> </paragraph> <paragraph num="(3)"> <text>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:</text> <paragraph num="(a)"> <text>Late fees,</text> </paragraph> <paragraph num="(b)"> <text>Real property taxes,</text> </paragraph> <paragraph num="(c)"> <text>Insurance premiums,</text> </paragraph> <paragraph num="(d)"> <text>Fees or costs, such as condominium or homeowners association fees as approved by the Administration,</text> </paragraph> <paragraph num="(e)"> <text>Reasonable costs previously expended by a mortgage lien holder in connection with initiating foreclosure, if approved by the Administration, or</text> </paragraph> <paragraph num="(f)"> <text>Application fees and loan review fees.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Terms—Loan Amount."> <paragraph num="A."> <text>Limits.</text> <paragraph num="(1)"> <text>The maximum loan amounts under the program shall be within limits set from time to time by the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>For a residence containing one dwelling unit the limit, as of April 1, 1991, is 150 percent of the maximum loan amount for a newly constructed single dwelling unit under the Maryland Mortgage Program (MMP) of the Administration.</text> </paragraph> <paragraph num="(3)"> <text>For a property containing two dwelling units the limit, as of April 1, 1991, is 175 percent of the MMP limit for a newly constructed single dwelling unit.</text> </paragraph> <paragraph num="(4)"> <text>For a property containing three units or four units, limits will be determined by the Secretary on a case by case basis, taking into account:</text> <paragraph num="(a)"> <text>The public purpose being served;</text> </paragraph> <paragraph num="(b)"> <text>Regional costs for this housing; and</text> </paragraph> <paragraph num="(c)"> <text>Other factors deemed appropriate by the Secretary.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Maximum loan amounts may be adjusted periodically by determination of the Secretary to:</text> <paragraph num="(1)"> <text>Reflect the annual rate of inflation;</text> </paragraph> <paragraph num="(2)"> <text>Reflect the number of dwelling units in the property;</text> </paragraph> <paragraph num="(3)"> <text>Reflect differing area property values;</text> </paragraph> <paragraph num="(4)"> <text>Respond to changes in average sales prices;</text> </paragraph> <paragraph num="(5)"> <text>Support State agency economic or community development initiatives; or</text> </paragraph> <paragraph num="(6)"> <text>Encourage innovative programs of the Administration.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Except for any financed mortgage insurance premium, and subject to the maximum loan amount under §A of this regulation:</text> <paragraph num="(1)"> <text>A first mortgage loan made to finance the purchase of an eligible property may not exceed the lesser of the:</text> <paragraph num="(a)"> <text>Appraised value; or</text> </paragraph> <paragraph num="(b)"> <text>Purchase price of the residence;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A second mortgage loan made to finance the purchase of an eligible property, when added to the amount of the first mortgage loan, may not exceed:</text> <paragraph num="(a)"> <text>The lesser of the:</text> <paragraph num="(i)"> <text>Appraised value; or</text> </paragraph> <paragraph num="(ii)"> <text>Purchase price of the residence; plus</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The amount of any down payment and closing costs covered by the second mortgage loan, so long as the Administration determines that the loan meets the requirements of the General Bond Certificate;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A loan made to finance the purchase and rehabilitation of an eligible residence may not exceed the lesser of:</text> <paragraph num="(a)"> <text>The total of:</text> <paragraph num="(i)"> <text>100 percent of the purchase price, plus</text> </paragraph> <paragraph num="(ii)"> <text>Estimated costs for rehabilitation of the eligible residence; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The after-rehabilitation appraised value;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A loan made to refinance an existing mortgage loan may not exceed the lesser of:</text> <paragraph num="(a)"> <text>The total refinancing costs permitted in accordance with Regulation .07C of this chapter; or</text> </paragraph> <paragraph num="(b)"> <text>The appraised value of the eligible residence, after rehabilitation, if applicable.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Loan Terms and Requirements—General."> <paragraph num="A."> <text>Each loan financed by the Fund shall comply with the conditions of this regulation.</text> </paragraph> <paragraph num="B."> <text>Security.</text> <paragraph num="(1)"> <text>Each loan shall be secured by a mortgage or deed of trust that shall be:</text> <paragraph num="(a)"> <text>In a lien position required by the Administration; and</text> </paragraph> <paragraph num="(b)"> <text>Executed and recorded in accordance with the requirements of existing law.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Each deed of trust shall be the subject of a title insurance policy in an amount at least equal to the outstanding principal amount of the loan, insuring that the deed of trust constitutes a first lien, subject only to liens for taxes and assessments and permitted liens and encumbrances on the real property with respect to which the loan is secured.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Mortgage Insurance or Guarantee.</text> <paragraph num="(1)"> <text>Primary Mortgage Insurance.</text> <paragraph num="(a)"> <text>Each first mortgage loan shall be the subject of primary mortgage insurance issued by a private or public mortgage insurer acceptable to the Administration.</text> </paragraph> <paragraph num="(b)"> <text>Except as provided in §C(1)(c) or (e) or C(2) of this regulation, each loan shall be subject to primary mortgage insurance either in the amount of:</text> <paragraph num="(i)"> <text>100 percent of the unpaid principal amount of the mortgage loan, if issued by the Federal Housing Administration (FHA) or the Veterans Administration (VA); or</text> </paragraph> <paragraph num="(ii)"> <text>25 percent of the mortgage loan amount if issued by a private or governmental insurer acceptable to the Administration.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A first mortgage loan need not be subject to primary mortgage insurance if the original principal amount of the mortgage loan is not in excess of 75 percent of the lesser of the:</text> <paragraph num="(i)"> <text>Appraised value; or</text> </paragraph> <paragraph num="(ii)"> <text>Purchase price of the residence, excluding settlement costs.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The Administration may permit termination of primary mortgage insurance if the unpaid principal amount of the mortgage loan is 75 percent or less of the original principal amount.</text> </paragraph> <paragraph num="(e)"> <text>A second mortgage loan may be required to be subject to primary mortgage insurance at the sole discretion of the Administration.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Except for second mortgage loans, loans made under the Program are required to be subject to mortgage pool insurance from an insurer acceptable to the Administration, unless the loan is subject to primary mortgage issuance or guaranty under §C(1)(b)(i) of this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Interest Rate.</text> <paragraph num="(1)"> <text>Loans financed from moneys in the Mortgage Yield Account may be subject to payment of points and shall bear interest at rates established from time to time by certificates of the Administration in order to achieve yields required for attribution to other investments made under the General Bond Certificate.</text> </paragraph> <paragraph num="(2)"> <text>Other loans financed under the Special Purpose Investment Fund may be made at rates of interest up to prevailing market rates of interest.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Escrow. Each loan shall require escrow payments on the part of the mortgagor with respect to all taxes, assessments, water rates, ground rents, sewer rates, condominium or homeowners association fees, insurance premiums, including mortgage insurance premiums, and other charges, to the extent actually charged or assessed, and any prior liens at any time assessed or levied against the premises or any part of it, unless otherwise approved by the Administration.</text> </paragraph> <paragraph num="F."> <text>Property Insurance. Fire and extended hazard insurance coverage shall meet the following requirements:</text> <paragraph num="(1)"> <text>Policies shall be written by insurance companies authorized to transact business in the State;</text> </paragraph> <paragraph num="(2)"> <text>Policies shall be in force at the time of the mortgage loan closing;</text> </paragraph> <paragraph num="(3)"> <text>The Administration shall be named as the mortgagee in a standard mortgagee clause or endorsement attached to or printed in the policy;</text> </paragraph> <paragraph num="(4)"> <text>The insurance shall be in an amount at least equal to the lesser of:</text> <paragraph num="(a)"> <text>The original principal balance of the mortgage loan, or</text> </paragraph> <paragraph num="(b)"> <text>100 percent of the replacement value of the improvements located on the property;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The insurance shall be payable in an amount equal to any partial or total loss not exceeding the full amount of insurance to prevent the borrower from being a co-insurer;</text> </paragraph> <paragraph num="(6)"> <text>The terms and coverage of all insurance policies shall be satisfactory to the Administration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Operations and Administration."> <paragraph num="A."> <text>Forms and Documentation.</text> <paragraph num="(1)"> <text>The application and the loan shall be made upon form documents prescribed by the Administration.</text> </paragraph> <paragraph num="(2)"> <text>If application is being made for a forward commitment of permanent take-out financing by a developer, sufficient information and documentation shall be provided to determine the extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the property.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Delegation of Authority. An action or decision required or permitted to be taken or made by the Department under the Act or these regulations, except for actions when the Secretary is designated, may be delegated by the Secretary.</text> </paragraph> <paragraph num="C."> <text>Allocation of Funds. The Secretary from time to time may designate use of any portion of the moneys available under the Fund for a particular purpose consistent with the Act and the General Bond Certificate.</text> </paragraph> <paragraph num="D."> <text>Operational Manuals. The Administration may establish, from time to time, operational handbooks or manuals governing matters relating to the Fund including descriptive statements of procedures which do not affect directly the rights of, or the procedures available to, the public.</text> </paragraph> <paragraph num="E."> <text>Loan Servicing. The Administration may enter into servicing agreements with loan servicers acceptable to the Administration for the servicing of loans made under this chapter.</text> </paragraph> <paragraph num="F."> <text>Power of the Administration. With respect to loans made under this chapter, the Administration may do any of the following:</text> <paragraph num="(1)"> <text>Assign a mortgage or deed of trust for value;</text> </paragraph> <paragraph num="(2)"> <text>Release a mortgage or deed of trust;</text> </paragraph> <paragraph num="(3)"> <text>Foreclose a mortgage or deed of trust;</text> </paragraph> <paragraph num="(4)"> <text>Acquire property securing a loan in default;</text> </paragraph> <paragraph num="(5)"> <text>Encumber, sell, or otherwise dispose of property acquired in connection with a loan in default;</text> </paragraph> <paragraph num="(6)"> <text>Obtain and seek enforcement of a deficiency judgment;</text> </paragraph> <paragraph num="(7)"> <text>Forbear; or</text> </paragraph> <paragraph num="(8)"> <text>Restructure the loan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="False Statements."> <text>A borrower who knowingly makes or causes to be made any false material statement or material misstatement of fact, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Administration's action, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-225, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="A."> <text>Conformance to the requirements of any federal, State, or local programs or of the General Bond Certificate in connection with a loan necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="B."> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purpose of the Act.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland;Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 20, 1992 (19:1 Md. R. 23)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective July 30, 2007 (34:15 Md. R. 1349)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D, E amended effective July 30, 2007 (34:15 Md. R. 1349)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective January 2, 1994 (20:25 Md. R. 1941)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective July 30, 2007 (34:15 Md. R. 1349)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08C amended effective July 30, 2007 (34:15 Md. R. 1349)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective July 30, 2007 (34:15 Md. R. 1349)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective January 2, 1994 (20:25 Md. R. 1941)</annotation> </annotations> </chapter> <chapter num="07" heading="Live Near Your Work Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter is adopted under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, to implement a program of community development projects in the State to be known as the Live Near Your Work (LNYW) Program. The LNYW Program is a cooperative effort between the State, local jurisdictions, and employers to provide financial assistance to eligible employees in purchasing homes near their place of employment. This chapter describes the policies, procedures, and authorizations for the operation of the LNYW Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <text>The objectives of the Program are to:</text> <paragraph num="A."> <text>Stimulate homeownership in designated neighborhoods;</text> </paragraph> <paragraph num="B."> <text>Promote public/private partnerships to strengthen communities;</text> </paragraph> <paragraph num="C."> <text>Support State transportation policy by promoting shorter commuting times; and</text> </paragraph> <paragraph num="D."> <text>Support employer compliance with the federal Clean Air Act Amendments of 1990.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Closing Costs.</text> <paragraph num="(a)"> <text>“Closing costs” means costs incurred in connection with purchasing an eligible residence.</text> </paragraph> <paragraph num="(b)"> <text>“Closing costs” include:</text> <paragraph num="(i)"> <text>Credit report fee;</text> </paragraph> <paragraph num="(ii)"> <text>Appraisal fee;</text> </paragraph> <paragraph num="(iii)"> <text>Home inspection fee;</text> </paragraph> <paragraph num="(iv)"> <text>Survey fee;</text> </paragraph> <paragraph num="(v)"> <text>Title examination;</text> </paragraph> <paragraph num="(vi)"> <text>Loan origination fee;</text> </paragraph> <paragraph num="(vii)"> <text>Title insurance fee;</text> </paragraph> <paragraph num="(viii)"> <text>Homeownership counseling fee;</text> </paragraph> <paragraph num="(ix)"> <text>Application fee;</text> </paragraph> <paragraph num="(x)"> <text>Attorneys' fees;</text> </paragraph> <paragraph num="(xi)"> <text>Document preparation fee;</text> </paragraph> <paragraph num="(xii)"> <text>Recording fees;</text> </paragraph> <paragraph num="(xiii)"> <text>State and local transfer tax; and</text> </paragraph> <paragraph num="(xiv)"> <text>State recordation tax.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(3)"> <text>“Designated neighborhood”' has the meaning stated in Housing and Community Development Article, §§6-301(b) and 6-306(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Eligible employee” means an individual who:</text> <paragraph num="(a)"> <text>Is employed by an employer approved pursuant to Regulation .05 of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>Is 18 years old or older;</text> </paragraph> <paragraph num="(c)"> <text>Has a contract to purchase an eligible residence located in the employer's applicable LNYW area;</text> </paragraph> <paragraph num="(d)"> <text>Shall hold title to an eligible residence;</text> </paragraph> <paragraph num="(e)"> <text>Shall make a cash contribution of at least $1,000 toward the cost of the downpayment or closing costs in connection with purchasing an eligible residence; and</text> </paragraph> <paragraph num="(f)"> <text>Meets any additional eligibility requirements imposed by the local jurisdiction or the participating employer and approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Eligible residence” means a dwelling unit that is:</text> <paragraph num="(a)"> <text>The primary residence of an eligible employee;</text> </paragraph> <paragraph num="(b)"> <text>Located in the LNYW area of the eligible employee's employer; and</text> </paragraph> <paragraph num="(c)"> <text>A single unit property, including a townhouse or condominium, or is a two to four unit property and the eligible employee occupies one of the units.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Family of limited income” means a household meeting income limits established for this Program by written determination of the Secretary.</text> </paragraph> <paragraph num="(7)"> <text>“Household” means the individual or individuals who occupy or intend to occupy the:</text> <paragraph num="(a)"> <text>Eligible residence, in the case of a single unit property; or</text> </paragraph> <paragraph num="(b)"> <text>Unit in the eligible residence occupied by the eligible employee, in the case of a two to four unit property.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Household income” means 100 percent of the projected annual gross income, based on current rate of income, from all members of the household 18 years old or older including Social Security income, retirement income, pensions, wages, overtime, bonuses, commissions, investment and interest income, rental income, disability or unemployment insurance, alimony and support payments, and all other income from any sources, less:</text> <paragraph num="(a)"> <text>Abnormal expenses of a long-term, unusual nature such as extraordinary unreimbursable medical, rehabilitation, or special education expenses;</text> </paragraph> <paragraph num="(b)"> <text>Unusual or temporary one-time income items, such as judgments or gifts, as determined by the Department;</text> </paragraph> <paragraph num="(c)"> <text>Income of a full-time high school or undergraduate college student, unless that individual is to hold title to an eligible residence; and</text> </paragraph> <paragraph num="(d)"> <text>Other income items as may be excluded by the Department.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“LNYW area” means an area that:</text> <paragraph num="(a)"> <text>Is the same as or is a part of the area or areas that lie within the LNYW boundary for the local jurisdiction;</text> </paragraph> <paragraph num="(b)"> <text>Is designated by an employer that desires to participate in the Program as the area where eligible employees may purchase a home;</text> </paragraph> <paragraph num="(c)"> <text>Has a relationship to the employer's location that supports the objectives of the Program;</text> </paragraph> <paragraph num="(d)"> <text>Is approved by the local jurisdiction; and</text> </paragraph> <paragraph num="(e)"> <text>Is approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“LNYW boundary” means an area or areas within a local jurisdiction that:</text> <paragraph num="(a)"> <text>Coincides with or lies within one or more designated neighborhoods located within the local jurisdiction;</text> </paragraph> <paragraph num="(b)"> <text>Is approved as the local jurisdiction's LNYW boundary by a resolution of the governing body of the local jurisdiction; and</text> </paragraph> <paragraph num="(c)"> <text>Is approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“LNYW grant” means the funds granted by the local jurisdiction to the eligible employee under the terms of this chapter, with combined funds from the Department, the local jurisdiction, and the employer.</text> </paragraph> <paragraph num="(12)"> <text>“LNYW project” means the Program operated by the local jurisdiction within the LNYW boundary for the local jurisdiction.</text> </paragraph> <paragraph num="(13)"> <text>“Local development agency” has the meaning stated in Housing and Community Development Article, §4-201(l), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Local development corporation” has the meaning stated in Housing and Community Development Article, §4-201(m), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Local jurisdiction” means either a municipal corporation subject to the provisions of the State Constitution, Article XI-E, or any one of the 23 counties of the State or Baltimore City.</text> </paragraph> <paragraph num="(16)"> <text>“Nonprofit organization” has the meaning stated in Housing and Community Development Article, §1-101(g), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Program” means the Live Near Your Work Program.</text> </paragraph> <paragraph num="(18)"> <text>“Program grant” means the funds granted by the Department to a local jurisdiction to be used for the Department's contribution to LNYW grants.</text> </paragraph> <paragraph num="(19)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Application and Approval Process for Local Jurisdictions."> <paragraph num="A."> <text>Application Process.</text> <paragraph num="(1)"> <text>The Department may set periodic deadlines for applications from local jurisdictions.</text> </paragraph> <paragraph num="(2)"> <text>The local jurisdiction shall submit an application to the Department in the form and containing the information and documentation required by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Awarding Program Grants to Local Jurisdictions.</text> <paragraph num="(1)"> <text>The Assistant Secretary for Neighborhood Revitalization and the Assistant Secretary who is the Director of the Community Development Administration shall:</text> <paragraph num="(a)"> <text>Review all applications from local jurisdictions; and</text> </paragraph> <paragraph num="(b)"> <text>Recommend to the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland, for review and recommendation to the Secretary, the amount of all Program grants to local jurisdictions based on the:</text> <paragraph num="(i)"> <text>Capacity of the local jurisdiction to operate a LNYW project, and</text> </paragraph> <paragraph num="(ii)"> <text>Financial commitment of the local jurisdiction and the employers.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Secretary shall by written determination approve, disapprove, or modify the terms of all Program grants after receipt of the recommendation of the Housing Finance Review Committee.</text> </paragraph> <paragraph num="(3)"> <text>If the Secretary approves a Program grant, the written determination from the Secretary shall also:</text> <paragraph num="(a)"> <text>Approve the LNYW project as a community development project as defined in Housing and Community Development Article, §4-217, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Approve the LNYW boundary.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The Department may set deadlines and conditions for using the Program grant.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Each local jurisdiction approved for a Program grant under §B of this regulation shall enter into a grant agreement with the Department which provides:</text> <paragraph num="(1)"> <text>That the local jurisdiction shall:</text> <paragraph num="(a)"> <text>Provide a minimum of $1,000 for each LNYW grant and demonstrate to the satisfaction of the Department that funds have been committed for that purpose,</text> </paragraph> <paragraph num="(b)"> <text>Ensure that at least 51 percent of the eligible employees who receive LNYW grants from the local jurisdiction's LNYW project are families of limited income,</text> </paragraph> <paragraph num="(c)"> <text>Agree to cooperate with the Department in conducting evaluations and analyses of the Program, and</text> </paragraph> <paragraph num="(d)"> <text>Develop a marketing plan to promote the Program that is satisfactory to the Department; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Other terms and conditions required by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Conditions on LNYW Grants.</text> <paragraph num="(1)"> <text>The contribution from the local jurisdiction may be in the form of a grant or a conditional grant.</text> </paragraph> <paragraph num="(2)"> <text>A conditional grant is subject to the following minimum terms and conditions:</text> <paragraph num="(a)"> <text>Repayment of the grant may be required upon any terms and conditions approved by the Department;</text> </paragraph> <paragraph num="(b)"> <text>No interest is due on the unpaid portion of the grant;</text> </paragraph> <paragraph num="(c)"> <text>The term of the grant may not exceed 3 years; and</text> </paragraph> <paragraph num="(d)"> <text>A pro rata portion of the grant shall be released in each year of the term, so that at the end of the term the grantee is not required to repay the grant if all terms and conditions are met.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The local jurisdiction may impose additional eligibility requirements for LNYW grants, including a minimum period of residency in the home purchased or homeownership counseling, if the additional restrictions:</text> <paragraph num="(a)"> <text>Do not violate any applicable law;</text> </paragraph> <paragraph num="(b)"> <text>Have been approved by the Department; and</text> </paragraph> <paragraph num="(c)"> <text>Are imposed on all LNYW grants from the local jurisdiction.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The local jurisdiction may not impose income limits that are higher than the requirements under this chapter for families of limited income.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Authorizing Another Entity.</text> <paragraph num="(1)"> <text>A local jurisdiction may authorize another entity to operate the LNYW project in that jurisdiction if the:</text> <paragraph num="(a)"> <text>Entity is a nonprofit organization, local development corporation, or local development agency;</text> </paragraph> <paragraph num="(b)"> <text>Local jurisdiction authorizes the entity to operate the Program in a resolution of its local governing body;</text> </paragraph> <paragraph num="(c)"> <text>Entity is approved by the Department to operate the LNYW project; and</text> </paragraph> <paragraph num="(d)"> <text>Local jurisdiction and the entity enter into a written agreement, which is approved by the Department, for the operation of the LNYW project.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If a local jurisdiction authorizes another entity to operate the LNYW project in that jurisdiction, the entity shall:</text> <paragraph num="(a)"> <text>Execute the grant agreement with the Department or, if the local jurisdiction has already executed a grant agreement with the Department, execute an amendment to the grant agreement agreeing to assume the local jurisdiction's rights and responsibilities under the grant agreement; and</text> </paragraph> <paragraph num="(b)"> <text>Take all actions described in this chapter for the local jurisdiction except for actions to designate an LNYW boundary.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If a local jurisdiction authorizes another entity to operate the LNYW project in that jurisdiction, either the local jurisdiction or the entity may provide the matching funds required of the local jurisdiction.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Employers."> <paragraph num="A."> <text>To be eligible to participate in the LNYW project operated by the local jurisdiction, an employer shall:</text> <paragraph num="(1)"> <text>Complete any application required by the local jurisdiction or the Department;</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §F(2) of this regulation, provide a minimum contribution of $1,000 for each LNYW grant made to one of its employees;</text> </paragraph> <paragraph num="(3)"> <text>In coordination with the local jurisdiction, designate an LNYW area that coincides with or is within the LNYW boundary for the local jurisdiction, in the form required by the Department;</text> </paragraph> <paragraph num="(4)"> <text>Coordinate participation in the Program with the local jurisdiction; and</text> </paragraph> <paragraph num="(5)"> <text>Submit all other materials to and comply with any restrictions imposed by the local jurisdiction or the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The contribution from the employer may be in the form of a grant or a conditional grant as described in Regulation .04D of this chapter.</text> </paragraph> <paragraph num="C."> <text>Employers may set eligibility requirements that are reasonably related to the employer-employee relationship for their employees to receive an LNYW grant if the eligibility requirements:</text> <paragraph num="(1)"> <text>Do not violate any applicable law;</text> </paragraph> <paragraph num="(2)"> <text>Are approved by the local jurisdiction;</text> </paragraph> <paragraph num="(3)"> <text>Are approved by the Department; and</text> </paragraph> <paragraph num="(4)"> <text>Are imposed on all eligible employees.</text> </paragraph> </paragraph> <paragraph num="D."> <text>An employer may offer additional benefits to its employees in connection with the purchase of an eligible residence.</text> </paragraph> <paragraph num="E."> <text>If an employer has more than one location, there shall be an LNYW area for each location, each of which shall comply with all requirements of this chapter for designation and approval of an LNYW area. The LNYW areas for an employer under this section may overlap. In addition to any other requirements of this chapter, an employee and a residence shall only be eligible if the residence is located in the LNYW area of the employer for the location where the employee works.</text> </paragraph> <paragraph num="F."> <text>Employer Groups.</text> <paragraph num="(1)"> <text>Two or more employers located in the same local jurisdiction may join together to combine resources from which LNYW grants may be made if:</text> <paragraph num="(a)"> <text>The group of employers agrees to contribute at least $1,000 to each LNYW grant made by the group of employers;</text> </paragraph> <paragraph num="(b)"> <text>LNYW grants are made by the group of employers only to employees of employers in the group;</text> </paragraph> <paragraph num="(c)"> <text>The group of employers submits to the local jurisdiction an application, an LNYW area map, and any other materials requested by the local jurisdiction or the Department, consistent with §A of this regulation; and</text> </paragraph> <paragraph num="(d)"> <text>The application and LNYW area are approved by the local jurisdiction and the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Each employer in a group of employers approved under this regulation shall make a contribution of at least the minimum amount established by the group of employers, which may be less than $1,000 for each LNYW grant.</text> </paragraph> <paragraph num="(3)"> <text>A group of employers approved under this regulation may impose eligibility requirements consistent with §C of this regulation and may offer additional benefits consistent with §D of this regulation in connection with any LNYW grants made by the group of employers.</text> </paragraph> <paragraph num="(4)"> <text>The contribution from a group of employers pursuant to this regulation may be in the form of a grant or a conditional grant as described in Regulation .04D of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Employees."> <paragraph num="A."> <text>An eligible employee shall:</text> <paragraph num="(1)"> <text>Comply with the Program requirements and terms for receiving an LNYW grant; and</text> </paragraph> <paragraph num="(2)"> <text>Respond to periodic surveys for Program evaluation purposes including a survey to be completed at settlement.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Only one person per household may receive an LNYW grant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Uses of Program Grants and LNYW Grants."> <paragraph num="A."> <text>Program grants from the Department to the local jurisdiction shall be used solely to fund $1,000 of an LNYW grant to an eligible employee.</text> </paragraph> <paragraph num="B."> <text>Program grants from the Department to the local jurisdiction may not be used to:</text> <paragraph num="(1)"> <text>Fund an LNYW grant if the eligible employee, the employer, and the local jurisdiction do not make the minimum contribution set forth in this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>Fund any expenses of operating the LNYW project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An LNYW grant may only be used for the downpayment and closing costs incurred in connection with purchasing an eligible residence.</text> </paragraph> <paragraph num="D."> <text>An LNYW grant may not be used to pay costs incurred in connection with a transfer of property where the grantor remains a title holder.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Funding Procedures and Reporting Requirements."> <paragraph num="A."> <text>At the closing on an eligible residence, the local jurisdiction shall provide funds for the local jurisdiction's contribution and the Department's contribution to the LNYW grant.</text> </paragraph> <paragraph num="B."> <text>Before agreeing to fund an LNYW grant to an employee, the local jurisdiction shall confirm:</text> <paragraph num="(1)"> <text>That the property to be purchased is an eligible residence;</text> </paragraph> <paragraph num="(2)"> <text>The eligibility of the employer and the employee;</text> </paragraph> <paragraph num="(3)"> <text>The employee's household income;</text> </paragraph> <paragraph num="(4)"> <text>That the employee has already made or at closing shall make a contribution of at least $1,000 towards the purchase of the home;</text> </paragraph> <paragraph num="(5)"> <text>That the employer has made a contribution of at least $1,000 towards the LNYW grant; and</text> </paragraph> <paragraph num="(6)"> <text>That at least 51 percent of all of the LNYW grant recipients for the local jurisdiction's LNYW project are families of limited income.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The local jurisdiction may, at its own risk, fund LNYW grants which do not comply with §B(6) of this regulation. However, the Department shall only reimburse the local jurisdiction for the Department's contribution to an LNYW grant if, at the time the request for reimbursement is submitted to the Department, at least 51 percent of the LNYW grant recipients for the local jurisdiction's LNYW project are families of limited income.</text> </paragraph> <paragraph num="D."> <text>After the closing, the local jurisdiction shall submit to the Department a request for reimbursement of the Department's contribution to the LNYW grant in the form required by the Department. The Department may require evidence of the closing and the fulfillment of all Departmental requirements before reimbursing the local jurisdiction for funds advanced for the Department's share of the LNYW grant. If any of the requirements of this chapter have not been met, the Department may deny a request for reimbursement.</text> </paragraph> <paragraph num="E."> <text>Reporting Requirements.</text> <paragraph num="(1)"> <text>The local jurisdiction shall make a report to the Department at times required by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The report shall be in the form and contain information required by the Department.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Overcommitment. If a local jurisdiction receives an application and financial commitment from an employer which would cause the total amount of financial commitments from all employers to exceed the total amount of the Program grant to the local jurisdiction, the local jurisdiction may not accept the new employer in the local jurisdiction's LNYW project, unless the local jurisdiction first informs all participating employers that:</text> <paragraph num="(1)"> <text>The local jurisdiction intends to accept a new commitment from an employer which will cause the total financial commitments of employers to exceed the total amount of the Program grant;</text> </paragraph> <paragraph num="(2)"> <text>Funds may be unavailable to fund all applications for LNYW grants; and</text> </paragraph> <paragraph num="(3)"> <text>Any new applications for LNYW grants shall be funded on a first-come, first-served basis.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Right to Reallocate. At any time after 6 months from the date of any grant agreement with a local jurisdiction, the Department may elect to reallocate any unused Program grant funds, originally allocated to a local jurisdiction, to another local jurisdiction.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Program Administration."> <paragraph num="A."> <text>The Department may establish operational handbooks or manuals governing matters relating to the Program including descriptive statements of Program procedures and policies.</text> </paragraph> <paragraph num="B."> <text>The Secretary may delegate to the Assistant Secretary for Neighborhood Revitalization, the Assistant Secretary who is the Director of the Community Development Administration, or any other official or employee of the Department, the authority to execute Program documents.</text> </paragraph> <paragraph num="C."> <text>The Secretary may waive or vary particular provisions of this chapter to the extent that waiver is not inconsistent with Housing and Community Development Article, Annotated Code of Maryland, if, in the determination of the Secretary, the application of a regulation in a particular case or in an emergency situation would be inequitable or contrary to the purposes of Housing and Community Development Article, Annotated Code of Maryland, or the purpose authorized for the Program.</text> </paragraph> <paragraph num="D."> <text>Reconsideration. A local jurisdiction, employer, or person dissatisfied with any decision of the Department may request reconsideration by writing to the Assistant Secretary for Neighborhood Revitalization and the Assistant Secretary who is the Director of the Community Development Administration. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 29, 1998 (25:13 Md. R. 992)</annotation> </annotations> </chapter> <chapter num="08" heading="Energy-Efficient Homes Construction Loan Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making construction loans and providing credit enhancement for the construction of net-zero homes and low-energy homes.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 20, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>Closing Costs.</text> <paragraph num="(a)"> <text>“Closing costs” means the costs incurred in connection with obtaining a loan from the Department under the Program.</text> </paragraph> <paragraph num="(b)"> <text>“Closing costs” includes:</text> <paragraph num="(i)"> <text>Credit report fees;</text> </paragraph> <paragraph num="(ii)"> <text>Appraisal fees;</text> </paragraph> <paragraph num="(iii)"> <text>Survey fees;</text> </paragraph> <paragraph num="(iv)"> <text>Loan origination and application fees;</text> </paragraph> <paragraph num="(v)"> <text>Title examination and insurance fees;</text> </paragraph> <paragraph num="(vi)"> <text>Property taxes and ground rent;</text> </paragraph> <paragraph num="(vii)"> <text>Hazard insurance and mortgage insurance premiums;</text> </paragraph> <paragraph num="(viii)"> <text>Attorney's fees;</text> </paragraph> <paragraph num="(ix)"> <text>Document preparation fees;</text> </paragraph> <paragraph num="(x)"> <text>Recording fees; and</text> </paragraph> <paragraph num="(xi)"> <text>Transfer and recordation taxes.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Credit enhancement” means any form of insurance, guarantee, or agreement that increases the credit strength of a loan and reduces the risk of lending to a borrower.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>Development Costs.</text> <paragraph num="(a)"> <text>“Development costs” means the costs incurred in carrying out all works and undertakings which the Department deems reasonable and necessary for the acquisition and construction of a project.</text> </paragraph> <paragraph num="(b)"> <text>“Development costs” includes the costs for:</text> <paragraph num="(i)"> <text>Acquisition of land and any buildings on it;</text> </paragraph> <paragraph num="(ii)"> <text>Closing costs;</text> </paragraph> <paragraph num="(iii)"> <text>Necessary studies, surveys, plans, and specifications;</text> </paragraph> <paragraph num="(iv)"> <text>Architectural, engineering, or special services;</text> </paragraph> <paragraph num="(v)"> <text>Site preparation and development;</text> </paragraph> <paragraph num="(vi)"> <text>Labor and materials for construction;</text> </paragraph> <paragraph num="(vii)"> <text>Fees incurred in connection with financing the project;</text> </paragraph> <paragraph num="(viii)"> <text>Construction period interest on the loan;</text> </paragraph> <paragraph num="(ix)"> <text>Indemnity and surety bonds;</text> </paragraph> <paragraph num="(x)"> <text>Premiums on insurance; and</text> </paragraph> <paragraph num="(xi)"> <text>Other costs the Department deems reasonable and necessary.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Director” means the Director of the Administration.</text> </paragraph> <paragraph num="(8)"> <text>“Home” means a single family residence or a multifamily building used by the occupants as their residence.</text> </paragraph> <paragraph num="(9)"> <text>“Low-energy home” means a home that achieves a Home Energy Rating System (HERS) Index rating of 50 or lower.</text> </paragraph> <paragraph num="(10)"> <text>“Net–zero home” means a home that is designed to produce an amount of energy in 1 year that is equal to the amount of energy that the home uses in 1 year.</text> </paragraph> <paragraph num="(11)"> <text>“Program” means the Energy-Efficient Homes Construction Loan Program.</text> </paragraph> <paragraph num="(12)"> <text>“Program Manager” means the Manager of the Program as assigned by the Department.</text> </paragraph> <paragraph num="(13)"> <text>“Project” means any undertaking or project, or portion thereof, including land, buildings, and improvements, that constitutes a low-energy home or net-zero home upon completion.</text> </paragraph> <paragraph num="(14)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Borrowers."> <text>To qualify as an eligible borrower under the program, an applicant shall:</text> <paragraph num="A."> <text>If a nonprofit organization, corporation, or partnership, be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="B."> <text>Have the legal capacity and all necessary authorization to incur the obligations of the loan;</text> </paragraph> <paragraph num="C."> <text>Own the project or have a valid sales contract to purchase the project;</text> </paragraph> <paragraph num="D."> <text>Demonstrate credit worthiness and repayment ability acceptable to the Department; and</text> </paragraph> <paragraph num="E."> <text>Demonstrate the ability to complete the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Projects."> <text>Eligible projects shall be:</text> <paragraph num="A."> <text>A low-energy or net-zero home upon completion;</text> </paragraph> <paragraph num="B."> <text>Properly zoned for residential use;</text> </paragraph> <paragraph num="C."> <text>Rehabilitated or constructed in accordance with the applicable federal, State, and local building, zoning, environmental, health, and housing codes and standards, which includes the latest version of the building codes adopted by the Department; and</text> </paragraph> <paragraph num="D."> <text>Sold or rented to an individual that will use the property as their residence.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Loan Terms and Requirements."> <paragraph num="A."> <text>Proceeds of the loan may be used for the:</text> <paragraph num="(1)"> <text>Acquisition of a project;</text> </paragraph> <paragraph num="(2)"> <text>Construction and development costs of a project; and</text> </paragraph> <paragraph num="(3)"> <text>Closing and settlement costs associated with the financing and acquisition of the project.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Department shall establish interest rates for each loan based on the underwriting of each project.</text> </paragraph> <paragraph num="C."> <text>The maximum interest rate on a loan shall be a rate which does not impair the financial viability of the project or the capability of the borrower to construct a low-energy home or net-zero home.</text> </paragraph> <paragraph num="D."> <text>The Department may establish lower interest rates for projects that achieve greater energy savings.</text> </paragraph> <paragraph num="E."> <text>The maximum loan, when added to any superior debts, may not exceed the greater of the:</text> <paragraph num="(1)"> <text>Amount of permanent financing approved for the project; or</text> </paragraph> <paragraph num="(2)"> <text>100 percent of the market value of the eligible building and property after construction as determined by the Department.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Repayment. Terms for repayment of principal and interest shall be established based on the underwriting for each project and in a manner which does not impair the financial viability of the project or the capability of the borrower to construct a project.</text> </paragraph> <paragraph num="G."> <text>A program loan shall be evidenced by a promissory note and secured by a mortgage or deed of trust to be recorded in the land records of the county in which the project is located.</text> </paragraph> <paragraph num="H."> <text>Loan funds shall be disbursed in accordance with a draw schedule approved by the Department, which may include releasing funds upon successful inspections.</text> </paragraph> <paragraph num="I."> <text>The borrower shall agree not to sell, cease to own, assign, transfer, or dispose of all or any part of the project or the borrower's interest in it, during the loan term, without the prior written consent of the Department.</text> </paragraph> <paragraph num="J."> <text>Insurance.</text> <paragraph num="(1)"> <text>The borrower shall maintain property, fire, and extended coverage insurance on the buildings comprising a project both during and after construction, which shall name the Department as a loss payee, additional insured, and mortgagee, as applicable.</text> </paragraph> <paragraph num="(2)"> <text>If the project is located on real property which is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the project shall be covered by a flood plain insurance policy.</text> </paragraph> <paragraph num="(3)"> <text>For all secured loans the borrower shall provide a standard American Land Title Association (ALTA) Loan policy or other form of title policy approved by the Department.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Taxes and assessments against the property which are due and payable shall be paid at or before closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Liability and Other Insurance."> <paragraph num="A."> <text>The Department may require the borrower to obtain any of the following types of insurance, issued by a company that is approved by the State Insurance Commissioner, depending on the size of the project and risks to the Department:</text> <paragraph num="(1)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(2)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(3)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(4)"> <text>Architect's errors and omissions; and</text> </paragraph> <paragraph num="(5)"> <text>Engineer's errors and omissions.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In addition to the requirements of §A of this regulation, owner's liability insurance shall:</text> <paragraph num="(1)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(2)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Additional Requirements."> <paragraph num="A."> <text>In addition to a promissory note and deed of trust, the Department may require the borrower to execute or provide any of the following documents:</text> <paragraph num="(1)"> <text>A loan agreement;</text> </paragraph> <paragraph num="(2)"> <text>An agreement and declaration of covenants and restrictions;</text> </paragraph> <paragraph num="(3)"> <text>A disbursement agreement;</text> </paragraph> <paragraph num="(4)"> <text>A guaranty of completion or loan payments;</text> </paragraph> <paragraph num="(5)"> <text>A completion assurance agreement;</text> </paragraph> <paragraph num="(6)"> <text>An assignment of the construction contract;</text> </paragraph> <paragraph num="(7)"> <text>An opinion of borrower's counsel;</text> </paragraph> <paragraph num="(8)"> <text>An opinion of contractor's counsel;</text> </paragraph> <paragraph num="(9)"> <text>A contractor's letter and certification;</text> </paragraph> <paragraph num="(10)"> <text>An assurance of compliance with civil rights requirements;</text> </paragraph> <paragraph num="(11)"> <text>A fair practices certification; and</text> </paragraph> <paragraph num="(12)"> <text>Such other documents as the Department may find it desirable or necessary to require.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Department, at its sole discretion, may require additional security or collateral from the borrower to assure completion of the construction of the project or repayment of the loan.</text> </paragraph> <paragraph num="C."> <text>The collateral may be in the form of one or more of the following:</text> <paragraph num="(1)"> <text>A cash escrow;</text> </paragraph> <paragraph num="(2)"> <text>A letter of credit in an amount and form and from a financial institution acceptable to the Department;</text> </paragraph> <paragraph num="(3)"> <text>Depository accounts pledged to the Department;</text> </paragraph> <paragraph num="(4)"> <text>Performance and payment bonds from a surety acceptable to the Department;</text> </paragraph> <paragraph num="(5)"> <text>A completion assurance agreement executed by the borrower and backed by some form of monetary collateral;</text> </paragraph> <paragraph num="(6)"> <text>A guaranty of completion or loan payments, or both, executed by a third party who is financially able and willing to back the guarantee by some collateral acceptable to the Department;</text> </paragraph> <paragraph num="(7)"> <text>A pledge of the developer's fee; or</text> </paragraph> <paragraph num="(8)"> <text>Other collateral acceptable to the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Application and Processing Procedures."> <paragraph num="A."> <text>The Department may accept applications on a first-come, first-served basis or through competitive rounds to be announced by the program periodically.</text> </paragraph> <paragraph num="B."> <text>A loan application shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="C."> <text>Each application shall be fully completed and properly executed and be accompanied by the following items:</text> <paragraph num="(1)"> <text>A copy of the articles of incorporation, bylaws, and most recent financial statements of an applicant for a nonprofit organization, corporation, or partnership;</text> </paragraph> <paragraph num="(2)"> <text>A copy of:</text> <paragraph num="(a)"> <text>The deed to the property;</text> </paragraph> <paragraph num="(b)"> <text>A contract or option agreement to purchase the property; or</text> </paragraph> <paragraph num="(c)"> <text>An agreement of understanding or letter of intent to purchase the property;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A preliminary description, plans, and specifications of the low-energy or net-zero home to be constructed;</text> </paragraph> <paragraph num="(4)"> <text>A description of the applicant’s experience and current activity which demonstrates the applicant’s capacity to construct a project; and</text> </paragraph> <paragraph num="(5)"> <text>Identification of how the land is presently zoned.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Feasibility Notification. Upon receipt of all documentation necessary to determine the feasibility of a project and the primary loan structure and terms, the Department shall issue a written notification letter to the applicant.</text> </paragraph> <paragraph num="E."> <text>The feasibility notification letter shall outline anticipated loan terms and shall specify any additional documentation which shall be provided or other conditions which shall be met in order for the Department to recommend a loan for commitment, including:</text> <paragraph num="(1)"> <text>Plans and specifications or a detailed scope of work for the construction of the project and proposed energy usage by the home;</text> </paragraph> <paragraph num="(2)"> <text>A copy of the contract for the work;</text> </paragraph> <paragraph num="(3)"> <text>Evidence of zoning compliance;</text> </paragraph> <paragraph num="(4)"> <text>A copy of a commitment or letter of intent to provide permanent financing which, at a minimum, shall state the amount, rate, and terms of the permanent financing; and</text> </paragraph> <paragraph num="(5)"> <text>A schedule of the proposed sales price or rent of the home.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Approval.</text> <paragraph num="(1)"> <text>Upon satisfaction of all the requirements and conditions of the feasibility notification letter, the Department shall undertake an analysis of each application as to the final recommended loan amount, structure, and terms.</text> </paragraph> <paragraph num="(2)"> <text>Loans shall be submitted to the Housing Finance Review Committee in accordance with COMAR 05.01.07, as applicable, and to the Secretary for approval.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Commitment Letter. Upon the approval a loan, the Director or Program Manager is authorized to issue a commitment letter setting forth the amount of the loan, the interest rate on the loan, and the other terms and conditions under which it will be made.</text> </paragraph> <paragraph num="H."> <text>Rejection of Applications. The Department shall issue a written notice of the determination of ineligibility if it determines that a project or applicant is not eligible for a loan.</text> </paragraph> <paragraph num="I."> <text>Reconsideration. Applicants may request reconsideration of a rejection in accordance with the procedures contained in the program guidelines.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Credit Enhancement."> <paragraph num="A."> <text>The Department may provide credit enhancement on a loan made by a lender for a project that meets the requirements of Regulation .04 of this chapter.</text> </paragraph> <paragraph num="B."> <text>A project financed by a loan that is credit-enhanced by the Department shall:</text> <paragraph num="(1)"> <text>Be a net-zero home or a low-energy home upon completion;</text> </paragraph> <paragraph num="(2)"> <text>Have clear and merchantable title acceptable to the Department;</text> </paragraph> <paragraph num="(3)"> <text>Conform to all applicable federal, State, and local building, zoning, environmental, health, and housing codes;</text> </paragraph> <paragraph num="(4)"> <text>Be insured with hazard insurance issued by a company that is approved by the State Insurance Commissioner and, when applicable, flood insurance;</text> </paragraph> <paragraph num="(5)"> <text>Have an appraised value that is satisfactory to the Department;</text> </paragraph> <paragraph num="(6)"> <text>Be secured by a lien against the mortgaged property; and</text> </paragraph> <paragraph num="(7)"> <text>Meet any other standards of the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A borrower shall establish to the satisfaction of the Department the capacity to meet the financial obligations of the loan and complete the project.</text> </paragraph> <paragraph num="D."> <text>Application.</text> <paragraph num="(1)"> <text>A lender shall submit an application, in the form prescribed by the Department, which shall contain a complete credit package and any other documentation required by the Department.</text> </paragraph> <paragraph num="(2)"> <text>Applications will be reviewed on a loan-by-loan basis by the Department.</text> </paragraph> <paragraph num="(3)"> <text>The Department will consider the following factors when deciding whether it will approve an application for credit enhancement:</text> <paragraph num="(a)"> <text>Amount of loss coverage being requested;</text> </paragraph> <paragraph num="(b)"> <text>The terms of the loan;</text> </paragraph> <paragraph num="(c)"> <text>Financial capability and credit rating of the borrower;</text> </paragraph> <paragraph num="(d)"> <text>Condition and value of property securing loan;</text> </paragraph> <paragraph num="(e)"> <text>Capability of borrower to successfully construct and sell a project; and</text> </paragraph> <paragraph num="(f)"> <text>Any other factors related to the Department’s risk in providing credit enhancement.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Scope of Credit Enhancement.</text> <paragraph num="(1)"> <text>The Department may offer the following types of credit enhancement:</text> <paragraph num="(a)"> <text>Mortgage insurance;</text> </paragraph> <paragraph num="(b)"> <text>Guarantee;</text> </paragraph> <paragraph num="(c)"> <text>Risk sharing agreement; or</text> </paragraph> <paragraph num="(d)"> <text>Any other form of credit enhancement.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Credit enhancement is limited to economic loss due to a monetary default and does not include loss due to casualty or title risk.</text> </paragraph> <paragraph num="(3)"> <text>Expenses incurred for property repair resulting from casualty loss, including losses due to negligence, flood, fire, termites, vandalism, and defective construction, are not eligible for credit enhancement coverage.</text> </paragraph> <paragraph num="(4)"> <text>Expenses incurred by the lender in the preservation and normal maintenance of a defaulted project may be covered in accordance with the terms and conditions of the credit enhancement agreement with the Department.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Premiums for credit enhancement shall be determined by the Department from time to time for various programs and types of coverage.</text> </paragraph> <paragraph num="G."> <text>Premiums may be set at different levels for different categories of loans and loan programs depending on the risk factors, which may include the:</text> <paragraph num="(1)"> <text>Amount of loss coverage being requested;</text> </paragraph> <paragraph num="(2)"> <text>Terms of the loan;</text> </paragraph> <paragraph num="(3)"> <text>Financial capability and credit rating of the borrower;</text> </paragraph> <paragraph num="(4)"> <text>Condition and value of property securing the loan;</text> </paragraph> <paragraph num="(5)"> <text>Capability of borrower to successfully construct and sell a project; and</text> </paragraph> <paragraph num="(6)"> <text>Any other factors related to the Department’s risk in providing credit enhancement.</text> </paragraph> </paragraph> <paragraph num="H."> <text>The lender shall follow the procedures contained in the credit enhancement agreement with the Department upon default of a loan.</text> </paragraph> <paragraph num="I."> <text>The right of the Department to pursue a borrower for deficiency or loss exists in every case to the extent allowed by law and may be enforced at the discretion of the Department.</text> </paragraph> <paragraph num="J."> <text>The Department may refuse payment of a claim on the basis of fraud, misrepresentation, or material error or omission with respect to any claim.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Participation with Private Lenders."> <paragraph num="A."> <text>The Department may participate with a lender to collectively lend money for the construction of net-zero and low-energy homes by:</text> <paragraph num="(1)"> <text>Making loans on a project, including subordinate loans;</text> </paragraph> <paragraph num="(2)"> <text>Pooling loan funds;</text> </paragraph> <paragraph num="(3)"> <text>Entering into loan participation agreements; and</text> </paragraph> <paragraph num="(4)"> <text>Purchasing a loan or an interest in a loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A lender shall submit an application, in the form prescribed by the Department, which shall contain a complete project description, credit package, and any other documentation required by the Department.</text> </paragraph> <paragraph num="C."> <text>The Department’s review and approval of an application shall follow the procedures in Regulation .08 of this chapter.</text> </paragraph> <paragraph num="D."> <text>The Department shall enter into an agreement with a lender with whom it has agreed to collectively lend money to a borrower on a project.</text> </paragraph> <paragraph num="E."> <text>Each agreement to collectively lend on a project shall specify:</text> <paragraph num="(1)"> <text>Timing of loan repayments;</text> </paragraph> <paragraph num="(2)"> <text>Rate of return for the lender and the Department;</text> </paragraph> <paragraph num="(3)"> <text>Risk of loss attributed to the lender and Department in the event of default; and</text> </paragraph> <paragraph num="(4)"> <text>Any other terms the lender and Department require.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Post-Construction Verification."> <paragraph num="A."> <text>Each project shall pass an inspection and verification test that the home was constructed to the standards to achieve the level of energy usage approved by the Department.</text> </paragraph> <paragraph num="B."> <text>The Department may require a third party to inspect and verify that the home was constructed to achieve the required energy rating.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Minority Business Enterprises."> <paragraph num="A."> <text>It is the goal of the Department to increase program participation by minority business enterprises certified under State Finance and Procurement Article, Title 14, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>To increase participation by minority business enterprises, the Department shall:</text> <paragraph num="(1)"> <text>Directly market the program to minority business enterprises; and</text> </paragraph> <paragraph num="(2)"> <text>Require an applicant to submit a minority business plan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>An applicant, borrower, or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the program.</text> </paragraph> <paragraph num="B."> <text>An applicant, borrower or contractor shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Title VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Program Administration."> <paragraph num="A."> <text>Program Handbook. The Department may establish from time to time program guidelines or manuals containing internal underwriting standards and loan processing requirements.</text> </paragraph> <paragraph num="B."> <text>Fees. The Department may charge an applicant, borrower, or lender customary loan application and loan fees.</text> </paragraph> <paragraph num="C."> <text>The Department shall ensure that program guidelines, fee information, and application forms are publicly available on its website and at its offices.</text> </paragraph> <paragraph num="D."> <text>Delegation. The Secretary may delegate to the Director of the Administration or to any other official or employee of the Department or Administration the authority to execute or approve any program loans, documents, or contract documents.</text> </paragraph> <paragraph num="E."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations in writing to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local programs in connection with providing financing to the project necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the determination of the Secretary, the application of a regulation in a specific case or in any emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §4-2003(a)(5), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 31, 2017 (44:15 Md. R. 759)</annotation> </annotations> </chapter> </subtitle> <subtitle num="04" heading="Special Loan Programs"> <chapter num="01" heading="Maryland Housing Rehabilitation Program — Regular Rehabilitation Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making loans for the rehabilitation of residential buildings with four or fewer units under Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The basic objectives of the Program are to:</text> <paragraph num="A."> <text>Make loans to families of limited income or sponsors to finance the rehabilitation of buildings with four or fewer units to eliminate health, safety, and property maintenance deficiencies and ensure compliance with applicable codes and standards;</text> </paragraph> <paragraph num="B."> <text>Make loans to elderly or disabled homeowners who qualify as families of limited income, in order to provide modifications or improvements to a building with four or fewer units that make the owner's dwelling unit more accessible to or functional for the elderly or disabled occupants, if, upon completion of the improvements, the building is structurally sound and free of health and safety hazards; and</text> </paragraph> <paragraph num="C."> <text>Develop the capacity of political subdivisions to administer the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, have the meanings defined there and, in addition, the meanings used in these regulations.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accessory dwelling unit” means a dwelling unit which is:</text> <paragraph num="(a)"> <text>Within, attached to, or on the same parcel as, and subordinate to but under the same ownership as, a single family, owner-occupied dwelling; and</text> </paragraph> <paragraph num="(b)"> <text>Intended for use as a complete, independent living facility, including permanent provisions for living, sleeping, cooking, and sanitation by one household within limits established by local codes, if any, pertaining to health, building, or other relevant provisions of the law.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(3)"> <text>“Allocation” means the share of the monies appropriated annually for the Program which is reserved for each county based on an allocation formula devised by the Department, in accordance with Regulation .17 of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>Amortizing Loans.</text> <paragraph num="(a)"> <text>“Amortizing loans” means loans with equal payments of principal and interest over the term of the loan such that the payments retire the loan by the end of the term.</text> </paragraph> <paragraph num="(b)"> <text>“Amortizing loans” includes loans with zero interest when the principal is repaid in equal monthly installments over the term.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits less:</text> <paragraph num="(a)"> <text>Unusual or temporary income items as determined by the Department; and</text> </paragraph> <paragraph num="(b)"> <text>Abnormal expenses of a long-term nature, such as extraordinary medical, rehabilitation, or special education expenses.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Applicable codes and rehabilitation standards” means the construction, health, safety, fire, occupancy, livability, and other codes and standards in force in the political subdivision in which an eligible building is located and applicable to that building.</text> </paragraph> <paragraph num="(7)"> <text>“Applicant” means any person or entity applying for a loan under the Program.</text> </paragraph> <paragraph num="(8)"> <text>“Borrower” means a single family owner-occupant, nonprofit sponsor, or sponsor who receives a loan to rehabilitate an eligible building.</text> </paragraph> <paragraph num="(9)"> <text>“Closing costs” means the total of all settlement costs and fees and, when applicable, initial payments for taxes, property insurance, title examination, percolation tests, or other expense items as determined by the Department.</text> </paragraph> <paragraph num="(10)"> <text>“Contract” means the agreements between a borrower and a licensed general contractor or licensed home improvement contractor accepted by the Department setting forth the terms of performance of work to be financed by a loan made under the Program.</text> </paragraph> <paragraph num="(11)"> <text>“County” means any of the 23 counties in the State and the City of Baltimore.</text> </paragraph> <paragraph num="(12)"> <text>“Deferred payment loans” means loans which have no current payment of principal and interest, and the principal and any interest are repaid in full upon loan maturity or sale or transfer of the property.</text> </paragraph> <paragraph num="(13)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(14)"> <text>“Director” means the Director of Single Family Housing Programs of the Department.</text> </paragraph> <paragraph num="(15)"> <text>“Elderly” means the age limit specified by the Secretary that is 55 years old or older.</text> </paragraph> <paragraph num="(16)"> <text>Family of Limited Income.</text> <paragraph num="(a)"> <text>“Family of limited income” means one or more individuals permanently residing as a household in a dwelling unit in an eligible building whose combined annual income does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-915, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Family of limited income” includes a trust described in 42 U.S.C. §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-915, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(17)"> <text>Family of Lower Income.</text> <paragraph num="(a)"> <text>“Family of lower income” means one or more individuals residing as a household in a dwelling unit in an eligible building, whose combined annual income does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-916(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Family of lower income” includes a trust described in 42 U.S.C §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-916(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(18)"> <text>Family of Very Low Income.</text> <paragraph num="(a)"> <text>“Family of very low income” means one or more individuals residing as a household in a dwelling unit, whose combined total income does not exceed an amount determined by the Secretary in accordance with Housing and Community Development Article, §4-916(b), Annotated Code of Maryland, which income limits shall be lower than those established for families of lower income.</text> </paragraph> <paragraph num="(b)"> <text>“Family of very low income” includes a trust described in 42 U.S.C §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-916(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(19)"> <text>“General property improvements” mean nonessential improvements that enhance the comfort, convenience, and appearance of a property, but are not necessary to remove unsanitary conditions or eliminate hazards to health and safety.</text> </paragraph> <paragraph num="(20)"> <text>“Household” means an individual or a group of individuals who occupy a dwelling unit as their permanent residence.</text> </paragraph> <paragraph num="(21)"> <text>“Level I local administrator” means a political subdivision certified by the Department under Regulation .16 of this chapter.</text> </paragraph> <paragraph num="(22)"> <text>“Level II local administrator” means a political subdivision certified by the Department under Regulation .16C of this chapter.</text> </paragraph> <paragraph num="(23)"> <text>“Local administrator” means a level I or level II local administrator.</text> </paragraph> <paragraph num="(24)"> <text>“Nonprofit organization” means a political subdivision, corporation, foundation, or other legal entity, no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(25)"> <text>“Nonprofit sponsor” means either a:</text> <paragraph num="(a)"> <text>Nonprofit organization; or</text> </paragraph> <paragraph num="(b)"> <text>Limited partnership formed for the purpose of undertaking a rehabilitation project which is eligible in whole or part for federal programs or incentives, including low-income housing tax credits, if each of the general partners qualifies as a nonprofit organization, or the following two requirements are satisfied:</text> <paragraph num="(i)"> <text>A general partner of the limited partnership is a wholly owned subsidiary of a nonprofit organization, and</text> </paragraph> <paragraph num="(ii)"> <text>A nonprofit organization either manages the rehabilitation project, or will be the recipient of net cash flow or the residual sale proceeds upon sale of the rehabilitation project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(26)"> <text>“Partially deferred loans” means loans for which there is periodic payment of a portion of the principal or interest, or both, due during the term of the loan with unpaid amounts accrued and repaid upon maturity of the loan or sale or transfer of the property.</text> </paragraph> <paragraph num="(27)"> <text>“Political subdivision” means any municipal corporation in Maryland subject to the provisions of Article XI-E of the Constitution, the Mayor and City Council of Baltimore, and any of the 23 counties in Maryland.</text> </paragraph> <paragraph num="(28)"> <text>“Program” means the Regular Rehabilitation Program of the Maryland Housing Rehabilitation Program.</text> </paragraph> <paragraph num="(29)"> <text>“Program Director” means the Assistant Director of Special Loan Programs in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(30)"> <text>Repealed.</text> </paragraph> <paragraph num="(31)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(32)"> <text>“Shared living unit facility” means a dwelling which will accommodate two or more households when some or all of the living, dining, kitchen, or sanitary facilities are shared by the households.</text> </paragraph> <paragraph num="(33)"> <text>Single Family Owner-Occupant.</text> <paragraph num="(a)"> <text>“Single family owner-occupant” means an eligible borrower residing or intending to reside in an eligible building which contains one residential unit and which may contain one accessory dwelling unit financed under the Program, but which contains no other units, either commercial or residential.</text> </paragraph> <paragraph num="(b)"> <text>“Single family owner-occupant” includes a trust described in 42 U.S.C §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-916(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(34)"> <text>“Special Loan Programs Fund” means the special fund created under Housing and Community Development Article, §4-501(a)(1), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(35)"> <text>“Sponsor” means an owner who receives a loan to rehabilitate a building with four or fewer units used for residential rental purposes.</text> </paragraph> <paragraph num="(36)"> <text>“Structurally sound” means not having any physical conditions serious enough to endanger the life, property, or safety of the occupants or their invitees, whether or not the building is in compliance with applicable codes and rehabilitation standards.</text> </paragraph> <paragraph num="(37)"> <text>“Subcontractor” means an entity authorized by the Department to carry out the duties and responsibilities of a local administrator under Regulation .16D(1) of this chapter and to hold and disburse funds under Regulation .16D(2) of this chapter.</text> </paragraph> <paragraph num="(38)"> <text>“Work write-up” means a description of the structural, mechanical, electrical, and other work items needed for the rehabilitation of an eligible building.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrowers."> <paragraph num="A."> <text>To qualify as an eligible borrower under the Program, the requirements set forth in §§B and C of this regulation shall be met jointly and separately if more than one individual is applying for a loan.</text> </paragraph> <paragraph num="B."> <text>Single family owner-occupants shall:</text> <paragraph num="(1)"> <text>Be a “family of limited income” as defined in Regulation .03B(15) of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Intend to reside in the property to be rehabilitated;</text> </paragraph> <paragraph num="(3)"> <text>Own the eligible property in fee simple or under a freely transferable ground rent lease;</text> </paragraph> <paragraph num="(4)"> <text>Have the legal capacity to incur the obligations of the loan;</text> </paragraph> <paragraph num="(5)"> <text>Demonstrate credit worthiness and repayment ability acceptable to the Department; and</text> </paragraph> <paragraph num="(6)"> <text>Have income at a level that the Secretary has determined will render the applicant unable to afford or secure private financing to rehabilitate the property.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Sponsors and nonprofit sponsors shall:</text> <paragraph num="(1)"> <text>If a business, be in good standing and be qualified to do business in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Own the eligible property in fee simple or under a ground rent;</text> </paragraph> <paragraph num="(3)"> <text>Have the legal capacity and all necessary legal and corporate authorizations to incur the obligations of the loan;</text> </paragraph> <paragraph num="(4)"> <text>Demonstrate credit worthiness and repayment ability acceptable to the Department;</text> </paragraph> <paragraph num="(5)"> <text>In the estimation of the Department be unable to afford or secure a loan from a private lending institution for the full amount required for rehabilitation and agree to use, to the extent determined by the Department, the maximum amount of private financing which the project can support consistent with the Program's purposes, without impairing the feasibility of the project;</text> </paragraph> <paragraph num="(6)"> <text>Agree in writing that all of the dwelling units rehabilitated with the proceeds of a loan shall be occupied by families of limited income until the later of:</text> <paragraph num="(a)"> <text>The date on which all principal or interest due on the loan is paid; or</text> </paragraph> <paragraph num="(b)"> <text>15 years after completion of the rehabilitation;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Agree to abide by the requirements of Titles VI and VII of the Civil Rights Act of 1964, and Title VIII of the Civil Rights Act of 1968;</text> </paragraph> <paragraph num="(8)"> <text>Agree to abide by all provisions of the Governor's Code of Fair Practices, COMAR 01.01.1987.20 and COMAR 01.01.1988.05, as amended from time to time;</text> </paragraph> <paragraph num="(9)"> <text>Provide satisfactory assurances that the borrower did not, within 12 months before making application for a loan under these regulations, cause a residential tenant to leave the building to be rehabilitated, except upon good cause;</text> </paragraph> <paragraph num="(10)"> <text>Agree in writing to assist with relocation of tenants to the extent required by the Department; and</text> </paragraph> <paragraph num="(11)"> <text>Agree to abide by any regulations promulgated by the Department implementing the Governor's Executive Order 01.01.1989.18, as amended from time to time, requiring recipients of State funds to maintain a workplace free of drug and alcohol abuse.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Borrowers shall be in good standing and may not be under suspension or debarment from any of the Department's programs pursuant to any action under COMAR 05.01.05.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Uses."> <paragraph num="A."> <text>Buildings shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(2)"> <text>Contain not more than four residential units or shared living unit facilities for more than four households;</text> </paragraph> <paragraph num="(3)"> <text>Be properly zoned for the proposed use;</text> </paragraph> <paragraph num="(4)"> <text>Be in need of repairs or modifications considered eligible under this chapter;</text> </paragraph> <paragraph num="(5)"> <text>Have the potential to be rehabilitated, reconstructed, renovated, redeveloped, improved, or modified as determined by the local administrator;</text> </paragraph> <paragraph num="(6)"> <text>Be owned by an eligible borrower who shall provide assurance of title or evidence of ownership acceptable to the Department; and</text> </paragraph> <paragraph num="(7)"> <text>If the building is in the 100-year flood plain, as designated by the U.S. Department of Housing and Urban Development, be covered by a flood plain insurance policy which:</text> <paragraph num="(a)"> <text>Is an amount equal to the loan,</text> </paragraph> <paragraph num="(b)"> <text>Names the Department as beneficiary, and</text> </paragraph> <paragraph num="(c)"> <text>Provides that the policy may not be terminated without prior notification to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A manufactured housing unit is eligible if it is intended for residential use by a single household, and:</text> <paragraph num="(1)"> <text>Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(2)"> <text>Is not less than 24 feet in width and 40 feet in length;</text> </paragraph> <paragraph num="(3)"> <text>Is not independently capable of movement and is installed permanently on an engineered foundation in conformance with COMAR 05.02.04;</text> </paragraph> <paragraph num="(4)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(5)"> <text>Is certified by the:</text> <paragraph num="(a)"> <text>United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, or by the Department as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland, and</text> </paragraph> <paragraph num="(b)"> <text>Complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Is installed on real property the occupant owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(7)"> <text>Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks;</text> </paragraph> <paragraph num="(8)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Manufactured homes which are taxed as personal property may be eligible for loans in amounts of $5,000 or less. Applications for manufactured homes shall be reviewed and approved by the Department on a case-by-case basis.</text> </paragraph> <paragraph num="D."> <text>Condominiums and cooperative units may be eligible buildings and shall be reviewed by the Department on a case-by-case basis before loan approval.</text> </paragraph> <paragraph num="E."> <text>Other types of property are not eligible buildings.</text> </paragraph> <paragraph num="F."> <text>All of the dwelling units in sponsor-owned or nonprofit sponsor-owned residential properties shall be occupied upon completion by families of limited income until the later of the date:</text> <paragraph num="(1)"> <text>On which the payment of all principal and any interest on the loan is made; or</text> </paragraph> <paragraph num="(2)"> <text>15 years after completion of rehabilitation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Loan Terms and Conditions — General."> <paragraph num="A."> <text>Loans shall be made on terms conforming to the requirements in §§B—K of this regulation.</text> </paragraph> <paragraph num="B."> <text>Interest Rate.</text> <paragraph num="(1)"> <text>The interest rate to be paid on loans may be at preferred rates set by the Department from time to time, as required by the Act.</text> </paragraph> <paragraph num="(2)"> <text>The collective interest rate charged on all loans shall be at least sufficient to cover administrative costs of the program and reasonably expected losses due to defaults.</text> </paragraph> <paragraph num="(3)"> <text>The Department may establish different interest rates available on loans serving occupants who are families of:</text> <paragraph num="(a)"> <text>Limited income;</text> </paragraph> <paragraph num="(b)"> <text>Lower income; and</text> </paragraph> <paragraph num="(c)"> <text>Very low income.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The interest rates charged on loans may not be more than private lending rates for comparable loans.</text> </paragraph> <paragraph num="(5)"> <text>Within the limits established in §§B(3) and (4), above, the interest rate shall be the maximum interest rate based on an applicant's ability to repay.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Term. The term of each loan may not exceed 30 years from completion of construction, and shall be based on the amount of the loan, the expected life of the rehabilitated building, and an applicant's ability to repay.</text> </paragraph> <paragraph num="D."> <text>Maximum Loan Amount.</text> <paragraph num="(1)"> <text>The maximum loan may not exceed an amount which, when added to any prior debts secured by or relating to the eligible building or property, or both, would equal 110 percent of the market value of the eligible building and property after rehabilitation as determined by the Department or the local administrator.</text> </paragraph> <paragraph num="(2)"> <text>For projects when 100 percent of the units are subject to a federal rent subsidy which is allocated to the project for the entire term of the loan, the 110 percent loan-to-value ratio requirement of §D(1), above, may be raised to 115 percent.</text> </paragraph> <paragraph num="(3)"> <text>If, in the determination of the Program Director, a loan increase is necessary to assure completion of the building and protect the Department's interest, an increase in the mortgage may be made to cover extraordinary and unforeseen construction problems provided the increase can be made within the limits on maximum loan amounts set forth in §D(1)—(2) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>Closing costs may be included in loans on owner-occupied dwellings, provided the loan does not exceed the limits on the maximum loan amount set forth in §D(1)—(2) of this regulation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Payments. Payments shall be applied to escrow expenses, when applicable, interest, and principal, in that order.</text> </paragraph> <paragraph num="F."> <text>Late Charge. Late charges, as permitted by law, may be charged.</text> </paragraph> <paragraph num="G."> <text>Security for Loans.</text> <paragraph num="(1)"> <text>Loans of $5,000 or less shall be evidenced by a promissory note and such other documents as may be required by the Department.</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §G(3)—(4) of this regulation, loans in excess of $5,000 and loans providing for deferred payments 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 property is located.</text> </paragraph> <paragraph num="(3)"> <text>A loan to a trust described in 42 U.S.C §1396P(D)(4), may be secured by a mortgage or deed of trust on real property, or other security device acceptable to the Department.</text> </paragraph> <paragraph num="(4)"> <text>A loan in excess of $5,000 to a borrower in a housing cooperative unit may be secured by another security device acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Default. Remedies upon loan default shall be exercised in the discretion of the Department and may be one or more of the remedies provided for in the loan documents or by law, such as:</text> <paragraph num="(1)"> <text>Adjustments to the interest rate of the loan upward or downward;</text> </paragraph> <paragraph num="(2)"> <text>Suspension or debarment from the Department's programs;</text> </paragraph> <paragraph num="(3)"> <text>Foreclosure;</text> </paragraph> <paragraph num="(4)"> <text>Accepting a deed instead of foreclosure;</text> </paragraph> <paragraph num="(5)"> <text>Appointment of a receiver; and</text> </paragraph> <paragraph num="(6)"> <text>Other legal action which protects the Department's interests.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Change of Ownership. A borrower may not sell, cease to own, assign, transfer, dispose of, or lease all or any part of the property except for residential leases of not more than 3 years duration, during the loan term, without the prior written consent of the Department, except as permitted by federal law.</text> </paragraph> <paragraph num="J."> <text>Refinancing. The Department may not refinance existing debts related to an eligible building.</text> </paragraph> <paragraph num="K."> <text>Land Installment Contracts. Purchases under a land installment contract are not eligible for a loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms and Conditions — Deferred Loans."> <paragraph num="A."> <text>In addition to the conditions and requirements of Regulation .06 of this chapter, deferred loans for residential buildings of four or fewer units shall meet the requirements in §§B—E of this regulation.</text> </paragraph> <paragraph num="B."> <text>Eligibility. The Department may make loans with deferred payments of principal or interest or both principal and interest to:</text> <paragraph num="(1)"> <text>Single family owner-occupants who are families of very low income and sponsors or nonprofit sponsors of buildings occupied entirely by tenants who are families of very low income; or</text> </paragraph> <paragraph num="(2)"> <text>As determined by the Secretary, any category of borrowers necessary to achieve the purposes of the Act.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Amount of Deferred Payments. Loans may provide for deferred payments of principal or interest, or both principal and interest, to the minimum extent necessary based on a borrower's ability to repay.</text> </paragraph> <paragraph num="D."> <text>Repayment. The loan documents shall provide for repayment of deferred amounts at the maturity date or at any earlier date established by the Department, or the local administrator, or upon any sale or other transfer of the building or any interest in the building other than a residential lease of less than 3 years duration. The Department may, but need not, charge interest on the deferred interest.</text> </paragraph> <paragraph num="E."> <text>Limitations. The Department may, from time to time, establish limitations on the percentage of allocations and the percentage of the annual funding appropriated to the Program which may be used for no interest and deferred payment loans.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07-1" heading="Program Grants."> <paragraph num="A."> <text>The Department may make a Program loan in the form of a grant to a single family owner-occupant that meets the requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>To be eligible for a grant, an applicant shall:</text> <paragraph num="(1)"> <text>Own and occupy the dwelling;</text> </paragraph> <paragraph num="(2)"> <text>Be a family of very low income; and</text> </paragraph> <paragraph num="(3)"> <text>Be unable to undertake the rehabilitation project without a grant as determined by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A grant may provide for:</text> <paragraph num="(1)"> <text>No required payments;</text> </paragraph> <paragraph num="(2)"> <text>The deferral of payments; or</text> </paragraph> <paragraph num="(3)"> <text>The reduction of the principal balance owed over a period of time.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Department shall follow Regulations .09 —.15 of this chapter for approving and processing grants.</text> </paragraph> <paragraph num="E."> <text>A grant may be unsecured or secured by a security instrument acceptable to the Department.</text> </paragraph> <paragraph num="F."> <text>The Department may establish limitations:</text> <paragraph num="(1)"> <text>On the percentage of allocations and the percentage of the annual funding appropriated to the Program which may be used for grants; and</text> </paragraph> <paragraph num="(2)"> <text>On the maximum grant amount that may be awarded for a dwelling.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Terms and Conditions — Secured Loans."> <paragraph num="A."> <text>In addition to the conditions and requirements of Regulations .06 and .07 of this chapter, secured loans shall meet the requirements of §§B—F of this regulation.</text> </paragraph> <paragraph num="B."> <text>Deed of Trust. A mortgage or deed of trust shall secure repayment of the loan by the granting of a valid lien on the eligible building and the underlying land or leasehold interest in the land.</text> </paragraph> <paragraph num="C."> <text>Escrow Account. If there is no prior mortgage or deed of trust requiring the payment of expenses to the mortgagee, the rehabilitation mortgage may require expense payments to the Department in escrow, 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 need not be paid to the borrowers on escrows.</text> </paragraph> <paragraph num="D."> <text>Insurance.</text> <paragraph num="(1)"> <text>A borrower shall maintain fire and extended coverage insurance at the borrower's expense in an amount not less than the sum of the rehabilitation loan and any prior mortgage or mortgages on the property.</text> </paragraph> <paragraph num="(2)"> <text>The insurance policy or policies shall:</text> <paragraph num="(a)"> <text>Be written by companies authorized to transact business in the State;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of loan closing;</text> </paragraph> <paragraph num="(c)"> <text>Name the Department as mortgagee in a standard mortgagee clause attached to or printed in the policy; and</text> </paragraph> <paragraph num="(d)"> <text>Contain other terms and coverage satisfactory to the Program.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>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.</text> </paragraph> <paragraph num="F."> <text>Appraisals.</text> <paragraph num="(1)"> <text>At the discretion of the Program Director or the local administrator, a borrower may be required to obtain an appraisal in a form and manner acceptable to the Department from an acceptable independent fee appraiser showing a building's value before and after the proposed rehabilitation.</text> </paragraph> <paragraph num="(2)"> <text>Applicants shall bear the costs of appraisals, which may be financed by the loan for single family owner-occupants.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Loan Application."> <paragraph num="A."> <text>Application Procedure Generally. The Department shall establish application processes and procedures for local administrators that will facilitate the application process and best serve the needs of the political subdivisions and the State. These procedures may be amended from time to time and shall be binding upon all applicants. Alternative procedures may not be used by local administrators without the prior approval of the Department.</text> </paragraph> <paragraph num="B."> <text>Application Forms. Loan applications shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="C."> <text>Application Fee. Upon submission of a loan application, an applicant may be required to pay an application fee in an amount determined by the local administrator, subject to approval by the Department.</text> </paragraph> <paragraph num="D."> <text>Documentation.</text> <paragraph num="(1)"> <text>An applicant shall submit with the application any documentation that the Department requires, including, but not limited to, any documentation needed to establish the eligibility and creditworthiness of the applicant.</text> </paragraph> <paragraph num="(2)"> <text>An applicant shall submit supporting documentation specified in the checklist attached to the application, which may include any of the following:</text> <paragraph num="(a)"> <text>A copy of the deed to the property;</text> </paragraph> <paragraph num="(b)"> <text>Copies of any existing mortgages secured by the building to be rehabilitated, or mortgage verification requests, on the form approved by the Department, signed by the applicant for each mortgage secured by the building to be rehabilitated;</text> </paragraph> <paragraph num="(c)"> <text>A copy of the first page and declarations page of all policies for fire and extended coverage insurance and, if applicable, flood insurance;</text> </paragraph> <paragraph num="(d)"> <text>A copy of the most recent real estate tax bill with the current assessed value;</text> </paragraph> <paragraph num="(e)"> <text>Verification of the total assets and annual income of each person in the household of a single-family owner-occupant applicant, and for sponsor applicants or nonprofit sponsors, a list of tenants in a building showing household name, address, number of persons in household, combined annual household income, and current monthly rent;</text> </paragraph> <paragraph num="(f)"> <text>For each of the immediately preceding 2 years, copies of the applicant's:</text> <paragraph num="(i)"> <text>Federal income tax returns, or when applicable, the federal reporting forms for nonprofit organizations,</text> </paragraph> <paragraph num="(ii)"> <text>State income tax returns, or</text> </paragraph> <paragraph num="(iii)"> <text>A signed request, on the form designated by the Department, for copies of the applicant's state income tax returns; and</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>Sufficient information and documentation to determine the extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the property.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition, all sponsor and nonprofit sponsor applicants shall submit the following documentation:</text> <paragraph num="(a)"> <text>Organizational documents of the sponsor or nonprofit sponsor and a certificate of good standing;</text> </paragraph> <paragraph num="(b)"> <text>A certified personal financial statement of the applicant or principals of the sponsor or nonprofit sponsor;</text> </paragraph> <paragraph num="(c)"> <text>Three years operating statements for a rental project;</text> </paragraph> <paragraph num="(d)"> <text>For sponsors or nonprofit sponsors which are corporations, a resolution of the board of directors authorizing the application;</text> </paragraph> <paragraph num="(e)"> <text>For rental projects receiving federal Section 8 Housing Assistance, copies of the Section 8 contracts or feasibility analysis prepared by the administering agency, as applicable;</text> </paragraph> <paragraph num="(f)"> <text>Photographs of the building and site;</text> </paragraph> <paragraph num="(g)"> <text>Evidence of zoning compliance;</text> </paragraph> <paragraph num="(h)"> <text>Preliminary plans and specifications or a detailed description of the proposed improvements and an estimate of the improvement costs.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Loan Approval and Disapproval."> <paragraph num="A."> <text>Initial Eligibility Determination.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the local administrator for initial review to make a preliminary determination of the eligibility of the applicant and the project.</text> </paragraph> <paragraph num="(2)"> <text>If an applicant is determined preliminarily to be eligible, appropriate verification forms shall be distributed, credit reports shall be obtained, and the applicant may be provided with a letter from the local administrator in the form approved by the Program acknowledging receipt of the application and notifying the applicant of the ongoing review process.</text> </paragraph> <paragraph num="(3)"> <text>If an applicant is ineligible for a loan, the applicant shall be informed in writing of the determination and the reasons for it.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Building Evaluation.</text> <paragraph num="(1)"> <text>Each building for which an eligible application is received shall be inspected for the purpose of preparing a work write-up by:</text> <paragraph num="(a)"> <text>The Department;</text> </paragraph> <paragraph num="(b)"> <text>The local administrator;</text> </paragraph> <paragraph num="(c)"> <text>A nonprofit corporation, acceptable to the Program; or</text> </paragraph> <paragraph num="(d)"> <text>A licensed contractor who is acceptable to the Program.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The applicant shall be provided with a copy of the work write-up or an analysis of rehabilitation proposals and instructions for obtaining the contractor's proposals to complete the work.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Approval.</text> <paragraph num="(1)"> <text>Upon receipt and approval of mortgage verifications, employment verification, credit information, the contractor's proposals which comply with the Department's standards and cost estimations, and any other pertinent data the Program considers relevant or necessary, the local administrator originating the loan shall undertake an analysis of each loan as to loan amount, interest rate, repayment provisions, and other loan terms and conditions.</text> </paragraph> <paragraph num="(2)"> <text>After completing the steps described in §C(1) of this regulation, a level I local administrator, or a level II local administrator, evaluating a loan for more than $60,000, shall forward the application package and the analysis of the loan to the Department for approval, disapproval, or modification.</text> </paragraph> <paragraph num="(3)"> <text>Approval to make a loan is as follows:</text> <paragraph num="(a)"> <text>Loans in amounts of $60,000 or less may be approved by the:</text> <paragraph num="(i)"> <text>Level II local administrator, when a level II local administrator originates the loan; or</text> </paragraph> <paragraph num="(ii)"> <text>Program Director, when a level I local administrator or the Department originates a loan;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Loans in amounts over $60,000 and up to $250,000 may be approved by the Director;</text> </paragraph> <paragraph num="(c)"> <text>Loans in amounts over $250,000 shall be submitted to the Housing Finance Review Committee in accordance with COMAR 05.01.07.</text> </paragraph> <paragraph num="(d)"> <text>In an emergency, when urgent action is required, the Secretary may approve loans by written determination without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Before a level II local administrator gives final approval and issues a loan commitment for a loan in the amount of $60,000 or less, the level II local administrator shall contact the Program and receive confirmation that funds for the loan are available.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Loan Commitments.</text> <paragraph num="(1)"> <text>Loan commitments shall be made on forms provided by the Program.</text> </paragraph> <paragraph num="(2)"> <text>Loan commitments shall specify a time limit for closing the loan. The time limit may be extended at the discretion of the local administrator with the approval of the Program.</text> </paragraph> <paragraph num="(3)"> <text>If the loan closing does not occur within the specified time, the local administrator shall notify the applicant that the commitment is officially canceled.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Rejection. If a loan application is rejected, the Department or the local administrator, as the case may be, shall notify the applicant in writing. The rejection letter shall state the reason the loan is rejected.</text> </paragraph> <paragraph num="F."> <text>Reconsideration. Sponsors may request reconsideration of a rejection in accordance with the procedures contained in the program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="G."> <text>Withdrawal of Application. An applicant may withdraw a loan application at any time before closing by delivering written notice to the Department or the local administrator originating the loan. The applicant shall bear any costs incurred for items other than internal processing including, but not limited to, title examinations, credit reports, and appraisals.</text> </paragraph> <paragraph num="H."> <text>Cancellation of Application.</text> <paragraph num="(1)"> <text>The Program or the local administrator may cancel an application at any time during processing if the applicant fails to provide information requested by the Program which is required to evaluate the request.</text> </paragraph> <paragraph num="(2)"> <text>Notification of the cancellation of an application shall be made in writing.</text> </paragraph> <paragraph num="(3)"> <text>A cancelled application may be reinstated upon the applicant's written request within 60 days following the date of the cancellation. Any time after 60 days following cancellation, a new application with supporting documents may be required.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Loan Closing."> <paragraph num="A."> <text>Time and Place. The loan closing shall be scheduled at a time acceptable to the applicant and the local administrator through a closing officer serving the applicant's area and otherwise acceptable to the local administrator.</text> </paragraph> <paragraph num="B."> <text>Loan Documents.</text> <paragraph num="(1)"> <text>Loan document forms shall be provided by the Program and may not be altered by the local administrator.</text> </paragraph> <paragraph num="(2)"> <text>Loan documents shall be executed on behalf of the Department by the officer or employee authorized to do so by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Charges and Fees. The Department or the local administrator may charge and collect from the borrower reasonable and customary amounts acceptable to the Department for the following items:</text> <paragraph num="(1)"> <text>Credit reports;</text> </paragraph> <paragraph num="(2)"> <text>Appraisal fee, if applicable;</text> </paragraph> <paragraph num="(3)"> <text>Recording fees and recording taxes or other charges incident to recordation;</text> </paragraph> <paragraph num="(4)"> <text>Required survey charges, if applicable;</text> </paragraph> <paragraph num="(5)"> <text>Cost of title examination and title insurance, if required;</text> </paragraph> <paragraph num="(6)"> <text>Administrative fee;</text> </paragraph> <paragraph num="(7)"> <text>Property and judgment report fees;</text> </paragraph> <paragraph num="(8)"> <text>Inspection fees; and</text> </paragraph> <paragraph num="(9)"> <text>Other reasonable and customary charges or fees authorized by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Points. Points may not be charged to the applicant on any loan under the program.</text> </paragraph> <paragraph num="E."> <text>Mortgageable Items.</text> <paragraph num="(1)"> <text>Closing costs, program charges, and fees may be allowed as mortgageable items for owner-occupants or for nonprofit sponsors.</text> </paragraph> <paragraph num="(2)"> <text>Sponsors that are not nonprofit organizations are required to pay for closing costs, program charges, and fees.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Taxes and Assessments. Taxes and assessments against the property which are due and payable shall be paid at or before closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Rehabilitation Requirements."> <paragraph num="A."> <text>Except as provided in §G of this regulation, loans shall comply with §§B—F of this regulation.</text> </paragraph> <paragraph num="B."> <text>Applicable Codes and Standards.</text> <paragraph num="(1)"> <text>The goal of the Program is to assure that all properties rehabilitated under the Program meet health, safety, fire, occupancy, and other codes and standards in force in the political subdivision in which an eligible building is located and applicable to that building.</text> </paragraph> <paragraph num="(2)"> <text>If these codes and standards do not exist or are considered by the Secretary to be insufficient to promote the purpose of the Act, then the codes and rehabilitation standards prescribed in COMAR 05.04.02 shall be in force for the purposes of the Program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Eligible Rehabilitation Work. Eligible rehabilitation work includes work done to address the following:</text> <paragraph num="(1)"> <text>Health and safety violations, including structural defects;</text> </paragraph> <paragraph num="(2)"> <text>Major system deficiencies;</text> </paragraph> <paragraph num="(3)"> <text>Exterior deficiencies;</text> </paragraph> <paragraph num="(4)"> <text>Interior deficiencies;</text> </paragraph> <paragraph num="(5)"> <text>Weatherization and energy conservation;</text> </paragraph> <paragraph num="(6)"> <text>Handicapped modifications; or</text> </paragraph> <paragraph num="(7)"> <text>Creation of accessory dwelling units, if the habitable floor area of the unit created does not exceed a percentage acceptable to the Department of the habitable floor area of the existing property to which the unit is added.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Eligible Work—General Property Improvements.</text> <paragraph num="(1)"> <text>General property improvements may:</text> <paragraph num="(a)"> <text>Only be financed under the Program if the loan for the general property improvement is made in:</text> <paragraph num="(i)"> <text>Connection with a loan to bring a building into conformance with the applicable codes and standards as set forth in §B of this regulation; and</text> </paragraph> <paragraph num="(ii)"> <text>Accordance with the restrictions in §D(2) and (3) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Not exceed 40 percent of the total loan amount;</text> </paragraph> <paragraph num="(c)"> <text>Not be funded with the proceeds of deferred payment loans;</text> </paragraph> <paragraph num="(d)"> <text>Include, but are not limited to:</text> <paragraph num="(i)"> <text>Additions, provided the addition does not exceed 240 square feet, exclusive of passageways and bathrooms;</text> </paragraph> <paragraph num="(ii)"> <text>Alterations and remodeling;</text> </paragraph> <paragraph num="(iii)"> <text>Enlargement of rooms;</text> </paragraph> <paragraph num="(iv)"> <text>The finishing of spaces within the building such as an attic, porch, or basement;</text> </paragraph> <paragraph num="(v)"> <text>Remodeling kitchens, including the purchase and permanent installation of appliances; and</text> </paragraph> <paragraph num="(vi)"> <text>Fences and landscaping.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>A loan may not provide for materials, fixtures, equipment, or landscaping of a type or quality which exceeds that customarily used in the locality for buildings of the same general type as the one being rehabilitated.</text> </paragraph> <paragraph num="(3)"> <text>Unapproved or untested materials and systems are not eligible costs except when they are used as part of a demonstration or pilot program approved by the Department.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Water Supply and Sewage. A loan may not be approved unless safe, sanitary, and adequate water supply and sewage disposal are available or will be provided through the rehabilitation financed by the loan.</text> </paragraph> <paragraph num="F."> <text>Code Enforcement. Any action taken by the Department or the local administrator to prepare or review work write-ups, evaluate the property, or review and approve plans and specifications is to ensure the Department and the local administrator of the adequacy of the proposed work. These actions are not intended to substitute for or ensure compliance with appropriate State and local building codes. Compliance with applicable codes and obtaining required permits and licenses are the responsibility of the borrower and contractor.</text> </paragraph> <paragraph num="G."> <text>If the owner is elderly or disabled and resides in the building, and the improvements make the building more accessible to or functional for the elderly or disabled owner, then the building shall be structurally sound and free of health and safety hazards, whether or not applicable codes and rehabilitation requirements are met.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Contractor Requirements."> <paragraph num="A."> <text>General Requirements. Contractors and subcontractors:</text> <paragraph num="(1)"> <text>Shall be licensed by the Maryland Home Improvement Commission or meet other State and local licensing requirements necessary to do the rehabilitation.</text> </paragraph> <paragraph num="(2)"> <text>Shall be qualified to do business in Maryland.</text> </paragraph> <paragraph num="(3)"> <text>Shall be able to demonstrate the capability to complete the rehabilitation as determined by the Department as evidenced by previous professional rehabilitation experience.</text> </paragraph> <paragraph num="(4)"> <text>May not be under a suspension or debarment order for any of the Department's programs pursuant to any action under COMAR 05.01.05.</text> </paragraph> <paragraph num="(5)"> <text>Shall agree in the contract to:</text> <paragraph num="(a)"> <text>Perform all work in conformance with the contract and all applicable laws, local codes, and Departmental rehabilitation standards in a competent, workman-like manner, equal to the standards of the industry. Failure of the work write-up to include any work required by local codes or standards does not relieve the contractor of the responsibility of complying with local codes and standards. Payment for any additional cost to complete work not included in the approved work write-up is the obligation of the borrower. A borrower may apply to the local administrator for a loan increase to cover some or all of the increased cost. Any loan increase shall be subject to approval or disapproval in accordance with the provisions of these regulations. The Department has no obligation under the contract to pay for increased costs.</text> </paragraph> <paragraph num="(b)"> <text>Comply with all applicable laws, ordinances, and regulations relating to the protection and safety of persons and property.</text> </paragraph> <paragraph num="(c)"> <text>Furnish all labor, materials, and equipment, and obtain all licenses, permits, insurance coverage, and workers' compensation as may be required to complete the rehabilitation.</text> </paragraph> <paragraph num="(d)"> <text>Not assign the contract without prior written consent of the owner and approval by the local administrator.</text> </paragraph> <paragraph num="(e)"> <text>In addition to all remedies and guarantees provided by law, make all necessary repairs, replacements, and corrections of any nature or description, interior or exterior, structural or nonstructural, as become necessary by reason of faulty workmanship or material, which appear within a period of 1 year from the date the notice of completion is filed, at its sole cost and expense, provided, however, that if any longer guarantee period is specified for any particular materials or workmanship under the plans and specifications, or under any subcontract, or in connection with any manufactured unit which is installed in the structure, or under the laws of the State, the longer period governs.</text> </paragraph> <paragraph num="(f)"> <text>Agree to complete all specifications of the work write-up within the completion date as specified in the contract.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Shall indemnify and hold the Department and any local administrator harmless from all liability and loss because of injury to or death of any individual or damage to any property which may occur or be alleged to occur during performance of the contract as a direct or indirect result of any act or omission, whether intentional, negligent or otherwise, by the contractor, subcontractors, or their agents, servants, and employees. The contractor shall defend all suits or claims involving those in this subsection at the contractor's sole cost and expense.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Minority Contractors. The Department encourages the use of minority contractors in all jurisdictions for all projects, and requires compliance with the Department's Minority Business Participation Plan. Copies of the Department's plan shall be made available to sponsors and contractors.</text> </paragraph> <paragraph num="C."> <text>Identity of Interest.</text> <paragraph num="(1)"> <text>Sponsors or nonprofit sponsors may act as general contractors only with the prior written approval of the Department or the local administrator. Application forms shall be provided upon request and shall be submitted and approved before submission of the proposal. Approval is conditioned on an assurance of completion acceptable to the Department.</text> </paragraph> <paragraph num="(2)"> <text>An owner-occupant may not act as a general contractor.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Assurance of Completion. The Department or the local administrator, at its discretion, may require:</text> <paragraph num="(1)"> <text>Performance and payment bonds;</text> </paragraph> <paragraph num="(2)"> <text>A letter of credit in the amount of 25 percent of the rehabilitation contract cost and an assurance of completion agreement; or</text> </paragraph> <paragraph num="(3)"> <text>Other assurances of completion acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="E."> <text>It shall be agreed by both the contractor and the owner that all communications which bear upon the content or performance of the contract shall be in writing.</text> </paragraph> <paragraph num="F."> <text>Contractors performing work covered by a rehabilitation loan may not be on the unacceptable risk determination list of the Department of Housing and Urban Development or the United States Department of Agriculture Rural Development, and any previous experience with the Program shall have been satisfactory. Contractors that do not perform up to program requirements may be suspended or debarred under COMAR 05.01.05.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Construction Process."> <paragraph num="A."> <text>Permits. If required by local codes, building permits shall be obtained and posted at the project before the beginning of construction. All other permits, if any, required by State or local government also shall be secured before construction begins.</text> </paragraph> <paragraph num="B."> <text>Contract Documents.</text> <paragraph num="(1)"> <text>Work done, materials supplied, and construction procedures employed shall comply with all contract documents, applicable codes and standards, including those set forth in these regulations, and those general specifications established by the Department. The Department's general requirements and specifications guidelines shall be furnished on request.</text> </paragraph> <paragraph num="(2)"> <text>Contract documents include without limitation:</text> <paragraph num="(a)"> <text>Rehabilitation contract agreement;</text> </paragraph> <paragraph num="(b)"> <text>Change orders;</text> </paragraph> <paragraph num="(c)"> <text>Work write-ups;</text> </paragraph> <paragraph num="(d)"> <text>Instructions to bidders;</text> </paragraph> <paragraph num="(e)"> <text>Specifications;</text> </paragraph> <paragraph num="(f)"> <text>Drawings; and</text> </paragraph> <paragraph num="(g)"> <text>Contractor's proposal.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>There shall be no modification of any contract documents without the prior written consent of the Department or the local administrator, as evidenced by an approved change order, executed by:</text> <paragraph num="(a)"> <text>The contractor; and</text> </paragraph> <paragraph num="(b)"> <text>The property owner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Inspections. The local administrator or an agent authorized by the local administrator and acceptable to the Program may conduct inspections to determine the required scope of work, to verify payments, and to facilitate construction problems and disputes and arbitration procedures.</text> </paragraph> <paragraph num="D."> <text>Construction Disputes. If disputes between the contractor and borrower occur, the Department shall recognize the findings of the Maryland Home Improvement Commission and the Consumer Protection Division of the Office of the Attorney General.</text> </paragraph> <paragraph num="E."> <text>Termination of Contracts. Contracts may be terminated for cause in accordance with the loan documents and contract documents.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Loan Disbursements."> <paragraph num="A."> <text>Monitoring.</text> <paragraph num="(1)"> <text>The local administrator shall monitor loans and disbursement of loan funds during rehabilitation to assist borrowers and to assure that loan funds are properly used.</text> </paragraph> <paragraph num="(2)"> <text>Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during rehabilitation taking into consideration:</text> <paragraph num="(a)"> <text>The capability of the borrower;</text> </paragraph> <paragraph num="(b)"> <text>The demonstrated experience and reliability of the contractor;</text> </paragraph> <paragraph num="(c)"> <text>The amount of the loan;</text> </paragraph> <paragraph num="(d)"> <text>The availability of local technical assistance; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The local administrator may charge borrowers a fee for inspections during rehabilitation, as approved by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Payments Generally.</text> <paragraph num="(1)"> <text>Loan funds shall be disbursed in full at the closing of the loan to an account held on behalf of the borrower by either the political subdivision that is the local administrator for the loan or the subcontractor. The loan funds shall be held in an account established under §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator or the subcontractor shall disburse the loan proceeds in accordance with the requirements of §B(3)—(5) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>Loan funds may not be disbursed if payments of interest or escrows required by the loan documents are in arrears.</text> </paragraph> <paragraph num="(4)"> <text>Payments of draws shall be by joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director.</text> </paragraph> <paragraph num="(5)"> <text>Except as provided in §D of this regulation, payments shall be made only for work completed. Payments may not be made for material delivered to the site but not installed in the project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Accounts.</text> <paragraph num="(1)"> <text>Loan funds shall be held in a non-interest-bearing account established by the local administrator or the subcontractor and approved by the Department. The account may be:</text> <paragraph num="(a)"> <text>An account with a depository institution that is separate from the other operating accounts of the local administrator or subcontractor;</text> </paragraph> <paragraph num="(b)"> <text>An account with a depository institution that is not separate from the other operating accounts of the local administrator or subcontractor using a separate reconciled general ledger account for all Program funds;</text> </paragraph> <paragraph num="(c)"> <text>An escrow account or attorney's trust account held and managed by an escrow agent if the escrow agent meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(i)"> <text>Any employee of the escrow agent with access to the account shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000;</text> </paragraph> <paragraph num="(ii)"> <text>The escrow agent shall provide the local administrator or the subcontractor, if any, and the Department with any statements required under §C(2) of this regulation; and</text> </paragraph> <paragraph num="(iii)"> <text>Any other requirements established by the Department; or</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Another type of account approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department may require the local administrator or the subcontractor to provide periodic statements to the Department of all loan funds in an account. If the statements do not correspond with the Department's records of loan funds in the account, the local administrator or the subcontractor shall work with the Department to reconcile the differences.</text> </paragraph> <paragraph num="(3)"> <text>The Department may revoke, at any time, its approval of any loan account established under this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Advance Payments. Advances or down payments may be made to contractors to purchase materials delivered on site or valid purchase requisitions not to exceed 20 percent of the contract costs.</text> </paragraph> <paragraph num="E."> <text>Progress Payments.</text> <paragraph num="(1)"> <text>Progress payments may not be made until the borrower has delivered satisfactory evidence, such as receipts or bills, of the amount of the payment requested.</text> </paragraph> <paragraph num="(2)"> <text>Progress payments may not be made without an inspection to verify completion of the work, except at the discretion of the Department or the local administrator, when the entire cost of the project is $60,000 or less. At a minimum, however, the local administrator shall verify completion of the work before disbursing the final payment, as described in §F of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>If a borrower's request for payment is refused, the local administrator shall notify the borrower. The determination of the local administrator as to percentage of work completed is final.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Final Payment. Final payment shall be made as follows:</text> <paragraph num="(1)"> <text>A borrower shall submit to the local administrator a certificate of completion, executed by the borrower and contractor, certifying that all work has been completed in accordance with the contract documents.</text> </paragraph> <paragraph num="(2)"> <text>Upon final inspection and receipt and approval of the certificate of completion, final payment shall be processed.</text> </paragraph> <paragraph num="(3)"> <text>If, in the opinion of the local administrator, the contractor has satisfied the contract and the borrower refuses to request or release the final payment, then the local administrator may follow the following procedure:</text> <paragraph num="(a)"> <text>The local administrator may require the borrower to explain in writing within 10 days why the local administrator should not make direct payment to the contractor;</text> </paragraph> <paragraph num="(b)"> <text>If the borrower responds within the 10-day period and requests a meeting, the local administrator shall hold a meeting at which the borrower shall present the borrower's objections to requesting or releasing the final payment;</text> </paragraph> <paragraph num="(c)"> <text>The local administrator, in its discretion, may then either approve or disapprove direct payment to the contractor or the borrower.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the local administrator receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, and all loan funds have not yet been disbursed, the local administrator shall retain an amount equal to the lesser of all funds not yet disbursed and the amount sufficient to satisfy the claims until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Retainage.</text> <paragraph num="(1)"> <text>The local administrator shall retain until final payment 10 percent of the contract proposal costs for all projects for which the borrower is responsible for project inspections.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator, at its discretion, may elect to retain until final payment 10 percent of the contract proposal costs for any other project, taking into consideration:</text> <paragraph num="(a)"> <text>The type of project;</text> </paragraph> <paragraph num="(b)"> <text>The contractor's experience; and</text> </paragraph> <paragraph num="(c)"> <text>Other factors the Program considers relevant.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Closeout Procedures. After final payment is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements and prepare a close-out statement. A copy of the close-out statement shall be forwarded to the Program and the servicer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Loan Administration — Certification of Local Governments as Local Administrator."> <paragraph num="A."> <text>General. The Department recognizes that the most effective housing rehabilitation programs are those administered at the local level. Therefore, each political subdivision is encouraged and expected to develop the capacity to originate and administer loans from its allocation. While the Department may originate and administer loans from its reserve or from the allocation to a political subdivision that is not certified under §B or C of this regulation, the Department may not operate a program for that political subdivision, and shall make loans in that case only if, and to the extent that, the Department at its sole discretion determines it to be feasible.</text> </paragraph> <paragraph num="B."> <text>Certification of Level I Local Administrators. The Department may certify a political subdivision to originate and administer loans when the political subdivision meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(1)"> <text>The political subdivision shall be able to perform adequately the functions of the following positions:</text> <paragraph num="(a)"> <text>A rehabilitation director, experienced in operating a rehabilitation program, supervising employees, and dealing with the public;</text> </paragraph> <paragraph num="(b)"> <text>A building inspector, experienced in residential rehabilitation, cost estimation, writing specifications, blueprint reading, residential inspections, and trained to understand and apply the appropriate codes and rehabilitation standards;</text> </paragraph> <paragraph num="(c)"> <text>A loan underwriter, experienced in mortgage lending and financial processing of loans; and</text> </paragraph> <paragraph num="(d)"> <text>Clerical and administrative staff trained to ensure prompt and efficient processing of applications, draw schedules, and other required items;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The rehabilitation staff or the political subdivision shall be capable of:</text> <paragraph num="(a)"> <text>Determining local rehabilitation needs evidenced by completion of a consolidated plan, a local comprehensive plan, or a local housing plan;</text> </paragraph> <paragraph num="(b)"> <text>Establishing a rehabilitation program, evidenced by prior experience in the development and operation of a rehabilitation program;</text> </paragraph> <paragraph num="(c)"> <text>Evaluating loan applications; and</text> </paragraph> <paragraph num="(d)"> <text>Monitoring both the loans and the work done under those loans; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The political subdivision shall execute and comply with the terms of an agreement required by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Certification of Level II Local Administrators: The Department may certify a political subdivision to originate and administer loans in any amount as well as approve loans in the amount of $60,000 or less, when:</text> <paragraph num="(1)"> <text>The political subdivision meets the criteria outlined in §B of this regulation to the Department's satisfaction; and</text> </paragraph> <paragraph num="(2)"> <text>The Department determines that the rehabilitation staff of the political subdivision is capable of:</text> <paragraph num="(a)"> <text>Evaluating, recommending, approving, or rejecting loans;</text> </paragraph> <paragraph num="(b)"> <text>Scheduling and executing loan closings;</text> </paragraph> <paragraph num="(c)"> <text>Monitoring construction activities;</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Subcontracting Program Administration.</text> <paragraph num="(1)"> <text>A political subdivision may subcontract its duties and responsibilities as a local administrator under this chapter, except as provided in §D(2) and (3) of this regulation, with the approval of the Department. The duties described in §§B and C of this regulation may be carried out by staff of the local administrator or its subcontractor.</text> </paragraph> <paragraph num="(2)"> <text>A political subdivision may not subcontract the holding and disbursement of loan funds described in Regulation .15B and H of this chapter except to a subcontractor which meets the following criteria to the satisfaction of the Department:</text> <paragraph num="(a)"> <text>The subcontractor meets the criteria of §§B and C of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>Any employee of the subcontractor with access to the loan funds shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000;</text> </paragraph> <paragraph num="(c)"> <text>If required by the Department, the subcontractor provides the local administrator and the Department with periodic statements of:</text> <paragraph num="(i)"> <text>All loan funds held and disbursed by the subcontractor under Regulation .15 of this chapter, and</text> </paragraph> <paragraph num="(ii)"> <text>The balance of funds on hand;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The subcontractor provides the local administrator and the Department with an annual audit conducted by an independent certified public accountant and prepared in accordance with generally accepted auditing standards; and</text> </paragraph> <paragraph num="(e)"> <text>The subcontractor complies with any other requirements established by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Regardless of any subcontracting, the Department shall continue to hold the political subdivision directly responsible for fulfilling all of its duties and responsibilities as a local administrator.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Revocation of Certification. The Department reserves the right and expects to monitor periodically the loan administration of certified local administrators, and may revoke certification upon determination that a local administrator is administering the loans in a manner inconsistent with the intent of the Program.</text> </paragraph> <paragraph num="F."> <text>Special Requirements for Certified Local Administrators and Their Subcontractors.</text> <paragraph num="(1)"> <text>Certified local administrators and their subcontractors shall maintain financial records of loan disbursements for at least 3 years, and shall make them available for review by the Department at all reasonable times and as set forth in Regulation .20 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A noncomplying loan approved by a level II local administrator shall either be amended, with the borrower's concurrence, to comply with the Program's requirements, or purchased from the Department by the political subdivision.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Local Administration Fee. The Department may, at its sole discretion, pay a local administrator an annual fee for administering loans made under the Program.</text> </paragraph> <paragraph num="H."> <text>Department Authority. When the Department, in its sole discretion, administers a loan, the Department has the authority that a local administrator would have under these regulations, in addition to its authority as the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Allocation of Funds."> <paragraph num="A."> <text>Annual Allocation.</text> <paragraph num="(1)"> <text>The Department shall allocate annually the funds available to the Program among the political subdivisions and to a reserve held by the Department to ensure that all areas of Maryland are served.</text> </paragraph> <paragraph num="(2)"> <text>Up to 25 percent of the total monies available for the Program may be held in reserve and not allocated to the counties, out of which reserve the Department may either itself originate loans or from time to time reallocate these funds to the counties.</text> </paragraph> <paragraph num="(3)"> <text>The allocations to the political subdivisions shall take into account those factors in Housing and Community Development Article, §4-911, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>The Department shall notify, in writing, each political subdivision of its allocation.</text> </paragraph> <paragraph num="(5)"> <text>At the end of each calendar quarter, the Department may evaluate the allocations in relation to demand for loans as evidenced by applications for loans, and may reallocate the funds among the counties in accordance with demand. The Department may notify a county in writing of any reallocations of funds.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The chief elected official of any political subdivision which has been notified of an allocation and which desires to participate in the Program shall, as a condition precedent to disbursement of funds from its allocation, submit a letter to the Department within 45 days after receipt of notice of its allocation indicating the intent of the political subdivision to participate in the program.</text> </paragraph> <paragraph num="C."> <text>If a political subdivision fails to comply with the provisions of §B of this regulation or is unable to comply, the Department may itself originate and administer loans from the fund allocated to the political subdivision or reallocate the funds to another political subdivision.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Repealed." /> <regulation prefix="Regulation" num=".19" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A sponsor, nonprofit sponsor, contractor, local administrator, or subcontractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any sponsor, nonprofit sponsor, contractor, local administrator, or subcontractor in connection with any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each sponsor, nonprofit sponsor, contractor, local administrator, and subcontractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Books and Accounts."> <paragraph num="A."> <text>Borrowers, contractors, and subcontractors shall maintain such books, accounts, and records, and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="General Provisions."> <paragraph num="A."> <text>Program Guidelines. The Department may establish from time to time detailed Program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financing of loans or to the Program. Copies of these guidelines shall be available for examination at the offices of any local administrator and at the Department's principal office. The Department, upon request, shall provide copies to the public for a reasonable charge.</text> </paragraph> <paragraph num="B."> <text>Fees. The Department may charge commitment fees, application fees, closing fees or other fees, charges, or penalties to applicants, borrowers, or other individuals or entities that participate in the Program. The Department may restrict the fees and charges that servicers, political subdivisions, local administrators, or other Program participants obtain from borrowers or applicants.</text> </paragraph> <paragraph num="C."> <text>Delegation. The Secretary may delegate to the Director, the Program Directors, or to any other official or employee of the Department the authority to execute or approve any program documents or loan documents, including loan commitments and agreements with the local administrators. In addition, through the agreement with the local administrator, specific staff members for the local administrator may be authorized by the Department to execute loan documents on behalf of the Department.</text> </paragraph> <paragraph num="D."> <text>False Statements. A borrower who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department or the local administrator originating the loan, is subject to immediate acceleration of the loan, in addition to the penalties authorized by Housing and Community Development Article, §4-933, Annotated Code of Maryland.</text> </paragraph> <paragraph num="E."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal agency in connection with any rehabilitation with respect to which federal assistance is sought necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitles 5 and 9, §§4-704—4-706,Annotated Code of Maryland;Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 3, 1977 (4:16 Md. R. 1207)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03, .04A, C, .05B, .06A, .07H, .08B, .09A amended effective June 16, 1978 (5:12 Md. R. 965)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03, .04A, .05B, .06A, .07G, .08, .09A, F, .10C amended effective March 23, 1979 (6:6 Md. R. 509)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03E, M, .04C, .05B, .06A, B, .07I, .08B amended effective October 5, 1979 (6:20 Md. R. 1627)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03G, M; .06A; .08B; .10C; and .12B amended effective September 5, 1980 (7:18 Md. R. 1737)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C adopted effective June 16, 1978 (5:12 Md. R. 965)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14D repealed effective September 5, 1980 (7:18 Md. R. 1737)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 25, 1982 (9:21 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective February 11, 1985 (12:3 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 11, 1985 (12:3 Md. R. 243); April 22, 1985 (12:8 Md. R. 800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective February 11, 1985 (12:3 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B, C, E amended effective February 11, 1985 (12:3 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective April 22, 1985 (12:8 Md. R. 800)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06—.10 amended effective February 11, 1985 (12:3 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective April 22, 1985 (12:8 Md. R. 800)</annotation> <annotation type="History" subtype="Administrative History">Regulations .11—.13 amended effective February 11, 1985 (12:3 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B amended effective February 11, 1985 (12:3 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulations .17 and .18 repealed and new Regulations .17 and .18 adopted effective February 11, 1985 (12:3 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.08 to COMAR 05.04.01</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.18 repealed and new Regulations .01—.21 adopted effective July 22, 1991 (18:14 Md. R. 1609)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02—.19 and .21 amended effective November 9, 1992 (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 22, 1999 (26:4 Md. R. 272); November 29, 1999 (26:24 Md. R. 1855)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective January 2, 1994 (20:25 Md. R. 1941); February 22, 1999 (26:4 Md. R. 272); April 5, 1999 (26:7 Md. R. 537)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08E amended effective February 22, 1999 (26:4 Md. R. 272); November 29, 1999 (26:24 Md. R. 1855)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09D amended effective January 2, 1994 (20:25 Md. R. 1941); February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10C amended effective February 22, 1999 (26:4 Md. R. 272); September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11E amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14B amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15E amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16C amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16D amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19A amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 5, 2010 (37:7 Md. R. 569)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective July 4, 2016 (43:13 Md. R. 712)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07-1 adopted effective July 4, 2016 (43:13 Md. R. 712)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15D amended effective July 4, 2016 (43:13 Md. R. 712)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="02" heading="Housing Rehabilitation Program—Applicable Codes and Standards"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>These standards are to be used as guidelines for property rehabilitation under the Program. The Program may, at its discretion, waive certain of these standards if needed to fulfill the intent of the Act. When suitable local standards have been developed, these standards are not applicable.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>General. Definitions given in this regulation are included to provide a basis for understanding the meaning of these terms, phrases, and their derivatives when they are used in these regulations. These definitions have general consistency with those used throughout the building industry, but are directed to the specific needs of rehabilitation. None is intended to nullify the provisions of any local code but the terms are furnished to provide understanding of these guidelines.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accessory building” means a secondary building, the use of which is incidental to that of the main building and which is located on the same plot.</text> </paragraph> <paragraph num="(2)"> <text>“Addition” means a construction which increases the size of a building or adds to the building, such as a porch, an attached garage, or a carport.</text> </paragraph> <paragraph num="(3)"> <text>“Alley” means a service way providing a secondary public means of access to abutting properties.</text> </paragraph> <paragraph num="(4)"> <text>“Alteration” means construction which may change the floor plan, structural parts, mechanical equipment, or location of openings, but which does not increase the size of the building.</text> </paragraph> <paragraph num="(5)"> <text>Area.</text> <paragraph num="(a)"> <text>“Building area” means the total ground area of each building and accessory building, but not including uncovered entrance platforms, terraces, and steps.</text> </paragraph> <paragraph num="(b)"> <text>“Floor area” means the total area of one story measured within exterior enclosing walls or between exterior walls and firewalls of a building. This area includes bays and dormers, but does not include space in garages or carports or in attics.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Attic” means the accessible space between the top of the uppermost ceiling and the underside of the roof. Inaccessible spaces are considered structural cavities.</text> </paragraph> <paragraph num="(7)"> <text>“Building line” means a line established by law or agreement usually parallel to the property line, beyond which a structure may not extend.</text> </paragraph> <paragraph num="(8)"> <text>“Carport” means a roofed space having at least one side open to the weather, primarily designed or used for motor vehicles.</text> </paragraph> <paragraph num="(9)"> <text>“Cellar” means that space of a building which is partly or entirely below grade and has more than half of its clear height below the average grade of the adjoining ground.</text> </paragraph> <paragraph num="(10)"> <text>“Chase” means an enclosed shaft in a masonry or other wall providing for the accommodation of pipes, ducts, or conduits.</text> </paragraph> <paragraph num="(11)"> <text>Construction Classification.</text> <paragraph num="(a)"> <text>“Construction classification” means a classification of buildings into types of construction which is based upon the fire resistance of walls, floors, roof, ceilings, and other elements.</text> </paragraph> <paragraph num="(b)"> <text>“Type 1, fire-resistive construction” means that type of construction in which the walls, partitions, columns, floors, roof, ceilings, and other structural members are noncombustible with sufficient fire resistance to withstand the effects of a fire and prevent its spread from one story to another.</text> </paragraph> <paragraph num="(c)"> <text>“Type 2, noncombustible construction” means that type of construction in which the walls, partitions, columns, floors, roof, ceiling, and other structural members are noncombustible, but which does not qualify as Type 1, fire-resistive construction (Type 2a (1 hour protected), and Type 2b, which does not require protection for certain members).</text> </paragraph> <paragraph num="(d)"> <text>“Type 3, exterior protected construction” means that type of construction in which the exterior walls are of noncombustible construction having a fire resistance rating as specified and are structurally stable under fire conditions, and in which the interior structural members and roof are wholly or partly of combustible construction. “Type 3a” means exterior protected construction in which the interior exitways, columns, beams, and bearing walls are noncombustible in combination with the floor system, roof construction, and non-load bearing partitions of combustible construction. “Type 3b” means exterior protected construction in which the interior structural members are of protected combustible materials, or of heavy timber unprotected construction.</text> </paragraph> <paragraph num="(e)"> <text>“Type 4, wood frame construction” means that type of construction in which the exterior walls, partitions, floors, roof, and other structural members are wholly or partly of wood or other combustible materials.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Court.</text> <paragraph num="(a)"> <text>“Inner court” means an open, outdoor space enclosed on all sides by exterior walls of a building or by exterior walls and property lines on which walls are allowable.</text> </paragraph> <paragraph num="(b)"> <text>“Outer court” means an open, outdoor space enclosed on at least two sides by exterior walls of a building or by exterior walls and property lines on which walls are allowable, with one side open to a street, driveway, alley, or yard.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Damp-proofing” means a treatment of a surface or structure which retards the passage of water.</text> </paragraph> <paragraph num="(14)"> <text>“Driveway” means a private way for the use of vehicles and pedestrians.</text> </paragraph> <paragraph num="(15)"> <text>Dwelling.</text> <paragraph num="(a)"> <text>“Dwelling” means a building designed or used as the living quarters for one or more families.</text> </paragraph> <paragraph num="(b)"> <text>“Detached” means a dwelling which is completely surrounded by permanent open space.</text> </paragraph> <paragraph num="(c)"> <text>“Semi-detached” means a dwelling, one side wall of which is a party or lot-line wall.</text> </paragraph> <paragraph num="(d)"> <text>“Row” means a dwelling, the walls on two sides of which are party or lot-line walls.</text> </paragraph> <paragraph num="(e)"> <text>“End-row” means semi-detached.</text> </paragraph> <paragraph num="(f)"> <text>“Multifamily” means a building containing three or more living units for families living independently of each other.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Dwelling unit” (see “living unit”).</text> </paragraph> <paragraph num="(17)"> <text>“Easement” means a vested or acquired right to use land other than as a tenant, for a specific purpose, this right being held by someone other than the owner who holds title to the land.</text> </paragraph> <paragraph num="(18)"> <text>“Exit” means a continuous and unobstructed way to get from the interior of a building to the outside at grade level. A secondary exit may, under certain conditions, provide only emergency egress to an adjacent building or roof, from which safe travel can be made to grade level.</text> </paragraph> <paragraph num="(19)"> <text>“Fire division” means the interior means of separation of one part of a floor area from another part together with the floor construction to form a complete fire barrier between adjoining or superimposed floor areas in the same building.</text> </paragraph> <paragraph num="(20)"> <text>“Fire resistance” means that property of construction assemblies which under fire conditions prevents or retards the passage of excessive heat, hot gases, or flames.</text> </paragraph> <paragraph num="(21)"> <text>“Fire-resistance ratings” means time in hours or parts of hours that a material, construction, or assembly will withstand fire exposure, as determined in a recognized fire test.</text> </paragraph> <paragraph num="(22)"> <text>“Fire resistive” means that quality of materials and assemblies to resist fire and prevent its spread.</text> </paragraph> <paragraph num="(23)"> <text>“Fire retardant treated wood” means lumber or plywood treated by a recognized impregnation process to reduce its combustibility.</text> </paragraph> <paragraph num="(24)"> <text>“Fire separation” means a construction of specified fire resistance separating parts of a building horizontally or vertically as required.</text> </paragraph> <paragraph num="(25)"> <text>“Firestopping” means a barrier within concealed spaces which is effective against the spread of flames or hot gases.</text> </paragraph> <paragraph num="(26)"> <text>“Flame-resistant” means that property of a material which is flame resistant by nature or has been made so by an accepted method.</text> </paragraph> <paragraph num="(27)"> <text>“Flame spread” means the propagation of flame over a surface.</text> </paragraph> <paragraph num="(28)"> <text>“Flashing” means sheet metal or other impervious materials used in roof and wall construction to protect a building from the seepage of water.</text> </paragraph> <paragraph num="(29)"> <text>“Floor” (see “story”).</text> </paragraph> <paragraph num="(30)"> <text>“Foundation” means construction, below or partly below grade, which provides support for exterior walls or other structural parts of the building.</text> </paragraph> <paragraph num="(31)"> <text>Garage.</text> <paragraph num="(a)"> <text>“Garage” means a building or enclosure primarily designed or used for motor vehicles.</text> </paragraph> <paragraph num="(b)"> <text>“Attached” means a garage having all or part of one or more walls common to the dwelling or to a covered porch attached to the dwelling.</text> </paragraph> <paragraph num="(c)"> <text>“Detached” means a garage which is completely surrounded by open space. A garage connected to the dwelling by an uncovered terrace is defined as a detached garage.</text> </paragraph> <paragraph num="(d)"> <text>“Built-in” means a garage located within the exterior walls of a dwelling.</text> </paragraph> </paragraph> <paragraph num="(32)"> <text>“Grade, finish” means the top surface elevation of lawns, walks, drives, or other improved surfaces after completion of construction or grading operations.</text> </paragraph> <paragraph num="(33)"> <text>“Habitable room” (see “room”).</text> </paragraph> <paragraph num="(34)"> <text>“Height, building” means vertical distance measured from curb or grade level, whichever is the higher, to the highest level of a flat roof or the average height of a pitched roof, excluding penthouse or other roof appendages occupying less than 30 percent of the roof area. When a height limitation is set forth in stories, this height shall include each full story as defined there.</text> </paragraph> <paragraph num="(35)"> <text>“Joists” means a series of floor, roof, or ceiling framing members spaced not more than 30 inches on center.</text> </paragraph> <paragraph num="(36)"> <text>“Kitchen” means a space, 50 square feet or more in area, used for cooking and preparation of food.</text> </paragraph> <paragraph num="(37)"> <text>“Kitchenette” means a space, less than 50 square feet in area, used for cooking and preparation of food.</text> </paragraph> <paragraph num="(38)"> <text>“Living unit” means a dwelling or portion of a dwelling providing complete living facilities for one family, including permanent provisions for living, sleeping, eating, cooking, and sanitation.</text> </paragraph> <paragraph num="(39)"> <text>Loads.</text> <paragraph num="(a)"> <text>“Dead load” means the weight of all permanent construction in a building.</text> </paragraph> <paragraph num="(b)"> <text>“Live load” means the weight of all moving and variable loads that may be placed on or in a building such as snow, wind, occupancy.</text> </paragraph> </paragraph> <paragraph num="(40)"> <text>Lot.</text> <paragraph num="(a)"> <text>“Lot” means a parcel of land that is described by reference to a recorded plat or by metes and bounds.</text> </paragraph> <paragraph num="(b)"> <text>“Corner lot” means a lot abutting upon two or more streets at their intersection.</text> </paragraph> <paragraph num="(c)"> <text>“Interior lot” means a lot bounded by a street on one side only.</text> </paragraph> <paragraph num="(d)"> <text>“Double-fronted lot” means an interior lot bounded by a street on front and back.</text> </paragraph> </paragraph> <paragraph num="(41)"> <text>Lot coverage" means that percentage of the plot area covered by the total of all building areas.</text> </paragraph> <paragraph num="(42)"> <text>“Lot line” means a line bounding the lot as described in the title to the property.</text> </paragraph> <paragraph num="(43)"> <text>“New construction” means proposed construction or other new structures erected on cleared or vacant land, or new additions to an existing building which enlarge the floor area or height of the building.</text> </paragraph> <paragraph num="(44)"> <text>“Noncombustible” means material or a combination of materials which will not ignite or support combustion at a temperature of 1,382 degrees F during a 5 minute exposure.</text> </paragraph> <paragraph num="(45)"> <text>“Plot” means a parcel of land consisting of one or more lots or portions of it, which is described by reference to a recorded plat or by metes and bounds.</text> </paragraph> <paragraph num="(46)"> <text>“Property” means a lot or plot, including all buildings and improvements on it.</text> </paragraph> <paragraph num="(47)"> <text>“Property line” means a recorded boundary of a plot.</text> </paragraph> <paragraph num="(48)"> <text>“Rafters” means a series of roof framing members, spaced not more than 30 inches on center in roofs having slopes over 3 in 12.</text> </paragraph> <paragraph num="(49)"> <text>“Rehabilitation” means the restoration of a reuseable single structure, or group of structures, which overcomes deterioration and provides a satisfactorily improved physical condition for residential purposes.</text> </paragraph> <paragraph num="(50)"> <text>“Rehabilitation construction” means all the following:</text> <paragraph num="(a)"> <text>All repairs to or replacement of present elements of an existing building, such as windows, stairs, walls, floors, roof, plumbing, wiring, heating, or other equipment;</text> </paragraph> <paragraph num="(b)"> <text>Rearrangement of rooms by the relocation of partitions or by the installation of new bathrooms and kitchens;</text> </paragraph> <paragraph num="(c)"> <text>The general replacement of the interior of a building. This replacement may but does not have to include changes to structural elements such as floor systems, columns, or load-bearing interior or exterior walls.</text> </paragraph> </paragraph> <paragraph num="(51)"> <text>“Repair” means restore to a sound and acceptable state of operation, serviceability, or appearance. Repairs shall be expected to last as long as the replacement by new items.</text> </paragraph> <paragraph num="(52)"> <text>“Replace” means to remove an existing item or portion of a system, and to construct or install a new item of similar or improved quality as the existing item when new. Replacement will ordinarily take place when the item is incapable of repair or when repair would be more costly.</text> </paragraph> <paragraph num="(53)"> <text>Room.</text> <paragraph num="(a)"> <text>“Habitable room” means a space used for living, sleeping, eating, or cooking, or combinations of these, but not including bathrooms, toilet compartments, closets, halls, storage rooms, laundry and utility rooms, basement recreation rooms, and similar spaces.</text> </paragraph> <paragraph num="(b)"> <text>“Combined rooms” means two or more adjacent habitable spaces which by their relationship, planning, and openness permit their common use.</text> </paragraph> </paragraph> <paragraph num="(54)"> <text>“Shaft” means a vertical opening or enclosed space extending through two or more floors of a building, or through a floor and roof.</text> </paragraph> <paragraph num="(55)"> <text>“Shall” is a term that imposes obligation to act.</text> </paragraph> <paragraph num="(56)"> <text>“Should” is a term that indicates minimum good practice but does not impose an obligation to act.</text> </paragraph> <paragraph num="(57)"> <text>“Space heater (room heater)” means a self-contained above-the-floor device for furnishing heated air, through openings in its casing directly into the space in which the device is located or immediately adjacent to it. The device may be free-standing or recessed in a wall or partition.</text> </paragraph> <paragraph num="(58)"> <text>Story.</text> <paragraph num="(a)"> <text>“Story” means that portion of a building between a floor and the next floor above, or roof.</text> </paragraph> <paragraph num="(b)"> <text>“Basement” means a space of full story height below the first story, which is partly below grade.</text> </paragraph> <paragraph num="(c)"> <text>“First story” (“first floor”) means the lowermost story which is accessible from outside the building at grade with its floor closest to grade, and which is used as habitable space.</text> </paragraph> <paragraph num="(d)"> <text>“Half story” means a story, finished as living accommodations, located wholly or partly within the roof frame and having a floor area at least one half as large as the story below. Space with less than 4 feet clear headroom may not be considered as floor area.</text> </paragraph> <paragraph num="(e)"> <text>“Top story” means the story between the uppermost floor and the ceiling or roof above.</text> </paragraph> </paragraph> <paragraph num="(59)"> <text>“Street” means a public or private way which affords principal means of vehicular access to properties which abut on it.</text> </paragraph> <paragraph num="(60)"> <text>“Substandard building” means a building or portion of a building in which there exist physical conditions serious enough to endanger the life, limb, health, property, safety, or welfare of the occupants or of the public, as determined by the program.</text> </paragraph> <paragraph num="(61)"> <text>Ventilation.</text> <paragraph num="(a)"> <text>“Mechanical ventilation” means supply and removal of air by power-driven devices.</text> </paragraph> <paragraph num="(b)"> <text>“Natural ventilation” means ventilation by openings to outside air through windows, doors, or other openings.</text> </paragraph> </paragraph> <paragraph num="(62)"> <text>Wall.</text> <paragraph num="(a)"> <text>“Bearing wall” means a wall which supports any vertical load in addition to its own weight.</text> </paragraph> <paragraph num="(b)"> <text>“Curtain wall” means a nonbearing exterior wall supported by the structural framework of the building.</text> </paragraph> <paragraph num="(c)"> <text>“Faced wall” means a wall in which the masonry facing and backing are so bonded as to exert a common action under load.</text> </paragraph> <paragraph num="(d)"> <text>“Fire wall” means a continuous wall from foundation to roof with designated qualities of fire resistance and structural stability which subdivides a building into fire areas and which resists the spread of fire.</text> </paragraph> <paragraph num="(e)"> <text>“Non-bearing wall” means a wall which supports no vertical load other than its own weight.</text> </paragraph> <paragraph num="(f)"> <text>“Parapet wall” means that part of any wall entirely above the roof.</text> </paragraph> <paragraph num="(g)"> <text>“Party wall” means a wall used jointly by two parties under easement, erected upon a line separating two parcels of land, each of which is a separate real estate entity.</text> </paragraph> <paragraph num="(h)"> <text>“Retaining wall” means a wall used to resist lateral displacement of any material.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="General Acceptability Criteria."> <paragraph num="A."> <text>Local Codes and Regulations.</text> <paragraph num="(1)"> <text>These guidelines, while setting forth basic objectives and provisions specifically related to rehabilitation, may not be construed as relieving the property owner, project sponsor, or their builder of his responsibility for compliance with local ordinances, codes, and regulations, including established requirements of a health officer or other authority having jurisdiction.</text> </paragraph> <paragraph num="(2)"> <text>When a local code, regulation, or requirement exists, it shall apply unless a political subdivision chooses to use these standards.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Service and Facilities.</text> <paragraph num="(1)"> <text>Utilities shall be provided for each property or project.</text> </paragraph> <paragraph num="(2)"> <text>Although the normal condition is for independent utilities for each property, a concentration and combining of utilities may be acceptable when a project of a number of properties has the same sponsor or is under a single mortgage.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Access.</text> <paragraph num="(1)"> <text>Access to the Building. Walks and steps shall be provided for all weather access to the building, and constructed to provide safety, reasonable durability, and economy of maintenance.</text> </paragraph> <paragraph num="(2)"> <text>Access to Each Living Unit. Access to each living unit shall be provided without passing through any other living unit.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Real Estate Entity. The land offered as security for an insured mortgage normally will comprise a single plot.</text> </paragraph> <paragraph num="E."> <text>Determining the Number of Living Units.</text> <paragraph num="(1)"> <text>Each dwelling or portions of a dwelling providing complete living facilities for one family shall be counted as a living unit.</text> </paragraph> <paragraph num="(2)"> <text>A room or group of rooms containing complete living facilities, such as an apartment of a janitor or caretaker, shall be counted as a separate living unit.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Partial Non-residential Use.</text> <paragraph num="(1)"> <text>A space or feature included in the property from which income is anticipated apart from the rental of living units is termed non-residential or commercial use.</text> </paragraph> <paragraph num="(2)"> <text>Non-residential use shall be of a character which is compatible with the residential character of the property or project. The extent of non-residential use shall be determined by the proper local authority.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Dilapidated or Blighted Structures. All dilapidated portions of existing properties or blighted structures which are not economically repairable shall be removed (see Regulation .05G for exterior appurtenances).</text> </paragraph> <paragraph num="H."> <text>Site Conditions.</text> <paragraph num="(1)"> <text>The property should not be subject to hazards such as objectionable smoke, noxious odors, unusual noise, or the probability of flooding.</text> </paragraph> <paragraph num="(2)"> <text>Essential community facilities and services, such as employment centers, shopping centers, schools, recreation areas, and police and fire protection, should be reasonably accessible to the site or group of sites making up the project.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Physically Handicapped. Any improvement necessary to accommodate the physically handicapped shall be considered a standard requirement of the Program, the cost of which shall be computed as a code cost item.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Site Criteria."> <paragraph num="A."> <text>The objective is to develop the individual site or group of sites so that obsolescence is overcome, and so that the development is appropriate and an asset to the neighborhood in which it is located.</text> </paragraph> <paragraph num="B."> <text>Every residential building shall have sufficient open space to permit convenient access for maintenance, fire protection, adequate light and ventilation of habitable rooms, and reasonable indoor privacy.</text> </paragraph> <paragraph num="C."> <text>In the site development of a target area, consideration should be given to the needs of the residents for non-vehicular open space for active and inactive recreation. Adequate night lighting for the safe use of streets, parking areas, walks, and steps should be provided or arrangements made for its provision by public authority.</text> </paragraph> <paragraph num="D."> <text>The open space of each property shall provide for the immediate diversion of water away from buildings and disposal from the lot, for the prevention of soil saturation detrimental to structures and lot use, and, when needed, for appropriate paved walks, parking areas, driveways, exterior steps, and landscaping.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Building Planning."> <paragraph num="A."> <text>The objective is to assure a living unit which provides for a healthful environment and complete living facilities arranged and equipped for suitable and desirable living conditions under consideration.</text> </paragraph> <paragraph num="B."> <text>Space Standards.</text> <paragraph num="(1)"> <text>General.</text> <paragraph num="(a)"> <text>The standard is to provide:</text> <paragraph num="(i)"> <text>Each living unit with space necessary for suitable living, sleeping, cooking and dining accommodations, storage, laundry, and sanitary facilities; and</text> </paragraph> <paragraph num="(ii)"> <text>Space of such size and dimensions so as to permit placement of furniture and essential equipment.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Habitable rooms in basements or below grade intended for year-round occupancy shall comply with building planning standards in the same manner as rooms above grade (see §C).</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Room Sizes. The size of rooms shown in Table .05-1 should be minimum for the subdividing of existing spaces or for the construction of new rooms. Unremodeled existing rooms where considered of adequate size and arrangement for the intended function by the Program are acceptable.</text> </paragraph> <paragraph num="(3)"> <text>Ceiling Heights. Ceiling heights shall permit the average person to move about comfortably, and create no unpleasant sensation because of the ceiling being of insufficient height.</text> </paragraph> <paragraph num="(4)"> <text>Privacy and Arrangement.</text> <paragraph num="(a)"> <text>A degree of privacy shall be provided commensurate with suitable living conditions by means of the proper location of exterior conditions, and by the interior arrangement of rooms.</text> </paragraph> <paragraph num="(b)"> <text>Access to all parts of a living unit shall be possible without passing through a public hall.</text> </paragraph> <paragraph num="(c)"> <text>Every water closet, bathtub, or shower of a living unit shall be installed in a bathroom or toilet compartment which will afford privacy to the occupant.</text> </paragraph> <paragraph num="(d)"> <text>A bathroom may not be used as a passageway to a habitable room, hall, basement, or to the exterior.</text> </paragraph> <paragraph num="(e)"> <text>Access to an existing bathroom may be through a bedroom in living units having more than one bedroom, provided it is judged to be acceptable to the market.</text> </paragraph> <paragraph num="(f)"> <text>A bathroom should not be separated from all bedrooms of a living unit by locating it a full story above or below the bedrooms.</text> </paragraph> <paragraph num="(g)"> <text>A bedroom should not be used as the only means of access to another bedroom or habitable room.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Kitchen Facilities. Each living unit shall have a specific kitchen space, which contains a sink with counter work space and has hot and cold running water, adequate space for installing cooking and refrigeration equipment, and for storing cooking utensils.</text> </paragraph> <paragraph num="(6)"> <text>Bath Facilities. Complete bathing and sanitary facilities shall be provided within each living unit. They shall consist of a water-closet, a tub or shower, and a lavatory. An adequate supply of hot water to the tub or shower stall, or both, and lavatory, and cold water to all fixtures shall be provided. Arrangement of fixtures shall provide for the comfortable use of each fixture and permit at least a 90-degree door swing. Wall space shall be available for a mirror or medicine cabinet and for towel bars.</text> </paragraph> <paragraph num="(7)"> <text>Space for Laundry Facilities. Adequate space should be provided for laundry equipment within each living unit, off a public corridor, or in a basement or other suitable public space for the use of all occupants of a building. If nearby public commercial laundries are available, consideration may be given as to the extent residents of the project can be expected to use them in determining laundry space needs.</text> </paragraph> <paragraph num="(8)"> <text>Closets and General Storage. Clothes closet space shall be provided within bedrooms or conveniently located nearby. In addition, each living unit should have a suitable space within the unit or a locked space elsewhere within the building for general storage.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Light and Ventilation.</text> <paragraph num="(1)"> <text>General. A healthful environment and an acceptable degree of comfort within all rooms and hallways of the dwelling by having sufficient light and ventilation, and natural ventilation for structural spaces to minimize conditions conducive to decay and deterioration shall be provided.</text> </paragraph> <paragraph num="(2)"> <text>Habitable Rooms.</text> <paragraph num="(a)"> <text>All habitable rooms, except kitchens, shall have natural light, provided by means of windows, glazed doors, or skylights. A glass area of at least 8 percent of the floor area shall be provided for new or remodeled rooms, or other spaces.</text> </paragraph> <paragraph num="(b)"> <text>An existing habitable room not disturbed in the rehabilitation which is deficient or without natural light can be considered acceptable provided this is judged to be acceptable to the market.</text> </paragraph> <paragraph num="(c)"> <text>An acceptable means of natural ventilation shall exist or be provided for all habitable spaces, except that for kitchens a mechanical ventilation system may be substituted. A ventilation area of 5 percent of the floor area of the space shall be provided.</text> </paragraph> <paragraph num="(d)"> <text>Artificial light shall be provided and so distributed as to assure healthful conditions and satisfactory illumination in all rooms.</text> </paragraph> <paragraph num="(e)"> <text>Kitchens shall have artificial light provided. Ventilation shall be provided by either mechanical ventilation, or if natural means are used, by 5 percent of the floor area but not less than a 3-square-foot area.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Bathrooms and Toilet Compartments. Artificial light shall be provided. Ventilation shall be provided by either mechanical means or if natural means are used, by 5 percent of the floor area, but not less than a 1-1/2 square-foot area.</text> </paragraph> <paragraph num="(4)"> <text>Public Spaces. Artificial light shall be provided in all public spaces.</text> </paragraph> <paragraph num="(5)"> <text>Public Entrance Spaces. Either natural ventilation of at least 5 percent of the floor area or mechanical ventilation shall be provided at all public entrance spaces.</text> </paragraph> <paragraph num="(6)"> <text>Ventilation of Utility Spaces. Utility spaces which contain heat producing, air conditioning, or other equipment shall be ventilated to the outer air, and air from these spaces may not be recirculated to other parts of the building.</text> </paragraph> <paragraph num="(7)"> <text>Ventilation of Structural Spaces. Natural ventilation of spaces such as attics and enclosed basement spaces shall be provided by openings of sufficient sizes to overcome dampness and minimize the effect of conditions conducive to decay and deterioration of the structure, and to prevent excessive heat in attics. Exterior ventilation openings shall be effectively screened where needed.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Doors and Access Openings.</text> <paragraph num="(1)"> <text>The standard is to provide openings adequate in size to admit furniture and equipment to all spaces and to permit inspection for repair and maintenance.</text> </paragraph> <paragraph num="(2)"> <text>Exterior Doors. Exterior doors shall have safe locks.</text> </paragraph> <paragraph num="(3)"> <text>Interior Doors. A door for each opening to a bedroom, bathroom, or toilet compartment, with a locking device on bath and toilet compartment doors, shall be provided.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Stairways.</text> <paragraph num="(1)"> <text>General. All stairways shall provide safety of ascent and descent, and stairs and landings shall be arranged to permit adequate headroom and space for the passage of furniture and equipment.</text> </paragraph> <paragraph num="(2)"> <text>Existing Stairways. Existing stairways in sound condition to remain or to be repaired may not be, to any serious extent, below minimum standards of good practice as to rise and run of steps, headroom, obstruction, stair width, landings, or railing protection. See Regulation .06C for related conditions.</text> </paragraph> <paragraph num="(3)"> <text>New Stairways. New stairways to be constructed shall comply with standards of good practice and be appropriate to the building and occupant load.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Corridors and Hallways. Corridors and hallways shall provide adequate, safe, and unobstructed circulation from living units or other spaces to various means of exit.</text> </paragraph> <paragraph num="G."> <text>Exterior Appurtenances. All exterior appurtenances or accessory structures which serve no useful purpose, or those in a deteriorated condition which are not economically repairable, shall be removed. These structures include porches, terraces, entrance platforms, garages, carports, walls, fences, and miscellaneous sheds.</text> </paragraph> <paragraph num="H."> <text>Trash and Garbage Disposal.</text> <paragraph num="(1)"> <text>Every dwelling and multifamily building shall be supplied with a means of disposal or removal of trash and garbage.</text> </paragraph> <paragraph num="(2)"> <text>If disposal will not take place promptly, there shall be a convenient and appropriate temporary and sanitary storage for trash and garbage provided, which is inaccessible to rodents.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Noise Control.</text> <paragraph num="(1)"> <text>When practical, functional areas of high noise should be separated from areas of quiet. Clothes or storage closets are useful separators.</text> </paragraph> <paragraph num="(2)"> <text>Partitions should extend to solid floor-ceiling construction and should not terminate at hung ceilings.</text> </paragraph> <paragraph num="(3)"> <text>Pipes should be caulked and wrapped and ductwork should be sealed where they penetrate sound-impeding partitions and floors. Ducts should be lined near registers or grilles, and at fan discharge.</text> </paragraph> <paragraph num="(4)"> <text>Motors, fans, and other mechanical equipment should be balanced and mounted.</text> </paragraph> <paragraph num="(5)"> <text>If kitchens or bathrooms are located back-to-back, special attention should be given to the construction to reduce noise from plumbing fixtures and noise through medicine cabinets.</text> </paragraph> <paragraph num="(6)"> <text>Where living units are adjacent to high noise areas such as boiler rooms or other mechanical equipment, the construction separating the spaces should provide a greater noise resistance than normal room separation.</text> </paragraph> </paragraph> <text>Notes:</text> <paragraph num="(1)"> <text>Abbreviations:</text> </paragraph> <paragraph num="(2)"> <text>Variations to these areas and dimensions may be permitted when existing partitions preclude precise compliance, and the available area or dimensions do not hinder furniture placement and the normal use of the space.</text> </paragraph> <paragraph num="(3)"> <text>The least dimension of each room function applies, except for the overlap or double use of space in combination rooms.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Fire Protection."> <paragraph num="A."> <text>Objective. The objective of this section is to assure a high degree of safety to life and property preservation, by the separation of living units and the use of materials which will retard the spread of fire and prevent the passage of flame, smoke, and hot gases through open or concealed spaces within the building. An additional objective of this section is to provide means of egress which will permit persons to leave the building with safety in an emergency, and permit access for fire control personnel.</text> </paragraph> <paragraph num="B."> <text>General. These provisions apply to rehabilitation construction of existing buildings. However, where the construction, plan arrangement, and approximate number of occupants of a property are to remain unchanged, and the fire protection provisions of the local code are complied with, noncompliance with the provisions of this chapter may be acceptable, when so determined by proper local authority.</text> </paragraph> <paragraph num="C."> <text>Exits.</text> <paragraph num="(1)"> <text>One- and two-family dwellings of one, two, or three stories, and one- or two-story multifamily buildings having not more than four living units above the first floor shall have the following two means of egress:</text> <paragraph num="(a)"> <text>One exit which is a doorway, a protected passage, or a stairway; and</text> </paragraph> <paragraph num="(b)"> <text>A second exit as provided in §C(1)(a), above, or a secondary exit such as a fire escape or openable window.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Access to required exits may not necessitate passage through another living unit, nor may either exit be subject to locking by any device that would impede or prohibit ready egress.</text> </paragraph> <paragraph num="(3)"> <text>Every below-grade living unit shall have direct and convenient access to the outside of the building at grade level.</text> </paragraph> <paragraph num="(4)"> <text>All interior stairways required to be enclosed shall lead directly or through an enclosed passageway to a street, or to an open space that is accessible to a street. This passageway shall conform to the requirements applying to the stair enclosure.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Interior Fire Protection.</text> <paragraph num="(1)"> <text>Firewall, Party, or Lot-Line Wall. Firewall, party, or lot-line walls shall be continuous from the foundation to the underside of, or through, the roof, with openings in firewalls only in corridors and where properly protected with appropriate automatic fire doors. There may not be openings in party or lot-line walls. All these walls shall effectively prevent the passage of fire at every floor-ceiling intersection with the wall.</text> </paragraph> <paragraph num="(2)"> <text>Walls, Floors, and Ceiling Construction. Existing wall, floor, and ceiling construction separating living units or separating a living unit from a public corridor where it is stripped down for new finish materials, or where it is new construction, shall have a fire resistance rating of at least 3/4-hour, or 1 hour if in condominium ownership.</text> </paragraph> <paragraph num="(3)"> <text>Interior Finish.</text> <paragraph num="(a)"> <text>Interior finish materials of walls, partitions (fixed or movable), ceilings, and interior trim may not be subject to excessive surface flame spread, or in burning may not give off excessive amounts of smoke or toxic gasses.</text> </paragraph> <paragraph num="(b)"> <text>If new interior wall and ceiling finish materials are used, the surface flame spread shall not exceed the class or range of rating shown in Table .06-1. Existing undisturbed finish materials where considered to have a rating above 200 should be covered with a flame retardent paint.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Exterior Fire Protection.</text> <paragraph num="(1)"> <text>Exterior Stairways.</text> <paragraph num="(a)"> <text>An exterior stairway may be acceptable as a required exit, provided that its use is not impaired by ice or snow.</text> </paragraph> <paragraph num="(b)"> <text>Exterior stairs and landings shall be of noncombustible materials except on buildings two stories in height.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Roof Covering.</text> <paragraph num="(a)"> <text>Roof coverings shall be capable of resisting fire appropriate to the type of construction and location, and new installations shall be in accordance with nationally recognized standards. Fire retardant qualities of roof coverings shall conform to the classification established by NFPA.</text> </paragraph> <paragraph num="(b)"> <text>New roof coverings on one- and two-family dwellings and on wood frame buildings shall provide a fire resistance equivalent to a Class C roof according to NFPA classification.</text> </paragraph> <paragraph num="(c)"> <text>New roof coverings on buildings of fire resistive, noncombustible, and exterior-protected construction having more than two living units shall provide a fire resistance equivalent to a Class A or Class B roof according to U.L. classification except that where the roof area of the property is less than 3,000 square feet and is well separated from adjacent properties, the roof covering may be Class C.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Fire Protection System. An approved “smoke detector” shall be provided in each sleeping area of a rehabilitated unit as defined in Chapter 11 of the National Fire Protection Association Life Safety Code (1973 edition).</text> <paragraph num="(1)"> <text>Exclude windows, trim, and doors not more than 25 square-foot area from flame spread calculations.</text> </paragraph> <paragraph num="(2)"> <text>Finish floors and floor coverings are not included in flame spread requirements but may not be a fire hazard.</text> </paragraph> <paragraph num="(3)"> <text>Twenty-five percent of the combined wall area of any single room may be of a finish material having a flame spread rating of up to 225.</text> </paragraph> <paragraph num="(4)"> <text>Kitchen cabinets and counter tops should not exceed a 200 flame spread rating.</text> </paragraph> <paragraph num="(5)"> <text>Classification in accordance with NFPA No. 101, “Life Safety Code,” as follows:</text> </paragraph> <paragraph num="(a)"> <text>ASTM E84 (Tunnel Test)</text> </paragraph> <paragraph num="(b)"> <text>ASTM E162-62T (Radiant Panel Test)</text> </paragraph> <aftertext>Note: Flame spread rating based on either of the following standard tests:</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Materials and Products."> <paragraph num="A."> <text>Objective. The objective is to provide materials of such kind and quality as to assure that the dwelling will provide appropriate structural strength, adequate resistance to weather and moisture, and reasonable durability and economy of maintenance.</text> </paragraph> <paragraph num="B."> <text>Quality of Materials and Products. All materials and products used as replacements or additions in rehabilitation construction shall be of good quality. Second-hand materials which meet the standards for new materials may be used when approved by the proper local authority. The suitability of special materials and products not conforming to a national standard shall be determined by the proper authority, after an evaluation of its properties and performance characteristics.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Construction."> <paragraph num="A."> <text>Objective. The objective is to assure that the construction of the rehabilitated portion of the building will provide sufficient structural strength and rigidity; adequate protection from corrosion, decay, insects, and other destructive forces; necessary resistance to the elements; reasonable durability and economy of maintenance; and acceptable quality of workmanship.</text> </paragraph> <paragraph num="B."> <text>Structural Soundness. All structural components of the building shall be in sound condition and considered serviceable for the expected useful life of the rehabilitated building. Sagging or out-of-plumb floors, chimneys, fireplaces, partitions, or stairs, and bulging of exterior walls shall be restored as near as practical to an acceptable level or plumb position, and supported or braced to prevent a recurrence of these conditions. Stair railings shall be rigid. Individual structural members in a seriously deteriorated condition shall be replaced. Loosely jointed structural members shall be restored to original rigidity.</text> </paragraph> <paragraph num="C."> <text>Thermal Protection. Necessary corrective measures shall be required to ensure that the building has the following minimum thermal protection:</text> <paragraph num="(1)"> <text>Thermal protection for glazing and doors is required for all habitable heated areas in locations having more than 4500 annual winter degree days. This will be effected through the installation of storm doors and storm sashes or inserts, or insulating glass. Material and installation may be the most economical locally acceptable, but shall meet the U values as prescribed for new construction. Storm doors need not be applied to double front doors, double French doors, sliding glass doors, or any other door for which the cost of custom manufacturing would be excessive. Casement and awning windows and other types of sash may be exempted on an individual basis in any instance due discontinued sizes, unusual opening configuration for which no storm sash is manufactured and for which the cost of custom manufacturing would be excessive.</text> </paragraph> <paragraph num="(2)"> <text>Ceiling insulation shall be provided over all heated areas in locations having 2500 or more annual winter degree days as follows:</text> <paragraph num="(a)"> <text>2500 to 4500 degree days —R-11 insulation;</text> </paragraph> <paragraph num="(b)"> <text>4501 to 8000 degree days —R-19 insulation;</text> </paragraph> <paragraph num="(c)"> <text>8001 or more degree days —R-22 insulation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In all instances the adequacy of attic ventilation must be ascertained. Exemption of the ceiling insulation requirements will be allowed for buildings having flat roofs or other ceiling areas where installation is determined to be impractical unless ceiling finish is to be removed in the course of rehabilitation. Under-floor insulation shall be required beneath all heated areas over unheated spaces in localities having 2500 or more annual winter degree days. Insulation may be installed between or under floor joists as follows: 2500 to 4500 degree days -- R-7 insulation; above 4500 degree days -- R-11 insulation. Exemption of under-floor insulation will be allowed where reflective foil insulation is already installed.</text> </paragraph> <paragraph num="(4)"> <text>When the exterior wall is repaired to the extent of removing the sheathing or inside wall covering, insulation shall be installed in the exposed portion of the wall cavity. The thermal insulation shall fill the exposed wall cavity or furring space without excessive compression. A vapor barrier shall be provided on the warm side of the cavity or furring space when insulation is added.</text> </paragraph> <paragraph num="(5)"> <text>Weatherproofing.</text> <paragraph num="(a)"> <text>Doors and windows shall be adequately weatherstripped to reduce infiltration of air.</text> </paragraph> <paragraph num="(b)"> <text>Loose or brittle caulking around door and window frames shall be replaced. New caulking shall be installed where none is present.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Exterior Walls.</text> <paragraph num="(1)"> <text>General. Foundations and exterior walls shall provide safe and adequate support for all loads upon them, and prevent the entrance of water or excessive moisture. Serious defects shall be repaired and cracks effectively sealed, or replaced.</text> </paragraph> <paragraph num="(2)"> <text>Basement and Foundation Walls.</text> <paragraph num="(a)"> <text>Basement and foundation walls should prevent the entrance of water or moisture into basement or crawl space areas. Cracks in the walls shall be effectively sealed, and loose or defective mortar joints shall be replaced. If necessary, the interior or exterior face of the walls shall be damp-proofed by bituminous coating and cement parging.</text> </paragraph> <paragraph num="(b)"> <text>Deficiencies in proper grading or paving adjacent to the building shall be corrected to assure surface drainage away from basement walls.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Partitions, Columns, and Posts. Partitions and other vertical supports which are to be continued in use shall be free of splits, excessive lean, buckling, or other defects.</text> </paragraph> <paragraph num="F."> <text>Floor Construction.</text> <paragraph num="(1)"> <text>General. All floor construction shall provide safe and adequate support for all existing or probable loads and shall be reasonably free of objectionable vibration. A suitable surface for finish flooring shall exist or be provided.</text> </paragraph> <paragraph num="(2)"> <text>Basement or Cellar Floors. The floors of all basement or cellar furnace rooms, or basements containing habitable space, shall be paved in an acceptable manner, except, if the basement or cellar has existing wood floor construction over a crawl space which is in a sound undamaged condition, it may remain, provided the crawl space is adequately vented, and an acceptable ground cover material is installed on the ground in the crawl space.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Chimneys, Incinerators and Vents. Chimneys and vents shall be structurally safe, durable, smoke-tight and capable of withstanding the action of flue gases. Factory-built chimneys shall be labeled by Underwriters' Laboratories Inc., and installed in accordance with the listing.</text> </paragraph> <paragraph num="H."> <text>Protection from Rodents, Termites, or Other Infestation.</text> <paragraph num="(1)"> <text>Each building and all exterior appurtenances on the site shall be effectively protected against rodents, termites, or other vermin infestation, using approved methods.</text> </paragraph> <paragraph num="(2)"> <text>Inspection and Correction. A careful inspection by qualified persons shall be made of each building and accessory structure on each property for evidence of actual or potential infestation or access channels. Existing buildings having defects that permit the entrance of rodents, termites, or other vermin shall be corrected by appropriate preventive measures. Damaged or deteriorated structural members shall be replaced.</text> </paragraph> <paragraph num="(3)"> <text>Inspection for Decay and Deterioration. An inspection shall be made of both interior and exterior construction for evidence of rot, rust, or decay damage or other hazards. If structural damage to these materials is found to exist, correction shall be provided.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Exterior and Interior Finishes."> <paragraph num="A."> <text>Objective.</text> <paragraph num="(1)"> <text>Acceptably prevent the entrance or penetration of moisture and weather;</text> </paragraph> <paragraph num="(2)"> <text>Be protected from damage by decay, corrosion, insects, and other destructive elements; and</text> </paragraph> <paragraph num="(3)"> <text>Provide reasonable durability and economy of maintenance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Exterior Finish.</text> <paragraph num="(1)"> <text>Exterior Wall Covering. Repairs or replacement shall be made to defective exterior wall finish materials. Exterior walls shall be free of holes, cracks, and broken or rotted finish materials.</text> </paragraph> <paragraph num="(2)"> <text>Roof Covering. All roofs shall have a suitable, watertight, and reasonably durable covering free of holes, cracks, excessively worn surfaces, or other defects.</text> </paragraph> <paragraph num="(3)"> <text>Exterior Surfaces. Exterior surfaces shall be treated, if necessary, to eliminate the hazards of lead-based paint poisoning in the manner determined by the Program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Gutters and Downspouts. Each dwelling shall have a controlled method of disposal of water from roofs if necessary to prevent damage to the property, and to avoid causing unsightly staining of walls and windows where adequate roof overhangs are not provided.</text> </paragraph> <paragraph num="D."> <text>Flashing. To prevent the entrance of water, all critical joints in exterior roof and wall construction which are exposed or partly exposed shall be protected by sheet metal or other suitable flashing material.</text> </paragraph> <paragraph num="E."> <text>Windows, Doors, and Other Openings.</text> <paragraph num="(1)"> <text>Existing windows and doors, including their hardware, shall operate satisfactorily and give evidence of continuing acceptable service. Defective glass or locking mechanisms shall be replaced or corrected.</text> </paragraph> <paragraph num="(2)"> <text>Screens shall be provided for all windows, doors, and other openings except in regions where their use is not customary or needed. Existing screens and storm sashes which are to be continued in use shall be in suitable condition to serve their intended purpose.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Interior Walls and Ceiling Finish.</text> <paragraph num="(1)"> <text>All interior walls and ceilings shall provide the following:</text> <paragraph num="(a)"> <text>A finished surface without noticeable irregularities or cracking;</text> </paragraph> <paragraph num="(b)"> <text>A waterproof and hard surface in space subject to moisture;</text> </paragraph> <paragraph num="(c)"> <text>A suitable base for painting or other decoration; and</text> </paragraph> <paragraph num="(d)"> <text>Reasonable durability and economy of maintenance.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Exterior surfaces shall be treated, if necessary, to eliminate the hazards of leadbased paint poisoning in the manner determined by the Program.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Finish Floors. Finish floors shall be appropriate to the use of the space and in good condition, and shall provide reasonable ease of maintenance and an extended life service.</text> </paragraph> <paragraph num="H."> <text>Painting and Decoration.</text> <paragraph num="(1)"> <text>Protective and decorative finish coating or surfacing shall provide adequate resistance to weathering, protection of surfaces from moisture or corrosion, an attractive appearance, and reasonable durability.</text> </paragraph> <paragraph num="(2)"> <text>Paint may not contain more than .5 percent lead by weight calculated as lead metal in the total nonvolatile content of liquid paints or in the dried film of paint already applied.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Alterations and Repairs. All alterations, repairs, and other improvements shall be harmonious with existing materials.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Mechanical Equipment."> <paragraph num="A."> <text>Objective. The objective is to provide mechanical equipment for the building and its living units that will meet the needs of the intended occupants and be of quality and condition which will assure safety of operation, adequate capacity for its intended use, protection from moisture, corrosion, or other destructive elements, reasonable quietness of operation, and reasonable durability and economy of maintenance.</text> </paragraph> <paragraph num="B."> <text>General.</text> <paragraph num="(1)"> <text>All mechanical equipment should be installed so that maintenance and replacement can be performed without the removal of other equipment.</text> </paragraph> <paragraph num="(2)"> <text>Existing mechanical equipment and systems shall be inspected for faulty operation, fire, or other hazards. Needed replacement or repair shall conform to applicable code requirements.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Mechanical Ventilation and Air Conditioning. If mechanical ventilation is required in rooms or other spaces, the equipment or system shall operate satisfactorily if presently in place. If new, it shall be designed and installed to good engineering practice.</text> </paragraph> <paragraph num="D."> <text>Heating.</text> <paragraph num="(1)"> <text>Heating facilities shall be provided for each living unit and other spaces that will be safe and convenient to operate, economical in performance, quiet in operation, free from objectionable drafts, and will assure interior comfort.</text> </paragraph> <paragraph num="(2)"> <text>Each heating system or device shall have a recognized approval for safety and shall be capable of maintaining a temperature of at least 70 degrees F within the living units, corridors, public spaces, and utility spaces when the outside temperature is at the design temperature.</text> </paragraph> <paragraph num="(3)"> <text>Open-flame radiant type space heaters may not be permitted except for one- and two-family detached dwellings where it is locally determined to be the predominant method of providing heat for dwellings.</text> </paragraph> <paragraph num="(4)"> <text>Unvented space heaters may not be permitted except for existing equipment in geographic areas where the use of equipment of this kind is predominant, and only for one- and two-family detached dwellings.</text> </paragraph> <paragraph num="(5)"> <text>Appropriate clearances around all room or space heaters shall be provided, and the floor shall be protected in an acceptable manner (for gas: NFPA Standard No. 54, 54A; for oil: NFPA Standard No. 31-65).</text> </paragraph> </paragraph> <paragraph num="E."> <text>Plumbing.</text> <paragraph num="(1)"> <text>General. The plumbing system and its appurtenances for each building shall provide satisfactory water supply, sewage, disposal, drainage, venting, and operation of fixtures in conformance with applicable codes or in the manner prescribed by the Program.</text> </paragraph> <paragraph num="(2)"> <text>Required Fixtures. For required plumbing fixtures see Regulation .05B(5) and (6).</text> </paragraph> <paragraph num="(3)"> <text>Condition of Existing Plumbing. Plumbing systems, including building sewers, shall operate free of fouling and clogging, and may not have cross connections which permit contamination of water supply or back-siphonage between fixtures.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Domestic Water Heating and Storage.</text> <paragraph num="(1)"> <text>Each building and living unit within the building shall have domestic hot water in quantities sufficient for the needs of the occupants.</text> </paragraph> <paragraph num="(2)"> <text>Existing water heating and storage equipment shall be in good serviceable condition.</text> </paragraph> <paragraph num="(3)"> <text>Water heaters may not be installed in a room used or designed to be used for sleeping purposes. Gas- or oil-fired water heaters may not be located in a bathroom clothes closet, under any stairway, or in a confined space with access only to the above locations.</text> </paragraph> <paragraph num="(4)"> <text>All fuel burning water heaters shall be connected to a vent leading to the exterior of the building.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Electrical.</text> <paragraph num="(1)"> <text>General. All habitable rooms and other appropriate spaces requiring electrical service shall be provided with a system of wiring, wiring devices, and equipment to safely supply electrical energy for proper illumination, appliances, resident security, and other electrical equipment.</text> </paragraph> <paragraph num="(2)"> <text>Existing Wiring and Equipment. If its continued service is contemplated, existing wiring and electrical equipment may not be a potential source of electrical hazard or ignition of combustible materials. The proper authority shall make this determination. Wherever these potential hazards are determined to be present, replacement of existing wiring and equipment shall be made. Existing facilities that are inadequate to meet anticipated demands shall be appropriately increased.</text> </paragraph> <paragraph num="(3)"> <text>New Electrical Work. The National Electrical Code shall be used as a guide for design layout and installation of new electrical work. At least two At least two general lighting circuits (15 amp.) and one appliance general lighting circuits (15 amp.) and one appliance circuit (20 amp.) shall be provided for each living unit. Heavy duty equipment shall have individual branch circuits, as required by the National Electrical Code.</text> </paragraph> <aftertext>Note: Table .10-2 gives the recommended minimum recovery rate in gallons per hour at 100 degrees F rise according to the storage capacity (or size) of the tank, and for a designated number of living units. The blank spaces in the table mean the tank size would be either too small to provide sufficient hot water, or too large a tank to be practical.</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Maintenance."> <paragraph num="A."> <text>Objective. The objective is to promote adequate maintenance of dwelling units rehabilitated under the Program.</text> </paragraph> <paragraph num="B."> <text>General. Each dwelling unit shall be free of maintenance conditions hazardous to health and safety upon the completion of rehabilitation work, and each occupant or sponsor should be counseled as to their responsibilities for continued maintenance of the dwelling unit.</text> </paragraph> <paragraph num="C."> <text>Cleanliness. Every occupant of a building should keep that part of the building or premises which he occupies, controls or uses in a clean and sanitary condition.</text> </paragraph> <paragraph num="D."> <text>Disposal of Garbage and Rubbish. Every occupant of a building should dispose all of his garbage and rubbish in a clean and sanitary manner.</text> </paragraph> <paragraph num="E."> <text>Use and Operation of Plumbing Fixtures. Every occupant of a building should keep plumbing fixtures clean and sanitary and should exercise reasonable care in their use and operation.</text> </paragraph> <paragraph num="F."> <text>Motor Vehicles. Not more than one currently unregistered or uninspected motor vehicle, or both, may be parked on any property, and that vehicle may not at any time be in a state of major disassembly or disrepair, nor may it be in the process of being stripped or dismantled.</text> </paragraph> <paragraph num="G."> <text>Abandoned Ice Boxes. Abandoned ice boxes, refrigerators, or other large airtight containers may not be stored in a living unit or elsewhere on the property.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §4-923(b), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 18, 1977 (4:24 Md. R. 1804)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.09 to COMAR 05.04.02</annotation> </annotations> </chapter> <chapter num="03" heading="Migratory Worker Housing Facilities Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making loans for improving migratory labor camps under the Act.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The basic objective of the Program is to make plans at a preferred rate of interest to owners of migratory labor camps to finance health and safety improvements to housing facilities for migratory workers.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in the Act have the meanings defined in the Act and, in addition, the meanings used in these regulations.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“ALTA” means the American Land Title Association.</text> </paragraph> <paragraph num="(3)"> <text>“Applicant” means any individual, partnership, corporation, or other business entity which applies for a loan under the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Approved plan” means a plan which has been approved by the Department.</text> </paragraph> <paragraph num="(5)"> <text>“Assistant Director” means the Assistant Director for Home Improvement Programs, Community Development Administration.</text> </paragraph> <paragraph num="(6)"> <text>“Borrower” means an owner of a migratory labor camp who receives a loan under the Program.</text> </paragraph> <paragraph num="(7)"> <text>“Closing costs” means the total of all settlement, costs and fees and, when applicable, initial payments for taxes, property insurance, title search, percolation tests, or other expense items related to the migratory labor camp property.</text> </paragraph> <paragraph num="(8)"> <text>“Contract” means all agreements and documents between the borrower and any other person or entity for the performance of work to be financed by a loan made by the Program.</text> </paragraph> <paragraph num="(9)"> <text>“Contractor” means any person or entity who contracts with the borrower for the performance of work to be financed by a loan made by the Program.</text> </paragraph> <paragraph num="(10)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(11)"> <text>“Director” means the Director of the Community Development Administration.</text> </paragraph> <paragraph num="(12)"> <text>“Loan” means a migratory housing facilities loan.</text> </paragraph> <paragraph num="(13)"> <text>“MAI” means a member of the Appraisal Institute of the American Institute of Real Estate Appraisers.</text> </paragraph> <paragraph num="(14)"> <text>"MDH" means the Maryland Department of Health.</text> </paragraph> <paragraph num="(15)"> <text>“Migratory housing facilities loan” means a loan to a qualified owner of a migratory labor camp made for the purpose of improving the health and safety of migratory worker housing facilities.</text> </paragraph> <paragraph num="(16)"> <text>“Migratory labor camp” means one or more structures, buildings, tents, barracks, trailers, vehicles, mobile homes, converted buildings, and unconventional enclosures of living spaces, together with the land appertaining to it, established, operated, or used as living quarters for four or more migratory workers engaged in agricultural activities, including related food processing.</text> </paragraph> <paragraph num="(17)"> <text>“Migratory worker” means any person from within or outside the State who:</text> <paragraph num="(a)"> <text>Moves seasonally from one place to another for the purpose of employment;</text> </paragraph> <paragraph num="(b)"> <text>Is not a year-round employee; and</text> </paragraph> <paragraph num="(c)"> <text>Occupies living quarters other than his permanent home during the period of this work.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“MOSHA” mean Maryland Occupational Safety and Health Administration.</text> </paragraph> <paragraph num="(19)"> <text>“Owner” means any individual, partnership, corporation, or other business entity which owns in fee simple a migratory labor camp located in the State.</text> </paragraph> <paragraph num="(20)"> <text>“Plan” means a proposal which has been approved by MDH and MOSHA describing the structural, mechanical, electrical, plumbing, and other work items necessary for health and safety improvements to a migratory labor camp.</text> </paragraph> <paragraph num="(21)"> <text>“Program” means the Migratory Worker Housing Facilities Program.</text> </paragraph> <paragraph num="(22)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(23)"> <text>“SRA” means a Senior Residential Appraiser of the Society of Real Estate Appraisers.</text> </paragraph> <paragraph num="(24)"> <text>“SREA” means a member of the Society of Real Estate Appraisers.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrowers."> <paragraph num="A."> <text>Borrowers shall meet the following requirements, which shall be met jointly and separately if there is more than one applicant:</text> <paragraph num="(1)"> <text>Be an owner as defined in these regulations;</text> </paragraph> <paragraph num="(2)"> <text>If an individual, be a resident of or have a principal place of business in the State, or, if a business entity, be in good standing and be qualified to do business in Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Have been denied a loan, in a comparable amount to that requested from the Program, by a private lending institution currently making similar loans, or else have received a commitment from a private lending institution for less than the amount of funds required to finance the necessary health and safety improvements;</text> </paragraph> <paragraph num="(4)"> <text>Submit a plan; and</text> </paragraph> <paragraph num="(5)"> <text>Have the legal capacity or, if applicable, all necessary legal and corporate authorization to incur the obligations of the loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If title to the migratory labor camp property to be improved is held by more than one individual, partnership, corporation, or business entity in any form of joint tenancy, each person having an interest in the property shall be deemed to be an applicant for purposes of these regulations.</text> </paragraph> <paragraph num="C."> <text>If the applicant for a loan is a business entity, personal guarantees will be required from the principals of the business in accordance with Regulation .06G of this chapter.</text> </paragraph> <paragraph num="D."> <text>An applicant may not receive more than $200,000 in total loans from the Program. This limitation shall apply both jointly and separately if there is more than one applicant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Migratory Labor Camp."> <text>Migratory labor camps shall meet the following requirements:</text> <paragraph num="A."> <text>Be located within the State;</text> </paragraph> <paragraph num="B."> <text>Provide living accommodations for four or more migratory workers engaged in agricultural activities, including related food processing; and</text> </paragraph> <paragraph num="C."> <text>Be, in the determination of MDH and MOSHA, in need of health or safety improvements, or both, in conjunction with a plan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Loan Terms, Limits, and Requirements."> <text>All loans shall be made for the terms, and conform to the requirements, set forth below:</text> <paragraph num="A."> <text>Interest Rate. The Department shall from time to time and, in accordance with the Act, establish the interest rate to be paid on all loans at a preferred rate.</text> </paragraph> <paragraph num="B."> <text>Term. The Department shall establish the term of all loans which:</text> <paragraph num="(1)"> <text>May include a construction period of generally not more than 4 months; and</text> </paragraph> <paragraph num="(2)"> <text>May not exceed 10 years from completion of construction.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Amount Restrictions. Restrictions on loan amounts are as follows:</text> <paragraph num="(1)"> <text>The minimum approvable loan amount shall be not less than $2,000;</text> </paragraph> <paragraph num="(2)"> <text>Except as otherwise provided in these regulations, the maximum amount of loans for improvements to any one migratory labor camp may not exceed $75,000;</text> </paragraph> <paragraph num="(3)"> <text>The preceding loan amount restrictions may be varied if, in the sole determination of the Department, the improvements required pursuant to the plan cannot reasonably be financed with the loan amount restrictions;</text> </paragraph> <paragraph num="(4)"> <text>If the plan is a multi-phased plan with respect to improvements to the migratory labor camp, and the owner applies to the Program for more than one loan, the preceding loan amount restrictions shall be applied separately to each loan; and</text> </paragraph> <paragraph num="(5)"> <text>Notwithstanding any other provision of these regulations, the total maximum amount of loans to any one borrower, or for improvements to any one migratory labor camp, may not exceed $200,000.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Loan-to-Value Ratio. Notwithstanding the provisions of §C of this regulation, a loan may not exceed an amount which, when added to any outstanding debts secured by or relating to the eligible migratory labor camp property, would equal 67 percent of the appraised value of the property after the proposed improvements are completed. If the total amount of outstanding debt relating to the property exceeds 67 percent of the appraised value, the borrower may pledge other assets of the borrower to satisfy the loan-to-value ratio. If other assets are pledged to secure the loan, any outstanding debts secured by or relating to the pledged assets shall be considered in determining the loan-to-value ratio.</text> </paragraph> <paragraph num="E."> <text>Monthly Payment. The borrower shall repay the loan by single monthly payments which shall be applied to expenses, when applicable, interest, and principal, in that order.</text> </paragraph> <paragraph num="F."> <text>Late Charge. Late charges, as permitted by law, will be charged.</text> </paragraph> <paragraph num="G."> <text>Security for Loans. All loans shall be evidenced by a promissory note and any other documents that the Department may require. All loans shall be secured by a first lien, or in the discretion of the Department a second lien, mortgage, or deed of trust in a form required by the Department, which shall be recorded in the land records of the political subdivision in which the migratory labor camp property is located. Pursuant to §D of this regulation, the Department may require the borrower to provide additional security through an indemnity mortgage or a lien covering other assets of the borrower. If the borrower is a business entity, the principals of the business entity shall guarantee repayment of the loan and the performance of the borrower's obligations under the loan documents.</text> </paragraph> <paragraph num="H."> <text>Disbursement. The Department shall disburse loan funds in accordance with a draw schedule approved before or at the loan closing. The draw schedule shall be based upon completion of specified items or a percentage of work. Payment shall be requested by the borrower and approved by the Assistant Director or his designee based on completed work.</text> </paragraph> <paragraph num="I."> <text>Change of Ownership or Use.</text> <paragraph num="(1)"> <text>The borrower may not sell, cease to own, assign, transfer, dispose of, lease, refinance, or encumber all or any portion of the migratory labor camp property, or the borrower's interest in the property, during the loan term, without the prior written consent of the Department.</text> </paragraph> <paragraph num="(2)"> <text>The borrower may not cease to use all or any portion of the migratory labor camp property for purposes other than housing facilities for migratory workers during the loan term, or, if the loan is prepaid in full before its maturity, within 5 years of the date of prepayment without the prior written consent of the Department.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Prepayment. Borrowers may prepay a loan, in whole or in part, without penalty, at any time during the term of the loan.</text> </paragraph> <paragraph num="K."> <text>Assumption. Loans may not be assumed without the prior written consent of the Department. However, an assumption may not be approved unless the proposed borrower qualifies as an eligible applicant in accordance with Regulation .04 of this chapter.</text> </paragraph> <paragraph num="L."> <text>Insurance.</text> <paragraph num="(1)"> <text>The borrower shall maintain fire and extended coverage insurance at the borrower's expense in an amount not less than the sum of the loan and any prior debts secured by the migratory labor camp property.</text> </paragraph> <paragraph num="(2)"> <text>The insurance policy or policies shall:</text> <paragraph num="(a)"> <text>Be written by companies authorized to transact business in the State;</text> </paragraph> <paragraph num="(b)"> <text>Be written by companies which are reputable and financially sound, as determined by the Department;</text> </paragraph> <paragraph num="(c)"> <text>Be in force at the time of the loan closing;</text> </paragraph> <paragraph num="(d)"> <text>Name the Department as mortgagee in a standard mortgagee clause attached to or printed in the policy; and</text> </paragraph> <paragraph num="(e)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="M."> <text>Flood Insurance. If the migratory labor camp is located in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, it shall be covered by a flood plain insurance policy in an amount equal to the loan, naming the Department as beneficiary. The policy may not be terminated without prior notification to the Department. Before initiation of construction of the improvements, the borrower shall secure all necessary flood plain permits from the Maryland Department of Natural Resources and the political subdivision in which the migratory labor camp is located.</text> </paragraph> <paragraph num="N."> <text>Title Insurance. The borrower shall provide a title insurance policy in standard ALTA form, or any other form approved by the Department naming the Department as an insured mortgagee, and containing only standard exceptions and encumbrances approved in writing by the Department.</text> </paragraph> <paragraph num="O."> <text>Appraisals.</text> <paragraph num="(1)"> <text>Before the approval of a loan, the borrower shall submit an appraisal of the migratory labor camp property which, at the discretion of the Department, shall be prepared by either of the following:</text> <paragraph num="(a)"> <text>A certified MAI, SREA, or SRA appraiser; or</text> </paragraph> <paragraph num="(b)"> <text>A person, financial institution, or entity acceptable to the Department with prior experience in appraising real property.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The appraisal shall indicate the property's value before and after the proposed improvements and shall be in a form and conducted in a manner acceptable to the Department.</text> </paragraph> <paragraph num="(3)"> <text>If machinery, equipment, or other personal property is also proposed to secure the loan, the borrower shall submit an appraisal of the machinery, equipment, or other property performed by a licensed auctioneer or other person generally engaged in the business of valuating equipment and whose experience and qualifications are acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="P."> <text>Escrow Account. If there is no prior mortgage on the migratory labor camp property requiring the payment of expenses to the mortgagee, the Program mortgage or deed of trust shall require the borrower to make monthly expense payments to the Program in escrow consisting of 1/12 of annual real estate taxes, property insurance premiums, and when appropriate, other items for which payments are required by the Department. Interest on the escrowed expense funds shall be credited to the escrow account at the rates and terms set forth in the documents evidencing and securing the loan.</text> </paragraph> <paragraph num="Q."> <text>Eligible Costs.</text> <paragraph num="(1)"> <text>The proceeds of a loan may be used to finance the following eligible costs:</text> <paragraph num="(a)"> <text>Construction of necessary improvements;</text> </paragraph> <paragraph num="(b)"> <text>Architectural, planning, technical, or design fees.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All closing costs, together with the cost of appraisals, and any other costs incidental to loan approval shall be paid by the borrower.</text> </paragraph> </paragraph> <paragraph num="R."> <text>Compliance with Laws. The borrower shall agree to comply with all applicable State and federal laws, orders, ordinances, and regulations, including, by way of example, the laws, orders, ordinances, and regulations relating to equal opportunity.</text> </paragraph> <paragraph num="S."> <text>Default.</text> <paragraph num="(1)"> <text>A loan is in default when:</text> <paragraph num="(a)"> <text>Any payment required by the loan documents is 90 days delinquent;</text> </paragraph> <paragraph num="(b)"> <text>There is a default in any other term or condition of any loan document; or</text> </paragraph> <paragraph num="(c)"> <text>As set forth in §T of this regulation, a representation made by the borrower in the application or any document submitted to the Program in connection with the loan is determined to have been untrue.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Remedies for default shall include all remedies provided for in the loan documents, in the Act, or by law.</text> </paragraph> <paragraph num="(3)"> <text>In the event of any default by the borrower, the Department may, after notice to the borrower, increase the interest rate of the loan to the prevailing private mortgage rate.</text> </paragraph> </paragraph> <paragraph num="T."> <text>Any borrower who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's actions, shall be subject to the criminal penalties set forth in the Act in addition to immediate acceleration of the loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Application, Processing, and Closing."> <paragraph num="A."> <text>Loan application shall be made on forms and in a manner prescribed by the Department and shall be submitted to the offices of the Program.</text> </paragraph> <paragraph num="B."> <text>The loan application shall include without limitation:</text> <paragraph num="(1)"> <text>A plan which shall be approved by the Department before the loan closing;</text> </paragraph> <paragraph num="(2)"> <text>A rejection letter from a bank or other private lending institution stating the terms and amounts applied for and the reason for rejection, or a letter of commitment from a bank or private lending institution for funding insufficient to finance the total cost of the improvements;</text> </paragraph> <paragraph num="(3)"> <text>An application fee in an amount to be determined by the Department;</text> </paragraph> <paragraph num="(4)"> <text>An appraisal of the migratory labor camp property pursuant to Regulation .06O of this chapter; and</text> </paragraph> <paragraph num="(5)"> <text>Sufficient information and documentation to determine the extent, if any, to which the plan or improvements will change the type of use or increase the intensity of the existing use of the migratory labor camp property.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Applicants shall submit any additional documentation required by the Department in order to establish the eligibility and creditworthiness of the applicant.</text> </paragraph> <paragraph num="D."> <text>The Department shall issue a letter of commitment to an applicant to evidence the approval of a loan. The Department may not take action on a loan after issuance of a commitment letter until the applicant accepts the terms and conditions of the commitment letter by executing and returning a copy of the letter.</text> </paragraph> <paragraph num="E."> <text>The Department shall issue a letter of rejection to an applicant to evidence disapproval of a loan. The rejection letter shall state the reasons for disapproval and shall advise the applicant of his appeal rights.</text> </paragraph> <paragraph num="F."> <text>An applicant may withdraw a loan application at any time before loan closing by written notice to the Program. The applicant shall bear any costs incurred for items other than the Program's internal processing, including but not limited to title examination, credit reports, and appraisals.</text> </paragraph> <paragraph num="G."> <text>The loan closing shall be scheduled at a time acceptable to the applicant and the Department through an attorney selected by the applicant and approved by the Department. All taxes and assessments against the migratory labor camp property which are due and payable shall be paid at or before the loan closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Contractor Requirements."> <paragraph num="A."> <text>All contractors shall:</text> <paragraph num="(1)"> <text>Be licensed by the appropriate authority governing the type of work to be performed and meet all other State and local licensing requirements;</text> </paragraph> <paragraph num="(2)"> <text>Be, in the opinion of the Department, of good reputation, financially sound, and fully qualified to perform the required work, as evidenced by previous professional construction experience;</text> </paragraph> <paragraph num="(3)"> <text>Furnish evidence of the following:</text> <paragraph num="(a)"> <text>Comprehensive public liability insurance coverage protecting the borrower for not less than $100,000 for injuries sustained by any one person, and $300,000 for injuries sustained by two or more persons in any one accident,</text> </paragraph> <paragraph num="(b)"> <text>Property damage liability insurance of not less than $50,000 for each occurrence and $100,000 aggregate in the event of property damage arising out of work performed by the contractor,</text> </paragraph> <paragraph num="(c)"> <text>Workmen's compensation insurance, and</text> </paragraph> <paragraph num="(d)"> <text>With respect to loans of $50,000 or more, a payment and performance bond in an amount satisfactory to the Department and naming the Department and the borrower as dual obligees;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Perform all work:</text> <paragraph num="(a)"> <text>In conformance with the contract and all applicable laws, local codes, ordinances, and regulations including, by way of example, those laws, local codes, ordinances and regulations relating to the protection and safety of persons and property, and</text> </paragraph> <paragraph num="(b)"> <text>In a competent, workmanlike manner equal to the standards of the industry;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Furnish all labor, materials, and equipment, and obtain and pay for all permits and licenses necessary for execution and completion of the work;</text> </paragraph> <paragraph num="(6)"> <text>Not assign the contract without the prior written consent of the Department;</text> </paragraph> <paragraph num="(7)"> <text>Agree to permit the Department or its designee to examine and inspect the work;</text> </paragraph> <paragraph num="(8)"> <text>Agree to complete all work within the completion date specified in the loan documents;</text> </paragraph> <paragraph num="(9)"> <text>Indemnify and hold the Department harmless from all liability and loss because of injury to or death of any person or damage to any property which may occur or be alleged to occur during performance of the contract as a direct or indirect result of any act or omission, whether intentional, negligent, or otherwise, by the contractor, subcontractors, or their agents, servants, and employees;</text> </paragraph> <paragraph num="(10)"> <text>Defend all claims and suits involving §A(9) at its sole cost and expense;</text> </paragraph> <paragraph num="(11)"> <text>Use its best efforts to employ contractors which are minority business enterprises; and</text> </paragraph> <paragraph num="(12)"> <text>Meet any other requirements that the Department may reasonably establish.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The requirements of §A of this regulation shall also apply to subcontractors except that, with respect to §A(3), subcontractors may be included within the contractor's insurance coverage.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Construction Process."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>Construction may not begin before the loan closing. Commencement of work before closing shall constitute an event of default under the loan documents. Except as may be otherwise approved pursuant to these regulations, construction shall be completed within 4 months of the loan closing.</text> </paragraph> <paragraph num="(2)"> <text>Work done, materials supplied, and construction procedures shall comply with the approved plan, the contract, and all applicable laws, local codes, ordinances, and regulations.</text> </paragraph> <paragraph num="(3)"> <text>There shall be no modifications of the contract without the prior written consent of the Department as evidenced by an approved change order executed by the contractor and the borrower and approved by the Department as well as MDH, and MOSHA, as applicable.</text> </paragraph> <paragraph num="(4)"> <text>The Department, through a designated agent, shall be given access to the migratory labor camp property during the normal business hours for the purpose of inspection or for any other lawful purpose.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Disbursement.</text> <paragraph num="(1)"> <text>All disbursements of the loan shall be made:</text> <paragraph num="(a)"> <text>In accordance with a draw schedule approved before the loan closing;</text> </paragraph> <paragraph num="(b)"> <text>Only for work completed and in place, as determined by the Department;</text> </paragraph> <paragraph num="(c)"> <text>Only upon receipt of a certification by the borrower and the contractor of the costs for which loan funds are requested; and</text> </paragraph> <paragraph num="(d)"> <text>With respect to loans of less than $50,000, only upon receipt of a waiver of liens from all contractors, subcontractors, and materialmen under the contract for all work performed or materials included in the last previous request for disbursement within 30 days from the date of funding of the previous request for disbursement or before the next request for disbursement, whichever is earlier.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department may not make any advances.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall issue final payment after:</text> <paragraph num="(a)"> <text>The Department receives a certificate of completion executed by the borrower and the contractor certifying that all work has been completed and paid for in accordance with the contract;</text> </paragraph> <paragraph num="(b)"> <text>The Department makes a final inspection of the work performed and receives and approves the certificate of completion;</text> </paragraph> <paragraph num="(c)"> <text>The Department has verified and reconciled all disbursements and receipts or deposits by the borrower which may be required by the Department;</text> </paragraph> <paragraph num="(d)"> <text>The Department receives a certification by MDH and MOSHA that the improvements have been completed in accordance with the plan; and</text> </paragraph> <paragraph num="(e)"> <text>With respect to loans of less than $50,000 the Department receives final waivers of liens from all contractors, subcontractors, and materialmen under the contract.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Any funds remaining in the loan account after final disbursement shall be applied to reduce the principal balance of the loan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Appeals by Borrower or Applicant."> <paragraph num="A."> <text>Criteria for Appeal.</text> <paragraph num="(1)"> <text>A borrower or applicant may appeal to the Assistant Director from any action taken by the Department through the Program.</text> </paragraph> <paragraph num="(2)"> <text>Notice of Appeal.</text> <paragraph num="(a)"> <text>An appeal shall be initiated by submitting a notice of appeal to the Assistant Director, in writing, within 30 days of the action complained of or the date of the notice of the action complained of, if any, whichever is later.</text> </paragraph> <paragraph num="(b)"> <text>The notice of appeal shall:</text> <paragraph num="(i)"> <text>State the reason for disagreement with the action of the Department;</text> </paragraph> <paragraph num="(ii)"> <text>Contain any additional information to be considered in support of the appeal, and a statement of why the information was not furnished with the original application;</text> </paragraph> <paragraph num="(iii)"> <text>Attach supporting documents;</text> </paragraph> <paragraph num="(iv)"> <text>State whether the borrower or applicant wants to meet with the Assistant Director;</text> </paragraph> <paragraph num="(v)"> <text>Contain the borrower's or applicant's name, address, telephone number, and, if known, the Program file number;</text> </paragraph> <paragraph num="(vi)"> <text>Contain an affirmation, under oath, that the facts set forth in the notice of appeal are true and correct.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Disposition.</text> <paragraph num="(a)"> <text>If requested, the Assistant Director will meet with the borrower or applicant to resolve the appeal. If a meeting is not requested, the Assistant Director shall decide the appeal based on the information contained in the notice of appeal and supplied to the Assistant Director by the Program staff.</text> </paragraph> <paragraph num="(b)"> <text>The Assistant Director shall issue a written decision within 15 days of receipt of the notice or the date of the meeting, if any, whichever is later.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Action by the Director.</text> <paragraph num="(1)"> <text>If a borrower or applicant is dissatisfied with an action taken by the Assistant Director, the borrower or applicant is encouraged to seek a resolution by the Director.</text> </paragraph> <paragraph num="(2)"> <text>Borrowers or applicants may initiate action by requesting a meeting with the Director and the Assistant Director. The request shall be submitted to the Director in writing, and a copy sent to the Assistant Director.</text> </paragraph> <paragraph num="(3)"> <text>The Director shall issue a written disposition as soon as practicable after the meeting with the borrower or applicant. The Director's decision shall state the action complained of, a concise summary of the matters and facts presented at the meeting, and the Director's decision. The Director shall deliver a copy of the decision to the borrower or applicant and the Assistant Director.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Appeal to the Secretary.</text> <paragraph num="(1)"> <text>A borrower or applicant may appeal an action of the Director to the Secretary only if the appeal is based on the alleged failure of the Director or Assistant Director, or both, to follow the regulations, rules, guidelines, standards, or loan documents of the Program. There will be no administrative appeal for any action which is not based on the failure to follow the regulations, rules, guidelines, standards, or loan documents.</text> </paragraph> <paragraph num="(2)"> <text>Procedure. The procedure for the taking of an appeal to the Secretary is set forth in COMAR 05.01.01.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="A."> <text>Conformance to the requirements of any federal agency in connection with any improvements with respect to which federal assistance is sought necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="B."> <text>In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purpose of the Act.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-910 and 4-928, Annotated Code of Maryland;Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 6, 1983 (10:11 Md. R. 973)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.14 to COMAR 05.04.03</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 2, 1994 (20:25 Md. R. 1941); April 5, 1999 (26:7 Md. R. 537)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective January 2, 1994 (20:25 Md. R. 1941)</annotation> </annotations> </chapter> <chapter num="04" heading="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.19 adopted as an emergency provision effective November</annotation> <annotation type="History" subtype="Administrative History">20, 1986 (13:26 Md. R. 2796); emergency status expired May 20, 1987; adopted</annotation> <annotation type="History" subtype="Administrative History">permanently effective July 27, 1987 (14:15 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.21 to COMAR 05.04.04</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.19 repealed effective May 25, 1992 (19:10 Md. R. 929)</annotation> </annotations> </chapter> <chapter num="05" heading="Indoor Plumbing Loan Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making loans to provide indoor plumbing connecting to supply adequate water and sewage disposal systems in residential buildings.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The basic objectives of the Program are to:</text> <paragraph num="(1)"> <text>Make loans to or for the benefit of individuals with limited incomes to finance indoor plumbing pipes, equipment, wells, septic tanks, or other on-site sewerage systems, or connection to community water and sewerage systems; and</text> </paragraph> <paragraph num="(2)"> <text>Develop the capacity of political subdivisions to administer the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in the Act shall have the meanings defined there and, in addition, the meanings used in these regulations.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” refers to Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits less:</text> <paragraph num="(a)"> <text>Unusual or temporary income items as determined by the Department; and</text> </paragraph> <paragraph num="(b)"> <text>Abnormal expenses of a long-term nature, such as extraordinary medical, rehabilitation, or special education expenses.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Borrower” means an applicant who receives a loan under the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Building” means any structure which satisfies the requirements of Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Closing costs” means the total of all settlement costs and fees and, when applicable, initial payment for taxes, property insurance, title examination, or other expense items as determined by the Department.</text> </paragraph> <paragraph num="(6)"> <text>“Deferred payment loan” means a loan which permits the deferral of principal or interest, or both principal and interest.</text> </paragraph> <paragraph num="(7)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Director” means the Director of Single Housing Programs of the Department.</text> </paragraph> <paragraph num="(9)"> <text>Family of Extremely Low Income.</text> <paragraph num="(a)"> <text>“Family of extremely low income” means one or more individuals residing as a household in a dwelling unit, whose total combined annual income does not exceed the limits established from time to time by the Secretary in accordance with §4-916(b) of the Act, which income limits are less than those established for families of very low income.</text> </paragraph> <paragraph num="(b)"> <text>“Family of extremely low income” includes a trust described in 42 U.S.C §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with §4-916(b) of the Act; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(10)"> <text>Family of Limited Income.</text> <paragraph num="(a)"> <text>“Family of limited income” means one or more individuals residing as a household in a dwelling unit whose total combined annual income does not exceed the limits established from time to time by the Secretary in accordance with §4-915 of the Act.</text> </paragraph> <paragraph num="(b)"> <text>“Family of limited income” includes a trust described in 42 U.S.C §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with §4-915 of the Act; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(11)"> <text>Family of Lower Income.</text> <paragraph num="(a)"> <text>“Family of lower income” means one or more individuals residing as a household in a dwelling unit, whose total combined annual income does not exceed the limits established from time to time by the Secretary in accordance with §4-916(b) of the Act, which income limits are less than those established for families of very low income.</text> </paragraph> <paragraph num="(b)"> <text>“Family of lower income” includes a trust described in 42 U.S.C §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with §4-916(b) of the Act; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(12)"> <text>Family of Very Low Income.</text> <paragraph num="(a)"> <text>“Family of very low income” means one or more individuals residing as a household in a dwelling unit, whose combined total annual income does not exceed the limits established by the Secretary in accordance with §4-916(b) of the Act, which income limits are less than those established for families of lower income.</text> </paragraph> <paragraph num="(b)"> <text>“Family of very low income” includes a trust described in 42 U.S.C §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with §4-916(b) of the Act; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Level I local administrator” means a political subdivision certified by the Department under Regulation .16B of this chapter.</text> </paragraph> <paragraph num="(14)"> <text>“Level II local administrator” means a political subdivision certified by the Department under Regulation .16C of this chapter.</text> </paragraph> <paragraph num="(15)"> <text>“Loan” means a loan made under the Program.</text> </paragraph> <paragraph num="(16)"> <text>“Local administrator” means a level I or level II local administrator.</text> </paragraph> <paragraph num="(17)"> <text>"MDE" means the Maryland Department of the Environment.</text> </paragraph> <paragraph num="(18)"> <text>“Mobile home” means a structure transportable in one or more sections which is built on a permanent chassis and is designed to be used as a dwelling, with or without a permanent foundation, when connected to the requisite utilities.</text> </paragraph> <paragraph num="(19)"> <text>“Owner-landlord” means an owner of a building, who may or may not occupy the building, some or all of which is used for residential rental purposes.</text> </paragraph> <paragraph num="(20)"> <text>“Owner-occupant” means an owner residing or intending to reside in a building which contains one dwelling unit and no other units, residential or commercial.</text> </paragraph> <paragraph num="(21)"> <text>“Political subdivision” means any municipal corporation in Maryland subject to the provisions of Article XI-E of the Constitution, the Mayor and City Council of Baltimore, and any of the 23 counties in Maryland.</text> </paragraph> <paragraph num="(22)"> <text>“Program” means the Indoor Plumbing Loan Program.</text> </paragraph> <paragraph num="(23)"> <text>“Program Director” means the Assistant Director of Special Loan Programs in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(24)"> <text>“Related costs” means costs related to the implementation of a rehabilitation project under the Program such as percolation tests, appraisal fees, engineering fees, permit and permit application fees, and other similar costs approved by the Program. Related costs do not include loan application fees.</text> </paragraph> <paragraph num="(25)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(26)"> <text>“Structurally and mechanically sound building” means a building that does not have physical conditions serious enough to endanger the life, property, or safety of the occupants or the public. A building may be structurally sound and not be in compliance with all applicable codes and standards.</text> </paragraph> <paragraph num="(27)"> <text>“Subcontractor” means an entity authorized by the Department to carry out the duties and responsibilities of a local administrator under Regulation .16D(1) of this chapter and to hold and disburse funds under Regulation .16D(2) of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrowers."> <paragraph num="A."> <text>Owner-occupants shall meet the following requirements which shall be met jointly and separately by all applicants if there is more than one applicant:</text> <paragraph num="(1)"> <text>Be a family of limited income;</text> </paragraph> <paragraph num="(2)"> <text>Reside, or intend to reside, in the building;</text> </paragraph> <paragraph num="(3)"> <text>Hold title to the building for which the loan is made in fee simple or under a freely transferable ground rent lease;</text> </paragraph> <paragraph num="(4)"> <text>Demonstrate repayment ability, in the estimation of the Department; and</text> </paragraph> <paragraph num="(5)"> <text>Have income at a level that the Secretary has determined renders the applicant unable to afford or secure private financing to rehabilitate the property.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Owner-landlords shall meet the following requirements, which shall be met jointly and separately if there is more than one applicant:</text> <paragraph num="(1)"> <text>If a business entity, be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Hold title to the building in fee simple or under a freely transferable ground rent lease;</text> </paragraph> <paragraph num="(3)"> <text>Have the legal capacity, and all necessary legal and corporate authorizations, to incur the obligations of the loan;</text> </paragraph> <paragraph num="(4)"> <text>Demonstrate credit worthiness and repayment ability in the estimation of the Department;</text> </paragraph> <paragraph num="(5)"> <text>In the estimation of the Department, be unable to afford or secure a loan from a private lending institution to finance the improvements;</text> </paragraph> <paragraph num="(6)"> <text>Agree in writing that all of the dwelling units improved with the loan proceeds shall be occupied by and rented to either:</text> <paragraph num="(a)"> <text>Families of limited income until the later of the following, after completion of the improvements:</text> <paragraph num="(i)"> <text>The end of the loan term;</text> </paragraph> <paragraph num="(ii)"> <text>The date on which all principal and interest and other sums due on the loan are fully paid;</text> </paragraph> <paragraph num="(iii)"> <text>15 years; or</text> </paragraph> <paragraph num="(iv)"> <text>Such longer period as the Department or the local administrator may require; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Families of lower income until the later of the following, after completion of the improvements:</text> <paragraph num="(i)"> <text>The end of the loan term;</text> </paragraph> <paragraph num="(ii)"> <text>The date on which all principal and interest and other sums due on the loan are fully paid;</text> </paragraph> <paragraph num="(iii)"> <text>15 years; or</text> </paragraph> <paragraph num="(iv)"> <text>Such longer period as the Department or the local administrator may require;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>If the number of units improved with the loan proceeds is less than 2/3 of the total number of units, agree in writing to rent at least 2/3 of all units in the building to families of limited income;</text> </paragraph> <paragraph num="(8)"> <text>Agree to abide by all requirements of Titles VI and VII of the Civil Rights Act of 1964, and Title VIII of the Civil Rights Act of 1968;</text> </paragraph> <paragraph num="(9)"> <text>Agree to abide by the provisions of the Governor's Code of Fair Practices, COMAR 01.01.1987.20 and COMAR 01.01.1988.05;</text> </paragraph> <paragraph num="(10)"> <text>Agree to abide by any regulations promulgated by the Department implementing the Governor's Executive Order 01.01.1989.18 requiring recipients of State funds to maintain a workplace free of any drug and alcohol abuse;</text> </paragraph> <paragraph num="(11)"> <text>Provide satisfactory assurances to the Department that in the 12 months preceding application for a Program loan, the borrower did not cause a residential tenant to leave the building except upon good cause; and</text> </paragraph> <paragraph num="(12)"> <text>Agree in writing to assist with relocation of tenants to the extent required by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Both owner-occupants and owner-landlords shall submit to the Department a proposal for the installation of the proposed improvements which complies with the requirements of MDE and other governmental entities with jurisdiction.</text> </paragraph> <paragraph num="D."> <text>An applicant who is suspended or debarred from the Department's programs pursuant to any action under COMAR 05.01.05 is not eligible to participate in the Program.</text> </paragraph> <paragraph num="E."> <text>If title to the property to be rehabilitated is held by more than one person in any form of joint tenancy, each person having an interest in the property is considered to be an applicant for purposes of these regulations.</text> </paragraph> <paragraph num="F."> <text>For the purposes of determining annual income, only the income of persons who permanently reside in the unit shall be used.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Building."> <paragraph num="A."> <text>All buildings shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(2)"> <text>Be a structurally and mechanically sound building except as permitted under §B of this regulation;</text> </paragraph> <paragraph num="(3)"> <text>Be in need of indoor plumbing pipes, equipment, wells, septic tanks, or other on-site sewerage system, or connection to community water and sewerage systems;</text> </paragraph> <paragraph num="(4)"> <text>Have:</text> <paragraph num="(a)"> <text>No or incomplete indoor plumbing, or</text> </paragraph> <paragraph num="(b)"> <text>An existing, failing septic system;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Be owned by an eligible borrower who shall provide assurance of title or evidence of ownership acceptable to the Department; and</text> </paragraph> <paragraph num="(6)"> <text>Contain not more than 20 dwelling units.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Buildings which are not structurally and mechanically sound may be eligible buildings if the owner of the building provides a commitment from a public or private lender to finance improvements required to make the building structurally and mechanically sound.</text> </paragraph> <paragraph num="C."> <text>A manufactured housing unit is eligible if it is intended for residential use by a single household, and:</text> <paragraph num="(1)"> <text>Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(2)"> <text>Is not less than 24 feet in width and 40 feet in length;</text> </paragraph> <paragraph num="(3)"> <text>Is not independently capable of movement and is installed permanently on an engineered foundation in conformance with COMAR 05.02.01, or the standards set by the American National Standards Institute, Inc. which are incorporated by reference under COMAR 05.02.04;</text> </paragraph> <paragraph num="(4)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(5)"> <text>Is certified by the United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, or by the Department as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(6)"> <text>Complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> <paragraph num="(7)"> <text>Is installed on real property the occupant owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(8)"> <text>Meets all applicable zoning requirements as to the number of dwelling units, lot size, and building setbacks; and</text> </paragraph> <paragraph num="(9)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Manufactured homes which are taxed as personal property may be eligible for loans in amounts of $5,000 or less. Applications for manufactured homes shall be reviewed and approved by the Department on a case-by-case basis.</text> </paragraph> <paragraph num="E."> <text>Condominiums and cooperative units may be eligible buildings and shall be reviewed by the Department on a case-by-case basis.</text> </paragraph> <paragraph num="F."> <text>Property being purchased under a land installment contract, or other types of property are not eligible buildings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Improvements."> <paragraph num="A."> <text>Proceeds of a loan may finance improvements which are necessary to provide adequate indoor plumbing connecting to adequate water supply and sewage disposal systems which include without limitation:</text> <paragraph num="(1)"> <text>Wells;</text> </paragraph> <paragraph num="(2)"> <text>Septic tanks and drain fields;</text> </paragraph> <paragraph num="(3)"> <text>Piping from the system into the buildings;</text> </paragraph> <paragraph num="(4)"> <text>Connection fees and assessments;</text> </paragraph> <paragraph num="(5)"> <text>Plumbing fixtures and equipment, including fixtures for the handicapped;</text> </paragraph> <paragraph num="(6)"> <text>Additions, modifications, and alterations required to provide adequate private space for toilet and bath facilities;</text> </paragraph> <paragraph num="(7)"> <text>Sand mound systems;</text> </paragraph> <paragraph num="(8)"> <text>Water treatment systems;</text> </paragraph> <paragraph num="(9)"> <text>For owner-occupants only, related costs described in Regulation .03B(27) of this chapter, and other costs or improvements essential to implementing the required system, and consistent with the purposes of the Act as determined by the Department; and</text> </paragraph> <paragraph num="(10)"> <text>Alternative and innovative septic and water systems which comply with the requirements of and are approved by MDE and all governmental entities having jurisdiction over those systems.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Proceeds of a loan may not finance any improvements which serve a nonresidential portion of a building.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms and Requirements — General."> <paragraph num="A."> <text>Maximum Loan Amount.</text> <paragraph num="(1)"> <text>The maximum loan amount, when added to any prior indebtedness secured by the building, may not exceed 95 percent of the after-rehabilitation value of the building.</text> </paragraph> <paragraph num="(2)"> <text>If 100 percent of the units are subject to a federal rent subsidy which is allocated to the project for the entire term of the loan, then the 95 percent loan-to-value ratio required by §A(1) of this regulation may be raised to 100 percent.</text> </paragraph> <paragraph num="(3)"> <text>If, in the determination of the Program Director, a loan increase is necessary to assure completion of the building and protect the Department's interest, an increase in the mortgage may be made to cover extraordinary and unforeseen construction problems if the increase can be made within the limits on maximum loan amounts set forth in §A(1)—(3) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>Closing costs as defined in Regulation .03B(5) of this chapter may be included in loans on owner-occupied dwellings, if the loan does not exceed the limits on the maximum loan amount set forth in §A(1)—(3) of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Interest Rate.</text> <paragraph num="(1)"> <text>The Department may establish different interest rates for loans serving occupants who are families of:</text> <paragraph num="(a)"> <text>Limited income;</text> </paragraph> <paragraph num="(b)"> <text>Lower income families; and</text> </paragraph> <paragraph num="(c)"> <text>Very low income.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The interest rates charged on loans may not be more than private lending rates for comparable loans.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Insurance.</text> <paragraph num="(1)"> <text>Hazard Insurance. The owner of the building shall maintain fire and extended coverage insurance at the owner's expense in an amount not less than the sum of the loan and any other indebtedness secured by the building, and the hazard insurance policy shall:</text> <paragraph num="(a)"> <text>Be written by companies authorized to transact business in the State;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of loan closing;</text> </paragraph> <paragraph num="(c)"> <text>Name the Department as named insured and loss payee as its interest may appear in a standard mortgagee endorsement attached to or printed in the policy; and</text> </paragraph> <paragraph num="(d)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Flood Insurance. If the building is in a 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the:</text> <paragraph num="(a)"> <text>Building shall be covered by a flood plain insurance policy in an amount equal to the sum of the loan and any other indebtedness secured by the building, naming the Department as beneficiary; and</text> </paragraph> <paragraph num="(b)"> <text>Flood plain policy may not be terminated without prior notification to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Term. The term of each loan may not exceed 30 years from the date of completion of the improvements, and shall be based upon the amount of the loan, the borrower's ability to repay, and the expected economic life of the building.</text> </paragraph> <paragraph num="E."> <text>Periodic Payment. Except for deferred payment loans, periodic payments shall be charged which shall be applied to expenses, when applicable, interest, and principal in that order.</text> </paragraph> <paragraph num="F."> <text>Late Charge. Late charges, as permitted by law, may be imposed.</text> </paragraph> <paragraph num="G."> <text>Security for Loans.</text> <paragraph num="(1)"> <text>Loans of $5,000 or less shall be evidenced by a promissory note and such other documents as may be required by the Department.</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §§G(4)—(5) of this regulation, loans in excess of $5,000, and loans providing for deferred payments, 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. The mortgage or deed of trust may be subordinate to other recorded mortgage liens if the mortgagee of the mortgage gives any consents required by the prior mortgagee's loan documents or by the Department.</text> </paragraph> <paragraph num="(3)"> <text>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.</text> </paragraph> <paragraph num="(4)"> <text>A loan to a trust described in 42 U.S.C. §1396P (D)(4) may be secured by a mortgage or deed of trust on real property, or other security device acceptable to the Department.</text> </paragraph> <paragraph num="(5)"> <text>A loan in excess of $5,000 to a borrower in a housing cooperative unit may be secured by another security device acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Appraisals.</text> <paragraph num="(1)"> <text>At the discretion of the Program Director or the local administrator, borrowers may be required to obtain an appraisal in a form and manner acceptable to the Department from an acceptable independent fee appraiser showing the building's value before and after the proposed rehabilitation.</text> </paragraph> <paragraph num="(2)"> <text>Applicants shall bear the costs of appraisals, which may be financed in the case of a loan made to an owner-occupant.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Change of Borrower Eligibility. If the borrower's income changes or the borrower no longer satisfies other requirements of Regulation .04 of this chapter, the Department may, in accordance with the terms of the loan agreements between the borrower and the Department:</text> <paragraph num="(1)"> <text>Increase the interest rate up to a rate set by the Program from time to time;</text> </paragraph> <paragraph num="(2)"> <text>Accelerate the payment of the entire principal and interest due; or</text> </paragraph> <paragraph num="(3)"> <text>If the income of the individuals served by the loan changes, increase or decrease the interest rate to a rate permitted by §B of this regulation.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Change of Ownership.</text> <paragraph num="(1)"> <text>If the loan finances improvements for a residential rental building, except for an owner-occupied building with four or fewer residential units, then the borrower may not sell, cease to own, assign, transfer, mortgage, pledge, encumber, grant a security interest in, or dispose of all or any part of the building or the borrower's interest in the building, or lease the dwelling unit in which the owner-occupant resides, during the loan term, without the prior written consent of the Department.</text> </paragraph> <paragraph num="(2)"> <text>If the loan finances improvements for a residential building with four or fewer units, one of which is occupied by the borrower, then the loan is due and payable in full upon the sale, encumbrance, or other transfer of the building or any interest in the building, including a lease of the owner's unit for more than 3 years, unless the transfer is made to a person who will occupy the owner's unit and the transfer is:</text> <paragraph num="(a)"> <text>Made by operation of law upon the death of a joint tenant;</text> </paragraph> <paragraph num="(b)"> <text>To a spouse upon separation or divorce;</text> </paragraph> <paragraph num="(c)"> <text>To a spouse or child;</text> </paragraph> <paragraph num="(d)"> <text>To a relative upon the death of the owner;</text> </paragraph> <paragraph num="(e)"> <text>To an inter vivos trust whereby the borrower is the beneficiary and owner of the property and provides assurances acceptable to the Department of any subsequent transfer; or</text> </paragraph> <paragraph num="(f)"> <text>A transfer for which the parties have received the prior written consent of the Department, in its sole discretion.</text> </paragraph> </paragraph> </paragraph> <paragraph num="K."> <text>Default. Remedies upon loan default shall be exercised in the discretion of the Department and may be one or more of the remedies provided for in the loan documents or by law, such as:</text> <paragraph num="(1)"> <text>Adjustments to the interest rate of the loan upward or downward;</text> </paragraph> <paragraph num="(2)"> <text>Suspension or debarment from the Department's programs;</text> </paragraph> <paragraph num="(3)"> <text>Foreclosure;</text> </paragraph> <paragraph num="(4)"> <text>Accepting a deed in lieu of foreclosure;</text> </paragraph> <paragraph num="(5)"> <text>Appointment of a receiver; and</text> </paragraph> <paragraph num="(6)"> <text>Other legal action which protects the Department's interests.</text> </paragraph> </paragraph> <paragraph num="L."> <text>Refinancing. The Department may not refinance existing debt related to an eligible building.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Terms and Requirements — Deferred Loans."> <paragraph num="A."> <text>In addition to the conditions and requirements of Regulation .07 of this chapter, deferred loans shall meet the requirements in §§B—F of this regulation.</text> </paragraph> <paragraph num="B."> <text>Eligibility. The Department may make loans with deferred payments of principal or interest or both principal and interest to:</text> <paragraph num="(1)"> <text>Single family owner-occupants who are families of very low income and sponsors or nonprofit sponsors of buildings occupied entirely by tenants who are families of very low income; or</text> </paragraph> <paragraph num="(2)"> <text>As determined by the Secretary, any category of borrowers necessary to achieve the purposes of the Act.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Amount of Deferred Payments. The Department may defer payments of principal or interest, or both principal and interest, to the minimum extent required based on the borrower's capacity to repay.</text> </paragraph> <paragraph num="D."> <text>Repayment. The loan documents shall provide for repayment of deferred amounts at the maturity date or at any earlier date established by the Department or the local administrator, or upon any sale or other transfer of the building or any interest in the building other than a residential lease of less than 3 years duration. The Department may, but need not, charge interest on the deferred interest.</text> </paragraph> <paragraph num="E."> <text>Forgiveness of Deferred Payments. The Program may forgive deferred payments or portions of deferred payments at any time during the term of the loan if:</text> <paragraph num="(1)"> <text>The borrower is a family of extremely low income;</text> </paragraph> <paragraph num="(2)"> <text>The Secretary determines that the borrower does not have sufficient income to repay at that time, which determination need not be made on a case-by-case basis; and</text> </paragraph> <paragraph num="(3)"> <text>In cases of deferral, upon the transfer of the property for consideration, in the Program's estimation there is not enough equity in the property available for repayment.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Limitations. The Department, from time to time, may establish limitations on percentage or amount of funding which may be used for deferred loans.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Loan Terms and Requirements for Secured Loans."> <paragraph num="A."> <text>In addition to the conditions and requirements of Regulations .07 and .08 of this chapter, secured loans shall meet requirements in §§B—D of this regulation.</text> </paragraph> <paragraph num="B."> <text>Deed of Trust. The deed of trust shall secure repayment of the loan by the granting of a valid lien on the building.</text> </paragraph> <paragraph num="C."> <text>Escrow Account. If there is no prior mortgage requiring the payment of expenses to a mortgagee, the borrower may be required 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 need not be paid to borrowers on escrowed monies except as required by law.</text> </paragraph> <paragraph num="D."> <text>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.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Loan Application Process."> <paragraph num="A."> <text>Procedure — In General. The Department shall establish application procedures for loan administrators to follow, that will facilitate the application process and best serve the needs of the political subdivisions and the State. These procedures may be amended from time to time and are binding upon all borrowers. Alternative procedures may not be used without the prior approval of the Department.</text> </paragraph> <paragraph num="B."> <text>Application Forms. Applications shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="C."> <text>Application Fee. Upon submission of a loan application, the applicant may be required to pay an application fee in an amount set by the local administrator, subject to approval by the Department.</text> </paragraph> <paragraph num="D."> <text>Documentation.</text> <paragraph num="(1)"> <text>The applicant shall submit with the application any documentation that the Department requires, including, but not limited to, any documentation needed to establish the eligibility and credit worthiness of the applicant.</text> </paragraph> <paragraph num="(2)"> <text>Applicants shall submit supporting documentation specified in the checklist attached to the application, which may include any of the following:</text> <paragraph num="(a)"> <text>A copy of the deed to the property;</text> </paragraph> <paragraph num="(b)"> <text>A copy of all existing mortgages or mortgage verification requests, on the form approved by the Department, signed by the applicant for each mortgage secured by the building;</text> </paragraph> <paragraph num="(c)"> <text>A copy of the first page and declarations page of all policies for fire and extended coverage insurance and, if applicable, flood insurance;</text> </paragraph> <paragraph num="(d)"> <text>A copy of the most recent real estate tax bill which sets forth the current assessed value of the building and the property;</text> </paragraph> <paragraph num="(e)"> <text>Verification of the total assets and annual income of each person in the household of an owner-occupant applicant, or, for owner-landlord applicants, a list of all tenants in a building showing household name, address, number of persons in the household, total combined annual household income, and current monthly rent;</text> </paragraph> <paragraph num="(f)"> <text>For the 2 years immediately preceding the application:</text> <paragraph num="(i)"> <text>If self-employed, copies of federal income tax returns, or, if a nonprofit organization, the applicable federal reporting forms;</text> </paragraph> <paragraph num="(ii)"> <text>Copies of State income tax returns; or</text> </paragraph> <paragraph num="(iii)"> <text>A request signed by the applicant, on the form designated by the Department, for copies of the applicant's State income tax returns; and</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>With the application, a description of the proposed improvements, followed by a contractor's proposal which complies with all applicable MDE and other governmental requirements.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition, owner-landlord applicants shall submit the following documentation:</text> <paragraph num="(a)"> <text>If applicable, certified copies of the organizational documents of the owner-landlord and a certificate of good standing;</text> </paragraph> <paragraph num="(b)"> <text>Certified financial statements of the applicant and, if applicable, certified financial statements of its principals;</text> </paragraph> <paragraph num="(c)"> <text>3 years of operating statements for the project;</text> </paragraph> <paragraph num="(d)"> <text>If applicable, resolutions of the board of directors or consents of all of the partners authorizing the application;</text> </paragraph> <paragraph num="(e)"> <text>For projects receiving federal subsidies, copies of all contracts or feasibility analyses prepared by the administering agency, as applicable;</text> </paragraph> <paragraph num="(f)"> <text>Photographs of the building and site;</text> </paragraph> <paragraph num="(g)"> <text>Evidence that the property is a separate subdivided lot and a separate tax lot, if the building has more than four dwelling units; and</text> </paragraph> <paragraph num="(h)"> <text>Evidence of zoning compliance.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Loan Approval and Disapproval."> <paragraph num="A."> <text>Initial Eligibility Determination.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the local administrator for an initial review to make a preliminary determination of the eligibility of the applicant and the project.</text> </paragraph> <paragraph num="(2)"> <text>If an applicant is determined preliminarily to be eligible, appropriate verification forms shall be distributed, credit reports shall be obtained, and the applicant may be provided with a letter from the local administrator in the form approved by the Program acknowledging receipt of the application and notifying the applicant of the ongoing review process.</text> </paragraph> <paragraph num="(3)"> <text>If the applicant is ineligible for a loan, the applicant shall be informed in writing of the determination and the reasons for it.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Building Evaluation.</text> <paragraph num="(1)"> <text>Each building for which an application is received shall be inspected for the purpose of determining structural and mechanical soundness and evaluating the adequacy of the proposed improvements by:</text> <paragraph num="(a)"> <text>The Department;</text> </paragraph> <paragraph num="(b)"> <text>The local administrator;</text> </paragraph> <paragraph num="(c)"> <text>A nonprofit corporation acceptable to the Program or the local administrator; or</text> </paragraph> <paragraph num="(d)"> <text>A licensed contractor who is acceptable to the local administrator or the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The applicant shall be provided with a copy of an analysis of the contractor's proposal submitted as required in Regulation .10D(2)(g) of this chapter, and instructions for obtaining the contractor's proposals to complete the work.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Approval.</text> <paragraph num="(1)"> <text>Upon receipt and approval of all acceptable contractor's proposals and all other data the Program considers relevant or necessary, the local administrator originating the loan shall undertake an analysis of each loan as to loan amount, interest rate, repayment provisions, and other loan terms and conditions.</text> </paragraph> <paragraph num="(2)"> <text>After completing the steps described in §C(1) of this regulation, a level I local administrator, or a level II local administrator evaluating a loan for more than $60,000, shall forward the application package and the analysis of the loan to the Department for approval, disapproval, or modification.</text> </paragraph> <paragraph num="(3)"> <text>Approval to make a loan is as follows:</text> <paragraph num="(a)"> <text>Loans in amounts of $60,000 or less may be approved by:</text> <paragraph num="(i)"> <text>The level II local administrator, when the level II local administrator originates the loan; or</text> </paragraph> <paragraph num="(ii)"> <text>The Program Director when a level I local administrator or the Department originates a loan;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Loans in amounts over $60,000 and up to $250,000 may be approved by the Director;</text> </paragraph> <paragraph num="(c)"> <text>Loans in amounts over $250,000 shall be submitted to the Housing Finance Review Committee in accordance with COMAR 05.01.07; and</text> </paragraph> <paragraph num="(d)"> <text>In an emergency, when urgent action is required, the Secretary may approve loans by written determination without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Before a level II local administrator gives final approval and issues a loan commitment for a loan in the amount of $60,000 or less, the level II local administrator shall contact the Program and receive confirmation that funds for the loan are available.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Loan Commitments.</text> <paragraph num="(1)"> <text>Loan commitments shall be made on forms provided by the Program.</text> </paragraph> <paragraph num="(2)"> <text>Loan commitments shall specify a time limit for closing the loan. The time limit may be extended at the discretion of the local administrator with the approval of the Program.</text> </paragraph> <paragraph num="(3)"> <text>If the loan closing does not occur within the time specified, the local administrator shall notify the applicant that the commitment is officially canceled.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Rejection. If a loan application is rejected, the Department, or the local administrator, as the case may be, shall notify the applicant in writing. The rejection letter shall state the reason the loan is rejected. Each month, the Program Director shall provide the Housing Finance Review Committee with a report listing all owner-landlord loan applications rejected by the Program during the preceding month.</text> </paragraph> <paragraph num="F."> <text>Reconsideration. Applicants who are rejected may request reconsideration of a rejection in accordance with the procedures contained in the Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act, State Government Article, Title 10, Annotated Code of Maryland, or COMAR 05.01.01.</text> </paragraph> <paragraph num="G."> <text>Withdrawal of Application.</text> <paragraph num="(1)"> <text>An applicant may withdraw a loan application at any time before closing by delivering written notice to the Department or the local administrator originating the loan. The applicant shall bear any costs incurred for items other than internal processing, including, but not limited to, title examinations, credit reports, and appraisals.</text> </paragraph> <paragraph num="(2)"> <text>Withdrawn applications may not be reinstated. A new application is required.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Cancellation of Application.</text> <paragraph num="(1)"> <text>The Program or the local administrator may cancel an application at any time during processing if the applicant fails to provide any information requested.</text> </paragraph> <paragraph num="(2)"> <text>Notification of the cancellation of an application shall be in writing.</text> </paragraph> <paragraph num="(3)"> <text>A canceled application may be reinstated upon the applicant's written request within 60 days following the date of the cancellation. After that time, a new application, together with supporting documents, may be required.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Loan Closing."> <paragraph num="A."> <text>Time and Place. The loan closing shall be scheduled at a time and place mutually acceptable to the applicant and the local administrator, through a closing officer serving the applicant's area and otherwise acceptable to the local administrator.</text> </paragraph> <paragraph num="B."> <text>Loan Documents.</text> <paragraph num="(1)"> <text>Loan document forms shall be provided by the Program and may not be altered by the local administrator.</text> </paragraph> <paragraph num="(2)"> <text>Loan documents shall be executed on behalf of the Department by the officer or employee authorized to do so by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Charges and Fees. The Department or the local administrator shall charge and collect from the borrower reasonable and customary amounts acceptable to the Department for the following items:</text> <paragraph num="(1)"> <text>Credit reports;</text> </paragraph> <paragraph num="(2)"> <text>Appraisal fees, if applicable;</text> </paragraph> <paragraph num="(3)"> <text>Recording fees, taxes, and charges, if applicable;</text> </paragraph> <paragraph num="(4)"> <text>Required survey charges, if applicable;</text> </paragraph> <paragraph num="(5)"> <text>The cost of title examination and title insurance premiums, if required;</text> </paragraph> <paragraph num="(6)"> <text>Administrative fees;</text> </paragraph> <paragraph num="(7)"> <text>The cost of property and judgment reports;</text> </paragraph> <paragraph num="(8)"> <text>Inspection fees; and</text> </paragraph> <paragraph num="(9)"> <text>Other reasonable and customary charges or fees authorized by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Points may not be charged to the applicant on any loan under the Program.</text> </paragraph> <paragraph num="E."> <text>Mortgageable Items. Program charges, closing costs, and related costs may be mortgageable items for owner-occupants or for nonprofit sponsors. Sponsors that are not nonprofit organizations are required to pay for closing costs, program charges, and related costs.</text> </paragraph> <paragraph num="F."> <text>Taxes and Assessments. Taxes and assessments against the property which are due and payable shall be paid at or before closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Contractor Requirements."> <paragraph num="A."> <text>General Requirements. Contractors and subcontractors:</text> <paragraph num="(1)"> <text>Shall be licensed by the State, the local political subdivision, or the Maryland Home Improvement Commission, as applicable, to do the work required under the contract;</text> </paragraph> <paragraph num="(2)"> <text>Shall be qualified to do business in the State of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Shall be able to demonstrate to the satisfaction of the Department the ability to complete the rehabilitation work, which evidence may include previous professional rehabilitation experience;</text> </paragraph> <paragraph num="(4)"> <text>May not be suspended or debarred from the Department's programs pursuant to any action under COMAR 05.01.05;</text> </paragraph> <paragraph num="(5)"> <text>Shall agree in the contract to:</text> <paragraph num="(a)"> <text>Perform all work:</text> <paragraph num="(i)"> <text>In conformance with the contract and all applicable laws, local codes, and Departmental rehabilitation standards, whether or not covered by the work write-up and drawings for the work, and</text> </paragraph> <paragraph num="(ii)"> <text>In a competent, workmanlike manner, equal to the standards of the industry;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Comply with all applicable laws, ordinances, and regulations relating to the protection and safety of persons or property;</text> </paragraph> <paragraph num="(c)"> <text>Furnish all labor, materials, and equipment, and obtain all licenses, permits, insurance coverage, and workers' compensation as may be required to complete the rehabilitation;</text> </paragraph> <paragraph num="(d)"> <text>Not assign the contract without prior written consent of the owner and approval of the local administrator;</text> </paragraph> <paragraph num="(e)"> <text>In addition to all remedies and guarantees provided by law, and at the contractor's expense, make all necessary repairs, replacements, and corrections of any nature or description, interior or exterior, structural or nonstructural, as shall become necessary by reason of faulty workmanship or material, which appear within:</text> <paragraph num="(i)"> <text>1 year from the date the notice of completion is filed,</text> </paragraph> <paragraph num="(ii)"> <text>A longer period if any longer guarantee period is specified for any particular materials or workmanship under the plans and specifications, under a subcontract, in connection with any manufactured unit which is installed in the structure, or</text> </paragraph> <paragraph num="(iii)"> <text>A longer period, if Maryland law so provides;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Complete all specifications of the proposal within the completion date as specified in the contract;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Shall indemnify and hold the Department harmless from all liability and loss because of injury to or death of any person or damage to any property which may occur or be alleged to occur during performance of the contract as a direct or indirect result of any act or omission, whether intentional, negligent, or otherwise, by the contractor, subcontractors, or their agents, servants, and employees, and defend all suits or claims involving the above at its sole cost and expense.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Minority Contractors.</text> <paragraph num="(1)"> <text>The Department encourages the use of minority contractors for all projects in all jurisdictions, and requires compliance with the Department's Minority Business Participation Plan for all projects with rehabilitation contract costs of $200,000 or more.</text> </paragraph> <paragraph num="(2)"> <text>Copies of the Department's plan shall be made available to sponsors and contractors.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Identity of Interest.</text> <paragraph num="(1)"> <text>Owner-landlords may act as general contractors only with the prior written approval of the local administrator. Application forms shall be provided upon request and shall be submitted and approved before submission of the proposal. Approval is conditioned on an assurance of completion acceptable to the Department.</text> </paragraph> <paragraph num="(2)"> <text>An owner-occupant may not act as general contractor.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Assurance of Completion. The Department or the local administrator, in its sole discretion, may require:</text> <paragraph num="(1)"> <text>100 percent performance and 100 percent payment bonds;</text> </paragraph> <paragraph num="(2)"> <text>A letter of credit in the amount of 25 percent of the rehabilitation contract cost, and an assurance of completion agreement; or</text> </paragraph> <paragraph num="(3)"> <text>Other assurances of completion acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="E."> <text>In order to be binding, all communications between the contractor and the owner concerning the content or performance of the contract shall be in writing.</text> </paragraph> <paragraph num="F."> <text>Contractors performing work financed by a Program loan:</text> <paragraph num="(1)"> <text>May not be on the unacceptable risk determination list of the Department of Housing and Urban Development or the United States Department of Agriculture Rural Development;</text> </paragraph> <paragraph num="(2)"> <text>May not be disbarred or suspended pursuant to COMAR 05.01.05; and</text> </paragraph> <paragraph num="(3)"> <text>Shall have performed all previous work financed by the Program in a manner satisfactory to the Director.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Code Compliance. The Department or local administrator's preparation or approval of work write-ups, evaluation of the property, and review and approval of plans and specifications are for the benefit of the Department only. These actions are not intended to substitute for or ensure compliance with appropriate State and local building codes. Compliance with applicable codes and obtaining required permits and licenses are the responsibility of the borrower and contractor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Construction Process."> <paragraph num="A."> <text>Permits. If required by MDE or by local law, building or rehabilitation permits shall be obtained and posted at the project before the beginning of construction.</text> </paragraph> <paragraph num="B."> <text>Contract Documents.</text> <paragraph num="(1)"> <text>Work done, materials supplied, and construction procedures employed shall comply with all contract documents and applicable codes and standards, including those set forth in these regulations and any others established by the Department or MDE. Contract documents include, without limitation:</text> <paragraph num="(a)"> <text>Rehabilitation loan agreement;</text> </paragraph> <paragraph num="(b)"> <text>Change orders;</text> </paragraph> <paragraph num="(c)"> <text>Certification of structural and mechanical soundness;</text> </paragraph> <paragraph num="(d)"> <text>Instructions to bidders;</text> </paragraph> <paragraph num="(e)"> <text>Specifications;</text> </paragraph> <paragraph num="(f)"> <text>Drawings, if applicable; and</text> </paragraph> <paragraph num="(g)"> <text>Contractor's proposal.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>There shall be no modification of any contract document without the prior written consent of the Department or the local administrator, as evidenced by an approved change order executed by the:</text> <paragraph num="(a)"> <text>Contractor;</text> </paragraph> <paragraph num="(b)"> <text>Owner; and</text> </paragraph> <paragraph num="(c)"> <text>Local administrator.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Borrower and Contractor.</text> <paragraph num="(1)"> <text>The borrower and the contractor shall cooperate to facilitate timely performance of the rehabilitation work and selection of materials.</text> </paragraph> <paragraph num="(2)"> <text>The borrower shall provide the contractor access to the property during normal business hours, and shall permit the contractor to use existing utilities for the execution and completion of work, at no cost to the contractor.</text> </paragraph> <paragraph num="(3)"> <text>The borrower is responsible for removing and replacing rugs, furnishings, and other personal property, unless otherwise provided in the contract documents.</text> </paragraph> <paragraph num="(4)"> <text>The borrower and the contractor shall protect and maintain the property and improvements in accordance with the contract documents.</text> </paragraph> <paragraph num="(5)"> <text>The borrower and the contractor shall each, in writing, hold and save the Department harmless from any loss, claim, cost, or damage of every kind, nature, and description arising from or related to the contract documents.</text> </paragraph> <paragraph num="(6)"> <text>Communications relating to content or performance of the contract shall be in writing, and copies sent to the Program.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Inspections. The local administrator shall conduct inspections to determine the required scope of work, verify payments, mediate construction problems and disputes, and facilitate arbitration procedures.</text> </paragraph> <paragraph num="E."> <text>Construction Disputes. If disputes between the contractor and borrower occur, the Department shall recognize the findings of the Maryland Home Improvement Commission and the Consumer Protection Division of the Office of the Attorney General.</text> </paragraph> <paragraph num="F."> <text>Termination of Contracts. Contracts may be terminated for cause in accordance with applicable provisions of the loan documents and contract documents.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Loan Disbursements."> <paragraph num="A."> <text>Monitoring.</text> <paragraph num="(1)"> <text>The local administrator shall monitor loans and disbursement of loan funds during rehabilitation to assist borrowers and to assure that loan funds are properly used.</text> </paragraph> <paragraph num="(2)"> <text>Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during rehabilitation, taking into consideration the:</text> <paragraph num="(a)"> <text>Capability of the borrower;</text> </paragraph> <paragraph num="(b)"> <text>Demonstrated experience and reliability of the contractor;</text> </paragraph> <paragraph num="(c)"> <text>Amount of the loan;</text> </paragraph> <paragraph num="(d)"> <text>Availability of the local technical assistance; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The local administrator may charge borrowers a fee for inspections during rehabilitation, as approved by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Payments Generally.</text> <paragraph num="(1)"> <text>Loan funds shall be disbursed in full at the closing of the loan to an account held on behalf of the borrower by either the political subdivision that is the local administrator for the loan or the subcontractor. The loan funds shall be held in an account established under §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator or the subcontractor shall disburse the loan proceeds in accordance with the following requirements:</text> <paragraph num="(a)"> <text>Loan funds may not be disbursed if payments of interest or escrows required by the loan documents are in arrears;</text> </paragraph> <paragraph num="(b)"> <text>Payments of draws shall be by joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Senior Manager; and</text> </paragraph> <paragraph num="(c)"> <text>Except as provided in §D of this regulation, payments shall be made only for work completed, and payments may not be made for material delivered to the site but not installed in the project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Accounts.</text> <paragraph num="(1)"> <text>Loan funds shall be held in a non-interest-bearing account established by the local administrator or the subcontractor and approved by the Department. The account may be:</text> <paragraph num="(a)"> <text>An account with a depository institution that is separate from the other operating accounts of the local administrator or the subcontractor;</text> </paragraph> <paragraph num="(b)"> <text>An account with a depository institution that is not separate from the other operating accounts of the local administrator or subcontractor using a separate reconciled general ledger account for all Program funds;</text> </paragraph> <paragraph num="(c)"> <text>An escrow account or attorney's trust account held and managed by an escrow agent if the escrow agent meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(i)"> <text>Any employee of the escrow agent with access to the account shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000;</text> </paragraph> <paragraph num="(ii)"> <text>The escrow agent shall provide the local administrator or the subcontractor, if any, and the Department with the statements required under §C(2) of this regulation; and</text> </paragraph> <paragraph num="(iii)"> <text>Any other requirements established by the Department; or</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Another type of account approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department may require the local administrator or the subcontractor to provide periodic statements to the Department of all loan funds in an account. If the statements do not correspond with the Department's records of loan funds in the account, the local administrator or subcontractor shall work with the Department to reconcile the differences.</text> </paragraph> <paragraph num="(3)"> <text>The Department may revoke, at any time, its approval of any loan account established under this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Advance Payments. Advances or down payments may be made to contractors to purchase materials delivered on site or for valid purchase requisitions which do not exceed 10 percent of the contract costs.</text> </paragraph> <paragraph num="E."> <text>Progress Payments.</text> <paragraph num="(1)"> <text>Progress payments may not be made until the borrower has delivered satisfactory evidence, such as receipts or bills, of the amount of the payment requested.</text> </paragraph> <paragraph num="(2)"> <text>Progress payments may not be made without an inspection to verify completion of the work, except at the discretion of the local administrator when the entire cost of the project is $60,000 or less, or otherwise by the Department. At a minimum, however, the local administrator shall verify completion of the work before disbursing the final payment, as described in §F of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>If a borrower's request for payment is refused, the local administrator shall notify the borrower. The determination of the local administrator as to percentage of work completed is final.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Final Payment.</text> <paragraph num="(1)"> <text>Final payment shall be made as set forth in §F(2)—(5) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>A borrower shall submit to the local administrator a certificate of completion, executed by the borrower and contractor, certifying that all work has been completed in accordance with the contract documents.</text> </paragraph> <paragraph num="(3)"> <text>Final payment shall be processed upon final inspection and receipt and approval of the certificate of completion.</text> </paragraph> <paragraph num="(4)"> <text>If, in the opinion of the local administrator, the contractor has satisfied the contract and the borrower refuses to request or release the final payment, then the local administrator may follow the procedure described below:</text> <paragraph num="(a)"> <text>The local administrator may require the borrower to explain in writing within 10 days why the local administrator should not make direct payment to the contractor;</text> </paragraph> <paragraph num="(b)"> <text>If the borrower responds within the 10-day period and requests a meeting, the local administrator shall hold a meeting at which the borrower shall present the borrower's objections to requesting or releasing the final payment;</text> </paragraph> <paragraph num="(c)"> <text>The local administrator, in its discretion, may then either approve or disapprove direct payment to the contractor or the borrower.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>If the local administrator receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, and all loan funds have not yet been disbursed, the local administrator shall retain an amount equal to the lesser of all funds not yet disbursed and the amount sufficient to satisfy the claims until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor promptly shall pay or bond any liens established.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Retainage.</text> <paragraph num="(1)"> <text>The local administrator shall retain until final payment 10 percent of the contract proposal costs for all projects for which the borrower is responsible for interim project inspections.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator, at the Administrator's discretion, may elect to retain until final payment 10 percent of the contract proposal costs for any other project, taking into consideration:</text> <paragraph num="(a)"> <text>The type of project;</text> </paragraph> <paragraph num="(b)"> <text>The contractor's experience; and</text> </paragraph> <paragraph num="(c)"> <text>Other factors the Program considers relevant.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the local administrator.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Payment for Additional Work. Payment for any additional cost to complete work not included in the approved contract proposal is the obligation of the borrower. A borrower may apply to the local administrator for a loan increase to cover some or all of the increased costs. Any loan increase is subject to approval or disapproval in accordance with the provisions of these regulations. The Department has no obligation to pay for increased costs.</text> </paragraph> <paragraph num="I."> <text>Construction Disputes.</text> <paragraph num="(1)"> <text>The local administrator and the Department shall coordinate with the borrower and the contractor to resolve any dispute concerning workmanship, the quality of materials, damaged property, the completion schedule, and other matters pertinent to the contract documents.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator and the Department shall recognize the findings of the Maryland Home Improvement Commission and the Consumer Protection Division of the State Office of the Attorney General, if the dispute is submitted to their arbitration.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Termination of Contracts. Contracts may be terminated for cause in accordance with the loan documents, contract documents, and Program policies and procedures.</text> </paragraph> <paragraph num="K."> <text>Closeout Procedures.</text> <paragraph num="(1)"> <text>After final payment or payout is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements.</text> </paragraph> <paragraph num="(2)"> <text>A copy of the closeout statement shall be forwarded to the Program and the servicer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Certification of Local Governments as Local Administrators."> <paragraph num="A."> <text>General. The Department recognizes that the most effective housing programs of this kind are those administered at the local level. Therefore, each political subdivision is encouraged and expected to develop the capacity to originate and administer Program loans. While the Department has the authority to originate and administer loans, the Department does not plan to operate a program for a political subdivision. The Department reserves the right, however, to originate or administer Program loans at its discretion.</text> </paragraph> <paragraph num="B."> <text>Certification of Level I Local Administrators. The Department may certify a political subdivision to originate and administer loans when the political subdivision meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(1)"> <text>The political subdivision shall be able to provide staff to perform adequately the functions of the following positions:</text> <paragraph num="(a)"> <text>A rehabilitation director, experienced in operating a rehabilitation program, supervising employees, and dealing with the public;</text> </paragraph> <paragraph num="(b)"> <text>A building inspector, experienced in residential rehabilitation, cost estimation, writing specifications, blueprint reading, and residential inspections, and trained to understand and apply the appropriate codes and rehabilitation standards;</text> </paragraph> <paragraph num="(c)"> <text>A loan underwriter, experienced in mortgage lending and financial processing of loans; and</text> </paragraph> <paragraph num="(d)"> <text>Clerical and administrative staff trained to ensure prompt and efficient processing of applications, draw schedules, and other required items;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The rehabilitation staff of the political subdivision shall be capable of:</text> <paragraph num="(a)"> <text>Determining local rehabilitation needs evidenced by completion of a consolidated plan, a local comprehensive plan, or a local housing plan;</text> </paragraph> <paragraph num="(b)"> <text>Establishing a rehabilitation program, evidenced by prior experience in the development and operation of a rehabilitation program;</text> </paragraph> <paragraph num="(c)"> <text>Evaluating loan applications; and</text> </paragraph> <paragraph num="(d)"> <text>Monitoring both the loans and the work done under those loans;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The political subdivision shall execute and comply with the terms of an agreement required by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Certification of Level II Local Administrators. The Department may certify a political subdivision to originate and administer loans in any amount, as well as approve loans in the amount of $60,000 or less, when the:</text> <paragraph num="(1)"> <text>Political subdivision meets the criteria outlined in §B of this regulation to the Department's satisfaction; and</text> </paragraph> <paragraph num="(2)"> <text>The Department determines that the rehabilitation staff of the political subdivision is capable of:</text> <paragraph num="(a)"> <text>Evaluating, recommending, approving, or rejecting loans;</text> </paragraph> <paragraph num="(b)"> <text>Scheduling and executing loan closings;</text> </paragraph> <paragraph num="(c)"> <text>Monitoring construction activities;</text> </paragraph> <paragraph num="(d)"> <text>Closing out loan accounts; and</text> </paragraph> <paragraph num="(e)"> <text>Providing financial information to loan servicers and the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Subcontracting Program Administration.</text> <paragraph num="(1)"> <text>A political subdivision may subcontract its duties and responsibilities as a local administrator, under this chapter, except as provided in §D(2) and (3) of this regulation, with the approval of the Department. The duties described in §§B and C of this regulation may be carried out by staff of the local administrator or its subcontractor.</text> </paragraph> <paragraph num="(2)"> <text>A political subdivision may not subcontract the holding and disbursement of loan funds described in Regulation .15B and K of this chapter, except to a subcontractor which meets the following criteria to the satisfaction of the Department:</text> <paragraph num="(a)"> <text>The subcontractor meets the criteria of §§B and C of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>Any employee of the subcontractor with access to the loan funds shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000;</text> </paragraph> <paragraph num="(c)"> <text>The subcontractor provides the local administrator and the Department with periodic statements of:</text> <paragraph num="(i)"> <text>All loan funds held and disbursed by the subcontractor under Regulation .15C(2) of this chapter; and</text> </paragraph> <paragraph num="(ii)"> <text>The balance of funds on hand;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The subcontractor provides the local administrator and the Department with an annual audit conducted by an independent certified public accountant and prepared in accordance with generally accepted auditing standards; and</text> </paragraph> <paragraph num="(e)"> <text>The subcontractor complies with any other requirements established by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Regardless of any subcontracting, the Department shall continue to hold the political subdivision directly responsible for fulfilling all of its duties and responsibilities as a local administrator.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Revocation of Certification. The Department reserves the right and expects to monitor periodically the loan administration of certified local administrators, and may revoke certification upon determination that the local administrator is administering the loans in a manner inconsistent with the intent of the Program.</text> </paragraph> <paragraph num="F."> <text>Special Requirements for Local Administrators and Their Subcontractors.</text> <paragraph num="(1)"> <text>Local administrators and their subcontractors shall maintain financial records of loan disbursements for at least 3 years, and shall make them available for review by the Department at all reasonable times and as set forth in Regulation .21 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A noncomplying loan approved by a level II local administrator shall either be amended, with the borrower's concurrence, to comply with the Program's requirements, or purchased from the Department by the political subdivision.</text> </paragraph> <paragraph num="(3)"> <text>Periodically, at the request of the Department, each local administrator shall agree in writing to administer the Program in conformance with these regulations and with any other procedures prescribed by the Department.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Local Administration Fee. The Department may, at its sole discretion, pay a local administrator an annual fee for administering loans made under the Program.</text> </paragraph> <paragraph num="H."> <text>Department Authority. When the Department, in its sole discretion, administers a loan, the Department has the authority that a local administrator would have under these regulations, in addition to its authority as the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Certification of Income."> <paragraph num="A."> <text>Owner-Occupants.</text> <paragraph num="(1)"> <text>At initial occupancy, each owner-occupant shall submit to the Department a signed certificate of annual income for each member of the household 18 years old or older, along with verification documentation acceptable to the Department.</text> </paragraph> <paragraph num="(2)"> <text>After initial occupancy, the Department may require each owner-occupant to periodically submit to the Department a signed certificate of annual income for each member of the household 18 years old or older, along with verification documentation acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Owner-Landlords.</text> <paragraph num="(1)"> <text>Before initial occupancy, owner-landlords shall obtain, from all those who will occupy a dwelling unit, a completed and signed income certification form. Borrowers shall certify to the Department at initial closing and on the schedule described below that each household residing in a building unit has an annual income that does not exceed the then current income limits. The certification of the borrower shall show the current rent being charged for each unit. The borrower shall retain records documenting the information in the initial and annual income certifications for 3 years. The Department reserves the right to inspect income certification records held by the borrower at any time.</text> </paragraph> <paragraph num="(2)"> <text>After initial occupancy, the Department may require each owner-landlord to periodically submit to the Department a signed certificate that each household residing in a building unit has an annual income that does not exceed the then current income limits, along with verification documentation acceptable to the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A borrower, contractor, local administrator, or subcontractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any borrower, contractor, local administrator, or subcontractor in the connection with any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each borrower, contractor, local administrator, and subcontractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Program Fund Allocations."> <text>It is the intent of the Department that Program funds be distributed Statewide. Monies appropriated to the Program shall be made available Statewide on a first-come, first-served basis.</text> </regulation> <regulation prefix="Regulation" num=".20" heading="Books and Accounts."> <paragraph num="A."> <text>Borrowers, contractors, and subcontractors shall maintain such books, accounts, and records, and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records in §A of this regulation shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="General Provisions."> <paragraph num="A."> <text>Combining with Other Loans and Grants. Program loans may be made in conjunction with other federal or State loan or grant programs, if the requirements of the Act and these regulations are met. The Program shall be administered to the extent possible to ensure maximum use of available federal funds.</text> </paragraph> <paragraph num="B."> <text>Program Guidelines. The Department may establish from time to time detailed Program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financing of loans or to the Program. Copies of these guidelines shall be available for examination at the offices of any local administrator and at the Department's principal office. The Department, upon request, shall provide copies to the public for a reasonable charge.</text> </paragraph> <paragraph num="C."> <text>Fees. The Department may charge commitment fees, application fees, closing fees, or other fees, charges, or penalties to applicants, borrowers, or other individuals or entities that participate in the Program. The Department may restrict the fees and charges that servicers, local administrators, or other Program participants obtain from borrowers or applicants.</text> </paragraph> <paragraph num="D."> <text>Delegation. The Secretary may delegate to the Director, the Program Director, or to any other official or employee of the Department the authority to execute or approve any program documents or loan documents, including loan commitments and agreements with local administrators. In addition, through the agreement with the local administrator, specific staff members for the local administrator may be authorized by the Department to execute loan documents on behalf of the Department.</text> </paragraph> <paragraph num="E."> <text>False Statements. A borrower who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department or the local administrator originating the loan, is subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-933, Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local programs used in connection with a loan necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-910 and 4-927, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 adopted as an emergency provision effective August 28, 1986 (13:20 Md. R. 2193); emergency status extended at 14:2 Md. R. 123; emergency status expired March 1, 1987</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 adopted effective March 1, 1987 (14:4 Md. R. 413)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.22 to COMAR 05.04.05</annotation> <annotation type="History" subtype="Administrative History">Regulations .02—.06 amended effective April 12, 1993 (20:7 Md. R. 639)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 22, 1999 (26:4 Md. R. 272); November 29, 1999 (26:24 Md. R. 1855)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulations .07—.15 repealed and Regulations .07—.22 adopted effective April 12, 1993 (20:7 Md. R. 639)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09D amended effective February 22, 1999 (26:4 Md. R. 272); November 29, 1999 (26:24 Md. R. 1855)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15E amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16C amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16D amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18A amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective July 12, 2010 (37:14 Md. R. 938)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="06" heading="Lead Hazard Reduction Grant and Loan Program"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter describes the policies and procedures for making State-funded loans and grants to finance lead hazard reduction activities in residential buildings and child care centers.</text> </paragraph> <paragraph num="B."> <text>The regulations set forth in COMAR 05.04.13 describe the policies and procedures for lead hazard related grants and loans to be funded through a federal grant to the Department from the United States Department of Housing and Urban Development.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 7, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Annual income” means total household income from all sources for persons who permanently reside in the unit, including wages, investment income, Social Security, retirement, disability, and unemployment benefits, less:</text> <paragraph num="(a)"> <text>Unusual or temporary income items as determined by the Department; and</text> </paragraph> <paragraph num="(b)"> <text>Abnormal expenses of a long-term nature, such as extraordinary medical, rehabilitation, or special education expenses.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Applicant” means a person or entity who applies for a loan or grant under the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Borrower” means an owner who receives a loan under the Program.</text> </paragraph> <paragraph num="(5)"> <text>“Building” means a structure which satisfies the requirements of Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(6)"> <text>“Child care center” has the meaning stated in Family Law Article, §5-570(c), Annotated Code of Maryland, and is licensed to operate as a child care center by the Department of Human Services.</text> </paragraph> <paragraph num="(7)"> <text>“Closing costs” means the total of all settlement costs and fees and, when applicable, initial payments for taxes, property insurance, title examination, or other expense items as determined by the Department.</text> </paragraph> <paragraph num="(8)"> <text>“Deferred payment loan” means a loan described in Regulation .07 of this chapter.</text> </paragraph> <paragraph num="(9)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(10)"> <text>“Director” means the Director of Single Family Housing Programs of the Department.</text> </paragraph> <paragraph num="(11)"> <text>“Elevated blood lead” means a quantity of lead in whole venous blood, expressed in micrograms per deciliter (µg/dl), that exceeds a threshold level which is specified by the Program and conforms with guidelines of the Centers for Disease Control.</text> </paragraph> <paragraph num="(12)"> <text>“Family of limited income” means one or more persons residing as a household in a dwelling unit whose total combined annual income does not exceed income limits established from time to time by the Secretary, in accordance with Housing and Community Development Article, §4-707, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Grant” means a grant made under the Program.</text> </paragraph> <paragraph num="(14)"> <text>“Grantee” means the recipient of a grant under the Program.</text> </paragraph> <paragraph num="(15)"> <text>“Lead-affected household” means a household that includes a child or pregnant woman who has been exposed to hazardous levels of lead, as shown by elevated blood lead levels or other medical evidence acceptable to the Department, or families at risk of lead poisoning.</text> </paragraph> <paragraph num="(16)"> <text>“Lead hazard reduction activity” means an activity described in Regulation .05A of this chapter.</text> </paragraph> <paragraph num="(17)"> <text>“Lead Poisoning Prevention Program” means the Program set forth in Environment Article, §§6-801—6-852, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(18)"> <text>“Level I local administrator” means a political subdivision certified by the Department under Regulation .16B of this chapter.</text> </paragraph> <paragraph num="(19)"> <text>“Level II local administrator” means a political subdivision certified by the Department under Regulation .16C of this chapter.</text> </paragraph> <paragraph num="(20)"> <text>“Loan” means a loan made under the Program.</text> </paragraph> <paragraph num="(21)"> <text>“Local administrator” means a level I or level II local administrator.</text> </paragraph> <paragraph num="(22)"> <text>"MDE" means the Maryland Department of the Environment, a principal department of the State.</text> </paragraph> <paragraph num="(23)"> <text>“Owner-landlord” means an owner who leases all or a portion of a building, whether or not the owner resides in a dwelling unit located in the building.</text> </paragraph> <paragraph num="(24)"> <text>“Owner-occupant” means an owner who resides or intends to reside in a building which contains one dwelling unit.</text> </paragraph> <paragraph num="(25)"> <text>“Political subdivision” means:</text> <paragraph num="(a)"> <text>A municipal corporation in Maryland subject to the provisions of Article XI-E of the Constitution;</text> </paragraph> <paragraph num="(b)"> <text>The Mayor and City Council of Baltimore; and</text> </paragraph> <paragraph num="(c)"> <text>Any of the 23 counties in Maryland.</text> </paragraph> </paragraph> <paragraph num="(26)"> <text>“Program” means the Lead Hazard Reduction Grant and Loan Program described in this chapter.</text> </paragraph> <paragraph num="(27)"> <text>“Program Director” means the Assistant Director of Special Loan Programs in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(28)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(29)"> <text>“Subcontractor” means an entity authorized by the Department to carry out the duties and responsibilities of a local administrator under Regulation .16D(1) of this chapter and to hold and disburse funds under Regulation .16D(2) of this chapter.</text> </paragraph> <paragraph num="(30)"> <text>“Target area” means an area determined by the Secretary to be an area with a concentration of families of limited income and either:</text> <paragraph num="(a)"> <text>Children who have been diagnosed with elevated blood lead; or</text> </paragraph> <paragraph num="(b)"> <text>Residential property constructed before 1950.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Borrowers and Grantees."> <paragraph num="A."> <text>Requirements for Loans and Grants. In order to be eligible for a loan or grant, an applicant shall meet the following requirements:</text> <paragraph num="(1)"> <text>Hold title to the property in fee simple or under a perpetually renewable lease;</text> </paragraph> <paragraph num="(2)"> <text>If an owner-occupant, reside, or intend to reside, in the building where the lead hazard reduction activity will take place;</text> </paragraph> <paragraph num="(3)"> <text>If an owner-landlord, meet the following requirements, which shall be met individually and together by all applicants if there is more than one applicant:</text> <paragraph num="(a)"> <text>If the business entity, be in good standing and qualified to do business in Maryland,</text> </paragraph> <paragraph num="(b)"> <text>Have the legal capacity, and all necessary legal and corporate authorizations, to incur the obligations of the loan or grant,</text> </paragraph> <paragraph num="(c)"> <text>Agree to abide by the nondiscrimination and alcohol-free and drug-free workplace requirements described in Regulation .18 of this chapter,</text> </paragraph> <paragraph num="(d)"> <text>Provide satisfactory assurance that, during the 12 months before making application for a loan or grant under this chapter, the borrower did not cause a residential tenant to leave the building to be abated, except upon good cause, and</text> </paragraph> <paragraph num="(e)"> <text>Agree in writing to assist with the relocation of tenants to the extent required by the Department; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Not have been suspended or debarred from the Department's programs under any action under COMAR 05.01.05.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Requirements for Loans.</text> <paragraph num="(1)"> <text>In order to be eligible for a loan, an applicant shall:</text> <paragraph num="(a)"> <text>Meet the requirements of §A of this regulation; and</text> </paragraph> <paragraph num="(b)"> <text>Demonstrate creditworthiness and repayment ability to the satisfaction of the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the loan is required to be secured, then all persons or entities having an ownership interest in the property shall be willing to execute documents evidencing a security interest in the property.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Buildings."> <paragraph num="A."> <text>A building shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(2)"> <text>Be one of the following:</text> <paragraph num="(a)"> <text>Structurally and mechanically sound such that there are no physical conditions that either endanger the life, property, safety, or welfare of the occupants or the public, or undermine the effectiveness of the lead hazard reduction work, or</text> </paragraph> <paragraph num="(b)"> <text>Property for which the borrower has obtained financing for rehabilitation work to make the building structurally and mechanically sound, and for which the rehabilitation work will take place before or in conjunction with the lead hazard reduction activity;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Be in need of lead hazard reduction activity as demonstrated by meeting the following criteria:</text> <paragraph num="(a)"> <text>Has chipping, peeling, flaking, or deteriorated lead paint on interior or exterior surface, and</text> </paragraph> <paragraph num="(b)"> <text>Has tested positive for lead paint or dust at levels determined to be hazardous under MDE regulations;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Be owned by an eligible borrower who shall provide evidence of ownership acceptable to the Department;</text> </paragraph> <paragraph num="(5)"> <text>Meet one of the following criteria:</text> <paragraph num="(a)"> <text>Contain one or more dwelling units,</text> </paragraph> <paragraph num="(b)"> <text>Provide congregate or group housing or temporary shelters, or</text> </paragraph> <paragraph num="(c)"> <text>Provide a child care center in the portion of the building to be assisted by the loan; and</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>If a rental property, be registered in accordance with the Lead Poisoning Prevention Program defined in Regulation .02B of this chapter and be current for all applicable fees.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Condominiums and cooperatives may be eligible buildings and shall be reviewed by the Department on a case-by-case basis.</text> </paragraph> <paragraph num="C."> <text>Manufactured housing and mobile homes are not eligible buildings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Projects—Lead Hazard Reduction Activity Requirements."> <paragraph num="A."> <text>The following lead hazard reduction activities may be financed by a Program grant or loan:</text> <paragraph num="(1)"> <text>Window replacement, which may include new wells, sills, and frames;</text> </paragraph> <paragraph num="(2)"> <text>Lead hazard treatment for existing windows, such as installation of new guides, guides and channels, and new well aluminum coil stock;</text> </paragraph> <paragraph num="(3)"> <text>Wall encapsulation or enclosure;</text> </paragraph> <paragraph num="(4)"> <text>Encapsulation or enclosure of lead-painted floors, stair risers, and treads;</text> </paragraph> <paragraph num="(5)"> <text>Treatment of floors and stairs to provide a smooth, clean surface that can easily be cleaned;</text> </paragraph> <paragraph num="(6)"> <text>Stabilization, repair, encapsulation, or enclosure of deteriorated or damaged lead-painted surfaces, whether interior or exterior;</text> </paragraph> <paragraph num="(7)"> <text>Repainting of all surfaces;</text> </paragraph> <paragraph num="(8)"> <text>Treatment of doors and door frames;</text> </paragraph> <paragraph num="(9)"> <text>Cleaning and HEPA vacuuming in accordance with MDE regulations;</text> </paragraph> <paragraph num="(10)"> <text>Post-treatment cleanup;</text> </paragraph> <paragraph num="(11)"> <text>Post-treatment clearance testing;</text> </paragraph> <paragraph num="(12)"> <text>Any other activity required to meet the risk reduction standards set forth in Environment Article, §6-815, or the modified risk reduction standards set forth in Environment Article, §6-819, Annotated Code of Maryland, and any regulations promulgated by MDE in connection with those provisions;</text> </paragraph> <paragraph num="(13)"> <text>Activities designed to test innovative or unproven methods of lead hazard reduction, as approved by MDE and the Program for the particular project; and</text> </paragraph> <paragraph num="(14)"> <text>Any other lead hazard reduction activity, including full abatement, relocation, or other activity authorized by the Act and approved by the Program.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Work Plan. A borrower and grantee shall submit to the Department a work plan that:</text> <paragraph num="(1)"> <text>Describes the lead hazard reduction activity or activities to be undertaken; and</text> </paragraph> <paragraph num="(2)"> <text>Meets the other requirements of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Scope of Work.</text> <paragraph num="(1)"> <text>The work plan shall address all interior and exterior flaking, chipping, or peeling lead paint, whether or not the cost is financed by the Program loan or grant.</text> </paragraph> <paragraph num="(2)"> <text>If a project involves window replacement, the project shall cover window replacement for all windows and window components that have friction surfaces containing lead paint, whether or not the total cost is to be financed by the Program loan or grant.</text> </paragraph> <paragraph num="(3)"> <text>The Program may require a risk assessment or lead paint survey to determine all lead hazards present in a project.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Additional Costs.</text> <paragraph num="(1)"> <text>For an owner-occupant borrower who is a family of limited income, the following additional costs may be financed:</text> <paragraph num="(a)"> <text>Closing costs described in Regulation .02B of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>Charges and fees described in Regulation .12C of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>The cost of pre-treatment and post-treatment lead testing performed by parties who are accredited and trained as required by MDE under COMAR 26.16.01.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For other owner-occupants and for nonprofit sponsors, the cost described in §D(1) of this regulation may be financed only if the borrower is receiving an amortizing loan.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Lead hazard reduction activities shall be undertaken in accordance with the regulations, requirements, and procedures of:</text> <paragraph num="(1)"> <text>MDE, as set forth in COMAR 26.16.01, 26.16.02, 26.16.03, and 26.02.07; and</text> </paragraph> <paragraph num="(2)"> <text>The local jurisdiction.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Inspections and Testing. The borrower shall fully cooperate in providing access to the property for inspections and for lead testing.</text> </paragraph> <paragraph num="G."> <text>Code Enforcement. Any actions taken by the Department or the local administrator to prepare or review work proposals, evaluate the property, or review and approve plans, are to ensure the Department and the local administrator of the adequacy of the proposed work. These actions are not intended to substitute for or ensure compliance with appropriate State and local building and housing codes. Compliance with applicable codes and obtaining required permits and licenses are the responsibility of the grantee or borrower, and the contractor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Loan Terms and Requirements — General."> <paragraph num="A."> <text>Interest Rate.</text> <paragraph num="(1)"> <text>The interest rate to be paid on each loan may not be more than private lending rates for comparable loans.</text> </paragraph> <paragraph num="(2)"> <text>Interest rates and repayment terms for each loan shall be set by the Department or the local administrator, as applicable, based upon the owner's ability to pay, in accordance with underwriting criteria set by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Maximum Loan Amount. Except for deferred payment loans in Regulation .07 of this chapter, loans for residential buildings and child care centers may not exceed an amount which, when added to any prior debts secured by the property, would equal 100 percent of the market value of the building and property after rehabilitation, in the estimation of the Department or the local administrator, as applicable.</text> </paragraph> <paragraph num="C."> <text>Term. The term of a loan may not exceed 30 years from the date of completion of the lead hazard reduction work and shall be based upon the amount of the loan, expected economic life of the rehabilitated building, and the borrower's ability to repay.</text> </paragraph> <paragraph num="D."> <text>Periodic Payment. Except for deferred payment loans described in Regulation .07 of this chapter, loans shall be repaid on a periodic basis, with payments applied first to expenses when applicable, then to interest, and then to principal.</text> </paragraph> <paragraph num="E."> <text>Late Charges. Late charges may be imposed as permitted by law.</text> </paragraph> <paragraph num="F."> <text>Insurance.</text> <paragraph num="(1)"> <text>Hazard Insurance. The owner of the building shall maintain fire and extended coverage insurance at the owner's expense in an amount not less than the sum of the loan and any other indebtedness secured by the building, up to the value of the improvements. The hazard insurance policy shall:</text> <paragraph num="(a)"> <text>Be written by companies authorized to transact business in the State;</text> </paragraph> <paragraph num="(b)"> <text>Be in force on or before the date of the loan closing;</text> </paragraph> <paragraph num="(c)"> <text>Name the Department as insured and as loss payee as its interest may appear in a standard mortgagee endorsement attached to or printed in the policy; and</text> </paragraph> <paragraph num="(d)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Flood Insurance. If a building is in a 100-year flood plain, as designated by the Federal Emergency Management Agency:</text> <paragraph num="(a)"> <text>The building shall be covered by a flood insurance policy, naming the Department as beneficiary, in an amount not less than the sum of the loan and any other indebtedness secured by the building; and</text> </paragraph> <paragraph num="(b)"> <text>The flood insurance policy may not be terminated without the Department's prior written consent.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Appraisals. At the discretion of the Program Director or the local administrator, a borrower may be required to obtain an appraisal in a form and manner acceptable to the Department from an acceptable independent fee appraiser showing the building's value before and after the proposed rehabilitation.</text> </paragraph> <paragraph num="H."> <text>Loan Administration Fee. The Department or the local administrator may charge a loan administration fee in an amount acceptable to the Department.</text> </paragraph> <paragraph num="I."> <text>Change of Ownership. A borrower may not sell, cease to own, assign, transfer, dispose of, or lease all or any part of the property during the loan term, without the prior written consent of the Department, except as permitted by federal law.</text> </paragraph> <paragraph num="J."> <text>Default. Remedies upon loan default shall be exercised in the discretion of the Department and may be one or more of the remedies provided in the loan documents or by law, such as:</text> <paragraph num="(1)"> <text>Adjustments to the interest rate of the loan upward or downward;</text> </paragraph> <paragraph num="(2)"> <text>Conversion of a deferred payment loan to a loan that suspends terms of deferral and requires periodic payments;</text> </paragraph> <paragraph num="(3)"> <text>Suspension or debarment from the Department's programs;</text> </paragraph> <paragraph num="(4)"> <text>Foreclosure;</text> </paragraph> <paragraph num="(5)"> <text>Accepting a deed instead of foreclosure;</text> </paragraph> <paragraph num="(6)"> <text>Appointment of a receiver;</text> </paragraph> <paragraph num="(7)"> <text>Modification of loan terms to facilitate repayment; and</text> </paragraph> <paragraph num="(8)"> <text>Other legal action which protects the Department's interest.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms and Requirements — Deferred Payment Loans."> <paragraph num="A."> <text>Deferral. In order to make a loan affordable, the Program may approve deferral of principal and interest payments for a period of time or until the transfer of the property or an interest in the property.</text> </paragraph> <paragraph num="B."> <text>Eligibility for a Deferred Payment Loan. The applicant shall submit evidence satisfactory to the Program that the project requires terms of deferral under the Program underwriting criteria.</text> </paragraph> <paragraph num="C."> <text>Security for a Deferred Payment Loan.</text> <paragraph num="(1)"> <text>The amount of the loan may not exceed the value of the property, less the amount of mortgage debt on the property, except that the Program may approve a higher loan-to-value ratio for owner-occupied property housing a lead-affected household.</text> </paragraph> <paragraph num="(2)"> <text>The loan shall be secured in accordance with the requirements set forth in Regulation .08 of this chapter.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Maximum Loan Amount for a Deferred Payment Loan. A sponsor may not receive commitments for more than $250,000 during a fiscal year for grants and deferred payment loans combined. This limit is reduced to $75,000 for child care centers. The sponsor limit applies to the sponsor and all related corporations, partnerships, and other business entities.</text> </paragraph> <paragraph num="E."> <text>Forgiveness of Deferred Payment Loans.</text> <paragraph num="(1)"> <text>The Program may forgive a deferred payment loan at the time of transfer, to the extent that the loan exceeds equity in the property.</text> </paragraph> <paragraph num="(2)"> <text>The Program may forgive a deferred payment loan after 20 years.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Terms and Requirements for Secured Loans."> <paragraph num="A."> <text>Security for Loans.</text> <paragraph num="(1)"> <text>Amortizing loans of $5,000 or less shall be evidenced by a promissory note and other documents as may be required by the Department.</text> </paragraph> <paragraph num="(2)"> <text>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.</text> </paragraph> <paragraph num="(3)"> <text>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.</text> </paragraph> <paragraph num="(4)"> <text>The lien of the mortgage or deed of trust:</text> <paragraph num="(a)"> <text>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</text> </paragraph> <paragraph num="(b)"> <text>May not be subordinate to a tax lien.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>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.</text> </paragraph> <paragraph num="C."> <text>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.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Grant Terms and Requirements."> <paragraph num="A."> <text>Requirements for Grants. In order to be eligible for a grant, the following requirements shall be met:</text> <paragraph num="(1)"> <text>A grantee shall meet the requirements of Regulation .03A of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The property shall be located in a target area as defined in Regulation .02B of this chapter, or the lead hazard reduction activity that the applicant proposes to use is one that the Program recognizes as testing an innovative or unproven method of lead hazard reduction; and</text> </paragraph> <paragraph num="(3)"> <text>A grantee shall provide evidence satisfactory to the Program to show that either:</text> <paragraph num="(a)"> <text>Based on Program underwriting:</text> <paragraph num="(i)"> <text>For an owner-occupant, there is insufficient household income to make loan payments; or</text> </paragraph> <paragraph num="(ii)"> <text>For an owner-landlord, there is insufficient income from the property to make loan payments; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The property does not have sufficient value to secure other financing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Matching Funds Requirement.</text> <paragraph num="(1)"> <text>An owner-landlord shall demonstrate that 20 percent of the funds for the project come from another source.</text> </paragraph> <paragraph num="(2)"> <text>If the owner-landlord is a nonprofit organization, the percentage of matching funds required is 10 percent rather than 20 percent.</text> </paragraph> <paragraph num="(3)"> <text>An owner-occupant shall demonstrate that 10 percent of the funds for the project come from another source, unless the owner's household is a family of limited income.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Maximum Grant Amount.</text> <paragraph num="(1)"> <text>A grant for a residential building may not exceed $25,000 per dwelling unit.</text> </paragraph> <paragraph num="(2)"> <text>A grant for a child care center that is not located in the operator's single family residence may not exceed $25,000.</text> </paragraph> <paragraph num="(3)"> <text>A sponsor may not receive commitments for more than $250,000 per fiscal year in grants and forgiven loans combined. The sponsor limit applies to the sponsor and all related corporations, partnerships, and other business entities.</text> </paragraph> <paragraph num="(4)"> <text>The Director may, in the Director's discretion, approve increases in the maximum grant amount to cover exceptional circumstances in an amount determined by the Director to be reasonable.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Insurance.</text> <paragraph num="(1)"> <text>An applicant shall follow the insurance requirements outlined in Regulation .06F of this chapter, except that insurance policies are not required to name the Department as mortgagee or loss payee.</text> </paragraph> <paragraph num="(2)"> <text>The required insurance shall be in force at the time the grant is closed.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Disbursement. Disbursement shall be made periodically based upon requests for disbursement submitted by the grantee in a form satisfactory to the Department.</text> </paragraph> <paragraph num="F."> <text>Grant Agreement.</text> <paragraph num="(1)"> <text>The Department shall enter into a grant agreement with each grantee.</text> </paragraph> <paragraph num="(2)"> <text>The Department may establish other terms and conditions in the grant agreement, and any other documents related to the grant, which the Department considers reasonable and necessary to accomplish the objectives of the Program or to ensure compliance with all federal, State, and local laws, ordinances, and regulations, and departmental programs and policies.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Loan and Grant Application Process."> <paragraph num="A."> <text>Application Procedures In General. The Department shall establish application procedures for local administrators to follow. These procedures may be amended from time to time and shall be binding on all applicants. Alternative procedures may not be used without the prior approval of the Department.</text> </paragraph> <paragraph num="B."> <text>Application Forms. All loan and grant applications shall be made upon standard forms described by the Department.</text> </paragraph> <paragraph num="C."> <text>Application Fee. Upon submission of a loan or grant application, the applicant may be required to pay an application fee in an amount set by the local administrator, subject to approval by the Department.</text> </paragraph> <paragraph num="D."> <text>Documentation.</text> <paragraph num="(1)"> <text>The applicant shall submit with the application any documentation that the Department requires.</text> </paragraph> <paragraph num="(2)"> <text>The applicant ;may submit supporting documentation specified in the checklist attached to the application, including but not limited to, the following:</text> <paragraph num="(a)"> <text>A copy of the deed to the property;</text> </paragraph> <paragraph num="(b)"> <text>A copy of the first page and declarations page of all policies for fire and extended coverage insurance and, if applicable, flood insurance;</text> </paragraph> <paragraph num="(c)"> <text>A copy of the most recent real estate tax bill which sets forth the current assessed value of the building and the property;</text> </paragraph> <paragraph num="(d)"> <text>A copy of lead-testing results and any inspection reports for the property;</text> </paragraph> <paragraph num="(e)"> <text>Contractor's proposal outlining the cost and proposed lead hazard reduction activity to achieve compliance with MDE regulations; and</text> </paragraph> <paragraph num="(f)"> <text>Evidence that the property is registered as required under the Lead Poisoning Prevention Program.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A loan applicant shall submit the following additional documentation:</text> <paragraph num="(a)"> <text>Any documentation required by the Department to establish the eligibility and creditworthiness of the applicant;</text> </paragraph> <paragraph num="(b)"> <text>For the 1 year immediately preceding the application:</text> <paragraph num="(i)"> <text>Copies of federal income tax returns; or</text> </paragraph> <paragraph num="(ii)"> <text>Sufficient documentation to verify income as determined by the Program.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition, an owner-landlord applicant shall submit the following documentation:</text> <paragraph num="(a)"> <text>If applicable, certified copies of the organizational documents of the owner-landlord and a certificate of good standing;</text> </paragraph> <paragraph num="(b)"> <text>If applicable, resolutions of the board of directors or consents of all of the partners authorizing the application;</text> </paragraph> <paragraph num="(c)"> <text>Photographs of the building and site;</text> </paragraph> <paragraph num="(d)"> <text>For secured loans, evidence that the property is a separate subdivided lot and a separate tax lot, if the building is nonresidential or has more than four dwelling units; and</text> </paragraph> <paragraph num="(e)"> <text>Evidence of zoning compliance.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Loan and Grant Approval and Disapproval."> <paragraph num="A."> <text>Initial Eligibility Determination.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the local administrator for an initial review to make a preliminary determination of the eligibility of the applicant and the project.</text> </paragraph> <paragraph num="(2)"> <text>If an applicant is determined preliminarily to be eligible for a loan or grant, an appropriate verification form shall be distributed and credit reports shall be obtained.</text> </paragraph> <paragraph num="(3)"> <text>If an applicant is determined preliminarily to be eligible for a grant or loan, the applicant may be provided with a letter from the local administrator in the form approved by the Program acknowledging receipt of the application and notifying the applicant of the ongoing review process.</text> </paragraph> <paragraph num="(4)"> <text>If the applicant is ineligible for a grant or loan, the applicant shall be informed in writing of the determination and the reasons for the determination.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Building Evaluation. Each building for which an application is received shall be inspected for the purpose of determining structural and mechanical soundness and evaluating the adequacy of lead hazard reduction proposals submitted by the applicant. The inspection shall be performed by:</text> <paragraph num="(1)"> <text>The Department;</text> </paragraph> <paragraph num="(2)"> <text>The local administrator; or</text> </paragraph> <paragraph num="(3)"> <text>Another inspector acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan and Grant Approval.</text> <paragraph num="(1)"> <text>Upon receipt and approval of all acceptable contractor's proposals, and all other data the Program considers relevant or necessary, the local administrator originating a:</text> <paragraph num="(a)"> <text>Loan shall undertake an analysis of each loan as to loan amount, interest rate, repayment provisions, and other loan terms and conditions; and</text> </paragraph> <paragraph num="(b)"> <text>Grant shall undertake an analysis of the grant amount and other grant terms and conditions.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>After completing the steps described in §C(1) of this regulation, a Level I local administrator, or a Level II local administrator evaluating Program financing for more than $60,000, shall forward the application package and the analysis of the loan or grant, or both, to the Department for approval, disapproval, or modification.</text> </paragraph> <paragraph num="(3)"> <text>Approval to make a loan, grant, or combination of loan and grant shall be as follows:</text> <paragraph num="(a)"> <text>Program financing in an amount of $60,000 or less may be approved by:</text> <paragraph num="(i)"> <text>The Level II local administrator, when the Level II local administrator originates the loan or grant; or</text> </paragraph> <paragraph num="(ii)"> <text>The Program Director when a Level I local administrator or the Department originates a loan or grant;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Program financing in an amount over $60,000 and up to $250,000 may be approved by the Director;</text> </paragraph> <paragraph num="(c)"> <text>Program financing in amounts over $250,000 shall be submitted to the Housing Finance Review Committee in accordance with COMAR 05.01.07; and</text> </paragraph> <paragraph num="(d)"> <text>In an emergency, when urgent action is required, the Secretary may approve loans and grants by written determination without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Before a Level II local administrator gives final approval and issues a commitment for Program funding in the amount of $60,000 or less, the Level II local administrator shall contact the Program and receive confirmation that funds are available.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Loan and Grant Commitments.</text> <paragraph num="(1)"> <text>A commitment for a loan and grant shall be made on the form provided by the Program.</text> </paragraph> <paragraph num="(2)"> <text>A commitment shall specify a time limit for closing the loan or grant. The time limit may be extended at the discretion of the loan administrator with the approval of the Program.</text> </paragraph> <paragraph num="(3)"> <text>If the closing does not occur within the time limit, the local administrator shall notify the applicant that the commitment is officially canceled.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Rejection. If an application is rejected, the Department, or local administrator, as the case may be, shall notify the applicant in writing of the rejection and the reasons for it.</text> </paragraph> <paragraph num="F."> <text>Reconsideration. An applicant who is rejected may request reconsideration of a rejection in accordance with the procedures contained in the Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="G."> <text>Withdrawal of Application. An applicant may withdraw an application at any time before closing by delivering written notice to the Department or the local administrator originating the loan or grant. The applicant shall bear any costs incurred for items other than internal processing, including, but not limited to, title examinations, credit reports, and appraisals.</text> </paragraph> <paragraph num="H."> <text>Cancellation of Application.</text> <paragraph num="(1)"> <text>The Program or the local administrator may cancel an application at any time during processing if the applicant fails to provide any information requested.</text> </paragraph> <paragraph num="(2)"> <text>Notification of the cancellation of an application, and the reasons for it, shall be in writing.</text> </paragraph> <paragraph num="(3)"> <text>A canceled application may be reinstated upon the applicant's written request within 60 days following the date of the cancellation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Loan and Grant Closings."> <paragraph num="A."> <text>Time and Place. The loan or grant closing shall be scheduled at a time and place mutually acceptable to the applicant and the local administrator, through a closing officer serving the applicant's area and otherwise acceptable to the local administrator.</text> </paragraph> <paragraph num="B."> <text>Loan and Grant Documents.</text> <paragraph num="(1)"> <text>Loan and grant document forms shall be provided by the Program and may not be altered by the local administrator.</text> </paragraph> <paragraph num="(2)"> <text>Loan and grant documents shall be executed on behalf of the Department by the officer or employee authorized to do so by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Charges and Fees. The Department or the local administrator shall charge and collect from the borrower reasonable and customary amounts acceptable to the Department for the following items:</text> <paragraph num="(1)"> <text>Credit reports;</text> </paragraph> <paragraph num="(2)"> <text>Application fees;</text> </paragraph> <paragraph num="(3)"> <text>Appraisal fees, if applicable;</text> </paragraph> <paragraph num="(4)"> <text>Recording fees, taxes, and charges, if applicable;</text> </paragraph> <paragraph num="(5)"> <text>Required survey charges, if applicable;</text> </paragraph> <paragraph num="(6)"> <text>The cost of title examination and title insurance premiums, if required;</text> </paragraph> <paragraph num="(7)"> <text>Loan administrative fees;</text> </paragraph> <paragraph num="(8)"> <text>The cost of property and judgment reports;</text> </paragraph> <paragraph num="(9)"> <text>Inspection fees; and</text> </paragraph> <paragraph num="(10)"> <text>Other reasonable and customary charges or fees authorized by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Points may not be charged to the applicant on any loan under the Program.</text> </paragraph> <paragraph num="E."> <text>Taxes and Assessments. Taxes and assessments against the property which are due and payable shall be paid at or before closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Contractor Requirements."> <paragraph num="A."> <text>General Requirements. A contractor and subcontractor:</text> <paragraph num="(1)"> <text>For lead abatement and risk reduction projects, shall have successfully completed, along with all workers in the firm, any training and accreditation course on lead abatement procedures required by MDE in accordance with COMAR 26.16.01;</text> </paragraph> <paragraph num="(2)"> <text>Shall be licensed by the Maryland Home Improvement Commission, if applicable, or otherwise meet all other State and local licensing requirements;</text> </paragraph> <paragraph num="(3)"> <text>Shall be qualified to do business in the State;</text> </paragraph> <paragraph num="(4)"> <text>Shall be able to demonstrate to the satisfaction of the Department the ability to complete the lead hazard reduction activity, including any evidence of previous professional experience;</text> </paragraph> <paragraph num="(5)"> <text>May not be suspended or debarred from the Department's programs under any action under COMAR 05.01.05;</text> </paragraph> <paragraph num="(6)"> <text>Shall agree in the contract to:</text> <paragraph num="(a)"> <text>Perform all work:</text> <paragraph num="(i)"> <text>In conformance with the contract and applicable laws, local codes, and Departmental rehabilitation standards, whether or not covered by the work write-up and drawings for the work; and</text> </paragraph> <paragraph num="(ii)"> <text>In a competent, workmanlike manner, equal to the standards of the industry;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Comply with applicable laws, ordinances, and regulations relating to the protection and safety of persons or property;</text> </paragraph> <paragraph num="(c)"> <text>Furnish all labor, materials, and equipment, and obtain all licenses, permits, insurance coverage, and workers' compensation as may be required to complete the project;</text> </paragraph> <paragraph num="(d)"> <text>Not assign the contract without prior written consent of the owner and approval of the local administrator;</text> </paragraph> <paragraph num="(e)"> <text>In addition to the remedies and guarantees provided by law, and at the contractor's expense, make all necessary repairs, replacements, and corrections of any nature or description, interior or exterior, structural or nonstructural, as shall become necessary by reason of faulty workmanship or material, which appear within:</text> <paragraph num="(i)"> <text>1 year from the date the notice of completion is filed;</text> </paragraph> <paragraph num="(ii)"> <text>A longer period if a longer guarantee period is specified for particular materials or workmanship under the plans and specifications; or</text> </paragraph> <paragraph num="(iii)"> <text>A longer period, if Maryland law so provides;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Complete all specifications of the proposal within the completion date, as specified in the contract;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Shall indemnify and hold the Department harmless from all liability and loss because of injury to or death of a person or damage to property which may occur or be alleged to occur during performance of the contract as a direct or indirect result of any act or omission, whether intentional, negligent, or otherwise, by the contractor, subcontractors, or their agents, servants, and employees, and defend all suits or claims involving these at the contractor's or subcontractor's sole cost and expense.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Minority Contractors.</text> <paragraph num="(1)"> <text>The Department encourages the use of minority contractors for all projects in all jurisdictions, and requires compliance with the Department's Minority Business Participation Plan for all projects with rehabilitation contract costs of $250,000 or more.</text> </paragraph> <paragraph num="(2)"> <text>Copies of the Department's plan shall be made available to sponsors and contractors.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Identity of Interest.</text> <paragraph num="(1)"> <text>An owner-landlord may act as general contractor only with the prior written approval of the Department or local administrator. An application form shall be provided upon request and shall be submitted and approved before submission of the proposal. Approval shall be conditioned on an assurance of completion acceptable to the Department.</text> </paragraph> <paragraph num="(2)"> <text>An owner-occupant may not act as general contractor.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Assurance of Completion. For a loan or grant or combination loan and grant that finances lead hazard reduction costs in excess of $50,000, either the Department or the local administrator, in its sole discretion, may require:</text> <paragraph num="(1)"> <text>100 percent performance and 100 percent payment bonds;</text> </paragraph> <paragraph num="(2)"> <text>A letter of credit in the amount of 25 percent of the rehabilitation contract cost, and an assurance of completion agreement; or</text> </paragraph> <paragraph num="(3)"> <text>Other assurances of completion acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Binding communications between the contractor and the owner concerning the content or performance of the contract shall be in writing.</text> </paragraph> <paragraph num="F."> <text>A contractor performing work financed by a Program loan or grant:</text> <paragraph num="(1)"> <text>May not be on the unacceptable risk determination list of the Department of Housing and Urban Development or the Development;</text> </paragraph> <paragraph num="(2)"> <text>May not be disbarred or suspended under COMAR 05.01.05; and</text> </paragraph> <paragraph num="(3)"> <text>Shall have performed all previous work financed by the Program in a manner satisfactory to the Director.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Construction Process."> <paragraph num="A."> <text>Permits. If required by MDE or by local law, building or rehabilitation permits shall be obtained and posted at the project before the beginning of construction.</text> </paragraph> <paragraph num="B."> <text>Contract Documents.</text> <paragraph num="(1)"> <text>Work done, materials supplied, and construction procedures employed shall comply with all contract documents and applicable codes and standards, including those set forth in this chapter and any others established by the Department or MDE. Contract documents include, without limitation:</text> <paragraph num="(a)"> <text>Rehabilitation loan agreement;</text> </paragraph> <paragraph num="(b)"> <text>Change orders;</text> </paragraph> <paragraph num="(c)"> <text>Certification of structural and mechanical soundness;</text> </paragraph> <paragraph num="(d)"> <text>Instructions to bidders;</text> </paragraph> <paragraph num="(e)"> <text>Specifications;</text> </paragraph> <paragraph num="(f)"> <text>Drawings, if applicable; and</text> </paragraph> <paragraph num="(g)"> <text>Contractor's proposal.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>There may not be modification of a contract document without prior written consent of the Department or the local administrator, as evidenced by an approved change order executed by the:</text> <paragraph num="(a)"> <text>Contractor;</text> </paragraph> <paragraph num="(b)"> <text>Owner; and</text> </paragraph> <paragraph num="(c)"> <text>Local administrator.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Inspections. The local administrator may conduct inspections to determine the required scope of work, verify payments, mediate construction problems and disputes, and facilitate arbitration procedures.</text> </paragraph> <paragraph num="D."> <text>Construction Disputes.</text> <paragraph num="(1)"> <text>The local administrator and the Department shall coordinate with the borrower and the contractor to resolve any dispute concerning workmanship, the quality of materials, damaged property, the completion schedule, and other matters pertinent to the contract documents.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator and the Department shall recognize the findings of the Maryland Home Improvement Commission or the Consumer Protection Division of the Office of the Attorney General, if the dispute is submitted to their arbitration.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Termination of Contracts. A contract may be terminated for cause in accordance with applicable provisions of the loan documents and contract documents.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Loan and Grant Disbursements."> <paragraph num="A."> <text>Monitoring.</text> <paragraph num="(1)"> <text>The local administrator shall monitor loan and grant disbursements during lead hazard reduction work to assist the borrower and to ensure that loan funds are properly used.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator shall make at least two inspections of the project, an initial inspection and an inspection before any disbursement of funds.</text> </paragraph> <paragraph num="(3)"> <text>Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during lead hazard reduction work, taking into consideration:</text> <paragraph num="(a)"> <text>The capability of the borrower;</text> </paragraph> <paragraph num="(b)"> <text>The demonstrated experience and reliability of the contractor;</text> </paragraph> <paragraph num="(c)"> <text>The amount of the grant or loan;</text> </paragraph> <paragraph num="(d)"> <text>The availability of local technical assistance; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Payments Generally.</text> <paragraph num="(1)"> <text>Loan and grant funds shall be disbursed in full at the closing to an account held on behalf of the borrower by either the political subdivision that is the local administrator for the loan or the subcontractor. The loan or grant funds shall be held in an account established under §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator or the subcontractor shall disburse loan and grant proceeds in accordance with the following requirements:</text> <paragraph num="(a)"> <text>Loan funds may not be disbursed if payments of interest or escrows required by the loan documents are in arrears;</text> </paragraph> <paragraph num="(b)"> <text>Draws shall be paid by a joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director;</text> </paragraph> <paragraph num="(c)"> <text>Advance payments are not permitted; and</text> </paragraph> <paragraph num="(d)"> <text>Payments shall be made only for work completed.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Payments may be made for material delivered to the site but not yet installed in the project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Accounts.</text> <paragraph num="(1)"> <text>Loan funds shall be held in a non-interest-bearing account established by the local administrator or the subcontractor and approved by the Department. The account may be:</text> <paragraph num="(a)"> <text>An account with a depository institution that is separate from the other operating accounts of the local administrator or subcontractor;</text> </paragraph> <paragraph num="(b)"> <text>An account with a depository institution that is not separate from the other operating accounts of the local administrator or subcontractor using a separate reconciled general ledger account for all Program funds;</text> </paragraph> <paragraph num="(c)"> <text>An escrow account or attorney's trust account held and managed by an escrow agent if the escrow agent meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(i)"> <text>Any employee of the escrow agent with access to the account shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000;</text> </paragraph> <paragraph num="(ii)"> <text>The escrow agent shall provide the local administrator or the subcontractor, if any, and the Department with the statements required under §C(2) of this regulation; and</text> </paragraph> <paragraph num="(iii)"> <text>Any other requirements established by the Department; or</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Another type of account approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department may require the local administrator or the subcontractor to provide periodic statements to the Department of all loan funds in an account. If the statements do not correspond with the Department's records of loan funds in the account, the local administrator or subcontractor shall work with the Department to reconcile the differences.</text> </paragraph> <paragraph num="(3)"> <text>The Department may revoke, at any time, its approval of any loan account established under this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Progress Payments.</text> <paragraph num="(1)"> <text>Progress payments shall be made in accordance with a schedule setting forth payments and corresponding percentages of completed work. The schedule shall be approved by the local administrator before any payments are made, and may be revised by the local administrator from time to time. The schedule may provide for a holdback of a portion of the loan amount.</text> </paragraph> <paragraph num="(2)"> <text>If a borrower's request for payment is refused, the local administrator shall notify the borrower and give the reasons for the refusal. The determination of the local administrator as to percentage of work completed shall be final.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Final Payment. Final payment shall be made as follows:</text> <paragraph num="(1)"> <text>The borrower shall submit to the local administrator a certificate of completion, executed by the borrower and contractor, certifying that all work has been completed in accordance with the contract documents;</text> </paragraph> <paragraph num="(2)"> <text>The borrower shall submit to the local administrator documentation that the work area meets the lead dust clearance test standard set by MDE or another agency acceptable to the Department;</text> </paragraph> <paragraph num="(3)"> <text>The borrower shall submit to the local administrator documentation that the entire dwelling unit meets MDE requirements and that all work required to achieve mechanical and structural soundness has been completed;</text> </paragraph> <paragraph num="(4)"> <text>Final payment shall be processed upon satisfactory final inspection and receipt of the certificate of completion;</text> </paragraph> <paragraph num="(5)"> <text>If, in the opinion of the local administrator, the contractor has satisfied the contract and the borrower refuses to request or release the final payment, the local administrator may employ the following procedure:</text> <paragraph num="(a)"> <text>The local administrator may require the borrower to explain in writing within 10 days why the local administrator should not make direct payment to the contractor;</text> </paragraph> <paragraph num="(b)"> <text>If the borrower responds within the 10-day period and requests a meeting, the local administrator shall hold a meeting at which the borrower shall present the borrower's objections to requesting or releasing the final payment;</text> </paragraph> <paragraph num="(c)"> <text>The local administrator, in the local administrator's discretion, may then either approve or disapprove direct payment to the contractor or the borrower, if applicable.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Retainage for Claims. If the borrower or the local administrator receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, the local administrator shall retain amounts sufficient to satisfy the claims, to the extent that loan funds have not been disbursed, until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established.</text> </paragraph> <paragraph num="G."> <text>Retainage in General.</text> <paragraph num="(1)"> <text>The local administrator may retain 10 percent of the loan amount until final payment.</text> </paragraph> <paragraph num="(2)"> <text>The retainage shall be released at final payment upon confirmation that:</text> <paragraph num="(a)"> <text>All lead hazard reduction work is complete and acceptable to the local administrator; and</text> </paragraph> <paragraph num="(b)"> <text>The lead dust clearance test standard has been met.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Payment for Additional Work. Payment for any additional cost to complete work not included in the approved contract proposal is the obligation of the borrower. A borrower may apply to the local administrator for a loan increase to cover some or all of the increased costs. Any loan increase shall be subject to approval or disapproval in accordance with the provisions of this chapter. The Department has no obligation to pay for increased costs.</text> </paragraph> <paragraph num="I."> <text>Quality Control.</text> <paragraph num="(1)"> <text>Subject to the rights of tenants, if any, the Department or the local administrator may collect random samples of dust levels in a building before and after completion of the lead hazard reduction activity.</text> </paragraph> <paragraph num="(2)"> <text>Wipe samples may be analyzed by MDE, or its designee, and the local administrator and the Department may maintain records of the results of the sampling.</text> </paragraph> <paragraph num="(3)"> <text>The Department may provide MDE with a list of all buildings which undertake lead hazard reduction through the Program.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Closeout Procedures.</text> <paragraph num="(1)"> <text>After final payment or payout is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements.</text> </paragraph> <paragraph num="(2)"> <text>A copy of the closeout statement shall be forwarded to the Program and the servicer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Certification of Local Governments as Local Administrators."> <paragraph num="A."> <text>In General. The Department recognizes that the most effective housing programs of this kind are those administered at the local level. Therefore, each political subdivision is encouraged and expected to develop the capacity to originate and administer Program loans. While the Department has the authority to originate and administer grants and loans, the Department does not plan to operate a program for a political subdivision. The Department reserves the right, however, to originate or administer Program grants and loans at its discretion.</text> </paragraph> <paragraph num="B."> <text>Certification of Level I Local Administrators. The Department may certify a political subdivision to originate and administer grants and loans when the political subdivision meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(1)"> <text>The political subdivision shall be able to provide staff to perform adequately the functions of the following positions:</text> <paragraph num="(a)"> <text>A rehabilitation director, experienced in operating a rehabilitation program, supervising employees, and dealing with the public;</text> </paragraph> <paragraph num="(b)"> <text>A building inspector, experienced in residential rehabilitation, cost estimation, writing specifications, blueprint reading, and residential inspections, and trained to understand and apply the appropriate codes and rehabilitation standards;</text> </paragraph> <paragraph num="(c)"> <text>A loan underwriter, experienced in mortgage lending and financial processing of loans; and</text> </paragraph> <paragraph num="(d)"> <text>Clerical and administrative staff trained to ensure prompt and efficient processing of applications, draw schedules, and other required items;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The rehabilitation staff of the political subdivision shall be capable of:</text> <paragraph num="(a)"> <text>Establishing a rehabilitation program, evidenced by prior experience in the development and operation of a rehabilitation program;</text> </paragraph> <paragraph num="(b)"> <text>Evaluating loan and grant applications; and</text> </paragraph> <paragraph num="(c)"> <text>Monitoring the loans and grants as well as the work done; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The political subdivision shall execute and comply with the terms of an agreement required by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Certification of Level II Local Administrators. The Department may certify a political subdivision to originate and administer grants and loans in any amount, as well as approve grants and loans, or combination of grants and loans, in the amount of $60,000 or less, when:</text> <paragraph num="(1)"> <text>The political subdivision meets the criteria outlined in §B of this regulation to the Department's satisfaction; and</text> </paragraph> <paragraph num="(2)"> <text>The Department determines that the rehabilitation staff of the political subdivision is capable of:</text> <paragraph num="(a)"> <text>Evaluating, recommending, approving, or rejecting loans and grants;</text> </paragraph> <paragraph num="(b)"> <text>Scheduling and executing loan and grant closings;</text> </paragraph> <paragraph num="(c)"> <text>Monitoring construction activities;</text> </paragraph> <paragraph num="(d)"> <text>Closing out loan and grant accounts; and</text> </paragraph> <paragraph num="(e)"> <text>Providing financial information to loan servicers and the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Subcontracting Program Administration.</text> <paragraph num="(1)"> <text>A political subdivision may subcontract its duties and responsibilities as a local administrator under this chapter, except as provided in §D(2) and (3) of this regulation, with the approval of the Department. The duties described in §§B and C of this regulation may be carried out by staff of the local administrator or its subcontractor.</text> </paragraph> <paragraph num="(2)"> <text>A political subdivision may not subcontract the holding and disbursement of loan funds described in Regulation .15B and J of this chapter, except to a subcontractor which meets the following criteria to the satisfaction of the Department:</text> <paragraph num="(a)"> <text>The subcontractor meets the criteria of §§B and C of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>Any employee of the subcontractor with access to the loan funds shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000;</text> </paragraph> <paragraph num="(c)"> <text>The subcontractor provides the local administrator and the Department with statements of:</text> <paragraph num="(i)"> <text>All loan funds held and disbursed by the subcontractor under Regulation .15C(2) of this chapter; and</text> </paragraph> <paragraph num="(ii)"> <text>The balance of funds on hand;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The subcontractor provides the local administrator and the Department with an annual audit conducted by an independent certified public accountant and prepared in accordance with generally accepted auditing standards; and</text> </paragraph> <paragraph num="(e)"> <text>The subcontractor complies with any other requirements established by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Regardless of any subcontracting, the Department shall continue to hold the political subdivision directly responsible for fulfilling all of its duties and responsibilities as a local administrator.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Revocation of Certification. The Department reserves the right and expects to monitor periodically the loan administration of certified local administrators, and may revoke certification upon determination that the local administrator is administering the loans in a manner inconsistent with the intent of the Program.</text> </paragraph> <paragraph num="F."> <text>Special Requirements for Local Administrators and Their Subcontractors.</text> <paragraph num="(1)"> <text>A local administrator and local administrator's subcontractors shall maintain financial records of loan disbursements for at least 3 years, and shall make them available for review by the Department at all reasonable times and as set forth in Regulation .19 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A noncomplying loan approved by a level II local administrator shall either be amended, with the borrower's concurrence, to comply with the Program's requirements, or purchased from the Department by the political subdivision.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Local Administration Fee. The Department may, at its sole discretion, pay a local administrator an annual fee for administering loans made under the Program.</text> </paragraph> <paragraph num="H."> <text>Department Authority. When the Department, in its sole discretion, administers a loan, the Department shall have the authority that a local administrator would have under these regulations, in addition to its authority as the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Program Fund Allocations; Reservation of Funds."> <paragraph num="A."> <text>It is the intent of the Department that Program funds be distributed Statewide. Monies appropriated to the Program may be made available Statewide on a first-come, first-served basis, subject to §B of this regulation. If the number of applications in process is insufficient to commit all monies appropriated to the Program within 6 months of the date of the appropriation, the Department may reallocate remaining funds to other programs authorized under the Act.</text> </paragraph> <paragraph num="B."> <text>The Department may set aside a portion of funding for owner-occupants.</text> </paragraph> <paragraph num="C."> <text>From time to time, the Department may establish limitations on the percentage or amount of Program funding which may be used for grants and deferred payment loans.</text> </paragraph> <paragraph num="D."> <text>Reservation of Funds.</text> <paragraph num="(1)"> <text>The Department may provide forward commitments of funds to nonprofit sponsors and local governments to provide Program financing to eligible grantees or borrowers, in accordance with these regulations and on any additional terms set by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The nonprofit sponsor shall be engaged in a project to provide affordable housing or medical treatment for lead poisoning.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Nondiscrimination; Alcohol and Drug Free Workplace."> <paragraph num="A."> <text>A borrower, contractor, local administrator, or subcontractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any borrower, contractor, local administrator, or subcontractor in connection with any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each borrower, contractor, local administrator, and subcontractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Books and Accounts."> <paragraph num="A."> <text>The borrower, contractor, and subcontractors shall maintain such books, accounts, and records, and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>The books, accounts, and records of a local agency shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the borrower and the Department. The books, accounts, and records of the contractor and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between the contractor and subcontractors and the borrower.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="General Provisions."> <paragraph num="A."> <text>Combining with Other Loans and Grants. A program loan or grant may be made in conjunction with other federal or State loan or grant programs, if the requirements of the Act and this chapter are met.</text> </paragraph> <paragraph num="B."> <text>Program Guidelines. The Department may establish from time to time detailed Program guidelines containing underwriting standards, loan and grant processing requirements, and other requirements or matters relating to the Program or to the financing of loans and grants. Copies of these guidelines shall be available for examination at the offices of a local administrator and at the Department's principal office. The Department, upon request, shall provide copies to the public for a reasonable charge.</text> </paragraph> <paragraph num="C."> <text>Fees. The Department may charge commitment fees, application fees, closing fees, or other fees, charges, or penalties to applicants, borrowers, or other individuals or entities that participate in the Program. The Department may restrict the fees and charges that servicers, local administrators, or other Program participants obtain from borrowers or applicants.</text> </paragraph> <paragraph num="D."> <text>Delegation. The Secretary may delegate to the Director, the Program Director, or to any other official or employee of the Department the authority to execute or approve Program documents or loan and grant documents, including commitments and agreements with local administrators. In addition, through the agreement with the local administrator, specific staff members of the local administrator may be authorized by the Department to execute loan and grant documents on behalf of the Department.</text> </paragraph> <paragraph num="E."> <text>False Statements. A borrower who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department or the local administrator originating the loan, is subject to immediate acceleration of the loan, in addition to the penalties authorized by Housing and Community Development Article, §4-712, Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>Waiver. The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local program used in connection with a loan or grant necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §4-706, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 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</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 adopted effective March 1, 1987 (14:4 Md. R. 414)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.23 to COMAR 05.04.06</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 repealed and new Regulations .01—.24 adopted effective October 12, 1992 (19:20 Md. R. 1813)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D amended and E adopted effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C, I amended effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13C amended effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18A amended effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.24, Residential Lead Paint Abatement Program, repealed and new Regulations .01—.20, Lead Hazard Reduction Grant and Loan Program, adopted effective February 24, 1997 (24:4 Md. R. 290)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 22, 1999 (26:4 Md. R. 272); March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective April 16, 2001 (28:7 Md. R. 688)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective April 16, 2001 (28:7 Md. R. 688)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B, D amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective April 16, 2001 (28:7 Md. R. 688); October 27, 2003 (30:21 Md. R. 1528); August 15, 2016 (43:16 Md. R. 899)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A, C amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08C amended effective November 29, 1999 (26:24 Md. R. 1855)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09C amended effective April 16, 2001 (28:7 Md. R. 688); October 27, 2003 (30:21 Md. R. 1528); August 15, 2016 (43:16 Md. R. 899)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10D amended effective April 16, 2001 (28:7 Md. R. 688); March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C, G amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective February 22, 1999 (26:4 Md. R. 272); March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16C amended effective September 29, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16D amended effective February 22, 1999 (26:4 Md. R. 272); March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17A, D amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18A amended effective February 22, 1999 (26:4 Md. R. 272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19C amended effective March 7, 2011 (38:5 Md. R. 317)</annotation> </annotations> </chapter> <chapter num="07" heading="Livability Code Rehabilitation Program" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.17 adopted as an emergency provision effective</annotation> <annotation type="History" subtype="Administrative History">December 4, 1986 (13:26 Md. R. 2801); emergency status expired June 2,</annotation> <annotation type="History" subtype="Administrative History">1987; adopted permanently effective July 27, 1987 (14:15 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.24 to COMAR 05.04.07</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective November 29, 1999 (26:24 Md. R. 1855)</annotation> </annotations> </chapter> <chapter num="08" heading="Accessory, Shared, and Sheltered Housing Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making loans to adapt existing housing to provide accessory, shared, and sheltered housing facilities.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The basic objectives of the Program are:</text> <paragraph num="A."> <text>To make loans to or for the benefit of individuals with limited incomes to finance rehabilitation projects to provide housing opportunities for families of limited income by creating accessory, shared, and sheltered housing facilities; and</text> </paragraph> <paragraph num="B."> <text>To develop the capacity of political subdivisions to administer the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in the Act shall have the meanings defined there and, in addition, the meanings used in these regulations.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accessory housing facility” means a dwelling unit with complete, independent sleeping, cooking, sanitation, and living facilities which are within or attached to, or on the same parcel as, and subordinate to, but under the same ownership as, a single-family, owner-occupied dwelling.</text> </paragraph> <paragraph num="(2)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(3)"> <text>“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits less:</text> <paragraph num="(a)"> <text>Unusual or temporary income items as determined by the Department; and</text> </paragraph> <paragraph num="(b)"> <text>Abnormal expenses of a long-term nature, such as extraordinary medical, rehabilitation, or special education expenses.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Borrower” means an applicant who receives a loan under the Program.</text> </paragraph> <paragraph num="(5)"> <text>“Closing costs” means the total of all settlement costs and fees and, when applicable, initial payment for taxes, property insurance, title examination, or other expense items as determined by the Department.</text> </paragraph> <paragraph num="(6)"> <text>“Contract” means the written agreement between a borrower and a licensed general contractor or licensed home improvement contractor that:</text> <paragraph num="(a)"> <text>Is acceptable to the Department; and</text> </paragraph> <paragraph num="(b)"> <text>Describes the work to be financed by a loan made under the Program.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Deferred payment loan” means a loan which permits the deferral of principal or interest, or both principal and interest.</text> </paragraph> <paragraph num="(8)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(9)"> <text>“Director” means the Director of the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(10)"> <text>“Disabled” means a person having a medically determinable physical or mental impairment which is expected to last for a substantial period of time and which causes an inability to engage in regular, sustained employment or other gainful activity.</text> </paragraph> <paragraph num="(11)"> <text>“Elderly” means a person who is 62 years old or older.</text> </paragraph> <paragraph num="(12)"> <text>“Family of limited income” means one or more individuals residing as a household in a dwelling unit whose total combined annual income does not exceed the limits established from time to time by the Secretary in accordance with Housing and Community Development Article, §4-915, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Family of lower income” means one or more individuals residing as a household in a dwelling unit, whose combined total annual income does not exceed the limits established by the Secretary in accordance with Housing and Community Development Article, §4-916(b), Annotated Code of Maryland, which income limits will be less than those established for families of limited income.</text> </paragraph> <paragraph num="(14)"> <text>“Family of very low income” means one or more individuals residing as a household in a dwelling unit, whose combined total annual income does not exceed the limits established by the Secretary in accordance with Housing and Community Development Article, §4-916(b), Annotated Code of Maryland, which income limits will be less than those established for families of lower income.</text> </paragraph> <paragraph num="(15)"> <text>“Handicapped” means a person having a physical or mental impairment which is expected to be of an indefinite duration and which impedes the ability to live independently.</text> </paragraph> <paragraph num="(16)"> <text>“Level I local administrator” means a political subdivision certified by the Department under Regulation .16B of this chapter.</text> </paragraph> <paragraph num="(17)"> <text>“Level II local administrator” means a political subdivision certified by the Department under Regulation .16C of this chapter.</text> </paragraph> <paragraph num="(18)"> <text>“Loan” means a loan made under the Program.</text> </paragraph> <paragraph num="(19)"> <text>“Local administrator” means a level I or level II local administrator.</text> </paragraph> <paragraph num="(20)"> <text>“Owner-occupant” means an owner residing or intending to reside in an eligible property which is a shared housing facility or which includes an accessory housing facility.</text> </paragraph> <paragraph num="(21)"> <text>“Political subdivision” means any municipal corporation in Maryland subject to the provisions of Article XI-E of the Constitution, the Mayor and City Council of Baltimore, and any of the 23 counties in Maryland.</text> </paragraph> <paragraph num="(22)"> <text>“Program” means the Accessory, Shared, and Sheltered Housing Program.</text> </paragraph> <paragraph num="(23)"> <text>“Program Director” means the Director of Special Loan Programs in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(24)"> <text>“Project” means the modification, addition, repair, renovation, or improvement to an existing property in order to provide accessory, shared, or sheltered housing.</text> </paragraph> <paragraph num="(25)"> <text>“Rehabilitation plan” means the rehabilitation plan described in Regulation .20 of this chapter.</text> </paragraph> <paragraph num="(26)"> <text>Related Costs.</text> <paragraph num="(a)"> <text>“Related costs” means costs related to the implementation of a rehabilitation project under the Program, such as appraisal fees, architect's and engineering fees, permit and permit application fees, and other similar costs approved by the Program.</text> </paragraph> <paragraph num="(b)"> <text>“Related costs” does not include loan application fees.</text> </paragraph> </paragraph> <paragraph num="(27)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(28)"> <text>“Shared housing facility” means a single-family, owner-occupied dwelling unit adapted for common and shared living use by the owner-occupant household and at least one other family of limited income, where some or all of the sleeping, cooking, living, or sanitary facilities are shared by all of the households.</text> </paragraph> <paragraph num="(29)"> <text>“Sheltered housing facility” means a single-family, owner-occupied dwelling unit that accommodates the sheltered housing sponsor and provides sleeping and living facilities, meals, and assistance with daily activities for a rental fee to not more than 15 elderly, disabled, or handicapped persons residing in the dwelling.</text> </paragraph> <paragraph num="(30)"> <text>“Sheltered housing sponsor” means an owner residing or intending to reside upon completion of the project in a sheltered housing facility.</text> </paragraph> <paragraph num="(31)"> <text>“Subcontractor” means an entity authorized by the Department to carry out the duties and responsibilities of a local administrator under Regulation .16D(1) of this chapter and to hold and disburse funds under Regulation .16D(2) of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrowers."> <paragraph num="A."> <text>To qualify for a loan, an owner-occupant shall meet the following requirements, which shall be met jointly and separately by all applicants if there is more than one applicant:</text> <paragraph num="(1)"> <text>Reside, or intend to reside, in the property after completion of the rehabilitation;</text> </paragraph> <paragraph num="(2)"> <text>Hold title to the property for which the loan is made in fee simple or under a freely transferable ground rent lease;</text> </paragraph> <paragraph num="(3)"> <text>Demonstrate creditworthiness and repayment ability, in the estimation of the Department; and</text> </paragraph> <paragraph num="(4)"> <text>Have income at a level that the Secretary has determined renders the applicant unable to afford or secure private financing to rehabilitate the property.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In addition to meeting those requirements set forth in §A of this regulation, to qualify for a loan to provide accessory facilities, an owner-occupant, jointly and separately if there is more than one applicant, shall either:</text> <paragraph num="(1)"> <text>Be a family of lower income or a family of limited income at the time the loan is made, and agree in writing to provide the accessory housing facility financed by the loan for the longer of:</text> <paragraph num="(a)"> <text>The term of the loan,</text> </paragraph> <paragraph num="(b)"> <text>The time during which principal and interest are unpaid, or</text> </paragraph> <paragraph num="(c)"> <text>10 years if a family of limited income or 15 years if a family of lower income; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Agree in writing to provide the accessory facility financed by the loan for occupancy by a family of lower income or a family of limited income for the longer of:</text> <paragraph num="(a)"> <text>The term of the loan,</text> </paragraph> <paragraph num="(b)"> <text>The time during which principal and interest are unpaid, or</text> </paragraph> <paragraph num="(c)"> <text>10 years if a family of limited income or 15 years if a family of lower income.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>In addition to meeting the requirements set forth in §A of this regulation, to qualify for a loan to provide shared housing facilities, an owner-occupant shall meet the following requirements, which shall be met jointly and separately if there is more than one applicant:</text> <paragraph num="(1)"> <text>Be a family of limited income; and</text> </paragraph> <paragraph num="(2)"> <text>Agree in writing that the shared housing facility provided with the proceeds of the loan shall be occupied by a family or families of lower income or a family or families of limited income for the longer of:</text> <paragraph num="(a)"> <text>The end of the loan term,</text> </paragraph> <paragraph num="(b)"> <text>The date on which all principal and interest and other sums due on the loan are fully paid, or</text> </paragraph> <paragraph num="(c)"> <text>10 years if a family or families of limited income, or 15 years if a family or families of lower income.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>In addition to meeting the requirements set forth in §A of this regulation, to qualify for a loan to provide sheltered housing facilities, a sheltered housing sponsor shall meet the following requirements, which shall be met jointly and separately by all applicants if there is more than one applicant:</text> <paragraph num="(1)"> <text>Agree in writing to provide shelter, meals, and assistance with daily activities to not more than 15 persons, all of whom shall be elderly, disabled, or handicapped persons who qualify as families of limited income for the longer of:</text> <paragraph num="(a)"> <text>The end of the loan term,</text> </paragraph> <paragraph num="(b)"> <text>The date on which all principal and interest and other sums due on the loan are fully paid, or</text> </paragraph> <paragraph num="(c)"> <text>10 years if the sheltered facility residents other than the borrower are families of limited income, or 15 years if families of lower income;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Demonstrate that the property will be certified by the appropriate governing agency to provide sheltered care to elderly, disabled, or handicapped persons.</text> </paragraph> </paragraph> <paragraph num="E."> <text>An applicant who is suspended or debarred from the Department's programs pursuant to any action under COMAR 05.01.05 is not eligible to participate in the Program.</text> </paragraph> <paragraph num="F."> <text>If title to the property to be rehabilitated is held by more than one person in any form of joint tenancy, each person having an interest in the property shall be considered to be an applicant for purposes of these regulations.</text> </paragraph> <paragraph num="G."> <text>For the purposes of determining annual income, only the income of persons who permanently reside in the unit will be used.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Property Requirements."> <paragraph num="A."> <text>All properties shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(2)"> <text>Be owned by an eligible borrower who shall provide assurance of title or evidence of ownership acceptable to the Department;</text> </paragraph> <paragraph num="(3)"> <text>When the project is complete, be in compliance with zoning requirements; and</text> </paragraph> <paragraph num="(4)"> <text>Be structurally and mechanically sound, except as permitted under §B of this regulation, such that:</text> <paragraph num="(a)"> <text>There are no physical conditions that endanger the life, property, safety, or welfare of the occupants or the public, and</text> </paragraph> <paragraph num="(b)"> <text>The property is in full compliance with all applicable housing codes and standards.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Properties which are not structurally and mechanically sound may be eligible properties if upon completion of the improvements financed by the Program loan, the property will be structurally and mechanically sound.</text> </paragraph> <paragraph num="C."> <text>A manufactured housing unit is eligible if it is intended for residential use, and:</text> <paragraph num="(1)"> <text>Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(2)"> <text>Is not less than 24 feet in width and 40 feet in length;</text> </paragraph> <paragraph num="(3)"> <text>Is not independently capable of movement and is installed permanently on an engineered foundation in conformance with the BOCA National Building Code (1990) which is incorporated by reference under COMAR 05.02.01, or the standards set by the American National Standards Institute, Inc. which are incorporated by reference under COMAR 05.02.02;</text> </paragraph> <paragraph num="(4)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(5)"> <text>Is certified by the United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, or by the Department as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(6)"> <text>Complies with all requirements set forth in COMAR 05.02.04;</text> </paragraph> <paragraph num="(7)"> <text>Is installed on real property the occupant owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(8)"> <text>Meets all applicable zoning requirements as to the number of dwelling units, lot size, and building setbacks;</text> </paragraph> <paragraph num="(9)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Condominiums may be eligible buildings and shall be reviewed by the Department on a case-by-case basis.</text> </paragraph> <paragraph num="E."> <text>Mobile homes which are taxed as personal property, cooperative units, property being purchased under a land installment contract, or other types of property are not eligible properties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Improvements."> <paragraph num="A."> <text>Proceeds of a loan may finance the following improvements:</text> <paragraph num="(1)"> <text>Repairs, improvements, and modifications to existing dwelling units, to the extent required by applicable codes and standards relating to accessory, shared, or sheltered housing facilities;</text> </paragraph> <paragraph num="(2)"> <text>Additions, modifications, and improvements, including all fixtures and finishes, necessary to create accessory, shared, or sheltered housing facilities.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Closing costs and related costs described in Regulation .03B(5) and (26) of this chapter, respectively, may be included in a loan to an owner-occupant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms and Requirements."> <paragraph num="A."> <text>Maximum Loan Amount.</text> <paragraph num="(1)"> <text>The maximum loan amount, when added to any indebtedness secured by the property, may not exceed 95 percent of the after-rehabilitation value of the property.</text> </paragraph> <paragraph num="(2)"> <text>If 100 percent of the units are subject to a federal rent subsidy which is allocated to the project for the entire term of the loan, then the 95 percent loan-to-value ratio required by §A(1) of this regulation may be raised to 100 percent.</text> </paragraph> <paragraph num="(3)"> <text>Deferred loans in amounts greater than or equal to $25,000 may not exceed an amount which, when added to any prior debts secured by the property would equal 85 percent of the market value of the property after rehabilitation as determined by the Department or the local administrator unless, in the written determination of the Program Director, extraordinary or emergency circumstances justify an amount up to 95 percent of the after-rehabilitation value.</text> </paragraph> <paragraph num="(4)"> <text>If, in the determination of the Program Director, a loan increase is necessary to assure completion of the building and protect the Department's interest, an increase in the mortgage not to exceed 10 percent may be made to cover extraordinary and unforeseen construction problems provided the increase can be made within the limits on maximum loan amounts set forth in §§A(1)—(3) of this regulation.</text> </paragraph> <paragraph num="(5)"> <text>Closing costs as defined in Regulation .03B(4) of this chapter may be included in loans on owner-occupied dwellings, provided the loan does not exceed the limits on the maximum loan amount set forth in §§A(1)—(3) of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Interest Rate.</text> <paragraph num="(1)"> <text>Loans to the following borrowers shall have interest rates of not less than 4.5 percent:</text> <paragraph num="(a)"> <text>Owner-occupants who themselves are families of limited income or whose accessory housing tenants are families of limited income; and</text> </paragraph> <paragraph num="(b)"> <text>Sheltered housing sponsors whose tenants are families of limited income.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Loans to the following borrowers may have interest rates of 4.5 percent or less:</text> <paragraph num="(a)"> <text>Owner-occupants who themselves are families of lower income or whose accessory housing tenants are families of lower income; and</text> </paragraph> <paragraph num="(b)"> <text>Sheltered housing sponsors whose tenants are families of lower income.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Within the limits established in §B(1) and (2) of this regulation, the interest rate shall be the maximum rate based on the applicant's ability to pay.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Insurance.</text> <paragraph num="(1)"> <text>Hazard Insurance. The owner of the building shall maintain fire and extended coverage insurance on the building at the owner's expense in an amount not less than the sum of the loan and any other indebtedness secured by the building. The hazard insurance policy shall:</text> <paragraph num="(a)"> <text>Be written by companies authorized to transact business in the State;</text> </paragraph> <paragraph num="(b)"> <text>Be written by companies which are reputable and financially sound, as determined by the Department;</text> </paragraph> <paragraph num="(c)"> <text>Be in force at the time of loan closing;</text> </paragraph> <paragraph num="(d)"> <text>Name the Department as named insured and loss payee as its interest may appear in a standard mortgage endorsement attached to or printed in the policy; and</text> </paragraph> <paragraph num="(e)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Flood Insurance. If the property is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development:</text> <paragraph num="(a)"> <text>The property shall be covered by a flood plain insurance policy in an amount equal to the sum of the loan and any other indebtedness secured by the building, naming the Department as beneficiary; and</text> </paragraph> <paragraph num="(b)"> <text>The flood plain policy may not be terminated without prior notification to the Department;</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Term. The term of each loan may not exceed 30 years from the date of completion of the improvements and shall be based upon the amount of the loan, the borrower's ability to repay, and the expected economic life of the building.</text> </paragraph> <paragraph num="E."> <text>Periodic Payment. Except for deferred payment loans, periodic payments shall be charged which shall be applied to expenses, when applicable, interest, and principal in that order.</text> </paragraph> <paragraph num="F."> <text>Late Charge. Late charges, as permitted by law, may be imposed.</text> </paragraph> <paragraph num="G."> <text>Security for Loans.</text> <paragraph num="(1)"> <text>Loans of $5,000 or less shall be evidenced by a promissory note and such other documents as may be required by the Department.</text> </paragraph> <paragraph num="(2)"> <text>All loans in excess of $5,000, and all loans providing for deferred payments, 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 property is located. The mortgage or deed of trust may be subordinate to other recorded mortgage liens provided that the mortgagee of the mortgage gives any consents required by the prior mortgagee's loan documents or by the Department.</text> </paragraph> <paragraph num="(3)"> <text>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.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Appraisals.</text> <paragraph num="(1)"> <text>At the discretion of the Program Director or the local administrator, borrowers may be required to obtain an appraisal in a form and manner acceptable to the Department from an acceptable independent fee appraiser showing the building's value before and after the proposed rehabilitation. In the alternative, the staff of the Program or the local administrator may prepare a comparable appraisal but may not charge a fee.</text> </paragraph> <paragraph num="(2)"> <text>Applicants shall bear the costs of appraisals, which may be financed in the case of a loan made to an owner-occupant.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Change of Borrower Eligibility. If the borrower's income changes or the borrower no longer satisfies other requirements of Regulation .04, the Department may, in accordance with the terms of the loan agreements between the borrower and the Department:</text> <paragraph num="(1)"> <text>Increase the interest rate up to a rate set by the Program from time to time;</text> </paragraph> <paragraph num="(2)"> <text>Accelerate the payment of the entire principal and interest due; or</text> </paragraph> <paragraph num="(3)"> <text>If the income of the individuals served by the loan changes, increase or decrease the interest rate to a rate permitted by §B of this regulation.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Change of Ownership. If the loan finances improvements for a residential building with 4 or fewer units, one of which is occupied by the borrower, then the loan shall be due and payable in full upon the sale, encumbrance, or other transfer of the building or any interest in the building, including a lease of the owner's unit for more than 3 years, unless the transfer is made to a person who will occupy the owner's unit and the transfer is:</text> <paragraph num="(1)"> <text>Made by operation of law upon the death of a joint tenant;</text> </paragraph> <paragraph num="(2)"> <text>To a spouse upon separation or divorce;</text> </paragraph> <paragraph num="(3)"> <text>To a spouse or child;</text> </paragraph> <paragraph num="(4)"> <text>To a relative upon the death of the owner;</text> </paragraph> <paragraph num="(5)"> <text>To an inter vivos trust whereby the borrower is the beneficiary and owner of the property and provides assurances acceptable to the Department of any subsequent transfer; or</text> </paragraph> <paragraph num="(6)"> <text>A transfer for which the parties have received the prior written consent of the Department, in the Department's sole discretion.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Default. Remedies upon loan default shall be exercised in the discretion of the Department and may be one or more of the remedies provided for in the loan documents or by law, such as:</text> <paragraph num="(1)"> <text>Adjustments to the interest rate of the loan upward or downward;</text> </paragraph> <paragraph num="(2)"> <text>Suspension or debarment from the Department's programs;</text> </paragraph> <paragraph num="(3)"> <text>Foreclosure;</text> </paragraph> <paragraph num="(4)"> <text>Accepting a deed instead of foreclosure;</text> </paragraph> <paragraph num="(5)"> <text>Appointment of a receiver; and</text> </paragraph> <paragraph num="(6)"> <text>Other legal action which protects the Department's interests.</text> </paragraph> </paragraph> <paragraph num="L."> <text>Refinancing. The Department may not refinance existing debt related to an eligible property.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Terms and Requirements—Deferred Loans."> <paragraph num="A."> <text>In addition to the conditions and requirements of Regulation .07 of this chapter, deferred loans shall meet the following additional requirements in §§B—E of this regulation.</text> </paragraph> <paragraph num="B."> <text>Eligibility. The following borrowers may be eligible for loans which defer payment of principal or interest or both:</text> <paragraph num="(1)"> <text>An owner-occupant who is a family of very low income and whose accessory housing unit tenant is a family of very low income;</text> </paragraph> <paragraph num="(2)"> <text>An owner-occupant who is a family of very low income and whose shared housing facility tenant or tenants are families of very low income; and</text> </paragraph> <paragraph num="(3)"> <text>Sheltered housing sponsors of properties occupied entirely by tenants who are families of very low income.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Amount of Deferred Payments. The Department may defer payments of principal or interest or both principal and interest to the minimum extent required based on the borrower's capacity to repay.</text> </paragraph> <paragraph num="D."> <text>Repayment.</text> <paragraph num="(1)"> <text>The loan documents shall provide for repayment of deferred amounts:</text> <paragraph num="(a)"> <text>At the maturity date or at any earlier date established by the Department or the local administrator; or</text> </paragraph> <paragraph num="(b)"> <text>Upon any sale or other transfer of the property or any interest in the property other than a residential lease of:</text> <paragraph num="(i)"> <text>The owner-occupied unit for less than 3 years duration, or</text> </paragraph> <paragraph num="(ii)"> <text>Any other portion of the property.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department may, but need not, charge interest on the deferred interest.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Limitations.</text> <paragraph num="(1)"> <text>The Department, from time to time, may establish limitations on percentage or amount of funding which may be used for deferred loans.</text> </paragraph> <paragraph num="(2)"> <text>Deferred loans in amounts greater than $25,000 may not exceed an amount which, when added to any prior debts secured by or relating to the eligible building or property, or both, would equal 85 percent of the market value of the eligible building and property after rehabilitation as determined by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Loan Terms and Requirements for Secured Loans."> <paragraph num="A."> <text>In addition to the conditions and requirements of Regulations .07 and .08 of this chapter, secured loans shall meet the following requirements in §§B—D of this regulation.</text> </paragraph> <paragraph num="B."> <text>Deed of Trust. The deed of trust shall secure repayment of the loan by the granting of a valid lien on the property.</text> </paragraph> <paragraph num="C."> <text>Escrow Account. If there is no prior mortgage requiring the payment of expenses to a mortgagee, the borrower shall 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 need not be paid to borrowers on escrowed monies except as required by law.</text> </paragraph> <paragraph num="D."> <text>Title Insurance. For all loans in excess of $30,000, 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.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Loan Application Process."> <paragraph num="A."> <text>Procedure—In General. The Department shall establish application procedures for local administrators to follow, that will facilitate the application process and best serve the needs of the political subdivisions and the State. These procedures may be amended from time to time and shall be binding upon all borrowers. Alternative procedures may not be used without the prior approval of the Department.</text> </paragraph> <paragraph num="B."> <text>Application Forms. Applications shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="C."> <text>Application Fee. Upon submission of a loan application, the applicant may be required to pay an application fee in an amount set by the local administrator, subject to approval by the Department.</text> </paragraph> <paragraph num="D."> <text>Documentation.</text> <paragraph num="(1)"> <text>The applicant shall submit with the application any documentation that the Department requires, including, but not limited to, any documentation needed to establish the eligibility and credit worthiness of the applicant.</text> </paragraph> <paragraph num="(2)"> <text>All applicants shall submit supporting documentation specified in the checklist attached to the application, including, but not limited to, the following:</text> <paragraph num="(a)"> <text>A copy of the deed to the property;</text> </paragraph> <paragraph num="(b)"> <text>A copy of all existing mortgages or mortgage verification requests, on the form approved by the Department, signed by the applicant for each mortgage secured by the property;</text> </paragraph> <paragraph num="(c)"> <text>A copy of the first page and declarations page of all policies for fire and extended coverage insurance and, if applicable, flood insurance;</text> </paragraph> <paragraph num="(d)"> <text>A copy of the most recent real estate tax bill which sets forth the current assessed value of the building and the property;</text> </paragraph> <paragraph num="(e)"> <text>One of the following:</text> <paragraph num="(i)"> <text>For a shared housing loan or an accessory housing loan that depends on the owner-occupant's income for eligibility, verification of the total annual income of each person in the owner-occupant's household,</text> </paragraph> <paragraph num="(ii)"> <text>For a shared or accessory housing loan that depends on the tenant's income for eligibility, if there is a current tenant, the name, address, number of persons in the tenant's household, total combined annual household income, and current monthly rent, or</text> </paragraph> <paragraph num="(iii)"> <text>For sheltered housing sponsor applicants a list of all current tenants in a building showing household name, address, number of persons in the household, total combined annual household income, and current monthly rent;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>For the 3 years immediately preceding the application:</text> <paragraph num="(i)"> <text>If self-employed, copies of federal income tax returns, or, if a nonprofit organization, the applicable federal reporting forms,</text> </paragraph> <paragraph num="(ii)"> <text>Copies of State income tax returns, or</text> </paragraph> <paragraph num="(iii)"> <text>A request signed by the applicant, on the form designated by the Department, for copies of the applicant's State income tax returns; and</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>With the application, a description of the proposed improvements followed by a contractor's proposal that complies with all applicable governmental requirements.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition, all sheltered housing sponsor applicants shall submit the following documentation:</text> <paragraph num="(a)"> <text>3 years of operating statements for the project;</text> </paragraph> <paragraph num="(b)"> <text>For projects receiving federal subsidies, copies of all contracts or feasibility analyses prepared by the administering agency, as applicable;</text> </paragraph> <paragraph num="(c)"> <text>Photographs of the building and site;</text> </paragraph> <paragraph num="(d)"> <text>Evidence of zoning compliance;</text> </paragraph> <paragraph num="(e)"> <text>With the application, a description of the proposed improvements, followed by a contractor's proposal that complies with all applicable governmental requirements;</text> </paragraph> <paragraph num="(f)"> <text>Evidence of certification by the appropriate government agency to provide sheltered care to elderly, disabled, or handicapped persons; and</text> </paragraph> <paragraph num="(g)"> <text>Evidence of operating subsidies from other governmental agencies.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Loan Approval and Disapproval."> <paragraph num="A."> <text>Initial Eligibility Determination.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the local administrator for an initial review to make a preliminary determination of the eligibility of the applicant and the project.</text> </paragraph> <paragraph num="(2)"> <text>If an applicant is determined preliminarily to be eligible, appropriate verification forms shall be distributed, credit reports shall be obtained, and the applicant may be provided with a letter from the local administrator in the form approved by the Program acknowledging receipt of the application and notifying the applicant of the ongoing review process.</text> </paragraph> <paragraph num="(3)"> <text>If the applicant is ineligible for a loan, the applicant shall be informed in writing of the determination and the reasons for it.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Property Evaluation.</text> <paragraph num="(1)"> <text>Each property for which an application is received shall be inspected for the purpose of:</text> <paragraph num="(a)"> <text>Determining if the property is structurally and mechanically sound, or will be upon completion of the improvements, and</text> </paragraph> <paragraph num="(b)"> <text>Evaluating the proposal for the improvements to be financed by the loan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The inspection shall be made by:</text> <paragraph num="(a)"> <text>The Department;</text> </paragraph> <paragraph num="(b)"> <text>The local administrator;</text> </paragraph> <paragraph num="(c)"> <text>A nonprofit corporation acceptable to the Program or the local administrator; or</text> </paragraph> <paragraph num="(d)"> <text>A licensed contractor who is acceptable to the local administrator or the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The applicant shall be provided with instructions for obtaining final contractor's proposals for the work.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Approval.</text> <paragraph num="(1)"> <text>Upon receipt and approval of all acceptable contractor's proposals, and all other data the Program considers relevant or necessary, the local administrator originating the loan shall undertake an analysis of each loan as to loan amount, interest rate, repayment provisions, and other loan terms and conditions.</text> </paragraph> <paragraph num="(2)"> <text>After completing the steps described in §C(1) of this regulation, a level I local administrator, or a level II local administrator evaluating a loan for more than $30,000, shall forward the application package and the analysis of the loan to the Department for approval, disapproval, or modification.</text> </paragraph> <paragraph num="(3)"> <text>Approval to make a loan shall be as follows:</text> <paragraph num="(a)"> <text>Loans in amounts of $30,000 or less may be approved by:</text> <paragraph num="(i)"> <text>The level II local administrator, where the level II local administrator originates the loan, or</text> </paragraph> <paragraph num="(ii)"> <text>The Program Director, where a level I local administrator or the Department originates a loan;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Loans in amounts over $30,000 and under $100,000 may be approved by the Director;</text> </paragraph> <paragraph num="(c)"> <text>For loans in amounts of $100,000 or more, the following procedures apply:</text> <paragraph num="(i)"> <text>Loan proposals shall be submitted to the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland, and the Housing Finance Review Committee shall review the loan proposal and make a recommendation to the Secretary,</text> </paragraph> <paragraph num="(ii)"> <text>For loans in amounts greater than or equal to $100,000 but less than $250,000, the recommendation of the Housing Finance Review Committee constitutes approval unless the loan is specifically disapproved by the Secretary,</text> </paragraph> <paragraph num="(iii)"> <text>For loans in amounts of $250,000 or more, the Secretary shall determine in writing whether the loan is approved and under what loan terms after receiving the recommendation of the Housing Finance Review Committee,</text> </paragraph> <paragraph num="(iv)"> <text>In an emergency, when urgent action is required, the Secretary may approve loans by written determination without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Before a level II local administrator gives final approval and issues a loan commitment for a loan in the amount of $30,000 or less, the level II local administrator shall contact the Program and receive confirmation that funds for the loan are available.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Loan Commitments.</text> <paragraph num="(1)"> <text>Loan commitments shall be made on forms provided by the Program.</text> </paragraph> <paragraph num="(2)"> <text>Loan commitments shall specify a time limit for closing the loan. The time limit may be extended at the discretion of the local administrator with the approval of the Program.</text> </paragraph> <paragraph num="(3)"> <text>If the loan closing does not occur within the time specified, the local administrator shall notify the applicant that the commitment is officially canceled.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Rejection. If a loan application is rejected, the Department, or the local administrator, as the case may be, shall notify the applicant in writing. The rejection letter shall state the reason the loan is rejected. Each month, the Program Director shall provide the Housing Finance Review Committee with a report listing all sheltered housing sponsor loan applications rejected by the Program during the preceding month.</text> </paragraph> <paragraph num="F."> <text>Reconsideration. Applicants who are rejected may request reconsideration of a rejection in accordance with the procedures contained in the Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="G."> <text>Withdrawal of Application.</text> <paragraph num="(1)"> <text>An applicant may withdraw a loan application at any time before closing by delivering written notice to the Department or the local administrator originating the loan. The applicant shall bear any costs incurred for items other than internal processing, including, but not limited to, title examinations, credit reports, and appraisals.</text> </paragraph> <paragraph num="(2)"> <text>Withdrawn applications may not be reinstated. Rather, a new application is required.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Cancellation of Application.</text> <paragraph num="(1)"> <text>The Program or the local administrator may cancel an application at any time during processing if the applicant fails to provide any information requested.</text> </paragraph> <paragraph num="(2)"> <text>Notification of the cancellation of an application shall be in writing.</text> </paragraph> <paragraph num="(3)"> <text>A canceled application may be reinstated upon the applicant's written request within 60 days following the date of the cancellation. After that time, a new application, together with supporting documents, is required.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Loan Closing."> <paragraph num="A."> <text>Time and Place. The loan closing shall be scheduled at a time and place mutually acceptable to the applicant and the local administrator, through a closing officer serving the applicant's area and otherwise acceptable to the local administrator.</text> </paragraph> <paragraph num="B."> <text>Loan Documents.</text> <paragraph num="(1)"> <text>Loan document forms shall be provided by the Program and may not be altered by the local administrator.</text> </paragraph> <paragraph num="(2)"> <text>Loan documents shall be executed on behalf of the Department by the officer or employee authorized to do so by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Charges and Fees. The Department or the local administrator shall charge and collect from the borrower reasonable and customary amounts acceptable to the Department for the following items:</text> <paragraph num="(1)"> <text>Credit reports;</text> </paragraph> <paragraph num="(2)"> <text>Appraisal fees, if applicable;</text> </paragraph> <paragraph num="(3)"> <text>Recording fees, taxes, and charges, if applicable;</text> </paragraph> <paragraph num="(4)"> <text>Required survey charges, if applicable;</text> </paragraph> <paragraph num="(5)"> <text>The cost of the title examination and title insurance premiums, if required;</text> </paragraph> <paragraph num="(6)"> <text>Administrative fees;</text> </paragraph> <paragraph num="(7)"> <text>The cost of property and judgment reports;</text> </paragraph> <paragraph num="(8)"> <text>Inspection fees; and</text> </paragraph> <paragraph num="(9)"> <text>Other reasonable and customary charges or fees authorized by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Points may not be charged to the applicant on any loan under the Program.</text> </paragraph> <paragraph num="E."> <text>Mortgageable Items. At the discretion of the Department or the level II local administrator for loans to owner-occupants only, program charges, closing costs described in Regulation .03B(5) of this chapter, and related costs described in Regulation .03B(26) of this chapter, may be mortgageable items.</text> </paragraph> <paragraph num="F."> <text>Taxes and Assessments. All taxes and assessments against the property which are due and payable shall be paid at or before closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Contractor Requirements."> <paragraph num="A."> <text>General Requirements. All contractors and subcontractors:</text> <paragraph num="(1)"> <text>Shall be licensed by the State, the local political subdivision, or the Maryland Home Improvement Commission, as applicable, to do the work required under the contract;</text> </paragraph> <paragraph num="(2)"> <text>Shall be qualified to do business in Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Shall be able to demonstrate to the satisfaction of the Department the ability to complete the rehabilitation work, which evidence may include previous professional rehabilitation experience;</text> </paragraph> <paragraph num="(4)"> <text>May not be suspended or debarred from the Department's programs pursuant to any action under COMAR 05.01.05;</text> </paragraph> <paragraph num="(5)"> <text>Shall agree in the contract to:</text> <paragraph num="(a)"> <text>Perform all work:</text> <paragraph num="(i)"> <text>In conformance with the contract and all applicable laws, local codes, and Departmental rehabilitation standards, whether or not covered by the work write-up and drawings for the work, and</text> </paragraph> <paragraph num="(ii)"> <text>In a competent, workmanlike manner, equal to the standards of the industry;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Comply with all applicable laws, ordinances, and regulations relating to the protection and safety of persons or property;</text> </paragraph> <paragraph num="(c)"> <text>Furnish all labor, materials, and equipment, and obtain all licenses, permits, insurance coverage, and workers' compensation as may be required to complete the rehabilitation;</text> </paragraph> <paragraph num="(d)"> <text>Not assign the contract without prior written consent of the owner and approval of the local administrator;</text> </paragraph> <paragraph num="(e)"> <text>In addition to all remedies and guarantees provided by law, and at the contractor's expense, make all necessary repairs, replacements, and corrections of any nature or description, interior or exterior, structural or nonstructural, as shall become necessary by reason of faulty workmanship or material, which appear within:</text> <paragraph num="(i)"> <text>1 year from the date the notice of completion is filed,</text> </paragraph> <paragraph num="(ii)"> <text>A longer period if any longer guarantee period is specified for any particular materials or workmanship under the plans and specifications, under a subcontract, in connection with any manufactured unit which is installed in the structure, or</text> </paragraph> <paragraph num="(iii)"> <text>A longer period, if Maryland law so provides;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Complete all specifications of the proposal within the completion date, which may not exceed 12 months from the date of the loan closing unless a longer period is approved in writing by the Department;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Shall indemnify and hold the Department harmless from all liability and loss because of injury to or death of a person or damage to any property which may occur or be alleged to occur during performance of the contract as a direct or indirect result of any act or omission, whether intentional, negligent, or otherwise, by the contractor, subcontractors, or their agents, servants, and employees, and defend all suits or claims involving the above at its sole cost and expense.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Minority Contractors.</text> <paragraph num="(1)"> <text>The Department encourages the use of minority contractors for all projects in all jurisdictions, and requires compliance with the Department's Minority Business Participation Plan for all projects with rehabilitation contract costs of $200,000 or more.</text> </paragraph> <paragraph num="(2)"> <text>Copies of the Department's plan shall be made available to sponsors and contractors.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Identity of Interest.</text> <paragraph num="(1)"> <text>Borrowers may not act as their own general contractors.</text> </paragraph> <paragraph num="(2)"> <text>Sheltered housing sponsors may act as general contractors only with the prior written approval of the local administrator. Application forms will be provided upon request and shall be submitted and approved before submission of the proposal. Approval shall be conditioned on an assurance of completion acceptable to the Department.</text> </paragraph> <paragraph num="(3)"> <text>An owner-occupant may not act as general contractor.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Assurance of Completion. For loans in excess of $50,000, either the Department or the local administrator, in its sole discretion, may require:</text> <paragraph num="(1)"> <text>100 percent performance and 100 percent payment bonds;</text> </paragraph> <paragraph num="(2)"> <text>A letter of credit in the amount of 25 percent of the rehabilitation contract cost, and an assurance of completion agreement; or</text> </paragraph> <paragraph num="(3)"> <text>Other assurances of completion acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="E."> <text>In order to be binding, all communications between the contractor and the owner concerning the content or performance of the contract shall be in writing.</text> </paragraph> <paragraph num="F."> <text>Contractors performing work financed by a Program loan:</text> <paragraph num="(1)"> <text>May not be on the unacceptable risk determination list of the Department of Housing and Urban Development or the Farmer's Home Administration;</text> </paragraph> <paragraph num="(2)"> <text>May not be disbarred or suspended pursuant to COMAR 05.01.05 as amended from time to time; and</text> </paragraph> <paragraph num="(3)"> <text>Shall have performed all previous work financed by the Program in a manner satisfactory to the Director.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Code Compliance. The Department or local administrator's preparation or approval of work write-ups, evaluation of the property, and review and approval of plans and specifications are for the benefit of the Department only. These actions are not intended to substitute for or ensure compliance with appropriate State and local building codes. Compliance with applicable codes and obtaining required permits and licenses are the responsibility of the borrower and contractor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Construction Process."> <paragraph num="A."> <text>Permits. If required by local law, building or rehabilitation permits shall be obtained and posted at the project before the beginning of construction.</text> </paragraph> <paragraph num="B."> <text>Contract Documents.</text> <paragraph num="(1)"> <text>Work done, materials supplied, and construction procedures employed shall comply with all contract documents and applicable codes and standards, including those set forth in these regulations and any others established by the Department. Contract documents include, without limitation:</text> <paragraph num="(a)"> <text>Rehabilitation loan agreement;</text> </paragraph> <paragraph num="(b)"> <text>Change orders;</text> </paragraph> <paragraph num="(c)"> <text>Certification of structural and mechanical soundness;</text> </paragraph> <paragraph num="(d)"> <text>Instructions to bidders;</text> </paragraph> <paragraph num="(e)"> <text>Specifications;</text> </paragraph> <paragraph num="(f)"> <text>Drawings, if applicable; and</text> </paragraph> <paragraph num="(g)"> <text>Contractor's proposal.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>There may not be modification of any contract document without the prior written consent of the Department or the local administrator, as evidenced by an approved change order executed by:</text> <paragraph num="(a)"> <text>The contractor;</text> </paragraph> <paragraph num="(b)"> <text>The owner; and</text> </paragraph> <paragraph num="(c)"> <text>The local administrator.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Borrower and Contractor.</text> <paragraph num="(1)"> <text>The borrower and the contractor shall cooperate to facilitate timely performance of the rehabilitation work and selection of materials.</text> </paragraph> <paragraph num="(2)"> <text>The borrower shall provide the contractor access to the property during normal business hours, and shall permit the contractor to use existing utilities for the execution and completion of work, at no costs to the contractor.</text> </paragraph> <paragraph num="(3)"> <text>The borrower shall be responsible for removing and replacing rugs, furnishings, and other personal property, unless otherwise provided in the contract documents.</text> </paragraph> <paragraph num="(4)"> <text>The borrower and the contractor shall protect and maintain the property and improvements in accordance with the contract documents.</text> </paragraph> <paragraph num="(5)"> <text>The borrower and the contractor shall each, in writing, hold the Department harmless from all loss, claim, cost, or damage of every kind, nature, and description arising from or related to the contract documents.</text> </paragraph> <paragraph num="(6)"> <text>All communications relating to content or performance of the contract shall be in writing, and copies sent to the Program.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Inspections. The local administrator shall conduct inspections to determine the required scope of work, verify payments, mediate construction problems and disputes, and facilitate arbitration procedures.</text> </paragraph> <paragraph num="E."> <text>Construction Disputes. If disputes between the contractor and borrower occur, the Department shall recognize the findings of the Maryland Home Improvement Commission and the Consumer Protection Division of the Office of the Attorney General.</text> </paragraph> <paragraph num="F."> <text>Termination of Contracts. Contracts may be terminated for cause in accordance with applicable provisions of the loan documents and contract documents.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Loan Disbursements."> <paragraph num="A."> <text>Monitoring.</text> <paragraph num="(1)"> <text>The local administrator shall monitor loans and disbursement of loan funds during rehabilitation to assist borrowers and to assure that loan funds are properly used.</text> </paragraph> <paragraph num="(2)"> <text>Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during rehabilitation, taking into consideration:</text> <paragraph num="(a)"> <text>The capability of the borrower;</text> </paragraph> <paragraph num="(b)"> <text>The demonstrated experience and reliability of the contractor;</text> </paragraph> <paragraph num="(c)"> <text>The amount of the loan;</text> </paragraph> <paragraph num="(d)"> <text>The availability of the local technical assistance; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The local administrator may charge borrowers a fee for inspections during rehabilitation, as approved by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Payments Generally.</text> <paragraph num="(1)"> <text>Loan funds shall be disbursed in full at the closing of the loan to an account held on behalf of the borrower by either the political subdivision that is the local administrator or the subcontractor for the loan. The loan funds shall be held in an account established under §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator or the subcontractor shall disburse the loan proceeds in accordance with the following requirements:</text> <paragraph num="(a)"> <text>Loan funds may not be disbursed if payments of interest or escrows required by the loan documents are in arrears;</text> </paragraph> <paragraph num="(b)"> <text>Payments of draws shall be by joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director;</text> </paragraph> <paragraph num="(c)"> <text>Except as provided in §D of this regulation, payments shall be made only for work completed, and payments may not be made for material delivered to the site but not installed in the project;</text> </paragraph> <paragraph num="(d)"> <text>Payment of draws shall be requested by the borrower, and loan funds may be disbursed to the borrower upon request except for final draws or as otherwise provided for in §E of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Accounts.</text> <paragraph num="(1)"> <text>Loan funds shall be held in a non-interest-bearing account established by the local administrator or the subcontractor and approved by the Department. The account may be:</text> <paragraph num="(a)"> <text>An account with a depository institution that is separate from the other operating accounts of the local administrator or subcontractor;</text> </paragraph> <paragraph num="(b)"> <text>An account with a depository institution that is not separate from the other operating accounts of the local administrator or subcontractor using a separate reconciled general ledger account for all Program funds;</text> </paragraph> <paragraph num="(c)"> <text>An escrow account or attorney's trust account held and managed by an escrow agent if the escrow agent meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(i)"> <text>Any employee of the escrow agent with access to the account shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000,</text> </paragraph> <paragraph num="(ii)"> <text>The escrow agent shall provide the local administrator or the subcontractor, if any, and the Department with the quarterly statements required under §C(2) of this regulation, and</text> </paragraph> <paragraph num="(iii)"> <text>Any other requirements established by the Department; or</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Another type of account approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The local administrator or the subcontractor shall provide the Department with quarterly statements of all loan funds in a loan account. The Department shall review these quarterly statements and shall reconcile the loan balances in the records of the local administrator or the subcontractor with the loan balances in the records of the Department. If the quarterly statements do not correspond with the Department's records of loan funds in the account, the local administrator or subcontractor shall work with the Department to reconcile the differences.</text> </paragraph> <paragraph num="(3)"> <text>The Department may revoke, at any time, its approval of any loan account established under this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Advance Payments. Advances or down payments may be made to contractors to purchase materials delivered on site or valid purchase requisitions not to exceed 10 percent of the contract costs.</text> </paragraph> <paragraph num="E."> <text>Progress Payments.</text> <paragraph num="(1)"> <text>Progress payments may not be made until the borrower has delivered satisfactory evidence, such as receipts or bills, of the amount of the payment requested.</text> </paragraph> <paragraph num="(2)"> <text>Progress payments may not be made without an inspection to verify completion of the work, except at the discretion of the local administrator where the entire cost of the project is $30,000 or less, or otherwise by the Department. At a minimum, however, the local administrator shall verify completion of the work before disbursing the final payment, as described in §F of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>If a borrower's request for payment is refused, the local administrator shall notify the borrower. The determination of the local administrator as to percentage of work completed shall be final.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Final Payment.</text> <paragraph num="(1)"> <text>Final payment shall be made as set forth in §E(2)—(5) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The borrower shall submit to the local administrator a certificate of completion, executed by the borrower and contractor, certifying that all work has been completed in accordance with the contract documents.</text> </paragraph> <paragraph num="(3)"> <text>Upon final inspection and receipt and approval of the certificate of completion, final payment shall be processed.</text> </paragraph> <paragraph num="(4)"> <text>Borrower's Refusal to Make Final Payment.</text> <paragraph num="(a)"> <text>If, in the opinion of the local administrator, the contractor has satisfied the contract and the borrower refuses to request or release the final payment, then the local administrator may follow the procedure in §F(4)(b)—(d) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The local administrator may require the borrower to explain in writing within 10 days why the local administrator should not make direct payment to the contractor.</text> </paragraph> <paragraph num="(c)"> <text>If the borrower responds within the 10-day period and requests a meeting, the local administrator shall hold a meeting at which the borrower shall present the borrower's objections to requesting or releasing the final payment.</text> </paragraph> <paragraph num="(d)"> <text>The local administrator, in its discretion, may then either approve or disapprove direct payment to the contractor or the borrower.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>If the local administrator receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, and all loan funds have not yet been disbursed, the local administrator shall retain an amount equal to the lesser of all funds not yet disbursed and the amount sufficient to satisfy the claims until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Retainage.</text> <paragraph num="(1)"> <text>The local administrator shall retain until final payment 10 percent of the contract proposal costs for all projects for which the borrower is responsible for interim project inspections.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator, at its discretion, may elect to retain until the final payment 10 percent of the contract proposal costs for any other project, taking into consideration:</text> <paragraph num="(a)"> <text>The type of project,</text> </paragraph> <paragraph num="(b)"> <text>The contractor's experience, and</text> </paragraph> <paragraph num="(c)"> <text>Other factors the Program considers relevant.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the local administrator.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Payment for Additional Work. Payment for any additional cost to complete work not included in the approved contract proposal is the obligation of the borrower. A borrower may apply to the local administrator for a loan increase to cover some or all of the increased costs. Any loan increase shall be subject to approval or disapproval in accordance with the provisions of these regulations. The Department has no obligation to pay for increased costs.</text> </paragraph> <paragraph num="I."> <text>Construction Disputes.</text> <paragraph num="(1)"> <text>The local administrator and the Department shall coordinate with the borrower and the contractor to resolve any dispute concerning workmanship, the quality of materials, damaged property, the completion schedule, and other matters pertinent to the contract documents.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator and the Department shall recognize the findings of the Maryland Home Improvement Commission and the Consumer Protection Division of the Office of the Attorney General, if the dispute is submitted to their arbitration.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Termination of Contracts. Contracts may be terminated for cause in accordance with the loan documents, contract documents, and Program policies and procedures.</text> </paragraph> <paragraph num="K."> <text>Closeout Procedures.</text> <paragraph num="(1)"> <text>After final payment or payout is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements.</text> </paragraph> <paragraph num="(2)"> <text>A copy of the closeout statement shall be forwarded to the Program and the servicer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Certification of Local Governments as Local Administrators."> <paragraph num="A."> <text>General. The Department recognizes that the most effective housing programs of this kind are those administered at the local level. Therefore, each political subdivision is encouraged and expected to develop the capacity to originate and administer Program loans. While the Department has the authority to originate and administer loans, the Department does not plan to operate a program for a political subdivision. The Department reserves the right, however, to originate and administer Program loans at its discretion.</text> </paragraph> <paragraph num="B."> <text>Certification of Level I Local Administrators. The Department may certify a political subdivision to originate and administer loans when the political subdivision meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(1)"> <text>The political subdivision shall be able to provide staff to perform adequately the functions of the following positions:</text> <paragraph num="(a)"> <text>A rehabilitation director, experienced in operating a rehabilitation program, supervising employees, and dealing with the public,</text> </paragraph> <paragraph num="(b)"> <text>A building inspector, experienced in residential rehabilitation, cost estimation, writing specifications, blueprint reading, and residential inspections, and trained to understand and apply the appropriate codes and rehabilitation standards,</text> </paragraph> <paragraph num="(c)"> <text>A loan underwriter, experienced in mortgage lending and financial processing of loans, and</text> </paragraph> <paragraph num="(d)"> <text>Clerical and administrative staff trained to ensure prompt and efficient processing of applications, draw schedules, and other required items;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The rehabilitation staff of the political subdivision shall be capable of:</text> <paragraph num="(a)"> <text>Determining local rehabilitation needs evidenced by completion of a housing assistance plan, a local comprehensive plan, or local housing plan,</text> </paragraph> <paragraph num="(b)"> <text>Establishing a rehabilitation program, evidenced by prior experience in the development and operation of a rehabilitation program,</text> </paragraph> <paragraph num="(c)"> <text>Evaluating loan applications, and</text> </paragraph> <paragraph num="(d)"> <text>Monitoring both the loans and the work done under those loans;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The political subdivision shall execute and comply with the terms of an agreement required by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Certification of Level II Local Administrators. The Department may certify a political subdivision to originate and administer loans in any amount, as well as approve loans in the amount of $30,000 or less, when:</text> <paragraph num="(1)"> <text>The political subdivision meets the criteria outlined in §B of this regulation to the Department's satisfaction; and</text> </paragraph> <paragraph num="(2)"> <text>The Department determines that the rehabilitation staff of the political subdivision is capable of:</text> <paragraph num="(a)"> <text>Evaluating, recommending, approving, or rejecting loans,</text> </paragraph> <paragraph num="(b)"> <text>Scheduling and executing loan closings,</text> </paragraph> <paragraph num="(c)"> <text>Monitoring construction activities,</text> </paragraph> <paragraph num="(d)"> <text>Closing out loan accounts, and</text> </paragraph> <paragraph num="(e)"> <text>Providing financial information to loan servicers and the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Subcontracting Program Administration.</text> <paragraph num="(1)"> <text>A political subdivision may subcontract its duties and responsibilities as a local administrator under this chapter, except as provided in §D(2) and (3) of this regulation, with the approval of the Department. The duties described in §§B and C of this regulation may be carried out by staff of the local administrator or its subcontractor.</text> </paragraph> <paragraph num="(2)"> <text>A political subdivision may not subcontract the holding and disbursement of loan funds described in Regulation .15B and K of this chapter except to a subcontractor which meets the following criteria to the satisfaction of the Department:</text> <paragraph num="(a)"> <text>The subcontractor meets the criteria of §§B and C of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>Any employee of the subcontractor with access to the loan funds shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000; and</text> </paragraph> <paragraph num="(c)"> <text>The subcontractor provides the local administrator and the Department with quarterly statements of:</text> <paragraph num="(i)"> <text>All loan funds held and disbursed by the subcontractor under Regulation .15C(2) of this chapter, and</text> </paragraph> <paragraph num="(ii)"> <text>The balance of funds on hand;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The subcontractor provides the local administrator and the Department with an annual audit conducted by an independent certified public accountant and prepared in accordance with generally accepted auditing standards; and</text> </paragraph> <paragraph num="(e)"> <text>The subcontractor complies with any other requirements established by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Periodically, at the request of the Department, each local administrator shall submit a rehabilitation plan satisfactory to the Department as outlined in Regulation .20 of this chapter, and shall agree in writing to administer the Program in conformance with these regulations and with any other procedures prescribed by the Department.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Revocation of Certification. The Department reserves the right and expects to monitor periodically the loan administration of certified local administrators, and may revoke certification upon determination that the local administrator is administrating the loans in a manner inconsistent with the intent of the Program.</text> </paragraph> <paragraph num="F."> <text>Special Requirements for Local Administrators and Their Subcontractors.</text> <paragraph num="(1)"> <text>Local administrators and their subcontractors shall maintain financial records of loan disbursements for at least 3 years, and shall make them available for review by the Department at all reasonable times and as set forth in Regulation .21 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Any noncomplying loan approved by a level II local administrator shall either be amended, with the borrower’s concurrence, to comply with the Program’s requirements, or purchased from the Department by the political subdivision.</text> </paragraph> <paragraph num="(3)"> <text>Periodically, at the request of the Department, each local administrator shall submit a rehabilitation plan satisfactory to the Department as outlined in Regulation .20 of this chapter, and shall agree in writing to administer the Program in conformance with these regulations and with any other procedures prescribed by the Department.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Local Administration Fee. The Department may, at its sole discretion, pay a local administrator an annual fee for administering loans made under the Program.</text> </paragraph> <paragraph num="H."> <text>Department Authority. When the Department, in its sole discretion, administers a loan, the Department shall have the authority that a local administrator would have under these regulations, in addition to its authority as the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Certification of Income."> <paragraph num="A."> <text>Certification of Borrower's Household Income.</text> <paragraph num="(1)"> <text>At initial occupancy, and at least every 5 years after that, each borrower shall submit to the Department a signed certificate of annual income for each member of the household 18 years old or older, along with verification documentation acceptable to the Department.</text> </paragraph> <paragraph num="(2)"> <text>The exception set forth in §A(1) of this regulation does not apply to accessory loan borrowers whose eligibility depends on tenant household income.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Certification of Each Tenant's Household Income.</text> <paragraph num="(1)"> <text>Before initial occupancy and at least every 5 years after that, borrowers shall obtain a completed, signed income certification from all persons who occupy, or will occupy, the property as accessory, shared, or sheltered housing tenants. Borrowers shall certify to the Department at initial closing, and annually after that, that each household residing in a building unit has an annual income that does not exceed the then current income limits. The certification of the borrower shall show the current rent being charged for each unit. The borrower shall retain records documenting the information in the initial and annual income certifications for 3 years. The department reserves the right to inspect income certification records held by the borrower at any time.</text> </paragraph> <paragraph num="(2)"> <text>The requirement set forth in §A(2) of this regulation does not apply to accessory loans if eligibility for the loan depends on the borrower's household income.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A borrower, contractor, local administrator, or subcontractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program , or in any aspect of employment by any borrower, contractor, local administrator, or subcontractor in connection with any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each borrower, contractor, local administrator, and subcontractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended.</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Program Fund Allocations."> <text>It is the intent of the Department that Program funds be distributed Statewide. Monies appropriated to the Program shall be made available Statewide on a first-come, first-served basis.</text> </regulation> <regulation prefix="Regulation" num=".20" heading="Rehabilitation Plan."> <paragraph num="A."> <text>Applications by a political subdivision for use of Program funds shall comply with a rehabilitation plan periodically prepared by the political subdivision and submitted to the Department.</text> </paragraph> <paragraph num="B."> <text>A rehabilitation plan includes the following:</text> <paragraph num="(1)"> <text>Documentation that a political subdivision is capable of satisfying the requirements to be a level I or level II local administrator as described in Regulation .16 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>A map of the jurisdiction showing the location and boundaries of neighborhood revitalization areas, and any other areas in which loans will be used in conjunction with federal programs assisting the rehabilitation of housing;</text> </paragraph> <paragraph num="(3)"> <text>As an attachment, any locally approved plans or programs or neighborhood revitalization with supporting data, including a description of housing conditions, general social and economic characteristics, and identification of public improvements or services recently implemented or planned for the area; and</text> </paragraph> <paragraph num="(4)"> <text>A description of the manner in which funds are to be used.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A rehabilitation plan shall be prepared and submitted to the Department before certification as a local administrator, and shall be updated as may be requested periodically by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Books and Accounts."> <paragraph num="A."> <text>Borrowers, contractors, and subcontractors shall maintain such books, accounts, and records, and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of a borrower shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the borrower and the Department. Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between them and the borrower.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="General Provisions."> <paragraph num="A."> <text>Combining with other Loans and Grants. Program loans may be made in conjunction with other federal or State loan or grant programs, provided the requirements of the Act and these regulations are met. The Program shall be administered to the extent possible to ensure maximum utilization of available federal funds.</text> </paragraph> <paragraph num="B."> <text>Program Guidelines. The Department may establish from time to time detailed Program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financing of loans or to the Program. Copies of these guidelines shall be available for examination at the offices of any local administrator and at the Department's principal office. The Department, upon request, shall provide copies to the public for a reasonable charge.</text> </paragraph> <paragraph num="C."> <text>Fees. The Department may charge commitment fees, application fees, closing fees, or other fees, charges, or penalties to applicants, borrowers, or other individuals or entities that participate in the Program. The Department may restrict the fees and charges that servicers, local administrators, or other Program participants obtain from borrowers or applicants.</text> </paragraph> <paragraph num="D."> <text>Delegation. The Secretary may delegate to the Director, the Program Director, or to any other official or employee of the Department the authority to execute or approve any program documents or loan documents, including loan commitments and agreements with local administrators. In addition, through the agreement with the local administrator, specific staff members for the local administrator may be authorized by the Department to execute loan documents on behalf of the Department.</text> </paragraph> <paragraph num="E."> <text>False Statements. Any borrower who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department or the local administrator originating the loan, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-933, Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local programs used in connection with a loan necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the determination of the Secretary, the application of a regulation in a specific case or in any emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-910 and 4-926, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 adopted as an emergency provision effective August 28, 1986 (13:20 Md. R. 2190); emergency status extended at 14:2 Md. R. 123</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 adopted effective March 1, 1987 (14:4 Md. R. 413)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.20 to COMAR 05.04.08</annotation> <annotation type="History" subtype="Administrative History">Regulations .02, .03, .06, and .07 amended effective June 7, 1993 (20:11 Md. R. 912)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 22, 1999 (26:4 Md. R. 273); November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulations .04, .05, and .08—.15 repealed and Regulations .04, .05, and .08—.22 adopted effective June 7, 1993 (20:11 Md. R. 912)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09D amended effective February 22, 1999 (26:4 Md. R. 273);</annotation> <annotation type="History" subtype="Administrative History">November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective February 22, 1999 (26:4 Md. R. 273)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16D amended effective February 22, 1999 (26:4 Md. R. 273)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18A amended effective February 22, 1999 (26:4 Md. R. 273)</annotation> </annotations> </chapter> <chapter num="09" heading="Group Home Financing Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies and procedures for making loans under the Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objective of the Program is to provide loans to sponsors to finance or refinance the costs of acquiring, constructing, and modifying buildings which will provide group homes for low income, elderly, handicapped, disabled, and other citizens of the State with special housing needs.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in the Act have the meaning defined there and, in addition, the meaning used in these regulations.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 6, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Annual income” means annual income as defined by the United States Department of Housing and Urban Development in 24 CFR §5.609.</text> </paragraph> <paragraph num="(3)"> <text>“Applicable codes and standards” means the applicable construction, health, safety, fire, occupancy, and other codes and standards in force in the political subdivision in which the project is located. If these codes and standards do not exist or are determined by the Secretary to be insufficient to promote the purposes of the Act, then the codes and standards prescribed in COMAR 05.02.01 or 05.04.02, as applicable, shall apply.</text> </paragraph> <paragraph num="(4)"> <text>“Applicant” means an individual, limited partnership, or other legal entity applying for a loan under the Program.</text> </paragraph> <paragraph num="(5)"> <text>“Borrower” means an applicant who receives a loan under the Program.</text> </paragraph> <paragraph num="(6)"> <text>“Closing costs” means:</text> <paragraph num="(a)"> <text>Financing costs such as the appraisal fee, credit report fee, survey fee, title examination fee, loan origination fee, title insurance fee, and application fee;</text> </paragraph> <paragraph num="(b)"> <text>Title fees such as the attorney's fee, documentary stamps, recording fees, State and local transfer taxes; and</text> </paragraph> <paragraph num="(c)"> <text>Prepaid expenses such as property taxes, ground rent, hazard insurance, and any mortgage insurance premiums to be paid at closing.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Contract” means the agreement, as approved by the Department, between the borrower and the entity which is doing any construction or modification work to be financed by a loan.</text> </paragraph> <paragraph num="(8)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(9)"> <text>“Deputy Director” means the Deputy Director of the Division of Development Finance.</text> </paragraph> <paragraph num="(10)"> <text>“Director” means the Director of the Division of Development Finance, an organizational unit within the Department established under Housing and Community Development Article, §4-103, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>Group Home.</text> <paragraph num="(a)"> <text>“Group home” means a housing facility that offers:</text> <paragraph num="(i)"> <text>Supportive services or supervisory personnel to individuals with special housing needs who are not related to the group home sponsor; and</text> </paragraph> <paragraph num="(ii)"> <text>Common, shared, or independent living, dining, kitchen, sanitary, and sleeping facilities.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Group home” need not include all of the facilities listed §B(11)(a) of this regulation if it provides emergency and temporary housing for homeless individuals.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Group home project” or “project” means the acquisition, construction, modification, or refinancing of a building which will provide a group home.</text> </paragraph> <paragraph num="(13)"> <text>“Group home sponsor” means a borrower under the Program who:</text> <paragraph num="(a)"> <text>Owns and operates a group home; and</text> </paragraph> <paragraph num="(b)"> <text>Is a nonprofit organization, an individual, or a qualified limited partnership.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Housing Finance Review Committee” or “HFRC” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(15)"> <text>“Modification” means improvement, repair, renovation, or rehabilitation of an existing building to make it suitable for use as a group home or to eliminate any housing, building, fire, safety, health, or other code violations.</text> </paragraph> <paragraph num="(16)"> <text>“Necessary services” means the minimum amount of services required by any agency licensing the group home.</text> </paragraph> <paragraph num="(17)"> <text>“Nonprofit organization” means a corporation, foundation, limited liability company, or other legal entity, no part of the net earnings of which inures to the benefit of any private shareholder, member, or other individual holding an interest in the entity.</text> </paragraph> <paragraph num="(18)"> <text>“Person of lower income” means an individual or family whose total annual income does not exceed the upper income limits established by the Secretary from time to time. Two or more unrelated individuals residing in a group home do not constitute a family.</text> </paragraph> <paragraph num="(19)"> <text>“Political subdivision” means any municipal corporation in Maryland subject to the provisions of Article XI-E of the Maryland Constitution, the Mayor and City Council of Baltimore, and any of the 23 counties in Maryland.</text> </paragraph> <paragraph num="(20)"> <text>“Program” or “GHFP” means the Group Home Financing Program established pursuant to Housing and Community Development Article, §4-602, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(21)"> <text>“Program Director” means the Director of Single Family Housing in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(22)"> <text>“Qualified limited partnership” means a limited partnership qualified to do business in Maryland, wherein:</text> <paragraph num="(a)"> <text>Each of the general partners of the limited partnership qualifies as a nonprofit organization or is a wholly owned subsidiary of a nonprofit organization; and</text> </paragraph> <paragraph num="(b)"> <text>The limited partnership:</text> <paragraph num="(i)"> <text>Was formed for the purpose of undertaking a group home project that is eligible in whole or in part for federal programs or incentives, including low income housing tax credits; and</text> </paragraph> <paragraph num="(ii)"> <text>Is organized so that the nonprofit organization is managing the project or will be the recipient of net cash flow or residual sale proceeds upon sale of the group home.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(24)"> <text>“Supervisory personnel” means an adult supervisor who may be occupying the group home part or full time as required by any agency authority which licenses and monitors the operation of the group home.</text> </paragraph> <paragraph num="(25)"> <text>“Supportive services” means any services provided as an alternative to supervisory personnel.</text> </paragraph> <paragraph num="(26)"> <text>“Work write-up” means the scope of work or other description of group home construction or modification to an existing building.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Sponsors."> <text>Group home sponsors shall meet the following minimum requirements to receive a loan:</text> <paragraph num="A."> <text>Be:</text> <paragraph num="(1)"> <text>An individual; or</text> </paragraph> <paragraph num="(2)"> <text>A nonprofit organization or qualified limited partnership that is in good standing and qualified to do business in Maryland;</text> </paragraph> </paragraph> <paragraph num="B."> <text>Have the legal capacity and all necessary legal authorization to incur the obligations of the loan under the Program;</text> </paragraph> <paragraph num="C."> <text>Not be under a debarment or suspension order of the Department under COMAR 05.01.05 or any other State or federal agency or department;</text> </paragraph> <paragraph num="D."> <text>Demonstrate creditworthiness and repayment capability acceptable to the Department;</text> </paragraph> <paragraph num="E."> <text>Demonstrate the capacity to:</text> <paragraph num="(1)"> <text>Undertake the project,</text> </paragraph> <paragraph num="(2)"> <text>Manage the group home, and</text> </paragraph> <paragraph num="(3)"> <text>Provide necessary services to the group home residents as defined in Regulation .03B(16) of this chapter;</text> </paragraph> </paragraph> <paragraph num="F."> <text>Provide supervisory personnel or supportive services acceptable to the Department;</text> </paragraph> <paragraph num="G."> <text>Agree in writing that at least 51 percent of the group home occupants, other than supervisory personnel, will be persons of lower income;</text> </paragraph> <paragraph num="H."> <text>Provide evidence acceptable to the Department that any financing being obtained outside the Program is assured and acceptable to the Department;</text> </paragraph> <paragraph num="I."> <text>Either:</text> <paragraph num="(1)"> <text>Have the required license to own and operate the group home or provide evidence acceptable to the Department that the license will be issued or that no license is required under State or local law; or</text> </paragraph> <paragraph num="(2)"> <text>Have a management agreement described in §J of this regulation with a manager who:</text> <paragraph num="(a)"> <text>Is licensed to operate a group home, and</text> </paragraph> <paragraph num="(b)"> <text>Meets the requirements of §§A, C, E, and F of this regulation; and</text> </paragraph> </paragraph> </paragraph> <paragraph num="J."> <text>Agree in writing either to operate the project directly, or, in the alternative, to operate it indirectly by entering into a management agreement in a form acceptable to the Department, with a manager acceptable to the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Projects."> <paragraph num="A."> <text>Buildings or properties to be acquired, constructed, modified, or refinanced with proceeds of a loan for the purpose of providing group homes shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(2)"> <text>Be in compliance with zoning requirements for the proposed use;</text> </paragraph> <paragraph num="(3)"> <text>Provide:</text> <paragraph num="(a)"> <text>Common, shared, or independent living, dining, kitchen, sanitary, and sleeping facilities, or</text> </paragraph> <paragraph num="(b)"> <text>Emergency and temporary housing facilities for homeless persons;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Provide supportive services or supervisory personnel as may be considered necessary by the sponsor or required by any licensing agency;</text> </paragraph> <paragraph num="(5)"> <text>Be in good repair and in compliance with applicable codes and standards, or be able to be made so with the proceeds of the loan or through other sources of funds, which may be a senior or a subordinate loan with terms and conditions acceptable to the Department; and</text> </paragraph> <paragraph num="(6)"> <text>Be adaptable for use as a group home by persons with special housing needs.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the group home will be occupied by four or more individuals, other nonresidential uses which may or may not be directly related to the housing facility may be included in the project, provided that the nonresidential uses:</text> <paragraph num="(1)"> <text>Offer goods or services for the benefit of lower income or otherwise disadvantaged persons;</text> </paragraph> <paragraph num="(2)"> <text>Do not exceed 10 percent of the gross square footage in the building; and</text> </paragraph> <paragraph num="(3)"> <text>Are in compliance with the zoning, approval, and permitting procedures of the local jurisdiction.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Uses."> <text>The proceeds of a mortgage loan may be used to finance:</text> <paragraph num="A."> <text>Purchase of a newly constructed building to provide a group home;</text> </paragraph> <paragraph num="B."> <text>Permanent long-term mortgage financing, including refinancing;</text> </paragraph> <paragraph num="C."> <text>Purchase of an existing building to provide a group home;</text> </paragraph> <paragraph num="D."> <text>Modifications to a building purchased with a loan if the modification improves, repairs, renovates, or rehabilitates the building to:</text> <paragraph num="(1)"> <text>Make it suitable as a group home; or</text> </paragraph> <paragraph num="(2)"> <text>Eliminate housing, building, fire, safety, health, or other code violations;</text> </paragraph> </paragraph> <paragraph num="E."> <text>Closing costs associated with site acquisition, purchase, or refinance of a group home;</text> </paragraph> <paragraph num="F."> <text>Engineering, legal, title, survey, or architectural fees associated with the rehabilitation, purchase, or modification of a group home;</text> </paragraph> <paragraph num="G."> <text>Costs associated with site preparation and evaluation including soil borings, environmental review reports, and testing for environmental hazards;</text> </paragraph> <paragraph num="H."> <text>A refinance of an existing group home;</text> </paragraph> <paragraph num="I."> <text>Construction costs for a new building to be used as a group home; or</text> </paragraph> <paragraph num="J."> <text>Other development costs considered reasonable by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms — General."> <paragraph num="A."> <text>Maximum Loan Amount. A program loan when aggregated with any other debt secured by the group home may not exceed the lesser of:</text> <paragraph num="(1)"> <text>Either:</text> <paragraph num="(a)"> <text>100 percent of the appraised value of the property after modification, for program loans secured by a first mortgage or subordinate to another loan made or insured by the Department or one of its units;or</text> </paragraph> <paragraph num="(b)"> <text>95 percent of the appraised value of the property after modification, for program loans secured by a mortgage which is subordinate to debt not made or insured by the Department or one of its units;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The sum of the purchase price of the property, the closing costs, and the costs of any modification;</text> </paragraph> <paragraph num="(3)"> <text>The sum of the land acquisition, the costs of construction, and any closing costs; or</text> </paragraph> <paragraph num="(4)"> <text>A maximum house price set periodically by the program for the region where the property is located, unless the Department's Housing Finance Review Committee approves an exception on the following basis:</text> <paragraph num="(a)"> <text>There are no other reasonably acceptable properties available within the cost limit; or</text> </paragraph> <paragraph num="(b)"> <text>The property is larger than the usual group home financed by the program and will serve more than three individuals with special housing needs.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Interest Rate.</text> <paragraph num="(1)"> <text>The interest rate to be charged on a loan shall not exceed an annual rate of 7 percent except as provided in §B(4) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The interest rate to be charged on a loan may be as low as zero percent in exceptional circumstances, as determined by the Department.</text> </paragraph> <paragraph num="(3)"> <text>The interest rate for each loan shall be established by the Department, after taking into consideration the:</text> <paragraph num="(a)"> <text>Annual income of the individuals or families expected to reside in the group home; and</text> </paragraph> <paragraph num="(b)"> <text>Amount of income from operating the group home available to repay the loan with interest after payment of the cost of operating the group home and payment of debt service on any prior mortgage secured by the group home.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the annual income of the individuals or families occupying the group home changes so that the borrower no longer would qualify for the interest rate, the Department may increase the interest rate on the loan to a rate that would be permitted given the annual income of the individuals up to the prevailing conventional interest rate.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Term.</text> <paragraph num="(1)"> <text>The term of each permanent loan may not exceed 40 years and shall be based upon the borrower's ability to repay.</text> </paragraph> <paragraph num="(2)"> <text>The term of each construction loan may not exceed 1 year unless the Program determines a longer term is necessary based upon the size or scope of the project.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Periodic Payment. Except for deferred payment loans, periodic payments shall be charged and applied first to escrows, when applicable, second to interest, and third to principal.</text> </paragraph> <paragraph num="E."> <text>Late Charge. Late charges, as permitted by law, may be imposed.</text> </paragraph> <paragraph num="F."> <text>Security for Loans.</text> <paragraph num="(1)"> <text>Program loans 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 applicable to the property. Except as provided in §F(2) of this regulation, the Department shall have a first position lien on the project property.</text> </paragraph> <paragraph num="(2)"> <text>A program loan may be secured by a subordinate lien mortgage or deed of trust if the borrower complies with Regulation .09 of this chapter and either:</text> <paragraph num="(a)"> <text>Obtains:</text> <paragraph num="(i)"> <text>Private financing for a portion of the project costs; and</text> </paragraph> <paragraph num="(ii)"> <text>Any required consent of the superior mortgagee; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Receives a loan under:</text> <paragraph num="(i)"> <text>A federal program, other than the federal Section 202 Program, which requires a first mortgage or deed of trust; or</text> </paragraph> <paragraph num="(ii)"> <text>The Department's Special Housing Opportunities Program.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Loans may not be subordinate to loans made under the Federal Section 202 Program.</text> </paragraph> <paragraph num="(4)"> <text>Liens subordinate to the loan may be placed on the property provided that the Department and any superior mortgagee give any required consents.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Change of Borrower Eligibility. If at any time at least 51 percent of the individuals or families residing in the group home are not persons of lower income or if the borrower ceases to satisfy the requirements of Regulation .04 or Regulation .11 of this chapter, the Department may, in accordance with the terms of the loan documents between the Department and the borrower, either:</text> <paragraph num="(1)"> <text>Increase the interest rate up to the then prevailing conventional mortgage rate; or</text> </paragraph> <paragraph num="(2)"> <text>Accelerate the payment of the entire principal and interest due under the loan.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Change of Ownership. If at any time during the term of the loan the borrower sells, ceases to own, assigns, transfers, or otherwise disposes of all or any part of the group home or the borrower's interest in the group home without the Department’s prior written consent, the Department, in accordance with the terms of the loan documents between the Department and the borrower, may accelerate the payment of the entire principal and interest due under the loan.</text> </paragraph> <paragraph num="I."> <text>Escrow Account. The borrower shall make periodic escrow payments to the Department or its agent to ensure payment when due of any annual real estate taxes, ground rent, property insurance premiums, and, when appropriate, other items for which payments are required by the Department. Interest need not be paid to borrowers on escrowed monies. The Department may waive this requirement under any of the following circumstances:</text> <paragraph num="(1)"> <text>Such amounts are paid in escrow to a superior mortgagee;</text> </paragraph> <paragraph num="(2)"> <text>With respect to insurance premiums, the Department has adequate evidence that the borrower and the project are sufficiently covered under a blanket policy then in effect held by the borrower; or</text> </paragraph> <paragraph num="(3)"> <text>The Department has consented in writing to waive this requirement.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Conditions — General."> <paragraph num="A."> <text>Environmental Review.</text> <paragraph num="(1)"> <text>A Project financed by a program loan shall comply with applicable local, State, and federal environmental laws and regulations.</text> </paragraph> <paragraph num="(2)"> <text>Group home sponsors may be required, at the discretion of the Department, to conduct a screening of the proposed site for environmental conditions such as man-made hazards, storm water runoff, underground storage tanks, lead-based paint, radon gas, PCB's, and asbestos.</text> </paragraph> <paragraph num="(3)"> <text>If the initial screening indicates adverse or potentially adverse environmental conditions, the Department may require a more detailed physical investigation, review of historical records, testing, and treatment, or abatement of the environmental condition as a requirement of the loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Title Insurance.</text> <paragraph num="(1)"> <text>The borrower shall provide an American Land Title Association (ALTA) Loan policy 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 and real property in and on which the group home is located on the date of closing is vested in the borrower, and containing only exceptions and encumbrances approved by the Department and the Office of the Attorney General.</text> </paragraph> <paragraph num="(2)"> <text>The title insurance policy shall be accompanied by a survey, certified in the manner required by the Department and the title company issuing the title insurance, showing that there are no easements or encroachments upon, or other matters pertaining to, the property, except those acceptable to the Department. The title insurance policy may not contain any survey exceptions.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Property, Liability, and Other Insurance.</text> <paragraph num="(1)"> <text>At or before closing of a loan, and at such other times as required by the Department, the borrower shall provide evidence that the borrower, contractor, and other parties, have obtained and maintained the following insurance:</text> <paragraph num="(a)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(b)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(c)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(d)"> <text>Architect's errors and omissions;</text> </paragraph> <paragraph num="(e)"> <text>Engineer's errors and omissions; and</text> </paragraph> <paragraph num="(f)"> <text>Flood insurance, if the project is located in a flood hazard zone.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All insurance required under §C(1) of this regulation shall meet the following requirements:</text> <paragraph num="(a)"> <text>Be written by a company that has a currently issued certificate of authority or other evidence of appropriate registration or licensure from the Maryland Insurance Administration;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(c)"> <text>Not be terminable without prior notification to the Department; and</text> </paragraph> <paragraph num="(d)"> <text>Contain such other terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition to the requirements of §C(2) of this regulation, owner's liability insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition to the requirements of §C(2) of this regulation, contractor's liability and contractor's builder's risk insurance, if applicable, shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in place through final closing or such later date as the Department requires.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In addition to the requirements of §C(2) of this regulation, owner's property or hazard insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as a loss payee and mortgagee; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Subordinate Loans."> <text>In addition to the requirements of Regulations .07 and .08 of this chapter, for program loans secured by a subordinate mortgage or deed of trust, the borrower shall obtain from each superior mortgagee a written agreement, in the form acceptable to the Department and the Office of the Attorney General, as follows:</text> <paragraph num="A."> <text>Acknowledging and consenting to the subordinate lien of the Department;</text> </paragraph> <paragraph num="B."> <text>Agreeing to provide timely notice to the Department in the event of default by the borrower on the superior mortgage; and</text> </paragraph> <paragraph num="C."> <text>Agreeing to suspend acceleration and foreclosure of the superior lien for a reasonable period of time if the Department brings current and maintains timely payment due on the superior mortgage.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Deferred Loans."> <paragraph num="A."> <text>In addition to the conditions and requirements of Regulations .07—.09 of this chapter, deferred loans shall comply with the requirements of §§B—D of this regulation.</text> </paragraph> <paragraph num="B."> <text>Deferrals. The loan documents may provide for deferred payments of principal or interest or both principal and interest.</text> </paragraph> <paragraph num="C."> <text>Term. The loan documents shall provide for repayment of deferred amounts at:</text> <paragraph num="(1)"> <text>The earliest possible date established by the Department;</text> </paragraph> <paragraph num="(2)"> <text>A sale or other transfer of the property or an interest in the property;</text> </paragraph> <paragraph num="(3)"> <text>Discontinuance of use of the property as a group home; or</text> </paragraph> <paragraph num="(4)"> <text>Maturity of the loan.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Department may, but need not, charge interest on deferred interest payments.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Limited Return on Equity."> <paragraph num="A."> <text>As a condition of any group home loan, the borrower is required to meet the conditions of §B, C, or D of this regulation.</text> </paragraph> <paragraph num="B."> <text>Equity Participation.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, the borrower shall remit to the Department, an amount of money at least equal to 25 percent of the difference between:</text> <paragraph num="(a)"> <text>The greater of:</text> <paragraph num="(i)"> <text>The gross sales proceeds from a resale of the group home, if any; or</text> </paragraph> <paragraph num="(ii)"> <text>The appraised value of the group home; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The sum of:</text> <paragraph num="(i)"> <text>The current principal balance of the loan;</text> </paragraph> <paragraph num="(ii)"> <text>The borrower's initial equity contribution;</text> </paragraph> <paragraph num="(iii)"> <text>Payments of principal made by the borrower on the loan; and</text> </paragraph> <paragraph num="(iv)"> <text>The documented cost of capital expenditures which directly benefited the group home.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the Department provides less than 1/2 of the total financing for the project, the percentage to be applied under the provisions of §B(1) of this regulation shall be the percentage of the total financing provided by the Department.</text> </paragraph> <paragraph num="(3)"> <text>Except as provided in §B(4) and (5) of this regulation, the borrower is obligated to remit the equity participation at the earliest to occur of:</text> <paragraph num="(a)"> <text>A default under any of the loan documents;</text> </paragraph> <paragraph num="(b)"> <text>Prepayment of the outstanding principal balance of the loan;</text> </paragraph> <paragraph num="(c)"> <text>Loan maturity; or</text> </paragraph> <paragraph num="(d)"> <text>Sale or other transfer of the group home or transfer without the Department’s consent of a controlling interest in the borrower.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Equity Proceeds.</text> <paragraph num="(a)"> <text>The Department, in its discretion, may agree to defer receiving its share of equity proceeds in the following situations:</text> <paragraph num="(i)"> <text>The borrower is maintaining the project as a group home after the loan has been prepaid or matured; or</text> </paragraph> <paragraph num="(ii)"> <text>The borrower has sold the project to a buyer that has agreed to continue the project as a group home, assume the program loan and the equity participation obligation, and comply with all applicable program requirements.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If the Department defers its receipt of equity proceeds, the borrower or the subsequent buyer, as applicable, shall remit the deferred amount of the equity proceeds upon the occurrence of any of the following events:</text> <paragraph num="(i)"> <text>The current owner fails to operate the project as group home in accordance with the program requirements;</text> </paragraph> <paragraph num="(ii)"> <text>The sale or other transfer of the group home or a transfer, without the Department's consent, of a controlling interest in the owner of the group home; or</text> </paragraph> <paragraph num="(iii)"> <text>In the case of an assumed loan, any of the events listed in §B(3) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>The Department, in its discretion, may agree to defer receiving its share of equity proceeds for a project that the borrower is selling under the following conditions:</text> <paragraph num="(a)"> <text>The purpose of the deferral is to facilitate the purchase of a new group home property that the Department will finance;</text> </paragraph> <paragraph num="(b)"> <text>The equity payment may be deferred one time only;</text> </paragraph> <paragraph num="(c)"> <text>Either the borrower shall apply:</text> <paragraph num="(i)"> <text>All of its equity in the group home that is sold to the purchase of a new group home; or</text> </paragraph> <paragraph num="(ii)"> <text>The same percentage of its equity share to the new group home as the percentage of the Department's equity share that is deferred and applied to the purchase of the new group home;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>If the existing group home is sold before the new purchase is made, then the equity to be rolled over into the purchase of a new group home shall be held in escrow by a third party acceptable to the Program director until the new property is purchased;</text> </paragraph> <paragraph num="(e)"> <text>The borrower may withdraw from escrow, with the written consent of the Program director, an amount needed for a down payment or other preclosing costs approved by the Program director, up to the amount of the borrower's share of equity in the group home that has been sold;</text> </paragraph> <paragraph num="(f)"> <text>If the funds held in escrow are not applied to the new purchase within 6 months from the sale of the existing group home, then the equity shall be paid to the Department and the borrower, in accordance with their respective shares, after the 6-month period has elapsed;</text> </paragraph> <paragraph num="(g)"> <text>An equity participation agreement or deed of trust shall be recorded against the new property to secure the Department's deferred equity contribution; and</text> </paragraph> <paragraph num="(h)"> <text>The value of the property to be purchased shall be greater than or equal to the deferred equity contribution plus any liens superior to the equity contribution.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The Department may, in its discretion, require the borrower to remit all or a portion of the equity participation upon:</text> <paragraph num="(a)"> <text>Prepayment of a portion of the loan; or</text> </paragraph> <paragraph num="(b)"> <text>Subsequent financing secured by the group home.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Deferred Interest.</text> <paragraph num="(1)"> <text>The Department may require the borrower to pay deferred interest at an interest rate which is up to 4 percent over the interest rate at which the loan amortizes.</text> </paragraph> <paragraph num="(2)"> <text>The deferred and accrued interest is payable at the time of sale, transfer, or conveyance of the project, maturity of the loan, or failure to maintain the group home in accordance with the requirements of the loan documents.</text> </paragraph> <paragraph num="(3)"> <text>The deferred interest shall accrue annually on the anniversary date of the loan based on simple interest on the outstanding principal balance of the loan.</text> </paragraph> <paragraph num="(4)"> <text>If accrued and deferred interest exceeds the profit from the sale of the group home, the Department may forgive that portion of accrued and deferred interest which exceeds the sale profit.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Limited Annual Return. If the Department requires the borrower to enter into an agreement that limits the profit and rate of return on investment, a sponsor may realize an annual return not to exceed 5 percent of its initial equity investment. Initial equity investment is the difference between the replacement cost, as approved by the Department, and the amount of the mortgage loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Loan Applications."> <paragraph num="A."> <text>Limitations.</text> <paragraph num="(1)"> <text>The Department may specify, from time to time, the type of applications it will consider, and may limit, during any period, the type of applications it will receive.</text> </paragraph> <paragraph num="(2)"> <text>Applications may be limited on the basis of:</text> <paragraph num="(a)"> <text>The type of sponsor or type of equity providing primary financing of the project;</text> </paragraph> <paragraph num="(b)"> <text>The amount of local governmental contributions;</text> </paragraph> <paragraph num="(c)"> <text>The number or proportion of eligible residents who will reside in the project;</text> </paragraph> <paragraph num="(d)"> <text>Areas of the State; or</text> </paragraph> <paragraph num="(e)"> <text>Other factors the Department considers relevant.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Procedure. The Department shall establish application and loan processing procedures that will facilitate the application and financing process. These procedures may be amended from time to time and shall be binding upon all applicants.</text> </paragraph> <paragraph num="C."> <text>Forms. Applications shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="D."> <text>Documentation. Applicants shall submit any documentation the Department requires including:</text> <paragraph num="(1)"> <text>A copy of the purchase contract, option, letter of intent, or other indication of ability to acquire property;</text> </paragraph> <paragraph num="(2)"> <text>For nonprofit organizations and qualified limited partnerships, executed and certified copies of organizational documents;</text> </paragraph> <paragraph num="(3)"> <text>For a nonprofit organization or qualified limited partnership, evidence acceptable to the Department of the nonprofit status of the entity, the members, or the general partners of the entity, as applicable;</text> </paragraph> <paragraph num="(4)"> <text>Financial statements or certified tax returns of the applicant for the preceding 3 years;</text> </paragraph> <paragraph num="(5)"> <text>Certified personal financial statement of individual applicants;</text> </paragraph> <paragraph num="(6)"> <text>For nonprofit organizations, a resolution from the appropriate governing body of the borrower, authorizing the loan application and signatories;</text> </paragraph> <paragraph num="(7)"> <text>For projects providing housing for four or more individuals, evidence of zoning compliance or submission of an application for zoning approval;</text> </paragraph> <paragraph num="(8)"> <text>Evidence of availability of other capital funds proposed for the acquisition or modification;</text> </paragraph> <paragraph num="(9)"> <text>Copies of contracts from governmental or other agencies for operating funds;</text> </paragraph> <paragraph num="(10)"> <text>A schedule of rates to be charged to residents;</text> </paragraph> <paragraph num="(11)"> <text>A list of other facilities owned or operated by the applicant including:</text> <paragraph num="(a)"> <text>Name of facility,</text> </paragraph> <paragraph num="(b)"> <text>Address,</text> </paragraph> <paragraph num="(c)"> <text>Number of residents/households served,</text> </paragraph> <paragraph num="(d)"> <text>Annual operating budget amount,</text> </paragraph> <paragraph num="(e)"> <text>Length of time owned/operated, and</text> </paragraph> <paragraph num="(f)"> <text>Mortgages secured by projects;</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>A description of current or proposed residents showing:</text> <paragraph num="(a)"> <text>Names,</text> </paragraph> <paragraph num="(b)"> <text>Monthly payment,</text> </paragraph> <paragraph num="(c)"> <text>Household size, and</text> </paragraph> <paragraph num="(d)"> <text>Gross annual income;</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>Photographs of the building and site;</text> </paragraph> <paragraph num="(14)"> <text>Preliminary plans and specifications, if available, or a contractor's proposal for any modifications to be funded by the loan;</text> </paragraph> <paragraph num="(15)"> <text>Sufficient information and documentation to determine the extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the building or property;</text> </paragraph> <paragraph num="(16)"> <text>A list of credit references if requested by the Department; and</text> </paragraph> <paragraph num="(17)"> <text>Other documentation the Department may specifically request.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Loan Processing."> <paragraph num="A."> <text>Eligibility Determination.</text> <paragraph num="(1)"> <text>An application is subject to an initial review to make a preliminary determination of the eligibility of the applicant and the project.</text> </paragraph> <paragraph num="(2)"> <text>If an applicant is eligible, appropriate verification forms shall be distributed, credit reports shall be obtained, and the applicant shall be provided with a letter acknowledging receipt of the application. If the applicant is ineligible for a program loan, the applicant shall be informed in writing of the determination and the reasons for it under §H of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Building and Site Evaluation. Each building or site shall be inspected by the Department to determine if the:</text> <paragraph num="(1)"> <text>Building is structurally sound or will be structurally sound upon completion of the improvements;</text> </paragraph> <paragraph num="(2)"> <text>Proposed improvements are eligible; and</text> </paragraph> <paragraph num="(3)"> <text>Site is suitable for construction, if applicable.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Construction Cost Evaluation. The Program may make a determination that the costs of new construction are comparable to the costs of the proposed acquisition and rehabilitation of an existing structure, or that new construction would better serve the special needs of those who will occupy the group home.</text> </paragraph> <paragraph num="D."> <text>Appraisals. The Department may require an appraisal of the property showing the property's value after installation of the modification or completion of the construction. Appraisals may be performed by staff of the Program.</text> </paragraph> <paragraph num="E."> <text>Loan Analysis. Upon receipt and approval of contractor's proposals, if applicable, and all documentation and credit information, the Program shall undertake a commitment analysis of each loan as to loan amount, interest rate, repayment provisions, and other loan terms and conditions.</text> </paragraph> <paragraph num="F."> <text>Loan Approval.</text> <paragraph num="(1)"> <text>Program loans must be approved by the Secretary or the Director and, if so required by the Housing Finance Review Committee policies then in effect, receive a recommendation of approval from the Housing Finance Review Committee. If authorized by the Secretary or the Director, the Deputy Director may approve a loan in lieu of the Secretary or the Director.</text> </paragraph> <paragraph num="(2)"> <text>In an emergency when urgent action is required, program loans which would otherwise require Housing Finance Review Committee review may be approved by the Secretary or the Director without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Loan Commitment.</text> <paragraph num="(1)"> <text>Upon approval of a program loan, the Department shall issue a commitment letter setting forth the interest rate on the loan, the repayment provisions, and any other terms and conditions that the Department considers appropriate for the loan or the project.</text> </paragraph> <paragraph num="(2)"> <text>The Department shall specify a time limit within which the initial closing of the loan shall occur, which time limit may be extended at the Department's sole discretion. If initial closing does not occur within the time limit specified by the Department, the Department may use the monies committed for the loan for any other loan or purpose authorized by the Act and these regulations.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Loan Rejection. If a loan application is rejected, the Department shall notify the applicant in a letter which states the reason the loan is rejected.</text> </paragraph> <paragraph num="I."> <text>Loan Reconsideration. An applicant may request reconsideration of a rejection in accordance with the procedures contained in the Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="J."> <text>Application Fee. The Department may require applicants for loans, except in hardship cases, to pay an initial application fee to cover some portion of the cost of processing the loan, including any credit reports.</text> </paragraph> <paragraph num="K."> <text>Withdrawal of Application. An applicant may withdraw an application at any time before closing of the loan, by written notice to the Department. The applicant shall bear any costs incurred for items other than internal processing including, but not limited to, title examinations, credit reports, and appraisals.</text> </paragraph> <paragraph num="L."> <text>Loan Closing.</text> <paragraph num="(1)"> <text>Time and Place. The loan closing shall be scheduled at a time and place acceptable to the borrower, the Department, and the Office of the Attorney General. Closing shall be conducted by a title company acceptable to the Department.</text> </paragraph> <paragraph num="(2)"> <text>Charges and Fees. The Department may charge the borrower the following items, if applicable, which may be financed by the loan:</text> <paragraph num="(a)"> <text>Recording fees and recording taxes or other charges incident to recordation;</text> </paragraph> <paragraph num="(b)"> <text>Survey charge and appraisal fee;</text> </paragraph> <paragraph num="(c)"> <text>Title examination and title insurance;</text> </paragraph> <paragraph num="(d)"> <text>An initial administrative fee to cover the costs of servicing the loan; and</text> </paragraph> <paragraph num="(e)"> <text>A closing fee.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Mortgageable Items. At the Department's discretion, all closing costs are mortgageable items.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Contractor Requirements."> <paragraph num="A."> <text>General Requirements. A contractor entering into a contract for a project shall:</text> <paragraph num="(1)"> <text>Meet all applicable State and local licensing requirements;</text> </paragraph> <paragraph num="(2)"> <text>Be of good reputation, financially sound, and fully qualified to perform the required work outlined in the work write-up as evidenced by previous professional rehabilitation experience;</text> </paragraph> <paragraph num="(3)"> <text>Provide insurance coverage for comprehensive public liability, property damage liability, and worker's compensation in the form and amounts required by the Department;</text> </paragraph> <paragraph num="(4)"> <text>Perform all work in a competent, workmanlike manner equal to the standards of the industry, in conformance with the contract, applicable codes and rehabilitation standards, and any other applicable laws, local codes, and Departmental rehabilitation standards, whether covered by the work write-up and drawings for the work;</text> </paragraph> <paragraph num="(5)"> <text>Comply with all applicable laws, ordinances, and regulations relating to the protection and safety of persons and property;</text> </paragraph> <paragraph num="(6)"> <text>Furnish all labor, materials, and equipment, and obtain and pay for all licenses and permits required to construct or modify the group home in accordance with the contract documents and the work write-up;</text> </paragraph> <paragraph num="(7)"> <text>Not assign the contract without the prior written consent of the borrower and the Department;</text> </paragraph> <paragraph num="(8)"> <text>Agree to complete all construction or modification specified in the work write-up by the date required by the contract;</text> </paragraph> <paragraph num="(9)"> <text>Indemnify and hold the Department harmless from all liability and loss because of injury to or death of any person or damage to any property which may occur or be alleged to occur during performance of the contract as a direct or indirect result of any act or omission, whether intentional, negligent, or otherwise, by the contractor, subcontractors, or their agents, servants, and employees; and</text> </paragraph> <paragraph num="(10)"> <text>Defend all suits or claims involving those in §A(9) of this regulation at its sole cost and expense.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Guarantees.</text> <paragraph num="(1)"> <text>In addition to all remedies and guaranties provided by law, a contractor entering into a contract for a project shall agree to make, at its sole cost and expense, all necessary repairs, replacements, and corrections of any nature or description, interior or exterior, structural or nonstructural, as becomes necessary by reason of faulty workmanship or material, which appear within a period of 1 year from the date that the required form of certificate of completion is filed with the Department.</text> </paragraph> <paragraph num="(2)"> <text>If any longer guarantee period is specified for any particular materials or workmanship under the work write-up, or under any subcontract, in connection with any manufactured unit which is installed in the building, or under the laws of the State, the longer period governs.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Identity of Interest Contractors.</text> <paragraph num="(1)"> <text>Group home sponsors may act as general contractors only with the prior written approval of the Department.</text> </paragraph> <paragraph num="(2)"> <text>Application forms to the Department to obtain the approval shall be provided upon request by the Department and shall be submitted and approved before submission of the bid proposal.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Completion Assurances. Performance and payment bonds, each in an amount equal to 100 percent of the contract price or, alternatively, cash or an irrevocable letter of credit equal to 25 percent of the contract price, and an assurance of completion agreement or other assurance of completion, may be required on any project at the option of the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Construction Process."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>As required by applicable codes and rehabilitation standards, building permits shall be obtained before loan closing, and are required to be posted at the project before the beginning of construction or modification.</text> </paragraph> <paragraph num="(2)"> <text>Work done, materials supplied, and construction procedures employed shall comply with all contract documents, applicable codes and rehabilitation standards, and these regulations. The Department's general requirements and specifications guidelines will be furnished on request.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Contract Documents.</text> <paragraph num="(1)"> <text>Contract documents may include, but are not limited to the following:</text> <paragraph num="(a)"> <text>Structural soundness certification;</text> </paragraph> <paragraph num="(b)"> <text>Building or rehabilitation loan agreement;</text> </paragraph> <paragraph num="(c)"> <text>Specifications or work write-ups;</text> </paragraph> <paragraph num="(d)"> <text>Contractor's proposal;</text> </paragraph> <paragraph num="(e)"> <text>Architectural or engineering drawings, or both;</text> </paragraph> <paragraph num="(f)"> <text>Construction or rehabilitation contract;</text> </paragraph> <paragraph num="(g)"> <text>Change orders.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>There shall be no modification of any contract document without the prior written consent of the Department, as evidenced by an approved change order, executed by the Program, the contractor, and the borrower.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Borrower and the Contractor.</text> <paragraph num="(1)"> <text>The borrower and the contractor shall cooperate to facilitate timely performance of the construction or modification work and selection of materials.</text> </paragraph> <paragraph num="(2)"> <text>The borrower shall provide the contractor access to the property during normal business hours, and shall permit the contractor to use existing utilities for the execution and completion of work, at no cost to the contractor unless specified otherwise.</text> </paragraph> <paragraph num="(3)"> <text>The borrower is responsible for removing and replacing rugs, furnishings, and other personal property, unless otherwise provided in the contract documents.</text> </paragraph> <paragraph num="(4)"> <text>The borrower and the contractor shall protect and maintain the property and improvements in accordance with the contract documents.</text> </paragraph> <paragraph num="(5)"> <text>The borrower and the contractor, and each of them, shall hold and save the Department harmless from any and all loss, claim, cost, or damage of every kind, nature, and description arising from or related to the contract documents.</text> </paragraph> <paragraph num="(6)"> <text>Communications relating to content or performance of the contract shall be in writing, and copies sent to the Program.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Inspections.</text> <paragraph num="(1)"> <text>The Department, in its sole discretion, shall determine the frequency and level of inspections during construction or modification, taking into consideration:</text> <paragraph num="(a)"> <text>The capability of the borrower;</text> </paragraph> <paragraph num="(b)"> <text>The demonstrated experience and reliability of the contractor;</text> </paragraph> <paragraph num="(c)"> <text>The amount of the loan;</text> </paragraph> <paragraph num="(d)"> <text>The availability of local technical assistance; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department may charge borrowers a fee for inspections during construction or modification.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Construction Disputes. If disputes between the contractor and borrower occur, the Department shall recognize the findings of the Home Improvement Commission and the Consumer Protection Division of the Office of the Attorney General.</text> </paragraph> <paragraph num="F."> <text>Termination of Contracts. Contracts may be terminated for cause in accordance with the loan documents, contract documents, and Program policies and procedures.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Loan Payments."> <paragraph num="A."> <text>Payments Generally.</text> <paragraph num="(1)"> <text>Loan funds may not be disbursed if there is any arrearage of interest payments or escrows required by the loan.</text> </paragraph> <paragraph num="(2)"> <text>Loan proceeds designated to finance modification or construction costs shall be held in escrow by the Department and disbursed at the discretion of the Department either upon completion of the modification or construction, or in accordance with a payment schedule approved by the Department.</text> </paragraph> <paragraph num="(3)"> <text>Payments of construction draws shall be by joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director.</text> </paragraph> <paragraph num="(4)"> <text>Except as provided in §C of this regulation, payments shall be made for work completed only. Payments may not be made for materials delivered to the site but not installed in the project.</text> </paragraph> <paragraph num="(5)"> <text>Payment of construction draws shall be requested by the borrower. Loan funds may be disbursed to the borrower upon request, except for final draws or as otherwise provided for in §F(1), (2), or (3) of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Advance Payments. Advances or down payments may be made to contractors to purchase materials delivered on site or valid purchase requisitions not to exceed 10 percent of the contract costs.</text> </paragraph> <paragraph num="C."> <text>Initial Payments. The portion of the loan used to finance the purchase of the building or land closing costs shall be disbursed at loan closing.</text> </paragraph> <paragraph num="D."> <text>Progress Payments.</text> <paragraph num="(1)"> <text>Progress payments may not be made until the borrower has delivered satisfactory evidence, such as receipt or bills, of the amount of the payment requested.</text> </paragraph> <paragraph num="(2)"> <text>Progress payments may not be made without an inspection to verify completion of the work, except at the discretion of the Department.</text> </paragraph> <paragraph num="(3)"> <text>If a request for payment is refused, the Program shall notify the borrower. The determination of the Program as to percentage of work completed is final.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Final Payment.</text> <paragraph num="(1)"> <text>Final payment shall be made as set forth in §E(2)—(5) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The borrower shall submit to the Program a certificate of completion, executed by the borrower and contractor, certifying that all work has been completed in accordance with the contract documents.</text> </paragraph> <paragraph num="(3)"> <text>Upon final inspection and receipt and approval of the certificate of completion, final payment shall be processed.</text> </paragraph> <paragraph num="(4)"> <text>If, in the opinion of the Department, the contractor has satisfied the contract and the borrower refuses to request or release the final payment, then the Program may follow the procedures described below:</text> <paragraph num="(a)"> <text>The Program may require the borrower to explain in writing, within 10 days, why the Department should not make direct payment to the contractor;</text> </paragraph> <paragraph num="(b)"> <text>If the borrower responds within the 10-day period and requests a meeting, the Program Director shall hold a meeting at which the borrower shall present the borrower's objections to requesting or releasing the final payment;</text> </paragraph> <paragraph num="(c)"> <text>The Program may then approve direct payment to either the contractor or the borrower.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>If the Program receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, and all loan funds have not yet been disbursed, the Department shall retain an amount equal to the lesser of all funds not yet disbursed and the amount sufficient to satisfy the claims until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Retainage.</text> <paragraph num="(1)"> <text>The Program shall retain until final payment 10 percent of the construction costs for all projects for which the borrower is responsible for project inspections.</text> </paragraph> <paragraph num="(2)"> <text>The Program, at its discretion, may elect to retain until final payment 10 percent of the construction costs for any other project, taking into consideration:</text> <paragraph num="(a)"> <text>The type of project;</text> </paragraph> <paragraph num="(b)"> <text>The contractor's experience; and</text> </paragraph> <paragraph num="(c)"> <text>Other factors the Program considers relevant.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Closeout Procedures.</text> <paragraph num="(1)"> <text>After final payment is made, the Department shall reconcile all receipts and disbursements.</text> </paragraph> <paragraph num="(2)"> <text>Funds remaining in the loan amount shall be disbursed to the borrower or applied to the principal balance of the loan, as determined by the Department.</text> </paragraph> <paragraph num="(3)"> <text>A shortage due to overpayment shall be remitted by the borrower. If reimbursement of the overpayment is not made by the borrower within 60 days of receipt of the letter, the Department shall pursue any appropriate legal remedies for collection.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Certification of Income."> <paragraph num="A."> <text>The group home sponsor shall obtain, before initial occupancy and every year after that, a completed income certification form from all persons of lower income who will occupy the group home. Initial certification and periodic certification of income shall contain such information as may be required by the Department. Certificates are subject to review by the Department at any time.</text> </paragraph> <paragraph num="B."> <text>For projects when existing tenants will continue occupancy during modification, the group home sponsor is required to obtain income certificates from income eligible persons of the group home before initial closing of the loan. The purpose of the certificates of income and the reports is to assure compliance with the upper income limits established in accordance with Housing and Community Development Article, §4-601(d), Annotated Code of Maryland. In the case of a project which receives federal assistance, the procedures for the certification of income prescribed by the federal agency may be employed to meet the Department's income certification requirement.</text> </paragraph> <paragraph num="C."> <text>The group home sponsor shall retain all certificates of income and documents verifying the information contained in them for a period of at least 3 years from the date on which the income certification is submitted to the group home sponsor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A borrower or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the program, or in any aspect of employment by any borrower or contractor in connection with any property financed or assisted under the program.</text> </paragraph> <paragraph num="B."> <text>A borrower or contractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18 Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Books and Accounts."> <paragraph num="A."> <text>Borrowers, contractors, and subcontractors shall maintain such books, accounts, and records, and shall file with the Department such financial and other reports as the Department may require from time to time.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records in §A of this regulation shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of the borrower shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the borrower and the Department. Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between the contractors and subcontractors and the borrower.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Program Administration."> <paragraph num="A."> <text>Funding. The Department shall publicize from time to time the availability of moneys to make loans. However, the Department may consider an application for a loan or may establish beginning and ending dates for the receipt of applications.</text> </paragraph> <paragraph num="B."> <text>Program Guidelines. The Department may establish from time to time detailed Program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financing of loans or to the Program. Copies of these guidelines shall be available for examination at the Department's principal office. The Department, upon request, shall provide copies to the public for a reasonable charge.</text> </paragraph> <paragraph num="C."> <text>Fees. The Department may:</text> <paragraph num="(1)"> <text>Charge any commitment fees, application fees, closing fees or other fees, charges, or penalties to applicants, servicers, borrowers, or other individuals or entities that participate in the Program; and</text> </paragraph> <paragraph num="(2)"> <text>Restrict the fees and charges that servicers or other Program participants obtain from borrowers or applicants.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Delegation. The Secretary may delegate to the Director of the Division of Development Finance of the Department, the Program Director, or any other official or employee of the Department or the Program the authority to execute or approve any Program documents or loan documents, including loan commitments and eligibility letters.</text> </paragraph> <paragraph num="E."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act, if in the written determination of the Secretary:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, state, or local programs in connection with providing financing to the project necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>The application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="False Statements."> <text>An applicant who knowingly makes or causes to be made a false statement or report for the purpose of influencing any action of the Department on a loan application or for the purpose of influencing any action of the Department affecting a loan already made is guilty of a misdemeanor and, on conviction, is subject to the criminal penalties authorized by Housing and Community Development Article, §4-612, Annotated Code of Maryland.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §4-606, Annotated Code of Maryland; Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 adopted as an emergency provision effective February 23, 1987 (14:6 Md. R. 704); adopted permanently effective July 27, 1987 (14:15 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.19 to COMAR 05.04.09</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 repealed and new Regulations .01—.21 adopted effective May 25, 1992 (19:10 Md. R. 929)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective November 29, 1999 (26:24 Md. R. 1856); February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A, I, J amended effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E, F amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C adopted effective January 2, 1994 (20:25 Md. R. 1942)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C amended effective June 5, 1995 (22:11 Md. R. 818)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C repealed effective April 5, 1999 (26:7 Md. R. 537)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A, C amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08B amended effective November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective November 7, 1994 (21:22 Md. R. 1873)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B, C amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12D amended effective January 2, 1994 (20:25 Md. R. 1942); February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13F amended effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 amended effective November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16F amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17A amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18B amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20D amended effective November 29, 1999 (26:24 Md. R. 1856)</annotation> </annotations> </chapter> <chapter num="10" heading="Home and Energy Loan Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for establishing and administering a program to assist in financing improvements to residential dwellings throughout the State through the purchase of loans from lending institutions or through the making of loans by the Administration.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objective of the program is to provide financing assistance to encourage improvements to residential dwellings including the installation of property improvements, energy conservation improvements, and solar energy systems to upgrade and improve the livability and habitability of residential property, to reduce energy consumption in residential property, and to promote utilization of solar energy in residential property.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>Terms defined in the Act have the meanings set forth in the Act. In addition, the terms set forth below have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, a division of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Borrower” means a natural person or persons, partnership, corporation, or other business entity that is eligible for a loan under the program. Applicants for a loan are borrowers until they are determined ineligible for a loan.</text> </paragraph> <paragraph num="(4)"> <text>“Code” means the Internal Revenue Code of 1954, as amended, and the regulations issued under that Code.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(6)"> <text>“Energy loan” means a loan or a portion of a loan, the proceeds of which are used exclusively to finance energy conservation or solar energy improvements set forth in Regulation .06B, below.</text> </paragraph> <paragraph num="(7)"> <text>“Families of limited incomes” means families or persons whose incomes do not exceed the income limits established by the Secretary for the program pursuant to the Act.</text> </paragraph> <paragraph num="(8)"> <text>“FHA” means the Federal Housing Administration of the Department of Housing and Urban Development.</text> </paragraph> <paragraph num="(9)"> <text>“Lender” means any lending institution that:</text> <paragraph num="(a)"> <text>Maintains an office in the State;</text> </paragraph> <paragraph num="(b)"> <text>Originates and services home improvement loans in the State;</text> </paragraph> <paragraph num="(c)"> <text>Is a member of, or subject to regulation by, the Federal Savings and Loan Insurance Corporation, the Federal Deposit Insurance Corporation, the National Credit Union Administration, or Maryland Savings Share Insurance Corporation, or any successor, or is qualified to sell deeds of trust to and service deeds of trust for the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation;</text> </paragraph> <paragraph num="(d)"> <text>Has a contract of insurance from the appropriate loan insuring entity;</text> </paragraph> <paragraph num="(e)"> <text>As determined by the Administration, is able to repurchase property improvement loans if required to do so; and</text> </paragraph> <paragraph num="(f)"> <text>As determined by the Administration, is able to make any representations and warranties that the Administration requires.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Loan” means any loan made under the program.</text> </paragraph> <paragraph num="(11)"> <text>“Mortgage” means any mortgage or deed of trust on a residential property, improvements to which are financed by a loan.</text> </paragraph> <paragraph num="(12)"> <text>“MHF” means the Maryland Housing Fund, a division of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(13)"> <text>“Multifamily property” means any residential property containing:</text> <paragraph num="(a)"> <text>One or more dwelling units which are occupied by families other than the owner; or</text> </paragraph> <paragraph num="(b)"> <text>Two or more units, one of which is occupied by the owner.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Program” means the Administration's Home and Energy Loan Program.</text> </paragraph> <paragraph num="(15)"> <text>“Property improvement loan” means a loan or portion of a loan, the proceeds of which are used to finance any eligible improvements set forth in Regulation .06A, below.</text> </paragraph> <paragraph num="(16)"> <text>“Residential property” means any building that is used or proposed for use primarily for human dwelling purposes on a year-round basis.</text> </paragraph> <paragraph num="(17)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(18)"> <text>“Single family property” means any residential property containing not more than one unit which is the principal residence of the owner or which will be the principal residence of the owner by the earlier of the date of completion of improvements financed by the loan or 60 days from the date of the loan.</text> </paragraph> <paragraph num="(19)"> <text>“Title I” means Title I of the National Housing Act as amended.</text> </paragraph> <paragraph num="(20)"> <text>“Trust indenture” means any trust indenture, bond resolution, certificate, or other similar document, including amendments and supplements, that authorize the issuance and sale of bonds or other obligations of the Administration, the proceeds of which finance the loans.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrowers."> <paragraph num="A."> <text>For loans made to improve single family properties, each borrower shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be a natural person;</text> </paragraph> <paragraph num="(2)"> <text>Own the property in fee simple or under a ground lease;</text> </paragraph> <paragraph num="(3)"> <text>Occupy or intend to occupy, by the earlier of the date of completion of improvements financed by the loan or 60 days from the date of the loan, the property as a principal residence;</text> </paragraph> <paragraph num="(4)"> <text>Have the legal capacity to incur the obligations of the loan;</text> </paragraph> <paragraph num="(5)"> <text>Demonstrate creditworthiness and repayment ability acceptable to the Administration;</text> </paragraph> <paragraph num="(6)"> <text>If the loan is a property improvement loan, be a family of limited income.</text> </paragraph> </paragraph> <paragraph num="B."> <text>For loans made to improve multifamily properties, each borrower shall meet the following requirements:</text> <paragraph num="(1)"> <text>If a business entity, be in good standing and be qualified to do business in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Own the property in fee simple or under a ground lease;</text> </paragraph> <paragraph num="(3)"> <text>Have all necessary legal and corporate authorizations to incur the obligations of the loan;</text> </paragraph> <paragraph num="(4)"> <text>Demonstrate creditworthiness and repayment ability acceptable to the Administration;</text> </paragraph> <paragraph num="(5)"> <text>If the loan is a property improvement loan, agree in writing that not less than 51 percent of the total dwelling units shall be occupied by families of limited incomes;</text> </paragraph> <paragraph num="(6)"> <text>Except in the case of a multifamily property of two or four units, one unit of which is occupied by the owner, covenant and agree in writing that not less than 20 percent (15 percent if the property is located within a “targeted area” within the meaning of §103 of the Code) of the units in each property are to be occupied by individuals of low or moderate income as determined by the Secretary of the United States Treasury in accordance with §103 of the Code. The Administration may require that this covenant be recorded among the land records of the jurisdiction in which the property is located.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Properties."> <paragraph num="A."> <text>All properties for which a borrower receives a loan under the program shall meet the following requirements:</text> <paragraph num="(1)"> <text>The property shall be located in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>The property shall be a permanent structure used primarily for year-round residential use;</text> </paragraph> <paragraph num="(3)"> <text>The property shall need property improvements or shall benefit from energy conservation measures in order to improve its habitability, livability, and energy efficiency;</text> </paragraph> <paragraph num="(4)"> <text>The property shall be owned by an eligible borrower who shall provide assurance of title or evidence of ownership acceptable to the program; and</text> </paragraph> <paragraph num="(5)"> <text>In the case of a multifamily property containing two to four dwelling units, one unit of which is occupied by the owner, all units shall have been used exclusively for residential purposes at least 5 years before the execution of the loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Condominiums and cooperatives may be eligible if the requirements of §A of this regulation are met.</text> </paragraph> <paragraph num="C."> <text>Improvements to a multifamily property, except an owner-occupied multifamily property of two to four units, may not be financed by a loan unless the improvements to the property comply with the notice, public hearing, and public approval requirements of §103 of the Code.</text> </paragraph> <paragraph num="D."> <text>Improvements to multifamily properties may not be financed by loans unless the:</text> <paragraph num="(1)"> <text>Secretary has issued a determination that the improvements constitute a community development project within the meaning of the Act.</text> </paragraph> <paragraph num="(2)"> <text>Administration has received a certified copy of an approving ordinance or resolution duly adopted by the legislative body of the municipal corporation or county, or Board of Estimates in Baltimore City, in which the properties are located, and approving the making of loans under the program. The chief executive officer of the municipal corporation or county, except when the officer is a member of the legislative body, shall approve the ordinance or resolution.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Improvements."> <paragraph num="A."> <text>Proceeds of property improvement loans may finance any improvement, alteration, addition, and repair that substantially protects or improves the basic livability of a residential property and that is eligible for financing under the regulations and requirements of any loan insurer. Eligible home improvements include without limitation the following:</text> <paragraph num="(1)"> <text>Enlarging structure;</text> </paragraph> <paragraph num="(2)"> <text>Repairing or replacing plumbing and electrical systems;</text> </paragraph> <paragraph num="(3)"> <text>Improving or replacing heating systems;</text> </paragraph> <paragraph num="(4)"> <text>Painting and plastering;</text> </paragraph> <paragraph num="(5)"> <text>Installing new bathrooms, kitchens, living rooms, bedrooms, and closets;</text> </paragraph> <paragraph num="(6)"> <text>Repairing or replacing roofs, ceilings, windows, stairways, and floors;</text> </paragraph> <paragraph num="(7)"> <text>Constructing private sidewalks, curbs, fences, or driveways;</text> </paragraph> <paragraph num="(8)"> <text>Installing a septic tank or cesspool;</text> </paragraph> <paragraph num="(9)"> <text>Drilling a well and installing pumping equipment and piping;</text> </paragraph> <paragraph num="(10)"> <text>Installing fire safety equipment; and</text> </paragraph> <paragraph num="(11)"> <text>Making any other improvements determined by the Administration to be consistent with the purpose of the program and the Act.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Proceeds of energy loans may finance energy conservation or solar energy improvements that reduce the consumption of energy or increase the use of solar energy, including without limitation the following:</text> <paragraph num="(1)"> <text>Caulking;</text> </paragraph> <paragraph num="(2)"> <text>Weatherstripping;</text> </paragraph> <paragraph num="(3)"> <text>Insulation, including ceilings, walls, floors, ducts, pipes, or water heaters;</text> </paragraph> <paragraph num="(4)"> <text>Furnace efficiency modifications, including replacement burner, furnace or boiler, vent dampers, or intermittent pilot ignition device;</text> </paragraph> <paragraph num="(5)"> <text>Replacement air conditioner;</text> </paragraph> <paragraph num="(6)"> <text>Storm or thermal doors or windows;</text> </paragraph> <paragraph num="(7)"> <text>Siding;</text> </paragraph> <paragraph num="(8)"> <text>Heat reflecting and absorbing door or window materials;</text> </paragraph> <paragraph num="(9)"> <text>Devices associated with electric load management techniques;</text> </paragraph> <paragraph num="(10)"> <text>Clock thermostats;</text> </paragraph> <paragraph num="(11)"> <text>Automatic energy control system;</text> </paragraph> <paragraph num="(12)"> <text>Machinery, equipment, or a facility for using ground water as a heat source for a heating system or as a heat sink for an air-conditioning system;</text> </paragraph> <paragraph num="(13)"> <text>Any other improvement bearing a manufacturer's certification that the product has energy conserving properties or any improvement that the Administration determines provides energy savings with a pay-back within the term of the loan;</text> </paragraph> <paragraph num="(14)"> <text>Solar domestic hot water systems;</text> </paragraph> <paragraph num="(15)"> <text>Active or passive solar space heating systems;</text> </paragraph> <paragraph num="(16)"> <text>Additions, alterations, or improvements designed to use wind energy, energy produced by a wood burning appliance, or solar energy to reduce the energy requirements of the building;</text> </paragraph> <paragraph num="(17)"> <text>Earth sheltering in which the sheltering substantially reduces the consumption of energy by the building;</text> </paragraph> <paragraph num="(18)"> <text>Heating systems or appliances using renewable sources of energy;</text> </paragraph> <paragraph num="(19)"> <text>Planning and technical services, an energy audit, and conversion from master utility meters to individual utility meters, any of which are related to or undertaken with the installation of any of the energy conservation or solar energy improvements described above;</text> </paragraph> <paragraph num="(20)"> <text>Roof replacement to reduce energy loss caused by defective roofing materials where the replacement includes the installation of adequate attic or ceiling insulation;</text> </paragraph> <paragraph num="(21)"> <text>Other energy conservation projects or solar energy projects within the meaning of the Act;</text> </paragraph> <paragraph num="(22)"> <text>Other improvements determined by the Administration with the approval of the Secretary to conserve energy and to be consistent with the purposes of the Program and the Act.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Installation of fireplaces, except as integral parts of a system that is designed to use solar energy, is not eligible for financing by an energy loan.</text> </paragraph> <paragraph num="D."> <text>Ineligible improvements include such items as barbecue pits, bathhouses, dumbwaiters, fire extinguishers, flower boxes, greenhouses, airplane hangars, kennels, kitchen appliances which are designed and manufactured to be free-standing and are not built-in and permanently affixed as an integral part of the kitchen in a residential structure, outdoor fireplaces or hearths, penthouses, photo murals, radiator covers or enclosures, stands, swimming pools, television antennas, tennis courts, tree surgery, waterproofing of a structure by pumping or injecting any substance in the earth adjacent to or beneath the basement or foundation or floors, entertainment facilities, landscaping, lawn sprinkling systems, saunas, and recreational facilities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Insurance Requirements."> <paragraph num="A."> <text>The Administration may require that each loan be subject to a loan insurance policy that provides coverage for the Administration in the case of a loan default with terms and conditions that the Administration approves.</text> </paragraph> <paragraph num="B."> <text>If loan insurance is provided by the FHA Title I Property Improvement Loan Program or any insurance program of the MHF or of any other insurer approved by the Administration, the purchase or making of loans by the Administration shall be regulated by the regulations, handbooks, or guidelines of the insurance programs.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Terms, Limits, and Requirements."> <paragraph num="A."> <text>Loans originated or purchased by the Administration shall meet the following terms and conditions:</text> <paragraph num="(1)"> <text>The Administration shall establish or determine an interest rate or rates and other charges and fees, if any, for loans that, together with other moneys made available for those purposes, are sufficient to meet the interest and other costs payable by the Administration for its revenue bonds or other obligations financing the loans, administrative expenses of the program, and possible losses due to loan defaults in the program. The interest rate or rates on loans may not exceed the maximum permitted by §103 or 103A of the Code as applicable.</text> </paragraph> <paragraph num="(2)"> <text>The Administration shall set maximum and minimum terms for loans taking into account the terms of the revenue bonds or other obligations issued to fund loans.</text> </paragraph> <paragraph num="(3)"> <text>Loans may be made in any amounts that are necessary to finance eligible improvements, but may not exceed the lesser of the limits set by any loan insurance program, if applicable, or:</text> <paragraph num="(a)"> <text>$15,000 for each property containing from one to four units, one unit of which is occupied by the owner; or</text> </paragraph> <paragraph num="(b)"> <text>$30,000 for the first dwelling unit and $20,000 for each additional dwelling unit for each property containing:</text> <paragraph num="(i)"> <text>One to four units, all units of which are occupied by families other than the owner, or</text> </paragraph> <paragraph num="(ii)"> <text>Five or more units.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Borrowers shall repay the loan in substantially equal monthly payments of interest and principal in order that the loan is fully amortized over its term.</text> </paragraph> <paragraph num="(5)"> <text>Borrowers shall pay any servicing fees, loan insurance premiums, or late charges that the Administration or the loan insurer may require and that are permitted by State law.</text> </paragraph> <paragraph num="(6)"> <text>Securing of Loans.</text> <paragraph num="(a)"> <text>Loans shall be secured as required by the Administration and any loan insurer.</text> </paragraph> <paragraph num="(b)"> <text>Property improvement loans shall be secured by a mortgage.</text> </paragraph> <paragraph num="(c)"> <text>Energy loans in an original principal amount greater than $5,000 shall be secured by a mortgage.</text> </paragraph> <paragraph num="(d)"> <text>The Administration may require that energy loans in an original principal amount of $5,000 or less be secured by a mortgage.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Borrowers shall maintain fire and extended insurance coverage in an amount not less than the outstanding principal amount of the loan and any other prior debt secured by the property.</text> </paragraph> <paragraph num="(8)"> <text>The Administration may prohibit assumptions of loans.</text> </paragraph> <paragraph num="(9)"> <text>Borrowers may prepay a loan to the extent permitted by the trust indenture.</text> </paragraph> <paragraph num="(10)"> <text>Borrowers may not refinance existing debt or work in place before approval of the loan.</text> </paragraph> <paragraph num="(11)"> <text>The loan shall comply with any restrictions or requirements of the trust indenture.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Borrowers shall execute a note, a mortgage (if required), a borrower's affidavit, and any other documents that the Administration requires in order to evidence or secure the loan or to comply with the Code, the Act, these regulations, or the policies of the Department, Administration, or Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Participation of Lenders."> <paragraph num="A."> <text>Lenders participating in the Program shall be approved as originators in the FHA Title I Property Improvement Program, or the applicable loan insurance program of the MHF, or any other approved loan insurer, and be in compliance with all applicable State and federal laws, rules and regulations governing the business of the lender and the making of residential property improvement loans.</text> </paragraph> <paragraph num="B."> <text>The Administration may issue invitations to lenders to participate in the Program and to sell loans to the Administration if there are funds available to conduct the Program. Invitations will be mailed to all eligible lenders who request them or who are known to the Administration to be interested in participating in the Program. These invitations will include:</text> <paragraph num="(1)"> <text>The date by which the application and other documents shall be submitted to be considered for acceptance and the date by which the Administration shall issue a notice of acceptance or approval if the application is accepted;</text> </paragraph> <paragraph num="(2)"> <text>The time period during which the lender must commit to make loans and deliver loans to the Administration for purchase;</text> </paragraph> <paragraph num="(3)"> <text>The time or times, if any, within which the Administration must sell and deliver bonds on terms satisfactory to it, as a condition of any obligation to purchase loans;</text> </paragraph> <paragraph num="(4)"> <text>Other information which is necessary or desirable to inform lenders of the terms of the invitation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Lenders wishing to participate in the Program shall file an application with the Administration in response to the invitation. The application will include the aggregate principal amount of loans which the lender desires to originate and sell. The Administration may require commitment fees. Also, the Administration may require other information necessary or desirable to assist in approving applications and allocating funds.</text> </paragraph> <paragraph num="D."> <text>The Administration shall enter into a loan purchase agreement with lenders who are notified that their application has been accepted or approved. The agreement shall include detailed terms and conditions under which the lender will offer loans to the Administration for purchase and by which the Administration shall purchase the loans. The agreement shall require that as a condition of purchase of a loan that the loan satisfy all of the applicable requirements of §§103 and 103A of the Code.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Participation of Political Subdivision."> <paragraph num="A."> <text>Political subdivisions or public utility companies may be authorized as agents of the Administration if they evidence the staff capacity and capability to evaluate loan applications and monitor rehabilitation undertaken pursuant to the loans.</text> </paragraph> <paragraph num="B."> <text>Political subdivisions or public utility companies seeking approval as agents shall submit a written application to the Administration on a form prescribed by the Administration specifying:</text> <paragraph num="(1)"> <text>Staff capacity and financial experience in lending, and experience in residential inspections;</text> </paragraph> <paragraph num="(2)"> <text>Prior experience in operating loan programs;</text> </paragraph> <paragraph num="(3)"> <text>Other relevant information the Administration may request which is necessary or desirable to assist in approving applications.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Political subdivisions or public utility companies approved as agents of the Administration shall perform the following functions on behalf of the Administration:</text> <paragraph num="(1)"> <text>Marketing and promotion;</text> </paragraph> <paragraph num="(2)"> <text>Loan application intake;</text> </paragraph> <paragraph num="(3)"> <text>Evaluation of financial and rehabilitation proposals;</text> </paragraph> <paragraph num="(4)"> <text>Making recommendations to the Administration for loan approval or disapproval;</text> </paragraph> <paragraph num="(5)"> <text>Coordination with borrowers for execution of closing documents; and</text> </paragraph> <paragraph num="(6)"> <text>Monitoring rehabilitation and making recommendations to the Administration for release of construction draws.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Political subdivisions or public utility companies approved as agents shall agree in writing to perform the functions in §C, above, in conformance with these regulations, the appropriate Program handbooks, and other procedures prescribed by the Administration.</text> </paragraph> <paragraph num="E."> <text>Political subdivisions or public utility companies approved as agents shall be required to secure the approval of the Administration or loan insurer, as applicable, before a loan is approved.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Allocation of Funds."> <paragraph num="A."> <text>The Administration may, in its sole discretion, allocate funds in aggregate amounts to lenders, political subdivisions, or the Administration between loans for single family properties and loans for multifamily properties.</text> </paragraph> <paragraph num="B."> <text>When applicable, funds will be allocated to targeted areas for the purposes of §103A of the Code.</text> </paragraph> <paragraph num="C."> <text>The Administration may accept or reject an application, and may specify in its notice of acceptance a lesser aggregate amount of loans than the amount requested in the application.</text> </paragraph> <paragraph num="D."> <text>All allocations will be made on the basis of need, population, demand for funds, and any other criteria that the Administration determines from time to time.</text> </paragraph> <paragraph num="E."> <text>Allocation of funds available or expected to be available among lenders will also be based on factors including:</text> <paragraph num="(1)"> <text>Aggregate amounts and distribution by county of loans and commitments requested by all lenders and by each lender;</text> </paragraph> <paragraph num="(2)"> <text>Financial condition of each lender;</text> </paragraph> <paragraph num="(3)"> <text>Amount and number of property improvement loans made in the State by each lender in the 2-year period preceding the application; and</text> </paragraph> <paragraph num="(4)"> <text>Previous participation of the lender in housing programs of the State or its subdivisions.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The Administration will notify the lender of the aggregate principal amount of loans that the Administration will purchase from the lender; subject to the conditions of the loan purchase agreement and interest rate to be charged on the loans.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Additional Requirements for Multifamily Properties."> <text>Loans for multifamily properties insured by the MHF multifamily insurance program shall meet the following requirements:</text> <paragraph num="A."> <text>The sum of the original principal amount of the loan and total amount of prior outstanding indebtedness encumbering the property at the time of the closing of the loan may not exceed the then applicable limits for MHF multifamily insurance.</text> </paragraph> <paragraph num="B."> <text>The appraisal of the property as rehabilitated shall be sufficient to meet the ratio of the loan plus the amount of prior indebtedness encumbering the property to the value of the property determined by the:</text> <paragraph num="(1)"> <text>Administration in its applicable Program handbook; and</text> </paragraph> <paragraph num="(2)"> <text>MHF in accordance with its regulations or guidelines.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Administration shall examine any prior indebtedness encumbering the property to ascertain that the prior indebtedness resulted from reasonable and responsible underwriting and evaluation.</text> </paragraph> <paragraph num="D."> <text>The mortgage may be subject to indebtedness encumbering the property having priority to the mortgage. The Administration may prohibit encumbrances junior to the mortgage.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Loan Applications, Processing, and Purchase Procedures."> <paragraph num="A."> <text>Applications shall be made upon form documents required by the Administration. Sufficient information and documentation shall be provided to determine the extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the property.</text> </paragraph> <paragraph num="B."> <text>Lenders, or the Administration, as applicable, shall be responsible for originating loans under the program. This responsibility shall include the:</text> <paragraph num="(1)"> <text>Acceptance of applications from borrowers;</text> </paragraph> <paragraph num="(2)"> <text>Review of applications for completeness and compliance with program eligibility standards;</text> </paragraph> <paragraph num="(3)"> <text>Determination of creditworthiness of the borrower using normal underwriting standards;</text> </paragraph> <paragraph num="(4)"> <text>Execution by the borrower of a note, mortgage (if required), and all other documents required by the Administration and the disbursal of all loan proceeds;</text> </paragraph> <paragraph num="(5)"> <text>Reporting of the loan for loan insurance and, in the case of lenders, the submission of the loan to the Administration for purchase.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Administration shall purchase all loans submitted by lenders for purchase after examination of the loans for compliance with the terms and conditions of the loan purchase agreement. Loans found not to be in conformance with the requirement of the agreement shall be returned to the lender.</text> </paragraph> <paragraph num="D."> <text>The Administration may delegate to political subdivisions some or all of the functions described in §A, above, in accordance with terms and conditions of the appropriate Program handbook. Loans found not to be in conformance with requirements of the Program handbook shall be returned to the political subdivisions.</text> </paragraph> <paragraph num="E."> <text>The Secretary may delegate to the Director of the Administration, or to other appropriate employees of the Department or the Administration, the execution or approval of any commitments to borrowers or lenders and any contracts, arrangements, agreements, or other documents that the Administration determines are necessary to evidence or secure any loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Loan Servicing."> <text>Loans shall be subject to a loan servicing agreement to be prepared by the Administration. The agreement shall establish the procedures for the servicing of loans and may permit the deduction of a servicing fee by the servicer from the proceeds of loan repayments.</text> </regulation> <regulation prefix="Regulation" num=".15" heading="Supplemental Programs."> <text>This Program is intended to work in conjunction with local, State, and federal programs to the maximum degree possible.</text> </regulation> <regulation prefix="Regulation" num=".16" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or the trust indenture if:</text> <paragraph num="A."> <text>Conformance to the requirement of any federal agency in connection with any rehabilitation with respect to which federal assistance is sought necessitates waiver of a regulation; or</text> </paragraph> <paragraph num="B."> <text>In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland;Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.16 adopted as an emergency provision effective June 1, 1983 (10:12 Md. R. 1065); emergency status extended at 10:25 Md. R. 2262</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.16 adopted effective December 5, 1983 (10:24 Md. R. 2184)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.15 to COMAR 05.04.10</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective January 2, 1994 (20:25 Md. R. 1942); April 5, 1999 (26:7 Md. R. 537)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective April 25, 1994 (21:8 Md. R. 671)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective January 2, 1994 (20:25 Md. R. 1942)</annotation> </annotations> </chapter> <chapter num="11" heading="Special Housing Opportunities Program"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>Authority. These regulations are adopted under the provisions of the Community Development Administration Act, Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Purpose. These regulations are intended to promote the purposes of the Act, Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, by implementing, interpreting, making specific, and otherwise carrying out the provisions of the Act within their scope. In particular, they are intended to provide basic information to nonprofit sponsors of special housing facilities which provide shelter and services to individuals with physical or mental impairments and special housing needs.</text> </paragraph> <paragraph num="C."> <text>Scope.</text> <paragraph num="(1)"> <text>These regulations apply to the program of insured or guaranteed loans made or purchased by the Administration with the proceeds of revenue bonds as authorized by , Housing and Community Development Article, §§4-227 and 4-245(a), Annotated Code of Maryland. Loans made or purchased under these regulations shall be made or purchased to finance special housing facilities undertaken by nonprofit organizations to house special needs populations.</text> </paragraph> <paragraph num="(2)"> <text>Loans made from the proceeds of revenue bonds for special housing facilities which provide shelter and services for individuals with special housing needs will be financed ordinarily under these regulations. The Department also makes loans for individuals with special housing needs under the State-funded group home program set forth at COMAR 05.04.09. Other projects financed with the proceeds of revenue bonds which provide multifamily rental housing are financed under COMAR 05.05.02 or 05.04.10.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(4)"> <text>“Director” means the Director of the Administration.</text> </paragraph> <paragraph num="(5)"> <text>“Families of limited income” means families or individuals whose incomes do not exceed upper income limits established by the Secretary in accordance with Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(6)"> <text>“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated under it.</text> </paragraph> <paragraph num="(7)"> <text>“Local government” means any of the 23 counties of the State, the Mayor and City Council of Baltimore, and any municipal corporation subject to the provisions of Article XI-E of the Constitution.</text> </paragraph> <paragraph num="(8)"> <text>“Nonprofit organization” means an organization whose organizational documents include among its charitable purposes the provision of housing to special needs populations, and which is currently recognized by the Internal Revenue Service as a tax-exempt organization under §501(c)(3) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(9)"> <text>“Project” means a special housing facilities project.</text> </paragraph> <paragraph num="(10)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(11)"> <text>“Special housing facility” means a special housing facility under the Act that does not constitute residential rental housing for family units within the meaning of §145(d) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(12)"> <text>“Special needs populations” means individuals with disabilities or special housing needs, including those who are developmentally or mentally disabled, physically or mentally handicapped, elderly, or juveniles in need of direct supervision, or otherwise in need of assistance due to special personal characteristics or circumstances.</text> </paragraph> <paragraph num="(13)"> <text>“Sponsor” means a borrower on a loan made by the Administration to finance a project and includes its successors and assigns by operation of law or as approved by the Administration or the Maryland Housing Fund.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Sponsors."> <text>Sponsors shall meet all of the following requirements to qualify for a loan:</text> <paragraph num="A."> <text>Be a nonprofit organization;</text> </paragraph> <paragraph num="B."> <text>Be in good standing and be qualified to do business in Maryland;</text> </paragraph> <paragraph num="C."> <text>Have all necessary legal and corporate authority to incur the obligations of the loan;</text> </paragraph> <paragraph num="D."> <text>Either:</text> <paragraph num="(1)"> <text>Be licensed to operate the project by the appropriate State agency, to the extent required by State law; or</text> </paragraph> <paragraph num="(2)"> <text>Enter into a management agreement acceptable to the Administration, with a manager acceptable to the Administration that:</text> <paragraph num="(a)"> <text>Is licensed to operate the project by the appropriate State agency, to the extent required by State law, and</text> </paragraph> <paragraph num="(b)"> <text>Meets the requirements of §§A, B, E, F and G of this regulation;</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Either:</text> <paragraph num="(1)"> <text>Have a contract, acceptable to the Administration, with a State agency or county government; or</text> </paragraph> <paragraph num="(2)"> <text>Have a management agreement acceptable to the Administration with a manager acceptable to the Administration who has a contract as described in §E(1) of this regulation;</text> </paragraph> </paragraph> <paragraph num="F."> <text>Demonstrate:</text> <paragraph num="(1)"> <text>Financial credibility and stability,</text> </paragraph> <paragraph num="(2)"> <text>The capability to undertake the project, and</text> </paragraph> <paragraph num="(3)"> <text>Either:</text> <paragraph num="(a)"> <text>The ability to manage the project as evidenced by at least 2 years of prior management of the project or comparable projects; or</text> </paragraph> <paragraph num="(b)"> <text>In the case of a manager acceptable to the Administration, with whom the borrower has a management agreement acceptable to the Administration, the ability of the manager to manage the project as evidenced by at least 2 years of prior management of the project or comparable project;</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Not be under an order suspending or debarring the sponsor from participating in the Department's programs under COMAR 05.01.05, or under any similar order from any other State or federal agency; and</text> </paragraph> <paragraph num="H."> <text>Not have defaulted under a Department or other governmental loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Projects."> <paragraph num="A."> <text>The project shall be a special housing facility, as defined in Regulation .02B(11) of this chapter.</text> </paragraph> <paragraph num="B."> <text>Fifty-one percent of the residents of the project, other than supervisory personnel, shall be families of limited income.</text> </paragraph> <paragraph num="C."> <text>Upon closing the loan, the special housing facility shall be owned by an eligible sponsor.</text> </paragraph> <paragraph num="D."> <text>The project shall be a single family dwelling unit.</text> </paragraph> <paragraph num="E."> <text>The project shall comply, if necessary, with the notice, public hearing, and public approval requirements of the Internal Revenue Code.</text> </paragraph> <paragraph num="F."> <text>The project shall conform upon completion with all applicable State and local laws, codes, and regulations, including zoning, building, and housing regulations and the regulations and requirements of any agency of State or local government governing supported housing for special needs populations.</text> </paragraph> <paragraph num="G."> <text>The project shall be, in the determination of the Administration, economically feasible so that the loan reasonably can be expected to be repaid in full, with interest.</text> </paragraph> <paragraph num="H."> <text>The project shall have a useful life of a length satisfactory to the Administration with reasonable maintenance.</text> </paragraph> <paragraph num="I."> <text>The project shall be subject to a contract with an agency of State or local government under terms and conditions acceptable to the Administration.</text> </paragraph> <paragraph num="J."> <text>For projects involving new construction or the acquisition of a newly constructed building, the project shall be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Income Limits."> <paragraph num="A."> <text>The Secretary shall establish upper income limits for families of limited income taking into consideration factors including:</text> <paragraph num="(1)"> <text>The amount of the total income of the families available for housing needs;</text> </paragraph> <paragraph num="(2)"> <text>The size of the family;</text> </paragraph> <paragraph num="(3)"> <text>The cost and condition of housing facilities available;</text> </paragraph> <paragraph num="(4)"> <text>The ability of the families to compete successfully in the normal private housing market; and</text> </paragraph> <paragraph num="(5)"> <text>Standards and definitions established for pertinent federal and State housing programs.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Secretary may establish income limits for individuals and households by size on a regional basis, and may establish income eligibility criteria, within limits lower than the regional limits, for particular projects.</text> </paragraph> <paragraph num="C."> <text>For projects occupied by two or more unrelated individuals, each individual shall be considered a family of limited income for the purpose of determining compliance with the income limits established in this regulation.</text> </paragraph> <paragraph num="D."> <text>The Secretary may determine, from time to time, the percentage of occupants in a public purpose project which shall be families of limited income in order to qualify as an eligible project. The Secretary shall take into consideration such factors as the Secretary may consider appropriate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Uses and Costs."> <paragraph num="A."> <text>The Administration may make loans as follows, subject to the requirements of the Internal Revenue Code if the interest on the bonds used to finance the loans is exempt from federal income taxation:</text> <paragraph num="(1)"> <text>Construction mortgage loans in conjunction with permanent mortgage loans;</text> </paragraph> <paragraph num="(2)"> <text>Rehabilitation or property improvement mortgage loans in conjunction with permanent mortgage loans;</text> </paragraph> <paragraph num="(3)"> <text>Mortgage loans to refinance the outstanding principal balance of acquisition debt on a project; and</text> </paragraph> <paragraph num="(4)"> <text>Permanent mortgage loans, including permanent take-out financing.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Secretary may, from time to time, limit the Administration to the making of loans under selected categories of eligible uses set forth in §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>The Administration may participate with other public or private lenders in the making of loans to finance projects.</text> </paragraph> <paragraph num="D."> <text>Loans may finance the costs associated with acquisition, construction, rehabilitation, or improvement of the project, including, subject to the requirements of the Internal Revenue Code if the interest on the bonds used to finance the loans is exempt from federal income taxation, the following:</text> <paragraph num="(1)"> <text>Costs of appraisals;</text> </paragraph> <paragraph num="(2)"> <text>Architectural and engineering costs for design and supervision;</text> </paragraph> <paragraph num="(3)"> <text>Costs of bonds, permits, and fees;</text> </paragraph> <paragraph num="(4)"> <text>Costs associated with site preparation and evaluation including soil borings, environmental review reports, and testing for environmental hazards;</text> </paragraph> <paragraph num="(5)"> <text>Carrying costs during construction, including construction interest, real estate taxes, and property insurance;</text> </paragraph> <paragraph num="(6)"> <text>Financing fees and charges imposed by the Administration or the mortgage insurer;</text> </paragraph> <paragraph num="(7)"> <text>Legal, processing, packaging, title, and closing fees, and other fees and charges; and</text> </paragraph> <paragraph num="(8)"> <text>Other costs and fees associated with the project acceptable to the Administration.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Loans associated with refinancing existing debt may finance:</text> <paragraph num="(1)"> <text>The amount of existing principal debt on the property;</text> </paragraph> <paragraph num="(2)"> <text>Lender prepayment fees and charges;</text> </paragraph> <paragraph num="(3)"> <text>Legal, processing, packaging, title, and other closing fees;</text> </paragraph> <paragraph num="(4)"> <text>Other fees and charges relating to the loan; and</text> </paragraph> <paragraph num="(5)"> <text>Any other costs approved by the Administration.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If there are expenditures relating to the project that are to be reimbursed, directly or indirectly, from the proceeds of tax-exempt bonds, the Administration shall have adopted an official intent resolution not later than 60 days after payment of the original expenditure and otherwise have complied with the Internal Revenue Code.</text> </paragraph> <paragraph num="G."> <text>Loans may not be used to finance salaries, services, or other operating costs of the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms—General."> <paragraph num="A."> <text>For acquisition, construction, reconstruction, rehabilitation, and improvement loans, the Administration may lend up to an amount which does not exceed the lesser of:</text> <paragraph num="(1)"> <text>75 percent of the appraised market value of the project; or</text> </paragraph> <paragraph num="(2)"> <text>The total cost of the project.</text> </paragraph> </paragraph> <paragraph num="B."> <text>For loans to refinance existing debt, the Administration may lend up to an amount which does not exceed the lesser of:</text> <paragraph num="(1)"> <text>75 percent of the appraised market value of the project; or</text> </paragraph> <paragraph num="(2)"> <text>The amount of eligible costs under Regulation .06D of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>By written determination, the Secretary may establish, from time to time, the maximum dollar amount of a loan which may be made to any project under the program.</text> </paragraph> <paragraph num="D."> <text>Term.</text> <paragraph num="(1)"> <text>Loans for permanent financing of projects may be for a term not to exceed 30 years, except that if the Administration elects to fund the project initially from a source other than proceeds of revenue bonds, then the term may not exceed 31 years and 6 months.</text> </paragraph> <paragraph num="(2)"> <text>The term of construction loans may not exceed 2 years and shall be based upon the type and size of the project and the extent of proposed construction or rehabilitation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Interest Rate. The Administration shall charge interest on the construction, rehabilitation, and permanent loans at a rate that, together with fees and charges by the Administration, covers the costs of issuance and interest that it pays on the revenue bonds or other obligations issued to raise the funds for loans and the allowable expenses of the Administration, including general operating expenses of the Department.</text> </paragraph> <paragraph num="F."> <text>Liens.</text> <paragraph num="(1)"> <text>Loans shall be secured by a mortgage or deed of trust. The mortgage to the Administration shall be a first lien on:</text> <paragraph num="(a)"> <text>The land and improvements; or</text> </paragraph> <paragraph num="(b)"> <text>A leasehold interest in the land which extends at least 25 years beyond the term of the loan and a fee interest in the improvements.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Administration may permit subordinate liens for other loans made by the Department or other lenders.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Cross-Default and Cross-Collateralization. If two or more program loans are made to the same sponsor, the Administration may require loan documents to contain cross-default and cross-collateralization provisions applicable.</text> </paragraph> <paragraph num="H."> <text>Assumption and Prepayment. Loans may not be assumed without the prior written approval of the Administration and the mortgage insurer. Loans may be prepaid to the extent permitted in the loan documents. Generally, loans may not be prepaid for at least 10 years following loan closing.</text> </paragraph> <paragraph num="I."> <text>Payment.</text> <paragraph num="(1)"> <text>Sponsors shall repay the loan in substantially equal monthly payments of interest and principal in order that the loan is fully amortized over its term, except that if the term exceeds 30 years in accordance with §D of this regulation then, at the direction of the Administration, a sponsor may make initial payments of interest only for up to 18 months after the loan closing.</text> </paragraph> <paragraph num="(2)"> <text>In addition, the sponsor shall pay mortgage insurance premiums, any reserve for replacement deposits, and any operating reserve on a monthly or annual basis, as required by the Administration.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Late Charges and Other Fees. Sponsors shall pay any servicing fees, loan insurance premiums, or late charges that the Administration or the loan insurer may require and that are permitted by State law.</text> </paragraph> <paragraph num="K."> <text>Expense Escrows. The Administration shall require the sponsor to deposit monthly with the Administration 1/12 of the annual amount of real estate taxes and property insurance, unless the sponsor is not required to pay property taxes on the project and has acceptable blanket property insurance covering multiple properties.</text> </paragraph> <paragraph num="L."> <text>Security Requirements. The Administration may require the following instruments or guarantees to secure its loans:</text> <paragraph num="(1)"> <text>For new construction or substantial rehabilitation projects:</text> <paragraph num="(a)"> <text>Payment and performance bonds shall be provided each in an amount equal to 100 percent of the contract price,</text> </paragraph> <paragraph num="(b)"> <text>Cash or an irrevocable letter of credit equal to 50 percent of the contract price,</text> </paragraph> <paragraph num="(c)"> <text>The completion assurance required by the mortgage insurer; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Such other sureties or guarantees of the loan as may be determined necessary by the Administration or the insurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Loan Terms—Public Purpose Restrictions."> <paragraph num="A."> <text>Limited Income Occupancy. The sponsor shall execute a recorded agreement stating that as long as the loan is outstanding, or such longer period of time as the Administration may require, not less than a specified number of occupants of the project shall be families of limited income in accordance with Regulation .04B of this chapter.</text> </paragraph> <paragraph num="B."> <text>Limited Income Distribution. The Administration may require the sponsor to agree to limits on the disposition of operating income of the project after payment of all project expenses, including loan payments and mortgage insurance premiums required by the Administration and the State or county agency which provides operating subsidies to the project.</text> </paragraph> <paragraph num="C."> <text>Project Monitoring. The sponsor shall permit monitoring by the Administration or an approved agent of the Administration during the term of the loan of the:</text> <paragraph num="(1)"> <text>Physical condition of the project;</text> </paragraph> <paragraph num="(2)"> <text>Financial condition of the project and sponsor; and</text> </paragraph> <paragraph num="(3)"> <text>Incomes of those residing in the project.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Management. The project shall be managed directly or, in special circumstances, under a type of management contract acceptable to the Administration and its bond counsel.</text> </paragraph> <paragraph num="E."> <text>Tax Compliance Agreement. The sponsor shall execute a legally binding covenant, to be recorded among the land records, requiring for as long as the loan is outstanding that:</text> <paragraph num="(1)"> <text>The sponsor shall continue to be a nonprofit organization;</text> </paragraph> <paragraph num="(2)"> <text>No portion of the loan may be used for a private business use or in an unrelated trade or business within the meaning of §513 of the Internal Revenue Code;</text> </paragraph> <paragraph num="(3)"> <text>The sum of the following amounts does not exceed $150,000,000:</text> <paragraph num="(a)"> <text>The Administration's §501(c)(3) bonds allocated to the sponsor; plus</text> </paragraph> <paragraph num="(b)"> <text>The outstanding tax-exempt nonhospital bonds allocated to the sponsor;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The project qualifies as a special housing facility.</text> </paragraph> </paragraph> <paragraph num="F."> <text>For purposes of §E(3) of this regulation, sponsor includes any organization under common management or control as the sponsor, any related person, and any test period beneficiary within the meanings of the Internal Revenue Code.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Loan Conditions."> <paragraph num="A."> <text>Appraisal.</text> <paragraph num="(1)"> <text>The Administration shall order an appraisal or require one to be ordered by the sponsor.</text> </paragraph> <paragraph num="(2)"> <text>The appraisal shall be performed by an appraiser acceptable to the Administration and shall show the current value of the property and the expected value of the property after completion of proposed improvements, if any.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Environmental Review.</text> <paragraph num="(1)"> <text>A project financed by a loan shall comply with applicable local, State, and federal environmental laws and regulations.</text> </paragraph> <paragraph num="(2)"> <text>A sponsor may be required, at the discretion of the Administration, to conduct a screening of the proposed site for environmental conditions such as man-made hazards, storm water runoff, underground storage tanks, lead-based paint, radon gas, PCBs, asbestos, and other environmental hazards within the meaning of the environmental laws referred to in §C(1) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>If the initial screening indicates adverse or potentially adverse environmental conditions, the Administration may require a more detailed physical investigation, review of historical records, testing and treatment, or abatement of the environmental condition as a requirement of the loan.</text> </paragraph> <paragraph num="(4)"> <text>For properties built before 1950, the sponsor shall keep the property registered with the Department of the Environment under Environment Article, Title 6, Subtitle 8, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Mortgage Insurance.</text> <paragraph num="(1)"> <text>Before any loan closing, the Administration and sponsor shall secure a commitment acceptable to the Administration to insure the proposed loan in an amount equal to 100 percent of the principal amount of the loan.</text> </paragraph> <paragraph num="(2)"> <text>The Administration and sponsor, as applicable, shall comply with any conditions of the insurance commitment so that the insurance shall attach from the time of closing.</text> </paragraph> <paragraph num="(3)"> <text>If a project is initially funded from a source other than proceeds of revenue bonds, and fails to be funded from proceeds of revenue bonds within 18 months of closing, then mortgage insurance may not be required after the initial period of up to 18 months.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Title Insurance.</text> <paragraph num="(1)"> <text>The sponsor shall provide a standard American Land Title Association (ALTA) Loan policy or other form of title insurance policy approved by the Administration and the Office of the Attorney General for an amount equal to the maximum principal amount of the loan, insuring the Administration that title to the building and the real property on which the building is located on the date of the loan closing is vested in the sponsor, and containing only exceptions and encumbrances approved by the Administration and the Office of the Attorney General.</text> </paragraph> <paragraph num="(2)"> <text>The Administration, in its discretion, may require the title insurance policy to include the ALTA endorsement form 100, comprehensive coverage, and ALTA endorsement form 8.1, environmental coverage, and such other endorsements as may be required by the Administration.</text> </paragraph> <paragraph num="(3)"> <text>The title insurance policy shall be accompanied by a survey certified in the manner required by the Administration and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Administration and the Office of the Attorney General. The title insurance policy may not contain any survey exceptions.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Property, Liability, and Other Insurance.</text> <paragraph num="(1)"> <text>At or before closing of a loan, and at such other times as required by the Department, the sponsor shall provide evidence that the sponsor, contractor, and other parties, have obtained and maintained the following insurance:</text> <paragraph num="(a)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(b)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(c)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(d)"> <text>Architect's errors and omissions;</text> </paragraph> <paragraph num="(e)"> <text>Engineer's errors and omissions; and</text> </paragraph> <paragraph num="(f)"> <text>Flood insurance, if the project is located in a flood hazard zone.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All insurance required under §E(1) of this regulation shall meet the following requirements:</text> <paragraph num="(a)"> <text>Be written by a company that has a currently issued certificate of authority or other evidence of appropriate registration or licensure from the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(c)"> <text>Not be terminable without prior notification to the Department; and</text> </paragraph> <paragraph num="(d)"> <text>Contain such other terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition to the requirements of §E(2) of this regulation, owner's liability insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition to the requirements of §E(2) of this regulation, contractor's liability and contractor's builder's risk insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in place through final closing or such later date as the Department requires.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In addition to the requirements of §E(2) of this regulation, owner's property or hazard insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured, loss payee and mortgagee; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Loan Documentation."> <paragraph num="A."> <text>The Administration shall prescribe the form and content of all loan documents. The loan documents shall contain any terms and conditions that the Administration considers advisable. Loan documents shall be prepared by the Administration and may not be retyped or altered by the sponsor.</text> </paragraph> <paragraph num="B."> <text>The loan documents shall include all of the following documents, as well as any other documents the Administration may require:</text> <paragraph num="(1)"> <text>A deed of trust note obligating the sponsor to repay the loan;</text> </paragraph> <paragraph num="(2)"> <text>A deed of trust, security agreement, and assignment of rents, which is a recorded instrument securing the Administration's interest in the project;</text> </paragraph> <paragraph num="(3)"> <text>A building loan agreement for new construction and substantial rehabilitation projects, which agreement specifies the details for the construction or rehabilitation of the project, including, but not limited to those relating to construction draws, remedies, releases, and terms of construction;</text> </paragraph> <paragraph num="(4)"> <text>A regulatory agreement which establishes the duties and obligations of the sponsor regarding reserves for replacement, construction surplus funds, savings in the amount of State operating subsidies provided to the project, occupancy requirements and income limits, and operation and maintenance of the project in the public interest;</text> </paragraph> <paragraph num="(5)"> <text>A compliance agreement executed in recordable form containing the requirements set forth in Regulation .08E and other covenants and provisions as may be required by the Administration and its counsel;</text> </paragraph> <paragraph num="(6)"> <text>A sponsor's counsel opinion for loans in excess of a minimum amount determined by the Administration, which is a letter as to the legal sufficiency of the sponsor's commitments and agreements as expressed in the loan documents; and</text> </paragraph> <paragraph num="(7)"> <text>A certificate or affidavit of the sponsor concerning federal tax law compliance in the purchase and financing of the property.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Application."> <paragraph num="A."> <text>Form and Content of Application. Applications for loans are to be made on forms prescribed by the Administration, and should include all supporting documentation specified in the check list included with the application.</text> </paragraph> <paragraph num="B."> <text>Rejection of Applications. If the Administration determines that a project or sponsor is not eligible for a loan, the Administration shall issue a written notice of the determination of ineligibility.</text> </paragraph> <paragraph num="C."> <text>Reconsideration. Sponsors may request reconsideration of a rejection in accordance with the procedures contained in the Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act, State Government Article, Title 10, Annotated Code of Maryland, or COMAR 05.01.02.</text> </paragraph> <paragraph num="D."> <text>Withdrawal of Application. A sponsor may withdraw an application at any time before closing of the loan by written notice to the Administration. The sponsor shall bear any costs incurred for items other than internal processing, including, but not limited to, title examinations, credit reports, and appraisals.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Processing Procedures."> <paragraph num="A."> <text>Commitment for Insurance. Before issuing a commitment for a loan, the Administration shall have secured a mortgage insurance commitment.</text> </paragraph> <paragraph num="B."> <text>Commitment.</text> <paragraph num="(1)"> <text>Except in the case of an emergency when urgent action is required, the Director shall submit all loans above a minimum amount, determined by the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland, to the Committee for review and recommendation to the Secretary for approval, disapproval, or modification of the loan and the terms of the loan. At the discretion of the Administration, loans in an amount below the minimum amount established for the Housing Finance Review Committee need not be submitted to the Committee for review and recommendation. The Secretary, in accordance with Regulation .19E of this chapter, may delegate the review and approval of these loans.</text> </paragraph> <paragraph num="(2)"> <text>After receipt of a recommendation of the Housing Finance Review Committee, the Secretary may approve, disapprove, or modify the loan and the terms of the loan. In an emergency, when urgent action is required and for loans below the minimum amount established for the Housing Finance Review Committee, the Secretary may approve a loan without the recommendation of the Committee.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary shall execute a written determination that each loan is to finance a special housing facility authorized by the Act, before the issuance of a commitment to make a loan or purchase a loan.</text> </paragraph> <paragraph num="(4)"> <text>Upon approval of a loan and execution of a determination, the Administration shall issue a commitment letter setting forth:</text> <paragraph num="(a)"> <text>The amount of the loan;</text> </paragraph> <paragraph num="(b)"> <text>The interest rate on the loan; and</text> </paragraph> <paragraph num="(c)"> <text>Other terms and conditions that the Administration considers appropriate for the loan or the project.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The Administration shall specify a time limit within which the initial closing of the loan shall occur, which time limit may be extended in the Administration's sole discretion. If initial closing does not occur within the time limit specified by the Administration, the Administration may use the moneys committed for loan for any other loan or purpose authorized by the Act.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Loan Closing Procedures—All Loans."> <paragraph num="A."> <text>The sponsor shall furnish or cause to be furnished to the Administration and the Office of the Attorney General satisfactory evidence of compliance with the terms and conditions of the loan before closing of the loan.</text> </paragraph> <paragraph num="B."> <text>The Administration shall require the sponsor to execute legal documents for closing in the form prescribed by the Administration. Only those modifications to the form documents necessitated by the business terms shall be approved for form and legal sufficiency by the Office of the Attorney General.</text> </paragraph> <paragraph num="C."> <text>Upon approval by the Administration and the Office of the Attorney General of the loan documents and a binder for title insurance, loan closing shall be scheduled at a time and place acceptable to the sponsor and the Administration through an approved title company.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Loan Procedures—Construction or Rehabilitation."> <paragraph num="A."> <text>Construction Period Disbursements. If the loan finances construction or rehabilitation, the Administration shall:</text> <paragraph num="(1)"> <text>Conduct on-site inspections of the construction;</text> </paragraph> <paragraph num="(2)"> <text>Make construction loan disbursements on the basis of work-in-place, plus materials acceptably stored on-site, less a retention of up to 10 percent of the construction request; and</text> </paragraph> <paragraph num="(3)"> <text>Make disbursement for materials acceptably stored off-site, if the materials are:</text> <paragraph num="(a)"> <text>In a bonded warehouse;</text> </paragraph> <paragraph num="(b)"> <text>Set aside and labeled with the project's name;</text> </paragraph> <paragraph num="(c)"> <text>Inspected by the Administration's inspector;</text> </paragraph> <paragraph num="(d)"> <text>Insured with the Administration as a named insured; and</text> </paragraph> <paragraph num="(e)"> <text>Documented by evidence of payment for the materials.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Cost Certification. For loans financing new construction and substantial rehabilitation under a cost-plus form of construction contract, the Administration shall require the sponsor and contractor to submit, upon completion of the project, a certification of project costs prepared by an independent accountant.</text> </paragraph> <paragraph num="C."> <text>Permanent Mortgage Closing. A closing shall be arranged after construction completion and cost certification according to procedures and documentation as may be required by the Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Fees, Program Guidelines."> <paragraph num="A."> <text>Amounts and time of payment of application fees, construction financing fees, permanent loan commitment fees, closing fees, issuance fees, and other fees as may be required by the Administration shall be as provided in a fee schedule set forth and revised from time to time by the Administration.</text> </paragraph> <paragraph num="B."> <text>The Administration may establish from time to time detailed Program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financing of mortgage loans or to the program which do not directly affect the rights of the public or the procedures available to the public.</text> </paragraph> <paragraph num="C."> <text>Copies of the fee schedule and guidelines shall be available for examination at the Administration's principal office. The Administration shall make copies available to the public upon request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Books and Accounts."> <paragraph num="A."> <text>Borrowers, contractors, and subcontractors shall maintain such books, accounts, and records, and shall file with the Administration such financial and other reports as the Department from time to time may require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records required to be maintained by §A of this regulation shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of:</text> <paragraph num="(1)"> <text>The borrower shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the borrower and the Department;</text> </paragraph> <paragraph num="(2)"> <text>Contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between them and the borrower.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Certification of Income."> <paragraph num="A."> <text>The sponsor shall obtain verification of income from all those who occupy or apply to occupy the project, in a form acceptable to the Administration. For projects where existing residents will continue in occupancy after the loan is made, the sponsor shall obtain income verifications from not less than 51 percent of the residents who satisfy the income limitations established under Regulation .05 of this chapter before initial loan closing. The sponsor shall file with the Administration, at least annually, a report disclosing the income of all individuals in residency or selected for residency.</text> </paragraph> <paragraph num="B."> <text>Annual recertifications of income shall be undertaken by the sponsor. Documentation and income verification shall be maintained at the project for a period of at least 3 years from the date on which the application for occupancy is submitted to the sponsor. The sponsor shall make the documentation available for review by the Administration at the Administration's request.</text> </paragraph> <paragraph num="C."> <text>The sponsor shall submit such annual or other reports relating to the occupancy of the project and the income of residents occupying the project as may be requested by the Administration.</text> </paragraph> <paragraph num="D."> <text>The purpose of the certification of income and the reports is to assure compliance with the upper income limits required by Housing and Community Development Article, §4-212, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A sponsor or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, sexual orientation, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the program , or in any aspect of employment by any borrower or contractor in connection with any property financed or assisted under the program.</text> </paragraph> <paragraph num="B."> <text>Each sponsor and contractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Department's Minority Business Enterprise Program, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18 Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Administration and the sponsor or other appropriate parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="General Provisions."> <paragraph num="A."> <text>Issuance of Bonds. The Administration may obtain funds for loans to finance projects from any source authorized by law, particularly by issuing bonds payable from revenues of the projects. In the event of any conflict, whether expressly so stated, the rights of sponsors or mortgagors under any mortgage or accompanying agreement with the Administration, which mortgage is financed by notes or bonds issued pursuant to a certificate of authorization or bond resolution, are subject to the rights of holders and owners of the Administration's bonds issued under the authorizing certificate or resolution.</text> </paragraph> <paragraph num="B."> <text>Project Selection. The Administration may, in its sole discretion, finance particular projects and decline to finance otherwise eligible projects based on its assessment of the project's overall merit and its merit relative to competing alternatives.</text> </paragraph> <paragraph num="C."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or contrary to the provisions of any applicable bond certificate or resolution:</text> <paragraph num="(1)"> <text>To conform to the requirements of the Internal Revenue Code, the bond documents, and any federal agency in connection with any project with respect to which federal assistance is sought; or</text> </paragraph> <paragraph num="(2)"> <text>In exceptional circumstances, if, in the written determination of the Secretary, the application of these regulations in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act, and waiver or variance of the specific regulations would not adversely impact the interest of any bond holders under the bond certificate or resolution.</text> </paragraph> </paragraph> <paragraph num="D."> <text>False Statements. A sponsor who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by the Act.</text> </paragraph> <paragraph num="E."> <text>Delegation. The Secretary may delegate to the Director of the Administration or to any other official or employee of the Department or Administration the authority to execute or approve any program documents or loan documents, including commitments and letters of intent.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland;Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 22, 1992 (19:12 Md. R. 1132)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C amended effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective November 20, 1995 (22:23 Md. R. 1799); November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D, E, F amended effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective January 2, 1994 (20:25 Md. R. 1942); November 20, 1995 (22:23 Md. R. 1799); April 5, 1999 (26:7 Md. R. 537)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04G amended effective June 5, 1995 (22:11 Md. R. 818)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C, G amended effective November 7, 1994 (21:22 Md. R. 1873)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09D amended effective November 7, 1994 (21:22 Md. R. 1873); November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10B amended effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective January 2, 1994 (20:25 Md. R. 1942)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12C amended effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 repealed, Regulation .18 amended, and Regulations .15—.19 recodified to .14—.18 effective November 20, 1995 (22:23 Md. R. 1799)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective March 31, 2003 (30:6 Md. R. 419)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04J amended effective February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09E amended effective April 19, 2010 (37:8 Md. R. 614); February 7, 2011 (38:3 Md. R. 151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="12" heading="Construction Loan Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making construction, preconstruction, and land bank loans to nonprofit organizations and local governments.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The basic objectives of the program are to provide:</text> <paragraph num="A."> <text>Construction-only financing to sponsors to acquire, construct, or rehabilitate adequate, safe, and sanitary single family and rental properties for occupancy by families of limited income, when permanent financing is assured;</text> </paragraph> <paragraph num="B."> <text>Financing to sponsors for preconstruction costs for the development of housing for occupancy by families of limited income, to eligible properties where construction and permanent financing is assured; and</text> </paragraph> <paragraph num="C."> <text>Land bank financing to local governments for the acquisition of land or interests in land to be held for future development of housing for occupancy by families of limited income.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in the Act have the meanings defined there and, in addition, the meanings used in these regulations.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 2, inclusive, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Applicable codes and standards” means construction, health, safety, fire, occupancy, and other codes and standards in force in the political subdivision in which an eligible building is located and which are applicable to that building or to the construction of that building. If these codes and standards do not exist or are deemed by the Secretary to be insufficient to promote the purpose of the program, then the codes and standards prescribed in COMAR 05.04.02 shall apply to rehabilitation projects and the Model Performance Code set forth in COMAR 05.02.01.03 shall apply to new construction projects.</text> </paragraph> <paragraph num="(4)"> <text>“Closing costs” means:</text> <paragraph num="(a)"> <text>Financing costs such as the credit report fee, survey fee, title examination, loan origination fee, title insurance fee, and application fee;</text> </paragraph> <paragraph num="(b)"> <text>Title fees such as the attorney's fee, documentation and preparation fee, recording fee, State and local transfer tax, and documentary stamps; and</text> </paragraph> <paragraph num="(c)"> <text>Prepaid expenses such as taxes, ground rent, hazard insurance, and any mortgage insurance premiums to be paid at closing.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Contract” means the written agreement between the sponsor and a licensed general contractor for the performance of work to be financed in whole or in part by the loan.</text> </paragraph> <paragraph num="(6)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Director” means the Director of the Administration.</text> </paragraph> <paragraph num="(8)"> <text>“Family of limited income” means an individual or family whose income does not exceed the income limits established by the Secretary for the program from time to time in accordance with Housing and Community Development Article, §4-218, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Family of very limited income” means an individual or family whose income does not exceed the income limits established by the Secretary for the program from time to time in accordance with Housing and Community Development Article, §4-218, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Homeownership property” means any residential property containing one self-contained unit which is the principal year-round residence of the owner and which may be a condominium, townhouse, or single family residence.</text> </paragraph> <paragraph num="(11)"> <text>“Housing Finance Review Committee” means the Housing Finance Review Committee established pursuant to Housing and Community Development Article, §4-208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Land bank” means land or interests in land which have been or are to be acquired by a local government and which are being or will be held for future development of housing for families of limited and very limited incomes.</text> </paragraph> <paragraph num="(13)"> <text>“Local government” means any municipal corporation in Maryland subject to the provisions of Article XI-E of the Constitution, the Mayor and City Council of Baltimore, and any of the 23 counties in Maryland. “Local government” may include any board, commission, agency, department, or authority of any municipal corporation or county designated by its chief executive officer to carry out the rehabilitation or construction of housing.</text> </paragraph> <paragraph num="(14)"> <text>“Modular or manufactured home” means a structure transportable in one or more sections which:</text> <paragraph num="(a)"> <text>In the traveling mode is 8 body feet or more in width and 40 body feet or more in length and, when erected on site, is 320 or more square feet;</text> </paragraph> <paragraph num="(b)"> <text>Is built on a permanent chassis which is permanently fixed to real property, or will be permanently fixed upon completion of the work financed by the loan;</text> </paragraph> <paragraph num="(c)"> <text>Is designed to be used as a dwelling; and</text> </paragraph> <paragraph num="(d)"> <text>Includes self-contained plumbing, heating, air conditioning, and electrical systems.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Mortgage” means a written instrument including a deed of trust evidencing or creating a lien against real property for the purpose of providing collateral to secure the repayment of a debt.</text> </paragraph> <paragraph num="(16)"> <text>“Nonprofit organization” means a corporation, partnership, joint venture, foundation, or other legal entity, a part of the net earnings of which does not inure to the benefit of any private shareholder or individual holding any form of interest in the entity.</text> </paragraph> <paragraph num="(17)"> <text>“Plans and specifications” means the drawings and written listing of all materials used in, or a detailed work write-up which describes, the structural, mechanical, electrical, and other work items for the construction or rehabilitation of a project.</text> </paragraph> <paragraph num="(18)"> <text>“Preconstruction costs” means all development costs, other than the cost of acquiring the property, incurred before the start of construction, reconstruction, or rehabilitation.</text> </paragraph> <paragraph num="(19)"> <text>“Program” means the Construction Loan Program.</text> </paragraph> <paragraph num="(20)"> <text>“Program Director” means the Director of the Program as assigned by the Administration.</text> </paragraph> <paragraph num="(21)"> <text>“Project” means any undertaking or project, or portion of it, including land, buildings, and improvements, and which otherwise constitutes a community development project as defined in the Act. “Project” includes a scattered site project.</text> </paragraph> <paragraph num="(22)"> <text>“Rental property” means any residential property containing one or more dwelling units which are occupied by families other than the owner.</text> </paragraph> <paragraph num="(23)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(24)"> <text>“Sponsor” means a nonprofit organization, local government, individual, corporation, or partnership which receives a loan to acquire, rehabilitate, or construct a project.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Sponsors."> <text>Sponsors shall meet the following requirements to qualify for a loan:</text> <paragraph num="A."> <text>Be a nonprofit organization, local government, individual, corporation, or partnership, except that only a local government is eligible for a land bank loan.</text> </paragraph> <paragraph num="B."> <text>If a nonprofit organization, corporation, or partnership, be in good standing and qualified to do business in Maryland.</text> </paragraph> <paragraph num="C."> <text>Have the legal capacity and all necessary authorization to incur the obligations of the loan.</text> </paragraph> <paragraph num="D."> <text>Own the project, have a valid sales contract to purchase the project, or have an option on or agreement of understanding acceptable to the Administration to purchase the project.</text> </paragraph> <paragraph num="E."> <text>In the determination of the Administration, be unable to secure a construction, preconstruction, or land bank loan from a private lending institution without impairing the feasibility of the project's serving the income levels of the proposed future occupants, or be ineligible for land bank financing or for combination construction and permanent financing through other public lending programs or programs of the Administration or Department.</text> </paragraph> <paragraph num="F."> <text>If the loan is for a rental property project, agree in writing that 100 percent of the dwelling units will be occupied upon completion of the project by families of limited income, and that best efforts will be undertaken to ensure that 50 percent of the dwelling units are occupied by families of very limited income.</text> </paragraph> <paragraph num="G."> <text>If the loan is for homeownership properties, agree in writing that all the residences will be sold initially to families of limited or very limited income who will occupy them as their principal residence.</text> </paragraph> <paragraph num="H."> <text>Except for land bank loans, have a commitment in a form acceptable to the Administration for permanent mortgage financing or have a letter of intent, from a lender or public program, acceptable to the Administration, to provide permanent financing upon completion of construction or rehabilitation of the project.</text> </paragraph> <paragraph num="I."> <text>Agree in writing to abide by all requirements of:</text> <paragraph num="(1)"> <text>Title VI and VII of the Civil Rights Act of 1964 and Title VIII of the Civil Rights Act of 1968;</text> </paragraph> <paragraph num="(2)"> <text>The provisions of the Governor's Code of Fair Practices, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Department's Minority Business Enterprise Program, as amended.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Agree in writing to provide and abide by a relocation assistance plan acceptable to the Department if occupants will be temporarily displaced during rehabilitation.</text> </paragraph> <paragraph num="K."> <text>Agree in a recordable document that a rental property project will be rented to families of limited income until the last to occur of:</text> <paragraph num="(1)"> <text>Repayment of the loan in full;</text> </paragraph> <paragraph num="(2)"> <text>Recordation of a document, recorded for the benefit of a permanent lender, with equivalent or more restrictive low income occupancy requirements, as determined by the Administration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Property."> <paragraph num="A."> <text>Projects shall be properly zoned for the proposed use.</text> </paragraph> <paragraph num="B."> <text>Projects other than land banking projects shall meet these additional requirements:</text> <paragraph num="(1)"> <text>Have available a safe, sanitary, and adequate water supply and sewage system;</text> </paragraph> <paragraph num="(2)"> <text>Be rehabilitated or constructed in accordance with the applicable codes and standards; and</text> </paragraph> <paragraph num="(3)"> <text>Provide homeownership or rental property to families of limited or very limited income.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Condominiums and cooperatives may be eligible projects.</text> </paragraph> <paragraph num="D."> <text>Modular or manufactured homes conforming with Regulation .03B(13) of this chapter may be eligible projects.</text> </paragraph> <paragraph num="E."> <text>Conversions of existing buildings to change the use to residential or to increase the number of residential units may be eligible projects.</text> </paragraph> <paragraph num="F."> <text>If a project is new construction, the project is eligible only if the:</text> <paragraph num="(1)"> <text>Department has complied with COMAR 05.01.06.06; and</text> </paragraph> <paragraph num="(2)"> <text>Secretary has issued the written determination required under COMAR 05.01.06.07.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Loan Terms and Requirements."> <paragraph num="A."> <text>Interest Rate. The interest rate to be paid on loans may not exceed 8 percent annual interest. The Administration may establish a lower interest rate if the Administration determines that a lower interest rate is required for the feasibility of the project to serve occupants of a specified income level.</text> </paragraph> <paragraph num="B."> <text>Term. The term of each loan generally may not exceed 2 years. The Administration may permit a loan term of greater than 2 years depending upon the size and nature of the project.</text> </paragraph> <paragraph num="C."> <text>Maximum Loan Amount. The maximum loan may not exceed the lesser of the:</text> <paragraph num="(1)"> <text>Amount of permanent financing approved for the project; or</text> </paragraph> <paragraph num="(2)"> <text>Total development costs, meaning the total costs as approved by the Administration, incurred in carrying out all works and undertakings which the Administration deems reasonable and necessary for the acquisition, construction, or rehabilitation of a project, including but not limited to the costs of:</text> <paragraph num="(a)"> <text>Acquisition of land and any buildings on it,</text> </paragraph> <paragraph num="(b)"> <text>Acquisition closing costs,</text> </paragraph> <paragraph num="(c)"> <text>Necessary studies, surveys, plans, and specifications,</text> </paragraph> <paragraph num="(d)"> <text>Architectural, engineering, or special services,</text> </paragraph> <paragraph num="(e)"> <text>Site preparation and development,</text> </paragraph> <paragraph num="(f)"> <text>Labor and materials for construction, reconstruction, or rehabilitation,</text> </paragraph> <paragraph num="(g)"> <text>Acquisition, repair, or improvement of such machinery, equipment, and furnishings as may be deemed necessary by the Administration,</text> </paragraph> <paragraph num="(h)"> <text>Expenses incurred in connection with initial occupancy or operation of the project as deemed necessary by the Administration,</text> </paragraph> <paragraph num="(i)"> <text>Fees incurred in connection with financing the project,</text> </paragraph> <paragraph num="(j)"> <text>Construction period interest on the loan,</text> </paragraph> <paragraph num="(k)"> <text>Indemnity and surety bonds,</text> </paragraph> <paragraph num="(l)"> <text>Premiums on insurance,</text> </paragraph> <paragraph num="(m)"> <text>Relocation costs,</text> </paragraph> <paragraph num="(n)"> <text>Contingency allowance deemed necessary by the Administration, if the loan is for a rehabilitation project, in an amount not to exceed 10 percent of the total cost of development, and</text> </paragraph> <paragraph num="(o)"> <text>Other costs the Administration deems reasonable and necessary.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Preconstruction Loans.</text> <paragraph num="(1)"> <text>The Administration may make a loan for preconstruction costs alone if:</text> <paragraph num="(a)"> <text>There is a commitment in place from the Administration, or other lender acceptable to the Administration, to finance the rehabilitation or construction of the project; or</text> </paragraph> <paragraph num="(b)"> <text>The sponsor has received a written assurance that a commitment will be issued for construction and permanent financing through the:</text> <paragraph num="(i)"> <text>Farmers Home Administration Section 502 Rural Homeownership Loan Program,</text> </paragraph> <paragraph num="(ii)"> <text>Farmers Home Administration Section 515 Rural Rental Housing Loan Program, or</text> </paragraph> <paragraph num="(iii)"> <text>Other public loan program acceptable to the Administration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>In either case, the loan shall be evidenced by a promissory note and, if the sponsor has title to the project, be secured by a mortgage.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Land Bank Loans.</text> <paragraph num="(1)"> <text>The Administration may make a loan for acquisition only of land, and improvements if any, if:</text> <paragraph num="(a)"> <text>The sponsor is a local government;</text> </paragraph> <paragraph num="(b)"> <text>The sponsor agrees that within 2 years of the date of acquisition of the property it will:</text> <paragraph num="(i)"> <text>Submit to the Administration a detailed plan for the development of the acquired land, and</text> </paragraph> <paragraph num="(ii)"> <text>Prepare and submit an application for construction and permanent financing to a governmental or private financial institution;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The loan is evidenced by a note and secured by a mortgage on the property.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the sponsor is unable to submit a plan within the required 2-year period, the Administration may grant an extension if it determines that an extension is in the best interest of the State.</text> </paragraph> <paragraph num="(3)"> <text>The maximum amount of a land bank loan may not exceed the fair market value of the property plus reasonable closing costs.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Repayment. The loan shall be repaid at the earliest of the stated loan maturity date, 90 days after the date the project is completed, or the closing of the permanent mortgage financing. For homeownership properties, loan repayment may be staged to coincide with the sale of individual units to families of limited or very limited income.</text> </paragraph> <paragraph num="G."> <text>Security for Loans. Loans shall be secured by a mortgage, except as otherwise provided in §D. All mortgages shall be in the form required by the Administration and shall be recorded in the land records of the county in which the project is located.</text> </paragraph> <paragraph num="H."> <text>Disbursement. Loan funds shall be held by the Administration and disbursed in accordance with a draw schedule approved by the Administration.</text> </paragraph> <paragraph num="I."> <text>Change of Ownership. The sponsor shall agree not to sell, cease to own, assign, transfer, or dispose of all or any part of the project or the sponsor's interest in it, during the loan term, without the prior written consent of the Administration.</text> </paragraph> <paragraph num="J."> <text>Insurance.</text> <paragraph num="(1)"> <text>Multi-Peril Insurance. The sponsor shall maintain fire and extended coverage insurance on the buildings comprising a project both during and after construction, which shall include such endorsements as the Administration may require, such as:</text> <paragraph num="(a)"> <text>Collapse;</text> </paragraph> <paragraph num="(b)"> <text>Explosion;</text> </paragraph> <paragraph num="(c)"> <text>Loss of rents;</text> </paragraph> <paragraph num="(d)"> <text>Vandalism.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Liability Insurance. The sponsor shall maintain comprehensive general liability insurance with such endorsements as the Administration may require, both during construction and upon occupancy of a project.</text> </paragraph> <paragraph num="(3)"> <text>Flood Insurance. If the project is located on real property which is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the project shall be covered by a flood plain insurance policy. Before loan closing, permits shall be secured from the Maryland Department of Natural Resources and the political subdivision in which the project is located.</text> </paragraph> <paragraph num="(4)"> <text>Other Insurance. The sponsor shall provide at loan closing such other insurance, including builders' risk, boiler insurance, comprehensive automobile liability, and broad form workers' compensation as may be required by the Department.</text> </paragraph> <paragraph num="(5)"> <text>Title Insurance. For all secured loans the sponsor shall provide a standard American Land Title Association (ALTA) Loan policy or other form of title policy approved by the Administration and the Office of the Attorney General for an amount equal to the maximum principal amount of the loan, insuring the Administration, evidencing that title to the project on the date of closing is vested in the sponsor, and containing only standard exceptions and encumbrances approved by the Administration and the Office of the Attorney General.</text> </paragraph> <paragraph num="(6)"> <text>Terms and Conditions. Each insurance policy shall meet the following minimum requirements:</text> <paragraph num="(a)"> <text>Be written by companies acceptable to the Administration;</text> </paragraph> <paragraph num="(b)"> <text>Be written by companies which are reputable and financially sound, as determined by the Administration;</text> </paragraph> <paragraph num="(c)"> <text>Be in force at the time of loan closing;</text> </paragraph> <paragraph num="(d)"> <text>Name the Administration as loss payee and additional insured as its interest may appear in a standard mortgagee endorsement attached to or printed in the policy;</text> </paragraph> <paragraph num="(e)"> <text>Not be terminable without prior notification to the Administration; and</text> </paragraph> <paragraph num="(f)"> <text>Contain terms and coverage satisfactory to the Administration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="K."> <text>Loan Documents. The Administration shall provide the sponsor with copies of relevant standard form loan documents which may include:</text> <paragraph num="(1)"> <text>A promissory note or deed of trust note;</text> </paragraph> <paragraph num="(2)"> <text>A deed of trust and security agreement;</text> </paragraph> <paragraph num="(3)"> <text>A loan agreement;</text> </paragraph> <paragraph num="(4)"> <text>An agreement and declaration of covenants and restrictions;</text> </paragraph> <paragraph num="(5)"> <text>A building loan agreement;</text> </paragraph> <paragraph num="(6)"> <text>A guaranty of completion or loan payments, or both;</text> </paragraph> <paragraph num="(7)"> <text>A completion assurance agreement;</text> </paragraph> <paragraph num="(8)"> <text>An assignment of the construction contract;</text> </paragraph> <paragraph num="(9)"> <text>An opinion of sponsor's counsel for nonprofit organizations;</text> </paragraph> <paragraph num="(10)"> <text>An opinion of contractor's counsel;</text> </paragraph> <paragraph num="(11)"> <text>A contractor's letter and certification;</text> </paragraph> <paragraph num="(12)"> <text>An assurance of compliance with civil rights requirements;</text> </paragraph> <paragraph num="(13)"> <text>A fair practices certification; and</text> </paragraph> <paragraph num="(14)"> <text>Such other documents as the Administration may find it desirable or necessary to require.</text> </paragraph> </paragraph> <paragraph num="L."> <text>Taxes. Taxes and assessments against the property which are due and payable shall be paid at or before closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Contractor Requirements."> <paragraph num="A."> <text>Contractors and subcontractors shall meet the following requirements:</text> <paragraph num="(1)"> <text>Meet all applicable State and local licensing requirements.</text> </paragraph> <paragraph num="(2)"> <text>Provide insurance coverage for comprehensive public liability, property damage liability, and workers' compensation in form and amounts required by the Administration.</text> </paragraph> <paragraph num="(3)"> <text>Perform all work in a competent, workmanlike manner equal to the standards of the industry in conformance with the contract and applicable codes and standards.</text> </paragraph> <paragraph num="(4)"> <text>Comply with all applicable laws, ordinances and regulations relating to the protection and safety of persons and property.</text> </paragraph> <paragraph num="(5)"> <text>Furnish all labor, materials, and equipment, and obtain and pay for all licenses and permits required to rehabilitate or construct the project in accordance with the contract and the plans and specifications.</text> </paragraph> <paragraph num="(6)"> <text>Not assign the contract without the prior written consent of the sponsor and the Administration.</text> </paragraph> <paragraph num="(7)"> <text>In addition to all remedies and guarantees provided by law, make at its sole cost and expense all necessary repairs, replacements, and corrections of any nature or description, interior or exterior, structural or nonstructural, as shall become necessary by reason of faulty workmanship or material, which appear within a period of 1 year from the date that a certificate of completion, on the Administration's approved form, is filed with the Administration. However, if any longer guarantee period is specified for any particular materials or workmanship under plans and specifications, or under any subcontract, in connection with any manufactured unit which is installed at the project, or under the laws of the State, the longer period shall govern.</text> </paragraph> <paragraph num="(8)"> <text>Agree to complete all work specified in the construction contract or plans and specifications, as the case may be, by the date required.</text> </paragraph> <paragraph num="(9)"> <text>Indemnify and hold the Administration harmless from all liability and loss because of injury to or death of any person or damage to any property which may occur or be alleged to have occurred during performance of the contract as a direct or indirect result of any act or omission, whether intentional, negligent, or otherwise, by the contractor, subcontractor, or their agents and employees. The contractor shall defend all suits or claims at its sole cost and expense.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Sponsors may act as general contractors only with the prior written approval of the Administration. The Administration's approval will be granted only if, in the opinion of the Administration, the sponsor has the capacity and expertise to perform as general contractor as evidenced by prior completion of projects of comparable or greater size and type.</text> </paragraph> <paragraph num="C."> <text>General contractors shall provide:</text> <paragraph num="(1)"> <text>Performance and payment bonds, each in an amount equal to 100 percent of the contract price;</text> </paragraph> <paragraph num="(2)"> <text>An irrevocable letter of credit equal to 25 percent of the contract price on assurance of completion agreement; or</text> </paragraph> <paragraph num="(3)"> <text>Other assurances as may be acceptable to the Administration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Application and Processing Procedures."> <paragraph num="A."> <text>Loan Application.</text> <paragraph num="(1)"> <text>A loan application shall be made upon standard forms prescribed by the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Each application shall be fully completed and properly executed and be accompanied by the following items:</text> <paragraph num="(a)"> <text>A copy of the articles of incorporation, bylaws, and most recent financial statements of the sponsor, if the sponsor is a nonprofit organization, or a letter of designation from the chief executive officer of the locality to carry out the project, if the sponsor is a local government;</text> </paragraph> <paragraph num="(b)"> <text>A copy of:</text> <paragraph num="(i)"> <text>The deed to the property,</text> </paragraph> <paragraph num="(ii)"> <text>A contract or option agreement to purchase the property, or</text> </paragraph> <paragraph num="(iii)"> <text>An agreement of understanding or letter of intent to purchase the property;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Photographs of the site and any existing buildings; and</text> </paragraph> <paragraph num="(d)"> <text>Sufficient information and documentation to determine the extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the property.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In the case of a land bank loan, the sponsor shall furnish the following:</text> <paragraph num="(a)"> <text>A preliminary description of the sponsor's plans for the development of the land;</text> </paragraph> <paragraph num="(b)"> <text>An explanation of the sponsor's housing development experience and current activity which demonstrates the sponsor's capacity to develop the land for occupancy by families of limited or very limited income; and</text> </paragraph> <paragraph num="(c)"> <text>Identification of how the land is presently zoned.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Feasibility Notification. Upon receipt of all documentation necessary to determine the feasibility of a project and the primary loan structure and terms, the Administration shall issue a written notification letter to the sponsor. The feasibility notification letter shall outline anticipated loan terms and shall specify any additional documentation which shall be provided or other conditions which shall be met in order for the Administration to recommend a loan for commitment, including:</text> <paragraph num="(1)"> <text>Plans and specifications or a detailed scope of work for the rehabilitation or construction of the project. The Administration shall review the plans and specifications or a detailed scope of work to ensure compliance with applicable codes and standards.</text> </paragraph> <paragraph num="(2)"> <text>A copy of the contract for the work. The Administration shall review the contract to determine if the contract and the licensed contractor are acceptable to the Administration.</text> </paragraph> <paragraph num="(3)"> <text>Evidence of zoning compliance.</text> </paragraph> <paragraph num="(4)"> <text>A resolution from the local government authorizing the construction or rehabilitation of the project.</text> </paragraph> <paragraph num="(5)"> <text>If the project is to be newly constructed, a soil test of the land upon which the project is to be constructed.</text> </paragraph> <paragraph num="(6)"> <text>A copy of a commitment or letter of intent to provide permanent financing which, at a minimum, shall state the amount, rate, and terms of the permanent financing.</text> </paragraph> <paragraph num="(7)"> <text>A schedule of proposed sales prices or rents.</text> </paragraph> <paragraph num="(8)"> <text>A plan to market the units to families of limited income and, if applicable, to families of very limited income.</text> </paragraph> <paragraph num="(9)"> <text>A relocation plan, if the loan is for rehabilitation of occupied residential units.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Approval.</text> <paragraph num="(1)"> <text>Upon satisfaction of all the requirements and conditions of the feasibility notification letter, the Administration shall undertake an analysis of each application as to the final recommended loan amount, structure, and terms.</text> </paragraph> <paragraph num="(2)"> <text>Except in the case of an emergency when urgent action is required, all loans above a minimum amount, determined by the Housing Finance Review Committee established pursuant to Housing and Community Development Article, §4-208, Annotated Code of Maryland, shall be submitted by the Administration to the Committee for review and recommendation to the Secretary for approval or disapproval of a loan and the terms of the loan. At the discretion of the Director, loans in an amount below the minimum amount established by the Housing Finance Review Committee need not be submitted to the Committee for review and recommendation. The Secretary, in accordance with Regulation .11B, may delegate the review and approval of these loans.</text> </paragraph> <paragraph num="(3)"> <text>Before the issuance of any commitment letter obligating the Administration to provide a loan, regardless of the loan amount, the Secretary shall execute a determination that the loan is a community development project authorized by the Act. The execution of a determination by the Secretary shall constitute an approval of the loan and authorize the issuance of a commitment letter obligating the Administration to provide the loan. In an emergency when urgent action is required, the Secretary may execute a determination approving a loan for a project without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Commitment Letter. Upon the issuance of a Secretarial determination approving a loan, the Director or Program Director is authorized to issue a commitment letter setting forth the amount of the loan, the interest rate on the loan, and the other terms and conditions under which it will be made.</text> </paragraph> <paragraph num="E."> <text>Expiration of Commitment. For any loan approved by the Secretary, the Administration shall specify in the commitment letter a time limit within which the sponsor shall execute the documents evidencing the loan, which time limit may be extended in the Administration's sole discretion. If execution of the documentation by the sponsor does not occur within the time limit specified by the Administration, the commitment shall expire and the Administration may withdraw the moneys encumbered for the project and use them for any other project authorized by the Act.</text> </paragraph> <paragraph num="F."> <text>Rejection of Applications. If the Administration determines that a project or sponsor is not eligible for a loan, the Administration shall issue a written notice of the determination of ineligibility. The Administration shall provide the Housing Finance Review Committee with a report listing all loan applications rejected during the month preceding each Housing Finance Review Committee meeting.</text> </paragraph> <paragraph num="G."> <text>Reconsideration. Sponsors may request reconsideration of a rejection in accordance with the procedures contained in the program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="H."> <text>Loan Closing. The loan closing shall be scheduled at a time acceptable to the sponsor, the Administration and the office of the Assistant Attorney General, or its designee.</text> </paragraph> <paragraph num="I."> <text>Release. Upon repayment in full of the loan, the Administration shall release its mortgage. Partial releases shall be made for single family properties as units are sold and proportionate amounts of the loan repaid.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A sponsor, developer or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in selling, leasing, or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the program, or in any aspect of employment by any sponsor, developer or contractor in the construction, repair, or maintenance of any property financed or assisted in whole or in part under the program.</text> </paragraph> <paragraph num="B."> <text>A sponsor, developer or contractor shall comply with all applicable federal, State, and local laws, and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Administration and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Program Administration."> <paragraph num="A."> <text>Program Handbook. The Administration may establish from time to time operational handbooks or manuals containing internal underwriting standards and loan processing requirements which do not directly affect the rights of the public or the procedures available to the public. Copies of these handbooks shall be available for examination at the Administration's principal office. The Administration, upon request, may make copies available to the public at a reasonable charge.</text> </paragraph> <paragraph num="B."> <text>Delegation. The Secretary may delegate to the Director of the Administration or to any other official or employee of the Department or Administration the authority to execute or approve any program documents or contract documents.</text> </paragraph> <paragraph num="C."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations in writing to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local programs in connection with providing financing to the project necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the determination of the Secretary, the application of a regulation in a specific case or in any emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="False Statements."> <text>A sponsor who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-255, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Severability."> <text>The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provision of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-225 and 4-226, Annotated Code of Maryland;Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A, B amended effective April 15, 1991 (18:7 Md. R. 771)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective April 15, 1991 (18:7 Md. R. 771); November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A, B amended effective April 15, 1991 (18:7 Md. R. 771)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05F adopted effective January 2, 1994 (20:25 Md. R. 1942)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05F amended effective April 5, 1999 (26:7 Md. R. 538)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06J amended effective November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective January 2, 1994 (20:25 Md. R. 1942)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="13" heading="Federal Lead Hazard Reduction Program"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter describes the policies and procedures for lead hazard reduction grants and loans to be funded through a federal grant to the Department from the United States Department of Housing and Urban Development.</text> </paragraph> <paragraph num="B."> <text>The regulations set forth in COMAR 05.04.06 describe the policies and procedures for making State-funded loans and grants to finance certain lead hazard reduction activities in residential buildings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The purpose of the Program is to make grants and loans to owner-occupants and sponsors of privately owned, owner-occupied, and rental housing property to fund certain lead hazard reduction activities. The Program will emphasize evaluating cost-effective and innovative treatment methods.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Abatement.</text> <paragraph num="(a)"> <text>“Abatement” means a set of measures designed to eliminate lead-based paint hazards in accordance with standards established by the Department.</text> </paragraph> <paragraph num="(b)"> <text>“Abatement” includes:</text> <paragraph num="(i)"> <text>The removal of lead-based paint and lead-contaminated dust, the permanent containment or encapsulation of lead-based painted surfaces or fixtures, and the removal or covering of lead-contaminated soils; and</text> </paragraph> <paragraph num="(ii)"> <text>All preparation, cleanup, disposal, worker protection, and post-abatement clearance testing activities associated with these measures.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits, less:</text> <paragraph num="(a)"> <text>Unusual or temporary income items as determined by the Department; and</text> </paragraph> <paragraph num="(b)"> <text>Abnormal expenses of a long-term nature, such as extraordinary medical, rehabilitation, or special education expenses.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Borrower” means an owner who receives a loan under the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Building” means a structure that satisfies the requirements of Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>Certified Contractor.</text> <paragraph num="(a)"> <text>“Certified contractor” means a contractor, inspector, or supervisor who has successfully completed the MDE State certification program set forth in COMAR 26.16.01.</text> </paragraph> <paragraph num="(b)"> <text>“Certified contractor” includes a certified inspector.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Clearance testing” means a wipe test, performed in accordance with HUD guidelines, that a dwelling unit shall pass before it may be reoccupied, showing that lead dust levels are below HUD's maximum allowable standards, as follows:</text> <paragraph num="(a)"> <text>For floors, 100 micrograms per square foot;</text> </paragraph> <paragraph num="(b)"> <text>For window sills, 500 micrograms per square foot; and</text> </paragraph> <paragraph num="(c)"> <text>For window wells, 800 micrograms per square foot.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Closing costs” means the total of all settlement costs and fees and, when applicable, initial payments for taxes, property insurance, title examination, or other expense items as determined by the Department.</text> </paragraph> <paragraph num="(8)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Director” means the Director of the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(10)"> <text>Encapsulation.</text> <paragraph num="(a)"> <text>“Encapsulation” means a method of abatement that involves the coating and sealing of surfaces with durable surface coatings specifically formulated to be elastic, able to withstand sharp and blunt impacts, long-lasting, and resilient, while also resistant to cracking, peeling, algae, fungus, and ultraviolet light, so as to prevent any part of lead-containing paint from becoming part of house dust or otherwise accessible to children.</text> </paragraph> <paragraph num="(b)"> <text>“Encapsulation” does not mean coating and sealing surfaces with paint, which is not an encapsulant.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Enclosure” means the resurfacing or covering of surfaces with durable materials such as gypsum board or paneling, and sealing or caulking the edges and joints so as to prevent or control chalking, flaking, peeling, scaling, or loose lead-containing substances from becoming part of house dust or otherwise accessible to children.</text> </paragraph> <paragraph num="(12)"> <text>“Grant” means a grant made under the Program.</text> </paragraph> <paragraph num="(13)"> <text>“Grantee” means the recipient of a grant under the Program.</text> </paragraph> <paragraph num="(14)"> <text>“Hazardous waste” means liquid or solid waste, or combination of solid wastes, which because of its quantity, concentration, or physical, chemical, or infectious characteristics may:</text> <paragraph num="(a)"> <text>Cause, or significantly contribute to, an increase in mortality or in serious, irreversible, or incapacitating illness; or</text> </paragraph> <paragraph num="(b)"> <text>Pose a substantial current or potential hazard to human health or the environment, when improperly treated, stored, transported, disposed of, or otherwise managed.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“HEPA (high efficiency particulate accumulator)” means a vacuum cleaner fitted with a filter capable of filtering out particles of 0.3 micron or greater from a body of air at 99.97 percent efficiency or more.</text> </paragraph> <paragraph num="(16)"> <text>“Housing programs” means the acquisition, construction, rehabilitation, refinancing, and other housing financing programs operated by the Department.</text> </paragraph> <paragraph num="(17)"> <text>“HUD” means the United States Department of Housing and Urban Development.</text> </paragraph> <paragraph num="(18)"> <text>“HUD guidelines” means any guidelines or manuals issued by HUD in connection with HUD's lead-based paint hazard reduction practices and requirements.</text> </paragraph> <paragraph num="(19)"> <text>“Interim controls” means a set of measures designed to reduce temporarily human exposure or likely exposure to lead-based paint hazards, including:</text> <paragraph num="(a)"> <text>Specialized cleaning;</text> </paragraph> <paragraph num="(b)"> <text>Repairs;</text> </paragraph> <paragraph num="(c)"> <text>Maintenance;</text> </paragraph> <paragraph num="(d)"> <text>Painting;</text> </paragraph> <paragraph num="(e)"> <text>Temporary containment;</text> </paragraph> <paragraph num="(f)"> <text>Ongoing monitoring of lead-based paint hazards or potential hazards; and</text> </paragraph> <paragraph num="(g)"> <text>The establishment and operation of management and resident education programs.</text> </paragraph> </paragraph> <paragraph num="(20)"> <text>“Lead-based paint hazard” means any condition that causes exposure to lead from lead-contaminated dust, lead-contaminated soil, or lead-contaminated paint that is deteriorated or present in accessible surfaces, friction surfaces, or impact surfaces, that would result in adverse human health effects as established by the appropriate federal agency.</text> </paragraph> <paragraph num="(21)"> <text>“Lead paint abatement services” means the risk assessment, inspection, or abatement of lead-containing substances.</text> </paragraph> <paragraph num="(22)"> <text>“Loan” means a loan made under the Program.</text> </paragraph> <paragraph num="(23)"> <text>“Local administrator” means a Level I or Level II local administrator certified under the Maryland Housing Rehabilitation Program, as set forth in COMAR 05.04.01.16.</text> </paragraph> <paragraph num="(24)"> <text>"MDE" means the Maryland Department of the Environment, a principal department of the State.</text> </paragraph> <paragraph num="(25)"> <text>“NOFA” means, collectively, Notices and Super Notices of Funding Availability covering the Lead-Based Paint Hazard Control Program, published by HUD in the Federal Register, including those published at 58 FR 13848—13857 and at 63 FR 15490—15620.</text> </paragraph> <paragraph num="(26)"> <text>“Program” means the Federal Lead Hazard Reduction (FLHR) Program.</text> </paragraph> <paragraph num="(27)"> <text>“Program Director” means the Director of Special Loan Programs for the Department.</text> </paragraph> <paragraph num="(28)"> <text>“Replacement” means a strategy of abatement that removes components such as windows, doors, and trim that have lead-based painted surfaces, and installs new or deleaded components free of lead-based paint.</text> </paragraph> <paragraph num="(29)"> <text>“Residential dwelling” means:</text> <paragraph num="(a)"> <text>A single-family dwelling, including attached structures, such as porches and stoops; or</text> </paragraph> <paragraph num="(b)"> <text>A single-family dwelling unit in a structure that contains at least one separate residential dwelling unit, and in which each unit is, or is intended to be, used or occupied, in whole or in part, as the home or residence of one or more persons.</text> </paragraph> </paragraph> <paragraph num="(30)"> <text>“Risk assessment” means an on-site investigation to determine and report the existence, nature, severity, and location of lead-based paint hazards in residential dwellings, including:</text> <paragraph num="(a)"> <text>Information-gathering regarding the age and history of the housing and occupancy by children younger than 6 years old;</text> </paragraph> <paragraph num="(b)"> <text>Visual inspection;</text> </paragraph> <paragraph num="(c)"> <text>Limited wipe sampling or other environmental sampling techniques;</text> </paragraph> <paragraph num="(d)"> <text>Other activity as may be appropriate; and</text> </paragraph> <paragraph num="(e)"> <text>Provision of a report explaining the results of the investigation.</text> </paragraph> </paragraph> <paragraph num="(31)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(32)"> <text>“State certification program” means the MDE program for accrediting, certifying, and licensing contractors, inspectors, and supervisors, and training workers, as set forth in COMAR 26.16.01.</text> </paragraph> <paragraph num="(33)"> <text>“Subcontractor” means an entity authorized by the Department to carry out the duties and responsibilities of a local administrator under the Maryland Housing Rehabilitation Program, as stated in COMAR 05.04.01.16.</text> </paragraph> <paragraph num="(34)"> <text>“Target housing” has the meaning stated in Regulation .04A of this chapter.</text> </paragraph> <paragraph num="(35)"> <text>“Testing” means the measurement of lead in painted surfaces by State-certified personnel using a portable XRF analyzer, laboratory analysis of paint samples, or other method approved by HUD.</text> </paragraph> <paragraph num="(36)"> <text>“Title X” means the federal Residential Lead-Based Hazard Reduction Act of 1992, found in Title X of Public Law 102-550, approved October 28, 1992, and any regulations promulgated under the statute.</text> </paragraph> <paragraph num="(37)"> <text>“Trained worker” means a worker who has successfully completed the State certification program defined in this section.</text> </paragraph> <paragraph num="(38)"> <text>“Wipe test” means the testing of a surface for the presence of lead dust by the patterned wiping of the surface, followed by analysis of the wipe by atomic absorption spectroscopy, giving the result in micrograms of lead per square foot of surface.</text> </paragraph> <paragraph num="(39)"> <text>“XRF analyzer” means a portable instrument that:</text> <paragraph num="(a)"> <text>Determines lead concentration in milligrams per square centimeter using the principle of X-ray fluorescence;</text> </paragraph> <paragraph num="(b)"> <text>Measures mean lead content or lead content plus a spectrum of other elements;</text> </paragraph> <paragraph num="(c)"> <text>Is used in accordance with the rules for interpretation of the XRF sampling data for multifamily or scattered-site housing, as provided in HUD guidelines; and</text> </paragraph> <paragraph num="(d)"> <text>Is a model approved by the Program.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Housing."> <paragraph num="A."> <text>Eligible housing shall be target housing, which is housing that meets the following criteria:</text> <paragraph num="(1)"> <text>Was constructed before 1950, except that housing constructed after that but before 1978 may be approved if the Program Director determines that a lead-based paint hazard is present;</text> </paragraph> <paragraph num="(2)"> <text>Is not housing for the elderly or persons with disabilities, unless a child younger than 6 years old resides or expects to reside there; and</text> </paragraph> <paragraph num="(3)"> <text>Consists of residential dwellings with at least one bedroom each.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Eligible housing shall be target housing under §A of this regulation that meets the following additional criteria:</text> <paragraph num="(1)"> <text>Is owner-occupied housing that meets the income requirements set forth in Regulation .13 of this chapter or rental housing for tenants who meet the requirements set forth in Regulation .13 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>Is not public housing (whether federal or locally supported), federally owned housing, or federally assisted housing, except for tenant-based housing that receives assistance under §8(b) or 8(a) of the United States Housing Act of 1937.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Each project building shall:</text> <paragraph num="(1)"> <text>Be located within the State; and</text> </paragraph> <paragraph num="(2)"> <text>Contain at least one residential unit, with each unit having at least one bedroom.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Preferences for funding shall be given to housing that is target housing with evidence of a lead-based paint hazard or rental housing which will give rental priority to families with a child younger than 6 years old, or a child with an elevated blood lead level, and that meets the following criteria:</text> <paragraph num="(1)"> <text>Has an existing lead violation;</text> </paragraph> <paragraph num="(2)"> <text>Has a child with an elevated blood lead level in residence;</text> </paragraph> <paragraph num="(3)"> <text>Has a child younger than 6 years old in residence; or</text> </paragraph> <paragraph num="(4)"> <text>Has a child younger than 6 years old or a child with an elevated blood lead level who is expected to spend a significant amount of time visiting.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A project shall meet the property standards set forth in Regulation .12 of this chapter.</text> </paragraph> <paragraph num="F."> <text>The Department in its discretion may approve a forward commitment reserving Program funds to a nonprofit organization, in connection with the organization's research into lead paint abatement or lead paint medical issues, for Program loans or grants.</text> </paragraph> <paragraph num="G."> <text>A project is ineligible for funding if any part of the property is located in:</text> <paragraph num="(1)"> <text>A federal Coastal Barrier Resource System; or</text> </paragraph> <paragraph num="(2)"> <text>An area identified by the Federal Emergency Management Agency as having special flood hazards, unless flood insurance is obtained in accordance with the federal Flood Disaster Protection Act.</text> </paragraph> </paragraph> <paragraph num="H."> <text>A project shall be reviewed and approved by the Maryland Historical Trust.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Owner-Occupants and Sponsors."> <text>Owner-occupants and sponsors shall meet all of the following requirements to qualify for Program financing:</text> <paragraph num="A."> <text>Either own the eligible housing, and be current for all mortgage and property tax and assessment payments, or have an agreement to purchase the eligible housing;</text> </paragraph> <paragraph num="B."> <text>Be an individual or a business entity;</text> </paragraph> <paragraph num="C."> <text>Be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="D."> <text>Have the legal capacity and all necessary legal authorization to incur the obligations of the financing;</text> </paragraph> <paragraph num="E."> <text>Not have been barred or suspended by:</text> <paragraph num="(1)"> <text>The Department under COMAR 05.01.05, or</text> </paragraph> <paragraph num="(2)"> <text>HUD;</text> </paragraph> </paragraph> <paragraph num="F."> <text>Demonstrate:</text> <paragraph num="(1)"> <text>Financial credibility and stability, and</text> </paragraph> <paragraph num="(2)"> <text>The ability to successfully complete the project in a timely and satisfactory manner; and</text> </paragraph> </paragraph> <paragraph num="G."> <text>Agree in writing to:</text> <paragraph num="(1)"> <text>Fully cooperate with any related research and evaluation sponsored by HUD and associated with this grant program, including preservation of the data and records of the project and compiling requested information in formats provided by the researchers or evaluators,</text> </paragraph> <paragraph num="(2)"> <text>Allow clearance testing of assisted units before units are re-occupied,</text> </paragraph> <paragraph num="(3)"> <text>Participate in education programs as required by the Department, and encourage participation in these programs,</text> </paragraph> <paragraph num="(4)"> <text>Use certified contractors and trained workers to perform lead paint abatement services in accordance with Regulation .17 of this chapter,</text> </paragraph> <paragraph num="(5)"> <text>Perform lead abatement work on the assisted unit as required by the Department,</text> </paragraph> <paragraph num="(6)"> <text>Make good faith efforts to assist the Department in obtaining blood lead tests for children younger than 6 years old who reside in the units to be abated within 3 months before abatement,</text> </paragraph> <paragraph num="(7)"> <text>Assist with relocation of tenants to the extent required by the Department in accordance with the Federal Uniform Relocation Act, and</text> </paragraph> <paragraph num="(8)"> <text>Assist in monitoring the tenant income as required by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Ineligible Projects."> <paragraph num="A."> <text>If any of the following federal funding sources were or may be used in a residential dwelling unit, Program funding may not be used for that unit:</text> <paragraph num="(1)"> <text>Shelter Plus Care;</text> </paragraph> <paragraph num="(2)"> <text>Emergency Shelter Grants Program;</text> </paragraph> <paragraph num="(3)"> <text>Surplus Property for Use to Assist the Homeless;</text> </paragraph> <paragraph num="(4)"> <text>Homeownership Assistance for Low- and Moderate-Income Families (§221(d)(2));</text> </paragraph> <paragraph num="(5)"> <text>Rent Supplements (§101);</text> </paragraph> <paragraph num="(6)"> <text>Multifamily Rental Housing for Moderate-Income Families (§221(d)(3));</text> </paragraph> <paragraph num="(7)"> <text>Supportive Housing for Persons with Disabilities (§811);</text> </paragraph> <paragraph num="(8)"> <text>HOPE 2: Homeownership of Multifamily Units (Title IV);</text> </paragraph> <paragraph num="(9)"> <text>Low-Income Housing Preservation and Resident Homeownership (Title VI);</text> </paragraph> <paragraph num="(10)"> <text>Emergency Low-Income Housing Preservation (Title II);</text> </paragraph> <paragraph num="(11)"> <text>Flexible Subsidy (§201);</text> </paragraph> <paragraph num="(12)"> <text>Lower Income Rental Assistance (§8);</text> </paragraph> <paragraph num="(13)"> <text>Section 8 Moderate Rehabilitation Program;</text> </paragraph> <paragraph num="(14)"> <text>Public Housing Development;</text> </paragraph> <paragraph num="(15)"> <text>Public Housing Operating Subsidy; and</text> </paragraph> <paragraph num="(16)"> <text>Public Housing Modernization (Comprehensive Grant Program and Comprehensive Improvement Assistance Program).</text> </paragraph> </paragraph> <paragraph num="B."> <text>If Program funds are used for other units in the building, the Program may require the sponsor to secure other funding for lead abatement for the units ineligible under §A of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Lead Abatement Treatment."> <paragraph num="A."> <text>The Program shall determine the level of lead abatement treatment for each residential dwelling unit, and the type of work to be done.</text> </paragraph> <paragraph num="B."> <text>The four levels of treatment are:</text> <paragraph num="(1)"> <text>Level I, which includes:</text> <paragraph num="(a)"> <text>Installing caps of vinyl, aluminum, or any other material in all window wells, in order to make window wells smooth and cleanable, in a manner and under conditions approved by the Department,</text> </paragraph> <paragraph num="(b)"> <text>Removing and repainting chipped, peeling, or flaking paint on exterior and interior painted surfaces,</text> </paragraph> <paragraph num="(c)"> <text>HEPA-vacuuming and washing of the interior of the property with high phosphate detergent or its equivalent, as determined by MDE, and</text> </paragraph> <paragraph num="(d)"> <text>Educational and other requirements of the Program;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Level II, which includes all of the following:</text> <paragraph num="(a)"> <text>Any Level I treatment,</text> </paragraph> <paragraph num="(b)"> <text>Stripping and repainting, replacing, or encapsulating all interior windowsills with vinyl, metal, or any other material in a manner and under conditions approved by the Department,</text> </paragraph> <paragraph num="(c)"> <text>Except for a treated or replacement window that is free of lead-based paint on its friction surfaces, fixing the top sash of all windows in place in order to eliminate the friction caused by movement of the top sash,</text> </paragraph> <paragraph num="(d)"> <text>Rehanging all doors where necessary in order to prevent the rubbing together of a lead-painted surface with another surface,</text> </paragraph> <paragraph num="(e)"> <text>Making all bare floors smooth and cleanable, and</text> </paragraph> <paragraph num="(f)"> <text>Ensuring that all kitchen and bathroom floors are overlaid with a smooth, water-resistant covering;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Level III, which includes:</text> <paragraph num="(a)"> <text>Any Level II treatment,</text> </paragraph> <paragraph num="(b)"> <text>Window replacement, and abatement of exterior window trim,</text> </paragraph> <paragraph num="(c)"> <text>Doorway treatments such as use of sealants and encapsulants following reworking and removal of peeling paint,</text> </paragraph> <paragraph num="(d)"> <text>Stairway treatments such as enclosure of treads and risers, and</text> </paragraph> <paragraph num="(e)"> <text>Encapsulation or enclosure of designated wall and trim surfaces;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Level IV, which consists of one of the other levels of treatment combined with new and innovative techniques, as approved for the project by the Program Director and MDE.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Program Testing."> <paragraph num="A."> <text>Biological Testing.</text> <paragraph num="(1)"> <text>For every unit to be assisted with Program funds, the sponsor shall make a good faith effort to ensure that each child younger than 6 years old receives a blood lead test within the 3-month period before the beginning of lead abatement treatment.</text> </paragraph> <paragraph num="(2)"> <text>Testing shall be performed by the local health department or other party approved by MDE.</text> </paragraph> <paragraph num="(3)"> <text>The project sponsor shall assist in obtaining the cooperation of tenants for the blood testing.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Environmental Testing. The testing in §§C—E of this regulation is required for each unit receiving abatement treatment under the Program.</text> </paragraph> <paragraph num="C."> <text>Initial Testing.</text> <paragraph num="(1)"> <text>Every room or area in a dwelling unit planned for abatement shall:</text> <paragraph num="(a)"> <text>Receive a risk assessment as defined in Regulation .03B of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Undergo testing as defined in Regulation .03B of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Risk assessment, initial wipe tests, and other testing shall be performed by certified contractors and trained workers selected by the sponsor and acceptable to the Program.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Clearance Testing.</text> <paragraph num="(1)"> <text>Before a dwelling unit may be re-occupied, the unit shall undergo a wipe test showing that lead dust levels are below HUD's maximum allowable standard for floors (currently 100 micrograms per square foot), window sills (currently 500 micrograms per square foot), and window wells (currently 800 micrograms per square foot).</text> </paragraph> <paragraph num="(2)"> <text>All lead dust samples shall be collected directly by MDE personnel or others approved by the Program. Test results shall be analyzed by the Maryland Department of Health or another entity acceptable to MDE.</text> </paragraph> <paragraph num="(3)"> <text>MDE shall be permitted to perform inspections during abatement work, after visual clearance and before repainting, and at final clearance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Eligible Costs."> <paragraph num="A."> <text>Program funds may be used to pay the cost of the lead abatement treatment required by the Program, as described in Regulation .07 of this chapter, to the extent permitted under Regulation .11B of this chapter.</text> </paragraph> <paragraph num="B."> <text>Program funds may also be used to pay all or a portion of the following costs, the extent of the coverage to be determined for each project in the discretion of the Program:</text> <paragraph num="(1)"> <text>Post-treatment cleanup costs;</text> </paragraph> <paragraph num="(2)"> <text>Costs of testing required under Regulation .08 of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>Costs of interim controls, defined in Regulation .03B of this chapter, as approved by the Program for the project;</text> </paragraph> <paragraph num="(4)"> <text>Costs of risk assessment, defined in Regulation .03B of this chapter, and costs of inspections; and</text> </paragraph> <paragraph num="(5)"> <text>Other costs determined by the Program to be permitted under the federal grant that provides the funds for the Program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Program funds may not be used:</text> <paragraph num="(1)"> <text>For chelation or other medical treatment; or</text> </paragraph> <paragraph num="(2)"> <text>To meet the costs of repairing a structural defect that causes paint to chip, peel, or flake.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Allocation of Funds."> <paragraph num="A."> <text>The Department may reserve a portion of Program funding for projects that are also receiving funding through the Department's Housing Development Programs.</text> </paragraph> <paragraph num="B."> <text>Program funds may not be used in jurisdictions that receive HUD funds to operate a lead abatement program, unless the project meets one of the following criteria:</text> <paragraph num="(1)"> <text>The following requirements are in connection with the project:</text> <paragraph num="(a)"> <text>Either the jurisdiction has committed all of its HUD lead abatement funds, or the project is ineligible for HUD lead abatement funding from that jurisdiction, and</text> </paragraph> <paragraph num="(b)"> <text>Program funding for that jurisdiction, including funding for the applicant's project, may not exceed $500,000, unless the Secretary determines the need for project funding is exceptional;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The project previously received funding or mortgage insurance through the Department and the property is in need of lead abatement; or</text> </paragraph> <paragraph num="(3)"> <text>The project meets the criteria of Regulation .04G of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Terms and Conditions of Financing."> <paragraph num="A."> <text>Form of Financing. The Department may offer grants and loans.</text> </paragraph> <paragraph num="B."> <text>Maximum Amount of Program Financing.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, Program financing may not exceed:</text> <paragraph num="(a)"> <text>$2,000 per dwelling unit for Level I treatment described in Regulation .07 of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>$4,000 per dwelling unit for Level II treatment described in Regulation .07 of this chapter; or</text> </paragraph> <paragraph num="(c)"> <text>$6,000 per dwelling unit for Level III or IV treatment described in Regulation .07 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Program may approve an increase in the per unit cost for a particular project based on site conditions, size of units, or innovative methods.</text> </paragraph> <paragraph num="(3)"> <text>A project may not receive more than $500,000 of Program financing, except as provided in §B(4) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>In the discretion of the Department, a project may receive more than $500,000 of Program funding if:</text> <paragraph num="(a)"> <text>Other Departmental financing for the project is in default and the Department in its discretion determines that the default workout requires Program funds; or</text> </paragraph> <paragraph num="(b)"> <text>The Program approves an increase for a particular project based on the size of the project, use of innovative methods, availability of other funding, or other special features of the project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Terms.</text> <paragraph num="(1)"> <text>Term. The term of a loan may not exceed the term of any other funding for the project provided by the Department.</text> </paragraph> <paragraph num="(2)"> <text>Interest Rate. In its discretion, the Department may require interest to be paid on a loan at a rate set by the Program. The Department may defer payment of interest.</text> </paragraph> <paragraph num="(3)"> <text>Repayment. At the discretion of the Department, repayment of principal and interest, or either, may be deferred for a period of time or until the earlier to occur of:</text> <paragraph num="(a)"> <text>Maturity;</text> </paragraph> <paragraph num="(b)"> <text>Sale of the project; or</text> </paragraph> <paragraph num="(c)"> <text>Such time as the project fails to qualify as priority housing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Security for Loans. Program loans shall be secured by a recorded mortgage or deed of trust.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Terms and Conditions—Property Standards and Insurance Requirements."> <paragraph num="A."> <text>Property Standards. All housing assisted with Program funds shall:</text> <paragraph num="(1)"> <text>Meet the minimum livability code set forth in COMAR 05.02.03, as adopted by the jurisdiction; or</text> </paragraph> <paragraph num="(2)"> <text>Be property for which the owner-occupant or sponsor has obtained financing for rehabilitation work to ensure that the building will meet the minimum livability code and, if necessary, repair any structural defect that is causing paint to chip, peel, or flake.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Insurance Requirements.</text> <paragraph num="(1)"> <text>Hazard Insurance.</text> <paragraph num="(a)"> <text>The owner of the building shall maintain fire and extended coverage insurance at the owner's expense in the amount not less than the sum of the loan and any other indebtedness secured by the building, up to the value of the improvements.</text> </paragraph> <paragraph num="(b)"> <text>The hazard insurance policy shall:</text> <paragraph num="(i)"> <text>Be written by companies authorized to transact business in the State;</text> </paragraph> <paragraph num="(ii)"> <text>Be written by companies which are reputable and financially sound, as determined by the Department;</text> </paragraph> <paragraph num="(iii)"> <text>Be in force on or before the date of the loan closing;</text> </paragraph> <paragraph num="(iv)"> <text>For loans, name the Department as insured and as loss payee as its interest may appear in a standard mortgagee endorsement attached to or printed in the policy; and</text> </paragraph> <paragraph num="(v)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Flood Insurance. If the building is in a 100-year flood plain, as designated by the United States Department of Housing and Urban Development:</text> <paragraph num="(a)"> <text>The building shall be covered by a flood insurance policy, naming the Department as beneficiary, in an amount not less than the sum of the loan and any other indebtedness secured by the building; and</text> </paragraph> <paragraph num="(b)"> <text>The flood insurance policy may not be terminated without prior notification to the Department.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Income, Occupancy, and Rental Housing Requirements."> <paragraph num="A."> <text>In order to qualify for Program funds, a rental housing project shall meet the requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>Income Requirements for Tenants.</text> <paragraph num="(1)"> <text>At least 50 percent of the project units shall be occupied by households whose annual income does not exceed 50 percent of the HUD area median income adjusted for household size.</text> </paragraph> <paragraph num="(2)"> <text>The remaining project units shall be occupied by households whose annual income does not exceed 80 percent of the HUD area median income adjusted for household size.</text> </paragraph> <paragraph num="(3)"> <text>Notwithstanding the requirements set forth in §B(2) of this regulation, for buildings with five or more units, 20 percent of the project units may be occupied without regard to household income level.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In renting a project unit, the landlord shall give priority to households with children younger than 6 years old.</text> </paragraph> <paragraph num="D."> <text>Each project is subject to the requirements set forth in §§B and C of this regulation for a period of at least 3 years, under covenants and restrictions in the form required by the Department.</text> </paragraph> <paragraph num="E."> <text>Annual Review.</text> <paragraph num="(1)"> <text>Owners shall examine the income of each tenant household annually for 3 years. The Program may require owners to report the results.</text> </paragraph> <paragraph num="(2)"> <text>If noncompliance with the occupancy requirements is caused by an increase in tenant income, all vacancies shall be filled with income eligible households until the noncompliance is corrected.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Income Requirements for Owner-Occupants. All owner-occupied units shall be the principal residence of families whose annual income does not exceed 80 percent of the HUD area median income adjusted for household size.</text> </paragraph> <paragraph num="G."> <text>Not less than 90 percent of owner-occupied units shall be occupied by a child younger than 6 years old or shall be units where a child younger than 6 years old spends a significant amount of time visiting.</text> </paragraph> <paragraph num="H."> <text>Property Maintenance. The owner shall maintain the premises in compliance with all applicable local requirements.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Application Procedures."> <paragraph num="A."> <text>Housing Programs Application. If the applicant is also applying for funding through a housing program described in Regulation .03B of this chapter, the applicant shall supply the information and supporting documentation specified on the application form for the housing program.</text> </paragraph> <paragraph num="B."> <text>Application for Program Funding Only.</text> <paragraph num="(1)"> <text>Application Procedures in General. Applicants for Program financing in amounts less than $100,000 may apply through local administrators in accordance with procedures established by the Program. All applicants may also apply directly to the Department through the Special Loan Programs, unless an alternative procedure has been approved on a case-by-case basis.</text> </paragraph> <paragraph num="(2)"> <text>Application Forms. All loan and grant applications shall be made on standard forms described by the Department.</text> </paragraph> <paragraph num="(3)"> <text>Documentation.</text> <paragraph num="(a)"> <text>The applicant shall submit with the application any documentation that the Department requires.</text> </paragraph> <paragraph num="(b)"> <text>The applicant shall submit supporting documentation specified in the checklist attached to the application, including but not limited to the following:</text> <paragraph num="(i)"> <text>A copy of the deed to the property;</text> </paragraph> <paragraph num="(ii)"> <text>A copy of all existing mortgages or mortgage verification requests, on the form approved by the Department, signed by the applicant for each mortgage secured by the building in need of abatement or verification of income, as required by the Department;</text> </paragraph> <paragraph num="(iii)"> <text>A copy of the first page and declarations page of all policies for fire and extended coverage insurance and, if applicable, flood insurance;</text> </paragraph> <paragraph num="(iv)"> <text>A copy of the most recent paid real estate tax bill which sets forth the current assessed value of the building and the property;</text> </paragraph> <paragraph num="(v)"> <text>Evidence of a lead-based paint hazard in each project building;</text> </paragraph> <paragraph num="(vi)"> <text>Contractor's proposal outlining proposed cost and proposed lead hazard reduction activity in accordance with MDE regulations, if available;</text> </paragraph> <paragraph num="(vii)"> <text>Results of any environmental testing for the presence of lead, and biological testing of occupants for blood lead content;</text> </paragraph> <paragraph num="(viii)"> <text>Relocation plan for tenants that complies with the federal Uniform Relocation Act; and</text> </paragraph> <paragraph num="(ix)"> <text>Hazardous waste disposal plan, if applicable.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>The loan applicant shall submit the following additional documentation:</text> <paragraph num="(a)"> <text>Any documentation required by the Department to establish the eligibility and credit worthiness of the applicant;</text> </paragraph> <paragraph num="(b)"> <text>For the 3 years immediately preceding the application:</text> <paragraph num="(i)"> <text>Copies of federal income tax returns, or</text> </paragraph> <paragraph num="(ii)"> <text>Sufficient documentation to verify income as determined by the Program;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>If applicable, certified copies of the organizational documents of the owner-landlord and a certificate of good standing;</text> </paragraph> <paragraph num="(d)"> <text>Certified financial statements of the applicant and, if applicable, certified financial statements of its principals;</text> </paragraph> <paragraph num="(e)"> <text>3 years of operating statements for the project;</text> </paragraph> <paragraph num="(f)"> <text>If applicable, resolutions of the board of directors or consents of all of the partners authorizing the application;</text> </paragraph> <paragraph num="(g)"> <text>Photographs of the building and site;</text> </paragraph> <paragraph num="(h)"> <text>Evidence of subdivision and zoning compliance.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Loan and Grant Approval."> <paragraph num="A."> <text>Initial Eligibility Determination.</text> <paragraph num="(1)"> <text>An application may be submitted to the local administrator for an initial review to make a preliminary determination of the eligibility of the applicant and the project.</text> </paragraph> <paragraph num="(2)"> <text>If an applicant is determined preliminarily to be eligible for a loan or grant, verifications and reports deemed appropriate by the Program Director or the local administrator, as the case may be, will be obtained.</text> </paragraph> <paragraph num="(3)"> <text>If an applicant is determined preliminarily to be eligible for a loan or grant, the applicant may be provided with a letter from the local administrator in the form approved by the Program acknowledging receipt of the application and notifying the applicant of the ongoing review process.</text> </paragraph> <paragraph num="(4)"> <text>If the applicant is ineligible for a grant or loan, the applicant shall be informed in writing of the determination.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Building Evaluation.</text> <paragraph num="(1)"> <text>Each building for which an application is received shall be inspected for the purposes of determining compliance with the minimum livability code and evaluating the adequacy of lead hazard reduction proposals submitted by the applicant.</text> </paragraph> <paragraph num="(2)"> <text>The inspection shall be performed by:</text> <paragraph num="(a)"> <text>The Department;</text> </paragraph> <paragraph num="(b)"> <text>The local administrator; or</text> </paragraph> <paragraph num="(c)"> <text>Another inspector acceptable to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Loan and Grant Approval.</text> <paragraph num="(1)"> <text>All loan applications shall be evaluated by the Special Loan Programs operated by the Department.</text> </paragraph> <paragraph num="(2)"> <text>Upon receipt and approval of all acceptable contractors' proposals, and all other data the Program considers relevant or necessary, the local administrator originating a grant shall undertake an analysis of the grant and other grant terms and conditions.</text> </paragraph> <paragraph num="(3)"> <text>After completing the steps described in §C(2) of this regulation, the local administrator shall forward the application package and the analysis of the loan or grant, or both, to the Department for approval, disapproval, or modification.</text> </paragraph> <paragraph num="(4)"> <text>Approval to make a loan, grant, or combination of loan and grant shall be as follows:</text> <paragraph num="(a)"> <text>A loan, grant, or combination of loan and grant in an amount of $30,000 or less may be approved by:</text> <paragraph num="(i)"> <text>The Level II local administrator, when the Level II local administrator originates the loan or grant, or</text> </paragraph> <paragraph num="(ii)"> <text>The Program Director when a Level I local administrator or the Department originates the loan or grant;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A loan, grant, or combination of loan and grant in an amount over $30,000 and less than $100,000 may be approved by the Director;</text> </paragraph> <paragraph num="(c)"> <text>For a loan, grant, or combination loan and grant in an amount of $100,000 or more, the following procedures shall apply:</text> <paragraph num="(i)"> <text>The loan/grant proposal shall be submitted to the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland,</text> </paragraph> <paragraph num="(ii)"> <text>For a loan, grant, or combination loan and grant in an amount greater than $100,000 but less than $250,000, the recommendation of the Housing Finance Review Committee constitutes approval unless the loan is specifically disapproved by the Secretary,</text> </paragraph> <paragraph num="(iii)"> <text>For a loan, grant, or combination loan and grant in amounts of $250,000 or more, the Secretary shall determine in writing whether the loan is approved and under what loan terms after receiving the recommendation of the Housing Finance Review Committee,</text> </paragraph> <paragraph num="(iv)"> <text>In an emergency when urgent action is required, the Secretary may approve loans and grants by written determination without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>Before a Level II local administrator gives final approval and issues a commitment for Program funding in the amount of $30,000 or less, the Level II local administrator shall contact the Program and receive confirmation that funds are available.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Rejection. If an application for Program funds through a Housing Program is rejected, the Director of the Housing Program processing the application shall notify the applicant in writing of the rejection. If a direct application for Program funds only is rejected, the Director of the Special Loan Programs or local administrator, as the case may be, shall notify the applicant in writing of the rejection.</text> </paragraph> <paragraph num="E."> <text>Reconsideration. An applicant may request reconsideration of a rejection in accordance with the procedures contained in Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="F."> <text>Loan and Grant Documents. Loans and grants shall be closed on standard form documents required and provided by the Program and may not be altered by the local administrator.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Loan and Grant Disbursements."> <paragraph num="A."> <text>Monitoring.</text> <paragraph num="(1)"> <text>The local administrator shall monitor loan and grant disbursements during lead hazard reduction work to assist the Program funding recipient and to ensure that loan funds are properly used.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator shall make at least two inspections of the project, including:</text> <paragraph num="(a)"> <text>An initial inspection; and</text> </paragraph> <paragraph num="(b)"> <text>An inspection before any disbursement of funds.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during lead hazard reduction work, taking into consideration:</text> <paragraph num="(a)"> <text>The capability of the Program funding recipient;</text> </paragraph> <paragraph num="(b)"> <text>The demonstrated experience and reliability of the contractor;</text> </paragraph> <paragraph num="(c)"> <text>The amount of the grant or loan;</text> </paragraph> <paragraph num="(d)"> <text>The availability of local technical assistance; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Payments Generally.</text> <paragraph num="(1)"> <text>Loan and grant funds shall be disbursed in full at the closing to an account held on behalf of the Program funding recipient by either the political subdivision that is the local administrator for the loan or the subcontractor. The loan or grant funds shall be held in an account established under §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator or the subcontractor shall disburse loan and grant proceeds in accordance with the following requirements:</text> <paragraph num="(a)"> <text>Loan funds may not be disbursed if payments of interest or escrow required by the loan documents are in arrears;</text> </paragraph> <paragraph num="(b)"> <text>Draws shall be paid by a joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director;</text> </paragraph> <paragraph num="(c)"> <text>Advance payments are not permitted; and</text> </paragraph> <paragraph num="(d)"> <text>Payments shall be made only for work completed.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Payments may not be made for material delivered to the site but not yet installed in the project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan Accounts.</text> <paragraph num="(1)"> <text>Loan funds shall be held in a non-interest-bearing account established by the local administrator or the subcontractor and approved by the Department. The account may be:</text> <paragraph num="(a)"> <text>An account with a depository institution that is separate from the other operating accounts of the local administrator or subcontractor;</text> </paragraph> <paragraph num="(b)"> <text>An account with a depository institution that is not separate from the other operating accounts of the local administrator or subcontractor using a separate reconciled general ledger account for all Program funds;</text> </paragraph> <paragraph num="(c)"> <text>An escrow account or attorney's trust account held and managed by an escrow agent if the escrow agent meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(i)"> <text>Any employee of the escrow agent with access to the account shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000,</text> </paragraph> <paragraph num="(ii)"> <text>The escrow agent shall provide the local administrator or the subcontractor, if any, and the Department with the quarterly statements required under §C(2) of this regulation, and</text> </paragraph> <paragraph num="(iii)"> <text>Any other requirements established by the Department; or</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Another type of account approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The local administrator or the subcontractor shall provide the Department with quarterly statements of all loan funds in a loan account. The Department shall review these quarterly statements and shall reconcile the loan balances in the records of the local administrator or the subcontractor with the loan balances in the records of the Department. If the quarterly statements do not correspond with the Department's records of loan funds in the account, the local administrator or subcontractor shall work with the Department to reconcile the differences.</text> </paragraph> <paragraph num="(3)"> <text>The Department may revoke, at any time, its approval of any loan account established under this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Progress Payments.</text> <paragraph num="(1)"> <text>Progress payments shall be made in accordance with a schedule setting forth payments and corresponding percentages of completed work. The schedule shall be approved by the local administrator before any payments are made, and may be revised by the local administrator from time to time. The schedule may provide for a holdback of a portion of the loan amount.</text> </paragraph> <paragraph num="(2)"> <text>If a Program funding recipients' request for payment is refused, the local administrator shall notify the Program funding recipient and give the reasons for the refusal. The determination of the local administrator as to the percentage of work completed is final.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Final Payment. Final payment shall be made as follows:</text> <paragraph num="(1)"> <text>The Program funding recipient shall submit to the local administrator a certificate of completion, executed by the Program funding recipient and contractor, certifying that all work has been completed in accordance with the contract documents;</text> </paragraph> <paragraph num="(2)"> <text>The Program funding recipient shall submit to the local administrator documentation that the work area meets the lead dust clearance test standard set by MDE or another agency acceptable to the Department;</text> </paragraph> <paragraph num="(3)"> <text>The Program funding recipient shall submit to the local administrator documentation that the entire dwelling unit meets MDE requirements and that all work required to achieve mechanical and structural soundness has been completed;</text> </paragraph> <paragraph num="(4)"> <text>Final payment shall be processed upon satisfactory final inspection and receipt of the certificate of completion; and</text> </paragraph> <paragraph num="(5)"> <text>If, in the opinion of the local administrator, the contractor has satisfied the contract and the Program funding recipient refuses to request or release the final payment, the local administrator may employ the following procedure:</text> <paragraph num="(a)"> <text>The local administrator may require the Program funding recipient to explain in writing within 10 days why the local administrator should not make direct payment to the contractor,</text> </paragraph> <paragraph num="(b)"> <text>If the Program funding recipient responds within the 10-day period and requests a meeting, the local administrator shall hold a meeting at which the Program funding recipient shall present the borrower's objections to requesting or releasing the final payment, and</text> </paragraph> <paragraph num="(c)"> <text>The local administrator, in the local administrator's discretion, may then either approve or disapprove direct payment to the contractor or the Program funding recipient, if applicable.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Retainage for Claims. If the Program funding recipient or the local administrator receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, the local administrator shall retain amounts sufficient to satisfy the claims, to the extent that loan funds have not been disbursed, until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established.</text> </paragraph> <paragraph num="G."> <text>Retainage in General.</text> <paragraph num="(1)"> <text>The local administrator may retain 10 percent of the loan amount until final payment.</text> </paragraph> <paragraph num="(2)"> <text>The retainage shall be released at final payment upon confirmation that:</text> <paragraph num="(a)"> <text>All lead hazard reduction work is complete and acceptable to the local administrator;</text> </paragraph> <paragraph num="(b)"> <text>The lead dust clearance test standard has been met; and</text> </paragraph> <paragraph num="(c)"> <text>Verification has been made by a county health department, MDE, or other agency acceptable to the Program that the lead hazard reduction was successful.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Payment for Additional Work. Payment for any additional cost to complete work not included in the approved contract proposal is the obligation of the Program funding recipient. A Program funding recipient may apply to the local administrator for a loan increase to cover some or all of the increased costs. Any loan increase shall be subject to approval or disapproval in accordance with the provisions of this chapter. The Department has no obligation to pay for increased costs.</text> </paragraph> <paragraph num="I."> <text>Quality Control.</text> <paragraph num="(1)"> <text>Subject to the rights of tenants, if any, the Department or the local administrator may collect random samples of dust levels in a building before and after completion of the lead hazard reduction activity.</text> </paragraph> <paragraph num="(2)"> <text>Wipe samples may be analyzed by MDE, or its designee, and the local administrator and the Department may maintain records of the results of the sampling.</text> </paragraph> <paragraph num="(3)"> <text>The Department may provide MDE with a list of all buildings which undertake lead hazard reduction through the Program.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Closeout Procedures.</text> <paragraph num="(1)"> <text>After final payment or payout is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements.</text> </paragraph> <paragraph num="(2)"> <text>A copy of the closeout statement shall be forwarded to the Program and the servicer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Accreditation and Training Requirements."> <text>All individuals involved in lead paint abatement services for the lead hazard reduction activity shall be fully trained and accredited in accordance with the MDE State certification program outlined in COMAR 26.16.01.</text> </regulation> <regulation prefix="Regulation" num=".18" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>Recipients of Program funds, contractors, local administrators, and subcontractors may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any recipient of Program funds, contractors, local administrators, or subcontractors in connection with any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each recipient of Program funds, contractor, local administrator, and subcontractor shall comply with applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Program Administration."> <paragraph num="A."> <text>Except for a waiver under §E of this regulation, any action or decision required or permitted to be taken or made by the Department under these regulations may be taken or made by the Director, Division of Development Finance, or the Director's designee.</text> </paragraph> <paragraph num="B."> <text>The Department may terminate an approval of funds or refuse to make disbursements under a loan or grant agreement if the Department finds that the sponsor is not complying with any of the requirements of the Program or the financing documents.</text> </paragraph> <paragraph num="C."> <text>The Department may establish from time to time operational handbooks or manuals governing matters relating to the Program including descriptive statements of Program procedures available to the public.</text> </paragraph> <paragraph num="D."> <text>Because a federal grant is the source of funding for the Program, federal laws and regulations such as Title X, NOFA, and HUD guidelines constitute Program requirements and take precedence over these regulations in the event of a conflict.</text> </paragraph> <paragraph num="E."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver or variance is not inconsistent with the requirements of HUD, if in the written determination of the Secretary:</text> <paragraph num="(1)"> <text>Application of the regulation would violate HUD requirements for administering the federal grant;</text> </paragraph> <paragraph num="(2)"> <text>The application of the regulations in a specific case or in an emergency situation would be inequitable or contrary to the purpose of the Program or the HUD grant to the Department; or</text> </paragraph> <paragraph num="(3)"> <text>Conformance with the requirements of any federal, State, or local programs in connection with the Program necessitates waiver or variance of a regulation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The Secretary may delegate to the Director, the Program Director, or to any other official or employee of the Department the authority to execute or approve Program documents, including commitments and agreements with local administrators. In addition, through the agreement with the local administrator, specific staff members of the local administrator may be authorized by the Department to execute loan and grant documents on behalf of the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Fees."> <paragraph num="A."> <text>The Program may charge fees such as application fees, commitment fees, loan processing fees, and financing fees.</text> </paragraph> <paragraph num="B."> <text>The fees for sponsors may not be included in Program financing.</text> </paragraph> <paragraph num="C."> <text>Fees for owner-occupants may be included in Program financing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="False Statements."> <text>A person may not knowingly make or cause to be made any false statement or report in any documents required to be furnished to the Department or the local administrator by any agreement relating to the Program.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article. §4-211(a)(8) and (9), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 1, 1996 (23:13 Md. R. 939)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective May 5, 1997 (24:9 Md. R. 655); November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective May 5, 1997 (24:9 Md. R. 655)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective May 5, 1997 (24:9 Md. R. 655)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18A amended effective November 29, 1999 (26:24 Md. R. 1856)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective February 21, 2000 (27:3 Md. R. 327)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="14" heading="Weatherization Program"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The Maryland Weatherization Program, subject to the availability of funds, provides assistance as part of a national energy conservation effort through an agency in a political subdivision of the State, for installation of heat-conserving materials in residential buildings in the State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Agency” means a local administering agency, including a governmental unit, community action agency, Office on Aging, or other nonprofit agency.</text> </paragraph> <paragraph num="(2)"> <text>“Applicant” means a representative member of the family unit in the dwelling unit, the owner, or designated agent of the owner, of a dwelling unit.</text> </paragraph> <paragraph num="(3)"> <text>“Benefit” means the amount of assistance that is provided to an eligible applicant.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(5)"> <text>“Dwelling unit” means any of the following:</text> <paragraph num="(a)"> <text>An individual house, including a semidetached house, or stationary mobile home;</text> </paragraph> <paragraph num="(b)"> <text>An apartment in an apartment complex;</text> </paragraph> <paragraph num="(c)"> <text>An apartment within a home;</text> </paragraph> <paragraph num="(d)"> <text>A unit in public housing;</text> </paragraph> <paragraph num="(e)"> <text>A unit in subsidized housing; or</text> </paragraph> <paragraph num="(f)"> <text>A single room occupied as separate living quarters.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Fair hearing” means a procedure established to provide the applicant with the opportunity to have a dispute reviewed by a hearing officer.</text> </paragraph> <paragraph num="(7)"> <text>“Family unit” means an individual or group of individuals who are living together as one economic unit.</text> </paragraph> <paragraph num="(8)"> <text>“Hearing officer” means a person designated by the Department to preside at a fair hearing.</text> </paragraph> <paragraph num="(9)"> <text>“Landlord-tenant agreement” means a document signed by the agency, the owner as landlord, and the applicant when the applicant is a tenant, specifying consent to provide access to the premises, and an agreement by the owner not to increase the rent of the premises on account of the weatherization improvements.</text> </paragraph> <paragraph num="(10)"> <text>“Material vendor” means a supplier of weatherization material.</text> </paragraph> <paragraph num="(11)"> <text>“Owner” means the person or persons listed in the land records of the State who holds title to the property, or the governmental agency that owns the dwelling unit.</text> </paragraph> <paragraph num="(12)"> <text>“Program” means the Maryland Weatherization Program.</text> </paragraph> <paragraph num="(13)"> <text>“Public housing” means a dwelling unit owned and operated by a municipality or governmental agency.</text> </paragraph> <paragraph num="(14)"> <text>“Subsidized housing” means a privately owned dwelling unit where rental fees are subsidized by local or federal funds.</text> </paragraph> <paragraph num="(15)"> <text>“Weatherization material” means any energy-conserving device or technology used in a dwelling unit.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Program Agency Selection."> <paragraph num="A."> <text>A local governmental unit qualifies as a local administering agency for the Program without participating in the selection process.</text> </paragraph> <paragraph num="B."> <text>Under 10 CFR §440.15, an administering agency shall be a private or public nonprofit entity as recognized by federal and State laws.</text> </paragraph> <paragraph num="C."> <text>A nonprofit entity shall have an active Board of Directors organized in accordance with the laws governing the corporate structure under which the organization was founded.</text> </paragraph> <paragraph num="D."> <text>Rating and Ranking.</text> <paragraph num="(1)"> <text>The Department shall rate and rank an agency that is not a local governmental unit based on the:</text> <paragraph num="(a)"> <text>Agency's experience in the administration of weatherization or similar programs in the area to be served;</text> </paragraph> <paragraph num="(b)"> <text>Agency's plan for managing the Program including production oversight, inventory, outreach, and other sources of funds leveraged;</text> </paragraph> <paragraph num="(c)"> <text>Education, background, and experience of Agency personnel assigned to the Program;</text> </paragraph> <paragraph num="(d)"> <text>Agency's knowledge and understanding of the nature and scope of the work to be performed; and</text> </paragraph> <paragraph num="(e)"> <text>Economic benefit to the State of Maryland from the use of the agency.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In the agency rating and ranking process, the Department may give preference to an agency that has, or is currently administering, a weatherization assistance program.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A hearing may be held to receive public comment on any agency new to the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligibility."> <paragraph num="A."> <text>A dwelling unit is eligible when occupied by a family unit which:</text> <paragraph num="(1)"> <text>Is resident in Maryland, has an income within the maximum income limits set in Regulation .12 of this chapter, and provides proof of ownership or a signed landlord-tenant agreement; or</text> </paragraph> <paragraph num="(2)"> <text>Contains a member who has received cash assistance payments under TPA, SSI, GPA-E, GPA-PW, food stamps, or veteran benefits during the 12-month period preceding the determination of eligibility.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A dwelling unit is not eligible if it:</text> <paragraph num="(1)"> <text>Has been previously weatherized under this Program unless the dwelling unit has been damaged by fire, flood, or other disaster and repair of damage to weatherization materials is not paid for by insurance;</text> </paragraph> <paragraph num="(2)"> <text>Within 12 months of the completion of weatherization, would be acquired by a federal, State, or local program for acquisition or clearance;</text> </paragraph> <paragraph num="(3)"> <text>Is in a designated special flood hazard area unless it complies with flood insurance purchase requirements;</text> </paragraph> <paragraph num="(4)"> <text>Would be adversely affected by weatherization activity and defeat the purpose of any historic federal or State conservation or restoration activity;</text> </paragraph> <paragraph num="(5)"> <text>Is unoccupied, except as provided in §C of this regulation; or</text> </paragraph> <paragraph num="(6)"> <text>Is in a state of disrepair that without more than $150 of repairs, the installation of weatherization materials would not achieve the purpose of the Program to conserve energy.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An unoccupied dwelling unit may become eligible for weatherization if the Agency can certify that within 180 days of the date of application for weatherization the dwelling:</text> <paragraph num="(1)"> <text>Is being or will be rehabilitated through a federal, State, or locally funded program; and</text> </paragraph> <paragraph num="(2)"> <text>Will be occupied by an eligible family unit.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application Process."> <paragraph num="A."> <text>The applicant shall apply at the Agency. If the applicant is unable to come to the Agency, the Agency shall send a representative to take the application.</text> </paragraph> <paragraph num="B."> <text>A completed application includes:</text> <paragraph num="(1)"> <text>A completed application form provided by the Agency;</text> </paragraph> <paragraph num="(2)"> <text>Verification of countable income;</text> </paragraph> <paragraph num="(3)"> <text>Proof of ownership or a landlord-tenant agreement; and</text> </paragraph> <paragraph num="(4)"> <text>Household data sheet.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Countable income is annualized and includes:</text> <paragraph num="(1)"> <text>Money wages;</text> </paragraph> <paragraph num="(2)"> <text>Net income from self-employment;</text> </paragraph> <paragraph num="(3)"> <text>Social Security or Supplemental Social Security Income (SSI) or both;</text> </paragraph> <paragraph num="(4)"> <text>Dividends, interest received, estate or trust income, rental income, or royalties;</text> </paragraph> <paragraph num="(5)"> <text>Public assistance or welfare;</text> </paragraph> <paragraph num="(6)"> <text>Pension and annuities including veterans' or railroad retirement;</text> </paragraph> <paragraph num="(7)"> <text>Workers' Compensation Insurance payments;</text> </paragraph> <paragraph num="(8)"> <text>Alimony or child support;</text> </paragraph> <paragraph num="(9)"> <text>Compensation payments including unemployment and Criminal Injuries Compensation Board awards; and</text> </paragraph> <paragraph num="(10)"> <text>Armed forces support payments.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Countable income excludes the following income:</text> <paragraph num="(1)"> <text>Third party payments for rent or other purposes over which the household has no control;</text> </paragraph> <paragraph num="(2)"> <text>In-kind contributions, such as food, furniture, clothing, and service from persons in the community;</text> </paragraph> <paragraph num="(3)"> <text>Money wages of the children under 18 years old, or persons who are students and are not employed full time;</text> </paragraph> <paragraph num="(4)"> <text>Grants and loans to undergraduate students made or insured by the Commissioner of Education under the Higher Education Assistance Act, 20 U.S.C.S. §§1070—1098, such as Basic Education Opportunity Grants and guaranteed student loans, and under the National Defense Education Act, 20 U.S.C.S. §401 et seq., as well as veterans' educational benefits;</text> </paragraph> <paragraph num="(5)"> <text>Payments under the Federal Action Program made to participants in the Retired Senior Volunteer Program, Foster Grandparents and Senior Companion Program;</text> </paragraph> <paragraph num="(6)"> <text>Job Training Partnership Act Program;</text> </paragraph> <paragraph num="(7)"> <text>Maryland Service Corps; or</text> </paragraph> <paragraph num="(8)"> <text>The value of any food stamp allotment.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Agency Response to Application."> <paragraph num="A."> <text>The Agency shall receive the application.</text> </paragraph> <paragraph num="B."> <text>Incomplete Application. If the application is not complete, the agency shall notify the applicant within 5 working days as to information needed and that the application will be denied if the information is not supplied within 30 days of the date of this notice.</text> </paragraph> <paragraph num="C."> <text>Completed Application.</text> <paragraph num="(1)"> <text>If the application is complete, the Agency shall decide within 5 working days if the applicant is eligible. The Agency shall use the income guideline that corresponds to the requirements of the source of funds used.</text> </paragraph> <paragraph num="(2)"> <text>If the Agency decides the applicant is eligible, the Agency shall notify the applicant within 5 working days of the decision. The notice shall include the:</text> <paragraph num="(a)"> <text>Fact that applicant is eligible;</text> </paragraph> <paragraph num="(b)"> <text>Funding source income eligibility requirements used to determine the applicant's eligibility;</text> </paragraph> <paragraph num="(c)"> <text>Approximate schedule for estimation of cost, installation, and completion; and</text> </paragraph> <paragraph num="(d)"> <text>Requirement that the applicant sign a final inspection form.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Estimation of Cost and Determination of Type and Amount of Weatherization.</text> <paragraph num="(a)"> <text>The Agency shall make an inspection of the premises and decide within 15 working days after the decision of eligibility whether the dwelling is eligible and if so, for what type and amount of weatherization.</text> </paragraph> <paragraph num="(b)"> <text>If the Agency decides that the dwelling is eligible, the Agency shall notify the applicant within 5 working days of the decision. The notice shall include the:</text> <paragraph num="(i)"> <text>Fact that the dwelling unit is eligible;</text> </paragraph> <paragraph num="(ii)"> <text>Type and amount of weatherization to be installed;</text> </paragraph> <paragraph num="(iii)"> <text>Approximate schedule for installation and completion;</text> </paragraph> <paragraph num="(iv)"> <text>Right to appeal the decision and the method to obtain a fair hearing; and</text> </paragraph> <paragraph num="(v)"> <text>Legal services that are available to provide representation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the Agency decides to deny the application because the applicant or the dwelling unit is ineligible, the Agency shall notify the applicant within 5 working days of the decision. The notification shall include the:</text> <paragraph num="(a)"> <text>Reason for denial;</text> </paragraph> <paragraph num="(b)"> <text>Specific regulation supporting the denial;</text> </paragraph> <paragraph num="(c)"> <text>Right to appeal the decision, and the means to obtain a fair hearing; and</text> </paragraph> <paragraph num="(d)"> <text>Legal services that are available to provide representation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The Agency may establish a waiting list when there is expectation of additional funding from a source whose income guideline requirements would include the applicant as eligible.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Delivery of Services."> <paragraph num="A."> <text>The Agency shall contact the applicant to arrange the specific date for installation of the materials.</text> </paragraph> <paragraph num="B."> <text>Final Inspection.</text> <paragraph num="(1)"> <text>The Agency shall contact the applicant to arrange the date for final inspection.</text> </paragraph> <paragraph num="(2)"> <text>If the inspector finds that the installation is incomplete, the inspector shall return to the Agency and arrange for the job to be completed.</text> </paragraph> <paragraph num="(3)"> <text>If the installation is complete, the inspector shall request the applicant to sign the final inspection form.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the applicant does not sign the final inspection form, the inspector shall note whether the applicant was available or was unavailable, or was available but declined to sign. If the applicant declined to sign the form, the inspector shall attempt to discover the reason.</text> </paragraph> <paragraph num="D."> <text>The inspector shall return the completed form and, if appropriate, include an explanation of the reasons why the applicant did not sign the form.</text> </paragraph> <paragraph num="E."> <text>If the applicant did not sign the final inspection form, the Agency shall contact the applicant within 7 working days to review the reason why the applicant did not sign. If the applicant did not sign because the applicant:</text> <paragraph num="(1)"> <text>Considered the job incomplete or improperly done, the Agency shall decide within 7 working days whether the applicant is correct. If the Agency decides that the:</text> <paragraph num="(a)"> <text>Work is incomplete or improperly installed, the Agency shall make appropriate reinstallation;</text> </paragraph> <paragraph num="(b)"> <text>Applicant is incorrect, the Agency shall inform the applicant in writing within 7 working days of the decision and include notification of the right to appeal the decision and the method to obtain a fair hearing.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Complained of the behavioral problems of the installers or damage to a person or to property, the Agency shall decide whether the applicant is correct. If the Agency decides that the:</text> <paragraph num="(a)"> <text>Applicant is incorrect, the Agency shall inform the applicant in writing within 7 working days of the decision and include notification of right to appeal the decision and the method to obtain a fair hearing;</text> </paragraph> <paragraph num="(b)"> <text>Applicant's complaint about the installers' behavioral problems is correct, the Agency shall follow the Agency's procedures on reporting and correcting the problem;</text> </paragraph> <paragraph num="(c)"> <text>Applicant's complaint of damage or injury is correct, the Agency shall file a claim with its insurance carrier.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Was not available, the Agency shall contact the applicant within 7 working days of the receipt of the unsigned final inspection form and attempt to obtain the signature.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The Agency shall complete the installation through the final inspection form within 90 days of the decision to provide the weatherization benefit.</text> </paragraph> <paragraph num="G."> <text>Types of Weatherization.</text> <paragraph num="(1)"> <text>Full Weatherization. The amount of benefit depends on the type and amount of the weatherization provided up to a maximum of $1,800 for labor and program support.</text> </paragraph> <paragraph num="(2)"> <text>Low-Cost/No-Cost Weatherization.</text> <paragraph num="(a)"> <text>The Agency may also provide low-cost/no-cost weatherization up to a maximum amount set by the Agency without regard to the $1,800 limitation on full weatherization as a stop-gap measure when an applicant in an eligible dwelling unit requests it.</text> </paragraph> <paragraph num="(b)"> <text>The low-cost weatherization part of the program includes:</text> <paragraph num="(i)"> <text>Workshops on weatherization;</text> </paragraph> <paragraph num="(ii)"> <text>In-home demonstrations to install low-cost weatherization materials;</text> </paragraph> <paragraph num="(iii)"> <text>Pamphlets, information, and material kits to guide the applicant in the application of low-cost materials for weatherization; and</text> </paragraph> <paragraph num="(iv)"> <text>Installation of low-cost weatherization materials in dwelling units where there are elderly or handicapped individuals or dwelling units where labor sources are not available.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Limitations on Service."> <paragraph num="A."> <text>The Agency may not authorize an expenditure for full weatherization in which the total cost exceeds $1,800 unless the Agency has been granted a waiver by the Department based on established criteria and sufficient documentation.</text> </paragraph> <paragraph num="B."> <text>The Agency may not authorize installation if:</text> <paragraph num="(1)"> <text>A dwelling unit has been previously fully weatherized;</text> </paragraph> <paragraph num="(2)"> <text>A dwelling unit is determined to be ineligible; or</text> </paragraph> <paragraph num="(3)"> <text>An applicant refuses weatherization services.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Termination."> <text>The Agency shall notify the applicant that the case is closed when the:</text> <paragraph num="A."> <text>Installation is complete and the final inspection form is signed;</text> </paragraph> <paragraph num="B."> <text>Applicant moves or the dwelling becomes unoccupied before the weatherization materials are installed;</text> </paragraph> <paragraph num="C."> <text>Dwelling unit is destroyed or rendered uninhabitable before the weatherization materials are installed;</text> </paragraph> <paragraph num="D."> <text>Applicant does not submit required information to complete the application within the 30-day time limit;</text> </paragraph> <paragraph num="E."> <text>Applicant cannot be contacted for inspection and the cost estimation of the job within the 15 working day time limit;</text> </paragraph> <paragraph num="F."> <text>Applicant intentionally furnished false information on the application form; or</text> </paragraph> <paragraph num="G."> <text>Applicant requests cancellation before the weatherization materials are installed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Appeals Process."> <paragraph num="A."> <text>The Agency shall have a grievance procedure and shall attempt to resolve a grievance at the local level.</text> </paragraph> <paragraph num="B."> <text>An applicant may appeal to the Department for a fair hearing in the following situations:</text> <paragraph num="(1)"> <text>The applicant's complaint is not resolved by the Agency's grievance settlement procedures;</text> </paragraph> <paragraph num="(2)"> <text>The applicant is denied assistance;</text> </paragraph> <paragraph num="(3)"> <text>The applicant is neither certified nor denied assistance within 5 days from the date that the required documentation is presented according to Regulation .06C of this chapter;</text> </paragraph> <paragraph num="(4)"> <text>The applicant disagrees with the Agency decision that the work is incomplete or improperly installed;</text> </paragraph> <paragraph num="(5)"> <text>The applicant disagrees with the Agency decision regarding behavioral problems of installers or damage to person or property; or</text> </paragraph> <paragraph num="(6)"> <text>The applicant disagrees with type or amount of weatherization provided or to be provided.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Fair Hearings Process."> <paragraph num="A."> <text>The applicant has 15 working days from the date that the notice of a right to a fair hearing was sent by the Agency to file a request.</text> </paragraph> <paragraph num="B."> <text>The Agency shall establish a process by which the request forwarded to the Department contains the following basic information:</text> <paragraph num="(1)"> <text>Date of request;</text> </paragraph> <paragraph num="(2)"> <text>Name and address of the applicant making the request;</text> </paragraph> <paragraph num="(3)"> <text>The reason for making the request; and</text> </paragraph> <paragraph num="(4)"> <text>The date of the action or decision being appealed or the date the notice of the action or decision was mailed to the applicant.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Agency shall assist the applicant in completing the required form for the request to ensure that all the information required by the Department to process the request is present.</text> </paragraph> <paragraph num="D."> <text>The applicant shall file the completed form requesting a fair hearing at the Agency. At the time of the filing the applicant shall be informed that the:</text> <paragraph num="(1)"> <text>Applicant may be represented at the hearing by a lawyer, a relative, a friend, or other person;</text> </paragraph> <paragraph num="(2)"> <text>Department shall provide an interpreter if the applicant does not speak English or is hearing impaired;</text> </paragraph> <paragraph num="(3)"> <text>Applicant may present witnesses, documentary evidence, and oral argument, and cross-examine any employee required to be present. The applicant may examine any documents introduced in the hearing by any party to the hearing.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Agency shall, within 2 working days, forward the completed request for a fair hearing form and pertinent case information to the Program.</text> </paragraph> <paragraph num="F."> <text>The Agency shall also include all pertinent information regarding the case that is part of the Agency's records.</text> </paragraph> <paragraph num="G."> <text>The Department shall decide within 7 working days of the date the request was received to accept or deny the applicant's request for a fair hearing.</text> </paragraph> <paragraph num="H."> <text>The Department may deny the request for a hearing if the:</text> <paragraph num="(1)"> <text>Sole issue is one of either State or federal law or policy and the issue is not one of incorrect determination of ineligibility or computation;</text> </paragraph> <paragraph num="(2)"> <text>Request has not been filed within the required time limits; or</text> </paragraph> <paragraph num="(3)"> <text>Issue is not one of those allowed in Regulation .09B of this chapter.</text> </paragraph> </paragraph> <paragraph num="I."> <text>The Department may dismiss a request for a fair hearing if the applicant:</text> <paragraph num="(1)"> <text>Withdraws the request in writing;</text> </paragraph> <paragraph num="(2)"> <text>Dies; or</text> </paragraph> <paragraph num="(3)"> <text>Without good cause, does not appear at the hearing.</text> </paragraph> </paragraph> <paragraph num="J."> <text>If the Department accepts the request, the hearing officer shall record the date that the request was filed with the Agency and shall schedule the hearing within 10 working days of the date of the request.</text> </paragraph> <paragraph num="K."> <text>The hearing officer shall notify the applicant and the Agency of the date and place of the fair hearing at least 15 days prior to the scheduled fair hearing. The notice to the applicant shall include:</text> <paragraph num="(1)"> <text>A summary of the regulations governing the fair hearings process, including the legal authority and jurisdiction under which the hearing is to be held;</text> </paragraph> <paragraph num="(2)"> <text>A reference to the particular statute or rule, including a rule of procedure, involved;</text> </paragraph> <paragraph num="(3)"> <text>A short and simple statement of the matters asserted;</text> </paragraph> <paragraph num="(4)"> <text>The right of the applicant to be represented by a lawyer or other person at the hearing;</text> </paragraph> <paragraph num="(5)"> <text>The availability of free legal services;</text> </paragraph> <paragraph num="(6)"> <text>The right of the applicant to present documents and witnesses to support the case at the hearing;</text> </paragraph> <paragraph num="(7)"> <text>The right of the applicant to examine the case record in the preparation for the hearing;</text> </paragraph> <paragraph num="(8)"> <text>The name and phone number of the person to call if the applicant cannot attend the hearing or wishes to change the time and place of the hearing; and</text> </paragraph> <paragraph num="(9)"> <text>The fact that the hearing will be dismissed if the applicant fails, without good cause, to attend the hearing.</text> </paragraph> </paragraph> <paragraph num="L."> <text>The Agency may be represented by the Director or the Director's designee.</text> </paragraph> <paragraph num="M."> <text>The hearing shall be recorded. The recordings, together with all papers and requests filed in the proceedings and the findings and conclusions constitute the exclusive record of the hearing. The record is kept available to the applicant for a period of 3 years or until litigation involved in the decision is ended, whichever is later.</text> </paragraph> <paragraph num="N."> <text>The hearing officer shall render a written decision within 45 days after the hearing is held.</text> </paragraph> <paragraph num="O."> <text>The hearing officer shall mail the written decision to the applicant, a representative, and the Agency. The decision shall include a statement of the applicant's right to judicial review of the decision.</text> </paragraph> <paragraph num="P."> <text>If the decision is favorable to the applicant, the local agency shall comply with the decision by taking corrective action promptly, but not later than 60 days from the date of the decision. The Agency shall notify the hearing officer promptly or within the time given in the decision that it has completed all required action.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Income Guidelines."> <text>The income guidelines to be used by each agency for certifying applicant eligibility are the federal poverty income guidelines that are published annually in the Federal Register.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §4-211(c), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 22, 1985 (12:8 Md. R. 801)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective September 8, 1986 (13:18 Md. R. 2019)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 07.06.05 to COMAR 05.07.03</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.07.03 to COMAR 05.04.14 effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02B, .03B, .07A, .09B, and .10 amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 31, 2005 (32:2 Md. R. 145)</annotation> </annotations> </chapter> <chapter num="15" heading="Accessible Homes for Senior Homeowners Grant Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for making grants to elderly homeowners to finance accessibility-related modifications to make the owner’s dwelling unit more accessible to or functional for the elderly.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits, less:</text> <paragraph num="(a)"> <text>Unusual or temporary income items as determined by the Department; and</text> </paragraph> <paragraph num="(b)"> <text>Abnormal expenses of a long-term nature, such as extraordinary medical, rehabilitation, or special education expenses.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Applicant” means any person applying for a grant under the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Authorized officer”, for purposes of executing the Program documents, means any of the following:</text> <paragraph num="(a)"> <text>The Director and any Deputy Director of the Community Development Administration, an agency within the Division of Development Finance of the Department;</text> </paragraph> <paragraph num="(b)"> <text>The Director of Single Family Housing Programs; and</text> </paragraph> <paragraph num="(c)"> <text>The Deputy Director of Single Family Housing Programs.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Contract” means the agreements between a grantee and a licensed general contractor or licensed home improvement contractor accepted by the Department setting forth the terms of performance of work to be financed by a grant made under the Program.</text> </paragraph> <paragraph num="(6)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(7)"> <text>“Director” means the Director of Single Family Housing Programs of the Department.</text> </paragraph> <paragraph num="(8)"> <text>“Deputy Director” means the Deputy Director of Single Family Housing Programs of the Department.</text> </paragraph> <paragraph num="(9)"> <text>“Elderly” means the age limit specified by the Secretary, which is 55 years old or older.</text> </paragraph> <paragraph num="(10)"> <text>Family of Limited Income.</text> <paragraph num="(a)"> <text>“Family of limited income” means one or more individuals permanently residing as a household in a dwelling unit in an eligible building whose combined annual income does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-915, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Family of limited income” includes a trust described in 42 U.S.C. §1396P(D)(4), or a trust established for the benefit of an individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-915, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the residential building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Grantee” means a single family owner-occupant who receives a grant to make modifications to an eligible building.</text> </paragraph> <paragraph num="(12)"> <text>“Household” means an individual or a group of individuals who occupy a dwelling unit as their permanent residence.</text> </paragraph> <paragraph num="(13)"> <text>“Level I local administrator” means a political subdivision certified by the Department under COMAR 05.04.01.16.</text> </paragraph> <paragraph num="(14)"> <text>“Level II local administrator” means a political subdivision certified by the Department under COMAR 05.04.01.16.</text> </paragraph> <paragraph num="(15)"> <text>“Local administrator” means a level I or level II local administrator.</text> </paragraph> <paragraph num="(16)"> <text>Modification.</text> <paragraph num="(a)"> <text>“Modification” means any improvement, addition, repair, renovation, or alteration to the interior or exterior of a grantee’s residence to make it more accessible or functional for the elderly owner.</text> </paragraph> <paragraph num="(b)"> <text>Modification includes any improvement or repair that is:</text> <paragraph num="(i)"> <text>Directly related to making the dwelling unit more accessible or functional; and</text> </paragraph> <paragraph num="(ii)"> <text>Necessary to ensure the modification can appropriately be made or installed.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Program” means the Accessible Homes for Senior Homeowners Grant Program.</text> </paragraph> <paragraph num="(18)"> <text>“Program Director” means the Assistant Director of Special Loan Programs in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(19)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(20)"> <text>Single Family Owner-Occupant.</text> <paragraph num="(a)"> <text>“Single family owner-occupant” means an eligible grantee that owns and resides, or intends to reside, in an eligible building.</text> </paragraph> <paragraph num="(b)"> <text>“Single family owner-occupant” includes a trust described in 42 U.S.C §1396P(D)(4), or a trust established for the benefit of an elderly individual with a disability by an individual other than the beneficiary and that is funded with the assets that were never owned or controlled by the beneficiary, if:</text> <paragraph num="(i)"> <text>The income of the trust does not exceed an amount established by the Secretary in accordance with Housing and Community Development Article, §4-916(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>The beneficiary of the trust is an individual who resides in the eligible building owned by the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Structurally sound” means not having any physical conditions serious enough to endanger the life, property, or safety of the occupants or their invitees, whether or not the building is in compliance with applicable codes and rehabilitation standards.</text> </paragraph> <paragraph num="(22)"> <text>“Work write-up” means a description of the modifications, and other work items needed for the modification of an eligible building.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Grantees."> <text>To qualify as an eligible grantee under the Program, single family owner-occupants shall:</text> <paragraph num="A."> <text>Be a “family of limited income” as defined in Regulation .02B of this chapter;</text> </paragraph> <paragraph num="B."> <text>Own the eligible property in fee simple or under a freely transferable ground rent lease;</text> </paragraph> <paragraph num="C."> <text>Have at least one of the owners meet the definition of elderly in Regulation .02B of this chapter who resides in or intends to reside in the property to be modified;</text> </paragraph> <paragraph num="D."> <text>Have the legal capacity to incur the obligations of the grant; and</text> </paragraph> <paragraph num="E."> <text>Demonstrate to the Department that they cannot undertake the modifications without a grant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Buildings."> <paragraph num="A."> <text>Buildings shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(2)"> <text>Contain not more than four residential units;</text> </paragraph> <paragraph num="(3)"> <text>Be properly zoned for the proposed use;</text> </paragraph> <paragraph num="(4)"> <text>Be in need of modifications considered eligible under this chapter;</text> </paragraph> <paragraph num="(5)"> <text>Be owned by an eligible grantee who shall provide assurance of title or evidence of ownership acceptable to the Department;</text> </paragraph> <paragraph num="(6)"> <text>Be covered by property insurance; and</text> </paragraph> <paragraph num="(7)"> <text>If the building is in the 100-year flood plain, as designated by the U.S. Department of Housing and Urban Development, be covered by a flood plain insurance policy.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A grant may not be approved unless:</text> <paragraph num="(1)"> <text>Safe, sanitary, and adequate water supply and sewage disposal are available; and</text> </paragraph> <paragraph num="(2)"> <text>The building is structurally sound and free of health and safety hazards.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A manufactured housing unit is eligible if it is intended for residential use by a single household, and meets the conditions of COMAR 05.04.01.05B.</text> </paragraph> <paragraph num="D."> <text>Manufactured homes which are taxed as personal property may be eligible buildings and shall be reviewed by the Department on a case-by-case basis before grant approval.</text> </paragraph> <paragraph num="E."> <text>Condominiums and cooperative units owned by an eligible grantee may be eligible buildings and shall be reviewed by the Department on a case-by-case basis before grant approval.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Uses."> <paragraph num="A."> <text>Grant proceeds may only be used for the cost, labor and materials for modifications to an eligible building.</text> </paragraph> <paragraph num="B."> <text>Grant proceeds may not be used to pay for taxes, insurance, mortgage payments, or nonessential repairs.</text> </paragraph> <paragraph num="C."> <text>If a building contains between 2—4 dwelling units, grant proceeds may only be used for:</text> <paragraph num="(1)"> <text>Modifications to the interior of the eligible grantee’s dwelling unit; and</text> </paragraph> <paragraph num="(2)"> <text>Modifications to the exterior of the eligible building necessary to make the grantee’s dwelling unit more accessible.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Modifications to the exterior of a condominium or cooperative unit that serves the eligible grantee’s dwelling unit may be eligible and shall be reviewed by the Department on a case-by-case basis.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Grant Terms and Conditions — General."> <paragraph num="A."> <text>The Department shall enter into a grant agreement with each grantee.</text> </paragraph> <paragraph num="B."> <text>The Department may establish other terms and conditions in the grant agreement, and any other documents related to the grant, which the Department considers reasonable and necessary to accomplish the objectives of the Program or to ensure compliance with all federal, State, and local laws, ordinances, and regulations, and departmental programs and policies.</text> </paragraph> <paragraph num="C."> <text>Maximum Grant Amount.</text> <paragraph num="(1)"> <text>A grant for a residential building may not exceed $25,000.</text> </paragraph> <paragraph num="(2)"> <text>The Director or Deputy Director may, in their discretion, approve increases in the maximum grant amount to cover exceptional circumstances in an amount determined to be reasonable but not exceeding $60,000.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Department may require that the grant be secured by an instrument recorded in the land records of the county in which the property is located.</text> </paragraph> <paragraph num="E."> <text>Insurance.</text> <paragraph num="(1)"> <text>A grantee shall provide evidence that fire and extended coverage insurance are in effect for 1 year from the date of closing for not less than the replacement value of the home.</text> </paragraph> <paragraph num="(2)"> <text>If applicable, a grantee shall provide evidence that flood insurance on the home is in effect for 1 year based on the current Federal Emergency Management Administration’s requirements.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Appraisals. At the discretion of the Program Director or the local administrator, a grantee may be required to obtain an appraisal in a form and manner acceptable to the Department from an acceptable independent fee appraiser showing a building’s value before and after the proposed modification.</text> </paragraph> <paragraph num="G."> <text>Default. Remedies upon grant default shall be exercised in the discretion of the Department and may be one or more of the remedies provided for in the grant documents or by law, which may include:</text> <paragraph num="(1)"> <text>Repaying all or a portion of the grant; and</text> </paragraph> <paragraph num="(2)"> <text>Any other legal action which protects the Department’s interests.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Grant Application."> <paragraph num="A."> <text>The Department may operate the Program or establish procedures that allow a local administrator to accept applications and approve grants under the Program.</text> </paragraph> <paragraph num="B."> <text>Application Forms. Grant applications shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="C."> <text>Application Fee. An applicant may be required to pay an application fee as designated by the Department from time to time.</text> </paragraph> <paragraph num="D."> <text>Documentation.</text> <paragraph num="(1)"> <text>An applicant shall submit with the application any documentation that the Department requires, including, but not limited to, any documentation needed to establish the eligibility of the applicant.</text> </paragraph> <paragraph num="(2)"> <text>An applicant shall provide evidence satisfactory to the Program demonstrating that the applicant could not undertake the modification without a grant due to:</text> <paragraph num="(a)"> <text>Insufficient household income to make loan payments; or</text> </paragraph> <paragraph num="(b)"> <text>The property not having sufficient value to secure private financing.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An applicant shall submit supporting documentation required by the Program guidelines.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Grant Approval and Disapproval."> <paragraph num="A."> <text>Initial Eligibility Determination.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the Department or local administrator, as applicable, for initial review to make a preliminary determination of the eligibility of the applicant and the project.</text> </paragraph> <paragraph num="(2)"> <text>If an applicant is determined preliminarily to be eligible, the applicant will be provided with a letter acknowledging receipt of the application and notifying the applicant of the ongoing review process.</text> </paragraph> <paragraph num="(3)"> <text>If an applicant is ineligible for a grant, the applicant shall be informed in writing of the determination and the reasons for it.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Building Evaluation.</text> <paragraph num="(1)"> <text>Each building for which an eligible application is received shall be inspected for the purpose of preparing a work write-up by:</text> <paragraph num="(a)"> <text>The Department;</text> </paragraph> <paragraph num="(b)"> <text>The local administrator;</text> </paragraph> <paragraph num="(c)"> <text>A nonprofit corporation that acceptable to the Program; or</text> </paragraph> <paragraph num="(d)"> <text>A licensed contractor who is acceptable to the Program.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The applicant shall be provided with a copy of the work write-up or an analysis of the modification and instructions for obtaining the contractor’s proposals to complete the work.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Grant Approval.</text> <paragraph num="(1)"> <text>Upon receipt and approval of all documentation and the contractor’s proposals, the local administrator or the Department shall undertake an analysis of each grant as to amount and other grant terms and conditions.</text> </paragraph> <paragraph num="(2)"> <text>Approval to make a grant is as follows:</text> <paragraph num="(a)"> <text>Grants in amounts of $25,000 or less may be approved by the:</text> <paragraph num="(i)"> <text>Level II local administrator, when a level II local administrator originates the grant; or</text> </paragraph> <paragraph num="(ii)"> <text>Program Director, when a level I local administrator or the Department originates a grant; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Grants or a combination of Program grants in amounts greater than $25,000 and up to a maximum of $60,000 may be approved by the Director or Deputy Director.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Grant Commitments.</text> <paragraph num="(1)"> <text>Grant commitments shall be made on forms provided by the Program.</text> </paragraph> <paragraph num="(2)"> <text>Grant commitments shall specify a time limit for closing the grant which may be extended with the approval of the Program.</text> </paragraph> <paragraph num="(3)"> <text>If the grant closing does not occur within the specified time, the local administrator or Department, as applicable, shall notify the applicant that the commitment is officially canceled.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If a grant application is rejected, the Department or the local administrator, as the case may be, shall notify the applicant in writing stating the reason the grant is rejected.</text> </paragraph> <paragraph num="F."> <text>Reconsideration. Applicants may request reconsideration of a rejection in accordance with the procedures contained in the Program guidelines.</text> </paragraph> <paragraph num="G."> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="H."> <text>Withdrawal of Application. An applicant may withdraw a grant application at any time before closing by delivering written notice to the Department or the local administrator originating the grant. The applicant shall bear any costs incurred for items other than internal processing including, but not limited to, title examinations, credit reports, and appraisals.</text> </paragraph> <paragraph num="I."> <text>Cancellation of Application.</text> <paragraph num="(1)"> <text>The Program or the local administrator may cancel an application at any time during processing if the applicant fails to provide information requested by the Program which is required to evaluate the request.</text> </paragraph> <paragraph num="(2)"> <text>Notification of the cancellation of an application shall be made in writing.</text> </paragraph> <paragraph num="(3)"> <text>A canceled application may be reinstated upon the applicant’s written request within 60 days following the date of the cancellation.</text> </paragraph> <paragraph num="(4)"> <text>Any time after 60 days following cancellation, a new application with supporting documents may be required.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Grant Closing."> <paragraph num="A."> <text>The grant closing shall be scheduled by the Department or the local administrator.</text> </paragraph> <paragraph num="B."> <text>Grant Documents.</text> <paragraph num="(1)"> <text>Grant document forms shall be provided by the Program and may not be altered.</text> </paragraph> <paragraph num="(2)"> <text>Grant documents shall be executed on behalf of the Department by an Authorized Officer of the Department or an authorized local administrator.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Charges and Fees. The Department or the local administrator may charge and collect from the grantee reasonable and customary amounts acceptable to the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Work Requirements."> <paragraph num="A."> <text>Contractors and their subcontractors shall meet the requirements of COMAR 05.04.01.13.</text> </paragraph> <paragraph num="B."> <text>Work done, materials supplied, and construction procedures employed shall comply with all contract documents, applicable codes and standards, including those set forth in these regulations, and those general specifications established by the Department.</text> </paragraph> <paragraph num="C."> <text>Permits. If required by State codes or local codes, all building permits shall be obtained and posted at the project before the beginning of construction.</text> </paragraph> <paragraph num="D."> <text>Compliance with applicable codes and obtaining required permits and licenses are the responsibility of the grantee and contractor.</text> </paragraph> <paragraph num="E."> <text>Any action taken by the Department or the local administrator to prepare or review work write-ups, evaluate the property, or review and approve plans and specifications is:</text> <paragraph num="(1)"> <text>To assure the Department and the local administrator of the adequacy of the proposed work; and</text> </paragraph> <paragraph num="(2)"> <text>Not intended to substitute for or ensure compliance with appropriate State and local building codes.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Contract Documents."> <paragraph num="A."> <text>There shall be no modification of any contract documents without the prior written consent of the Department or the local administrator, as evidenced by an approved change order, executed by:</text> <paragraph num="(1)"> <text>The contractor; and</text> </paragraph> <paragraph num="(2)"> <text>The grantee.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Contract documents are listed and described in Program guidelines.</text> </paragraph> <paragraph num="C."> <text>Inspections. The Department or local administrator, or an agent authorized by the local administrator and acceptable to the Program, may conduct inspections to determine the required scope of work, to verify payments, and to facilitate construction problems and disputes and arbitration procedures.</text> </paragraph> <paragraph num="D."> <text>Construction Disputes. If disputes between the contractor and the grantee occur, the Department shall recognize the findings of the Maryland Home Improvement Commission and the Consumer Protection Division of the Office of the Attorney General.</text> </paragraph> <paragraph num="E."> <text>Termination of Contracts. Contracts may be terminated for cause in accordance with the grant documents and contract documents</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Grant Disbursements."> <paragraph num="A."> <text>Monitoring of Disbursements.</text> <paragraph num="(1)"> <text>The local administrator or Department shall monitor grants and disbursement of grant funds during rehabilitation to assist grantees and to assure that grant funds are properly used.</text> </paragraph> <paragraph num="(2)"> <text>The local administrator or Department shall determine the frequency and level of inspections during rehabilitation based on Program guidelines.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Payments Generally.</text> <paragraph num="(1)"> <text>If a grant is originated by a local administrator, Grant funds may be disbursed in full at the closing of the grant to an account established under §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Grant proceeds shall be disbursed for modifications in accordance with the requirements of §B(3)—(5) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The local administrator shall return any unused grant proceeds to the Department.</text> </paragraph> <paragraph num="(4)"> <text>Payments of draws shall be by joint payee check issued to the grantee and contractor unless an alternative payment method is approved by the Program Director.</text> </paragraph> <paragraph num="(5)"> <text>Except as provided in §D of this regulation, payments shall be made only for work completed.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Grant accounts established by a local administrator shall comply with the following:</text> <paragraph num="(1)"> <text>Grant funds shall be held in a non-interest-bearing account established by the local administrator or the subcontractor and approved by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The account may be:</text> <paragraph num="(a)"> <text>An account with a depository institution that is separate from the other operating accounts of the local administrator or subcontractor;</text> </paragraph> <paragraph num="(b)"> <text>An account with a depository institution that is not separate from the other operating accounts of the local administrator or subcontractor using a separate reconciled general ledger account for all Program funds;</text> </paragraph> <paragraph num="(c)"> <text>An escrow account or attorney’s trust account held and managed by an escrow agent if the escrow agent meets the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(i)"> <text>Any employee of the escrow agent with access to the account shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000;</text> </paragraph> <paragraph num="(ii)"> <text>The escrow agent shall provide the local administrator or the subcontractor, if any, and the Department with any statements required under this subsection; and</text> </paragraph> <paragraph num="(iii)"> <text>Any other requirements established by the Department; or</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Another type of account approved by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Department may require the local administrator or the subcontractor to provide periodic statements to the Department of all grant funds in an account.</text> </paragraph> <paragraph num="(4)"> <text>If the statements do not correspond with the Department’s records of grant funds in the account, the local administrator or the subcontractor shall work with the Department to reconcile the differences.</text> </paragraph> <paragraph num="(5)"> <text>The Department may revoke, at any time, its approval of any grant account established under this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Advance Payments. Advances or down payments may be made to contractors to purchase materials delivered on site or valid purchase requisitions not to exceed 10 percent of the contract costs.</text> </paragraph> <paragraph num="E."> <text>Progress Payments.</text> <paragraph num="(1)"> <text>Progress payments may not be made until the grantee has delivered satisfactory evidence, such as receipts or bills, of the amount of the payment requested.</text> </paragraph> <paragraph num="(2)"> <text>Progress payments may not be made without an inspection to verify completion of the work, except at the discretion of the Department or the local administrator.</text> </paragraph> <paragraph num="(3)"> <text>A grantee shall be notified in writing by the Department or the local administrator, as applicable, if their request for payment is refused.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Final Payment. Final payment shall be made as follows:</text> <paragraph num="(1)"> <text>A grantee shall submit a certificate of completion, executed by the grantee and contractor, certifying that all work has been completed in accordance with the contract documents.</text> </paragraph> <paragraph num="(2)"> <text>Upon final inspection and receipt and approval of the certificate of completion, final payment shall be processed.</text> </paragraph> <paragraph num="(3)"> <text>If, in the opinion of the local administrator or Department, the contractor has satisfied the contract and the grantee refuses to request or release the final payment, then the following procedures shall apply:</text> <paragraph num="(a)"> <text>The grantee shall be notified in writing by the local administrator or Department;</text> </paragraph> <paragraph num="(b)"> <text>The grantee shall explain in writing within 10 days of receiving the written notification why direct payment to the contractor should not be made;</text> </paragraph> <paragraph num="(c)"> <text>If the grantee responds within the 10-day period and requests a meeting, the local administrator or Department shall hold a meeting at which the grantee shall present the grantee’s objections to requesting or releasing the final payment; and</text> </paragraph> <paragraph num="(d)"> <text>The local administrator or Department may then either approve or disapprove direct payment to the contractor or the grantee.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the local administrator or Department receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, it shall retain an amount equal to the lesser of all funds not yet disbursed and the amount needed to satisfy the claims.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Retainage.</text> <paragraph num="(1)"> <text>The local administrator or Department may retain until final payment 10 percent of the contract costs.</text> </paragraph> <paragraph num="(2)"> <text>The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Closeout Procedures. After final payment is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements and prepare a close-out statement. A copy of the close-out statement shall be forwarded to the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Nondiscrimination."> <paragraph num="A."> <text>A contractor, local administrator, or subcontractor may not discriminate against any person on the basis of race, color, religion, national origin, sex, sexual orientation, gender, marital status, physical or mental handicap, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program.</text> </paragraph> <paragraph num="B."> <text>Each contractor, local administrator, and subcontractor shall comply with all applicable federal, State, and local laws and Department policies regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Title VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(5)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(6)"> <text>Executive Order 01.01.1989.18 relating to Drug and Alcohol Free Workplaces, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Books and Accounts."> <paragraph num="A."> <text>Grantees, contractors, and subcontractors shall maintain such books, accounts, and records, and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="General Provisions."> <paragraph num="A."> <text>The Department may establish from time to time Program guidelines containing underwriting standards, grant processing requirements, and other requirements or matters relating to the financing of grants or to Program requirements.</text> </paragraph> <paragraph num="B."> <text>The Department shall ensure that Program guidelines, fee information, and application forms are publically available on its website and at its offices.</text> </paragraph> <paragraph num="C."> <text>Delegation. In addition to authorized officers identified in Regulation .02B of this chapter, the Secretary may delegate to any other official or employee of the Department or Administration the authority to execute or approve any Program documents or grant documents.</text> </paragraph> <paragraph num="D."> <text>Through the agreement with the local administrator, specific staff members for the local administrator may be authorized by the Department to execute grant documents on behalf of the Department.</text> </paragraph> <paragraph num="E."> <text>False Statements. A grantee who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department or the local administrator originating the grant, is subject to immediate acceleration of the grant, in addition to the penalties authorized by Housing and Community Development Article, §4-933, Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal agency in connection with any modification with respect to which federal assistance is sought necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-910 and 4-931, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 29, 2014 (41:19 Md. R. 1076)</annotation> </annotations> </chapter> </subtitle> <subtitle num="05" heading="Rental Housing Programs"> <chapter num="01" heading="Rental Housing Program"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter prescribes the policies, procedures, and authorizations for making loans from and administering the Rental Housing Program.</text> </paragraph> <paragraph num="B."> <text>This chapter is applicable to the Maryland HOME Program (rental housing development only) as set forth under COMAR 05.12.01.</text> </paragraph> <paragraph num="C."> <text>Projects which receive funding under this chapter may also receive low-income housing tax credits, which are governed by COMAR 05.05.06 and by federal law. For these projects, if any provision of this chapter conflicts with any law or regulation related to low-income housing tax credits, the more restrictive provision shall apply.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <text>The basic objectives of the Rental Housing Program are to:</text> <paragraph num="A."> <text>Increase or preserve the supply of decent, safe, and sanitary rental housing in the State for occupancy by households of limited income by providing financial assistance for certain costs of acquiring, constructing, or rehabilitating rental housing; and</text> </paragraph> <paragraph num="B."> <text>Revitalize designated neighborhoods through the conversion of office and other commercial space to rental housing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, a unit of the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(3)"> <text>“Annual income” means annual income as defined by HUD at 24 CFR §5.609, as amended.</text> </paragraph> <paragraph num="(4)"> <text>“Applicable codes and standards” means:</text> <paragraph num="(a)"> <text>The applicable construction, health, safety, fire, occupancy, and other codes and standards in force in the political subdivision in which a project is located; or</text> </paragraph> <paragraph num="(b)"> <text>If the codes and standards under §B(4)(a) of this regulation do not exist or are determined by the Secretary to be insufficient to promote the purposes of the Act, then the codes and standards prescribed in COMAR 05.02.01.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Applicant” means a person, partnership, corporation, limited liability company, or other entity applying for a loan under the Program.</text> </paragraph> <paragraph num="(6)"> <text>“Bridge loan” means an interim loan used during the construction or rehabilitation of a project and repaid with cash proceeds realized from a syndicated sale of the project or with the proceeds of permanent loans from other sources.</text> </paragraph> <paragraph num="(7)"> <text>“Capital assistance loan” means a loan to a sponsor to finance all or a portion of a project’s development costs.</text> </paragraph> <paragraph num="(8)"> <text>“Closing costs” means:</text> <paragraph num="(a)"> <text>Financing costs such as a credit report fee, title examination, loan origination fee, title insurance fee, application fee, survey fee, recording fees, State and local transfer taxes, and recording taxes;</text> </paragraph> <paragraph num="(b)"> <text>Prepaid expenses such as property taxes, ground rent, and any mortgage insurance premiums to be paid at closing; and</text> </paragraph> <paragraph num="(c)"> <text>Other costs incidental to the closing of a loan and acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“County” means a county of the State or Baltimore City.</text> </paragraph> <paragraph num="(10)"> <text>Department.</text> <paragraph num="(a)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(b)"> <text>“Department” includes the Administration.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Development costs” means costs incurred to acquire, construct, or rehabilitate a project, as approved by the Department, including:</text> <paragraph num="(a)"> <text>Necessary studies, surveys, plans, and specifications;</text> </paragraph> <paragraph num="(b)"> <text>Reasonable fees for architectural, engineering, legal, accounting, or other special services;</text> </paragraph> <paragraph num="(c)"> <text>Special studies, including:</text> <paragraph num="(i)"> <text>Appraisals;</text> </paragraph> <paragraph num="(ii)"> <text>Compaction tests;</text> </paragraph> <paragraph num="(iii)"> <text>Test borings;</text> </paragraph> <paragraph num="(iv)"> <text>Market analyses;</text> </paragraph> <paragraph num="(v)"> <text>Construction cost estimates; and</text> </paragraph> <paragraph num="(vi)"> <text>Environmental or other special engineering studies;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Acquisition of land and improvements;</text> </paragraph> <paragraph num="(e)"> <text>Site preparation;</text> </paragraph> <paragraph num="(f)"> <text>Cost of labor and materials for new construction or rehabilitation, ancillary demolition and installation of improvements as set forth in approved plans and specifications;</text> </paragraph> <paragraph num="(g)"> <text>Acquisition of necessary machinery, equipment, and furnishings installed at the project, including household appliances normally supplied to tenants in the rental market;</text> </paragraph> <paragraph num="(h)"> <text>Initial occupancy expenses of the project including marketing and advertising costs;</text> </paragraph> <paragraph num="(i)"> <text>Indemnity and surety bonds;</text> </paragraph> <paragraph num="(j)"> <text>Premiums on hazard and liability insurance;</text> </paragraph> <paragraph num="(k)"> <text>Relocation expenses;</text> </paragraph> <paragraph num="(l)"> <text>Closing costs;</text> </paragraph> <paragraph num="(m)"> <text>Program administrative expenses; and</text> </paragraph> <paragraph num="(n)"> <text>Other costs and fees acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Development team” means the applicant, the sponsor, the developer or co-developer, the guarantors, and the owner, including general partners or managing members, but not including limited partners and nonmanaging members of the foregoing, and architects, general contractors, management agents, and consultants affiliated with the project and any officer, director, or principal of any of the foregoing.</text> </paragraph> <paragraph num="(13)"> <text>“Director” means the Director of the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(14)"> <text>“Elderly Household” means:</text> <paragraph num="(a)"> <text>One or more individuals who occupy the same residential dwelling unit, at least one of whom is 62 years old or older;</text> </paragraph> <paragraph num="(b)"> <text>For projects which also receive funding through one or more programs administered by HUD, an elderly family, elderly person, or elderly household, all as defined by HUD;</text> </paragraph> <paragraph num="(c)"> <text>Such other definition established by the Secretary pursuant to Housing and Community Development Article, §4-101, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(d)"> <text>Such other definition established for a specific project in accordance with the standards established in the Program Guide.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Equity” means the difference between the total project costs and the aggregate amount of indebtedness of the project, whether secured by the project or otherwise, from all sources including the Program, all as determined by the Department.</text> </paragraph> <paragraph num="(16)"> <text>“Fund” means the Rental Housing Fund established under Housing and Community Development Article, §4-504, Annotated Code of Maryland, which is a nonlapsing special fund consisting of all moneys appropriated or otherwise available and allocated to the Program.</text> </paragraph> <paragraph num="(17)"> <text>Household.</text> <paragraph num="(a)"> <text>“Household” means one or more individuals who occupy the same residential dwelling unit as their permanent residence.</text> </paragraph> <paragraph num="(b)"> <text>“Household” includes a family as defined in 24 CFR §5.403, as amended.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Household of limited income” means a household whose total household annual income does not exceed the upper income limits established by the Secretary in accordance with Housing and Community Development Article, §§4-402(c) and 4-404(b), Annotated Code of Maryland, and Regulation .11 of this chapter.</text> </paragraph> <paragraph num="(19)"> <text>“Housing Finance Review Committee” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(20)"> <text>“HUD” means the United States Department of Housing and Urban Development.</text> </paragraph> <paragraph num="(21)"> <text>“Income-restricted project” means the acquisition, construction, rehabilitation, or operation of land and improvements that will be rented and occupied entirely or in part by households of limited income.</text> </paragraph> <paragraph num="(22)"> <text>“Internal Revenue Code” means the Internal Revenue Code, Title 26 of the United States Code, as amended.</text> </paragraph> <paragraph num="(23)"> <text>“Limited equity cooperative housing” means limited equity cooperative housing as defined in §143(K)(9)(C) of the Internal Revenue Code and the regulations adopted under it.</text> </paragraph> <paragraph num="(24)"> <text>“Loan” means a loan made by the Department from the Fund under the Act and this chapter.</text> </paragraph> <paragraph num="(25)"> <text>“Loan documents” means those documents required by the Department to evidence or secure the loan or enforce the requirements of the Act and this chapter.</text> </paragraph> <paragraph num="(26)"> <text>Nonprofit Organization.</text> <paragraph num="(a)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity, no part of the net earnings of which inures to the benefit of a private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(b)"> <text>“Nonprofit organization” includes a qualified nonprofit organization as defined in §42(h)(5)(C) of the Internal Revenue Code.</text> </paragraph> </paragraph> <paragraph num="(27)"> <text>“Office or other commercial space conversion” means the conversion to rental housing of a building that:</text> <paragraph num="(a)"> <text>Is located in a sustainable community as defined in Housing and Community Development Article, §§6-301(b) and 6-305,Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Was built more than 30 years before an application is submitted to the Department to finance the conversion;</text> </paragraph> <paragraph num="(c)"> <text>Consists of at least two floors at or above ground level; and</text> </paragraph> <paragraph num="(d)"> <text>Was last used as office or other commercial space, including any improvements that might otherwise be considered residential rental property but were last used on a transient basis, such as hotels, motels, dormitories, fraternity and sorority houses, rooming houses, hospitals, nursing homes, sanitariums, rest homes, and assisted living facilities.</text> </paragraph> </paragraph> <paragraph num="(28)"> <text>Office and Commercial Space Conversion Project.</text> <paragraph num="(a)"> <text>“Office and commercial space conversion project” means the acquisition or rehabilitation, or both, of land and improvements for office or other commercial space conversion.</text> </paragraph> <paragraph num="(b)"> <text>“Office and commercial space conversion project” includes a project that is part of a larger development that may include nonresidential uses.</text> </paragraph> </paragraph> <paragraph num="(29)"> <text>“Operating assistance loan” means a loan to a sponsor to pay some or all of the operating expenses as described in Regulation .05A(3) of this chapter of a completed project.</text> </paragraph> <paragraph num="(30)"> <text>“Political subdivision” means a county or municipal corporation of the State.</text> </paragraph> <paragraph num="(31)"> <text>“Program” means the Rental Housing Program established under Housing and Community Development Article, Title 4, Subtitle 4, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(32)"> <text>“Program Director” means the Director of Multifamily Housing in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(33)"> <text>“Program Guide” means the Multifamily Rental Financing Program Guide adopted by the Department, as amended from time to time.</text> </paragraph> <paragraph num="(34)"> <text>Project.</text> <paragraph num="(a)"> <text>“Project” means the acquisition, construction, or rehabilitation of buildings and improvements.</text> </paragraph> <paragraph num="(b)"> <text>“Project” includes income-restricted projects and office and commercial space conversion projects.</text> </paragraph> </paragraph> <paragraph num="(35)"> <text>“Relocation expenses” means compensation given to tenants displaced either temporarily or permanently by the acquisition, demolition, or rehabilitation of existing structures in connection with a project.</text> </paragraph> <paragraph num="(36)"> <text>“Residual receipts” means any cash remaining at the end of an annual fiscal period for a project after deducting from gross income all:</text> <paragraph num="(a)"> <text>Sums due under the loan documents and any liens superior to the lien or other liens approved by the Department;</text> </paragraph> <paragraph num="(b)"> <text>Operating costs necessary to maintain or operate the project, including real estate taxes but excluding reserve for replacement deposits and debt service payments; and</text> </paragraph> <paragraph num="(c)"> <text>Amounts distributed to a sponsor as a permitted return on equity.</text> </paragraph> </paragraph> <paragraph num="(37)"> <text>“Scattered site development” means noncontiguous residential units developed and operated under a common plan of ownership and financing.</text> </paragraph> <paragraph num="(38)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(39)"> <text>“Shared living unit facility” means a dwelling which will accommodate two or more households when some or all of the living, dining, kitchen, or sanitary facilities are to be shared by the households, which shall include a single room occupancy unit.</text> </paragraph> <paragraph num="(40)"> <text>Sponsor.</text> <paragraph num="(a)"> <text>“Sponsor” means all of the following:</text> <paragraph num="(i)"> <text>A borrower or obligor on a loan made by the Department to finance a project;</text> </paragraph> <paragraph num="(ii)"> <text>The person or entity principally responsible for the project and loan application before the loan closing;</text> </paragraph> <paragraph num="(iii)"> <text>Any person or entity who has an ownership interest in, or identity of interest with, a person or entity under §B(40)(a)(i) or (ii) of this regulation; and</text> </paragraph> <paragraph num="(iv)"> <text>An applicant that develops a project and qualifies under §B(40)(a)(i), (ii), or (iii) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Sponsor” includes a nonprofit sponsor.</text> </paragraph> </paragraph> <paragraph num="(41)"> <text>“State” means the State of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Sponsors."> <text>Sponsors shall meet the following minimum requirements to qualify for a loan:</text> <paragraph num="A."> <text>Be in good standing and qualified to do business in the State;</text> </paragraph> <paragraph num="B."> <text>Have the legal capacity and all necessary legal authorization to incur the obligations of the loan; and</text> </paragraph> <paragraph num="C."> <text>Meet all threshold criteria under Regulation .22 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Uses."> <paragraph num="A."> <text>Loan funds may be used for:</text> <paragraph num="(1)"> <text>Capital assistance loans to sponsors for financing development costs of projects;</text> </paragraph> <paragraph num="(2)"> <text>Loans to finance acquisition only of existing or completed:</text> <paragraph num="(a)"> <text>Vacant projects; or</text> </paragraph> <paragraph num="(b)"> <text>Occupied projects, if:</text> <paragraph num="(i)"> <text>The rental units are not occupied before acquisition or rehabilitation by households of limited income;</text> </paragraph> <paragraph num="(ii)"> <text>The number of units to be subject to income restrictions will be increased substantially;</text> </paragraph> <paragraph num="(iii)"> <text>Existing income limits will be reduced from current levels;</text> </paragraph> <paragraph num="(iv)"> <text>Units have been condemned or cited for code violations and the tenants are likely to be subject to displacement; or</text> </paragraph> <paragraph num="(v)"> <text>Any existing federal capital or operating subsidies will be lost without financing through the Program;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Operating assistance loans to sponsors for existing or completed income-restricted projects including:</text> <paragraph num="(a)"> <text>Buy down of the interest rate on a conventional permanent loan;</text> </paragraph> <paragraph num="(b)"> <text>Payments of principal and interest on superior mortgage liens;</text> </paragraph> <paragraph num="(c)"> <text>Maintenance and repair costs;</text> </paragraph> <paragraph num="(d)"> <text>Property taxes;</text> </paragraph> <paragraph num="(e)"> <text>Hazard and liability insurance premiums;</text> </paragraph> <paragraph num="(f)"> <text>Utilities;</text> </paragraph> <paragraph num="(g)"> <text>Permits and licenses;</text> </paragraph> <paragraph num="(h)"> <text>Reasonable management fees and expenses as determined by the Department;</text> </paragraph> <paragraph num="(i)"> <text>Rent subsidies;</text> </paragraph> <paragraph num="(j)"> <text>Closing costs;</text> </paragraph> <paragraph num="(k)"> <text>Department administrative expenses; and</text> </paragraph> <paragraph num="(l)"> <text>Other project operating expenses or fees approved by the Department;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Acquisition by the Department of a completed project or the land for a project, and subsequent transfer of the project or land, or both, to a sponsor;</text> </paragraph> <paragraph num="(5)"> <text>Purchase or lease by the Department of a project and, after construction or rehabilitation by the Department, sale or transfer of the project to a sponsor upon terms or conditions which make it economically feasible for the sponsor to rent to households of limited income; or</text> </paragraph> <paragraph num="(6)"> <text>Bridge loans.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Loan funds may not be used for:</text> <paragraph num="(1)"> <text>Work-out financing for troubled projects;</text> </paragraph> <paragraph num="(2)"> <text>Refinancing of existing debt;</text> </paragraph> <paragraph num="(3)"> <text>Financing for a project for which the application is received after:</text> <paragraph num="(a)"> <text>Acquisition;</text> </paragraph> <paragraph num="(b)"> <text>Assumption by the sponsor of the liability for the costs of acquisition or rehabilitation; or</text> </paragraph> <paragraph num="(c)"> <text>Completion of rehabilitation intended to be financed in whole or in part by the loan;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Financing only minor improvements which are not required to make the housing decent, safe, and sanitary in accordance with applicable State and local codes;</text> </paragraph> <paragraph num="(5)"> <text>Transaction costs and fees associated with the offering and syndication of a project; or</text> </paragraph> <paragraph num="(6)"> <text>Developer fees.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Projects."> <paragraph num="A."> <text>Land and Improvements.</text> <paragraph num="(1)"> <text>Land and improvements comprising a project shall meet the following minimum requirements:</text> <paragraph num="(a)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(b)"> <text>When the project is complete, be in compliance with zoning requirements and applicable codes and standards;</text> </paragraph> <paragraph num="(c)"> <text>Be owned by the Department or a sponsor in fee simple or a leasehold estate, with title acceptable to the Department;</text> </paragraph> <paragraph num="(d)"> <text>If the project is contained within a larger undertaking, provide equal access to tenants of the project to any amenities and common areas within the larger undertaking;</text> </paragraph> <paragraph num="(e)"> <text>Provide:</text> <paragraph num="(i)"> <text>Five or more traditional rental housing units;</text> </paragraph> <paragraph num="(ii)"> <text>Two or more units in a shared living unit facility; or</text> </paragraph> <paragraph num="(iii)"> <text>Emergency or temporary shelter to multiple persons.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Land and improvements comprising a project may be a scattered site development.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A project is eligible only if:</text> <paragraph num="(1)"> <text>The Department has complied with COMAR 05.01.06.06; and</text> </paragraph> <paragraph num="(2)"> <text>The Secretary has issued the written determination required under COMAR 05.01.06.07.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loans for office and commercial space conversion projects shall meet the requirements of §§A and B of this regulation and the following additional requirements:</text> <paragraph num="(1)"> <text>The sponsor shall have a commitment of funds for the project from private, local, or federal sources so that upon receipt of financial assistance from the Program there will be adequate funding to assure completion of the project;</text> </paragraph> <paragraph num="(2)"> <text>Sufficient funds to complete the project would not be available to the sponsor without the financial assistance from the Program;</text> </paragraph> <paragraph num="(3)"> <text>The financial assistance requested from the Program is the least amount of money necessary to complete the project as determined by the Department;</text> </paragraph> <paragraph num="(4)"> <text>The project shall be ready to proceed upon receipt of financial assistance from the Program;</text> </paragraph> <paragraph num="(5)"> <text>The project will provide substantial economic development to a sustainable community as defined in Housing and Community Development Article, §§6-301(b) and 6-305, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(6)"> <text>The amount of the loan does not exceed the maximum loan amount in Regulation .14C of this chapter.</text> </paragraph> </paragraph> <paragraph num="D."> <text>An income-restricted project may include structures suitable for use by households of limited income residing in the project or in surrounding communities such as cafeterias or dining halls, community rooms or buildings, and workshops or other essential services facilities.</text> </paragraph> <paragraph num="E."> <text>A project may not be:</text> <paragraph num="(1)"> <text>A nursing home;</text> </paragraph> <paragraph num="(2)"> <text>A hospital;</text> </paragraph> <paragraph num="(3)"> <text>A sanitarium;</text> </paragraph> <paragraph num="(4)"> <text>A life care facility;</text> </paragraph> <paragraph num="(5)"> <text>A retirement home providing significant services other than housing unless licensed under Maryland law as an assisted living facility;</text> </paragraph> <paragraph num="(6)"> <text>A dormitory;</text> </paragraph> <paragraph num="(7)"> <text>Housing solely for members of a social organization, such as a fraternity or sorority house;</text> </paragraph> <paragraph num="(8)"> <text>Housing provided by an employer solely for its employees; or</text> </paragraph> <paragraph num="(9)"> <text>A trailer park.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The project shall meet all threshold criteria under Regulation .22 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Political Subdivisions; Notice and Contribution."> <paragraph num="A."> <text>Notice.</text> <paragraph num="(1)"> <text>For each project for which an application is received under this chapter, the Department shall provide written notice and reasonable opportunity to comment on the project to the chief executive officer or the equivalent officer and the head or president of the legislative body of the political subdivision in which the proposed project is located.</text> </paragraph> <paragraph num="(2)"> <text>If a proposed project is in a municipal corporation, the notice required under §A(1) of this regulation shall be sent to the chief executive officer and the head or president of the legislative body of the municipal corporation, not the surrounding county.</text> </paragraph> <paragraph num="(3)"> <text>The notice provided under §A(1) of this regulation shall contain the following information about the proposed project:</text> <paragraph num="(a)"> <text>Date of application;</text> </paragraph> <paragraph num="(b)"> <text>Name and description of project;</text> </paragraph> <paragraph num="(c)"> <text>Address of project;</text> </paragraph> <paragraph num="(d)"> <text>Sponsor of the project and sponsor’s contact information;</text> </paragraph> <paragraph num="(e)"> <text>Amount of funding requested;</text> </paragraph> <paragraph num="(f)"> <text>Amount, type, and provider of other sources of funding;</text> </paragraph> <paragraph num="(g)"> <text>Total number of units;</text> </paragraph> <paragraph num="(h)"> <text>Number of units reserved for households of limited income, including the income and rent limits; and</text> </paragraph> <paragraph num="(i)"> <text>Such other information as the Department deems relevant.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Contribution. In reviewing applications for funding under the Act and this chapter, the Department shall consider the degree of political subdivision support provided to the proposed project, including contribution of land, abatement of taxes or fees, direct or indirect rental subsidies, and grants.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Geographic Distribution of Funds."> <paragraph num="A."> <text>It is the intent of the Department that Program funds be distributed and made available Statewide.</text> </paragraph> <paragraph num="B."> <text>The Department shall undertake best efforts to ensure some Program funds are distributed Statewide, including the following geographic areas of the State:</text> <paragraph num="(1)"> <text>Eastern Shore counties;</text> </paragraph> <paragraph num="(2)"> <text>Western Maryland counties;</text> </paragraph> <paragraph num="(3)"> <text>Baltimore metropolitan area counties; and</text> </paragraph> <paragraph num="(4)"> <text>Washington, D.C., metropolitan area counties and Southern Maryland counties.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Sponsor’s Equity Contribution."> <paragraph num="A."> <text>For income-restricted projects, the Department may establish requirements for the amount of equity a sponsor must contribute to a project which may vary for different types of sponsors, including nonprofit sponsors.</text> </paragraph> <paragraph num="B."> <text>Sponsors of office and other commercial space conversion projects shall make an equity contribution of at least 10 percent of the residential development costs of the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Limit on Return of Equity."> <paragraph num="A."> <text>Projects may be subject to a limitation on return of equity or an equity participation agreement, at the discretion of the Department.</text> </paragraph> <paragraph num="B."> <text>Periodically, at the convenience and discretion of the Department, residual receipts held by the Department in connection with a limitation on return on equity imposed under this regulation, if any, shall be credited to the Fund. At the option of the Department, residual receipts may be disbursed for the project which generated the receipts or for any other project.</text> </paragraph> <paragraph num="C."> <text>Sponsors of office and commercial space conversion projects are not subject to any limitation on return of equity.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Income Limits."> <paragraph num="A."> <text>The Secretary shall establish income limits for households of limited income and may revise the limits from time to time. The Secretary may establish different limits for different areas of the State and may establish lower limits within any area or for a particular project.</text> </paragraph> <paragraph num="B."> <text>In establishing or revising income limits under this regulation, the Secretary shall consider:</text> <paragraph num="(1)"> <text>The median income for the area;</text> </paragraph> <paragraph num="(2)"> <text>The minimum income needed to afford available standard rental units in the area;</text> </paragraph> <paragraph num="(3)"> <text>Federal income guidelines, including the requirements of the federal low-income housing tax credit program; and</text> </paragraph> <paragraph num="(4)"> <text>Any other relevant factor.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Limits for Shared Housing. For the purpose of determining compliance with the income limits, the Department may not aggregate the income of two or more individuals or households living together in one unit if the unit is to provide a shared living unit facility, group housing, congregate housing, or temporary shelters.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Restrictions on Ownership and Occupancy."> <paragraph num="A."> <text>Change of Ownership. During the loan term, the sponsor of the project may not sell, cease to own, assign, transfer, or dispose of all or any part of the sponsor’s interest in the project or the real property on which it is situated, without the prior written consent of the Department, except for leases of individual units or as set forth in the loan documents.</text> </paragraph> <paragraph num="B."> <text>Income-restricted projects are subject to the occupancy requirements set forth in §§C—G of this regulation, which occupancy restrictions shall be evidenced by a covenant running with the land which shall be recorded in the land records of the county where the project is located.</text> </paragraph> <paragraph num="C."> <text>Minimum Restricted Occupancy Period. The project shall be maintained as rental housing for households of limited income for a minimum of the greater of:</text> <paragraph num="(1)"> <text>15 years; or</text> </paragraph> <paragraph num="(2)"> <text>The number of years required by federal law.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Limited Income Occupancy Requirements.</text> <paragraph num="(1)"> <text>The minimum number of rental units set aside under this regulation shall be the greater of:</text> <paragraph num="(a)"> <text>The number that bears the same ratio to the whole number of rental units in the project as the amount the Program loan bears to the whole financing of the project or undertaking; or</text> </paragraph> <paragraph num="(b)"> <text>The number of rental units chosen by the sponsor to satisfy federal occupancy requirements if the project receives federal low-income housing tax credits or is financed in part with government-issued, federally tax-exempt revenue bonds.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Units restricted for occupancy to meet other federal, State or local occupancy requirements may be counted toward the minimum number of units required under §D(1) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>Units occupied by households that continue to meet applicable federal occupancy restrictions under §D(1) of this regulation shall be deemed to continue to meet the applicable restrictions of this regulation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The maximum rent for each unit in a project shall equal the difference between:</text> <paragraph num="(1)"> <text>30 percent of the imputed tenant income as calculated in §F of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>A utility allowance based on standards established by the Department in accordance with Treasury Regulation 1.42-10, as amended, for the low-income housing tax credit program.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The imputed tenant income shall equal the restricted unit income limit for:</text> <paragraph num="(1)"> <text>A household which is considered to have a size of 1.5 times the number of bedrooms in the unit for units with one or more bedrooms; and</text> </paragraph> <paragraph num="(2)"> <text>One person for efficiency and single room occupancy units.</text> </paragraph> </paragraph> <paragraph num="G."> <text>For units occupied by elderly households, the imputed household size under §F(1) of this regulation may not exceed three persons regardless of the number of bedrooms.</text> </paragraph> <paragraph num="H."> <text>If fewer than all of the units in a project are income-restricted, the location of the income-restricted units may change from time to time as tenants move, and the rental housing units in a project which are not income-restricted units are not required by the Program to be occupied by persons meeting income restrictions.</text> </paragraph> <paragraph num="I."> <text>Limited Equity Cooperative Housing.</text> <paragraph num="(1)"> <text>The units in a limited equity cooperative housing project shall be occupied by households of limited income at the time of initial occupancy, and following any subsequent sale, resale, or transfer of shares, or subletting which results in a change in the household occupying the unit.</text> </paragraph> <paragraph num="(2)"> <text>If existing rental housing is converted to limited equity cooperative housing through the assistance of a loan from the Program, an existing tenant may not be required to vacate the premises solely because the tenant does not elect to become a stockholder in the corporation owning the limited equity cooperative housing.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Prepayment."> <paragraph num="A."> <text>For an income-restricted project, if the prepayment operates to terminate the occupancy covenants for households of limited income, with the prior written approval of the Department, a sponsor may prepay a loan subject to any prohibition on prepayment contained in the loan documents and if the sponsor complies with the following requirements:</text> <paragraph num="(1)"> <text>Provide written notice to each tenant residing in the project which describes the impact of the prepayment on the tenant, and, if applicable, any assistance to which the tenant is entitled;</text> </paragraph> <paragraph num="(2)"> <text>Provide written notice of the prepayment to the Department, the political subdivision in which the project is located, and any interested parties registered with the Department;</text> </paragraph> <paragraph num="(3)"> <text>Offer a right of first purchase to the Department, the political subdivision in which the project is located, the local public housing authority, if any, and any interested parties registered with the Department;</text> </paragraph> <paragraph num="(4)"> <text>Provide a lease extension for at least 1 year following the notice of the prospective prepayment action to each tenant residing in an assisted unit;</text> </paragraph> <paragraph num="(5)"> <text>Make relocation assistance payments to each tenant in an amount determined by the Department;</text> </paragraph> <paragraph num="(6)"> <text>Provide 3-year lease extensions or 3 months rent equivalent payments to 20 percent of the tenants who live in assisted units and qualify as elderly households, disabled, or households with minors; and</text> </paragraph> <paragraph num="(7)"> <text>Comply with any procedural requirements of the Department with respect to the right of first purchase, relocation payments, and lease extensions.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A sponsor of an office and commercial space conversion project may prepay a loan at any time.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Loan Terms."> <paragraph num="A."> <text>Interest Rates.</text> <paragraph num="(1)"> <text>Interest rates for each loan shall be established based on the underwriting of each project.</text> </paragraph> <paragraph num="(2)"> <text>The maximum interest rate on a loan shall be a rate which does not impair the financial viability of the project or the capability of the sponsor to provide rents which are affordable to households of limited income. The interest rate on a loan may be as low as zero percent, based upon projected cash flows for the proposed project.</text> </paragraph> <paragraph num="(3)"> <text>Bridge loans or portions of loans which will be repaid with the cash proceeds realized from a syndicated sale of the project shall have interest rates equal to private lending rates for bridge loans, unless in the determination of the Department a lower interest rate is required to ensure the financial feasibility and viability of the project. A lower rate approved by the Department under this subsection may not be less than the interest rates permitted under §A(1) and (2) of this regulation based upon the use and occupancy of the project.</text> </paragraph> <paragraph num="(4)"> <text>For income-restricted projects, the Department may establish additional provisions related to interest rates in the Program Guide.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Repayment.</text> <paragraph num="(1)"> <text>Terms for repayment of principal and interest shall be established based on the underwriting for each project and in a manner which does not impair the financial viability of the project or the capability of the sponsor to provide rents which are affordable to households of limited income.</text> </paragraph> <paragraph num="(2)"> <text>Repayment of principal and interest may be deferred at the discretion of the Department to meet the goals of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>For income-restricted projects, the Department may establish additional provisions related to repayment terms in the Program Guide.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Maximum Loan Amount.</text> <paragraph num="(1)"> <text>The maximum amount of funds to be provided to an income-restricted project from the Program or the Maryland HOME Program under COMAR 05.12.01 may not exceed $2,000,000, unless the Housing Finance Review Committee has recommended and the Secretary has approved an exception on the basis that:</text> <paragraph num="(a)"> <text>The following three conditions are met:</text> <paragraph num="(i)"> <text>Other potential sources of funds have been sought and clearly are unavailable;</text> </paragraph> <paragraph num="(ii)"> <text>It is not feasible to reduce the size or scope of the project; and</text> </paragraph> <paragraph num="(iii)"> <text>The project serves a high public purpose, such as serving a significant percentage of very low-income households or being located in a high cost area; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>An increase in the loan amount addresses administrative or programmatic needs of the Department and will result in an effective and appropriate use of DHCD resources.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The maximum amount of funds to be provided to an office and commercial space conversion project:</text> <paragraph num="(a)"> <text>From the Program, shall be the lesser of:</text> <paragraph num="(i)"> <text>20 percent of the total costs for the project; or</text> </paragraph> <paragraph num="(ii)"> <text>$1,500,000; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>From all State-funded and State-administered programs, may not exceed 30 percent of the total costs of the undertaking, with the following limitations:</text> <paragraph num="(i)"> <text>State historic tax credits are excluded from the 30 percent limit; and</text> </paragraph> <paragraph num="(ii)"> <text>No other funds from the Fund, federal low-income housing tax credits, or State bond-allocated funds may be used on the project.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Term.</text> <paragraph num="(1)"> <text>The permanent loan term of each capital assistance loan may not exceed 40 years from the later of the date of acquisition or completion of construction or rehabilitation of the project, except when other sources of financing require a longer term.</text> </paragraph> <paragraph num="(2)"> <text>The term of a bridge loan generally may not exceed the greater of 2 years or the equity payment schedule and shall be based on the size and complexity of the project.</text> </paragraph> <paragraph num="(3)"> <text>The term of a loan during rehabilitation or construction generally may not exceed 2 years and shall be based on the size of the project and the nature of the rehabilitation or construction financed by the loan.</text> </paragraph> <paragraph num="(4)"> <text>The term of an operating assistance loan generally may not exceed 15 years and may be subject to renewal at the Department’s discretion.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Late Charges. Late charges, as permitted by law, may be imposed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Insurance Requirements."> <paragraph num="A."> <text>Mortgage Insurance. Mortgage insurance is not required for loans made from the Program.</text> </paragraph> <paragraph num="B."> <text>Property, Liability, and Other Insurance.</text> <paragraph num="(1)"> <text>At or before closing of a loan, and at such other times as required by the Department, the sponsor shall provide evidence that the sponsor, contractor, and other parties, have obtained and maintained the following insurance:</text> <paragraph num="(a)"> <text>Owner’s liability;</text> </paragraph> <paragraph num="(b)"> <text>Owner’s property or hazard or contractor’s builder’s risk;</text> </paragraph> <paragraph num="(c)"> <text>Contractor’s liability;</text> </paragraph> <paragraph num="(d)"> <text>Architect’s errors and omissions;</text> </paragraph> <paragraph num="(e)"> <text>Engineer’s errors and omissions; and</text> </paragraph> <paragraph num="(f)"> <text>Flood insurance, if the project is located in a flood hazard zone.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All insurance required under §B(1) of this regulation shall meet the following requirements:</text> <paragraph num="(a)"> <text>Be written by a company registered with the Maryland Insurance Administration;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(c)"> <text>Not be terminable without prior notification to the Department; and</text> </paragraph> <paragraph num="(d)"> <text>Contain such other terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition to the requirements of §B(2) of this regulation, owner’s liability insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition to the requirements of §B(2) of this regulation, contractor’s liability insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in place through final closing or such later date as the Department requires.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In addition to the requirements of §B(2) of this regulation, owner’s property or hazard or contractor’s builder’s risk insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as a loss payee, and mortgagee; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>For sponsors that are political subdivisions, the Department shall evaluate any self-insurance program to determine if adequate coverage and terms acceptable to the Department can be provided and accept coverage under the self-insurance program subject to this determination.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Environmental Review."> <paragraph num="A."> <text>Each project shall comply with applicable local, State, and federal environmental laws and regulations.</text> </paragraph> <paragraph num="B."> <text>Sponsors may be required, at the discretion of the Department, to conduct a screening of the proposed site for environmental conditions, including man-made hazards, storm water runoff, underground storage tanks, lead-based paint, radon gas, PCBs, and asbestos.</text> </paragraph> <paragraph num="C."> <text>If the initial screening indicates adverse or potentially adverse environmental conditions, the Department may require a more detailed physical investigation, review of historical records, testing and treatment, or abatement of the environmental condition as a requirement of the loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Reserves and Security."> <paragraph num="A."> <text>Reserve for Replacement. The Department may require the sponsor to make periodic payments to the Department or a senior lender for a reserve for replacement account for future repairs, maintenance, and improvement of the project.</text> </paragraph> <paragraph num="B."> <text>Appraisal. The sponsor or the Department, in the Department’s discretion, shall obtain an appraisal by an appraiser acceptable to the Department, showing the value of the land and any improvements on the land before and after the proposed rehabilitation or construction in a form and manner acceptable to the Department. The sponsor shall bear the cost of the appraisal.</text> </paragraph> <paragraph num="C."> <text>Escrow Account. If there is no prior mortgage or deed of trust requiring the payment of expenses to the mortgagee, the mortgage or deed of trust securing the loan shall require monthly payments to the Department in escrow, 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 may or may not be paid to the sponsors on escrows, in the Department’s discretion.</text> </paragraph> <paragraph num="D."> <text>Additional Security.</text> <paragraph num="(1)"> <text>The Department may require additional security from the sponsor both to assure completion of the construction or rehabilitation of the project, and to assure repayment of the loan.</text> </paragraph> <paragraph num="(2)"> <text>The additional security may be in the form of one or more of the following:</text> <paragraph num="(a)"> <text>A cash escrow;</text> </paragraph> <paragraph num="(b)"> <text>A letter of credit in an amount, in a form, and from a financial institution acceptable to the Department;</text> </paragraph> <paragraph num="(c)"> <text>Depository accounts pledged to the Department;</text> </paragraph> <paragraph num="(d)"> <text>Payment and performance bonds from a surety acceptable to the Department;</text> </paragraph> <paragraph num="(e)"> <text>A completion assurance agreement executed by the sponsor and backed by some form of monetary collateral;</text> </paragraph> <paragraph num="(f)"> <text>A guaranty of completion or loan payments, or both, executed by a third party acceptable to the Department;</text> </paragraph> <paragraph num="(g)"> <text>A pledge of syndication proceeds;</text> </paragraph> <paragraph num="(h)"> <text>A pledge of the developer’s fee; or</text> </paragraph> <paragraph num="(i)"> <text>Other collateral acceptable to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Superior Mortgagee’s Agreement. For loans secured by a subordinate lien, the sponsor shall obtain the written agreement of each superior lender:</text> <paragraph num="(1)"> <text>Acknowledging and consenting to the subordinate lien of the Department;</text> </paragraph> <paragraph num="(2)"> <text>Agreeing to provide timely notice to the Department in the event of default by the sponsor on the superior mortgage; and</text> </paragraph> <paragraph num="(3)"> <text>Agreeing to either suspend acceleration and foreclosure of the superior lien for a reasonable period of time if the Department brings current and maintains timely payments due on the superior mortgage or permitting the Department to cure the event of default.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Additional Requirements for Certain Loans."> <paragraph num="A."> <text>Capital assistance loans shall meet the following additional requirements:</text> <paragraph num="(1)"> <text>Loans shall be secured by a mortgage lien, which may be subordinate to other mortgage liens; and</text> </paragraph> <paragraph num="(2)"> <text>The Department shall require the sponsor to provide a standard American Land Title Association Loan Policy, or other form of title policy acceptable to the Department and the Office of the Attorney General, for an amount equal to the maximum principal amount of the loan:</text> <paragraph num="(a)"> <text>Insuring the Department;</text> </paragraph> <paragraph num="(b)"> <text>Evidencing that title to the improvements and the real property on which the improvements are located on the date of closing is vested in the sponsor; and</text> </paragraph> <paragraph num="(c)"> <text>Containing only standard exceptions and encumbrances approved by the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Operating Assistance Loans.</text> <paragraph num="(1)"> <text>Security. The loans shall be made subject to either:</text> <paragraph num="(a)"> <text>The terms of a loan and security agreement, which need not be recorded; or</text> </paragraph> <paragraph num="(b)"> <text>A recorded mortgage lien which may be subordinate to other mortgage liens.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Investment Account. Loan funds disbursed subject to a loan and security agreement shall be deposited into an interest-bearing account for the benefit of the project and shall be invested, reinvested, and disbursed in accordance with the terms of an agreement between the sponsor and the Department. The Department shall maintain control over the investment account.</text> </paragraph> <paragraph num="(3)"> <text>Insurance. At the discretion of the Department, a project receiving an operating assistance loan is not required to satisfy the insurance provisions of Regulation .15 of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Deferred Payment Loans.</text> <paragraph num="(1)"> <text>Amount of Deferred Payments. The Department may defer payments of principal or interest, or both, in the Department’s discretion, to the minimum extent necessary based on:</text> <paragraph num="(a)"> <text>The sponsor’s ability to repay the loan and the financial feasibility and viability of the project;</text> </paragraph> <paragraph num="(b)"> <text>Conformance with the requirements of the terms and conditions of any prior mortgage or deed of trust; or</text> </paragraph> <paragraph num="(c)"> <text>Such additional provisions related to deferred payment loans established in the Program Guide.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Repayment of Deferred Loans.</text> <paragraph num="(a)"> <text>The loan documents shall provide for repayment of deferred amounts at the maturity date or at any earlier date established by the Department, or upon any default, sale, or other transfer of the project, or sale or other transfer of any interest in the project. The Department may, but need not, charge interest on deferred interest.</text> </paragraph> <paragraph num="(b)"> <text>The Department may, in its discretion, require sponsors who receive bridge loans and who receive and syndicate an allocation of federal low-income housing tax credits or historic investment tax credits to share a portion of the proceeds of the syndication of the tax credits with the Department to repay deferred interest or pay all or a portion of the principal amount of the loan.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Application Submission."> <paragraph num="A."> <text>Applications for income-restricted projects shall be accepted:</text> <paragraph num="(1)"> <text>In one or more competitive rounds to be announced by the Department annually in accordance with the procedures established in Regulation .20 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>At any time, subject to availability of funding for:</text> <paragraph num="(a)"> <text>Projects requesting financing from the Department’s Multifamily Bond Program; or</text> </paragraph> <paragraph num="(b)"> <text>Pilot programs or other special initiatives in accordance with processing procedures established by the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Applications for office and commercial space conversion projects shall be accepted in accordance with processing procedures established by the Department and shall be submitted by the political subdivision in which the project is located. If the project is located in a municipal corporation, the application shall be submitted by the municipal corporation, not the surrounding county.</text> </paragraph> <paragraph num="C."> <text>Forms. Applications shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="D."> <text>Documentation. Applications shall be accompanied by all documentation in the form and containing the information specified by the application procedures adopted by the Department, which may vary depending on the type of loan.</text> </paragraph> <paragraph num="E."> <text>Fees and Charges.</text> <paragraph num="(1)"> <text>Amounts and time of payment of application fees, administration fees, financing fees, closing fees, and other fees as may be required by the Department shall be as provided in a fee schedule set forth in the Program Guide, or as otherwise provided by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The Department may charge sponsors for the following items, if initially paid for by the Department:</text> <paragraph num="(a)"> <text>Market studies;</text> </paragraph> <paragraph num="(b)"> <text>Construction cost estimates;</text> </paragraph> <paragraph num="(c)"> <text>Recording fees and recording taxes or other charges incidental to recordation;</text> </paragraph> <paragraph num="(d)"> <text>Survey;</text> </paragraph> <paragraph num="(e)"> <text>Appraisal;</text> </paragraph> <paragraph num="(f)"> <text>Title examination and title insurance; and</text> </paragraph> <paragraph num="(g)"> <text>Investment fees.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Department may charge penalties to applicants, lenders, servicers, sponsors, or other individuals or entities that participate in the Program. The Department may restrict the fees and charges that servicers, political subdivisions, or other Program participants obtain from sponsors.</text> </paragraph> <paragraph num="(4)"> <text>Fees and charges referenced in this regulation may be financed by the Program loan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Application Review."> <paragraph num="A."> <text>Each application for an income-restricted project competing in a funding round pursuant to Regulation .19A(1) of this chapter shall be reviewed in accordance with Regulations .21 through .23 of this chapter.</text> </paragraph> <paragraph num="B."> <text>Each application for an income-restricted project not competing in a funding round pursuant to Regulation .19A(2) of this chapter shall be reviewed in accordance with Regulation .22 of this chapter or such other procedures established by the Department.</text> </paragraph> <paragraph num="C."> <text>Applications for office and commercial space conversion projects shall be reviewed in accordance with procedures established by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Project Priority Categories."> <paragraph num="A."> <text>The Department may establish project priority categories which must be satisfied prior to review of a project for threshold criteria pursuant to Regulation .22 of this chapter.</text> </paragraph> <paragraph num="B."> <text>The project priority categories under §A of this regulation shall be established by the Department in the Program Guide and may be modified from time to time to eliminate or add categories or criteria.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Threshold Criteria."> <paragraph num="A."> <text>The Department shall establish detailed threshold criteria, including the following categories:</text> <paragraph num="(1)"> <text>Development team requirements;</text> </paragraph> <paragraph num="(2)"> <text>Occupancy requirements;</text> </paragraph> <paragraph num="(3)"> <text>Marketing requirements;</text> </paragraph> <paragraph num="(4)"> <text>Tenant services;</text> </paragraph> <paragraph num="(5)"> <text>Provisions for persons with disabilities or special needs;</text> </paragraph> <paragraph num="(6)"> <text>Other financing commitments;</text> </paragraph> <paragraph num="(7)"> <text>Underwriting requirements;</text> </paragraph> <paragraph num="(8)"> <text>Readiness to proceed;</text> </paragraph> <paragraph num="(9)"> <text>Site requirements;</text> </paragraph> <paragraph num="(10)"> <text>Market studies; and</text> </paragraph> <paragraph num="(11)"> <text>Development quality.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The threshold criteria under §A of this regulation shall be established by the Department in the Program Guide and may be modified from time to time to eliminate or add categories or criteria.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="Project Evaluation Criteria; State Bonus Points."> <paragraph num="A."> <text>All projects in a round which meet the requirements of Regulations .21 and .22 of this chapter shall be evaluated on a point basis, which may include the following criteria:</text> <paragraph num="(1)"> <text>Capacity of the development team;</text> </paragraph> <paragraph num="(2)"> <text>Community context;</text> </paragraph> <paragraph num="(3)"> <text>Public purpose;</text> </paragraph> <paragraph num="(4)"> <text>Leveraging and cost-effectiveness; and</text> </paragraph> <paragraph num="(5)"> <text>Development quality.</text> </paragraph> </paragraph> <paragraph num="B."> <text>At the completion of the review of projects under §A of this regulation, the Department may award bonus points to one or more projects based on one or more of the following considerations:</text> <paragraph num="(1)"> <text>Project priority categories;</text> </paragraph> <paragraph num="(2)"> <text>Geographic distribution;</text> </paragraph> <paragraph num="(3)"> <text>Unique or time sensitive financing opportunities;</text> </paragraph> <paragraph num="(4)"> <text>Urgent or recent changes in housing needs;</text> </paragraph> <paragraph num="(5)"> <text>Economic development opportunities;</text> </paragraph> <paragraph num="(6)"> <text>Changes in the equity or debt market related to low-income housing tax credits or other funding sources;</text> </paragraph> <paragraph num="(7)"> <text>Critical policy directives or goals; or</text> </paragraph> <paragraph num="(8)"> <text>Fair housing considerations.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The project selection criteria and bonus points under §§A and B of this regulation shall be established by the Department in the Program Guide and may be modified from time to time to eliminate or add categories or criteria.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Recommendation and Approval."> <paragraph num="A."> <text>For income-restricted projects competing in a competitive round, after considering the scores under the project evaluation criteria of Regulation .23 of this chapter and the availability of resources, the Program staff shall select projects for review and recommendation for funding by the Housing Finance Review Committee. The number of projects selected will vary depending on the availability of funds.</text> </paragraph> <paragraph num="B."> <text>For income-restricted projects not competing in a competitive round, the Program staff shall select projects for review and recommendation for funding by the Housing Finance Review Committee based on the availability of funding and such other procedures established by the Department.</text> </paragraph> <paragraph num="C."> <text>For office and commercial space conversion projects, the Program staff shall select projects for review and recommendation for funding by the Housing Finance Review Committee based on the availability of funding and such other procedures established by the Department.</text> </paragraph> <paragraph num="D."> <text>The Housing Finance Review Committee shall review the projects selected by Program staff under §A, B, or C of this regulation and recommend projects to the Secretary for reservation of funds and loan commitments, as appropriate, pursuant to Regulation .25 of this chapter.</text> </paragraph> <paragraph num="E."> <text>Upon receipt of the recommendation of the Housing Finance Review Committee, the Secretary shall approve or disapprove the loan and the terms of the loan. A written determination that each loan, regardless of the loan amount, is statutorily authorized and approved by the Secretary shall be executed before the issuance of a reservation of funds or loan commitment, as appropriate, pursuant to Regulation .25 of this chapter.</text> </paragraph> <paragraph num="F."> <text>The Secretary may approve a loan without the recommendation of the Housing Finance Review Committee:</text> <paragraph num="(1)"> <text>In an emergency, when urgent action is required; or</text> </paragraph> <paragraph num="(2)"> <text>For loans below the minimum amount established by the Housing Finance Review Committee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".25" heading="Reservation and Commitment."> <paragraph num="A."> <text>Reservations. All projects competing in a funding round and approved by the Secretary pursuant to Regulation .24 of this chapter shall be issued a reservation letter by the Department. The reservation letter shall include basic proposed loan terms, a list of all additional information to be submitted for further review, and a processing schedule setting forth dates for the submission and review of all requested information and documentation.</text> </paragraph> <paragraph num="B."> <text>Commitments.</text> <paragraph num="(1)"> <text>For projects competing in a funding round, upon satisfaction of all requirements in the reservation letter and the Secretary’s determination, if any, or as otherwise required by the Program, the Program shall issue a commitment letter setting forth the terms and conditions of the loan.</text> </paragraph> <paragraph num="(2)"> <text>For projects not competing in a funding round, upon satisfaction of the requirements in the Secretary’s determination, or as otherwise required by the Program, the Program shall issue a commitment letter setting forth the terms and conditions of the loan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".26" heading="Rejection, Reconsideration, Modification, and Withdrawal."> <paragraph num="A."> <text>Rejection. If a loan application is rejected, the Department shall notify the sponsor in writing. The rejection letter shall state the reason the loan is rejected.</text> </paragraph> <paragraph num="B."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>A sponsor of an office and commercial space conversion project or an income-restricted project not competing in a round may request reconsideration of a rejection within 7 days of receipt of notice of the rejection. The request shall be in writing and submitted to the Program Director. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> <paragraph num="(2)"> <text>A sponsor of an income-restricted project competing in a round may not request reconsideration of a rejection but may resubmit an application in a subsequent round or in accordance with the procedures established by the Department for income-restricted projects not competing in a round.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Modifications.</text> <paragraph num="(1)"> <text>A sponsor may not modify a project in a manner that affects any of the following factors without the prior review and approval of the Department:</text> <paragraph num="(a)"> <text>The project cannot proceed in accordance with the schedule established by the Department and the sponsor;</text> </paragraph> <paragraph num="(b)"> <text>The project changes substantially from the initial submission, including:</text> <paragraph num="(i)"> <text>A change resulting in a score reduction of the lesser of 3 percent or an amount sufficient to lower the score below the cut off score for the round in which the project was approved;</text> </paragraph> <paragraph num="(ii)"> <text>A significant change in the project’s design, financing, or amenities;</text> </paragraph> <paragraph num="(iii)"> <text>A material reduction in the project’s income targeting or unit count;</text> </paragraph> <paragraph num="(iv)"> <text>A change of the project’s sponsor or other member of the development team; or</text> </paragraph> <paragraph num="(v)"> <text>A change in the project’s site;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The project no longer meets the requirements of Regulations .21 and .22 of this chapter, as applicable; or</text> </paragraph> <paragraph num="(d)"> <text>Such other reasons as may be established in the Program Guide.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If a project is modified in violation of §C(1) of this regulation, the sponsor shall provide to the Department a detailed explanation of the modification, along with a written request for approval of the modification. After review of the sponsor’s request and explanation, the Department may permit the modification or notify the sponsor that the modification is not acceptable to the Department. If an unacceptable modification is not cured within a time period acceptable to the Department, the reservation or commitment, as applicable, shall be withdrawn from processing.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Withdrawal of Application.</text> <paragraph num="(1)"> <text>An applicant may withdraw an application at any time before closing of the loan by written notice to the Department.</text> </paragraph> <paragraph num="(2)"> <text>An applicant that withdraws its application may be required to bear any costs incurred by the Department, including, but not limited to:</text> <paragraph num="(a)"> <text>Title examinations;</text> </paragraph> <paragraph num="(b)"> <text>Credit reports;</text> </paragraph> <paragraph num="(c)"> <text>Appraisals;</text> </paragraph> <paragraph num="(d)"> <text>Market analyses;</text> </paragraph> <paragraph num="(e)"> <text>Fees attributable to the Department’s processing costs; and</text> </paragraph> <paragraph num="(f)"> <text>Legal fees.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Department may withdraw an application from processing for the following reasons:</text> <paragraph num="(a)"> <text>The project’s developer, sponsor, or owner or any general partner or managing member of the foregoing files for bankruptcy or is the subject of an involuntary bankruptcy;</text> </paragraph> <paragraph num="(b)"> <text>The project is, for any other reason, no longer feasible;</text> </paragraph> <paragraph num="(c)"> <text>The project’s developer, sponsor, or owner submits false, misleading, or incomplete information to the Department;</text> </paragraph> <paragraph num="(d)"> <text>The sponsor has failed to cure a modification unacceptable to the Department in the time frame provided under §C of this regulation;</text> </paragraph> <paragraph num="(e)"> <text>The project fails to meet the established time frames for processing or otherwise fails to make reasonable progress toward closing; or</text> </paragraph> <paragraph num="(f)"> <text>Such other reasons as may be established in the Program Guide.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Loan Closing and Processing."> <paragraph num="A."> <text>Initial Loan Closing. The sponsor shall furnish to the Department and its counsel satisfactory evidence of compliance with the terms and conditions of the loan before the closing of the loan. When all procedures and requirements are completed, a closing shall be arranged by counsel to the Department.</text> </paragraph> <paragraph num="B."> <text>Loan Documents. The Department shall prescribe or approve the form and content of all documents, which may include a note, deed of trust, regulatory agreement, and other instruments that the Department may require to evidence or secure the loan or enforce the requirements of the Act or this chapter. The loan documents shall be executed at the loan closing.</text> </paragraph> <paragraph num="C."> <text>Early Start.</text> <paragraph num="(1)"> <text>Construction or rehabilitation undertaken by the sponsor before the closing of the loan is at the risk of the sponsor, and does not bind or obligate the Department to make the loan.</text> </paragraph> <paragraph num="(2)"> <text>In certain circumstances and upon the request of a sponsor who has applied for a loan which has been approved by the Secretary, the Program may issue an early start letter which sets forth the conditions under which the Program may authorize the beginning of construction or rehabilitation of a project before the closing of the Department’s loan.</text> </paragraph> <paragraph num="(3)"> <text>The early start approval letter sets forth various conditions, such as receipt by the Program of acceptable plans and specifications or scope of work and evidence of the availability of acceptable assurance of completion, which shall be complied with before beginning construction or rehabilitation. If the conditions are complied with and the Program approves the beginning of construction or rehabilitation, then, when the loan is closed, loan proceeds shall be used to reimburse the sponsor, as specified in the loan closing documents, for the approved costs incurred before loan closing.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Construction or Rehabilitation Period Disbursement. The Department shall:</text> <paragraph num="(1)"> <text>Conduct regular on-site inspections of the construction or rehabilitation; and</text> </paragraph> <paragraph num="(2)"> <text>Make loan disbursements on the basis of work in place plus materials acceptably stored on site, less a retention of 10 percent or any other amount required by the loan documents.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Disbursement. Loan funds shall be held by the Department and disbursed in accordance with a draw schedule approved by the Department before initial closing. The draw schedule, which may be revised at the discretion of the Department during construction, shall be based upon completion of specified items or a percentage of rehabilitation work. Payment of draws shall be requested by the sponsor and approved by the Department based on completed work. Loan funds may be withheld if there is any arrearage of interest payments or escrows required by the loan documents.</text> </paragraph> <paragraph num="F."> <text>Final Closing. A final closing of the loan shall be arranged after completion of the rehabilitation or construction and cost certification, if required, according to the procedures and documentation required by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".28" heading="Signs."> <text>If requested by the Department, each sponsor shall install a sign identifying the Department as a lender on the project. The sign, at the discretion of the Department, may be supplied by the Department, but in any case shall comply with the design specifications of the Department. The sponsor shall bear all costs of acquisition, delivery, and installation of a conforming sign, which costs may be included in the loan.</text> </regulation> <regulation prefix="Regulation" num=".29" heading="Books and Accounts."> <paragraph num="A."> <text>Sponsors, contractors, and subcontractors shall maintain the books, accounts, and records, and shall file with the Department the financial and other reports that the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records in §A of this regulation shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of sponsors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the sponsor and the Department. Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between them and the sponsor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".30" heading="Certification of Income."> <paragraph num="A."> <text>Income-restricted projects are subject to the requirements set forth in §§B—F of this regulation.</text> </paragraph> <paragraph num="B."> <text>The sponsor shall obtain signed certificates of annual income from all tenants occupying a project and shall certify annual incomes of all tenants to the Department. The Department may require annual recertifications of income as well as periodic occupancy reports containing the information required by the Department. Leases and certifications are subject to periodic review by the Department.</text> </paragraph> <paragraph num="C."> <text>For projects where existing tenants continue in occupancy during rehabilitation, the sponsor shall obtain signed income certifications from income-eligible tenants of at least the number of units required by Regulation .12 of this chapter, before loan closing.</text> </paragraph> <paragraph num="D."> <text>The purpose of the certification of annual income and the reports is to assure compliance with the upper income limits established in accordance with the Act and Regulation .11 of this chapter. In the case of a project which receives federal assistance, including low-income housing tax credits, the procedures for the certification of income prescribed by the federal agency are acceptable, including recertification waivers under §42(g)(8)(B) of the Internal Revenue Code.</text> </paragraph> <paragraph num="E."> <text>The sponsor shall verify the information contained in the certificate of income, upon the consent of the individual, with the source of income, and file with the Department a report disclosing the income of all individuals selected for occupancy unless the sponsor obtained a waiver under the federal low-income housing tax credit program, as provided in §1.42-5 of the Federal Income Tax Regulations.</text> </paragraph> <paragraph num="F."> <text>The sponsor shall retain all certificates of income and documents verifying the information contained in them for a period of at least 3 years from the date on which the income certification is submitted to the sponsor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".31" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A sponsor or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the Program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>A sponsor or contractor shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Title VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".32" heading="Affirmative Fair Housing Marketing Plan."> <text>Each project shall submit for review and approval by the Department an affirmative fair housing marketing plan in accordance with the requirements of the Program Guide. The Department shall monitor the project’s compliance with the approved plan.</text> </regulation> <regulation prefix="Regulation" num=".33" heading="False Statements."> <text>A sponsor who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department’s action, is subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-411, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".34" heading="Waiver and Delegation."> <paragraph num="A."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is consistent with the Act, if:</text> <paragraph num="(1)"> <text>In the determination of the Secretary, the application of a regulation in a specific case, or in an emergency situation, would be inequitable or contrary to the purposes of the Act; or</text> </paragraph> <paragraph num="(2)"> <text>Conformance to the requirements of any federal, State, or local agency in connection with any federal, State, or local assistance sought necessitates waiver or variance of a regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Delegation. The Secretary may delegate to the Director, the Program Director, or any other official or employee of the Department the authority to execute or approve any loan documents, including loan commitments and early start letters, after approval of a loan by the Secretary.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-401—4-411, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 19, 1984 (11:23 Md. R. 1991)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.17 to COMAR 05.05.01</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13 repealed and new Regulations .01—.29 adopted effective March 4, 1991 (18:4 Md. R. 446)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective January 2, 1994 (20:25 Md. R. 1942); April 5, 1999 (26:7 Md. R. 538); January 21, 2002 (29:1 Md. R. 20)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09E amended effective January 2, 1994 (20:25 Md. R. 1942)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 repealed and Regulation .11 amended and recodified to Regulation .10 as an emergency provision effective August 24, 1995 (22:19 Md. R. 1456); emergency status extended at 23:7 Md. R. 547)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 repealed effective August 26, 1996 (23:17 Md. R. 1246)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective August 26, 1996 (23:17 Md. R. 1246)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16C amended effective May 31, 1999 (26:11 Md. R. 853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18D amended effective November 7, 1994 (21:22 Md. R. 1873)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 amended effective August 26, 1996 (23:17 Md. R. 1246)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.23 Rental Housing Program repealed and new Regulations .01—.32 Multifamily Rental Financing Program adopted effective March 13, 2006 (33:5 Md. R. 518)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.32 Multifamily Rental Financing Program repealed and new Regulations .01—.34 Rental Housing Program adopted effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective October 8, 2018 (45:20 Md. R. 917)</annotation> </annotations> </chapter> <chapter num="02" heading="Multifamily Bond Program"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>Authority. These regulations are adopted under the provisions of the Community Development Administration Act, Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="B."> <text>Purpose. These regulations are intended to promote the purposes of the Act, Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, by implementing, interpreting, making specific, and otherwise carrying out the provisions of the Act within their scope. In particular, they are intended to provide basic information to sponsors of community development projects, public purpose projects, energy conservation projects, solar energy projects, and home improvement projects and will be supplemented by manuals and program directives from time to time.</text> </paragraph> <paragraph num="C."> <text>Scope.</text> <paragraph num="(1)"> <text>This chapter applies to loans made or purchased by the Administration with the proceeds of revenue bonds and those funds derived from payments or prepayments on these loans, as authorized by Housing and Community Development Article, Annotated Code of Maryland, §§4-211(a)(10) and (b), 4-225—4-227, and 4-244—4-252. Loans made or purchased under this chapter shall be made or purchased to finance multi-family community development projects, public purpose projects, energy conservation projects, solar energy projects, and home improvement projects undertaken by private, public, or quasi-public sponsors, consistent with the intent of local governing bodies. This chapter also applies to loans financed by the Administration by purchase of a security guaranteed by the Government National Mortgage Association which security is backed by an insured loan financing a multi-family community development project or public purpose project.</text> </paragraph> <paragraph num="(2)"> <text>Ordinarily subject to these regulations are loans for home improvement projects, solar energy projects, or energy conservation projects when the project is being acquired and improved with revenue bond proceeds. The Administration will have a first lien security position in the project. Other home improvement, solar energy, and energy conservation loans for existing projects secured by subordinate liens will be financed ordinarily under COMAR 05.04.10.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, a unit of the Division of Development Finance of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Annual income” means annual income as defined by the United States Department of Housing and Urban Development at 24 CFR §5.609.</text> </paragraph> <paragraph num="(4)"> <text>Community Development Project.</text> <paragraph num="(a)"> <text>“Community development project”:</text> <paragraph num="(i)"> <text>Means any undertaking or project, or portion of an undertaking or project, including lands, buildings, and improvements, real, mixed, and personal properties or interest that is planned, acquired, owned, developed, constructed, reconstructed, rehabilitated, repaired, renovated, or improved for the purpose of promoting sound community development;</text> </paragraph> <paragraph num="(ii)"> <text>Shall provide for existing or new housing which is or which will be occupied in substantial part by families of limited incomes, or if the project is financed with taxable bonds, at least 20 percent are families of limited incomes; and</text> </paragraph> <paragraph num="(iii)"> <text>Shall provide improvements such as streets, roads, sewer and water lines, and other public or private facilities intended for commercial, educational, cultural, recreational, community, or other civic purpose, as may be needed to support new or existing housing.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If other public or private facilities as referred to in §B(4)(a)(iii) of this regulation are not needed to support new or existing housing, they may be included in a community development project if they comprise less than a substantial part of the community development project, unless it is determined by the Secretary that sound community development is promoted by including a greater proportion of public or private facilities.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Construction completion” means satisfactory completion of all items in the construction contract, as approved by the Administration, and the acceptance of the project by the local jurisdiction as evidenced by final certificates of occupancy or their equivalent.</text> </paragraph> <paragraph num="(6)"> <text>“Construction loan closing” means that time at which a sponsor executes a note, a building loan agreement, regulatory agreement, mortgage, and other security instruments deemed necessary by the Administration to secure the repayment of the Administration's construction loan.</text> </paragraph> <paragraph num="(7)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(8)"> <text>“Distressed area” means a geographically defined area or areas of any municipality or county designated by the Secretary at the request of the municipality or county, taking into consideration factors including:</text> <paragraph num="(a)"> <text>The availability, cost, and condition of housing and neighborhood facilities, including the age and number of abandoned and substandard structures;</text> </paragraph> <paragraph num="(b)"> <text>The income of residents relative to the State or area wide regional median incomes, including the number of individuals who are welfare recipients, unemployed, and in poverty;</text> </paragraph> <paragraph num="(c)"> <text>The need for financing for housing or public or private facilities to upgrade the social and economic conditions of the distressed area;</text> </paragraph> <paragraph num="(d)"> <text>The plans and financial commitment of the municipality or county to undertake improvements in the distressed area; and</text> </paragraph> <paragraph num="(e)"> <text>Other standards and criteria considered relevant by the Secretary, including standards established for other relevant State or federal programs.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Energy conservation project” means any undertaking or part of an undertaking without regard to the incomes of the occupants or owners of the buildings for the purpose of installing certain energy improvement items and establishing certain conservation services in residential and commercial buildings.</text> </paragraph> <paragraph num="(10)"> <text>“Home improvement project” means an undertaking for any improvement, alteration, addition, or repair that substantially protects or improves the basic liveability of a residential building of more than four units that will be occupied in substantial part by families of limited incomes.</text> </paragraph> <paragraph num="(11)"> <text>Household.</text> <paragraph num="(a)"> <text>“Household” means one or more individuals who occupy the same residential dwelling unit as their permanent residence.</text> </paragraph> <paragraph num="(b)"> <text>“Household” includes a family as defined in 24 CFR §5.403, as amended.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Household of limited income” means a household whose total household annual income does not exceed the upper income limits established by the Secretary in accordance with Housing and Community Development Article, §4-212, Annotated Code of Maryland, and Regulation .04B of this chapter.</text> </paragraph> <paragraph num="(13)"> <text>“Internal Revenue Code of 1986” means the Internal Revenue Code of 1986, as amended, and any applicable regulations and rulings.</text> </paragraph> <paragraph num="(14)"> <text>“Internal Revenue Code of 1954” means the Internal Revenue Code of 1954, as amended (before amendment by the Internal Revenue Code of 1986), and the applicable regulations and rulings.</text> </paragraph> <paragraph num="(15)"> <text>Nonprofit entity.</text> <paragraph num="(a)"> <text>“Nonprofit entity” means any corporation, foundation, or other legal entity which has been declared exempt from taxation by the Internal Revenue Service under §501 of the Internal Revenue Code, or any other entity in which no part of the net earnings inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(b)"> <text>“Nonprofit entity” does not mean limited dividend corporations as defined in Housing and Community Development Article, §4-220, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Permanent loan closing” means that time, after construction completion, when cost certification is complete, the amount of the permanent mortgage loan is determined, and all necessary documents are provided by the sponsor.</text> </paragraph> <paragraph num="(17)"> <text>“Profit-motivated entity” means an individual, individuals, or legal entity which is not a nonprofit entity.</text> </paragraph> <paragraph num="(18)"> <text>“Program Guide” means the Multifamily Rental Financing Program Guide adopted by the Department, as amended from time to time.</text> </paragraph> <paragraph num="(19)"> <text>“Project” means a community development project, public purpose project, energy conservation project, or home improvement project.</text> </paragraph> <paragraph num="(20)"> <text>“Public purpose project” means any undertaking or project which:</text> <paragraph num="(a)"> <text>Is eligible, in whole or in part, for federal low-income housing credits;</text> </paragraph> <paragraph num="(b)"> <text>Is located in a distressed area including land, buildings, and other improvements, real, mixed, and personal properties, or an interest in these properties, that is planned, acquired, owned, developed, constructed, reconstructed, rehabilitated, repaired, renovated, or improved with the financial assistance of the Administration or the assistance of federal low-income housing tax credits as may be authorized by the Internal Revenue Code;</text> </paragraph> <paragraph num="(c)"> <text>May include improvements such as streets, roads, sewer and water lines, and other public or private facilities intended for commercial, educational, cultural, recreational, community, or other civic purposes;</text> </paragraph> <paragraph num="(d)"> <text>Shall provide in substantial part for existing or new housing, unless it is determined by the Secretary that sound community development is promoted by including a greater proportion of public or private facilities; and</text> </paragraph> <paragraph num="(e)"> <text>Provides that the housing portion of a public purpose project shall be occupied in whole or in part by families of limited incomes.</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Secretary” means the Secretary of Housing and Community Development of Maryland.</text> </paragraph> <paragraph num="(22)"> <text>“Section 8” means Section 8 of the United States Housing Act of 1937, as amended.</text> </paragraph> <paragraph num="(23)"> <text>“Solar energy project” means any addition, alteration, or improvement to a residential or commercial building that is designed to use wind energy, energy produced by a wood-burning appliance, or solar energy, either of the active type based on mechanically forced energy transfer or of the passive type based on convective, conductive, or radiant energy transfer (or some combination of these types), to reduce the energy requirements of the building. Solar energy project includes:</text> <paragraph num="(a)"> <text>A solar process heat device, solar electric device, and any earth sheltered building in which the sheltering substantially reduces the consumption of energy by the building; and</text> </paragraph> <paragraph num="(b)"> <text>Only those fireplaces that are integral parts of a system that is designed to use passive type solar energy.</text> </paragraph> </paragraph> <paragraph num="(24)"> <text>“Sponsor” means:</text> <paragraph num="(a)"> <text>A borrower on a loan made by the Administration to finance a project;</text> </paragraph> <paragraph num="(b)"> <text>The person or entity principally responsible for the project and application for the loan before construction loan closing.</text> </paragraph> </paragraph> <paragraph num="(25)"> <text>“Targeted area” means any:</text> <paragraph num="(a)"> <text>Census tracts in which 70 percent or more of the families have income which is 80 percent or less of the Statewide median family income, based on the most recent decennial census for which data are available; or</text> </paragraph> <paragraph num="(b)"> <text>Area of chronic economic distress designated by the State and approved by the United States Secretary of the Treasury and the United States Secretary of Housing and Urban Development.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Sponsors."> <paragraph num="A."> <text>Each sponsor shall meet all of the applicable requirements set forth in §§ B—I of this regulation.</text> </paragraph> <paragraph num="B."> <text>If the sponsor is a business entity, the entity shall be in good standing and be qualified to do business in Maryland.</text> </paragraph> <paragraph num="C."> <text>The sponsor shall own the property in fee simple or under a ground lease acceptable to the Administration.</text> </paragraph> <paragraph num="D."> <text>The sponsor shall have all necessary legal and corporate authorizations to incur the obligations of the loan.</text> </paragraph> <paragraph num="E."> <text>The sponsor shall demonstrate creditworthiness and repayment ability acceptable to the Administration.</text> </paragraph> <paragraph num="F."> <text>For community development, public purpose, and home improvement projects, a sponsor shall agree in a recordable document that the percentage of the total dwelling units in the project to be occupied by families of limited incomes, as determined in accordance with Regulation .04B, below, shall be occupied for so long as the loan is outstanding or such longer period of time as the Administration may require. If a sponsor is subject to the occupancy requirements of §F or §G, the units restricted for those purposes may also be used to meet the occupancy requirements of this section.</text> </paragraph> <paragraph num="G."> <text>If the project is funded with proceeds that are subject to the occupancy requirements of the Internal Revenue Code of 1986, the sponsor shall agree in a recordable document that:</text> <paragraph num="(1)"> <text>Not less than:</text> <paragraph num="(a)"> <text>20 percent of the dwelling units in the project will be occupied by households whose gross incomes do not exceed 50 percent of the area median gross income, adjusted for household size as published from time to time by the United States Department of Housing and Urban Development, or</text> </paragraph> <paragraph num="(b)"> <text>40 percent of the dwelling units in the project will be occupied by households whose gross incomes do not exceed 60 percent of the area median gross income, adjusted for household size as published from time to time by the United States Department of Housing and Urban Development;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The project will have the applicable percentage of occupied dwelling units actually occupied by individuals or families whose gross incomes do not exceed the applicable percentage of the area median gross income as soon as 10 percent of the dwelling units in the project are first occupied unless, in the case of a project occupied at closing, the Administration permits a reasonable period for compliance based on an opinion of bond counsel that this reasonable period is permitted under applicable federal tax law;</text> </paragraph> <paragraph num="(3)"> <text>The applicable occupancy percentage will be maintained until the latest of the:</text> <paragraph num="(a)"> <text>Date which is 15 years after the date on which 50 percent of the dwelling units in the project are occupied,</text> </paragraph> <paragraph num="(b)"> <text>First day on which no tax-exempt bond, including any refunding bond in certain instances when a loan is made from the funds derived from payments or prepayment on loans made with the proceeds of revenue bonds, issued with respect to the project is outstanding, or</text> </paragraph> <paragraph num="(c)"> <text>Date on which any assistance provided with respect to the project under Section 8 terminates.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>If the project is funded with proceeds that are subject to the occupancy requirements of the Internal Revenue Code of 1954, the sponsor shall agree in a recordable document that:</text> <paragraph num="(1)"> <text>Not less than 20 percent of the dwelling units will be occupied by households whose gross incomes do not exceed 80 percent of area median gross income as published from time to time by the United States Department of Housing and Urban Development; or if the project is located in a targeted area, not less than 15 percent of the dwelling units will be occupied by households whose gross incomes do not exceed 80 percent of area median gross income, as published from time to time by the United States Department of Housing and Urban Development;</text> </paragraph> <paragraph num="(2)"> <text>The project will have the applicable percent of occupied dwelling units actually occupied by individuals or families whose gross incomes do not exceed 80 percent of area median gross income as soon as 10 percent of the dwelling units in the project are first occupied;</text> </paragraph> <paragraph num="(3)"> <text>The applicable occupancy percentage will be maintained until the latest of the:</text> <paragraph num="(a)"> <text>Date which is 10 years after the date on which 50 percent of the dwelling units in the project are occupied,</text> </paragraph> <paragraph num="(b)"> <text>Last day of a period starting with the date the first unit is occupied and continuing for half the life of the longest bond issued in connection with the project financing (for a refunding issue, in certain instances when a loan is made from the funds derived from payments or prepayment on loans made with the proceeds of revenue bonds, the life of the longest bond equals the sum of the period the prior issue was outstanding and the longest term of any of the refunding bonds), or</text> </paragraph> <paragraph num="(c)"> <text>Date on which any assistance provided with respect to the project under Section 8 terminates.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>If a project is funded with proceeds that are subject to the requirements of either the Internal Revenue Code of 1986 or 1954, a sponsor shall agree to comply with the most restrictive requirement of the Internal Revenue Code which applies to the project or to the sponsor in connection with the financing and as determined by opinion of the bond counsel of the Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Projects."> <paragraph num="A."> <text>To qualify as an eligible project for a loan, the project shall meet the following requirements:</text> <paragraph num="(1)"> <text>The project shall provide rental units used primarily for year-round residential use;</text> </paragraph> <paragraph num="(2)"> <text>If the project is a:</text> <paragraph num="(a)"> <text>Community development or home improvement project, it shall be constructed or rehabilitated for use as rental housing,</text> </paragraph> <paragraph num="(b)"> <text>Solar energy or energy conservation project, it shall be rental housing in need of property or energy conservation improvements to improve its habitability, liveability, and energy efficiency, or</text> </paragraph> <paragraph num="(c)"> <text>Public purpose project, more than half of the project shall be constructed or rehabilitated for use as housing to be occupied in whole or part by families of limited income, unless the Secretary determines in writing that a smaller portion of housing and a greater proportion of public or private facilities such as streets, roads, sewer and water lines, and other public or private facilities intended for commercial, educational, cultural, recreational, community or other civic purpose will promote sound community development;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The project shall be owned by an eligible sponsor;</text> </paragraph> <paragraph num="(4)"> <text>The Secretary shall have issued a determination that the improvements constitute a community development project, public purpose project, energy conservation project, solar energy project, or home improvement project within the meaning of the Act;</text> </paragraph> <paragraph num="(5)"> <text>The project shall comply, if necessary, with the notice, public hearing, and public approval requirements of the applicable Internal Revenue Code;</text> </paragraph> <paragraph num="(6)"> <text>The project shall conform to the statutory definitions and criteria for a community development project, public purpose project, home improvement project, solar energy project, or energy conservation project;</text> </paragraph> <paragraph num="(7)"> <text>If the project is a public purpose project, it either shall be:</text> <paragraph num="(a)"> <text>Qualified for federal low income housing tax credits, or</text> </paragraph> <paragraph num="(b)"> <text>Located in a distressed area designated by the Secretary in accordance with Regulation .09 of this chapter;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>The sponsor is capable of and can be expected to achieve successful completion of the project;</text> </paragraph> <paragraph num="(9)"> <text>Other than construction financed by the proceeds of revenue bonds issued on behalf of a county, the project shall be eligible only if:</text> <paragraph num="(a)"> <text>The Department has complied with COMAR 05.01.06.06, and</text> </paragraph> <paragraph num="(b)"> <text>The Secretary has issued the written determination required under COMAR 05.01.06.07;</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>The project conforms or will conform to all applicable State and local laws, codes, and regulations, including zoning, building, and housing regulations;</text> </paragraph> <paragraph num="(11)"> <text>The project is economically feasible so that the loan reasonably can be expected to be repaid in full on such terms and conditions as determined by the Administration;</text> </paragraph> <paragraph num="(12)"> <text>The project has a useful life of a length satisfactory to the Administration with reasonable maintenance;</text> </paragraph> <paragraph num="(13)"> <text>The project promotes the purposes of the Act and these regulations; and</text> </paragraph> <paragraph num="(14)"> <text>The project is located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland, unless, for existing construction, the Secretary determines in the Secretary's sole discretion that the project is necessary to:</text> <paragraph num="(a)"> <text>Protect public safety or health;</text> </paragraph> <paragraph num="(b)"> <text>Alleviate personal economic hardship in an emergency situation;</text> </paragraph> <paragraph num="(c)"> <text>Promote economically integrated housing;</text> </paragraph> <paragraph num="(d)"> <text>Avoid a conflict with federal law; or</text> </paragraph> <paragraph num="(e)"> <text>Relieve an inequity or carry out the purposes of the Program, consistent with the purposes of State Finance and Procurement Article, Title 5, Subtitle 7B, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Establishment of Limits.</text> <paragraph num="(1)"> <text>The Secretary shall establish upper income limits for households of limited income taking into consideration factors including:</text> <paragraph num="(a)"> <text>The amount of the total annual income of the households available for housing needs;</text> </paragraph> <paragraph num="(b)"> <text>The size of the household;</text> </paragraph> <paragraph num="(c)"> <text>The cost and condition of housing facilities available;</text> </paragraph> <paragraph num="(d)"> <text>The ability of the households to compete successfully in the normal private housing market; and</text> </paragraph> <paragraph num="(e)"> <text>Standards and definitions established for pertinent federal housing programs.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Limits may be established by household size. Limits also may be established from time to time on a regional basis. Income eligibility criteria, within limits lower than the regional limits, may be established for particular projects.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Secretary may determine, from time to time, the percentage of units in a project which are occupied by families of limited income in order to qualify as an eligible project. The Secretary shall take into consideration such factors as the Secretary may deem appropriate, which may include:</text> <paragraph num="(1)"> <text>Housing needs in the region within which the project is to be located;</text> </paragraph> <paragraph num="(2)"> <text>Availability and cost of alternative housing within that region; and</text> </paragraph> <paragraph num="(3)"> <text>The economic feasibility of the project.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Community development and home improvement projects shall be required to be occupied by families of limited income in not less than 51 percent of the total dwelling units in a project, unless the project is financed with taxable bonds, in which case at least 20 percent of the dwelling units shall be occupied by families of limited income.</text> </paragraph> <paragraph num="E."> <text>Public purpose projects which are eligible for federal low income housing tax credits shall be occupied and rented in accordance with all federal requirements governing the continuing qualifications for the tax credits. Public purpose projects located in distressed areas shall be occupied in whole or in part by families of limited income. The percentage of dwelling units to be regulated for each particular project shall be determined by the Secretary in writing.</text> </paragraph> <paragraph num="F."> <text>Solar energy and energy conservation projects are not subject to income or occupancy requirements unless otherwise determined by the Secretary.</text> </paragraph> <paragraph num="G."> <text>Project Selection. The Administration may, in its sole discretion, finance particular projects and decline to finance otherwise eligible projects, based on its assessment of the project's overall merit and its merit relative to competing alternatives.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Uses and Costs."> <paragraph num="A."> <text>The Administration may make loans as follows:</text> <paragraph num="(1)"> <text>Construction loans;</text> </paragraph> <paragraph num="(2)"> <text>Rehabilitation loans;</text> </paragraph> <paragraph num="(3)"> <text>Acquisition and rehabilitation loans;</text> </paragraph> <paragraph num="(4)"> <text>Home improvement project loans; and</text> </paragraph> <paragraph num="(5)"> <text>Permanent or refinancing loans.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Administration may participate with other lenders in the making of loans to finance projects.</text> </paragraph> <paragraph num="C."> <text>The Administration may purchase securities issued by the Government National Mortgage Association which are backed by loans which comply with the requirements of:</text> <paragraph num="(1)"> <text>Regulation .03B—D, F, and G;</text> </paragraph> <paragraph num="(2)"> <text>Regulation .04;</text> </paragraph> <paragraph num="(3)"> <text>Regulation .06B, E, F, and P(5);</text> </paragraph> <paragraph num="(4)"> <text>Regulation .08E and F; and</text> </paragraph> <paragraph num="(5)"> <text>Regulations .11—.14.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Administration may issue revenue bonds, on a pooled or stand-alone basis, which are secured only by a pledge of a housing authority's funding from the United States Department of Housing and Urban Development's Capital Fund Program as amended from time to time or other similar program of the United States Department of Housing and Urban Development. Loans made to housing authorities with the proceeds of revenue bonds shall comply with the requirements of this chapter except:</text> <paragraph num="(1)"> <text>Regulation .03F;</text> </paragraph> <paragraph num="(2)"> <text>Regulation .06D, F, K, and L;</text> </paragraph> <paragraph num="(3)"> <text>Regulation .08D;</text> </paragraph> <paragraph num="(4)"> <text>Regulation .09D; and</text> </paragraph> <paragraph num="(5)"> <text>Regulation .13.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Before closing a construction loan where the Administration does not provide permanent financing, the sponsor shall provide a permanent loan commitment from a mortgagee approved by the Administration containing terms satisfactory to the Administration or cash or cash equivalent acceptable to the Administration in its sole discretion.</text> </paragraph> <paragraph num="F."> <text>Loans may finance the costs associated with undertaking construction or substantial rehabilitation of the project, including without limitation the following:</text> <paragraph num="(1)"> <text>Costs of appraisals and market studies;</text> </paragraph> <paragraph num="(2)"> <text>Architectural and engineering costs for design and supervision;</text> </paragraph> <paragraph num="(3)"> <text>Costs of bonds, permits, and fees;</text> </paragraph> <paragraph num="(4)"> <text>Carrying costs during construction, including construction interest, real estate taxes, and property insurance;</text> </paragraph> <paragraph num="(5)"> <text>Financing fees and charges imposed by the Administration, the mortgage insurer, guarantor, letter of credit provider, or any entity servicing or providing credit enhancement with respect to the loan or the bonds financing the loan; and</text> </paragraph> <paragraph num="(6)"> <text>Legal, processing, packaging, and marketing fees and charges.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Loan Terms and Requirements — General."> <paragraph num="A."> <text>Amount. The Administration may lend up to 100 percent of the approved replacement cost of any project. “Replacement cost” for this purpose means development costs including those costs of construction, carrying charges, financing costs, and professional fees approved by the Administration, plus the market value of the land on which the project was built or is to be constructed.</text> </paragraph> <paragraph num="B."> <text>Term. The terms of loans for financing of projects shall be established by the Administration based on underwriting and market conditions at the time of financing.</text> </paragraph> <paragraph num="C."> <text>Interest Rate. The Administration may charge interest at a rate in accordance with the underwriting factors for the project including the term of the loan and income and operating projections.</text> </paragraph> <paragraph num="D."> <text>Enhancement of Mortgage or Bonds.</text> <paragraph num="(1)"> <text>After consideration of underwriting, market conditions, and the requirements of the bond issuance, the Administration shall determine and notify the sponsor whether the sponsor will be required to insure or guarantee the proposed loan, or otherwise insure or enhance the bonds financing the loan.</text> </paragraph> <paragraph num="(2)"> <text>If required by the Administration, the sponsor shall engage a credit enhancer and secure a commitment to insure or guarantee the proposed loan, or otherwise insure or enhance the bonds financing the loan. This commitment shall be secured before any loan closing or at an earlier time as required by the Administration in its sole discretion.</text> </paragraph> <paragraph num="(3)"> <text>The sponsor shall comply with any conditions of the insurance or guarantee commitment so that the insurance or guarantee will be in effect from the time of loan closing, with respect to loan insurance, or from the time of the issuance of the bonds, with respect to bond insurance.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Local Governments.</text> <paragraph num="(1)"> <text>For each project for which an application is received under this chapter, the Department shall provide written notice and reasonable opportunity to comment on the project to the chief executive officer or the equivalent officer and the head or president of the legislative body of the political subdivision in which the proposed project is located.</text> </paragraph> <paragraph num="(2)"> <text>If a proposed project is in a municipal corporation, the notice required under §E(1) of this regulation shall be sent to the chief executive officer and the head or president of the legislative body of the municipal corporation, not the surrounding county.</text> </paragraph> <paragraph num="(3)"> <text>The notice provided under §E(1) of this regulation shall contain the following information about the proposed project:</text> <paragraph num="(a)"> <text>Date of application;</text> </paragraph> <paragraph num="(b)"> <text>Name and description of project;</text> </paragraph> <paragraph num="(c)"> <text>Address of project;</text> </paragraph> <paragraph num="(d)"> <text>Sponsor of the project and sponsor’s contact information;</text> </paragraph> <paragraph num="(e)"> <text>Amount of funding requested;</text> </paragraph> <paragraph num="(f)"> <text>Amount type and provider of other sources of funding;</text> </paragraph> <paragraph num="(g)"> <text>Total number of units;</text> </paragraph> <paragraph num="(h)"> <text>Number of units reserved for households of limited income, including the income and rent limits; and</text> </paragraph> <paragraph num="(i)"> <text>Such other information as the Department deems relevant.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Lien Priority. Except for liens held in connection with public purpose projects, any lien held by the Administration on property shall be a lien superior to all other liens on the property except liens for taxes owed to the State or any subdivision of the State and earlier mortgage liens. The Administration, in its discretion, may require the release and repayment of any liens.</text> </paragraph> <paragraph num="G."> <text>Property, Liability, and Other Insurance</text> <paragraph num="(1)"> <text>At or before closing of a loan, and at such other times as required by the Administration, the sponsor shall provide evidence that the sponsor, contractor and other parties, have obtained and maintained the following insurance:</text> <paragraph num="(a)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(b)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(c)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(d)"> <text>Architect's errors and omissions;</text> </paragraph> <paragraph num="(e)"> <text>Engineer's errors and omissions; and</text> </paragraph> <paragraph num="(f)"> <text>Flood insurance, if the project is located in a flood hazard zone.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All insurance required under §G(1) of this regulation shall meet the following requirements:</text> <paragraph num="(a)"> <text>Be written by a company registered with the Maryland Insurance Administration;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(c)"> <text>Not be terminable without prior notification to the Administration; and</text> </paragraph> <paragraph num="(d)"> <text>Contain such other terms and coverage satisfactory to the Administration.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition to the requirements of §G(2) of this regulation, owner's liability insurance shall:</text> <paragraph num="(a)"> <text>Name the Administration as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition to the requirements of §G(2) of this regulation, contractor's liability and contractor's builder's risk insurance shall:</text> <paragraph num="(a)"> <text>Name the Administration as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in place through final closing or such later date as the Administration requires.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In addition to the requirements of §G(2) of this regulation, owner's property or hazard insurance shall:</text> <paragraph num="(a)"> <text>Name the Administration as an additional insured, loss payee and mortgagee; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Payment. Sponsors shall repay the loan in substantially equal monthly payments of interest and principal in order that the loan is fully amortized over its term or in amounts which ensure timely payments of interest and principal to the bondholders. In cases where loans are made from proceeds derived from payments or prepayments on loans made or purchased by the Administration with the proceeds of revenue bonds, the Administration may set repayment terms in accordance with the terms and conditions as determined by the Administration which will promote the economic feasibility of its project.</text> </paragraph> <paragraph num="I."> <text>Late Charges and Other Fees. Sponsors shall pay any servicing fees, loan insurance premiums, bond insurance premiums, or late charges that the Administration or the loan insurer may require and that are permitted by State law.</text> </paragraph> <paragraph num="J."> <text>Expense Escrows. The Administration may require the sponsor to deposit monthly with the Administration 1/6 of the annual amount of real estate taxes, insurance, mortgage insurance premiums, a reserve for replacements, and other expenses of the project. While the loan is outstanding, the Administration may require additional amounts to be deposited into the reserve for replacements.</text> </paragraph> <paragraph num="K."> <text>Title Insurance. The sponsor shall provide a standard American Land Title Association Loan policy or other form of title policy acceptable to the Administration and to the Office of the Attorney General, for an amount equal to the maximum principal amount of the loan, insuring the Administration that title to the building and the real property on which the building is located on the date of the construction loan closing is vested in the sponsor, and containing only standard exceptions and encumbrances approved by the Administration.</text> </paragraph> <paragraph num="L."> <text>Appraisal. Sponsors shall provide or pay for an appraisal performed by an appraiser acceptable to the Administration which shows the current value of the property and the expected value of the property after completion of the improvements.</text> </paragraph> <paragraph num="M."> <text>Security Requirements. The Administration may require the following instruments or guarantees to secure its loans:</text> <paragraph num="(1)"> <text>Such sureties or guarantees of the loan as may be determined necessary by the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Cash or an unconditional, irrevocable letter of credit from a financial institution approved by the Administration to meet working capital, operating deficit, and off-site improvement completion requirements.</text> </paragraph> <paragraph num="(3)"> <text>Payment and performance bonds for rental projects each in an amount equal to 100 percent of the contract price, or alternatively, cash or an irrevocable letter of credit equal to 25 percent of the contract price. For FHA-insured multi-family rental projects, compliance with FHA requirements for completion assurance normally will be accepted.</text> </paragraph> <paragraph num="(4)"> <text>Guarantees of completion as may be deemed necessary or desirable by the Administration.</text> </paragraph> <paragraph num="(5)"> <text>Escrows of syndication proceeds when appropriate.</text> </paragraph> <paragraph num="(6)"> <text>An unconditional, irrevocable letter of credit from a financial institution approved by the Administration to secure any costs of negative arbitage.</text> </paragraph> </paragraph> <paragraph num="N."> <text>Disclosure.</text> <paragraph num="(1)"> <text>All directors, officers, principals, members, general partners, and limited partners of the sponsor shall be identified, and the proportionate share of each in the proposed project so indicated in the application. Subsequent changes in either a general partner, a limited partner having more than a 25 percent interest in the sponsor, a managing member, or member owning more than a 25 percent interest in the sponsor shall be subject to the written approval of the Administration.</text> </paragraph> <paragraph num="(2)"> <text>The sponsor is responsible for providing any disclosure required by the Administration or any credit enhancer relating to the project, the sponsor, the syndication, and the construction team.</text> </paragraph> </paragraph> <paragraph num="O."> <text>Financial Statements. The Administration shall require certified financial statements for all general partners or corporate sponsors acceptable to the Administration in its sole discretion. Furthermore, at the discretion of the Administration, financial statements may be required for all limited partners or any other individuals or entities having an interest in the project.</text> </paragraph> <paragraph num="P."> <text>Documentation. The Administration shall prescribe the form and content of all loan documents which may include a note, deed of trust, regulatory agreement, or other instruments that the Administration may, from time to time, require to evidence or secure the loan or enforce the requirements of the Act or this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms — Restrictions on Ownership."> <paragraph num="A."> <text>Change of Ownership. The sponsor may not sell, cease to own, assign, transfer, or dispose of all or any part of the property, or the sponsor's interest in the property, except for leases of less than 3 years to tenants, during the loan term, without the prior express written consent of the Administration, as set forth in the loan documents.</text> </paragraph> <paragraph num="B."> <text>Assumption. A loan may not be assumed without the prior written approval of the Administration.</text> </paragraph> <paragraph num="C."> <text>Prepayment. If the prepayment operates to terminate the occupancy covenants for households of limited income, with the prior written approval of the Administration, a sponsor may prepay a loan subject to any prohibition on prepayment contained in the loan documents and if the sponsor complies with the following requirements:</text> <paragraph num="(1)"> <text>Provide written notice to each tenant residing in the project, which describes the impact of the prepayment on the tenant, and, if applicable, any assistance to which the tenant is entitled;</text> </paragraph> <paragraph num="(2)"> <text>Provide written notice of the prepayment to the Administration, the political subdivision in which the project is located, and any interested parties registered with the Administration;</text> </paragraph> <paragraph num="(3)"> <text>Offer a right of first purchase to the Administration, the political subdivision in which the project is located, the local public housing authority, if any, and any interested parties registered with the Administration;</text> </paragraph> <paragraph num="(4)"> <text>Provide a lease extension for at least 1 year following the notice of the prospective prepayment to each tenant residing in an assisted unit;</text> </paragraph> <paragraph num="(5)"> <text>Make relocation assistance to each tenant in an amount determined by the Administration;</text> </paragraph> <paragraph num="(6)"> <text>Provide 3-year lease extensions or 3 months rent equivalent payments to 20 percent of the tenants who live in assisted units and qualify as elderly, disabled, or households with minors; and</text> </paragraph> <paragraph num="(7)"> <text>Comply with any procedural requirements of the Administration with respect to the right of first purchase, relocation payments, and lease extensions.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Continuing Occupancy Income Limits. If after initial occupancy the annual income of a family of limited income exceeds the income limits set by the Secretary, and thereby causes the project to not meet the requirements of the Internal Revenue Code and regulations promulgated under the Internal Revenue Code, as amended from time to time (considering any limited increases permitted by this chapter or applicable federal tax law), the sponsor shall notify the Administration upon the Administration's next subsequent income certification request and shall rent the next available unrestricted rental housing unit to a family of limited income.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Application Processing Procedures."> <paragraph num="A."> <text>Application. Applications for loans are to be made on forms prescribed by the Administration, and shall include all supporting documentation required by the Administration.</text> </paragraph> <paragraph num="B."> <text>Review of Applications. Each application shall be subject to an initial review to make a preliminary assessment of the eligibility of the sponsor and the project in accordance with Regulations .03 and .04 and in accordance with the Program Guide. The Administration shall notify the sponsor in writing upon completion of its assessment of eligibility.</text> </paragraph> <paragraph num="C."> <text>Rejection of Applications. If the Administration determines that a project or sponsor is not eligible for a loan, the Administration shall issue a written notice of the determination of ineligibility.</text> </paragraph> <paragraph num="D."> <text>Commitment for Insurance. Before issuing a commitment for a loan, the Administration shall receive a commitment from the appropriate mortgage insurer for approval for mortgage insurance, as may be required by Regulation .06D of this chapter.</text> </paragraph> <paragraph num="E."> <text>Commitment.</text> <paragraph num="(1)"> <text>Upon satisfaction of all the requirements and receipt of an approval or commitment from a credit enhancer, if required, the Administration may undertake a commitment analysis of each loan as to final loan amount, structure, and terms.</text> </paragraph> <paragraph num="(2)"> <text>Except in the case of an emergency when urgent action is required, the Director of the Administration shall submit all loans above a minimum amount, determined by the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland, to the Committee for review and recommendation to the Secretary for approval or disapproval of the loan and the terms of the loan. At the discretion of the Administration, loans in an amount below the minimum amount established by the Housing Finance Review Committee need not be submitted to the Committee for review and recommendation. The Secretary, in accordance with Regulation.16E of this chapter, may delegate the review and approval of these loans.</text> </paragraph> <paragraph num="(3)"> <text>After receipt of a recommendation of the Housing Finance Review Committee, the Secretary may approve or disapprove the loan and the terms of the loan. In an emergency, when urgent action is required or for loans below the minimum amount established by the Housing Finance Review Committee, the Secretary may approve a loan without the recommendation of the Committee.</text> </paragraph> <paragraph num="(4)"> <text>The Secretary shall execute a written determination that each loan is for a community development project, energy conservation project, solar energy project, public purpose project, or home improvement project authorized by the Act, before the issuance of a commitment to make, purchase, or finance a loan or purchase a security backed by a loan.</text> </paragraph> <paragraph num="(5)"> <text>Upon approval of a loan and execution of a determination, the Administration shall issue a commitment letter setting forth:</text> <paragraph num="(a)"> <text>The interest rate on the loan;</text> </paragraph> <paragraph num="(b)"> <text>The repayment provisions; and</text> </paragraph> <paragraph num="(c)"> <text>Other terms and conditions that the Administration considers appropriate for the loan or the project.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The Administration will specify a time limit within which the initial closing of the loan shall occur, which time limit may be extended in the Administration's sole discretion. If initial closing does not occur within the time limit specified by the Administration, the Administration may use the monies committed for the loan for any other loan or purpose authorized by the Act.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Reconsideration. Sponsors may request reconsideration of a rejection in accordance with the procedures contained in the Program Guide. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Loan Procedures."> <paragraph num="A."> <text>Early Start. In certain circumstances and upon the request of a sponsor who has applied for a loan which has been recommended for approval by the Housing Finance Review Committee and approved by the Secretary, the Administration may approve the beginning of construction of a project before the initial loan closing. All construction undertaken by the sponsor before initial loan closing is at the risk of the sponsor, and does not bind or obligate the Administration to make the loan. The early start approval letter sets forth various conditions, such as receipt by the Administration of acceptable plans and specifications and delivery of payment and performance bonds, which shall be complied with before beginning construction. If the conditions are complied with and the loan is closed, the loan reimburses the sponsor, as specified in the loan closing documents, for a portion of the costs incurred in the construction undertaken before initial loan closing.</text> </paragraph> <paragraph num="B."> <text>Construction Loan Closing.</text> <paragraph num="(1)"> <text>The sponsor shall furnish or cause to be furnished to the Administration and its counsel satisfactory evidence of compliance with the terms and conditions of the loan before the closing of the loan.</text> </paragraph> <paragraph num="(2)"> <text>The Administration shall request the sponsor to have its attorney review the required legal documents for closing in the form prescribed by the Administration, and to submit comments for the Administration's and its counsel's review. When all procedures and requirements are completed, initial loan closing shall be arranged by counsel to the Administration.</text> </paragraph> <paragraph num="(3)"> <text>The sponsor shall tender an off-site bond, cash, or an unconditional, irrevocable letter of credit to the Administration at the time of construction loan closing to assure completion of any off-site improvements.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Construction Period Disbursements. The Administration may:</text> <paragraph num="(1)"> <text>Conduct regular on-site inspections of construction;</text> </paragraph> <paragraph num="(2)"> <text>Make construction loan disbursements on the basis of work-in-place plus materials acceptably stored on site, less 10 percent retention; and</text> </paragraph> <paragraph num="(3)"> <text>Make disbursement for materials acceptably stored off-site, if the materials are:</text> <paragraph num="(a)"> <text>In a bonded warehouse,</text> </paragraph> <paragraph num="(b)"> <text>Set aside and labeled with the project's name,</text> </paragraph> <paragraph num="(c)"> <text>Inspected by the Administration's inspector,</text> </paragraph> <paragraph num="(d)"> <text>Insured, with the Administration as a named insured, and</text> </paragraph> <paragraph num="(e)"> <text>Documented by evidence of payment for the materials.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Permanent Loan Closing. Permanent loan closing shall be arranged after construction completion and cost certification according to such procedures and documentation as may be required by the Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Distressed Area Designation."> <paragraph num="A."> <text>Request for Designation. A municipality or county may request in writing at any time that a geographically defined area of the municipality or county be designated by the Secretary as a distressed area. The request may be made before or in conjunction with the request of a sponsor for financing for a public purpose project.</text> </paragraph> <paragraph num="B."> <text>Application. The request for designation shall include information with respect to the following:</text> <paragraph num="(1)"> <text>The availability, cost, and condition of housing and neighborhood facilities, including the age and number of abandoned and substandard structures;</text> </paragraph> <paragraph num="(2)"> <text>The income of residents relative to State or area median incomes, including the number of persons who are welfare recipients, unemployed, and in poverty;</text> </paragraph> <paragraph num="(3)"> <text>The need for financing for housing or public or private facilities to upgrade the social and economic conditions of the distressed area;</text> </paragraph> <paragraph num="(4)"> <text>The plans and financial commitment of the municipality or county to undertake improvements in the distressed area; and</text> </paragraph> <paragraph num="(5)"> <text>Such other information as may be requested by the Secretary, including standards established for other relevant State or federal programs.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Consideration. The Secretary, after considering the information supplied in accordance with §B, above, and other information and criteria deemed relevant by the Secretary, may, upon the basis of the information, issue a written determination designating any specific geographically defined area as a distressed area for purposes of these regulations and the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Fees; Program Guide."> <paragraph num="A."> <text>Amounts and time of payment of application fees, construction financing fees, permanent loan commitment fees, nonusage bond issuance fees, and other fees as may be required by the Administration shall be as provided in a fee schedule set forth in the Program Guide.</text> </paragraph> <paragraph num="B."> <text>The Administration shall establish underwriting standards, loan processing requirements, and other requirements or matters relating to the financing of mortgage loans or to the program in the Program Guide.</text> </paragraph> <paragraph num="C."> <text>Copies of the fee schedule and Program Guide shall be available for examination at the Administration’s principal office. The Administration shall make copies available to the public upon request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Books and Accounts."> <text>Sponsors, contractors, and subcontractors shall:</text> <paragraph num="A."> <text>Maintain such books, accounts, and records and file with the Administration such financial and other reports as the Administration may from time to time require;</text> </paragraph> <paragraph num="B."> <text>Ensure all of these books, accounts, and records are open to the inspection of representatives of the Administration or other agencies of the State during reasonable working hours;</text> </paragraph> <paragraph num="C."> <text>Maintain and make available for inspection for 7 years past the date of termination of the contractual relationship between:</text> <paragraph num="(1)"> <text>The sponsor and the Administration, all books, accounts, and records of the sponsor,</text> </paragraph> <paragraph num="(2)"> <text>The contractors, the subcontractors, and the sponsor, all books, accounts, and records of contractors and subcontractors.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Certification of Income."> <paragraph num="A."> <text>The sponsor shall obtain signed certificates of annual income from all persons who apply to occupy a project unit, on a form furnished or approved by the Administration. For projects where existing tenants will continue in occupancy during rehabilitation, the sponsor shall obtain signed income certifications from the required percentage of eligible tenants prior to the initial loan closing. Upon the consent of the person applying, the sponsor shall verify with the employer the information contained in the certificate of income. The sponsor shall file with the Administration, at least annually, a report disclosing the annual income of all persons in occupancy or selected for occupancy. In the case of a project which receives federal assistance, the procedures for the certification of income prescribed by the federal agency may be employed to the extent the procedures are consistent with the applicable income limitations of the Internal Revenue Code.</text> </paragraph> <paragraph num="B."> <text>Annual recertifications of income, semi-annual market rate tenant data reports, as well as periodic occupancy reports shall be submitted to the Administration, containing information as may be required by the Administration. The sponsor shall retain all certificates of income and documents verifying the information contained in them for a period of at least 3 years from the date on which the application to occupy a project unit is submitted to the sponsor.</text> </paragraph> <paragraph num="C."> <text>The purpose of the certification of annual income and the reports is to assure compliance with both the upper income limits required by Housing and Community Development Article, §4-212, Annotated Code of Maryland, and any upper income limits and occupancy requirements imposed by federal tax law in order to maintain the tax-exempt status of the bonds or notes, the proceeds of which financed the loan for the project. The requirements of this section are in addition to any other requirements imposed under federal tax law, including, without limitation, §142(d)(7) of the Internal Revenue Code of 1986 as amended.</text> </paragraph> <paragraph num="D."> <text>Sections A—C of this regulation do not apply to a project occupied by juveniles, placed in the project by court order or by any federal, State, or local agencies, and not occupied by other persons, provided that the projects are funded with the proceeds of taxable bonds and do not receive an allocation of low income housing tax credits.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Nondiscrimination; Drug Free and Alcohol Free Workplace."> <paragraph num="A."> <text>A sponsor or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the program.</text> </paragraph> <paragraph num="B."> <text>A sponsor or contractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Americans with Disabilities Act of 1990, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Administration and the sponsor or other appropriate parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Signs."> <text>If required by the Administration, each sponsor shall install a sign identifying the Administration as a lender on the project. The sign, at the discretion of the Administration, may be supplied by the Administration, but in any case shall comply with the design specifications of the Administration. The sponsor shall bear all costs of acquisition, delivery, and installation of a conforming sign, which costs may be included in the loan.</text> </regulation> <regulation prefix="Regulation" num=".16" heading="General Provisions."> <paragraph num="A."> <text>Issuance of Bonds and Notes.</text> <paragraph num="(1)"> <text>Timing. The Administration may obtain funds for loans to finance projects from any source authorized by law, particularly by issuing bonds or notes to be repaid from revenues of the project, federal subsidies made in connection with the project, or payments made by an insurer, guarantor, or credit enhancer of the loans or the bonds. The timing of any bond or note sale and the acceptability of the interest rate to be paid by the Administration are solely within the discretion of the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>Letter of Intent. The Administration generally requires a sponsor whose loan will be funded out of the proceeds of tax-exempt bonds or notes to execute a letter of intent to use a minimum amount of bond or note proceeds for an acquisition or construction loan to undertake a project at a specified location. The letters shall be accompanied by any required nonusage fee. If the sponsor fails to close a loan with the proceeds of bonds issued in whole or in part on behalf of the sponsor or the bonds or notes are not issued, the Administration will retain the fee.</text> </paragraph> <paragraph num="(3)"> <text>Rights of Bond and Note Holders. In the event of any conflict, whether expressly as stated, the rights of sponsors or borrowers under any agreement with the Administration, which loan is financed by notes or bonds issued pursuant to a certificate of authorization or bond resolution, are subject to the rights of holders and owners of the Administration's bonds or notes issued under that authorizing certificate or resolution.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or the Internal Revenue Code, or contrary to the provisions of any applicable bond certificate or resolution:</text> <paragraph num="(1)"> <text>To conform to the requirements of any federal agency in connection with any project with respect to which federal assistance is sought; or</text> </paragraph> <paragraph num="(2)"> <text>In exceptional circumstances, if, in the written determination of the Secretary, the application of these regulations in a specific case, or in an emergency situation, would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Severability Clause. If any clause, sentence, paragraph, section, or part of these regulations is adjudged invalid, the judgment does not affect, impair, or invalidate the remainder of them, but shall be confined in its operation to the clause, sentence, paragraph, section, or part of it directly involved in the controversy in which the judgment is rendered.</text> </paragraph> <paragraph num="D."> <text>False Statements. A sponsor who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by the Act.</text> </paragraph> <paragraph num="E."> <text>Delegation. The Secretary may delegate to the Director of the Administration or to any other official or employee of the Department or Administration the authority to execute or approve any program documents or loan documents, including commitments and letters of intent.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Affirmative Fair Housing Marketing Plan."> <text>Each project shall submit for review and approval by the Administration an affirmative fair housing marketing plan in accordance with the requirements of the Program Guide. The Administration shall monitor the project’s compliance with the approved plan.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §2-111 and Title 4, Subtitle 2; State Finance and Procurement Article, §§5-7B-01—5-7B-10; Annotated Code of Maryland;Executive Orders 01.01.1992.27C and 01.01.1998.04</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 20, 1975 (2:18 Md. R. 1234)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02C—M and .04A, A-1 amended effective August 2, 1982 (9:15 Md. R. 1511)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective June 2, 1978 (5:11 Md. R. 881)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04N amended effective August 3, 1977 (4:16 Md. R. 1207)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06, .07, .09, .18, .20 amended and new Regulation .21 adopted as an emergency provision effective November 1, 1982 (9:23 Md. R. 2253) (Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06, .07I, .18B, and .20 amended, and new Regulation .21 adopted effective March 14, 1983 (10:5 Md. R. 463)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06—.17 adopted effective March 9, 1979 (6:5 Md. R. 443); repealed effective October 11, 1982 (9:20 Md. R. 1981)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06—.20 adopted effective October 11, 1982 (9:20 Md. R. 1981)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06—.21 repealed effective July 30, 1984 (11:15 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulations .10A and .16 amended as an emergency provision effective April 23, 1980 (7:10 Md. R. 949); adopted permanently effective September 5, 1980 (7:18 Md. R. 1735)</annotation> <annotation type="History" subtype="Administrative History">Annotation: COMAR 05.01.05.04H(2) is within the scope of Article 41, §266DD-5 and is valid. Forestville Park v. State, 50 Md. App. 570, 439 A.2d 46 (1982).</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.05 to COMAR 05.05.02</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05, Community Development Financing Program, repealed and new Regulations .01—.14, Multi-Family Housing Revenue Bond Financing Program, adopted effective October 30, 1989 (16:21 Md. R. 2260)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective January 2, 1994 (20:25 Md. R. 1942); April 5, 1999 (26:7 Md. R. 538); January 21, 2002 (29:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective April 12, 1993 (20:7 Md. R. 640); May 31, 1999 (26:11 Md. R. 853)</annotation> <annotation type="History" subtype="Administrative History">Regulations .07 and .13 amended and recodified to Regulations .08 and 14, respectively, effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 adopted effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Regulations .08—.12 and .14 recodified to Regulations .09—.13 and .17, respectively, effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective January 2, 1994 (20:25 Md. R. 1942)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13D adopted effective December 5, 1994 (21:24 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulations .15 and .16 adopted effective April 12, 1993 (20:7 Md. R. 640)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective July 19, 2004 (31:14 Md. R. 1077)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06E amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06G amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective October 8, 2018 (45:20 Md. R. 917)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08B, F amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 adopted effective December 22, 2014 (41:25 Md. R. 1476)</annotation> </annotations> </chapter> <chapter num="03" heading="Rental Allowance Program" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.17 adopted as an emergency provision effective February 23, 1987 (14:6 Md. R. 707); emergency status extended at 14:20 Md. R. 2138</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.17 adopted effective November 30, 1987 (14:24 Md. R. 2554)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.29 to COMAR 05.05.03</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended as an emergency provision effective July 1, 1995 (22:14 Md. R. 1044); emergency status expired January 1, 1996; amended permanently effective March 25, 1996 (23:6 Md. R. 474)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D adopted effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended as an emergency provision effective July 1, 1995 (22:14 Md. R. 1044); emergency status expired January 1, 1996; amended permanently effective March 25, 1996 (23:6 Md. R. 474)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08B amended as an emergency provision effective July 1, 1995 (22:14 Md. R. 1044); emergency status expired January 1, 1996; amended permanently effective March 25, 1996 (23:6 Md. R. 474)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08E repealed effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended as an emergency provision effective July 1, 1995 (22:14 Md. R. 1044); emergency status expired January 1, 1996; amended permanently effective March 25, 1996 (23:6 Md. R. 474)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09C amended effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09E adopted as an emergency provision effective July 1, 1995 (22:14 Md. R. 1044); emergency status expired January 1, 1996; adopted permanently effective March 25, 1996 (23:6 Md. R. 474)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11D amended effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended as an emergency provision effective July 1, 1995 (22:14 Md. R. 1044); emergency status expired January 1, 1996; amended permanently effective March 25, 1996 (23:6 Md. R. 474)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective February 20, 1989 (16:3 Md. R. 340)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective June 28, 1999 (26:13 Md. R. 1018)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective September 12, 2005 (32:18 Md. R. 1518)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A, D amended effective April 30, 2001 (28:8 Md. R. 759)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective April 30, 2001 (28:8 Md. R. 759)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09C amended effective September 12, 2005 (32:18 Md. R. 1518)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 repealed and new Regulation .13 adopted effective April 30, 2001 (28:8 Md. R. 759)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective February 26, 2007 (34:4 Md. R. 398)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 6, 2009 (36:7 Md. R. 521)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective August 13, 2018 (45:16 Md. R. 774)</annotation> </annotations> </chapter> <chapter num="04" heading="Rental Housing Production Program" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.17 adopted as an emergency provision effective July 21, 1987 (14:17 Md. R. 1863); emergency status extended at 15:4 Md. R. 469; emergency status expired April 30, 1988</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.18 to COMAR 05.05.04</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.17 adopted effective May 30, 1988 (15:11 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective February 18, 1991 (18:3 Md. R. 302)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective April 5, 1999 (26:7 Md. R. 538)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08C amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended as an emergency provision effective August 24, 1995 (22:19 Md. R. 1457); emergency status extended at 23:7 Md. R. 547</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective August 26, 1996 (23:17 Md. R. 1249)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09H amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11H amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13D amended effective February 1, 1993 (20:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 repealed and new Regulation .15 adopted effective November 9, 1992 (19:22 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective March 5, 2001 (28:4 Md. R. 417)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective January 21, 2002 (29:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective June 11, 2001 (28:11 Md. R. 1053)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective March 13, 2006 (33:5 Md. R. 518)</annotation> </annotations> </chapter> <chapter num="05" heading="Partnership Rental Housing Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter prescribes the policies, procedures, and authorizations for providing capital assistance from the Partnership Rental Housing Fund and administering the Partnership Rental Housing Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <paragraph num="A."> <text>The objective of the Program is to provide financing for all or a portion of the development costs of rental housing that will be occupied by households of lower income and is either:</text> <paragraph num="(1)"> <text>Owned, or to be owned, by local governments, or local government entities, for which the applicable local government provides a site or funds to acquire a site and any necessary off-site improvements; or</text> </paragraph> <paragraph num="(2)"> <text>Owned by private sector entities and is occupied by households of lower income that include one or more individuals with disabilities or special needs.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Program intends to provide financing to projects that:</text> <paragraph num="(1)"> <text>Will be financially self-sufficient so that they do not require further State, local, or federal governmental funding for maintenance, renovation, or operating subsidies, other than as anticipated at the time the Program financing is provided; and</text> </paragraph> <paragraph num="(2)"> <text>Can be maintained economically as rental housing for households of lower income in perpetuity if the sponsor so wishes.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Projects financed by the Program are intended to provide rental housing to households with income, assets, or other resources sufficient to pay rent in amounts necessary to maintain the financial self-sufficiency of the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, a unit of the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(3)"> <text>“Annual Income” means annual income as defined by the United States Department of Housing and Urban Development at 24 CFR §5.609, as amended.</text> </paragraph> <paragraph num="(4)"> <text>“Applicable codes and standards” means the zoning, construction, health, safety, fire, occupancy, and other codes and standards applicable to the project in the political subdivision in which the project is located.</text> </paragraph> <paragraph num="(5)"> <text>“Capital assistance” means funding provided by the Program used by a sponsor to finance development costs of a project.</text> </paragraph> <paragraph num="(6)"> <text>“Capital assistance documents” means all documents either executed or supplied by a sponsor in connection with the application for and closing of capital assistance financing.</text> </paragraph> <paragraph num="(7)"> <text>Department.</text> <paragraph num="(a)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(b)"> <text>“Department” includes the Administration.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Development costs” means those costs incurred for the acquisition, construction, or rehabilitation of rental housing that are eligible for financing under the Program in accordance with, and as limited by, Regulation .07 of this chapter.</text> </paragraph> <paragraph num="(9)"> <text>“Elderly household” means:</text> <paragraph num="(a)"> <text>One or more individuals who occupy the same residential dwelling unit, at least one of whom is 62 years old or older;</text> </paragraph> <paragraph num="(b)"> <text>For projects which also receive funding through one or more programs administered by HUD, an elderly family, elderly household, or elderly person, as defined by HUD; or</text> </paragraph> <paragraph num="(c)"> <text>Such other definition established by the Secretary pursuant to Housing and Community Development Article, §4-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Fund” means the Partnership Rental Housing Fund, which is a special, continuing, nonlapsing fund composed of moneys appropriated by the State for the Program or made available to the Program from the sale of general obligation or other bonds.</text> </paragraph> <paragraph num="(11)"> <text>Household.</text> <paragraph num="(a)"> <text>“Household” means one or more individuals who occupy the same residential dwelling unit as their permanent residence.</text> </paragraph> <paragraph num="(b)"> <text>“Household” includes a family as defined in 24 CFR §5.403, as amended.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Household of Lower Income.</text> <paragraph num="(a)"> <text>“Household of lower income” means a household whose annual income, upon initial occupancy, does not exceed 50 percent of the Statewide median income for a household of similar size or such lesser income level as may be established by the Secretary for any particular project or for partnership units to be occupied by one or more individuals with disabilities or special needs.</text> </paragraph> <paragraph num="(b)"> <text>“Household of lower income”, for the purpose of continuing occupancy, includes a household whose annual income does not exceed an income level that the Secretary establishes or any applicable federal requirement.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Housing Finance Review Committee” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Local contribution” means a contribution to the project by a local government that is consistent with the requirements set forth in Regulation .17 of this chapter.</text> </paragraph> <paragraph num="(15)"> <text>“Local government” means:</text> <paragraph num="(a)"> <text>Any municipal corporation in Maryland subject to the provisions of Article XI-E of the Constitution;</text> </paragraph> <paragraph num="(b)"> <text>The Mayor and City Council of Baltimore;</text> </paragraph> <paragraph num="(c)"> <text>Any of the 23 counties in Maryland; and</text> </paragraph> <paragraph num="(d)"> <text>Any housing authority authorized under the Act.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Local government entity” means a corporation, limited partnership, limited liability company, or other legal entity in which a local government has an ownership interest.</text> </paragraph> <paragraph num="(17)"> <text>“Moderately priced dwelling unit (MPDU)” means a residential rental unit that is newly constructed by a private sector entity and sold to a local government under a local regulatory land use program.</text> </paragraph> <paragraph num="(18)"> <text>“Partnership units” means the residential rental units in a rental housing project that are financed with capital assistance.</text> </paragraph> <paragraph num="(19)"> <text>“Private sector entity” means any for-profit or nonprofit partnership, corporation, limited liability company, organization, or other legal entity that is not a local government or a local government entity.</text> </paragraph> <paragraph num="(20)"> <text>“Program” means the Partnership Rental Housing Program.</text> </paragraph> <paragraph num="(21)"> <text>“Project” means any undertaking for the acquisition, construction, or rehabilitation of land, buildings, and improvements, or any portion thereof, financed by the Program, that will be used for rental housing to be occupied entirely by households of lower income, except for any units occupied by management personnel.</text> </paragraph> <paragraph num="(22)"> <text>“Rental housing” means any rental housing facilities, including apartments, condominiums, cooperatives, townhouses, single-family homes, or single-room occupancy facilities, for which rent is charged to the household occupying the housing, including improvements directly related to providing rental housing, such as:</text> <paragraph num="(a)"> <text>Community spaces;</text> </paragraph> <paragraph num="(b)"> <text>Maintenance work areas;</text> </paragraph> <paragraph num="(c)"> <text>Administrative offices;</text> </paragraph> <paragraph num="(d)"> <text>Laundry facilities; and</text> </paragraph> <paragraph num="(e)"> <text>Units occupied by management personnel.</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Scattered site project” means noncontiguous units of rental housing developed and operated under a common plan of ownership and financing.</text> </paragraph> <paragraph num="(24)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(25)"> <text>“Sponsor” means all of the following:</text> <paragraph num="(a)"> <text>A borrower or obligor on a loan made by the Department to finance a project;</text> </paragraph> <paragraph num="(b)"> <text>The person or entity principally responsible for the project and loan application before the loan closing;</text> </paragraph> <paragraph num="(c)"> <text>Any person or entity that has an ownership interest in, or identity of interest with, a person or entity under §B(25)(a) or (b) of this regulation; and</text> </paragraph> <paragraph num="(d)"> <text>An applicant that develops a project and qualifies under §B(25)(a), (b), or (c) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(26)"> <text>“Treasurer” means the Maryland State Treasurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrowers — Local Governments and Local Government Entities."> <paragraph num="A."> <text>A local government or local government entity shall meet the requirements in §§B—F of this regulation to qualify for capital assistance.</text> </paragraph> <paragraph num="B."> <text>The local government shall provide a local contribution that meets the requirements of Regulation .17 of this chapter.</text> </paragraph> <paragraph num="C."> <text>The local government or local government entity shall assure that any off-site improvements necessary for a project are provided without capital assistance from the Program.</text> </paragraph> <paragraph num="D."> <text>The local government or local government entity shall develop a project or contract with a qualified for-profit or nonprofit developer to develop the project.</text> </paragraph> <paragraph num="E."> <text>The local government or local government entity shall own the project.</text> </paragraph> <paragraph num="F."> <text>A local government entity shall also meet the requirements of Regulation .05A(1)—(4) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Borrowers — Private Sector Entities."> <paragraph num="A."> <text>If a project is owned by a private sector entity, the entity shall meet the following requirements to qualify for capital assistance:</text> <paragraph num="(1)"> <text>Be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Have the legal capacity and all necessary legal authorizations to incur the obligations of the capital assistance;</text> </paragraph> <paragraph num="(3)"> <text>At the time the assistance is provided, not be debarred or suspended by the Department under COMAR 05.01.05;</text> </paragraph> <paragraph num="(4)"> <text>Demonstrate:</text> <paragraph num="(a)"> <text>Financial credibility and stability;</text> </paragraph> <paragraph num="(b)"> <text>The capability of achieving successful completion of the project; and</text> </paragraph> <paragraph num="(c)"> <text>The ability to manage the project; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Agree in writing to rent all partnership units to households of lower income that include one or more individuals with disabilities or special needs.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Private sector entities that intend to sell a project to a local government or local government entity under Regulation .09 of this chapter shall:</text> <paragraph num="(1)"> <text>Meet the requirements of §A(1)—(4) of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Have a binding contract to sell the housing financed by the capital assistance to the local government.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Management."> <paragraph num="A."> <text>The sponsor shall directly manage or contract with a qualified for-profit or nonprofit management agent for the management of the operation of a project.</text> </paragraph> <paragraph num="B."> <text>The management contract:</text> <paragraph num="(1)"> <text>Shall be acceptable to the Department and its counsel;</text> </paragraph> <paragraph num="(2)"> <text>If the capital assistance is funded from the proceeds of tax-exempt revenue bonds, shall have a duration not greater than 1 year, unless a longer term is approved by counsel to the Treasurer, and shall contain such other provisions necessary to ensure the tax-exempt status of the bonds; and</text> </paragraph> <paragraph num="(3)"> <text>May be renewed at 1-year intervals, or such longer intervals as approved by counsel to the Treasurer, at the option of the parties.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The sponsor shall agree in writing that as long as the capital assistance is outstanding, the sponsor shall:</text> <paragraph num="(1)"> <text>Maintain the project in good physical and financial condition;</text> </paragraph> <paragraph num="(2)"> <text>Cooperate with the Department in periodic monitoring of the:</text> <paragraph num="(a)"> <text>Physical condition of the project;</text> </paragraph> <paragraph num="(b)"> <text>Financial condition of the project;</text> </paragraph> <paragraph num="(c)"> <text>Incomes of households residing in the project; and</text> </paragraph> <paragraph num="(d)"> <text>Contributions of the households in the project to enhance and maintain the project or the community;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Maintain project accounts as required by the loan documents, including accounts for operating costs, tenant security deposits, insurance, taxes, and reserves for replacements, and a residual receipts account containing all project revenues in excess of allowable project expenses; and</text> </paragraph> <paragraph num="(4)"> <text>Operate the project in accordance with the requirements of the Act and this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Uses."> <paragraph num="A."> <text>Program funds may be used to provide capital assistance for financing development costs, including:</text> <paragraph num="(1)"> <text>Acquisition of buildings and land, provided, if the sponsor is a local government or local government entity, it has met the local contribution requirements of Regulation .17 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Labor and materials for construction, rehabilitation, and installation of improvements as set forth in approved plans and specifications;</text> </paragraph> <paragraph num="(3)"> <text>Necessary studies, surveys, tests, plans, and specifications, including:</text> <paragraph num="(a)"> <text>Appraisals;</text> </paragraph> <paragraph num="(b)"> <text>Market analysis studies;</text> </paragraph> <paragraph num="(c)"> <text>Construction cost estimates;</text> </paragraph> <paragraph num="(d)"> <text>Test borings; and</text> </paragraph> <paragraph num="(e)"> <text>Compaction tests;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Reasonable fees for architectural, design, engineering, and other special services;</text> </paragraph> <paragraph num="(5)"> <text>Site preparation, including the costs of:</text> <paragraph num="(a)"> <text>Running services from public utilities abutting the site to the buildings in the project;</text> </paragraph> <paragraph num="(b)"> <text>Public utility connection fees;</text> </paragraph> <paragraph num="(c)"> <text>Roads from public roads abutting the site to the buildings in the project;</text> </paragraph> <paragraph num="(d)"> <text>Installing wells or septic systems on the site; and</text> </paragraph> <paragraph num="(e)"> <text>Parking areas, play areas, and landscaping;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Indemnity and surety bonds;</text> </paragraph> <paragraph num="(7)"> <text>Premiums on title, mortgage, and hazard insurance;</text> </paragraph> <paragraph num="(8)"> <text>An allowance for start-up costs such as marketing and leasing expenses, as approved by the Department;</text> </paragraph> <paragraph num="(9)"> <text>Costs associated with obtaining environmental assessments and testing for the presence of environmental hazards; and</text> </paragraph> <paragraph num="(10)"> <text>Other costs and fees acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Program funds may be used in accordance with Regulation .10 of this chapter to purchase MPDUs.</text> </paragraph> <paragraph num="C."> <text>Program funds may not be used for:</text> <paragraph num="(1)"> <text>Acquisition of the site, except as permitted in §A(2) of this regulation; or</text> </paragraph> <paragraph num="(2)"> <text>Off-site improvements.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If a capital assistance from the program loan is funded with the proceeds of general obligation bonds issued by the State of Maryland, additional limitations on eligible uses may be applicable.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Project Eligibility."> <paragraph num="A."> <text>General Requirements. Buildings and improvements comprising a project shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(2)"> <text>When the project is complete, be in compliance with applicable codes and standards;</text> </paragraph> <paragraph num="(3)"> <text>Be owned by an eligible borrower, with title and title insurance insuring the Department that are acceptable to the Department; and</text> </paragraph> <paragraph num="(4)"> <text>For projects involving new construction, be located within a priority funding area as described in State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A project is eligible only if:</text> <paragraph num="(1)"> <text>The Department has complied with COMAR 05.01.06.06; and</text> </paragraph> <paragraph num="(2)"> <text>The Secretary has issued the written determination required under COMAR 05.01.06.07.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Project Income.</text> <paragraph num="(1)"> <text>Rents charged for partnership units shall be in amounts adequate for total income from the partnership units plus any funds contributed under §C(2) of this regulation, to be sufficient to:</text> <paragraph num="(a)"> <text>Pay all operating costs, insurance premiums, and payments instead of taxes, if any, that may be due; and</text> </paragraph> <paragraph num="(b)"> <text>Fund a reserve account for future maintenance, renovation, and improvement of the project by periodic deposits in amounts, as determined by the Department, that are adequate for the long-term maintenance and renovation of the project.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The local government in its discretion may increase total income with operating or rent subsidies appropriated by the local government from its funds specifically for the project.</text> </paragraph> <paragraph num="(3)"> <text>The total income collected under §C(1) and (2) of this regulation shall be of such an amount that it is reasonable to anticipate that additional State and federal subsidies will not be required to maintain, on a long-term basis, occupancy of the partnership units by households of lower income.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Occupancy Limitation.</text> <paragraph num="(1)"> <text>Throughout the term of the capital assistance financing, all of the residential rental units in a project that are financed with the capital assistance, other than units occupied by management personnel, shall be:</text> <paragraph num="(a)"> <text>Occupied by households of lower income; or</text> </paragraph> <paragraph num="(b)"> <text>If the project is owned by a private sector entity, occupied by households of lower income that include one or more individuals with disabilities or special needs.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A household whose annual income after initial occupancy exceeds the income limit set by the Secretary for continuing occupancy for households of lower income shall be given notice requiring it to vacate on or before that date which is 24 months after the date of the notice. The sponsor or its management agent shall deliver the required notice within 2 months of the date of the certification showing that the annual income of the household exceeded the income limit for continuing occupancy for households of lower income.</text> </paragraph> <paragraph num="(3)"> <text>Notwithstanding §D(2) of this regulation, a lease renewal may be entered into with a household that is required to receive a notice to vacate, but the term of the renewal may not exceed 24 months after the date of the notice, unless conflicting federal requirements apply.</text> </paragraph> <paragraph num="(4)"> <text>Partial Financing.</text> <paragraph num="(a)"> <text>If capital assistance is used to partially finance a project, there shall be a minimum number of partnership units, other than units occupied by management personnel, that shall be occupied by households of lower income throughout the term of the capital assistance financing.</text> </paragraph> <paragraph num="(b)"> <text>Except as provided in §D(4)(c) of this regulation, the minimum number of partnership units shall be equal to the amount of the loan divided by $75,000 or such other per unit cap as may be established by the Secretary.</text> </paragraph> <paragraph num="(c)"> <text>For capital assistance to private sector entities for rental housing for households that include one or more individuals with disabilities or special needs, the minimum number of partnership units shall be as set by the Program.</text> </paragraph> <paragraph num="(d)"> <text>The income levels and the disabilities or special needs of households not residing in the partnership units may not be restricted by the Program.</text> </paragraph> <paragraph num="(e)"> <text>Only those households that reside in partnership units in a project are subject to the tenant participation requirements as provided under Regulation .18 of this chapter.</text> </paragraph> <paragraph num="(f)"> <text>The sponsor shall provide equal access for all tenants to any amenities and common areas in a project that is partially funded with capital assistance from the Program.</text> </paragraph> <paragraph num="(g)"> <text>A household having excess income may stay in its rental unit if, within 12 months of the income certification showing excess income:</text> <paragraph num="(i)"> <text>There is another residential rental unit in the project that is not a required partnership unit;</text> </paragraph> <paragraph num="(ii)"> <text>The nonpartnership unit is either vacant and will be rented to an income eligible household, or is occupied by an income eligible household; and</text> </paragraph> <paragraph num="(iii)"> <text>Converting the nonpartnership unit to a partnership unit would not otherwise cause a violation of this regulation.</text> </paragraph> </paragraph> <paragraph num="(h)"> <text>If the sponsor or its management agent has not identified a substitute partnership unit in accordance with §D(4)(g) of this regulation within the 12-month period, the household having excess income shall be given a notice requiring it to vacate the partnership unit on or before that date which is 24 months after the date of the notice.</text> </paragraph> <paragraph num="(i)"> <text>If a nonpartnership unit becomes available before the 24-month date, the sponsor or its management agent may convert the available nonpartnership unit under the same restrictions identified in §D(4)(g) of this regulation and allow the household having excess income to remain in its rental unit, which shall be converted to nonpartnership status.</text> </paragraph> <paragraph num="(j)"> <text>A lease renewal may be entered into with a household that is scheduled to receive or has received a notice to vacate under §D(4)(h) of this regulation, but the term of the lease renewal may not extend beyond 24 months after the date of the household's notice of excess income.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Special Projects—Assistance to Private Sector Entities for Sale to Local Governments."> <paragraph num="A."> <text>Capital assistance may be provided to private sector entities to construct, acquire, reconstruct, or rehabilitate projects that are, upon completion, to be sold to a local government or local government entity, if, upon completion of the project, the private sector entity is required to:</text> <paragraph num="(1)"> <text>Transfer legal title to the local government or local government entity without additional capital assistance from the Department; and</text> </paragraph> <paragraph num="(2)"> <text>Unless the local government has contributed the land, pay an amount not to exceed the cost of the land and any off-site improvements paid for by the private sector entity.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the capital assistance is for partnership units that are part of a larger rental housing project or homeownership development project, the minimum number of units in the project that are required to be sold to the local government shall be determined by the formula specified in Regulation .08D(4) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Special Projects—MPDUs."> <paragraph num="A."> <text>MPDU projects that are constructed or rehabilitated by third parties and then sold to a local government or local government entity under a local regulatory land use program shall be eligible for financing under the Program, provided that the following requirements are satisfied, instead of the requirements set forth in Regulations .04 and .07A and C of this chapter:</text> <paragraph num="(1)"> <text>The local government or local government entity is or will be the legal or equitable owner of the project not later than the time that capital assistance funds are disbursed; and</text> </paragraph> <paragraph num="(2)"> <text>The amount of financing provided by the Program to the project does not exceed the amount of the acquisition cost of the completed project, less the sum of:</text> <paragraph num="(a)"> <text>The market value of the land on which the project is located as set forth in or determined from the most recent tax assessment; and</text> </paragraph> <paragraph num="(b)"> <text>Any additional contribution from the local government as may be required in accordance with Regulation .17 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The Department may impose additional requirements pertinent to any unique factors of MPDU projects.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Special Projects—Other."> <paragraph num="A."> <text>Projects with Commercial or Other Nonresidential Space. The Department, in its discretion, may allow capital assistance for projects that are located on sites with improvements that are not eligible for financing under the Program in that the improvements are not for the purpose of providing rental housing, such as government offices or commercial space. If a project of this type does receive capital assistance, the Department may impose additional requirements pertinent to any unique factors of the project.</text> </paragraph> <paragraph num="B."> <text>Projects for the Elderly. Projects restricted to occupancy by elderly households may receive funding under the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Terms and Conditions — Repayment."> <paragraph num="A."> <text>Conditional Repayment Obligation. Except as provided in §B of this regulation, a repayment of principal or interest on the capital assistance is not required unless the project ceases to be owned by the sponsor or operated in accordance with the requirements of the Act and this chapter and the terms and conditions of the capital assistance documents.</text> </paragraph> <paragraph num="B."> <text>If necessary to comply with, or receive the benefit of, federal or other financial assistance, capital assistance provided under the program may be made available as a deferred payment loan repayable on the later of:</text> <paragraph num="(1)"> <text>The sale of the project;</text> </paragraph> <paragraph num="(2)"> <text>The failure of the sponsor to operate the project for the benefit of households of lower income in accordance with the agreements between the Department and the local government; or</text> </paragraph> <paragraph num="(3)"> <text>A maturity date set by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Amounts Due upon Sale of Project.</text> <paragraph num="(1)"> <text>If a project or any interest in it is sold or transferred by the sponsor, other than to a local government or local government entity in accordance with Regulations .09 and .10 of this chapter, or to another eligible borrower approved by the Department, the sponsor shall pay to the Department the principal amount of the financing, plus simple interest, if any, at the rate set forth in the capital assistance documents.</text> </paragraph> <paragraph num="(2)"> <text>The capital assistance documents may require that the sponsor or the Department apply any proceeds of the sale of a project or any other loan repayment funds plus all sums held in any project accounts to the housing needs of low-income and moderate-income persons.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Amounts Due upon Default.</text> <paragraph num="(1)"> <text>In the event of default, the Department has the right to accelerate the indebtedness, and the amounts set forth in §C(1) of this regulation shall then be due and payable by the owner.</text> </paragraph> <paragraph num="(2)"> <text>The Department shall have the right to demand a deed in lieu of foreclosure, or to foreclose, if the financing is secured by a mortgage or deed of trust.</text> </paragraph> <paragraph num="(3)"> <text>An obligation to repay the financing under the Program is secured only by the project property or other security device acceptable to the Department, and a deficiency judgment against the owner may not be sought or obtained following foreclosure.</text> </paragraph> <paragraph num="(4)"> <text>A local government is not required to pledge its faith or credit for the repayment of capital assistance.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Voluntary Repayment. A sponsor may voluntarily repay Program financial assistance at any time if the sponsor complies with the following requirements:</text> <paragraph num="(1)"> <text>If the financing was made with State bond proceeds, provides the Department with an opinion of bond counsel, prior to or simultaneously with the voluntary prepayment, that the prepayment does not adversely affect the interest of the bondholders under the pertinent State bonds and the State’s bond counsel for the bonds agrees;</text> </paragraph> <paragraph num="(2)"> <text>Provides written notice to each tenant residing in the project which describes the impact of the prepayment on the tenant and, if applicable, any assistance to which the tenant is entitled;</text> </paragraph> <paragraph num="(3)"> <text>Provides notice of the prepayment to the Department, the political subdivision, if not an owner of the project, the local public housing authority, if any and if not an owner of the project, and any parties registered with the Department;</text> </paragraph> <paragraph num="(4)"> <text>Offer a right of first purchase to the Department, the political subdivision, if not an owner of the project, the local public housing authority, if any and if not an owner of the project, and any interested parties registered with the Department;</text> </paragraph> <paragraph num="(5)"> <text>Provides a lease extension for at least 1 year following the notice of the prospective prepayment action to each tenant residing in an assisted unit;</text> </paragraph> <paragraph num="(6)"> <text>Makes relocation assistance payments to each tenant in an amount determined by the Department;</text> </paragraph> <paragraph num="(7)"> <text>Provides 3-year lease extensions or payments equal to 3 months rent to 20 percent of the tenants who live in assisted units and qualify as senior citizens, disabled, or households with minors; and</text> </paragraph> <paragraph num="(8)"> <text>Complies with any procedural requirements of the Department with respect to the right of first purchase, the relocation payments, and lease extensions.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Terms and Conditions — General."> <paragraph num="A."> <text>Project Income.</text> <paragraph num="(1)"> <text>A sponsor shall charge rents in amounts sufficient to pay all project expenses and fund project accounts as provided in the capital assistance documents and in this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Project revenues, including all income from the rental of dwelling units, parking, and laundry, shall be placed in project accounts as provided in §B of this regulation and may not be withdrawn except to pay project expenses.</text> </paragraph> <paragraph num="(3)"> <text>If the total amount in the accounts in §B of this regulation reaches a level that the Secretary and the sponsor agree exceeds the reasonable foreseeable needs of a project, the sponsor and the Secretary may enter into an agreement to use the excess moneys for the housing needs of low-income and moderate-income individuals who need not reside in the project.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Project Accounts.</text> <paragraph num="(1)"> <text>The sponsor shall establish and maintain accounts for a project in a manner satisfactory to the Department and as required by the capital assistance documents.</text> </paragraph> <paragraph num="(2)"> <text>The accounts may include funds for:</text> <paragraph num="(a)"> <text>Tenant security deposits;</text> </paragraph> <paragraph num="(b)"> <text>Operating costs;</text> </paragraph> <paragraph num="(c)"> <text>Insurance;</text> </paragraph> <paragraph num="(d)"> <text>Taxes or payment in lieu of taxes;</text> </paragraph> <paragraph num="(e)"> <text>Reserves for maintenance, renovation, and improvements in amounts satisfactory to the Department; and</text> </paragraph> <paragraph num="(f)"> <text>A residual receipts account containing all project revenues in excess of allowable project expenses.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The sponsor shall file periodic reports with the Department regarding those accounts required by the capital assistance documents.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Tenant Selection Procedures.</text> <paragraph num="(1)"> <text>The sponsor may establish tenant selection preferences for applicants living or working in the area.</text> </paragraph> <paragraph num="(2)"> <text>Tenant selection preferences may not be based upon the length of time the applicant has lived or worked in the area.</text> </paragraph> <paragraph num="(3)"> <text>Local residency requirements are prohibited.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Security Deposits. The sponsor may collect security deposits as permitted by Maryland law.</text> </paragraph> <paragraph num="E."> <text>Rental Period. For the entire period during which the capital assistance, or any part of it, is outstanding, the partnership units shall be maintained:</text> <paragraph num="(1)"> <text>If the project is owned by a local government or local government entity, as rental housing for households of lower income; or</text> </paragraph> <paragraph num="(2)"> <text>If the project is owned by a private sector entity, as housing for households of lower income that include one or more individuals with disabilities or special needs.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Payments in Lieu of Taxes. A project owned by a local government as a governmentally owned facility is not subject to property taxes and may only be charged a payment in lieu of taxes if there is a preexisting agreement between the sponsor and the local government providing for payments instead of taxes.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Terms and Conditions — Property, Liability, and Other Insurance."> <paragraph num="A."> <text>At or before closing of a loan, and at such other times as required by the Department, the sponsor shall provide evidence that the sponsor, contractor and other parties, have obtained and maintained the following insurance:</text> <paragraph num="(1)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(2)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(3)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(4)"> <text>Architect's errors and omissions;</text> </paragraph> <paragraph num="(5)"> <text>Engineer's errors and omissions; and</text> </paragraph> <paragraph num="(6)"> <text>Flood insurance, if the project is located in a flood hazard zone.</text> </paragraph> </paragraph> <paragraph num="B."> <text>All insurance required under §A of this regulation shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be written by a company registered with the Maryland Insurance Administration;</text> </paragraph> <paragraph num="(2)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(3)"> <text>Not be terminable without prior notification to the Department; and</text> </paragraph> <paragraph num="(4)"> <text>Contain such other terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In addition to the requirements of §B of this regulation, owner's liability insurance shall:</text> <paragraph num="(1)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(2)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="D."> <text>In addition to the requirements of §B of this regulation, contractor's liability and contractor's builder's risk insurance shall:</text> <paragraph num="(1)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(2)"> <text>Remain in place through final closing or such later date as the Department requires.</text> </paragraph> </paragraph> <paragraph num="E."> <text>In addition to the requirements of §B of this regulation, owner's property or hazard insurance shall:</text> <paragraph num="(1)"> <text>Name the Department as an additional insured, loss payee and mortgagee; and</text> </paragraph> <paragraph num="(2)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="F."> <text>For local governments, the Department shall:</text> <paragraph num="(1)"> <text>Evaluate any self-insurance program to determine if adequate coverage and terms acceptable to the Department can be provided; and</text> </paragraph> <paragraph num="(2)"> <text>Accept coverage under the self-insurance subject to this determination.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Terms and Conditions—Construction."> <paragraph num="A."> <text>Construction Standards. Construction, reconstruction, and rehabilitation funded with capital assistance shall comply with applicable codes and standards.</text> </paragraph> <paragraph num="B."> <text>Construction Wages. The wages paid for construction, reconstruction, or rehabilitation are not subject to the requirements of the prevailing wage rates law for public work contracts, State Finance and Procurement Article, Title 17, Subtitle 2, Annotated Code of Maryland, if:</text> <paragraph num="(1)"> <text>More than 50 percent of the cost of the construction, reconstruction, and rehabilitation is contracted and paid for by a sponsor out of the proceeds of a loan from the Fund; and</text> </paragraph> <paragraph num="(2)"> <text>The sponsor has not by resolution or ordinance required that it shall be covered by the prevailing wage rates law for public work contracts, State Finance and Procurement Article, Title 17, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>At the request of the local government or local government entity, the Department may defer to the local government for construction review and approval of construction draws if the Department determines that such deference will avoid duplication of effort while ensuring appropriate fiduciary oversight and controls.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Capital Assistance Documents."> <text>The Department shall prescribe or approve the form and content of all documents, which may include a note, deed of trust, regulatory agreement, and other instruments that the Department may require to evidence or secure the capital assistance or enforce the requirements of the Act and this chapter.</text> </regulation> <regulation prefix="Regulation" num=".17" heading="Local Contribution."> <paragraph num="A."> <text>For each project undertaken by a local government or local government entity, the local government shall contribute from non-State sources:</text> <paragraph num="(1)"> <text>All or a portion of the land for the project;</text> </paragraph> <paragraph num="(2)"> <text>Funds equal to the proportion of the acquisition cost of the property attributable to the value of the land as set forth in, or determined from, the most recent tax assessment;</text> </paragraph> <paragraph num="(3)"> <text>A contribution towards development costs that equals or exceeds the value of the land, as set forth in, or determined from, the most recent tax assessment; or</text> </paragraph> <paragraph num="(4)"> <text>A combination of the above.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In determining the amount of the local contribution the Department shall consider:</text> <paragraph num="(1)"> <text>The value of land contributed by the local government which shall be equal to the:</text> <paragraph num="(a)"> <text>Amount paid for the land, if the land is acquired in conjunction with undertaking the project; or</text> </paragraph> <paragraph num="(b)"> <text>Market value of the land, if the land is contributed from the local government's existing inventory of land;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Cash contributions that pay for capital costs;</text> </paragraph> <paragraph num="(3)"> <text>The value of contributed services such as design, architectural, or engineering services;</text> </paragraph> <paragraph num="(4)"> <text>The value of foregone or waived fees required for newly developed housing such as water and sewer tap fees, front footage fees, impact fees, and building or other permit fees;</text> </paragraph> <paragraph num="(5)"> <text>The value of locally installed infrastructure on and off the site that reduces costs normally attributable to a rental housing project; and</text> </paragraph> <paragraph num="(6)"> <text>Other contributions that in the determination of the Department reduce the amount of Program funding required for the project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A local contribution is not required for projects owned by private sector entities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Tenant Participation."> <paragraph num="A."> <text>Except as provided in §C of this regulation, as a condition of capital assistance, a sponsor shall provide a plan, acceptable to the Department, to ensure that households residing in partnership units contribute services to enhance or maintain the project or community in which the project is located, such as:</text> <paragraph num="(1)"> <text>Participation in a tenants association, which may be responsible for activities such as:</text> <paragraph num="(a)"> <text>Evaluation of tenant complaints with recommendations to project management for resolution;</text> </paragraph> <paragraph num="(b)"> <text>Participation in formulating operating policies for the project; or</text> </paragraph> <paragraph num="(c)"> <text>Organization of tenant or community activities;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Project maintenance, upkeep, or management that enhances the project and reduces operating costs, such as:</text> <paragraph num="(a)"> <text>Snow removal from sidewalks, lawn maintenance, and exterior painting;</text> </paragraph> <paragraph num="(b)"> <text>Interior unit painting undertaken on a regular schedule with materials, supplies, and supervision provided by the project management;</text> </paragraph> <paragraph num="(c)"> <text>Community room activity scheduling and post-activity cleanup;</text> </paragraph> <paragraph num="(d)"> <text>Grounds or building decorating including flower gardens and lobby decorations;</text> </paragraph> <paragraph num="(e)"> <text>Tenant assignments to answer project management office telephones or staff a reception desk; or</text> </paragraph> <paragraph num="(f)"> <text>Minor repairs, including window and screen repairs, undertaken in conjunction with a management-sponsored training program; or</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Community activities that benefit the community in which the project is located on a continuing basis or on a periodic schedule, such as:</text> <paragraph num="(a)"> <text>Participation in recycling programs, neighborhood crime watch, or neighborhood community associations; or</text> </paragraph> <paragraph num="(b)"> <text>Participation in periodic neighborhood cleanups or fund-raising activities to benefit community charities or nonprofit activities.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Tenant Participation Encouragement. For a rental housing project where not all of the rental units are partnership units, the sponsor shall be encouraged to require tenants who do not reside in partnership units to participate in activities specified in the tenant participation plan.</text> </paragraph> <paragraph num="C."> <text>Tenant participation may not be required in connection with capital assistance if:</text> <paragraph num="(1)"> <text>Private sector entities receive financial assistance to provide rental housing for individuals with disabilities or special needs; or</text> </paragraph> <paragraph num="(2)"> <text>Such a requirement is prohibited by a federal program applicable to the project.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Making an Application."> <text>Applications for capital assistance shall be made upon standard forms prescribed by the Department and shall include the information and documentation required by the Department to assess whether the project meets the requirements of the Act and this chapter.</text> </regulation> <regulation prefix="Regulation" num=".20" heading="Application Processing Procedures."> <paragraph num="A."> <text>Approval.</text> <paragraph num="(1)"> <text>After considering the application and the availability of resources, the Program staff shall select projects for review and recommendation for funding by the Housing Finance Review Committee.</text> </paragraph> <paragraph num="(2)"> <text>The Housing Finance Review Committee shall review the projects selected by Program staff and recommend projects to the Secretary for reservation of funds and capital assistance commitments.</text> </paragraph> <paragraph num="(3)"> <text>Upon receipt of the recommendation of the Housing Finance Review Committee, the Secretary shall approve or disapprove the capital assistance and the terms of the capital assistance. A written determination that each instance of capital assistance, regardless of the capital assistance amount, is statutorily authorized and approved by the Secretary shall be executed before the issuance of a reservation of funds or capital assistance commitment.</text> </paragraph> <paragraph num="(4)"> <text>In an emergency, when urgent action is required, the Secretary may approve capital assistance that would otherwise have been forwarded to the Housing Financing Review Committee, without the recommendation of the Housing Financing Review Committee.</text> </paragraph> <paragraph num="(5)"> <text>For capital assistance below the minimum amount established by the Housing Finance Review Committee, the Director of Development Finance may approve the capital assistance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Commitment Letter. Upon the issuance of a determination by the Secretary approving capital assistance financing, the Director of Development Finance or Director of Multifamily Housing is authorized to issue a commitment letter setting forth the amount of the capital assistance and the terms and conditions under which the capital assistance will be made.</text> </paragraph> <paragraph num="C."> <text>Expiration of Commitment.</text> <paragraph num="(1)"> <text>The Department shall specify in the commitment letter a time limit within which the execution of the commitment letter and the documents evidencing the financing shall occur.</text> </paragraph> <paragraph num="(2)"> <text>The time limits may be extended in the Department's sole discretion.</text> </paragraph> <paragraph num="(3)"> <text>If execution of the commitment and loan documentation do not occur within the time limits specified by the Department, the commitment shall expire, and, upon written notification to the sponsor, the Department may withdraw the moneys encumbered for the project and use them for any other project authorized by the Act.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Rejection of Applications. If Program staff determines not to recommend approval of a project for capital assistance, or if the Housing Finance Review Committee or the Secretary rejects a project for financing, the Director of Multifamily Housing shall issue a written notice of rejection.</text> </paragraph> <paragraph num="E."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>A sponsor may request reconsideration of a rejection by submitting a written request to the Director of Development Finance, to be received within 15 days following the date of the rejection notice.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues.</text> </paragraph> <paragraph num="(3)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Allocation of Funds."> <paragraph num="A."> <text>It is the intent of the Department that Program funds be made available Statewide.</text> </paragraph> <paragraph num="B."> <text>Funds generally shall be available on a first-come, first-served basis and be based upon the readiness of projects to initiate construction or rehabilitation. If a project application is submitted, but funding is not then available under the Program, the Program, in its discretion, may continue to process the application until funding is available, and then may authorize the capital assistance without the necessity of a new application.</text> </paragraph> <paragraph num="C."> <text>If applications for capital assistance exceed available financing, the Department, in approving projects for funding, may give priority to projects that provide:</text> <paragraph num="(1)"> <text>A greater percentage of housing for families with children; or</text> </paragraph> <paragraph num="(2)"> <text>An equitable distribution of funds Statewide.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Funding Availability.</text> <paragraph num="(1)"> <text>The Department shall publicize the Program on the Department's website or by such other means as the Department determines to be appropriate. Any publications shall provide general information about the availability of funding.</text> </paragraph> <paragraph num="(2)"> <text>The Department may at any time consider applications for a loan or loans or may establish beginning and ending dates for the receipt of applications.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall provide notice on the Department's website, or by such other means as the Department determines to be appropriate, of the lack of funding availability that would result in closing of the Program or restrictions on the acceptance of applications.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Limitations.</text> <paragraph num="(1)"> <text>The Department may specify the type of applications it will consider, and may limit during any period the type of applications that it will receive on the basis of:</text> <paragraph num="(a)"> <text>The type of entity providing primary financing of the undertaking;</text> </paragraph> <paragraph num="(b)"> <text>The amount of local government contributions;</text> </paragraph> <paragraph num="(c)"> <text>The number or proportion of eligible residents who will reside in the undertaking;</text> </paragraph> <paragraph num="(d)"> <text>The areas of the State in which the undertaking is located; or</text> </paragraph> <paragraph num="(e)"> <text>Other factors the Department considers relevant.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department may also establish priorities among applications.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Fund Administration."> <text>Funds shall be maintained in the State Treasurer's collection account and may be withdrawn by the Department upon the request of the Director of Multifamily Housing or the Director's designee to reimburse or pay for development costs. Sponsors shall requisition funds on forms prescribed by the Department in accordance with the terms of the capital assistance documents for approved development costs.</text> </regulation> <regulation prefix="Regulation" num=".23" heading="Program Administration."> <paragraph num="A."> <text>Guidelines. The Program may establish from time to time detailed Program guidelines containing underwriting standards, processing requirements, and other requirements or matters relating to providing capital assistance.</text> </paragraph> <paragraph num="B."> <text>Delegation. The Secretary may delegate to the Director of Development Finance, or to any other official or employee of the Department or Program, the authority to execute or approve any capital assistance documents or other documents governing capital assistance, except waivers pursuant to Regulation .28 of this chapter and determinations under Regulation .20B of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Nondiscrimination; Drug Free and Alcohol Free Workplace."> <paragraph num="A."> <text>A sponsor or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the program.</text> </paragraph> <paragraph num="B."> <text>Each sponsor or contractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Act Amendments of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Department's Minority Business Enterprise Program, as amended, if the local government does not have its own minority business participation program that is acceptable to the Department; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".25" heading="Signs."> <text>If requested by the Department, each sponsor shall install a sign identifying the Department as a lender on the project. The sign, at the discretion of the Department, may be supplied by the Department, but in any case shall comply with the design specifications of the Department. The sponsor shall bear all costs of acquisition, delivery, and installation of a conforming sign, which costs may be included in the loan.</text> </regulation> <regulation prefix="Regulation" num=".26" heading="Books and Accounts."> <paragraph num="A."> <text>Sponsors, contractors, and subcontractors shall maintain books, accounts, and records and shall file with the Department financial and other reports as the Department may require. All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="B."> <text>Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the contractor and the sponsor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Certification of Income."> <paragraph num="A."> <text>The sponsor shall obtain signed certificates of annual income from all tenants occupying a partnership unit and shall certify the annual incomes to the Department. The Department requires annual recertifications of income as well as periodic occupancy reports containing the information required by the Department. Leases and certifications are subject to periodic review by the Department.</text> </paragraph> <paragraph num="B."> <text>For projects where existing tenants continue in occupancy during rehabilitation, the sponsor shall obtain signed income certifications from income-eligible tenants in partnership units before the loan closing.</text> </paragraph> <paragraph num="C."> <text>The purpose of the certification of annual income and the reports is to assure compliance with the upper income limits established in accordance with the Act, and Regulation .08D of this chapter. In the case of a project that receives federal assistance, including low-income housing tax credits, the procedures for the certification of income prescribed by the federal agency are acceptable, including recertification waivers under 26 U.S.C. §42(g)(8)(B).</text> </paragraph> <paragraph num="D."> <text>The sponsor shall verify the information contained in the certificate of income, upon the consent of the individual, with the source of income, and file with the Department a report disclosing the income of all individuals selected for occupancy unless the sponsor obtained a waiver under the federal low-income housing tax credit program, as provided in 26 CFR §1.42-5.</text> </paragraph> <paragraph num="E."> <text>The sponsor shall retain all certificates of income and documents verifying the information contained in them for a period of at least 3 years from the date on which the income certification is submitted to the sponsor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".28" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is consistent with the legal authorizations for the Program, if:</text> <paragraph num="A."> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act; and</text> </paragraph> <paragraph num="B."> <text>The Secretary's determination is approved for form and legal sufficiency by the Office of the Attorney General.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".29" heading="False Statements."> <text>A sponsor that knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-1209, Annotated Code of Maryland.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitle 12;State Finance and Procurement Article, §§5-7B-01—5-7B-10; Annotated Code of Maryland;Executive Orders 01.01.1992.27C and 01.01.1998.04</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.16 adopted as an emergency provision effective December 13, 1988 (15:27 Md. R. 3116); emergency status extended at 16:10 Md. R. 1101; emergency status expired July 24, 1989; adopted permanently effective August 7, 1989 (16:15 Md. R. 1650)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.16 repealed and new Regulations .01—.27 adopted effective November 11, 1991 (18:22 Md. R. 2393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective January 2, 1994 (20:25 Md. R. 1943); November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E amended effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective January 21, 2002 (29:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07G amended effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07H amended effective May 20, 1996 (23:10 Md. R. 730)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective May 31, 1999 (26:11 Md. R. 853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10B amended effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A—C amended effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11D amended effective February 1, 1993 (20:2 Md. R. 111)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12F amended effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18B amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.27 repealed and new Regulations .01—.29 adopted effective December 15, 2008 (35:25 Md. R. 2150)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A, B amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D adopted effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08D amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13E amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective April 19, 2010 (37:8 Md. R. 614); December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18C amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> </annotations> </chapter> <chapter num="06" heading="Low-Income Housing Tax Credits"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for allocating federal low-income housing tax credits to eligible housing projects. The credits are created by the federal Tax Reform Act of 1986 and are allocated to each state on a per capita basis. The Governor of Maryland has designated the Department of Housing and Community Development as the housing credit agency with the responsibility for allocating the tax credits.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objective of the Program is to administer and make reservations and allocations of tax credits to eligible housing projects in order to promote the development of housing for low-income families.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated. Any terms also appearing in the Internal Revenue Code have the meanings defined there as well.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(2)"> <text>“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and any successor statute as it applies to the tax credits, together with all regulations promulgated under it.</text> </paragraph> <paragraph num="(3)"> <text>“Plan” means the Administration's Qualified Allocation Plan (formerly known as the “Plan for the Allocation of Low-Income Housing Tax Credit in Maryland”) currently in effect, as approved by the Governor of the State of Maryland and required by the Internal Revenue Code.</text> </paragraph> <paragraph num="(4)"> <text>“Program” means the low-income housing tax credit program as established by the Internal Revenue Code and as administered by the Administration.</text> </paragraph> <paragraph num="(5)"> <text>“Tax credits” means the low-income housing tax credits allocated under this chapter and the Internal Revenue Code.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Program Administration."> <paragraph num="A."> <text>The Administration shall administer the Program according to the Plan.</text> </paragraph> <paragraph num="B."> <text>At intervals to be determined by the Secretary, the Administration shall revise the Plan according to the procedures in the Plan and as required by the Internal Revenue Code.</text> </paragraph> <paragraph num="C."> <text>The Administration shall have copies of the Plan available for public inspection at the offices of the Administration and on the Department's website (www.dhcd.state.md.us).</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Subsidy Layering Review."> <text>All projects receiving an allocation of tax credits and federal financial assistance shall be reviewed by the Administration for consistency with federal subsidy layering requirements. The review shall be conducted as set forth in the Plan.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Disclaimer of Liability."> <paragraph num="A."> <text>The Department and the Administration make no representations as to any tax or other consequences to a sponsor or related entities resulting from any notice of reservation of tax credits to a sponsor.</text> </paragraph> <paragraph num="B."> <text>The Department and the Administration accept no responsibility for any tax or other consequences to any recipient or related entities arising out of any allocation of tax credits.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Discretionary Decisions and Actions."> <text>The Administration has sole and complete discretion to make any decision or take any action for which discretion has been granted to the Administration by the Plan or this chapter.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="False Statements."> <text>A sponsor or recipient who knowingly makes or causes to be made a false statement or report is subject to withdrawal of its reservation of a credit, or cancellation of its allocation of a credit, by the Secretary, in addition to the criminal penalties authorized by law.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §2-111; State Finance and Procurement Article, §§5-7B-01—5-7B-10; Annotated Code of Maryland;Executive Orders 01.01.1987.26K and 01.01.1998.04</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 11, 1989 (16:24 Md. R. 2617)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 repealed and new Regulations .01—.17 adopted effective April 25, 1994 (21:8 Md. R. 671)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B—D amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B, C amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective May 20, 1996 (23:10 Md. R. 730)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective July 24, 2000 (27:14 Md. R. 1340); January 21, 2002 (29:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 25, 2004 (31:21 Md. R. 1544)</annotation> </annotations> </chapter> <chapter num="07" heading="Maryland Housing Rehabilitation Program — Multifamily Rehabilitation Program" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: September 30, 1991 (18:19 Md. R. 2098)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective May 23, 1994 (21:10 Md. R. 840)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective January 2, 1994 (20:25 Md. R. 1943); April 5, 1999 (26:7 Md. R. 538); January 21, 2002 (29:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective May 20, 1996 (23:10 Md. R. 730)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective May 20, 1996 (23:10 Md. R. 730)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10-1 adopted effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10-1A amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective February 1 , 1993 (20:2 Md. R. 111)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13C amended effective December 5, 1994 (21:24 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13D amended effective May 23, 1994 (21:10 Md. R. 840)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective May 20, 1996 (23:10 Md. R. 730)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 amended effective May 20, 1996 (23:10 Md. R. 730)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18E amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 repealed as an emergency provision effective August 24, 1995 (22:19 Md. R. 1458); emergency status extended at 23:7 Md. R. 547 (Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 repealed effective August 26, 1996 (23:17 Md. R. 1246)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 amended as an emergency provision effective August 24, 1995 (22:19 Md. R. 1458); emergency status extended at 23:7 Md. R. 547 (Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 amended effective August 26, 1996 (23:17 Md. R. 1246); March 13, 2006 (33:5 Md. R. 518)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective December 22, 2014 (41:25 Md. R. 1476)</annotation> </annotations> </chapter> <chapter num="08" heading="Nonprofit Rehabilitation Program" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: May 25, 1992 (19:10 Md. R. 929)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective January 2, 1994 (20:25 Md. R. 1943); April 5, 1999 (26:7 Md. R. 538); January 21, 2002 (29:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12C amended effective February 1, 1993 (20:2 Md. R. 111)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17E amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 repealed as an emergency provision effective August 24, 1995 (22:19 Md. R. 1458); emergency status extended at 23:7 Md. R. 548 (Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 repealed effective August 26, 1996 (23:17 Md. R. 1248)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 amended as an emergency provision effective August 24, 1995 (22:19 Md. R. 1458); emergency status extended at 23:7 Md. R. 547 (Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 amended effective August 26, 1996 (23:17 Md. R. 1248); March 13, 2006 (33:5 Md. R. 518)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective December 22, 2014 (41:25 Md. R. 1476)</annotation> </annotations> </chapter> <chapter num="09" heading="Shelter and Transitional Housing Facilities Grant Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter describes the policies, procedures, and authorizations for providing capital grants funded with State moneys for shelter, transitional, or other housing facilities for homeless households, and administering the Shelter and Transitional Housing Facilities Grant Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objective of the Program is to provide capital financing for local governments and nonprofit organizations to develop shelter, transitional, or other housing facilities for homeless individuals and families.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Applicable codes and standards” means the zoning, construction, health, safety, fire, occupancy, and other codes and standards applicable to the project in the political subdivision in which the project is located.</text> </paragraph> <paragraph num="(2)"> <text>“Capital assistance” means Program funding provided to a sponsor to finance the development costs of a project.</text> </paragraph> <paragraph num="(3)"> <text>“Capital assistance documents” means all documents either executed or supplied by a sponsor in connection with the application for and closing of capital assistance financing.</text> </paragraph> <paragraph num="(4)"> <text>“Capital equipment and furnishings” means permanently affixed equipment or other equipment, machinery, fixtures, and furnishings necessary to operate a shelter, transitional, or other housing facility for homeless households, including HVAC systems, stoves, refrigerators, washers, dryers, and playground equipment.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development of the State of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>Development Costs.</text> <paragraph num="(a)"> <text>“Development costs” means those costs incurred for the acquisition, new construction, reconstruction, or rehabilitation of shelter, transitional, or other housing facilities for homeless households that are eligible for financing under the Program in accordance with Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>“Development costs” includes the value of any labor provided by the sponsor for the project.</text> </paragraph> <paragraph num="(c)"> <text>“Development costs” does not include the costs of off-site improvements.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Homeless” means a household without permanent housing and lacking the resources to obtain permanent housing, or a household in imminent danger of homelessness.</text> </paragraph> <paragraph num="(8)"> <text>“Household” means an individual or group of individuals who occupy or intend to occupy a shelter, transitional, or other housing facility unit for homeless households in a project.</text> </paragraph> <paragraph num="(9)"> <text>“Housing Finance Review Committee” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Local government” means any municipal corporation in Maryland subject to the provisions of Article XI-E of the Constitution, the Mayor and City Council of Baltimore, any of the 23 counties in Maryland, and any housing authority authorized under Housing and Community Development Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(12)"> <text>“Nonprofit sponsor” means a:</text> <paragraph num="(a)"> <text>Nonprofit organization; or</text> </paragraph> <paragraph num="(b)"> <text>Limited partnership formed for the purpose of undertaking a project which is eligible in whole or in part for federal programs or incentives, including low-income housing tax credits, if:</text> <paragraph num="(i)"> <text>Each of the general partners qualifies as a nonprofit organization, or</text> </paragraph> <paragraph num="(ii)"> <text>The general partner of the limited partnership is a wholly owned subsidiary of the nonprofit organization and a nonprofit organization manages the development of the project or will be the recipient of net cash flow of the residual sale proceeds upon sale of the project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Program” means the Shelter and Transitional Housing Facilities Grant Program.</text> </paragraph> <paragraph num="(14)"> <text>“Project” means any undertaking for the acquisition, construction, reconstruction, or rehabilitation of buildings or improvements or any portion of them, financed by the Program, which will be occupied by homeless households, except for any units occupied by management personnel.</text> </paragraph> <paragraph num="(15)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(16)"> <text>“Service provider” means a sponsor or a person or entity that contracts with a sponsor to provide services to a shelter, transitional, or other housing facility for homeless households.</text> </paragraph> <paragraph num="(17)"> <text>Shelter, Transitional, or Other Housing Facility for Homeless Households.</text> <paragraph num="(a)"> <text>“Shelter, transitional, or other housing facility for homeless households” means a housing facility, including apartments, condominiums, townhouses, single-family homes, single-room occupancy facilities, and shared housing facilities which:</text> <paragraph num="(i)"> <text>If a shelter facility, provides sleeping accommodations and support services for homeless households on a short-term basis, but for a period not to exceed 6 months, while other arrangements are being explored;</text> </paragraph> <paragraph num="(ii)"> <text>If a transitional facility, provides housing for up to 24 months, and support services to help homeless households achieve stable, permanent housing; or</text> </paragraph> <paragraph num="(iii)"> <text>If another type of housing facility for homeless households, provides housing with no length of stay requirement, and support services as appropriate to help homeless households.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Shelter, transitional, or other housing facility for homeless households” includes improvements directly related to providing shelter, transitional, or other housing facilities for homeless households, including but not limited to:</text> <paragraph num="(i)"> <text>Community spaces;</text> </paragraph> <paragraph num="(ii)"> <text>Maintenance work areas;</text> </paragraph> <paragraph num="(iii)"> <text>Administrative and support service offices;</text> </paragraph> <paragraph num="(iv)"> <text>Laundry; and</text> </paragraph> <paragraph num="(v)"> <text>Units occupied by management and service personnel.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Shelter, transitional, or other housing facility units for homeless households” means the shelter, transitional, or other housing units in a shelter, transitional, or other housing facility for homeless households that are financed with capital assistance.</text> </paragraph> <paragraph num="(19)"> <text>Support Services.</text> <paragraph num="(a)"> <text>“Support services” means services that help the household achieve as high a level of self-sufficiency as possible.</text> </paragraph> <paragraph num="(b)"> <text>“Support services” may include case management, child care, life skills assistance, and linkage to services in the community.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Sponsors."> <paragraph num="A."> <text>Nonprofit sponsors and local governments are eligible to receive capital assistance for shelter, transitional, or other housing facilities for homeless households.</text> </paragraph> <paragraph num="B."> <text>Each nonprofit sponsor or local government shall meet all of the following requirements that are applicable:</text> <paragraph num="(1)"> <text>If the nonprofit sponsor is a business entity, the entity shall be in good standing and be qualified to do business in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>The sponsor shall:</text> <paragraph num="(a)"> <text>Own the property in fee simple or under a lease acceptable to the Department, or</text> </paragraph> <paragraph num="(b)"> <text>Have a valid purchase contract to acquire the property and secure acceptable title before or upon receipt of the capital assistance;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The sponsor shall have all necessary legal and corporate authorizations to incur the obligations of the capital assistance;</text> </paragraph> <paragraph num="(4)"> <text>Sponsors shall be in good standing and may not be under suspension or debarment from the Department of Human Services or from any of the Department's programs.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Each sponsor shall agree in writing:</text> <paragraph num="(1)"> <text>That all of the shelter, transitional, or other housing facility units for homeless households financed with the capital assistance shall be maintained for homeless households for not less than 15 years;</text> </paragraph> <paragraph num="(2)"> <text>To abide by all nondiscrimination requirements set forth in Regulation .16 of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>To monitoring by the Department during the term of the capital assistance of:</text> <paragraph num="(a)"> <text>The physical condition of the project,</text> </paragraph> <paragraph num="(b)"> <text>Occupancy information and records for the project, and</text> </paragraph> <paragraph num="(c)"> <text>Management and operational activities at the project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Each sponsor shall provide evidence acceptable to the Department that any financing being obtained outside the Program is assured and acceptable to the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Uses."> <paragraph num="A."> <text>Program funds may be used for:</text> <paragraph num="(1)"> <text>The cost of acquiring land and buildings;</text> </paragraph> <paragraph num="(2)"> <text>Necessary studies, surveys, plans, specifications, appraisals, compaction tests, test borings, construction cost estimates, and environmental impact reports;</text> </paragraph> <paragraph num="(3)"> <text>Site preparation;</text> </paragraph> <paragraph num="(4)"> <text>Cost of labor and materials, including reasonable overhead and profit, for construction, rehabilitation, and installation of improvements as set forth in approved proposals or plans and specifications;</text> </paragraph> <paragraph num="(5)"> <text>Acquisition of capital equipment and furnishings to be installed at the project; or</text> </paragraph> <paragraph num="(6)"> <text>Fees and premiums normally incurred in real estate development including indemnity and surety bonds, hazard and liability insurance, legal and closing costs, and other costs and fees acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Program funds may not be used:</text> <paragraph num="(1)"> <text>To refinance existing debt on projects;</text> </paragraph> <paragraph num="(2)"> <text>To finance the costs of any portion of a building or undertaking that does not provide shelter, transitional, or other housing units for homeless households and the necessary space and facilities required to operate the project;</text> </paragraph> <paragraph num="(3)"> <text>For transaction costs associated with the offering and syndicated sale; and</text> </paragraph> <paragraph num="(4)"> <text>For replacement of capital equipment and furnishings, such as beds, furniture, and floor coverings, and noncapital items in existing shelter, transitional, or other housing facilities for homeless households except under certain circumstances.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Projects."> <paragraph num="A."> <text>To qualify as an eligible project for capital assistance, the project shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be located within the State;</text> </paragraph> <paragraph num="(2)"> <text>When the project is complete:</text> <paragraph num="(a)"> <text>Be in compliance with zoning requirements and applicable codes and standards; and</text> </paragraph> <paragraph num="(b)"> <text>Be in compliance with the Minimum Livability Code required in COMAR 05.02.03;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Be owned by a nonprofit sponsor or local government; and</text> </paragraph> <paragraph num="(4)"> <text>When complete, provide a shelter, transitional, or other housing facility for homeless households.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If a project includes uses other than shelter, transitional, or other housing for homeless households, such as traditional rental housing or nonresidential uses, the number of transitional housing units may not be less than the amount of capital assistance provided to the project divided by the total development costs of the project multiplied by the total number of units in the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Terms and Conditions — Repayment."> <paragraph num="A."> <text>Conditional Repayment Obligation. Repayment of capital assistance may not be required unless the project ceases to be owned by a sponsor or operated in accordance with the requirements of this chapter and the terms and conditions of the capital assistance documents.</text> </paragraph> <paragraph num="B."> <text>Conditions for Repayment. The Department may recover capital assistance from the sponsor if:</text> <paragraph num="(1)"> <text>The sponsor terminates the project before completion; or</text> </paragraph> <paragraph num="(2)"> <text>Within 15 years following completion of the project:</text> <paragraph num="(a)"> <text>The sponsor refinances, assigns, conveys, sells, or transfers an interest in all or some portion of the project or property:</text> <paragraph num="(i)"> <text>To any person, agency, or organization without the prior written consent of the Department; or</text> </paragraph> <paragraph num="(ii)"> <text>For use other than as a shelter, transitional, or other housing facility for homeless households;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The sponsor ceases to operate all or a portion of the project as a shelter, transitional, or other housing facility for homeless households; or</text> </paragraph> <paragraph num="(c)"> <text>The sponsor encumbers or permits any other lien against the project or the property without the prior written consent of the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Amount of Repayment. If the conditions in either §B(1) or (2) of this regulation exist, the Department shall recover from the sponsor:</text> <paragraph num="(1)"> <text>The amount of capital assistance provided to the project divided by the total development costs of the project, multiplied by the fair market value of the project at the time the condition for repayment occurs; and</text> </paragraph> <paragraph num="(2)"> <text>All costs and reasonable attorney fees incurred by the Department in recovery proceedings.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Notice of Repayment.</text> <paragraph num="(1)"> <text>Before the payment of any capital assistance, the sponsor shall record notice, in the form acceptable to the Department, in the land records of the jurisdiction in which the project is located, of the Department's right to repayment.</text> </paragraph> <paragraph num="(2)"> <text>The sponsor shall provide evidence of the recordation to the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Terms and Conditions — Property, Liability, and Other Insurance."> <paragraph num="A."> <text>At or before closing of a loan, and at such other times as required by the Department, the sponsor shall provide evidence that the sponsor, contractor, and other parties, have obtained and maintained the following insurance:</text> <paragraph num="(1)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(2)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(3)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(4)"> <text>Architect's errors and omissions;</text> </paragraph> <paragraph num="(5)"> <text>Engineer's errors and omissions; and</text> </paragraph> <paragraph num="(6)"> <text>Flood insurance, if the project is located in a flood hazard zone.</text> </paragraph> </paragraph> <paragraph num="B."> <text>All insurance required under §A of this regulation shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be written by a company registered with the Maryland Insurance Administration;</text> </paragraph> <paragraph num="(2)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(3)"> <text>Not be terminable without prior notification to the Department; and</text> </paragraph> <paragraph num="(4)"> <text>Contain such other terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In addition to the requirements of §A of this regulation, owner's liability insurance shall:</text> <paragraph num="(1)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(2)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="D."> <text>In addition to the requirements of §A of this regulation, contractor's liability and contractor's builder's risk insurance shall:</text> <paragraph num="(1)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(2)"> <text>Remain in place through final closing or such later date as the Department requires.</text> </paragraph> </paragraph> <paragraph num="E."> <text>In addition to the requirements of §A of this regulation, owner's property or hazard insurance shall:</text> <paragraph num="(1)"> <text>Name the Department as an additional insured, loss payee, and mortgagee; and</text> </paragraph> <paragraph num="(2)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="F."> <text>For local governments, the Department shall:</text> <paragraph num="(1)"> <text>Evaluate any self-insurance program to determine if adequate coverage and terms acceptable to the Department can be provided; and</text> </paragraph> <paragraph num="(2)"> <text>Accept coverage under the self-insurance program subject to the determination.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Terms and Conditions — Amount of Capital Assistance."> <paragraph num="A."> <text>General Rule. Except as provided in §B of this regulation, total capital assistance to a project may not exceed 50 percent of the total development costs of the shelter, transitional, or other housing facility for homeless households.</text> </paragraph> <paragraph num="B."> <text>Exceptional Rule. Capital assistance may be in an amount equal to 75 percent of the total development costs of the project if:</text> <paragraph num="(1)"> <text>The sponsor demonstrates to the satisfaction of the Department that all available sources of funds have been sought and insufficient funds are available to the project;</text> </paragraph> <paragraph num="(2)"> <text>The sponsor agrees in writing to serve households who upon initial occupancy in the shelter, transitional, or other housing facility for homeless households have annual incomes that do not exceed 30 percent of the area median income as determined by the Department of Housing and Urban Development and adjusted for household size; and</text> </paragraph> <paragraph num="(3)"> <text>The Department determines that the project cannot support repayment of loans offered by the Department or other public lenders.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Calculation of Amount.</text> <paragraph num="(1)"> <text>The amount of capital assistance for a project shall be determined based on an analysis of the financial feasibility of the project and the availability of resources to repay other sources of funds.</text> </paragraph> <paragraph num="(2)"> <text>Within the limitations established in §§A and B of this regulation, the capital assistance may not exceed total project costs, less the sum of other resources provided by the applicant and less the amount of any loan the Department determines the project can support without impacting the financial feasibility of the project or the capability of the sponsor to provide the services proposed in the application.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Capital Assistance Documents."> <paragraph num="A."> <text>The Department shall provide the sponsor with copies of standard form capital assistance documents.</text> </paragraph> <paragraph num="B."> <text>The capital assistance documents may include the following:</text> <paragraph num="(1)"> <text>A conditional financing agreement with conditions for repayment;</text> </paragraph> <paragraph num="(2)"> <text>A notice of the Department's right to repayment which shall be filed in the land records of the jurisdiction in which the project is located;</text> </paragraph> <paragraph num="(3)"> <text>A regulatory agreement, which is an agreement covering the administrative and occupancy requirements of the capital assistance;</text> </paragraph> <paragraph num="(4)"> <text>A disbursement agreement, which is an agreement setting forth the terms and conditions for the disbursement of capital assistance funds over the course of construction or rehabilitation of the project;</text> </paragraph> <paragraph num="(5)"> <text>Contractor's letter and certification, which is an agreement provided to the Department by the project's general contractor in which the general contractor agrees not to amend the construction or rehabilitation contract without the Department's consent and, in the event of default by the sponsor, to cooperate with the Department in the completion of the project;</text> </paragraph> <paragraph num="(6)"> <text>Assurance of compliance with equal employment, civil rights, fair housing, and drug-free workplace requirements, which is an agreement committing the sponsor to comply with State and federal provisions governing employment and housing in force in the State; and</text> </paragraph> <paragraph num="(7)"> <text>Other documents as may be required by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Making an Application."> <paragraph num="A."> <text>Applications for capital assistance shall be made upon standard forms required by the Department.</text> </paragraph> <paragraph num="B."> <text>Each application shall include the following information or items:</text> <paragraph num="(1)"> <text>A site map that identifies the location of the property;</text> </paragraph> <paragraph num="(2)"> <text>Evidence that the sponsor owns the site or has control of the site, such as a deed, contract of sale for the site, site option agreement, or other instrument satisfactory to the Department;</text> </paragraph> <paragraph num="(3)"> <text>A general description of the site and project and the plan of action for construction, reconstruction, rehabilitation, general improvements, or purchase of capital equipment and furnishings;</text> </paragraph> <paragraph num="(4)"> <text>Evidence of the sources and availability of all financing which is not provided by the Program and which is necessary to complete a project;</text> </paragraph> <paragraph num="(5)"> <text>A management plan including:</text> <paragraph num="(a)"> <text>A description of the proposed services to be provided to residents of the shelter, transitional, or other housing facility for homeless households;</text> </paragraph> <paragraph num="(b)"> <text>Descriptions of the service provider and management agent, if different from the sponsor;</text> </paragraph> <paragraph num="(c)"> <text>A set of proposed administrative and maintenance procedures; and</text> </paragraph> <paragraph num="(d)"> <text>A copy of the proposed lease or leases;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A description of the households expected to be served, including projected income levels and proposed rents;</text> </paragraph> <paragraph num="(7)"> <text>Evidence of compliance with any applicable zoning;</text> </paragraph> <paragraph num="(8)"> <text>Preliminary plans and specifications or a proposed scope of work, an estimate of development costs, and an estimate of any additional expenses necessary to complete the project;</text> </paragraph> <paragraph num="(9)"> <text>A proposed operating budget for the project;</text> </paragraph> <paragraph num="(10)"> <text>Other information the Department requires which may be set forth in the application package or requested in writing by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Application Processing Procedures."> <paragraph num="A."> <text>Local Governments.</text> <paragraph num="(1)"> <text>For each project for which an application is received under this chapter, the Department shall provide written notice and reasonable opportunity to comment on the project to the chief executive officer or the equivalent officer and the head or president of the legislative body of the political subdivision in which the proposed project is located.</text> </paragraph> <paragraph num="(2)"> <text>If a proposed project is in a municipal corporation, the notice required under §A(1) of this regulation shall be sent to the chief executive officer and the head or president of the legislative body of the municipal corporation, not the surrounding county.</text> </paragraph> <paragraph num="(3)"> <text>The notice provided under §A(1) of this regulation shall contain the following information about the proposed project:</text> <paragraph num="(a)"> <text>Date of application;</text> </paragraph> <paragraph num="(b)"> <text>Name and description of project;</text> </paragraph> <paragraph num="(c)"> <text>Address of project;</text> </paragraph> <paragraph num="(d)"> <text>Sponsor of the project and sponsor’s contact information;</text> </paragraph> <paragraph num="(e)"> <text>Amount of funding requested;</text> </paragraph> <paragraph num="(f)"> <text>Amount, type, and provider of other sources of funding;</text> </paragraph> <paragraph num="(g)"> <text>Total number of units; and</text> </paragraph> <paragraph num="(h)"> <text>Such other information as the Department deems relevant.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Notification Letter to Sponsor.</text> <paragraph num="(1)"> <text>Upon receipt and analysis of all documentation necessary to assess the feasibility of a project, the Program shall issue a written notification letter to the sponsor that details conditions that shall be met in order for the Program to recommend approval of capital assistance, including:</text> <paragraph num="(a)"> <text>Final plans, specifications or scope of work, and firm costs for the acquisition, construction, rehabilitation, and capital equipment and furnishings;</text> </paragraph> <paragraph num="(b)"> <text>A minority business participation plan that complies with the Department's Minority Business Enterprise Program;</text> </paragraph> <paragraph num="(c)"> <text>Evidence of the commitment of any other necessary financing; and</text> </paragraph> <paragraph num="(d)"> <text>Other documentation required by the Department and included in the notification letter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An expedited analysis of whether to recommend approval of capital assistance may be conducted and recommendation of approval or disapproval made under §C of this regulation without the intermediate step of a notification letter, if all necessary documentation is provided with the initial application.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Approval.</text> <paragraph num="(1)"> <text>Upon satisfaction of all terms and conditions of the notification letter, the Program shall undertake an analysis of each application to determine the final recommended amount of capital assistance and any recommended special terms and conditions for the project.</text> </paragraph> <paragraph num="(2)"> <text>Except in the case of an emergency when urgent action is required, all capital assistance in amounts greater than the minimum amount set forth in COMAR 05.01.07 shall be submitted to the Housing Finance Review Committee for review and recommendation to the Secretary for modification, approval, or disapproval of the capital assistance and the terms under which it shall be provided.</text> </paragraph> <paragraph num="(3)"> <text>Upon receipt of a recommendation of the Housing Finance Review Committee, the Secretary shall approve or disapprove the capital assistance and the terms under which the capital assistance shall be provided. In an emergency when urgent action is required, the Secretary, or the Secretary's designee, may approve the capital assistance without the recommendation of the Housing Finance Review Committee.</text> </paragraph> <paragraph num="(4)"> <text>For capital assistance in amounts at or below the minimum amount set forth in COMAR 05.01.07, the Department's Director of the Division of Development Finance may approve the capital assistance without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Commitment Letter. Upon approval of the capital assistance under §C of this regulation, the Department’s Director of the Division of Development Finance or the Division’s Director of Multifamily Housing is authorized to issue a commitment letter setting forth the amount of the capital assistance and the terms and conditions under which the capital assistance shall be made.</text> </paragraph> <paragraph num="E."> <text>Expiration of Commitment.</text> <paragraph num="(1)"> <text>The Department shall specify in the commitment letter a time within which the execution of the commitment letter and the capital assistance documents shall occur, which time limits may be extended in the Department's sole discretion.</text> </paragraph> <paragraph num="(2)"> <text>If execution of the commitment and capital assistance documents does not occur within the time limits specified by the Department, the commitment shall expire, and upon written notification to the sponsor, the Department may withdraw the moneys encumbered for the project and use them for any other project authorized by the regulations.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Rejection of Applications. If the Department determines not to recommend approval of a project for capital assistance, the Program shall issue a written notice of rejection.</text> </paragraph> <paragraph num="G."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>Sponsors may request reconsideration of a rejection by submitting a written request to the Director of the Division of Development Finance, to be received within 30 days following the date of the Program's rejection notice. The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues.</text> </paragraph> <paragraph num="(2)"> <text>The Director shall respond in writing to the sponsor's request for reconsideration within 30 days of receipt of the request for reconsideration.</text> </paragraph> <paragraph num="(3)"> <text>Sponsors may request reconsideration of the written response of the Director by submitting a written request for reconsideration to the Secretary to be received within 30 days of the date of the written response of the Director. This request shall be referred to the Housing Finance Review Committee for review and recommendation to the Secretary, who shall take final action regarding the request.</text> </paragraph> <paragraph num="(4)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Allocation of Funds."> <paragraph num="A."> <text>Priority.</text> <paragraph num="(1)"> <text>It is the intent of the Department that Program funds be made available throughout the State.</text> </paragraph> <paragraph num="(2)"> <text>Funds generally shall be available on a first-come, first-served basis based upon the readiness of projects to initiate acquisition, construction, rehabilitation, or purchase of capital equipment and furnishings, and provided that the Department has the right, in its sole discretion, to deny funding to any project.</text> </paragraph> <paragraph num="(3)"> <text>If a project application is submitted but funding is not then available under the Program, the Program in its discretion may continue to process the application until such time as funding is available, and then may authorize the capital assistance without the necessity of a new application.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Funding Availability.</text> <paragraph num="(1)"> <text>The Department may from time to time publicize the availability of moneys to provide capital assistance.</text> </paragraph> <paragraph num="(2)"> <text>The Department may at any time consider applications for capital assistance or may establish beginning and ending dates for the receipt of applications.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Fund Administration."> <paragraph num="A."> <text>Funds shall be maintained in the State Treasurer's account and may be withdrawn by the Department upon the request of the Director of Multifamily Housing or the Director's designee to reimburse or pay for development costs.</text> </paragraph> <paragraph num="B."> <text>Sponsors shall requisition funds on forms required by the Department in accordance with the terms of the capital assistance documents for approved development costs.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Program Administration."> <paragraph num="A."> <text>Guidelines. The Program may establish from time to time detailed Program guidelines containing underwriting standards, processing requirements, and other requirements or matters relating to providing capital assistance.</text> </paragraph> <paragraph num="B."> <text>Delegation. The Secretary may delegate to the Director of the Department's Division of Development Finance, or to any other official or employee of the Department or Program, the authority to execute or approve any capital assistance documents or other documents governing capital assistance, except waivers under Regulation .18 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A sponsor or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, sexual orientation, or physical or mental disability, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project financed or assisted under the Program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, reconstruction, and rehabilitation of any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each sponsor or contractor shall comply with all applicable federal, State, and local laws and department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Department’s Minority Business Enterprise Program, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements in this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Books and Accounts."> <paragraph num="A."> <text>Sponsors, developers, contractors, and subcontractors shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the contractor and the sponsor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is consistent with the legal authorizations for the Program, if:</text> <paragraph num="A."> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Program; and</text> </paragraph> <paragraph num="B."> <text>The Secretary's determination is approved for form and legal sufficiency by the Office of the Attorney General.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §2-102(a)(7), Annotated Code of Maryland;Ch. 396, Acts of 2011; Ch. 444, Acts of 2012; Ch. 424, Acts of 2013; and Ch. 463, Acts of 2014</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 7, 1994 (21:22 Md. R. 1873)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07 and .09—.16 amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 7, 2009 (36:18 Md. R. 1380)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective June 22, 2015 (42:12 Md. R. 761)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective June 22, 2015 (42:12 Md. R. 761)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective June 22, 2015 (42:12 Md. R. 761)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective June 22, 2015 (42:12 Md. R. 761)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective June 22, 2015 (42:12 Md. R. 761)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="10" heading="Maryland Appalachian Housing Program"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>This chapter prescribes the policies, procedures, and authorizations for administering the Maryland Appalachian Housing Program and the Maryland Appalachian Housing Fund.</text> </paragraph> <paragraph num="B."> <text>Under the provisions of Housing and Community Development Article, Title 11, Annotated Code of Maryland, the Department has been given the authority to administer the Program. The Department has assigned administration of the Program to the Community Development Administration, an agency with the Division of Development Finance, a division of the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <text>The objectives of the program are to provide assistance to Maryland Appalachian counties in the following areas:</text> <paragraph num="A."> <text>The stimulation of production of housing for low and moderate income families; and</text> </paragraph> <paragraph num="B."> <text>The preservation of existing housing for low and moderate income families.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in the Act and the Code shall have the meanings defined there and, in addition, the meanings used in this chapter.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means the Appalachian Regional Development Act of 1965, 40 U.S.C. App. §§101—405, as amended, and the regulations, rules, resolutions, policies, and procedures promulgated under it.</text> </paragraph> <paragraph num="(2)"> <text>“ARC” or the “Commission” means the Appalachian Regional Commission established under §101 of the Act.</text> </paragraph> <paragraph num="(3)"> <text>“Code” means Housing and Community Development Article, Title 11, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(4)"> <text>“Demonstration assistance” means financial assistance which shall be used for activities set forth in Regulation .05D of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Director” means the Director of the Community Development Administration.</text> </paragraph> <paragraph num="(7)"> <text>“Financial assistance” means a grant under the Program including a grant with conditional repayment conditions.</text> </paragraph> <paragraph num="(8)"> <text>“Financial assistance documents” means the documents by and between the sponsor and the Department which set forth the terms of financial assistance under the Program.</text> </paragraph> <paragraph num="(9)"> <text>“Fund” or “MAHF” means the Maryland Appalachian Housing Fund established under the Code.</text> </paragraph> <paragraph num="(10)"> <text>“Housing Finance Review Committee” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(11)"> <text>“Legal entity” means a corporation, cooperative, association, general partnership, limited partnership, joint venture, organization, or business which is organized legally to conduct a project.</text> </paragraph> <paragraph num="(12)"> <text>“Limited dividend organization” means any legal entity which receives a limited rate of return on a project, as approved by the Program staff.</text> </paragraph> <paragraph num="(13)"> <text>“Local jurisdiction” means the Maryland Appalachian counties, or instrumentalities of them, and all municipalities located in the Maryland Appalachian counties.</text> </paragraph> <paragraph num="(14)"> <text>“Low and moderate income families” means an individual or household whose combined income does not exceed the income limits established by the public agency which contributes to or oversees a project receiving financial assistance for planning or site development, except for financial assistance for demonstration projects whose income limits are established by the Secretary.</text> </paragraph> <paragraph num="(15)"> <text>“Maryland Appalachian counties” means Allegany, Garrett, and Washington counties in Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Maryland ARC representative” means the Governor, or the individual and an alternate appointed by the Secretary, with approval of the Governor, to the ARC.</text> </paragraph> <paragraph num="(17)"> <text>“Municipality” means a municipal corporation subject to the provision of the State Constitution, Article XI-E.</text> </paragraph> <paragraph num="(18)"> <text>“Nonprofit organization” means a:</text> <paragraph num="(a)"> <text>Legal entity, no part of the earnings of which inures to the benefit of any private shareholder or individual holding an interest in that entity; or</text> </paragraph> <paragraph num="(b)"> <text>Limited partnership if:</text> <paragraph num="(i)"> <text>Each of the general partners qualifies as a nonprofit organization or the limited partnership is a wholly owned subsidiary of a nonprofit organization,</text> </paragraph> <paragraph num="(ii)"> <text>The limited partnership is formed for the purpose of undertaking a project that is eligible in whole or in part for a federal program or incentives, including low-income housing tax credits, and</text> </paragraph> <paragraph num="(iii)"> <text>An organization that meets the criteria set forth in §B(18)(a) is managing the project or will be the recipient of net cash flow or the residual sale proceeds upon the sale of the project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Planning assistance” means financial assistance which shall be used for the activities set forth in Regulation .05B of this chapter.</text> </paragraph> <paragraph num="(20)"> <text>“Program” means the Maryland Appalachian Housing Program operated by the Department.</text> </paragraph> <paragraph num="(21)"> <text>“Program income” means interest earned on investment of Program funds.</text> </paragraph> <paragraph num="(22)"> <text>“Project” means a housing project for which financial assistance for a planning, site development, or demonstration project has been made and which benefits low and moderate income families under the Program.</text> </paragraph> <paragraph num="(23)"> <text>“Public agency” means any State, federal, or local public agency or program which contributes or oversees a project.</text> </paragraph> <paragraph num="(24)"> <text>“Public housing authority” means a housing authority created under Article 44A, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(25)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(26)"> <text>“Site development assistance” means financial assistance which shall be used for the activities set forth in Regulation .05C of this chapter.</text> </paragraph> <paragraph num="(27)"> <text>“Sponsors” means eligible applicants who receive financial assistance under the Program.</text> </paragraph> <paragraph num="(28)"> <text>“State” means the State of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Forms of Financial Assistance."> <text>Grants, including grants with conditional repayment provisions, are the eligible form of financial assistance under the Program, unless the Department is otherwise directed by the ARC.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Uses."> <paragraph num="A."> <text>The Department may provide the following types of financial assistance from the Fund to an eligible sponsor:</text> <paragraph num="(1)"> <text>Planning;</text> </paragraph> <paragraph num="(2)"> <text>Site development; and</text> </paragraph> <paragraph num="(3)"> <text>Demonstration.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Planning Assistance.</text> <paragraph num="(1)"> <text>Planning assistance may be used to pay for predevelopment costs associated with a project including:</text> <paragraph num="(a)"> <text>Reasonable fees for architectural, engineering, consultant, or legal services;</text> </paragraph> <paragraph num="(b)"> <text>Organizational expenses;</text> </paragraph> <paragraph num="(c)"> <text>Socioeconomic market studies;</text> </paragraph> <paragraph num="(d)"> <text>Appraisals;</text> </paragraph> <paragraph num="(e)"> <text>Surveys;</text> </paragraph> <paragraph num="(f)"> <text>Reasonable costs associated with obtaining construction or permanent financing; and</text> </paragraph> <paragraph num="(g)"> <text>Other fees and costs acceptable to the Department and permitted under the Act and the Code.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Planning assistance may be used to fund an option for the purchase of land which will be part of a project, but may not be used for the acquisition of land which will be a part of a project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Site development assistance may be used to pay for on-site development and off-site development costs associated with a project, including:</text> <paragraph num="(1)"> <text>Excavation;</text> </paragraph> <paragraph num="(2)"> <text>Sewer and water services;</text> </paragraph> <paragraph num="(3)"> <text>Demolition, clearing, and grubbing;</text> </paragraph> <paragraph num="(4)"> <text>Sidewalks, curbs, and gutters;</text> </paragraph> <paragraph num="(5)"> <text>Paving;</text> </paragraph> <paragraph num="(6)"> <text>Landscaping;</text> </paragraph> <paragraph num="(7)"> <text>Seeding and sediment control;</text> </paragraph> <paragraph num="(8)"> <text>Installation of wells;</text> </paragraph> <paragraph num="(9)"> <text>Installation of septic and other waste disposal systems;</text> </paragraph> <paragraph num="(10)"> <text>Recreation facilities; and</text> </paragraph> <paragraph num="(11)"> <text>Other costs acceptable to the Department and permitted under the Act and the Code.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Demonstration assistance may be used to pay direct costs associated with a project which responds to housing needs of low and moderate income families in Maryland Appalachian counties, and which demonstrates a new or innovative method of constructing or financing housing for low and moderate income families, or projects which demonstrate alternative living arrangements for low and moderate income families. These direct costs include:</text> <paragraph num="(1)"> <text>The activities described in §§B and C of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>The acquisition of equipment which will be part of a project;</text> </paragraph> <paragraph num="(3)"> <text>The acquisition of land and any buildings located on the land;</text> </paragraph> <paragraph num="(4)"> <text>Cost of labor and materials for new construction or rehabilitation or installation of improvements as set forth in the approved plans and specifications for a project;</text> </paragraph> <paragraph num="(5)"> <text>Indemnity and security bonds;</text> </paragraph> <paragraph num="(6)"> <text>Premiums on hazard, liability, title, and mortgage insurance;</text> </paragraph> <paragraph num="(7)"> <text>Necessary fees, licenses, and permits related to construction, project review, and approval;</text> </paragraph> <paragraph num="(8)"> <text>Payment and performance bonds; and</text> </paragraph> <paragraph num="(9)"> <text>Other costs acceptable to the Department and permitted under the Act and the Code.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Grants with conditional repayment provisions may be used to provide planning, site development, or demonstration assistance in accordance with the provisions set forth in Regulation .08B of this chapter.</text> </paragraph> <paragraph num="F."> <text>Program income from the Fund may be used to pay the expenses of the Program, as approved by the ARC.</text> </paragraph> <paragraph num="G."> <text>The Fund may not be used to pay for costs associated with the following activities unless otherwise permitted by the Act:</text> <paragraph num="(1)"> <text>Activities associated with libraries, cultural centers, or adult or child day-use facilities;</text> </paragraph> <paragraph num="(2)"> <text>Construction of schools, hospitals, or government office buildings; and</text> </paragraph> <paragraph num="(3)"> <text>Construction of community centers or social service facilities.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Sponsors."> <paragraph num="A."> <text>The following entities are eligible to apply for financial assistance under the Program:</text> <paragraph num="(1)"> <text>Nonprofit organizations;</text> </paragraph> <paragraph num="(2)"> <text>Limited dividend organizations;</text> </paragraph> <paragraph num="(3)"> <text>Local jurisdictions eligible or potentially eligible to sponsor projects; and</text> </paragraph> <paragraph num="(4)"> <text>Public housing authorities.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Applicants for financial assistance shall meet the following minimum requirements to be eligible to apply for financial assistance under the Program:</text> <paragraph num="(1)"> <text>Applicants shall be in good standing and qualified to do business in Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>Applicants shall have the legal capacity and all necessary legal authority to incur the obligations of any financial assistance provided under the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Projects."> <text>In order to be eligible for financial assistance under the Program, a project shall demonstrate that it:</text> <paragraph num="A."> <text>Is located in a Maryland Appalachian county;</text> </paragraph> <paragraph num="B."> <text>Will provide housing for low and moderate income families;</text> </paragraph> <paragraph num="C."> <text>Is eligible for financial assistance from a public agency if the project involves planning or site development assistance; and</text> </paragraph> <paragraph num="D."> <text>Will be in compliance upon completion with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which it is located.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Terms and Conditions of Financial Assistance."> <paragraph num="A."> <text>Amount of Financial Assistance. The maximum amount of financial assistance under the Program shall be as follows:</text> <paragraph num="(1)"> <text>Planning assistance may not exceed 50 percent of the total predevelopment costs of a project or such other percentage as may be specified by ARC;</text> </paragraph> <paragraph num="(2)"> <text>Site development assistance may not exceed the following amounts of such other amounts as may be specified by ARC:</text> <paragraph num="(a)"> <text>10 percent of the total project costs for new construction, or</text> </paragraph> <paragraph num="(b)"> <text>10 percent of the reasonable costs after rehabilitation value of a rehabilitation project;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Demonstration assistance may not exceed 50 percent of the total cost of a project or such other percentage as may be specified by ARC;</text> </paragraph> <paragraph num="(4)"> <text>The total amount of federal financial assistance involved in a project may not exceed 80 percent of the total costs of a project.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Conditional Repayment Provisions. The Department may require the repayment of any financial assistance if the:</text> <paragraph num="(1)"> <text>Sponsor anticipates being reimbursed for eligible costs paid out of financial assistance from the Program; and</text> </paragraph> <paragraph num="(2)"> <text>Reimbursement of the sponsor will occur within 2 years of the date of the grant agreement between the sponsor and the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Department may require a sponsor to maintain the following insurance:</text> <paragraph num="(1)"> <text>Multi-peril insurance which provides fire and extended coverage insurance on a project both during and after construction or rehabilitation. The insurance coverage shall include such endorsements as the Department may require including:</text> <paragraph num="(a)"> <text>Collapse;</text> </paragraph> <paragraph num="(b)"> <text>Explosion;</text> </paragraph> <paragraph num="(c)"> <text>Loss of rents; and</text> </paragraph> <paragraph num="(d)"> <text>Vandalism.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Liability Insurance. Comprehensive general liability insurance shall be maintained with such endorsements as the Department may require, both during and after construction or rehabilitation of a project.</text> </paragraph> <paragraph num="(3)"> <text>Flood Insurance. If the project is located on real property which is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the project shall be covered by a flood plain insurance policy. Before closing of a loan for a project, permits shall be secured from the Maryland Department of Natural Resources and the Maryland Appalachian county in which the project is located.</text> </paragraph> <paragraph num="(4)"> <text>Contractor's Insurance. If a project involves construction or rehabilitation of a building or improvements of any kind, the general contractor shall provide insurance coverage for comprehensive public liability, property damage, and workers' compensation in form and amounts required by the Department.</text> </paragraph> <paragraph num="(5)"> <text>Other Insurance. The sponsor shall provide at closing of the financial assistance such other insurance as the Department may require including builder's risk, boiler insurance, comprehensive automobile liability, and broad form workers' compensation.</text> </paragraph> <paragraph num="(6)"> <text>Terms and Conditions. Each insurance policy shall meet the following minimum requirements plus any additional requirements which may be set by the Department:</text> <paragraph num="(a)"> <text>Be written by companies acceptable to the Department;</text> </paragraph> <paragraph num="(b)"> <text>Be written by companies which are reputable and financially sound, as determined by the Department;</text> </paragraph> <paragraph num="(c)"> <text>Be in force to the extent applicable upon the closing of the financial assistance;</text> </paragraph> <paragraph num="(d)"> <text>Contain to the extent applicable a standard mortgagee endorsement attached to or printed in the policy naming the Department as mortgagee;</text> </paragraph> <paragraph num="(e)"> <text>Name to the extent required by the Department, the Department as loss payee and additional insured;</text> </paragraph> <paragraph num="(f)"> <text>Provide for notification to the Department before termination; and</text> </paragraph> <paragraph num="(g)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Applications and Processing."> <paragraph num="A."> <text>An application for financial assistance shall be submitted to the Department and shall be made upon standard forms prescribed by the Department. Each application shall contain sufficient information and documentation to determine:</text> <paragraph num="(1)"> <text>Whether the project is located in a Maryland Appalachian county;</text> </paragraph> <paragraph num="(2)"> <text>The extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the property;</text> </paragraph> <paragraph num="(3)"> <text>Whether the project will benefit low and moderate income families;</text> </paragraph> <paragraph num="(4)"> <text>The rate of return, if any, the sponsor anticipates receiving on a project;</text> </paragraph> <paragraph num="(5)"> <text>In the case of an application for a planning or site development assistance, whether the project is eligible for financial assistance from a public agency;</text> </paragraph> <paragraph num="(6)"> <text>The availability or lack of conventional financing for the project; and</text> </paragraph> <paragraph num="(7)"> <text>Such other information as the Program may request.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Approval of Applications.</text> <paragraph num="(1)"> <text>Upon submission of all required information, the Program shall undertake an analysis of each application and make a recommendation as to the amount of financial assistance and any special terms and conditions for a project.</text> </paragraph> <paragraph num="(2)"> <text>Approval of Application.</text> <paragraph num="(a)"> <text>If the Secretary approves an application for financial assistance, the Secretary shall execute a determination that the financial assistance is authorized by the Act and the Code. The determination shall include authorization for the issuance of a grant agreement between the Department and the sponsor for the financial assistance only if the financial assistance is approved by ARC on the same terms and conditions approved by the Secretary. The determination also shall constitute authorization for issuance of a grant agreement between the sponsor and the Department, obligating the Department to provide the financial assistance after the financial assistance is approved by ARC on the same terms and conditions approved by the Secretary.</text> </paragraph> <paragraph num="(b)"> <text>Upon issuance of a determination by the Secretary approving the financial assistance, the application for financial assistance shall be submitted to the Maryland ARC representative for approval. If the Maryland ARC representative approves the application, the Maryland ARC representative shall submit the application to the ARC for approval.</text> </paragraph> <paragraph num="(c)"> <text>If the application is approved by the ARC on the same terms and conditions set forth in the Secretary's determination, the Department shall issue a grant agreement between the sponsor and the Department for the financial assistance.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Rejection of Application.</text> <paragraph num="(a)"> <text>The Program shall inform an applicant in writing of rejection of an application for financial assistance, and an applicant shall have the right to appeal any rejection of an application by the Program under the procedures set forth in §E of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>When an application is rejected by the ARC:</text> <paragraph num="(i)"> <text>If the ARC requires additional terms and conditions for a proposed project, the Director shall inform the applicant, in writing, of these additional terms and conditions. The applicant shall notify the Director, in writing, of its acceptance or rejection of the new or additional terms and conditions required by the ARC.</text> </paragraph> <paragraph num="(ii)"> <text>If the ARC rejects an applicant's application for financial assistance for a project, the Department may not have the authority to provide the financial assistance requested by the applicant. The Program shall inform the applicant of rejection by the ARC of its proposed project.</text> </paragraph> <paragraph num="(iii)"> <text>The appeal procedures set forth in §E of this regulation may not be available to an applicant whose application is rejected by the ARC.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The Program, the Maryland ARC representative, and the ARC may take the following factors into consideration in considering the award of financial assistance:</text> <paragraph num="(1)"> <text>With respect to a planning assistance, whether the costs incurred are reimbursable out of permanent financing for the project;</text> </paragraph> <paragraph num="(2)"> <text>The area in a Maryland Appalachian county in which the project will be located;</text> </paragraph> <paragraph num="(3)"> <text>The extent to which the project will benefit low or moderate income families;</text> </paragraph> <paragraph num="(4)"> <text>The availability or unavailability of funds for preconstruction expenses and gap financing through conventional commercial lenders;</text> </paragraph> <paragraph num="(5)"> <text>The extent of local government participation in the project; and</text> </paragraph> <paragraph num="(6)"> <text>Other factors which the Program determines are desirable in fostering development in the Maryland Appalachian counties.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Department shall provide the sponsor with a grant agreement that is consistent with the terms and requirements under which the financial assistance was approved, and the provisions set forth in these regulations and in the Act and the Code. The grant agreement shall specify the reports necessary to monitor compliance by the sponsor with the terms and conditions of the Act, the Code, and these regulations.</text> </paragraph> <paragraph num="E."> <text>Appeal.</text> <paragraph num="(1)"> <text>An applicant may appeal rejection by the Program of an application for financial assistance in the following manner:</text> <paragraph num="(a)"> <text>Submission to the Secretary within 15 working days of the date of the notice of rejection from the Program, a written appeal which contains the following information:</text> <paragraph num="(i)"> <text>Reasons for disagreement with rejection,</text> </paragraph> <paragraph num="(ii)"> <text>Additional information and supporting documents, and</text> </paragraph> <paragraph num="(iii)"> <text>Explanation as to why the documentation was not furnished in the original application;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The Secretary shall respond in writing to the applicant's request within 30 days of receipt of the written appeal of the applicant.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An applicant may not have any right to appeal to the Department a rejection of any application by the ARC.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Books and Accounts."> <paragraph num="A."> <text>Sponsors, contractors, and subcontractors shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records in §A of this regulation, as well as the administrative personnel, whether full-time or part-time, shall be available to the inspection of representatives of the ARC, the Department, or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the contractor and the sponsor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Fees and Charges."> <paragraph num="A."> <text>The Department may charge a sponsor an application and administrative fee to cover the costs to the Department involved in processing the financial assistance.</text> </paragraph> <paragraph num="B."> <text>A sponsor may withdraw an application at any time before an award of financial assistance by written notice to the Department. The sponsor may be required to bear any costs incurred by the Department for items other than Departmental processing including a nonusage fee.</text> </paragraph> <paragraph num="C."> <text>The Department may retain the application and administrative fees paid before the date of withdrawal of an application.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A sponsor or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project financed or assisted under the Program, or in any aspect of employment by any sponsor or contractor in the construction, repair, or maintenance of any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>A sponsor or contractor shall comply with all applicable federal, State, and local laws, and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Americans with Disabilities Act of 1990, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Drug and Alcohol Policy."> <text>As a condition of receipt of financial assistance from the Program, the Department may require the sponsor to:</text> <paragraph num="A."> <text>Adopt and administer a program to promote a drug and alcohol free workplace;</text> </paragraph> <paragraph num="B."> <text>Make a good faith effort to ensure that any project it owns, manages, or otherwise retains an interest in shall be free from the illegal use, possession, or distribution of drugs or alcohol by residents or beneficiaries of the project; and</text> </paragraph> <paragraph num="C."> <text>Agree to participate in the Families Insisting on Safe Tenancies Program sponsored by the State.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Waiver."> <text>The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act and the Code and if, in the written determination of the Secretary, the application of the regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act or the Code, or contrary to federal law or regulation.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §2-102(a)(7), Title 11, Annotated Code of Maryland;Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 30, 1990 (17:8 Md. R. 976)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective January 2, 1994 (20:25 Md. R. 1944); April 5, 1999 (26:7 Md. R. 539)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective January 2, 1994 (20:25 Md. R. 1944)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.07.07 to COMAR 05.05.10 effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> </subtitle> <subtitle num="06" heading="Housing Insurance"> <chapter num="01" heading="Maryland Housing Fund — Multifamily Program"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>It is the purpose of the Fund to use creatively its authority to insure mortgages so as to increase the housing opportunities of the residents of the State.</text> </paragraph> <paragraph num="B."> <text>More particularly, the Fund promotes the construction and rehabilitation of housing by insuring mortgages to finance multifamily housing funded by any qualified bank, trust company, savings and loan association, national bank association, public agency, insurance company, or other financial institution. This insurance makes these obligations more marketable, and permits them to be sold at more favorable rates than otherwise possible. The qualified public agencies include the Community Development Administration of the Department of Housing and Community Development, which is the State housing finance agency, and may include other public agencies which operate housing finance programs satisfactory to the Fund and which would benefit by Fund insurance.</text> </paragraph> <paragraph num="C."> <text>These regulations set forth the policies and procedures for issuance of mortgage insurance by the Maryland Housing Fund to insure multifamily residential property.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>Mortgage loans secured by residential multifamily real property may be insured by the Maryland Housing Fund under its Multifamily Insurance Reserve and these regulations.</text> </paragraph> <paragraph num="B."> <text>The Multifamily Insurance Reserve is governed by the Multifamily Insurance Agreement, as may be amended, by and between the Fund and the Community Development Administration.</text> </paragraph> <paragraph num="C."> <text>The Multifamily Reserve backs the insurance of multifamily loans under these regulations, and in addition backs the insurance of loans made under the multifamily Home and Energy Loan Program, COMAR 05.04.10, and the Special Housing Opportunity Program, COMAR 05.04.11.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Appraised value” means the value of a property, as determined by a written valuation performed by a certified appraiser.</text> </paragraph> <paragraph num="(3)"> <text>“Borrower” means the original borrower under a mortgage loan and that borrower's successors and assigns by operation of law or as approved by the Fund.</text> </paragraph> <paragraph num="(4)"> <text>“Certified appraiser” means a certified general real estate appraiser entitled or qualified to provide real estate appraisal services under Business Occupations and Professions Article, §15.5-101 et seq., Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Claim” means a request by an insured lender for reimbursement for any loss resulting from the occurrence of a default in a mortgage which is insured by the Maryland Housing Fund.</text> </paragraph> <paragraph num="(6)"> <text>“Condominium” means a multi-unit structure or project, subject to a condominium regime under Real Property Article, Title 11, Annotated Code of Maryland. A multifamily condominium may be comprised of five or more individual units.</text> </paragraph> <paragraph num="(7)"> <text>“Cooperative” means a multi-unit project operated for the benefit of members or shareholders who occupy the dwelling units in the project under a shareholders' or occupancy agreement.</text> </paragraph> <paragraph num="(8)"> <text>“Default” means the failure of a borrower to repay the obligation of a note, or otherwise to fully perform according to the terms provided in a deed of trust.</text> </paragraph> <paragraph num="(9)"> <text>“Department” means the Department of Housing and Community Development of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Director” means the Director of the Division of Housing Credit Assurance of the Department.</text> </paragraph> <paragraph num="(11)"> <text>“Fund” or “MHF” means the Maryland Housing Fund, an agency within the Division of Housing Credit Assurance and, when appropriate, its authorized officers or personnel.</text> </paragraph> <paragraph num="(12)"> <text>“Housing Finance Review Committee” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>Insured Lender or Lender.</text> <paragraph num="(a)"> <text>“Insured lender” or “lender” means the original lender of a mortgage loan and that lender's successors and assigns, by operation of law or as approved by the Fund.</text> </paragraph> <paragraph num="(b)"> <text>“Insured lender” includes any qualified bank, trust company, savings institution, savings and loan association, national bank association, public agency, insurance company, or other financial institution that makes a loan which the Fund insures in whole or in part.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Loan” means the delivery by a lender of a sum of money to a borrower, upon agreement that it be repaid.</text> </paragraph> <paragraph num="(15)"> <text>Mortgage.</text> <paragraph num="(a)"> <text>“Mortgage” means a written instrument evidencing or creating a lien against real property for the purpose of providing collateral to secure the repayment of a loan.</text> </paragraph> <paragraph num="(b)"> <text>“Mortgage” includes a deed of trust.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Multifamily project” or “project” means:</text> <paragraph num="(a)"> <text>A development of one or more structures containing five or more dwelling units;</text> </paragraph> <paragraph num="(b)"> <text>Other uses as may be permitted under Regulation .05B of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>The real property upon which a development in §B(16)(a) of this regulation is situated.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>Nonprofit Entity.</text> <paragraph num="(a)"> <text>“Nonprofit entity” means any corporation, foundation, or other legal entity, no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity. This includes governmental bodies, local development agencies, and local development corporations.</text> </paragraph> <paragraph num="(b)"> <text>“Nonprofit entity” does not mean limited dividend corporations as defined in Housing and Community Development Article, §4-220, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Property” means the land upon which a multifamily project is situated, and all improvements constructed on it, including the rights and benefits of its ownership.</text> </paragraph> <paragraph num="(19)"> <text>“Public agency” means any board, commission, agency, department, or authority of the State or of any county or municipal corporation, including a county or municipal corporation.</text> </paragraph> <paragraph num="(20)"> <text>“Secretary” means the Secretary of Housing and Community Development of Maryland.</text> </paragraph> <paragraph num="(21)"> <text>“Statement of projected net revenues” means a statement of projected net revenues, as those terms are defined in the bond indentures authorizing issuance of the bonds.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Reserves."> <paragraph num="A."> <text>Types of Reserves. Insurance issued by the Fund is backed by an insurance reserve. There currently exist seven separate reserves, one for multifamily insurance, three for single family insurance, one for general use, one for business insurance, and an unallocated reserve for moneys not yet transferred to a specific reserve. More specifically, separate reserve funds have been established to back the following categories of insurance:</text> <paragraph num="(1)"> <text>Single family regular insurance;</text> </paragraph> <paragraph num="(2)"> <text>Revitalization program insurance formerly known as pilot program insurance;</text> </paragraph> <paragraph num="(3)"> <text>Single family home and energy loan insurance;</text> </paragraph> <paragraph num="(4)"> <text>Multifamily insurance;</text> </paragraph> <paragraph num="(5)"> <text>General reserve insurance;</text> </paragraph> <paragraph num="(6)"> <text>Business reserve insurance; and</text> </paragraph> <paragraph num="(7)"> <text>An unallocated reserve.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Claims on Reserves.</text> <paragraph num="(1)"> <text>Except for the unallocated reserve, each specified category of reserve is maintained as a reserve to pay claims, when necessary or desirable to do so, arising from its respective category of insurance, and is not subject to claims arising from other categories of insurance except as provided in §B(2) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Reserves are subject to payment of claims arising from single family regular and revitalization program insurance issued before August 20, 1975.</text> </paragraph> <paragraph num="(3)"> <text>The unallocated reserve may be used, as provided in §C of this regulation, for the payment of claims arising under any category of insurance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Earnings on Reserves. Investment earnings on each of the seven reserves which are retained by the Fund are credited to the unallocated reserve. The moneys in the unallocated reserve may be:</text> <paragraph num="(1)"> <text>Allocated and transferred by the Secretary into any or each of the identified reserves;</text> </paragraph> <paragraph num="(2)"> <text>Restricted by the Secretary as a reserve for the payment of a claim or potential claim under any category of insurance during any workout period;</text> </paragraph> <paragraph num="(3)"> <text>Applied by the Fund as payment of a claim, in whole or in part, under any category of insurance; or</text> </paragraph> <paragraph num="(4)"> <text>Retained in the unallocated reserve pending allocation, transfer, restriction, or use.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Allocations to Reserves. The Secretary may issue determinations from time to time to make the discretionary allocations, transfers, or restrictions to or within the reserve funds.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Projects."> <paragraph num="A."> <text>General. A multifamily project is eligible for Fund insurance if it:</text> <paragraph num="(1)"> <text>Is located in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>When complete, conforms to all applicable federal, State, and local building, health, environmental, historic preservation, and housing codes or regulations;</text> </paragraph> <paragraph num="(3)"> <text>Is zoned to permit rental housing; and</text> </paragraph> <paragraph num="(4)"> <text>Secures a loan which is in all respects in conformance with these regulations.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Uses.</text> <paragraph num="(1)"> <text>A multifamily project shall be used primarily for residential dwelling purposes, including space for living, dining, sleeping, and sanitary purposes.</text> </paragraph> <paragraph num="(2)"> <text>A multifamily project may include up to:</text> <paragraph num="(a)"> <text>15 percent of the total building space for related noncommercial supporting purposes for use by the residents; and</text> </paragraph> <paragraph num="(b)"> <text>5 percent of the total building space for incidental, ancillary, and supportive commercial or other nonresidential uses that may be used by residents and nonresidents.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A project may include up to an additional 15 percent of the total building space for related noncommercial supporting purposes upon a written determination of the Director of the Fund that the nonresidential spaces and architectural configuration of the project are adaptable to other marketable uses.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loans secured by cooperatives are eligible for insurance.</text> </paragraph> <paragraph num="D."> <text>Loans secured by a qualified condominium of five or more units are eligible for insurance.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Lenders."> <paragraph num="A."> <text>General Criteria. Any for-profit or nonprofit entity or public agency may qualify as an eligible lender if, in the determination of the Fund, it:</text> <paragraph num="(1)"> <text>Makes loans as a substantial function of its operations;</text> </paragraph> <paragraph num="(2)"> <text>Provides evidence of responsibility, permanency, and financial capacity; and</text> </paragraph> <paragraph num="(3)"> <text>Has requisite administrative, loan underwriting, loan servicing, and construction loan monitoring capabilities.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Office in State. The insured lender shall maintain an office in the State, be authorized to transact business in the State, and agree to receive service of process in and be subject to the jurisdiction and venue of the courts of the State.</text> </paragraph> <paragraph num="C."> <text>Certification of Lenders. An entity which meets the eligibility requirements under this regulation may request certification by the Fund that it qualifies to originate loans to be insured under this chapter. To become certified, an eligible lender shall submit an application to the Fund, which application may require information and supporting documentation regarding the lender's ability to satisfy all eligibility criteria.</text> </paragraph> <paragraph num="D."> <text>Disciplinary Prohibition. A lender may not be under an order suspending or debarring it from participating in the Department's programs under COMAR 05.01.05 at the time the loan is initially endorsed for insurance. The Department may decline to grant eligibility to an otherwise qualified lender that is suspended or disbarred from participating in the programs of any other state or federal agency.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Borrowers."> <text>A limited partnership, corporation, or public agency may qualify as an eligible borrower if, in the determination of the Fund, it:</text> <paragraph num="A."> <text>Owns, at the closing of the loan, the property in fee simple or controls the property under a leasehold interest under a ground lease satisfactory to the Fund having a term not shorter than the term of the insured loan plus 25 years;</text> </paragraph> <paragraph num="B."> <text>Has all necessary legal and corporate authority to incur the obligations of the insured loan;</text> </paragraph> <paragraph num="C."> <text>Is in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="D."> <text>Can establish to the satisfaction of the Fund the:</text> <paragraph num="(1)"> <text>Financial capacity to complete the development of the project, including the satisfaction of all equity requirements,</text> </paragraph> <paragraph num="(2)"> <text>Experience, background, and construction capacity to construct the project, including the ability to provide all required guarantees, collateral, and escrows, and</text> </paragraph> <paragraph num="(3)"> <text>Managerial capacity to operate the project, together with the financial capacity to meet the normal and typical expenses of ownership;</text> </paragraph> </paragraph> <paragraph num="E."> <text>Has a general credit standing and an overall financial position acceptable to the Fund after a review of the borrower's:</text> <paragraph num="(1)"> <text>Total obligations,</text> </paragraph> <paragraph num="(2)"> <text>Contingent liabilities,</text> </paragraph> <paragraph num="(3)"> <text>Operating capital, and</text> </paragraph> <paragraph num="(4)"> <text>Other relevant information as may be required by the Fund;</text> </paragraph> </paragraph> <paragraph num="F."> <text>Is not under an order suspending or debarring it from participating in the Department's programs under COMAR 05.01.05, or under any similar order from any other State agency, nor has the Department declined to grant eligibility to an otherwise qualified borrower because the borrower is suspended or debarred from participating in the programs of any federal agency; and</text> </paragraph> <paragraph num="G."> <text>Agrees and certifies that it shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination and equal opportunity in employment, housing and credit practices, and drug-free and alcohol-free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended,</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended, including the Fair Housing Amendments Act of 1988,</text> </paragraph> <paragraph num="(3)"> <text>For projects containing nonresidential uses, the Americans with Disabilities Act of 1990, as amended,</text> </paragraph> <paragraph num="(4)"> <text>The Governor's Code of Fair Practices, as amended,</text> </paragraph> <paragraph num="(5)"> <text>The Department's Minority Business Enterprise Plan, as amended, and</text> </paragraph> <paragraph num="(6)"> <text>Executive Order 01.01.1989.18 relating to drug and alcohol free workplaces, and any Departmental regulations adopted to carry out more specifically the requirements of the Order.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Eligible Loans—Generally."> <paragraph num="A."> <text>To qualify as an eligible loan for a project, a loan shall meet the general terms in §§B—J of this regulation.</text> </paragraph> <paragraph num="B."> <text>Eligible Lender. The loan shall be originated by a lender who has been determined eligible under Regulation .06 of this chapter.</text> </paragraph> <paragraph num="C."> <text>First Lien. The loan shall be secured by a first lien upon the property. The loan shall be evidenced and secured using such documentation as is approved by the Office of the Attorney General, as counsel to the Fund.</text> </paragraph> <paragraph num="D."> <text>Insured Loan-to-Value Ratio.</text> <paragraph num="(1)"> <text>The maximum loan-to-value ratio of a loan insured by the Fund may not exceed 90 percent of the property's appraised value as of completion of the project, except as provided in §D(2)—(5) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Notwithstanding the maximum insured loan-to-value ratio set forth in §D(1) of this regulation, 15 percent of the multifamily reserve may be used to back the outstanding principal of loans which have a maximum loan-to-value ratio of between 90 and 100 percent if the loan qualifies under §D(3), (4), or (5) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The permitted loan-to-value ratio of an insured project may be over 90 percent if:</text> <paragraph num="(a)"> <text>A materially significant number of the units in the project are subsidized by federal rent subsidies and the rent subsidy contract extends to or beyond the time when the project is expected to achieve a 90 percent loan-to-value ratio; or</text> </paragraph> <paragraph num="(b)"> <text>The first 10 percent of the insured loss is covered by a:</text> <paragraph num="(i)"> <text>Governmental agency other than the Fund,</text> </paragraph> <paragraph num="(ii)"> <text>Financial institution acceptable to the Fund, or</text> </paragraph> <paragraph num="(iii)"> <text>Letter of credit from a financial institution acceptable to the Fund; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The loan being insured is a refinancing of an existing Fund-insured project and the reinsurance or continuation of insurance is essential to bring the loan current or otherwise avoid a claim to the Fund.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A loan may be insured with a loan-to-value ratio up to 100 percent in order to achieve the public purposes of the Fund, if the:</text> <paragraph num="(a)"> <text>Project meets all other underwriting standards of the Fund; and</text> </paragraph> <paragraph num="(b)"> <text>Secretary has executed a determination of exceptional public purpose.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The permitted loan-to-value ratio for insurance of a permanent loan for a project with an operating history, but not previously insured by the Fund, may be up to 100 percent of the property's appraised value if the project satisfies the following criteria:</text> <paragraph num="(a)"> <text>The loan is secured by a completed and occupied project;</text> </paragraph> <paragraph num="(b)"> <text>The project has a minimum of 5 years' operating history and has positive cash flow for a minimum of 3 years immediately before the application for insurance;</text> </paragraph> <paragraph num="(c)"> <text>The project has no greater than 5 percent annual average vacancy rate during the 3 years immediately before the application for insurance;</text> </paragraph> <paragraph num="(d)"> <text>The project has been assessed by an independent construction analyst or building engineer and requires no major systems or structural rehabilitation; and</text> </paragraph> <paragraph num="(e)"> <text>The borrower will not be receiving any cash or other return on equity from the project at the time the loan is insured.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Interest. The loan shall bear interest at the rate agreed upon by the insured lender and the borrower and acceptable to the Fund.</text> </paragraph> <paragraph num="F."> <text>Proceeds. The proceeds of an insured loan shall be:</text> <paragraph num="(1)"> <text>Used for the financing or refinancing of acquisition, construction, or rehabilitation of a multifamily project; and</text> </paragraph> <paragraph num="(2)"> <text>Evidenced by a promissory note and secured by a mortgage.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Amortization.</text> <paragraph num="(1)"> <text>Permanent loans shall contain amortization provisions satisfactory to the Fund for the complete amortization of the loan in monthly installments.</text> </paragraph> <paragraph num="(2)"> <text>The Fund may not insure a permanent loan that comes due before the expiration of its full term of years, which loan may be otherwise known as a balloon loan.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Loan Term. The Fund may insure a permanent loan for a period of up to 40 years.</text> </paragraph> <paragraph num="I."> <text>Transfer of Property Insured. The loan shall provide that any transfer of the property, except by operation of law, shall require prior approval of the Fund for the insurance to remain in effect. The Fund's coverage will not be impaired by reason of a transfer in violation of covenants of the mortgage, unless the insured lender had actual advance knowledge of the transfer and is considered to have consented to it.</text> </paragraph> <paragraph num="J."> <text>Multiple Insured Loans. The Fund may insure more than one loan on any project if all insured loans, in the aggregate, comply with these regulations, including without limitation:</text> <paragraph num="(1)"> <text>The aggregated loans do not exceed the maximum loan-to-value ratio in §D of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>The aggregated loans are all to be secured equably by a first lien deed of trust;</text> </paragraph> <paragraph num="(3)"> <text>If the loans are originated by different lenders, each lender has executed an intercreditor agreement in form and substance acceptable to the Fund; and</text> </paragraph> <paragraph num="(4)"> <text>The aggregated loans do not exceed the maximum insured loan requirements of Regulation .09 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Eligible Loans—Maximum Insured Loan."> <paragraph num="A."> <text>The maximum insurable loan amount that the Fund can insure is 25 percent of the multifamily insurance reserve, unless:</text> <paragraph num="(1)"> <text>Additional collateral is deposited with the Fund in accordance with §B of this regulation; or</text> </paragraph> <paragraph num="(2)"> <text>For projects in which the Fund participates in reinsurance, coinsurance, or shared insurance, the Fund's maximum exposure is 25 percent of the multifamily reserve, with adjustments, if any, calculated in accordance with Regulation .15 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A loan may be insured even when the amount of the insurance by the Fund exceeds 25 percent of the multifamily reserve as of the date of making the loan, if the:</text> <paragraph num="(1)"> <text>Principal portion of the loan being insured which is in excess of the reserve amount will be supported by collateral or security acceptable to the Fund in an amount equal to or greater than the excess loan amount;</text> </paragraph> <paragraph num="(2)"> <text>Collateral or security is deposited with or held by the Fund for its benefit in the event of default for such period of time as determined necessary by the Fund; and</text> </paragraph> <paragraph num="(3)"> <text>Acceptable forms of collateral or security are:</text> <paragraph num="(a)"> <text>Cash;</text> </paragraph> <paragraph num="(b)"> <text>Securities of the following types:</text> <paragraph num="(i)"> <text>General obligations of or obligations guaranteed by the federal government,</text> </paragraph> <paragraph num="(ii)"> <text>Certificates of deposit or other banking arrangements fully insured by the Federal Deposit Insurance Corporation, or</text> </paragraph> <paragraph num="(iii)"> <text>Bonds or other obligations rated in one of the two highest rating categories by a nationally recognized credit rating agency and otherwise acceptable to the Fund;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Letters of credit which are irrevocable, unconditional, renewable, transferable, and drawable at sight on an investment-grade, rated financial institution with acceptable combined capital and surplus, with a minimum term and all other provisions acceptable to the Fund; or</text> </paragraph> <paragraph num="(d)"> <text>Other collateral equivalent to that described in §B(3)(a), (b), or (c) of this regulation and otherwise acceptable to the Fund.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The Fund may insure two or more loans secured by mortgages on adjacent projects which are under common ownership or sponsorship when the combined loans exceed the maximum insurable loan amount, if the Fund determines in writing that the:</text> <paragraph num="(1)"> <text>Adjacent projects have substantially different risks of insurance loss evidenced by each project having at least one of the following:</text> <paragraph num="(a)"> <text>Federal, State, or local rent subsidies committed to the project for a term of not less than 5 years for not less than 35 percent of the units in the project, or non-rental subsidies which result in at least a 10 percent reduction in the debt service of the loan, or</text> </paragraph> <paragraph num="(b)"> <text>Additional collateral or security deposited with the Fund for its benefit in the event of default, in one of the forms set forth in §B(3)(a), (b), (c), or (d) of this regulation, in an amount which, when added to the borrower's equity, equals 22.5 percent of the Fund-determined value for the second project to be insured;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Loan for each adjacent project contains cross-default provisions providing that upon monetary default of one adjacent project the insured lender would be required, at the Fund's election to:</text> <paragraph num="(a)"> <text>Declare a default on either adjacent project, and</text> </paragraph> <paragraph num="(b)"> <text>Operate, sell, or transfer the adjacent project rather than assign the project to the Fund unless the adjacent project itself was in monetary default; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Likelihood of nonpayment of principal, interest, or other sums agreed to be paid to the mortgagee by the mortgagor is no greater than that of similar projects, taking into consideration all relevant factors, including the financial strength and experience of the developer and builder.</text> </paragraph> </paragraph> <paragraph num="D."> <text>In the event of a default on a loan insured under the provisions of §B or C of this regulation, the terms of the loan are required to give the insured lender the right to call on any collateral or security provided and apply the proceeds to a reduction in the amount of the insurance claim to be paid by the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Environmental and Insurance Requirements."> <paragraph num="A."> <text>Environmental Review.</text> <paragraph num="(1)"> <text>Each loan to be insured by the Fund shall comply with applicable local, State, and federal environmental laws and regulations.</text> </paragraph> <paragraph num="(2)"> <text>A lender may be required, at the discretion of the Fund, to have a borrower conduct a screening of the proposed site for environmental conditions, such as man-made hazards, stormwater runoff, underground storage tanks, lead-based paint, radon gas, PCBs, asbestos, or other environmental hazards within the meaning of the environmental laws referred to in this section.</text> </paragraph> <paragraph num="(3)"> <text>If the initial screening indicates adverse or potentially adverse environmental conditions, the Fund may require a more detailed physical investigation, review of historic records, testing and treatment, or abatement of the environmental condition as a requirement of the mortgage insurance.</text> </paragraph> <paragraph num="(4)"> <text>The Fund may require the borrower to certify to it that no hazardous environmental conditions are present on the property, in addition to the screening required by this section.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Title Insurance.</text> <paragraph num="(1)"> <text>The borrower shall provide to the insured lender a standard American Land Title Association Loan Policy — 1970, as amended, for an amount equal to the maximum principal amount of the loan, insuring the lender and the Fund that title to the building and the real property on which the building is located on the date of the loan closing is vested in the borrower, and containing only exceptions and encumbrances approved by the insured lender and the Fund.</text> </paragraph> <paragraph num="(2)"> <text>The title policy shall include American Land Title Association endorsement form 100, comprehensive coverage, and American Land Title Association endorsement form 8.1, environmental coverage, and such other endorsements as may be required by the insured lender and the Fund.</text> </paragraph> <paragraph num="(3)"> <text>The title insurance policy shall be accompanied by a survey certified in the manner required by the insured lender, the Fund, and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property except those acceptable to the insured lender and the Fund.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Property, Liability, and Other Insurance.</text> <paragraph num="(1)"> <text>At or before closing of a loan, and at such other times as required by the Department, the borrower shall provide evidence that the borrower, contractor, and other parties, have obtained and maintained the following insurance:</text> <paragraph num="(a)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(b)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(c)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(d)"> <text>Architect's errors and omissions;</text> </paragraph> <paragraph num="(e)"> <text>Engineer's errors and omissions; and</text> </paragraph> <paragraph num="(f)"> <text>Flood insurance, if the project is located in a flood hazard zone.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All insurance required under §C(1) of this regulation shall meet the following requirements:</text> <paragraph num="(a)"> <text>Be written by a company registered with the Maryland Insurance Administration;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(c)"> <text>Not be terminable without prior notification to the Department; and</text> </paragraph> <paragraph num="(d)"> <text>Contain such other terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition to the requirements of §C(2) of this regulation, owner's liability insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition to the requirements of §C(2) of this regulation, contractor's liability and contractor's builder's risk insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in place through final closing or such later date as the Department requires.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In addition to the requirements of §C(2) of this regulation, owner's property or hazard insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured, loss payee, and mortgagee; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Valuation."> <paragraph num="A."> <text>Appraisal Requirement.</text> <paragraph num="(1)"> <text>The Fund shall, at its option, either obtain, or have the lender obtain, an independent appraisal of any project for which insurance is sought, or require the borrower to submit an appraisal.</text> </paragraph> <paragraph num="(2)"> <text>Appraisal Report.</text> <paragraph num="(a)"> <text>The appraisal report shall be prepared by a certified appraiser and submitted by the borrower or an independent appraiser before initial insurance endorsement of a loan. The appraisal shall include the income, cost, and market comparable approaches to valuation.</text> </paragraph> <paragraph num="(b)"> <text>The Fund may determine in its sole discretion those projects for which an independent appraisal will be required, based upon the risk of insurance loss to the Fund and the project's cost, location, and market.</text> </paragraph> <paragraph num="(c)"> <text>An independent appraisal may be obtained by the Fund at its expense, but the cost shall be reimbursed to the Fund at the time the loan is endorsed for insurance.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Appraisal Review.</text> <paragraph num="(1)"> <text>The Fund shall review each appraisal, whether provided by the borrower or an independent appraiser, to determine its accuracy, completeness, and adherence to accepted standards of appraisal practice. The Fund review shall consider the extent of research and methods used and shall otherwise determine that the appraisal was done in accordance with appropriate appraisal practice and standards.</text> </paragraph> <paragraph num="(2)"> <text>The Fund also may evaluate appraisals whether provided by the borrower or obtained independently by the Fund, and the valuation given by the Fund review appraiser doing the evaluation shall be used by the Fund in considering an application for mortgage insurance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Special Criteria for Construction Advances."> <paragraph num="A."> <text>This regulation is applicable to any construction advances under a mortgage insured by the Fund. This regulation applies to all construction advances, and in the case of a conflict between the provisions of this regulation and Regulations .08 — .10 of this chapter, the provisions of this regulation shall control.</text> </paragraph> <paragraph num="B."> <text>Insurance of Construction Advances. Loans to finance construction of multifamily projects are eligible for the insurance of advances by the Fund if either:</text> <paragraph num="(1)"> <text>The Fund also insures the permanent loan for the project; or</text> </paragraph> <paragraph num="(2)"> <text>At the time the construction loan is endorsed for insurance by the Fund:</text> <paragraph num="(a)"> <text>There is a commitment for a permanent loan for the projects,</text> </paragraph> <paragraph num="(b)"> <text>Terms and conditions on the commitment are acceptable to the Fund, and</text> </paragraph> <paragraph num="(c)"> <text>The lender is acceptable to the Fund.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Construction Term.</text> <paragraph num="(1)"> <text>The Fund may insure construction advances for a period of 24 months. Depending on the size and complexity of a project, the Fund may extend the period of insurance for construction advances for up to an additional 12 months.</text> </paragraph> <paragraph num="(2)"> <text>For the purposes of this chapter, the construction period shall begin at initial endorsement of the insured loan, and shall end at the final endorsement of the insured loan for permanent mortgage insurance.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Construction Period Disbursement. The insured lender shall:</text> <paragraph num="(1)"> <text>Conduct or contract for regular independent on-site inspections of the construction;</text> </paragraph> <paragraph num="(2)"> <text>Make construction loan disbursements on the basis of work in place, plus materials acceptably stored on site, less a retention of 10 percent of the construction contract amount; and</text> </paragraph> <paragraph num="(3)"> <text>Make disbursement for materials acceptably stored off site, if the materials are:</text> <paragraph num="(a)"> <text>In a bonded warehouse,</text> </paragraph> <paragraph num="(b)"> <text>Set aside and labeled with the project's name,</text> </paragraph> <paragraph num="(c)"> <text>Inspected by the insured lender or its contract inspector, and</text> </paragraph> <paragraph num="(d)"> <text>Documented by evidence of payment for the materials.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Each construction draw shall be approved and endorsed by the Fund before its disbursement. Approval is based on:</text> <paragraph num="(1)"> <text>An acceptable title endorsement;</text> </paragraph> <paragraph num="(2)"> <text>Evidence of waivers of mechanics' liens; and</text> </paragraph> <paragraph num="(3)"> <text>At the option of the Fund, an on-site inspection to:</text> <paragraph num="(a)"> <text>Verify that the project is proceeding on schedule, and</text> </paragraph> <paragraph num="(b)"> <text>Confirm that there are sufficient funds in the construction budget to complete the project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>In addition to the requirements of §E of this regulation, the final construction draw is subject to review and approval of certificates of completion and cost certification.</text> </paragraph> <paragraph num="G."> <text>If at any time during construction the Fund determines from its reconciliation of the project budget, in accordance with §E of this regulation, that the project does not have sufficient funds in the construction budget to complete the project, the Fund may refuse to endorse further construction advances until the construction budget is returned to balance through approved budget adjustments or contributions by the borrower.</text> </paragraph> <paragraph num="H."> <text>Disbursement records are subject to review by the Fund at any time, with or without notice. The Fund may also, at any time and with or without notice, conduct inspections of the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Insurance Coverage Ratios."> <paragraph num="A."> <text>Public Agency Lenders. For loans made by public agency lenders to a borrower, the Fund may insure up to 100 percent of the loan amount for an initial premium of 1 percent of the insured loan amount for 12-month coverage. The premium and fee schedule for all insurance is more fully set forth in Regulation .14 of this chapter.</text> </paragraph> <paragraph num="B."> <text>Private Lenders.</text> <paragraph num="(1)"> <text>For loans made by private lenders to nonprofit borrowers, the Fund may insure up to the top 25 percent of the loan amount for an initial premium of 1 percent of the insured loan amount for 12-month coverage, or additional coverage in accordance with §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>For loans made by private lenders to for-profit borrowers, the Fund may insure up to the top 20 percent of the loan amount for an initial premium of 1 percent of the insured loan amount for 12-month coverage, or additional coverage in accordance with §C of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Additional Coverage for Private Lenders. The Fund may insure loans made by private lenders with more than a 25 percent loan to insurance coverage ratio, under Regulation .08C or D of this chapter, up to a maximum of 100 percent of the loan amount, upon the payment of higher initial and annual premiums as determined on a case-by-case basis by the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Fees and Premiums."> <paragraph num="A."> <text>Application Fee.</text> <paragraph num="(1)"> <text>The sponsor shall pay an application fee equal to the greater of:</text> <paragraph num="(a)"> <text>1/10 of 1 percent (0.1 percent) of the loan amount for which insurance is requested; or</text> </paragraph> <paragraph num="(b)"> <text>$1,000.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The application fee shall be paid to the Fund at the time the application for insurance is submitted by the lender. The Secretary may waive or postpone the time for payment of an application fee in the Secretary's sole discretion.</text> </paragraph> <paragraph num="(3)"> <text>The application fee shall be calculated at the time of application on the amount of the loan or part of it for which insurance is requested. Any adjustment for overpayment or underpayment shall be paid by or credited to the borrower at initial endorsement, provided that, at the sole discretion of the Fund, any overpayment may be credited towards the initial mortgage insurance premium.</text> </paragraph> <paragraph num="(4)"> <text>The application fee for an existing insured loan being refinanced out of refunding bonds is the greater of:</text> <paragraph num="(a)"> <text>$500; or</text> </paragraph> <paragraph num="(b)"> <text>1 percent of any increase to the insured loan amount.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Refund.</text> <paragraph num="(a)"> <text>Up to 1/2 of the application fee may be refunded within 60 days of the sponsor's submission of an application if the:</text> <paragraph num="(i)"> <text>Fund rejects the application upon initial review; or</text> </paragraph> <paragraph num="(ii)"> <text>Sponsor submits a written request to withdraw the application.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Refunds may not be made after 60 days from application submission.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Commitment Extension Fees. A nonrefundable commitment extension fee of 1/20 of 1 percent (0.05 percent) of the loan amount for which insurance is requested may be charged by the Fund for each extension by the Fund of its commitment to insure a loan, under Regulation .18H of this chapter.</text> </paragraph> <paragraph num="C."> <text>Closing Fees. The Fund may charge fees to cover costs of closing a loan, including administrative and legal costs associated with endorsement of a loan for insurance. The closing fees may be paid at loan closing and may be paid with proceeds of the loan.</text> </paragraph> <paragraph num="D."> <text>Insurance Premiums.</text> <paragraph num="(1)"> <text>Construction Advances.</text> <paragraph num="(a)"> <text>The premium for insurance of a loan for construction advances is 1 percent of the total loan amount for each year or partial year within the construction period, and shall be paid to the Fund in full at the time of initial endorsement.</text> </paragraph> <paragraph num="(b)"> <text>If the construction period is less than 24 months, that portion of the prepaid construction premium for each full calendar month after the final endorsement of the insured loan shall be credited to the initial permanent mortgage insurance premium.</text> </paragraph> <paragraph num="(c)"> <text>If the construction period is extended after the initial 24 months, the premium for insurance of the loan for construction advances during the extension period is 1 percent of the insured loan amount, and shall be paid to the Fund in full before the extension period.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Permanent Loans.</text> <paragraph num="(a)"> <text>The initial mortgage insurance premium is 1/2 of 1 percent (0.5 percent) of the insured permanent loan and shall be paid to the Fund at the time of endorsement of the insured loan for permanent mortgage insurance.</text> </paragraph> <paragraph num="(b)"> <text>The annual renewal premium is 1/2 of 1 percent (0.5 percent) of the outstanding principal balance of the insured permanent loan.</text> </paragraph> <paragraph num="(c)"> <text>When a permanent loan is insured by the Fund following Fund insurance of a construction loan:</text> <paragraph num="(i)"> <text>The construction period shall continue until the final endorsement of the insured loan for permanent mortgage insurance; and</text> </paragraph> <paragraph num="(ii)"> <text>Only the annual renewal premium, not the initial premium, for the permanent mortgage insurance shall be charged.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Modification of Premium Rates.</text> <paragraph num="(1)"> <text>The Fund may participate in a plan of shared insurance, coinsurance, or reinsurance under this regulation. In each of these instances, the Fund may charge an initial premium and annual renewal premium which is in excess of the standard mortgage insurance premiums set forth in §D(2) of this regulation. The Fund shall determine the amount of the excess premium in its sole discretion based on its analysis of the insurance risks.</text> </paragraph> <paragraph num="(2)"> <text>If the Fund insures a loan when a portion of the insurance provided is supported by collateral deposited with the Fund, including loans in excess of the maximum insurable amount under Regulation .09B of this chapter, the Fund may charge an increased premium under §E(1) of this regulation, or may in its sole discretion reduce the annual mortgage insurance premium based on its analysis of the insurance risks. The Fund may reduce the annual mortgage insurance premium payable on the entire insured loan by not more than the product of 1/2 of the collateral deposited for the annual period, multiplied by the percentage rate for the applicable insurance premium.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The premium, or any portion of it, is not refundable except when an insured loan is paid in full. If a loan is prepaid in full, no further premium is due and a portion of the premium paid for the year shall be refunded, as prorated on a monthly basis.</text> </paragraph> <paragraph num="G."> <text>Insurance Fees and Premiums.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Reinsurance, Coinsurance, and Shared Insurance."> <paragraph num="A."> <text>Loans insured by the Fund may be reinsured or coinsured, or insurance may be shared by and with public or private mortgage insurers, or through federal guarantees, when available. Portions of risk on any loan insured by the Fund may be assigned to other eligible mortgage insurers on a participating basis. Any reinsurance, coinsurance, or shared insurance shall be made on terms and conditions satisfactory to the Fund.</text> </paragraph> <paragraph num="B."> <text>The reinsurer, coinsurer, or shared insurer shall be reputable and financially sound in the judgment of the Fund.</text> </paragraph> <paragraph num="C."> <text>The Fund may not retain contingent liability to pay an entire claim in the event of nonpayment of a claim by a reinsurer or coinsurer, except in exceptional circumstances by written determination of the Secretary that a heightened public purpose is served by the retention of the contingent insurance risk.</text> </paragraph> <paragraph num="D."> <text>The total of multifamily insurance considered standing for purposes of calculating the leverage ratios permitted may not be decreased by the amount of any reinsurance, coinsurance, or shared insurance with respect to which the Fund retains contingent liability.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Property Improvement and Energy Loans."> <paragraph num="A."> <text>Property improvement loans or energy loans made or purchased by the Community Development Administration under its Home and Energy Loan Program, or by any other public agency mortgagee operating a similar program, the proceeds of which are to be used for the general improvement or rehabilitation of any multifamily project or for energy-conserving improvements to any multifamily project, may be insured by the Fund under the requirements of this section instead of Regulation .08B—D of this chapter.</text> </paragraph> <paragraph num="B."> <text>The loans shall be secured by a first or second mortgage upon the land and improvements.</text> </paragraph> <paragraph num="C."> <text>The maximum amount of the total of any mortgage loan to be insured and the then outstanding balance of any existing prior liens on the multifamily project may not exceed 85 percent of the property's appraised value as of completion of the improvements. The insurance coverage may be 100 percent of the mortgage loan to be insured.</text> </paragraph> <paragraph num="D."> <text>The total amount of liens on the property, including the mortgage loan to be insured, may not exceed 25 percent of the amount in the multifamily reserve.</text> </paragraph> <paragraph num="E."> <text>In the case of loans secured by a second mortgage, the:</text> <paragraph num="(1)"> <text>Fund shall examine any existing first mortgage and shall determine that the lender of the first mortgage meets the requirements of Regulation .06A of this chapter or, if the first lender is an individual or individuals, that the lender is financially responsible and has evidenced responsible management of the mortgage;</text> </paragraph> <paragraph num="(2)"> <text>Proposed second lender shall determine whether the first mortgage contains any restrictions upon second mortgages, and, if the first mortgage prohibits second mortgages or the first mortgage requires the mortgagor of the second borrower to obtain approval of the first lender before executing a second mortgage, the borrower shall obtain, in form and substance satisfactory to the Fund, a waiver of any prohibition against second mortgages or the approval by the first lender of the second mortgage;</text> </paragraph> <paragraph num="(3)"> <text>Borrower shall agree, and the first mortgage shall permit or the first lender shall agree, that:</text> <paragraph num="(a)"> <text>The Fund may have an opportunity to cure any defaults under the first mortgage, and</text> </paragraph> <paragraph num="(b)"> <text>Any defaults that the Fund is unable to cure shall be suspended, if the Fund keeps current any payments due under the first mortgage;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Fund shall determine whether the borrower has made all payments of principal, interest, and escrows for expenses, if applicable, in compliance with the terms and conditions of the first mortgage;</text> </paragraph> <paragraph num="(5)"> <text>Borrower shall notify the first lender of the existence of the second mortgage, and the borrower and the first lender shall agree in writing to notify the second lender of any events of default under the first mortgage by the borrower; and</text> </paragraph> <paragraph num="(6)"> <text>Fund may not insure any loan if the first mortgage requires a mandatory payment before full amortization unless the:</text> <paragraph num="(a)"> <text>Loan to be insured has a term less than the remaining term of the first mortgage, and</text> </paragraph> <paragraph num="(b)"> <text>Fund determines, in its sole discretion, that the requirement of the mandatory payment does not jeopardize the borrower's ability to repay in full the second mortgage.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Special Programs under Multifamily Reserves."> <paragraph num="A."> <text>Community Development Single-Family Projects Insured Under Multifamily Reserves.</text> <paragraph num="(1)"> <text>The Secretary has authorized an additional plan for community development projects, financed by the Community Development Administration, consisting of single-family or condominium residential units, when a mortgage for the project has been insured by the Fund under the reserve fund designated for the insurance of mortgages insured by multifamily properties.</text> </paragraph> <paragraph num="(2)"> <text>The Fund may insure 100 percent of a mortgage loan made by the Community Development Administration for a one-family unit, including a condominium unit. The mortgage shall satisfy all requirements of the Fund's single-family regulations under COMAR 05.06.06.</text> </paragraph> <paragraph num="(3)"> <text>The amount of the loan may not exceed the total sale price of the unit, including extras or options selected by the purchasers, but not including prepaid expenses and closing costs. Initial premium fees shall be based on the ratio of the amount of the mortgage to this sale price.</text> </paragraph> <paragraph num="(4)"> <text>The fee schedule is:</text> </paragraph> <paragraph num="(5)"> <text>The multifamily reserve fund, rather than the revitalization program reserve fund, applies to insurance provided under this regulation, and also to any insurance provided for a single-family community development project before November 9, 1977.</text> </paragraph> <paragraph num="(6)"> <text>The Fund's single-family regulations under COMAR 05.06.06 govern insurance under this regulation, when not inconsistent with this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Additional Coverage for Bond-Financed Mortgages.</text> <paragraph num="(1)"> <text>The Fund may provide additional coverage with respect to mortgage loans:</text> <paragraph num="(a)"> <text>Which are made by a public agency lender;</text> </paragraph> <paragraph num="(b)"> <text>The principal and interest of which are pledged to the repayment of revenue bonds issued by a public agency;</text> </paragraph> <paragraph num="(c)"> <text>Which are insured to the extent of 100 percent under the multifamily program; and</text> </paragraph> <paragraph num="(d)"> <text>Which are secured by a multifamily rental project.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The purpose of the additional coverage is to prevent imminent or prospective default on bonds, issued by a public agency, following a default on an insured mortgage which could result in a loss of revenues which had been expected to be derived from the insured mortgage loan for payment on the bonds. Eligible insureds are the Community Development Administration, upon the terms set forth here, and other public agencies, for which terms may be adopted by agreement in the future.</text> </paragraph> <paragraph num="(3)"> <text>The additional insurance shall be payable upon a:</text> <paragraph num="(a)"> <text>Default in the insured mortgage; and</text> </paragraph> <paragraph num="(b)"> <text>Certification by an authorized officer of the Administration that:</text> <paragraph num="(i)"> <text>Proceeds of the Fund's claim payment under its standard multifamily coverage shall be used to redeem bonds,</text> </paragraph> <paragraph num="(ii)"> <text>After the redemption of the bonds as certified in §B(3)(b)(i) of this regulation, the Administration is unable to file a positive statement of projected net revenues, as defined in Regulation .03 of this chapter, for the current and all subsequent bond years, unless additional bonds are redeemed, due to the loss of revenues from the defaulted loan,</text> </paragraph> <paragraph num="(iii)"> <text>The amount of the additional bonds which need to be redeemed to permit the Administration to file a positive statement of projected net revenues and the amount of money required to redeem these additional bonds, including interest on the additional bonds until they can be redeemed and any premium payable on the redemption and any expenses of the redemption,</text> </paragraph> <paragraph num="(iv)"> <text>The amount of money then available to the Administration which is not pledged to the repayment of the bonds or to the repayment of any other obligations of the Administration or which, if so pledged, may be withdrawn free of the pledge and expended for any lawful purpose of the Administration, and which is not reasonably required to provide for operating costs, or other obligations and commitments of the Administration, in the current and next subsequent fiscal years.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>The amount of the additional insurance claim shall be the lesser of the:</text> <paragraph num="(a)"> <text>Excess of the amount certified in §B(3)(b)(iii) of this regulation, over the amount certified in §B(3)(b)(iv) of this regulation, or</text> </paragraph> <paragraph num="(b)"> <text>Sum of:</text> <paragraph num="(i)"> <text>Interest on the mortgage up to the bond redemption date,</text> </paragraph> <paragraph num="(ii)"> <text>Any redemption premium payable on any redemption,</text> </paragraph> <paragraph num="(iii)"> <text>The expenses of the redemption, and</text> </paragraph> <paragraph num="(iv)"> <text>The amount, if any, by which the unpaid aggregate principal amount of the mortgage loan is less than the allocable unamortized principal amount of the bonds issued to finance the mortgage, or the bonds issued to refinance the bonds which financed the mortgage.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>The premium payable by the Community Development Administration to the Fund is an amount whose present value equivalent is 10 percent of the estimated maximum exposure of the Fund for this additional insurance, determined as of the time the bonds are issued. The premium shall be paid in equal annual installments over the term of the bonds issued to finance the insured mortgages, or the term of the bonds issued to refinance the bonds.</text> </paragraph> <paragraph num="(6)"> <text>The reserves applicable for the additional insurance are the multifamily insurance reserve.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Processing Procedures."> <paragraph num="A."> <text>Guidelines for underwriting applications for insurance of multifamily loans are those set forth by the Maryland Housing Fund.</text> </paragraph> <paragraph num="B."> <text>Application.</text> <paragraph num="(1)"> <text>Applications for insurance shall:</text> <paragraph num="(a)"> <text>Be submitted by lenders on forms acceptable to or prescribed by the Fund;</text> </paragraph> <paragraph num="(b)"> <text>Be accompanied by all supporting documentation specified in the multifamily application checklist and the Fund's operating manual; and</text> </paragraph> <paragraph num="(c)"> <text>Include sufficient information and documentation to determine the extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the property.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Applications are not required for continuing insurance or re-endorsement for insurance of an existing Fund-insured loan after a refunding of the revenue bonds which provided the source of funds for the loan.</text> </paragraph> <paragraph num="(3)"> <text>Each application for insurance shall have a maximum processing period of 18 months from the date the application and fee are received to the date the commitment is issued. If the application cannot satisfy commitment requirements by the end of the 18-month period, the application expires unless the period is extended in writing at the sole discretion of the Fund. If the application expires and is not extended, a new application is required to be submitted and a new application fee paid before renewed consideration by the Fund.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Review. Upon delivery of an application for insurance and all requisite documentation and payment of the required application fee, the Fund shall review the application to determine whether it complies with these regulations and underwriting guidelines, so as to determine the insurance amount, conditions, and terms.</text> </paragraph> <paragraph num="D."> <text>Eligibility.</text> <paragraph num="(1)"> <text>The Fund may, in its sole discretion, participate in particular projects and decline to participate in otherwise eligible projects based on its assessment of each project's overall risks and merits and each project's risks and merits relative to competing alternatives.</text> </paragraph> <paragraph num="(2)"> <text>The Fund may issue a written notice of eligibility, but all notices of eligibility shall state that it is within the discretion of the Fund to not participate in an eligible loan, and the notice of eligibility is not in any way a commitment to insure a particular loan.</text> </paragraph> <paragraph num="(3)"> <text>If the Fund determines that a project, a borrower, or a loan is not eligible for insurance, the Fund shall issue a written notice of ineligibility.</text> </paragraph> <paragraph num="(4)"> <text>The Fund shall provide the Housing Finance Review Committee with a report listing all insurance applications rejected during the month preceding each committee meeting.</text> </paragraph> <paragraph num="(5)"> <text>A borrower may request reconsideration of a rejection of an application due to ineligibility, or a rejection at the discretion of the Fund, by making written request for reconsideration to the Secretary within 30 days of the notice of rejection. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.02.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Withdrawal of Application.</text> <paragraph num="(1)"> <text>A lender may withdraw an application for mortgage insurance at any time before the initial endorsement of the loan by providing written notice to the Fund.</text> </paragraph> <paragraph num="(2)"> <text>The borrower shall bear any costs incurred by the Fund for items other than internal processing including, without limitation, title examinations, credit reports, and appraisals.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Approval. The Fund shall submit all proposed insurance commitments to the Housing Finance Review Committee for review and recommendation to the Secretary, except for those applications for mortgage insurance in an amount below the minimum amount established by the Housing Finance Review Committee, or in the case of an emergency when urgent action is required.</text> </paragraph> <paragraph num="G."> <text>Secretarial Determination.</text> <paragraph num="(1)"> <text>Applications for mortgage insurance in an amount below any minimum amount established by the Housing Finance Review Committee need not be submitted for review and recommendation.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary shall consider the recommendation of the Housing Finance Review Committee and approve, disapprove, or approve with modifications the mortgage insurance and its terms. In an emergency when urgent action is required, the Secretary may act on an insurance request without the recommendation of the Housing Finance Review Committee.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary shall execute a written determination that the insurance of the loan for the project is authorized by the Act and approve the insurance as recommended or with modifications before the issuance by the Fund of a commitment to insure a loan.</text> </paragraph> <paragraph num="(4)"> <text>A written Secretarial determination is required for the refinancing of an existing insured loan.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Commitment.</text> <paragraph num="(1)"> <text>Upon approval of the insurance and execution of a determination by the Secretary, the Fund shall issue a commitment letter to the lender setting forth the:</text> <paragraph num="(a)"> <text>Terms of the insured loan;</text> </paragraph> <paragraph num="(b)"> <text>Terms and conditions of the insurance by the Fund; and</text> </paragraph> <paragraph num="(c)"> <text>Requirements to be satisfied before the insurance of the loan by the Fund.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The commitment may remain valid for a period not to exceed 12 months, unless renewed at the discretion of the Fund. The Fund may renew a commitment one or more times, and each renewal may not exceed 6 months. If the Fund insures a permanent mortgage only, the Fund may issue the commitment at any time during the construction period, and the commitment may remain valid for up to 6 months following the anticipated date for completion of the project unless renewed at the discretion of the Fund.</text> </paragraph> <paragraph num="(3)"> <text>The insurance commitment may not be assigned without the prior written approval of the Fund.</text> </paragraph> <paragraph num="(4)"> <text>The Secretary's determination and an approval letter signed by the Director setting forth any conditions the Fund requires before a continuation of insurance or re-endorsement for insurance by the Fund shall be issued when a Fund-insured loan is refinanced.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Effective Date of Insurance. At any time before the end of the commitment period and upon satisfaction of all conditions to the commitment, the Fund shall insure the loan. The insurance is effective as of the time the insured loan is endorsed for insurance, and upon receipt of the required premium by the Fund and certification by the lender that all conditions of the lender's loan commitment have been fulfilled.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Claims Procedures."> <paragraph num="A."> <text>Notification. In the event of a default on an insured loan, the lender shall notify the Fund in writing within 30 days of the default. For insured lenders other than the Community Development Administration, all notices shall be sent by certified mail addressed to the Director.</text> </paragraph> <paragraph num="B."> <text>Preclaim Period—Public Agency Lenders.</text> <paragraph num="(1)"> <text>The provisions of this section apply to all public agency insured lenders.</text> </paragraph> <paragraph num="(2)"> <text>During the first 6 months after an insured loan is in default, the insured lender may not assign the insured loan and its rights under the mortgage to the Fund and make a claim for insurance unless it receives the prior written consent of the Fund.</text> </paragraph> <paragraph num="(3)"> <text>After the insured loan has been in default for 6 months, either the Fund or the insured lender may, without the written consent of the other, require the filing of a claim and the assignment of the insured loan to the Fund.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Preclaim Period—Private Lenders.</text> <paragraph num="(1)"> <text>At the sole discretion of the Fund, the provisions of §B of this regulation may apply to private insured lenders.</text> </paragraph> <paragraph num="(2)"> <text>If the provisions of §B of this regulation are not applicable to a private insured lender, then at any time after 30 days after the insured lender has notified the Fund of a default in accordance with §A of this regulation, either the Fund or the insured lender may, without the written consent of the other, require the filing of a claim and the assignment of the insured loan to the Fund.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Preclaim Action. Upon default and before assignment of the defaulted insured loan to the Fund:</text> <paragraph num="(1)"> <text>The Fund may require the insured lender to exercise any or all rights under the loan instruments or at law or in equity including, but not limited to:</text> <paragraph num="(a)"> <text>The appointment of a receiver,</text> </paragraph> <paragraph num="(b)"> <text>The assignment of rents and rent subsidies,</text> </paragraph> <paragraph num="(c)"> <text>The exercise of any or all remedies to enforce or collect the indebtedness against the collateral security, or exercising of any rights of offset,</text> </paragraph> <paragraph num="(d)"> <text>The exercise of any or all rights or the filing of any claims under the collateral project documents, including without limitation policies of title or casualty insurance,</text> </paragraph> <paragraph num="(e)"> <text>The enforcement of guarantees,</text> </paragraph> <paragraph num="(f)"> <text>An attempt to obtain a voluntary conveyance by means of a deed in lieu of foreclosure, and</text> </paragraph> <paragraph num="(g)"> <text>Any other actions as to the project, the borrower, and the insured loan as the loan documents permit and as the Fund may direct;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The insured lender may not take any actions to foreclose, forbear, suspend payment, modify loan terms, or otherwise exercise any of the lender's rights upon default, without the prior written approval of the Fund;</text> </paragraph> <paragraph num="(3)"> <text>The lender shall:</text> <paragraph num="(a)"> <text>Advise the Fund as to the possibility of loan modification agreements, suspension of payments to escrows or reserve accounts, or other methods of forbearance or restructuring of the insured loans which would be helpful or appropriate,</text> </paragraph> <paragraph num="(b)"> <text>Consult with the Fund at all stages, advise the Fund of any possibility of contested proceedings, provide the Fund with monthly operating and management reports on the project, and notify the Fund in writing of all actions taken or proposed to be taken with regard to the project or the loan, and</text> </paragraph> <paragraph num="(c)"> <text>Propose alternative solutions to cure a default before assigning the insured loan to the Fund;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the lender fails to comply with §D(1) or (2) of this regulation, then in addition to the right of the Fund to terminate the insurance coverage as provided in Regulation .23B of this chapter, the lender shall pay to the Fund all costs incurred by or losses suffered by the Fund which arise directly or indirectly out of the lender's failure.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Foreclosure.</text> <paragraph num="(1)"> <text>If the lender's actions under §D of this regulation are unsuccessful and it has not made an assignment of the mortgage to the Fund under §B, C, or F of this regulation, the Fund may direct the lender in writing to proceed with a foreclosure action.</text> </paragraph> <paragraph num="(2)"> <text>The insured lender may not proceed with any foreclosure action without the prior written approval of the Fund. The insured lender shall consult with the Fund at all stages of the foreclosure proceeding, including without limitation any anticipated acquisition of the project by the lender in satisfaction of its debt and the management and final disposition of a project which is acquired by the lender at foreclosure.</text> </paragraph> <paragraph num="(3)"> <text>The lender shall notify the Fund in writing when a foreclosure sale occurs, which notice shall include the identity of the party that acquires title to the property through foreclosure and the purchase price of the foreclosed project.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Assignment of Mortgage to the Fund.</text> <paragraph num="(1)"> <text>If the lender assigns the insured loan to the Fund, it shall assign all documents evidencing or securing the insured loan. The assignment of the mortgage shall be in writing in a form suitable for recordation among the land records of the jurisdiction in which the project is located.</text> </paragraph> <paragraph num="(2)"> <text>The assignment shall include:</text> <paragraph num="(a)"> <text>An assignment to the Fund of all claims of the lender against the borrower;</text> </paragraph> <paragraph num="(b)"> <text>An assignment of all collateral agreements affecting the financing, construction, use, or operation of the project, including without limitation any leases, rents, federal, State, or local contracts for rent or operating subsidies, letters of credit, bonds, warranties, guarantees, and escrow accounts; and</text> </paragraph> <paragraph num="(c)"> <text>All policies of title or other insurance or surety bonds or other guarantees and all claims under them.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Preclaim Payments and Insurance Coverage."> <paragraph num="A."> <text>Preclaim Payments.</text> <paragraph num="(1)"> <text>The provisions of this section apply to all public agency insured lenders, and to private insured lenders only at the sole discretion of the Fund.</text> </paragraph> <paragraph num="(2)"> <text>After receipt of notice of default, the Fund, upon request of an insured lender, shall make the periodic payments to the lender that are due under the terms of the insured mortgage, except late charges and mortgage insurance premiums.</text> </paragraph> <paragraph num="(3)"> <text>The periodic payments shall be made for all missed debt service payments beginning with the default for which the Fund is given notice in accordance with Regulation .19A of this chapter. The periodic payments shall continue until the default is cured or the insured loan is foreclosed upon by the lender or assigned to the Fund.</text> </paragraph> <paragraph num="(4)"> <text>If the default is cured, the amount of periodic payments made shall be reimbursed by the lender to the Fund. If the insured loan is foreclosed upon by the lender, the amount of periodic payments shall be excluded from the loss computed to the lender. If the loan is assigned to the Fund, the amount of periodic payments shall be included in the claim paid by the Fund in accordance with Regulation .21C(4) of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>If the Fund makes periodic payments under this section, then it shall be considered to obtain from the lender the right to recover from the property or the borrower, as may be permitted under the loan documents, the total of all periodic payments plus that amount which equals the mortgage insurance premiums not paid to the Fund by the lender on behalf of the borrower. This right of recovery of payments is additional to and cumulative with all other rights arising from an assignment of an insured mortgage to the Fund.</text> </paragraph> <paragraph num="(6)"> <text>Periodic payments made to the lender by the Fund may not be considered a remedy of the borrower's default under the terms of the insured loan or any collateral agreements.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Insurance Coverage.</text> <paragraph num="(1)"> <text>Inclusions. The Fund insures only monetary losses, as computed in accordance with Regulation .21C or D of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Exclusions. The Fund does not insure property losses, including without limitation title risk, the risk of loss from defective construction, casualty risk, or any other reduction in project value due to insurable risk or force majeure.</text> </paragraph> <paragraph num="(3)"> <text>Preclaim Property Loss. If any reduction in value due to casualty, title loss, act of God, or other damage to or destruction of the property occurs before the assignment of a loan to the Fund, the Fund has the option, at its sole discretion, to:</text> <paragraph num="(a)"> <text>Reduce the claim by the amount of the reduction in property value or anticipated loss and permit the lender to enforce its rights under any applicable insurance policies or at law or in equity; or</text> </paragraph> <paragraph num="(b)"> <text>Require the lender to assign to the Fund its rights, whether under insurance policies or at law or in equity, to be compensated for the loss, without reduction in the claim by reason of the reduced property value or anticipated loss.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Claims Payment."> <paragraph num="A."> <text>Claims Payment—General. The Fund shall pay the claims of the lender with interest at the interest rate of the loan from the date the claim is submitted until the date the claim is paid. Claims shall be paid in cash under §C of this regulation or by delivery of a promissory claim note in accordance with §D of this regulation.</text> </paragraph> <paragraph num="B."> <text>Claims Payment Without Assignment to the Fund.</text> <paragraph num="(1)"> <text>If the project is foreclosed upon by the insured lender, the amount of the claim to be paid by the Fund shall be calculated after the project is sold at foreclosure sale, as follows:</text> <paragraph num="(a)"> <text>If, at the foreclosure sale, the property is sold to a third party purchaser, the Fund shall pay to the insured lender the net loss after crediting gross proceeds of the sale;</text> </paragraph> <paragraph num="(b)"> <text>If the insured lender takes title to the property at the foreclosure sale, the Fund shall continue to direct the insured lender in its disposition of the property, and, in calculating the loss, the Fund may elect either to:</text> <paragraph num="(i)"> <text>Take title to the property and pay the full loss to the insured lender, or</text> </paragraph> <paragraph num="(ii)"> <text>After sale or disposition of the property by the insured lender, pay the net loss after crediting gross proceeds of the disposition.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For projects which have less than 100 percent coverage, the Fund may elect at any time to pay its declared percentage of the loss and waive any interest in the property.</text> </paragraph> <paragraph num="(3)"> <text>For any project, the Fund may elect at any time to take an assignment of the insured loan and pay the full claim.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Claims Payment After Assignment—By Cash. If a claim is paid after an assignment of the insured loan to the Fund, then the claim shall be paid either in cash or by a claim note. If a claim is paid in cash, the amount of payment is calculated as follows:</text> <paragraph num="(1)"> <text>The lesser of:</text> <paragraph num="(a)"> <text>The unamortized principal balance of the insured loan at the time of default, or</text> </paragraph> <paragraph num="(b)"> <text>The unamortized principal balance of the insured loan on the date of the notice from the insured lender to the Fund; plus</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Interest at the mortgage rate on the unamortized principal balance of the insured loan from the date of:</text> <paragraph num="(a)"> <text>Default, through the date of claims settlement if notice was timely given under Regulation .19A of this chapter, or</text> </paragraph> <paragraph num="(b)"> <text>The notice under Regulation .19A of this chapter through the date of claim settlement, if notice was not timely given under Regulation .19A of this chapter; plus</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Expenses paid by the insured lender during the period of default in connection with preserving the project, including:</text> <paragraph num="(a)"> <text>Property taxes,</text> </paragraph> <paragraph num="(b)"> <text>Property and liability insurance premiums,</text> </paragraph> <paragraph num="(c)"> <text>Other customary and reasonable expenses of operating the project paid by the lender with the prior written approval of the Fund; plus</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Any periodic payments which the lender would have been entitled to under Regulation .20A of this chapter but for which no request was made; less</text> </paragraph> <paragraph num="(5)"> <text>All amounts received by the lender after default, or retained for the account of the borrower and not applied in reduction of the principal balance or interest due on the insured loan from:</text> <paragraph num="(a)"> <text>Any source, for the account of the borrower, and</text> </paragraph> <paragraph num="(b)"> <text>Rents or other income, after deducting actual and reasonable expenses for operating the property; less</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The amount of any expired or lapsed letters of credit, bonds, or collateralized guarantees in effect and held by the lender for the benefit of the project as of the date of the default but before an assignment to the Fund, that were intended or required by the terms of the loan documents to remain in effect but that are allowed to expire by the lender without prior written approval of the Fund.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Claims Payment After Assignment—by Promissory Claim Note.</text> <paragraph num="(1)"> <text>The provisions of this section apply to all public agency insured lenders, but apply to private insured lenders only at the sole discretion of the Fund.</text> </paragraph> <paragraph num="(2)"> <text>A claim may be paid by delivery of a promissory claim note if all of the following conditions are satisfied:</text> <paragraph num="(a)"> <text>The lender consents;</text> </paragraph> <paragraph num="(b)"> <text>The Fund makes a cash payment to the lender equal to all delinquent principal and interest due on the loan through the date of claim settlement, plus or minus the amounts set forth in §C of this regulation; and</text> </paragraph> <paragraph num="(c)"> <text>The principal amount of the claim note, when aggregated with the outstanding principal amounts of all other claim notes issued by the Fund, does not exceed 25 percent of the multifamily insurance reserve.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If payment by claim note is permitted under §D(2) of this regulation:</text> <paragraph num="(a)"> <text>The principal amount of the claim note may not be more than the principal balance of the insured loan which would have been outstanding at the date of the claim settlement, had all payments of principal and interest been timely made;</text> </paragraph> <paragraph num="(b)"> <text>The claim note shall require principal and interest payments equal to those required by the insured loan payable at the times payments were to have been made under the insured loan;</text> </paragraph> <paragraph num="(c)"> <text>The fund shall restrict an amount equal to the principal amount of the claim note in one or more of the unallocated reserve, the multifamily insurance reserve, or the cash operating account;</text> </paragraph> <paragraph num="(d)"> <text>The Fund's obligation to repay the claim note shall be backed generally by the multifamily insurance reserve and the unrestricted portion of the unallocated reserve; and</text> </paragraph> <paragraph num="(e)"> <text>Funds restricted in the multifamily insurance reserve under this section are not considered part of the multifamily insurance reserve for purposes of computing the leverage ratio under the amended and restated multifamily insurance agreement.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A note issued in payment of a claim shall mature and be paid upon the first to occur of the following:</text> <paragraph num="(a)"> <text>Sale of the project financed by the loan;</text> </paragraph> <paragraph num="(b)"> <text>Maturity of the loan;</text> </paragraph> <paragraph num="(c)"> <text>7 years from the date of issuance of the claim note; or</text> </paragraph> <paragraph num="(d)"> <text>The date on which the unrestricted amount of the multifamily insurance reserve is less than 75 percent of the unrestricted amount of the multifamily insurance reserve at the time the claim note was issued.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Partial Claims."> <paragraph num="A."> <text>The Fund may accept and make payment on a partial claim if all of the following conditions are satisfied:</text> <paragraph num="(1)"> <text>The lender requests approval to file a partial claim;</text> </paragraph> <paragraph num="(2)"> <text>At the time the claim is paid the:</text> <paragraph num="(a)"> <text>Partial claim payment is applied by the lender to reduce the unamortized principal balance of the insured loan, or</text> </paragraph> <paragraph num="(b)"> <text>Fund receives collateral of the type described in Regulation .09B of this chapter in an amount equal to the partial claim payment;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The loan balance remaining on the insured loan after application of the partial claim payment can be amortized over its remaining term of years on terms that are feasible and the loan will otherwise conform to the initial insurance requirements of these regulations;</text> </paragraph> <paragraph num="(4)"> <text>Payment of the partial claim will cure the default and the lender will withdraw the notice of default issued; and</text> </paragraph> <paragraph num="(5)"> <text>The borrower shall give a promissory note to the Fund, secured by a subordinate lien on the project for the full amount of the partial claim payment, that provides for repayment to the Fund over the remaining term of the insured loan or from a sale or refinancing of the project, at an interest rate not less than the rate on the insured loan or on terms otherwise acceptable to the Fund.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Instead of the Fund making payment for the amount of the partial claim, the lender may make an additional loan to the borrower to bring the original insured loan current and accept a note from the borrower, which the Fund may insure, if:</text> <paragraph num="(1)"> <text>The additional loan is secured equably with the original insured loan;</text> </paragraph> <paragraph num="(2)"> <text>The maximum insurable loan amount permitted under Regulation .09 of this chapter is not exceeded; and</text> </paragraph> <paragraph num="(3)"> <text>All other requirements of these regulations are satisfied.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="Insurance Termination."> <paragraph num="A."> <text>Maryland Housing Fund insurance coverage shall be terminated if:</text> <paragraph num="(1)"> <text>The lender requests cancellation;</text> </paragraph> <paragraph num="(2)"> <text>A claim is satisfied by the Fund; or</text> </paragraph> <paragraph num="(3)"> <text>The loan is paid in full.</text> </paragraph> </paragraph> <paragraph num="B."> <text>At the Fund's sole option, Maryland Housing Fund insurance coverage may be terminated if:</text> <paragraph num="(1)"> <text>A renewal mortgage insurance premium is not paid by the lender after its receipt of final demand for same from the Fund;</text> </paragraph> <paragraph num="(2)"> <text>Mortgage or loan terms are modified without prior written approval of the Fund;</text> </paragraph> <paragraph num="(3)"> <text>The insured lender permits noncompliance with the loan documents without the prior written consent of the Fund;</text> </paragraph> <paragraph num="(4)"> <text>The mortgage is assigned by the lender without prior written approval of the Fund;</text> </paragraph> <paragraph num="(5)"> <text>Without prior written approval of the Fund, the project's borrower, lender, general contractor, or management agent, as approved by the Fund at the time of loan closing, is substituted with the knowledge or consent of the lender;</text> </paragraph> <paragraph num="(6)"> <text>The property is transferred, conveyed, or encumbered in violation of the provisions of these regulations;</text> </paragraph> <paragraph num="(7)"> <text>The lender fails to fulfill its obligations under Regulation .19D of this chapter after demand to do so has been made by the Fund;</text> </paragraph> <paragraph num="(8)"> <text>The lender fails to fulfill its obligations under the loan documents, the underwriting guidelines, or these regulations, including, without limitation, its obligation to provide periodic project information to the Fund, after demand to do so has been made by the Fund; or</text> </paragraph> <paragraph num="(9)"> <text>The lender is debarred from participating in the Department's programs under COMAR 05.01.05.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="General Provisions."> <paragraph num="A."> <text>Lender Assignments.</text> <paragraph num="(1)"> <text>Insured loans may not be assigned to another lender without prior written notice to and approval of the Fund. A request for assignment of an insured loan shall be accompanied by submission of an application fee and supporting documentation as may be required by the Fund.</text> </paragraph> <paragraph num="(2)"> <text>Servicing of insured loans may not be transferred by the insured lender to another servicer without prior written notice to and approval of the Fund.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Changes in Identity of Borrower, General Contractor, or Management Agent. The identity of the borrower or, if a partnership, the managing project's general partner, the identity of the general contractor, and the identity of the management agent may not be changed or substituted after the initial endorsement of an insured loan without prior written notice to and approval of the Fund.</text> </paragraph> <paragraph num="C."> <text>Incontestability. Evidence of insurance issued by the Fund under the Act is conclusive evidence of the eligibility of the insured loan for insurance. This insurance is incontestable except as to defenses based on fraud or misrepresentation.</text> </paragraph> <paragraph num="D."> <text>Books and Accounts.</text> <paragraph num="(1)"> <text>The lender shall require the borrower and its contractors, subcontractors, representatives, accountants, record keepers, and management agents to maintain such books, accounts, and records as the Fund may require. The borrower shall file with the lender such financial, operating, and other reports as the Fund may require.</text> </paragraph> <paragraph num="(2)"> <text>The books, accounts, and records required to be maintained are open to the inspection of representatives of the Fund or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="(3)"> <text>Books, accounts, and records of:</text> <paragraph num="(a)"> <text>The lender shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the lender and the Fund;</text> </paragraph> <paragraph num="(b)"> <text>The lender shall, with respect to each specific insured loan, be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the borrower and the lender; and</text> </paragraph> <paragraph num="(c)"> <text>Contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between the contractor or subcontractor and the borrower.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Specific information regarding the qualification of lenders, borrowers, and projects, the underwriting of insurance, and claims procedures is provided by the Fund.</text> </paragraph> <paragraph num="F."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or with agreements to which the Fund may be subject if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal agency for any project with respect to which federal assistance is sought necessitates a waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary:</text> <paragraph num="(a)"> <text>The application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act,</text> </paragraph> <paragraph num="(b)"> <text>A waiver would not be materially adverse to bondholders or others relying on the multifamily insurance reserve of the Fund, and</text> </paragraph> <paragraph num="(c)"> <text>The Office of the Attorney General has approved the form and legal sufficiency of the waiver.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>False Statements. A borrower or lender who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to cancellation of insurance, in addition to the criminal penalties authorized by the Act.</text> </paragraph> <paragraph num="H."> <text>Delegation. The Secretary may delegate to the Director of the Fund or to any other official or employee of the Department or the Fund the authority to execute or approve any program documents or loan documents, including commitments and letters of intent.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 15, 1972</annotation> <annotation type="History" subtype="Administrative History">Regulations .07A, .09A, B, and .17A amended as an emergency provision effective January 20, 1977 (4:4 Md. R. 276); emergency status expired June 14, 1977</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A, B amended effective June 25, 1977 (4:13 Md. R. 1027)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective August 4, 1976 (3:16 Md. R. 848)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07F amended effective October 27, 1976 (3:3 Md. R. 1249)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective October 29, 1975 (2:27 Md. R. 1626)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective June 25, 1977 (4:13 Md. R. 1027)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective April 13, 1977 (4:8 Md. R. 632)</annotation> <annotation type="History" subtype="Administrative History">Regulations .10—.20 amended effective August 20, 1975 (2:18 Md. R. 123)</annotation> <annotation type="History" subtype="Administrative History">Regulations .10 and .16 amended effective October 29, 1975 (2:27 Md. R. 16)</annotation> <annotation type="History" subtype="Administrative History">Regulations .10, .11C, .14—.16 amended effective August 30, 1974 (1:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 amended effective January 31, 1976 (3:4 Md. R. 214) and June 25, 1977 (4:13 Md. R. 1027)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised as an emergency provision effective November 9, 1977 (4:22 Md. R. 1666); adopted permanently effective November 18, 1977 (4:24 Md. R. 1804)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C amended effective December 5, 1983 (10:24 Md. R. 2184)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03E amended effective June 29, 1979 (6:13 Md. R. 1124)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06A, .07A, and .09A amended effective October 20, 1978 (5:21 Md. R. 1585)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06B, .09C, .10 adopted effective March 24, 1978 (5:6 Md. R. 464)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C adopted effective October 20, 1978 (5:21 Md. R. 1585)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective June 29, 1979 (6:13 Md. R. 1124); September 5, 1980 (7:18 Md. R. 1735)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective June 29, 1979 (6:13 Md. R. 1124)</annotation> <annotation type="History" subtype="Administrative History">Regulations .11K and .15N adopted as an emergency provision effective October 15, 1983 (10:22 Md. R. 1962); adopted permanently effective March 26, 1984 (11:6 Md. R. 548)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B amended effective September 5, 1980 (7:18 Md. R. 1735)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B amended as an emergency provision effective April 25, 1983 (10:15 Md. R. 1341); emergency status expired October 25, 1983</annotation> <annotation type="History" subtype="Administrative History">Regulation .17C repealed effective October 8, 1984 (11:20 Md. R. 1741)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 adopted as an emergency provision effective March 22, 1979 (6:7 Md. R. 574); emergency status expired October 3, 1979</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 adopted effective June 29, 1979 (6:13 Md. R. 1124)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18C adopted effective December 12, 1980 (7:25 Md. R. 2332)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18D adopted as an emergency provision effective April 25, 1983 (10:15 Md. R. 1341); emergency status expired October 25, 1983; adopted permanently effective November 7, 1983 (10:22 Md. R. 1965)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 adopted as an emergency provision effective June 1, 1983 (10:12 Md. R. 1063); emergency status extended at 10:25 Md. R. 2262; adopted permanently effective December 5, 1983 (10:24 Md. R. 2184)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.02 to COMAR 05.06.01</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C amended effective March 4, 1991 (18:4 Md. R. 446)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective November 14, 1988 (15:23 Md. R. 2657)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02, .07, and .18 amended as an emergency provision effective April 30, 1991 (18:10 Md. R. 1114)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective September 16, 1991 (18:18 Md. R. 2003)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03—.08 repealed effective May 23, 1994 (21:10 Md. R. 841)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective January 8, 1990 (16:26 Md. R. 2786)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective March 4, 1991 (18:4 Md. R. 446)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective September 16, 1991 (18:18 Md. R. 2003)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 repealed and new Regulation .09 adopted effective March 4, 1991 (18:4 Md. R. 446)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective March 4, 1991 (18:4 Md. R. 446)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C amended effective November 14, 1988 (15:23 Md. R. 2657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11L adopted effective November 14, 1988 (15:23 Md. R. 2657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B and E amended effective November 14, 1988 (15:23 Md. R. 2657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16A amended effective April 30, 1990 (17:8 Md. R. 975)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16F amended and G adopted effective October 28, 1991 (18:21 Md. R. 2304)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16G amended effective June 22, 1992 (19:12 Md. R. 1132)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18A amended as an emergency provision effective June 28, 1989 (16:14 Md. R. 1562); adopted permanently effective October 30, 1989 (16:21 Md. R. 2260)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 repealed and new Regulation .18 adopted effective September 16, 1991 (18:18 Md. R. 2003)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 repealed effective May 23, 1994 (21:10 Md. R. 841)</annotation> <annotation type="History" subtype="Administrative History">Chapter, Maryland Housing Fund, repealed and Regulations .01—.24, Maryland Housing Fund—Multifamily Program, adopted effective December 5, 1994 (21:24 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective September 29, 2014 (41:19 Md. R. 1076)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective November 3, 2008 (35:22 Md. R. 1956)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A, C amended effective March 26, 2018 (45:6 Md. R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective April 5, 1999 (26:7 Md. R. 539)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10C amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> </annotations> </chapter> <chapter num="02" heading="Tax Credit Bridge Loan Insurance"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>The Fund may provide limited insurance for bridge loans that provide interim financing until equity capital contributions are made by investors when the Fund expects a rental housing project to qualify for federal tax credits. The Fund may insure these bridge loans under this chapter instead of COMAR 05.06.01, except as provided in Regulation .14 of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Borrower” means the original borrower under a loan and the borrower's successors and assigns by operation of law or as approved by the Fund.</text> </paragraph> <paragraph num="(3)"> <text>“Bridge loan” means a loan to provide interim financing until equity capital contributions are made by investors in a project that qualifies for federal low income housing tax credits.</text> </paragraph> <paragraph num="(4)"> <text>“Construction risk” means the risk that a borrower will be unable to complete construction or rehabilitation of a project in the time anticipated at closing of the bridge loan.</text> </paragraph> <paragraph num="(5)"> <text>“Default” means the failure of the borrower to:</text> <paragraph num="(a)"> <text>Make required payments under the loan when due; or</text> </paragraph> <paragraph num="(b)"> <text>Perform any other obligation under the loan after the notice, lapse of time, and opportunity to correct, if any, which may be provided in the loan.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Fund (MHF)” means the Maryland Housing Fund, an agency within the Division of Credit Assurance, and, when appropriate, its authorized officers or personnel.</text> </paragraph> <paragraph num="(7)"> <text>“Initial rent-up” means that period before the number of units required to qualify for low-income housing credits is rented.</text> </paragraph> <paragraph num="(8)"> <text>“Insurance Agreement” means the Amended and Restated Multi-Family Insurance Agreement governing insurance of multi-family rental housing developments by the Fund dated August 30, 1988, as amended and restated on February 16, 2006, by and between the Fund and the Community Development Administration.</text> </paragraph> <paragraph num="(9)"> <text>“Investor” means an individual or an entity that makes an equity capital contribution to the borrower in exchange for a limited partnership or nonmanaging member interest in the borrower.</text> </paragraph> <paragraph num="(10)"> <text>Mortgage.</text> <paragraph num="(a)"> <text>“Mortgage” means a written instrument evidencing or creating a lien against real property for the purpose of providing collateral to secure the repayment of a debt.</text> </paragraph> <paragraph num="(b)"> <text>“Mortgage” includes a deed of trust.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Mortgagee” means the original lender under a loan and its successors and assigns.</text> </paragraph> <paragraph num="(12)"> <text>“Multi-family reserve” shall have the meaning ascribed to that term in the Insurance Agreement.</text> </paragraph> <paragraph num="(13)"> <text>“Operating fund” means the net amount of money or securities on deposit to the credit of the Fund with the State Treasurer and not allocated to any of the Fund's reserve funds.</text> </paragraph> <paragraph num="(14)"> <text>“Project” means a development of one or more structures containing residential units and which may include ancillary commercial, service, and social facilities, and the real property upon which the development is situated.</text> </paragraph> <paragraph num="(15)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Risks Insured."> <paragraph num="A."> <text>The Fund may insure bridge loans to the extent of defaults on the bridge loan, including failure to make payments on the bridge loan, by the borrower which arise when an investor fails to make the capital contributions required to make timely payments on the bridge loan by reason of:</text> <paragraph num="(1)"> <text>A direct reduction or elimination of tax credits due to a change in the provision of the Internal Revenue Code authorizing the credit, issuance of regulations under that provision, or a ruling interpreting that provision. A reduction in the amount of the tax credit shall only be insured to the extent of the reduction.</text> </paragraph> <paragraph num="(2)"> <text>The borrower's failure to qualify for low-income housing credits because it failed, for reasons other than failure to complete construction in the time anticipated at loan closing, to rent a sufficient number of units in the project to qualified tenants with low incomes.</text> </paragraph> <paragraph num="(3)"> <text>The borrower's failure to complete construction or rehabilitation of a project in the time anticipated at closing of the bridge loan. Under most circumstances the Fund will require the bridge loan lender to retain the construction risk, but may insure some construction risk under the following circumstances:</text> <paragraph num="(a)"> <text>The Fund may insure construction risk in an amount not to exceed 75 percent of the insured amount of the bridge loan if the insured amount of the bridge loan, when added to the amount of any superior liens on the project, equals or exceeds:</text> <paragraph num="(i)"> <text>85 percent of the project's appraised value as of completion of the improvements, taking into consideration the value of the tax credits for a for-profit borrower; or</text> </paragraph> <paragraph num="(ii)"> <text>90 percent of the project's appraised value as of completion of the improvements, taking into consideration the value of the tax credits for a borrower which is either wholly owned by a nonprofit entity or whose general partner is a nonprofit entity; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The Fund may insure construction risk in an amount up to the insured amount of the bridge loan if the insured amount of the bridge loan, when added to the amount of any superior liens on the project, is less than:</text> <paragraph num="(i)"> <text>85 percent of the project's appraised value as of completion of the improvements, taking into consideration the value of the tax credits for a for-profit borrower; or</text> </paragraph> <paragraph num="(ii)"> <text>90 percent of the project's appraised value as of completion of the improvements, taking into consideration the value of the tax credits for a borrower which is either wholly owned by a nonprofit entity or whose general partner is a nonprofit entity.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>The inability of the borrower to claim an historic investment tax credit if:</text> <paragraph num="(a)"> <text>Upon completion of construction, the United States Department of the Interior notifies the borrower that it will not certify the project for historic tax credit purposes; and</text> </paragraph> <paragraph num="(b)"> <text>The borrower has secured:</text> <paragraph num="(i)"> <text>Preliminary approval of Parts I and II of the Certificate of Rehabilitation by the National Park Service before beginning construction, and</text> </paragraph> <paragraph num="(ii)"> <text>Approval by the National Park Service of all change orders which the Fund determines will affect historic elements of the building.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The Fund may not insure a general failure to pay by the investor (for example, insolvency or bankruptcy of the investor limited partner).</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Amount of Insured Loan."> <paragraph num="A."> <text>Except as provided in §B of this regulation, the insured amount of the bridge loan, when added to the amount of any superior liens on the project, may not exceed 95 percent of the project's appraised value as of completion of the improvements, taking into consideration the value of the tax credits.</text> </paragraph> <paragraph num="B."> <text>The insured amount of the bridge loan may exceed the limit set forth in §A of this regulation if 100 percent of the tax credit units in the project are subsidized as to rental payments by the United States Department of Housing and Urban Development for the term of the bridge loan.</text> </paragraph> <paragraph num="C."> <text>The insured amount of the bridge loan may not exceed the amount of the investor's capital contributions.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Permitted Uses of Insured Loan Proceeds."> <paragraph num="A."> <text>The Fund may insure bridge loans only if the loan proceeds are used for acquisition, construction, or rehabilitation and directly related soft costs, including developer fees, syndication fees, and an amount to cover a reasonable profit for the developer, required to complete the project.</text> </paragraph> <paragraph num="B."> <text>If the bridge loan is made from the proceeds of tax-exempt bonds, or other obligations on which the interest is excluded from gross income for federal income tax purposes, the bridge loan may only be used for costs approved by the Department's bond counsel.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Term of Insurance."> <paragraph num="A."> <text>The Fund may insure a bridge loan having a term longer than the term of the Fund's insurance, but the insurance shall expire on the first to occur of the date which is:</text> <paragraph num="(1)"> <text>One month after the date on which the investor makes the final payment of all scheduled capital contributions to the borrower; or</text> </paragraph> <paragraph num="(2)"> <text>Five years after closing of the bridge loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Insurance of the bridge loan shall terminate on the first to occur of:</text> <paragraph num="(1)"> <text>A change in the terms and conditions of the bridge loan without the prior written approval of the Fund;</text> </paragraph> <paragraph num="(2)"> <text>Five business days following the date on which the investor has made the final payment of all scheduled capital contributions to the borrower;</text> </paragraph> <paragraph num="(3)"> <text>Thirty business days after the maturity date of the bridge loan, unless extended with the prior written approval of the Fund;</text> </paragraph> <paragraph num="(4)"> <text>Repayment in full of the bridge loan;</text> </paragraph> <paragraph num="(5)"> <text>Payment in full of any claim; or</text> </paragraph> <paragraph num="(6)"> <text>Expiration of the term of the insurance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Collateral."> <text>Bridge loans shall be secured by:</text> <paragraph num="A."> <text>A pledge of the investor's note or notes or other instruments evidencing the investor's obligations to make capital contributions; and</text> </paragraph> <paragraph num="B."> <text>One or more of the following:</text> <paragraph num="(1)"> <text>A mortgage on the project, which may be subordinate to mortgages securing new or existing debt on the project;</text> </paragraph> <paragraph num="(2)"> <text>A guaranty of payment equal to the insured amount of the bridge loan, backed by assets of quality and liquidity satisfactory to the Fund;</text> </paragraph> <paragraph num="(3)"> <text>A guaranty of completion of the project; or</text> </paragraph> <paragraph num="(4)"> <text>Such other collateral as the Fund deems appropriate related to the risk of the bridge loan and the project and other factors it deems relevant.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Superior Mortgagee's Agreement."> <text>The holder of any superior mortgage on the project shall agree that:</text> <paragraph num="A."> <text>The Fund shall have an opportunity to cure any monetary defaults under the superior mortgage;</text> </paragraph> <paragraph num="B."> <text>Any defaults that the Fund is unable to cure shall be suspended for a reasonable period, if the Fund elects to keep current any payments due under the superior mortgage; and</text> </paragraph> <paragraph num="C."> <text>The superior mortgagee shall notify the Fund of any events of default under the superior mortgage.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Assurance of Completion."> <text>Completion of construction of the project shall be assured by provision of either:</text> <paragraph num="A."> <text>Performance and payment bonds, each in an amount equal to 100 percent of the construction contract amount;</text> </paragraph> <paragraph num="B."> <text>Two irrevocable letters of credit equal to 25 percent, or cash or a pledge of depository accounts equal to 50 percent, of the construction contract amount; or</text> </paragraph> <paragraph num="C."> <text>Other assurances of equivalent value.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Approval of Project, Loans, and Disbursement."> <paragraph num="A."> <text>Before closing of the bridge loan, the Fund shall review and give its written approval to the completed drawings and specifications for the project, and all loans relating to the project, whether junior or senior to the insured bridge loan.</text> </paragraph> <paragraph num="B."> <text>The Fund shall review financial statements and resumes for the general partners, the general contractor, and the management agent for the project. The financial statements shall show adequate liquidity to complete the project for the general partners and a consistent or increasing net worth for the contractor. The general contractor and the management agent shall have successfully constructed or managed, respectively, at least one comparable project and the general contractor shall have a record of timely completion of projects.</text> </paragraph> <paragraph num="C."> <text>The Fund shall approve the total budget for the project and each disbursement of the bridge loan.</text> </paragraph> <paragraph num="D."> <text>After closing of the bridge loan, the Fund shall review and give its written approval to any changes to the plans and specifications, any modifications to the bridge loan documents or documents relating to any superior loans, any change orders, and all requisitions for disbursement of the bridge loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Project Management."> <text>The Fund requires that either the holder of the first mortgage or the Fund be able to require replacement of the management agent, if either the first mortgagee or the Fund in conjunction with the first mortgagee determines that rent-up or other operation of the project is not progressing satisfactorily.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Insurance Reserves."> <paragraph num="A."> <text>The Fund may not permit more than 10 percent of its multi-family reserve to be committed for insurance of bridge loans under this regulation.</text> </paragraph> <paragraph num="B."> <text>Subject to §C of this regulation, the Fund may insure bridge loans from the multi-family reserve or any other monies of the Fund as may be restricted for that purpose. However, the Fund may not:</text> <paragraph num="(1)"> <text>Issue insurance under this section payable from the multi-family reserve in an aggregate principal amount greater than 8 times the amount of the multi-family reserve available for insurance of bridge loans; and</text> </paragraph> <paragraph num="(2)"> <text>Insure from any source more than an aggregate of $30 million of bridge loans that are not secured by a mortgage.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Fund shall insure a bridge loan during construction and initial rent-up from restricted funds in the operating fund and may, at its election, insure the bridge loan from the multifamily reserve upon completion of construction and initial rent-up.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Fees."> <text>The Fund may charge an application fee, closing fee, and insurance premium. The amount of the premium shall be determined on the basis of each insured loan relative to the degree of risk, as determined by the Fund in its sole discretion. The amount of the fees shall be determined by the Fund in its sole discretion.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Requirements of COMAR 05.06.01."> <text>The requirements of COMAR 05.06.01.06, 07, .10, .11, .18—.21, .23, and .24 shall also apply to bridge loans insured under this chapter.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§3-203 and 3-206, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 30, 1990 (17:8 Md. R. 976)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective February 1, 1993 (20:2 Md. R. 111)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 20, 2008 (35:21 Md. R. 1823)</annotation> </annotations> </chapter> <chapter num="03" heading="Maryland Housing Fund—Revitalization Program"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>These regulations set forth the policies, procedures, and authorization for:</text> <paragraph num="(1)"> <text>Insurance by the Maryland Housing Fund (M.H.F.) of 100 percent or less of a mortgage loan for the purchase, or purchase and rehabilitation, of an owner-occupied home with four or less units; and</text> </paragraph> <paragraph num="(2)"> <text>Agreements with mortgage lenders to share financial risk and insurance fees in connection with certain loans insured by M.H.F.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The insurance reserve fund for this Program is the reserve fund established in COMAR 05.06.01.01C(2) for the Revitalization Program. The ratio of the total outstanding amount of insurance provided through the Revitalization Program, to the total amount of the Revitalization Program Reserve Fund, may not exceed the ratio of 10:1.</text> </paragraph> <paragraph num="C."> <text>The Revitalization Program was formerly known as the Pilot Program which was governed by COMAR 05.06.01.09.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Purpose."> <paragraph num="A."> <text>The Maryland Housing Fund recognizes the important role homeownership plays in stabilizing and revitalizing neighborhoods and communities. The purpose of the Revitalization Program is to provide opportunities to lower the risk of lending by using M.H.F. insurance to stimulate the flow of private mortgage capital into areas which have suffered from decreasing homeownership and associated economic and social instability. In addition, the program makes homeownership possible for those who do not have the resources for a down payment and closing costs, both of which otherwise would be required without M.H.F. insurance.</text> </paragraph> <paragraph num="B."> <text>From 1973 to 1978, the predecessor to the Program operated in Baltimore City only, and was called the Baltimore City Pilot Program. The Program demonstrated that the level of losses can be acceptable for high loan-to-value mortgages in older urban areas, and together with other factors contributed to the decrease of red-lining practices and the resurgence of private conventional mortgage lending in Baltimore City. The experience in Baltimore City also demonstrated the feasibility of extending the Program Statewide. Starting in 1978, the Program has been available Statewide.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Closing costs (financing)” means the credit report fee, survey fee, title examination, loan origination fee, title insurance fee, mortgage application fee, and the cost of the home inspection required in Regulation .04F of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Closing costs (title)” means the attorney's fee, documentation and preparation fee, recording fee, State and local transfer tax, and documentary stamps.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(5)"> <text>“Designated revitalization area” means an area within the State designated by the Secretary as a revitalization area, taking into account the operation in that area of a nonprofit housing agency or a nonprofit financial or housing counseling agency.</text> </paragraph> <paragraph num="(6)"> <text>“M.H.F.” means the Maryland Housing Fund, and, when appropriate, its authorized officers or personnel.</text> </paragraph> <paragraph num="(7)"> <text>Mortgage.</text> <paragraph num="(a)"> <text>“Mortgage” means a written instrument evidencing or creating a lien against real property to provide collateral to secure the repayment of a debt.</text> </paragraph> <paragraph num="(b)"> <text>“Mortgage” includes a deed of trust.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Mortgagee” means the original lender under a mortgage and its successors and assigns.</text> </paragraph> <paragraph num="(9)"> <text>“Mortgagor” means the original borrower under a mortgage and the borrower's successors and assigns by operation of law or as approved by the Fund.</text> </paragraph> <paragraph num="(10)"> <text>Nonprofit Entity.</text> <paragraph num="(a)"> <text>“Nonprofit entity” means any organization exempt from taxation under the Internal Revenue Code of the United States, §501(c).</text> </paragraph> <paragraph num="(b)"> <text>“Nonprofit entity” includes local development agencies and local development corporations, as defined in Housing and Community Development Article, §4-201, Annotated Code of Maryland, and organizations exempt by reason of charitable or public purpose.</text> </paragraph> <paragraph num="(c)"> <text>“Nonprofit entity” does not include limited dividend corporations or partnerships.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Prepaid expenses” means taxes, ground rent, hazard insurance, and M.H.F. premiums to be paid at closing.</text> </paragraph> <paragraph num="(12)"> <text>“Property” means an owner-occupied, one- to four-family residential property which meets the applicable standards set forth in Regulation .04B of this chapter.</text> </paragraph> <paragraph num="(13)"> <text>“Secretary” means the Secretary of Housing and Community Development or the Secretary's designee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="General Terms and Provisions for Purchase and Purchase/Rehabilitation Loans."> <paragraph num="A."> <text>Insurance Coverage. M.H.F. may insure:</text> <paragraph num="(1)"> <text>Up to 100 percent of a mortgage loan that finances the purchase, or the purchase and rehabilitation, of an eligible property, provided that all of the requirements of these regulations are met;</text> </paragraph> <paragraph num="(2)"> <text>A mortgage loan on a cooperative unit in accordance with COMAR 05.06.01.10.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Eligible Borrowers and Eligible Properties.</text> <paragraph num="(1)"> <text>The applicable standards for eligible borrowers of mortgage loans insured by M.H.F. are set forth in COMAR 05.06.06.06.</text> </paragraph> <paragraph num="(2)"> <text>The applicable standards for eligible properties securing mortgage loans insured by M.H.F. are set forth in COMAR 05.06.06.05, except that COMAR 05.06.06.05D does not apply to an insured loan that finances both the purchase and rehabilitation of the property.</text> </paragraph> <paragraph num="(3)"> <text>An eligible property shall be located in a designated revitalization area as defined in Regulation .03B(5) of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Eligible Uses of the Insured Mortgage Loan.</text> <paragraph num="(1)"> <text>The insured mortgage loan may be used to pay for the following costs and expenses:</text> <paragraph num="(a)"> <text>Purchase price of the property;</text> </paragraph> <paragraph num="(b)"> <text>Closing costs (financing);</text> </paragraph> <paragraph num="(c)"> <text>Closing costs (title);</text> </paragraph> <paragraph num="(d)"> <text>Prepaid expenses; and</text> </paragraph> <paragraph num="(e)"> <text>Rehabilitation costs permitted in §C(2), below.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the mortgage loan is for the rehabilitation as well as the purchase of an eligible property, then the mortgage loan also may be used for the following rehabilitation costs if the conditions set forth in §C(3) of this regulation are fulfilled:</text> <paragraph num="(a)"> <text>The reasonable cost of correcting major structural defects;</text> </paragraph> <paragraph num="(b)"> <text>The reasonable cost of repairing or replacing plumbing, HVAC, or electrical systems;</text> </paragraph> <paragraph num="(c)"> <text>The reasonable cost of correcting any violations of local planning, zoning, or building codes, or other applicable laws;</text> </paragraph> <paragraph num="(d)"> <text>The reasonable cost of inspections performed in accordance with Regulation .05E, below; and</text> </paragraph> <paragraph num="(e)"> <text>Other reasonable rehabilitation costs, including the cost of cosmetic repairs, which are approved by M.H.F.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In order for a mortgage loan for rehabilitation as well as purchase costs to be eligible for insurance, a nonprofit housing agency or nonprofit financial or housing counseling agency active in the applicable designated revitalization area shall certify that:</text> <paragraph num="(a)"> <text>The acquisition and rehabilitation of the property will stabilize or improve the neighborhood;</text> </paragraph> <paragraph num="(b)"> <text>Other resources are currently being targeted to the neighborhood; and</text> </paragraph> <paragraph num="(c)"> <text>The acquisition and rehabilitation of the property represents a significant public purpose action.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Agreement with Mortgage Lender Required. A loan insured under this chapter shall be made by:</text> <paragraph num="(1)"> <text>A mortgage lender under an agreement with M.H.F described in Regulation .08 of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>The Department.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Equity Capital.</text> <paragraph num="(1)"> <text>A borrower whose mortgage is to be insured by M.H.F. under the Revitalization Program shall meet M.H.F.'s requirement for equity capital in the mortgage loan transaction as set forth in §E(2)—(6) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The borrower is required to pay in cash at least 2 percent of the first mortgage loan amount.</text> </paragraph> <paragraph num="(3)"> <text>Equity capital may be applied to one, a combination, or all of the following items:</text> <paragraph num="(a)"> <text>Purchase price of the property;</text> </paragraph> <paragraph num="(b)"> <text>Closing costs (financing);</text> </paragraph> <paragraph num="(c)"> <text>Closing costs (title); or</text> </paragraph> <paragraph num="(d)"> <text>Prepaid expenses.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Equity capital may include gifts, except for those from:</text> <paragraph num="(a)"> <text>The realtor for the transaction;</text> </paragraph> <paragraph num="(b)"> <text>The seller of the property; or</text> </paragraph> <paragraph num="(c)"> <text>Any other party having an interest in the contract.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Equity capital may not include loans, except for a loan secured by a 401(k) or other retirement account that is subject to a penalty for early withdrawal under the federal tax code.</text> </paragraph> <paragraph num="(6)"> <text>Once the equity capital amount has been satisfied in accordance with §E(2)—(5) of this regulation, the balance of funds necessary for settlement of the loan may include gifts, including seller concessions.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Purchase Contract Inspection Contingency. M.H.F. may require that a home inspection be conducted before closing by a home inspector acceptable to the purchaser and lender. The inspection may be required by the purchaser as a contingency to the purchase contract. The purchaser shall obtain the inspection report, although the cost to the purchaser may be reimbursed by the seller. A copy of the inspection shall be supplied to M.H.F. by a lender with the application required in COMAR 05.06.06.09A.</text> </paragraph> <paragraph num="G."> <text>Appraisals.</text> <paragraph num="(1)"> <text>There shall be an appraisal of the property securing the loan to be insured by M.H.F.</text> </paragraph> <paragraph num="(2)"> <text>The appraisal shall:</text> <paragraph num="(a)"> <text>Establish an “as is” value for the property; and</text> </paragraph> <paragraph num="(b)"> <text>Be performed by an appraiser acceptable to M.H.F.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Special Terms and Provisions for Purchase/Rehabilitation Mortgage Loans."> <paragraph num="A."> <text>In addition to the general terms and provisions required under Regulation .04 of this chapter, the terms and provisions in §§B—E of this regulation apply to M.H.F. insured mortgage loans that finance both the purchase and the rehabilitation of the property.</text> </paragraph> <paragraph num="B."> <text>Standards for Rehabilitation Work. The rehabilitated property shall satisfy the:</text> <paragraph num="(1)"> <text>State and local planning, zoning, and building codes, and other applicable laws; and</text> </paragraph> <paragraph num="(2)"> <text>Standards established by M.H.F.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Unless an alternative process is approved by M.H.F., all rehabilitation work shall be supervised by a licensed general contractor, a local government agency, or a nonprofit corporation approved by M.H.F.</text> </paragraph> <paragraph num="D."> <text>Work Write-Up.</text> <paragraph num="(1)"> <text>The work write-up describing the rehabilitation work shall:</text> <paragraph num="(a)"> <text>Be prepared by the party undertaking or supervising the work;</text> </paragraph> <paragraph num="(b)"> <text>Be approved by M.H.F.;</text> </paragraph> <paragraph num="(c)"> <text>Include only those rehabilitation costs permitted under Regulation .04C(2) of this chapter; and</text> </paragraph> <paragraph num="(d)"> <text>Include both a draw schedule and a plan for implementing the work write-up.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Rehabilitation work shall be performed:</text> <paragraph num="(a)"> <text>In accordance with the work write-up; and</text> </paragraph> <paragraph num="(b)"> <text>By State-licensed contractors or other entities approved by M.H.F.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Inspections. Rehabilitation work shall be inspected in accordance with all of the requirements described below:</text> <paragraph num="(1)"> <text>Inspectors performing the inspections:</text> <paragraph num="(a)"> <text>Shall be knowledgeable and experienced about rehabilitation or construction work,</text> </paragraph> <paragraph num="(b)"> <text>Shall be acceptable to M.H.F. and the mortgage lender making the insured loan, and</text> </paragraph> <paragraph num="(c)"> <text>May be appraisers;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The inspector shall prepare an inspection report for each inspection performed;</text> </paragraph> <paragraph num="(3)"> <text>The inspection report in §E(2), above, shall include:</text> <paragraph num="(a)"> <text>A description of the property,</text> </paragraph> <paragraph num="(b)"> <text>Name of the contractor,</text> </paragraph> <paragraph num="(c)"> <text>Name of the mortgage lender,</text> </paragraph> <paragraph num="(d)"> <text>Date of the inspection,</text> </paragraph> <paragraph num="(e)"> <text>Stage in the draw schedule,</text> </paragraph> <paragraph num="(f)"> <text>Work to be inspected, as described in the work write-up, and</text> </paragraph> <paragraph num="(g)"> <text>Whether the work performed was acceptable and complete;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The final inspection report shall state whether all of the work done was:</text> <paragraph num="(a)"> <text>Acceptable and complete,</text> </paragraph> <paragraph num="(b)"> <text>Performed in a workmanlike manner, and</text> </paragraph> <paragraph num="(c)"> <text>In accordance with all applicable planning, zoning, and building codes, or other applicable laws;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>M.H.F. shall receive a copy of each inspection report.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Draws. The mortgage lender may not permit a draw of mortgage money to pay for rehabilitation costs unless the requirements of §E, above, are fulfilled.</text> </paragraph> <paragraph num="G."> <text>Appraisal Requirements. When the loan insured by M.H.F. finances both purchase and rehabilitation, the appraisal shall establish the following two values in addition to the “as is” value established under Regulation .04E of this chapter:</text> <paragraph num="(1)"> <text>Predominant Neighborhood Value. The predominant neighborhood value:</text> <paragraph num="(a)"> <text>Is the value determined by an appraiser to best represent property value in the area surrounding the property being purchased and rehabilitated based on recent sales within that area;</text> </paragraph> <paragraph num="(b)"> <text>Is based primarily on sales when 90 percent or more of the purchase price was financed, and the first mortgage was a VA or FHA mortgage or was made by an institutional mortgage lender; and</text> </paragraph> <paragraph num="(c)"> <text>Excludes investor sales with depressed sales prices or sales involving assumptions or creative financing which artificially inflate the sales price.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Value After Rehabilitation.</text> <paragraph num="(a)"> <text>The value after rehabilitation is the value estimated by the appraiser to be the value of the property securing the insured loan, once the rehabilitation work is complete.</text> </paragraph> <paragraph num="(b)"> <text>In order to be acceptable to M.H.F., the value after rehabilitation may not exceed 120 percent of the predominant value.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Loans for Purchase and Purchase/Rehabilitation—Maximum Mortgage Amount."> <paragraph num="A."> <text>Maximum Mortgage—General Limit.</text> <paragraph num="(1)"> <text>The maximum mortgage loan amounts insured by M.H.F. under the Revitalization Program shall be within limits set from time to time by the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>If the mortgage covers either acquisition only, or acquisition and minor cosmetic improvements excluding rehabilitation costs set forth in Regulation .04C(2) of this chapter, then the maximum mortgage may not exceed the maximum loan amount for a single family dwelling unit under the Maryland Mortgage Program (MMP) of the Community Development Administration.</text> </paragraph> <paragraph num="(3)"> <text>If the mortgage covers permitted rehabilitation costs, the maximum mortgage may not exceed the following limits:</text> <paragraph num="(a)"> <text>For a property containing one dwelling unit, the limit is 150 percent of the maximum loan amount for a single family dwelling unit under the Maryland Mortgage Program (MMP) of the Community Development Administration;</text> </paragraph> <paragraph num="(b)"> <text>For a property containing two dwelling units, the limit is 175 percent of the MMP limit for a single family dwelling unit;</text> </paragraph> <paragraph num="(c)"> <text>For a property containing three or four units, limits shall be determined by the Secretary on a case-by-case basis, taking into account:</text> <paragraph num="(i)"> <text>The public purpose being served,</text> </paragraph> <paragraph num="(ii)"> <text>Regional costs for this housing, and</text> </paragraph> <paragraph num="(iii)"> <text>Other factors considered appropriate by the Secretary.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Maximum loan amounts may be adjusted periodically by determination of the Secretary to:</text> <paragraph num="(a)"> <text>Reflect the annual rate of inflation;</text> </paragraph> <paragraph num="(b)"> <text>Reflect the number of dwelling units in the property;</text> </paragraph> <paragraph num="(c)"> <text>Reflect the differing area property values;</text> </paragraph> <paragraph num="(d)"> <text>Respond to changes in average sales prices;</text> </paragraph> <paragraph num="(e)"> <text>Support State agency economic or community development initiatives; or</text> </paragraph> <paragraph num="(f)"> <text>Encourage innovative programs of M.H.F.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Purchase-Only Mortgage Limit. A mortgage loan insured by M.H.F. which finances only the purchase of the property may not exceed the lesser of either the:</text> <paragraph num="(1)"> <text>Appraised “as is” value or the purchase price of the property, whichever is less, plus the:</text> <paragraph num="(a)"> <text>Sum of the:</text> <paragraph num="(i)"> <text>Closing costs (financing),</text> </paragraph> <paragraph num="(ii)"> <text>Closing costs (title), and</text> </paragraph> <paragraph num="(iii)"> <text>Prepaid expenses; minus</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Equity capital described in Regulation .04E of this chapter; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Maximum mortgage limit set forth in §A of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Purchase/Rehabilitation Mortgages Limit. The amount of the mortgage loan insured by M.H.F. may not exceed the lesser of the following:</text> <paragraph num="(1)"> <text>The sum of:</text> <paragraph num="(a)"> <text>The purchase price, plus</text> </paragraph> <paragraph num="(b)"> <text>Rehabilitation costs permitted in accordance with Regulation .04C(2) of this chapter, plus</text> </paragraph> <paragraph num="(c)"> <text>A contingency cost override of 10 percent of the permitted rehabilitation costs, plus</text> </paragraph> <paragraph num="(d)"> <text>The cost of construction period interest if approved by M.H.F., plus</text> </paragraph> <paragraph num="(e)"> <text>The sum of closing costs (financing), closing costs (title), and prepaid expenses, minus</text> </paragraph> <paragraph num="(f)"> <text>Equity capital required by Regulation .04E of this chapter;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The sum of:</text> <paragraph num="(a)"> <text>The value after rehabilitation determined by the appraiser in accordance with Regulation .05G(2) of this chapter, plus</text> </paragraph> <paragraph num="(b)"> <text>Closing costs (financing), plus</text> </paragraph> <paragraph num="(c)"> <text>Closing costs (title), plus</text> </paragraph> <paragraph num="(d)"> <text>Prepaid expenses, minus</text> </paragraph> <paragraph num="(e)"> <text>Equity capital required by Regulation .04E of this chapter; or</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The maximum mortgage amount set forth in §A of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Premiums."> <text>Insurance fees for the Revitalization Program are as follows:</text> <paragraph num="A."> <text>An initial premium of 2 percent of the initial loan balance; and</text> </paragraph> <paragraph num="B."> <text>A renewal premium of:</text> <paragraph num="(1)"> <text>0.65 percent of the initial loan balance for 9 annual renewals, and</text> </paragraph> <paragraph num="(2)"> <text>0.325 percent annually from year 10 to maturity.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Agreements with Mortgage Lenders."> <paragraph num="A."> <text>Under conditions set forth in this regulation, M.H.F. may enter into agreements with mortgage lenders who wish to make insured mortgage loans under the Revitalization Program.</text> </paragraph> <paragraph num="B."> <text>Each mortgage lender shall:</text> <paragraph num="(1)"> <text>Be an eligible mortgagee approved by M.H.F. under COMAR 05.06.01.04; and</text> </paragraph> <paragraph num="(2)"> <text>Establish the Revitalization Program as a priority as evidenced by the mortgage lender's endorsement of the Program in its Community Reinvestment Act statement.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Each agreement:</text> <paragraph num="(1)"> <text>Shall include such terms and conditions as M.H.F. determines are necessary to balance the risk factors which exist in connection with the proposed agreement;</text> </paragraph> <paragraph num="(2)"> <text>Shall be approved by the Secretary;</text> </paragraph> <paragraph num="(3)"> <text>May provide for M.H.F. and the mortgage lender to share up to 1/2 of the insurance fees and a commensurate degree of financial risk of subsequent default in connection with mortgage loans made by the mortgage lender and insured by M.H.F.; and</text> </paragraph> <paragraph num="(4)"> <text>Shall require all borrowers receiving loans insured by M.H.F. to participate in a counseling program, administered by a counseling agency acceptable to M.H.F., which shall provide:</text> <paragraph num="(a)"> <text>Counseling on credit issues as required by M.H.F.,</text> </paragraph> <paragraph num="(b)"> <text>At least one pre-purchase meeting and one post-purchase meeting, and</text> </paragraph> <paragraph num="(c)"> <text>Additional meetings as required by M.H.F.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Applicability of Other M.H.F. Regulations Under COMAR 05.06.06"> <text>The following regulations under COMAR 05.06.06 apply to the Revitalization Program to the extent that their provisions do not conflict with these regulations for the Revitalization Program:</text> <paragraph num="A."> <text>COMAR 05.06.06.03, .06—.08, .10, .11, .15, and .16;</text> </paragraph> <paragraph num="B."> <text>COMAR 05.06.06.05, except that COMAR 05.06.06.05D does not apply to an insured mortgage that finances both the purchase and rehabilitation of the property securing the mortgage; and</text> </paragraph> <paragraph num="C."> <text>COMAR 05.06.06.09, except that COMAR 05.06.06.09C(6) is subject to agreements between the Fund and insurers under the Revitalization Program.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 4, 1991 (18:4 Md. R. 446)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective February 28, 1994 (21:4 Md. R. 273)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02—.05 and .08 amended effective August 3, 1992 (19:15 Md. R. 1388)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03B and .04 amended effective June 7, 1993 (20:11 Md. R. 912)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective November 7, 1994 (21:22 Md. R. 1873)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2025); amended permanently effective July 1, 1996 (23:13 Md. R. 939)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2025); amended permanently effective July 1, 1996 (23:13 Md. R. 939)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective November 7, 1994 (21:22 Md. R. 1873)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06 and .07 repealed and new Regulations .06 and .07 adopted</annotation> <annotation type="History" subtype="Administrative History">effective August 3, 1992 (19:15 Md. R. 1388)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective November 7, 1994 (21:22 Md. R. 1873)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B, C amended effective June 7, 1993 (20:11 Md. R. 912)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B, C amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2025); amended permanently effective July 1, 1996 (23:13 Md. R. 939)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2025); amended permanently effective July 1, 1996 (23:13 Md. R. 939)</annotation> </annotations> </chapter> <chapter num="04" heading="Special Housing Facility Projects"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>This chapter sets forth the policies and procedures for insurance by the Maryland Housing Fund of mortgage loans for the refinancing, purchase and rehabilitation, or construction of special housing facility projects.</text> </paragraph> <paragraph num="B."> <text>The insurance reserve for this Program is the multifamily reserve fund established in accordance with COMAR 05.06.01.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objective of the Program is to provide insurance of mortgage loans made or purchased by the Community Development Administration to nonprofit organizations for the purpose of financing or refinancing special housing facility projects.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Scope."> <text>This Program is intended to insure loans made or purchased by the Administration under its Special Housing Opportunities Program as contained in COMAR 05.04.11.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(3)"> <text>“Default” means the failure of the sponsor to:</text> <paragraph num="(a)"> <text>Make required payments under the mortgage loan when due including any applicable grace period; or</text> </paragraph> <paragraph num="(b)"> <text>Perform any other obligation under the mortgage loan after the notice, lapse of time, and opportunity to correct, if any, which may be provided in the mortgage.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development, a principal department of State government.</text> </paragraph> <paragraph num="(5)"> <text>“Director” means the Director of the Maryland Housing Fund.</text> </paragraph> <paragraph num="(6)"> <text>“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated under it.</text> </paragraph> <paragraph num="(7)"> <text>“Lender” means the Administration.</text> </paragraph> <paragraph num="(8)"> <text>“Maryland Housing Fund” or “the Fund” means the Maryland Housing Fund, an agency within the Division of Credit Assurance of the Department.</text> </paragraph> <paragraph num="(9)"> <text>“Nonprofit organization” means an organization:</text> <paragraph num="(a)"> <text>Whose organizational documents include among its charitable purposes the provision of housing to special needs populations; and</text> </paragraph> <paragraph num="(b)"> <text>Which is currently recognized by the Internal Revenue Service as a tax-exempt organization under §501(c)(3) of the Internal Revenue Code.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Program” means the Maryland Housing Fund mortgage insurance program of loans for special housing facility projects.</text> </paragraph> <paragraph num="(11)"> <text>“Project” means a special housing facility project within the meaning of the Act</text> </paragraph> <paragraph num="(12)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(13)"> <text>“Sponsor” means the borrower under a mortgage loan for a project and includes its successors and assigns by operation of law or as approved by the Maryland Housing Fund.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Loans—Generally."> <paragraph num="A."> <text>Type of Loans. Loans made or purchased by the Administration under its Special Housing Opportunities Program, the proceeds of which are to be used to refinance, acquire, construct, or rehabilitate a project are eligible for mortgage insurance from the Fund.</text> </paragraph> <paragraph num="B."> <text>Interest. Loans shall bear interest at not more than the rate approved by the Fund. The Fund may not insure a loan that provides for an increased interest rate upon default.</text> </paragraph> <paragraph num="C."> <text>Payment. A sponsor is required to repay the loan in equal monthly payments of interest and principal in order that the loan is fully amortized over its term, except that if the term exceeds 30 years in accordance with §D of this regulation then, at the direction of the Administration, a sponsor may make initial payments of interest only for up to 18 months after the loan closing.</text> </paragraph> <paragraph num="D."> <text>Term.</text> <paragraph num="(1)"> <text>Loans for permanent financing of projects shall contain amortization provisions satisfactory to the Fund for the complete amortization of the loan in monthly installments in 30 years or less, except that if the project is funded initially from a source other than proceeds of revenue bonds, then, at the direction of the Administration, a sponsor may make initial monthly payments of interest only for up to 18 months after the loan closing, followed by monthly principal and interest payments that will fully amortize the loan over a term of 30 years.</text> </paragraph> <paragraph num="(2)"> <text>Loans for construction or rehabilitation financing of projects are eligible for insurance of advances by the Fund. Insurance of construction loans is conditioned upon the existence of a commitment for permanent financing which is acceptable to the Fund.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Liens.</text> <paragraph num="(1)"> <text>The loan shall be secured by a mortgage or deed of trust. The mortgage shall be a first lien on:</text> <paragraph num="(a)"> <text>The land and improvements; or</text> </paragraph> <paragraph num="(b)"> <text>A leasehold interest in the land and improvements which extends at least 25 years beyond the term of the loan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Administration may permit subordinate liens for other loans made by the Department or other lenders.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Additional Security. The Fund may require the following additional instruments or guarantees securing an insured loan:</text> <paragraph num="(1)"> <text>For projects involving new construction or substantial rehabilitation:</text> <paragraph num="(a)"> <text>Payment and performance bonds each in an amount equal to 100 percent of the contract price,</text> </paragraph> <paragraph num="(b)"> <text>Cash or an irrevocable letter of credit equal to 50 percent of the contract price; or</text> </paragraph> <paragraph num="(c)"> <text>Other completion assurance as may be acceptable to the Fund; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Such other sureties or guarantees of the loan as may be determined necessary by the Fund.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Assumption and Prepayment. Loans insured by the Fund under the Program may not be assumed by another sponsor without the prior written approval of the Fund. Loans may be prepaid only to the extent permitted in the loan documents.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Loans—Maximum Loan Amount."> <paragraph num="A."> <text>For acquisition, construction, or rehabilitation loans, the maximum amount of any loan that may be insured by the Fund under the Program may not exceed the lesser of:</text> <paragraph num="(1)"> <text>75 percent of the appraised market value of the project; or</text> </paragraph> <paragraph num="(2)"> <text>The total cost of the project.</text> </paragraph> </paragraph> <paragraph num="B."> <text>For loans to refinance existing debt, the maximum loan amount that may be insured by the Fund under the Program may not exceed the lesser of:</text> <paragraph num="(1)"> <text>75 percent of the appraised market value of the project; or</text> </paragraph> <paragraph num="(2)"> <text>The sum of the following:</text> <paragraph num="(a)"> <text>The amount of existing principal debt secured by the property;</text> </paragraph> <paragraph num="(b)"> <text>Improvements to be financed with the proceeds of the loan;</text> </paragraph> <paragraph num="(c)"> <text>Costs associated with closing the loan, including lender prepayment fees and charges;</text> </paragraph> <paragraph num="(d)"> <text>Legal, processing, packaging, title, and other closing fees;</text> </paragraph> <paragraph num="(e)"> <text>Other fees and charges relating to the existing debt to be paid off with proceeds of the loan; and</text> </paragraph> <paragraph num="(f)"> <text>Any other costs approved by the Fund.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Loans — Environmental and Insurance Conditions."> <paragraph num="A."> <text>Environmental Conditions.</text> <paragraph num="(1)"> <text>Compliance with Law. The lender shall require the sponsor to certify that each mortgage loan to be insured by the Fund is in compliance with applicable local, State, and federal environmental laws and regulations.</text> </paragraph> <paragraph num="(2)"> <text>Permits. Before loan closing, the sponsor shall secure any required permits from the Department of Natural Resources and the political subdivision in which the project is located.</text> </paragraph> <paragraph num="(3)"> <text>Screening and Investigation.</text> <paragraph num="(a)"> <text>The lender may be required, at the discretion of the Fund, to require a sponsor to have a screening of the proposed site conducted for environmental conditions, such as man-made hazards, storm water runoff, underground storage tanks, lead-based paint, radon gas, PCBs, asbestos, and other environmental hazards within the meaning of the environmental laws referred to in §A(1) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>If the initial screening indicates adverse or potentially adverse environmental conditions, the Fund may require a more detailed physical investigation, review of historical records, testing and treatment, or abatement of the environmental condition as a requirement of the mortgage insurance.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Registration. For properties built before 1950, the sponsor shall keep the property registered with the Maryland Department of the Environment under Environment Article, Title 6, Subtitle 8, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Title Insurance.</text> <paragraph num="(1)"> <text>The sponsor shall provide to the lender a standard American Land Title Association Loan Policy or other form of title insurance policy approved by the Administration and the Office of the Attorney General for an amount equal to the maximum principal amount of the loan, insuring the lender and the Fund that title to the building and the real property on which the building is located on the date of the loan closing is vested in the sponsor and containing only exceptions and encumbrances approved by the lender, the Fund, and the Office of the Attorney General.</text> </paragraph> <paragraph num="(2)"> <text>The Fund, in its discretion, may require the title insurance policy to include ALTA endorsement form 100, comprehensive coverage, and ALTA endorsement form 8.1, environmental coverage, and such other endorsements as may be required by the lender and the Fund.</text> </paragraph> <paragraph num="(3)"> <text>The title insurance policy shall be accompanied by a survey certified in the manner required by the lender, the Fund, and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property except those acceptable to the lender, the Fund, and the Office of the Attorney General. The title insurance policy may not contain any survey exceptions.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Property, Liability, and Other Insurance.</text> <paragraph num="(1)"> <text>At or before closing of a loan, and at such other times as required by the Department, the sponsor shall provide evidence that the sponsor, contractor, and other parties, have obtained and maintained the following insurance:</text> <paragraph num="(a)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(b)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(c)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(d)"> <text>Architect's errors and omissions;</text> </paragraph> <paragraph num="(e)"> <text>Engineer's errors and omissions; and</text> </paragraph> <paragraph num="(f)"> <text>Flood insurance, if the project is located in a flood hazard zone.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All insurance required under §C(1) of this regulation shall meet the following requirements:</text> <paragraph num="(a)"> <text>Be written by a company registered with the Maryland Insurance Administration;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(c)"> <text>Not be terminable without prior notification to the Department; and</text> </paragraph> <paragraph num="(d)"> <text>Contain such other terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition to the requirements of §C(2) of this regulation, owner's liability insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition to the requirements of §C(2) of this regulation, contractor's liability and contractor's builder's risk insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in place through final closing or such later date as the Department requires.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In addition to the requirements of §C(2) of this regulation, owner's property or hazard insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured, loss payee, and mortgagee; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Eligible Sponsors."> <text>A sponsor shall meet all of the following requirements to qualify as an eligible sponsor of an insured mortgage:</text> <paragraph num="A."> <text>Be a nonprofit organization;</text> </paragraph> <paragraph num="B."> <text>Be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="C."> <text>Own, or upon closing of the loan will own, the property that secures the loan for which mortgage insurance is intended, and continue to own the property as long as the Maryland Housing Fund mortgage insurance is in force;</text> </paragraph> <paragraph num="D."> <text>Have all necessary legal and corporate authority to incur the obligations of the loan;</text> </paragraph> <paragraph num="E."> <text>Either:</text> <paragraph num="(1)"> <text>Be licensed to operate the project by the appropriate State agency, to the extent required by State law; or</text> </paragraph> <paragraph num="(2)"> <text>Have an agreement acceptable to the Fund, with a manager who:</text> <paragraph num="(a)"> <text>Is acceptable to the Fund,</text> </paragraph> <paragraph num="(b)"> <text>Is licensed in accordance with the requirements of §E(1) of this regulation, and</text> </paragraph> <paragraph num="(c)"> <text>Meets the requirements of §§A, B, F, G, H, and I of this regulation;</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Either:</text> <paragraph num="(1)"> <text>Have a contract, acceptable to the Fund, with a State agency or county government; or</text> </paragraph> <paragraph num="(2)"> <text>Have an agreement acceptable to the Fund, with a manager who is acceptable to the Fund and has a contract that meets the requirements of §F(1)(a) and (b) of this regulation;</text> </paragraph> </paragraph> <paragraph num="G."> <text>Demonstrate:</text> <paragraph num="(1)"> <text>Financial credibility and stability,</text> </paragraph> <paragraph num="(2)"> <text>The capability to undertake the project, and</text> </paragraph> <paragraph num="(3)"> <text>Either the ability:</text> <paragraph num="(a)"> <text>To manage the project as evidenced by at least 2 years of prior management of the project or comparable projects by the sponsor or an entity with an affiliation to the sponsor which is acceptable to the Fund, or</text> </paragraph> <paragraph num="(b)"> <text>Of a manager, acceptable to the Fund, with whom the fund has an agreement acceptable to the Fund, to manage the project as required in §G(3)(a) of this regulation;</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Not be under an order suspending or debarring the sponsor from participating in the Department's programs under COMAR 05.01.05, or under any similar order from any other State or federal agency;</text> </paragraph> <paragraph num="I."> <text>Agree and certify that it will comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination and equal opportunity in employment, housing and credit practices, and drug-free and alcohol-free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended,</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended, including the Fair Housing Amendments Act of 1988,</text> </paragraph> <paragraph num="(3)"> <text>For projects containing nonresidential uses, the Americans with Disabilities Act of 1990, as amended,</text> </paragraph> <paragraph num="(4)"> <text>Article 49B, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(5)"> <text>The Department's Minority Business Enterprise Program, as amended, and</text> </paragraph> <paragraph num="(6)"> <text>Executive Order 01.01.1989.18 relating to Drug and Alcohol Free Work Places, and any Departmental regulations adopted to carry out more specifically the requirements of the order; and</text> </paragraph> </paragraph> <paragraph num="J."> <text>Not have defaulted under a Department or other governmental loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Eligible Projects."> <text>The lender may apply for mortgage insurance under the Program if the project meets the following minimum requirements:</text> <paragraph num="A."> <text>The project is located in Maryland;</text> </paragraph> <paragraph num="B."> <text>Title to the project is acceptable to the Fund;</text> </paragraph> <paragraph num="C."> <text>The project:</text> <paragraph num="(1)"> <text>Conforms to applicable State and local building, zoning, health, and housing codes, or in cases of proposed construction or rehabilitation, will conform to those codes when completed, and</text> </paragraph> <paragraph num="(2)"> <text>Is in compliance with the requirements of any State agency or local government where the project is located governing special housing facility projects;</text> </paragraph> </paragraph> <paragraph num="D."> <text>The project, in the determination of the Fund, has a useful life of a length satisfactory to the Fund;</text> </paragraph> <paragraph num="E."> <text>Upon closing of the loan, the project will be owned by the sponsor;</text> </paragraph> <paragraph num="F."> <text>The project is, or will be upon closing of the loan, subject to a contract with an agency of State or local government under terms and conditions, acceptable to the Fund;</text> </paragraph> <paragraph num="G."> <text>The project is a single family dwelling unit; and</text> </paragraph> <paragraph num="H."> <text>The project, if a condominium unit, is part of a condominium regime approved by the Federal Housing Administration, as required by the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Schedules of Premiums and Fees."> <text>The Director, with the approval of the Secretary, shall establish schedules of premiums and fees for insurance of loans under the Program, as required by the Act.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Mortgage Insurance Conditions."> <paragraph num="A."> <text>Appraisal.</text> <paragraph num="(1)"> <text>The Fund requires an appraisal report acceptable to the Fund, in its sole discretion, prepared by a qualified appraiser, before approval of any loan for mortgage insurance.</text> </paragraph> <paragraph num="(2)"> <text>An appraisal shall show the:</text> <paragraph num="(a)"> <text>Current market value of the property; and</text> </paragraph> <paragraph num="(b)"> <text>Expected value of the property after completion of the proposed improvements, if any.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Types of Insurance Coverage.</text> <paragraph num="(1)"> <text>The Fund may insure a construction loan for a period of 12 months and, depending upon the size and complexity of a project, may renew the insurance for one additional 12-month term.</text> </paragraph> <paragraph num="(2)"> <text>The Fund may insure a permanent loan for up to 30 years, except that, if the Administration elects to fund the project initially from a source other than proceeds of tax-exempt bonds, then the term may not exceed 31 years and 6 months.</text> </paragraph> <paragraph num="(3)"> <text>The Fund may not insure construction advances only, without also insuring the permanent mortgage.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Processing and Closing Fees.</text> <paragraph num="(1)"> <text>The sponsor shall pay a processing fee in an amount to be determined in accordance with the schedule of premiums and fees established under Regulation .10 of this chapter. The processing fee shall be paid to the Fund at or before closing. The Fund may waive or postpone the payment of the processing fee at its sole discretion.</text> </paragraph> <paragraph num="(2)"> <text>The sponsor shall pay a closing fee at or before the initial endorsement of the loan for insurance, in an amount to be determined in accordance with the schedule of premiums and fees established under Regulation .10 of this chapter.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Insurance Premiums.</text> <paragraph num="(1)"> <text>Permanent Financing.</text> <paragraph num="(a)"> <text>The initial and annual renewal premiums for a mortgage loan for permanent financing shall be determined in accordance with the schedule of premiums and fees established under Regulation .10 of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>When a permanent loan is insured by the Fund following Fund insurance of a construction loan, the annual renewal rather than initial premium for the permanent loan shall be charged.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Construction or Rehabilitation Financing.</text> <paragraph num="(a)"> <text>The premium for insurance of a mortgage loan for construction or rehabilitation advances shall be determined in accordance with the schedule of premiums and fees established under Regulation .10 of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>For public lenders, construction insurance may be renewed for one period of 6 months. The renewal premium shall be determined in accordance with the schedule of premiums and fees established under Regulation .10 of this chapter.</text> </paragraph> <paragraph num="(c)"> <text>There may not be refunds or credits for completion of construction in less than the initial 12 months or any renewal period.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Refund of Mortgage Premium. The premium, or any portion of it, is not refundable except when an insured mortgage is prepaid in full. In those cases, no further premiums are due and a portion of the premium paid for the year shall be refunded in accordance with the short rate cancellation schedule.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Effective Date.</text> <paragraph num="(1)"> <text>The mortgage insurance is effective as of the date the loan is closed if the:</text> <paragraph num="(a)"> <text>Fund has received payment of the required premium and fees; and</text> </paragraph> <paragraph num="(b)"> <text>Lender has certified to the Fund that all conditions of the loan and insurance commitments have been fulfilled.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Insurance extends only to the amount of funds disbursed under a construction or rehabilitation loan.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Incontestability. Any evidence of insurance issued by the Fund under the Act is conclusive evidence of the eligibility of the mortgage loan for insurance, and this insurance is incontestable, except as to defenses based on fraud or misrepresentation.</text> </paragraph> <paragraph num="G."> <text>Loan Assignment.</text> <paragraph num="(1)"> <text>Assignment by the lender of a loan insured by the Fund does not impair insurance coverage, if the:</text> <paragraph num="(a)"> <text>New lender is determined to be an eligible lender under the requirements in Regulation .08 of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Fund is advised in writing of the:</text> <paragraph num="(i)"> <text>Assignment,</text> </paragraph> <paragraph num="(ii)"> <text>Name of the assignor and its address,</text> </paragraph> <paragraph num="(iii)"> <text>Name of the assignee and its address,</text> </paragraph> <paragraph num="(iv)"> <text>Proposed date of the assignment, and</text> </paragraph> <paragraph num="(v)"> <text>Policy number of loans to be assigned.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Loan servicing by the lender may not be transferred without the approval of the Fund.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Insurance Termination. Insurance coverage may be terminated, at the sole option of the Fund and without liability to the Fund, if:</text> <paragraph num="(1)"> <text>The lender requests cancellation;</text> </paragraph> <paragraph num="(2)"> <text>A claim is satisfied by the Fund;</text> </paragraph> <paragraph num="(3)"> <text>The mortgage loan is paid in full;</text> </paragraph> <paragraph num="(4)"> <text>A renewal premium is not paid by the lender or sponsor after receipt of a notice from the Fund;</text> </paragraph> <paragraph num="(5)"> <text>The loan terms are modified without the prior written consent of the Fund;</text> </paragraph> <paragraph num="(6)"> <text>There is any change in the identity of the sponsor without the prior written consent of the Fund;</text> </paragraph> <paragraph num="(7)"> <text>The property is transferred, sold, conveyed, or encumbered other than by operation of law, without the prior written approval of the Fund; or</text> </paragraph> <paragraph num="(8)"> <text>The lender assigns the loan in contravention of the requirements under §G of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Processing Procedures."> <paragraph num="A."> <text>Application.</text> </paragraph> <paragraph num="B."> <text>Review.</text> <paragraph num="(1)"> <text>The Fund may review each application for a loan for which mortgage insurance is intended to determine whether it complies with this chapter and the insurance guidelines of the Fund.</text> </paragraph> <paragraph num="(2)"> <text>The Fund may delegate to the Administration authority to review one or more applications for insurance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Approval.</text> <paragraph num="(1)"> <text>Except in the case of an emergency when urgent action is required, the Administration, with concurrence of the Fund, shall submit insurance applications to the Housing Finance Review Committee of the Department for review and recommendation to the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary shall consider the recommendation of the Housing Finance Review Committee and approve, disapprove, or approve with modifications the mortgage insurance and its terms.</text> </paragraph> <paragraph num="(3)"> <text>Applications for mortgage insurance in an amount below the minimum amount established by the Housing Finance Review Committee need not be submitted to the Committee for review and recommendation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Insurance Determination. The Secretary shall execute a written determination that the mortgage insurance of the loan for the project is authorized by the Act and approved before the issuance by the Fund of a commitment to insure a loan.</text> </paragraph> <paragraph num="E."> <text>Commitment. Upon approval of the insurance and execution of a determination by the Secretary, the Fund shall issue a commitment letter setting forth:</text> <paragraph num="(a)"> <text>The amount of the insured loan;</text> </paragraph> <paragraph num="(b)"> <text>The maximum interest rate on the insured loan;</text> </paragraph> <paragraph num="(c)"> <text>The term of the insured loan; and</text> </paragraph> <paragraph num="(d)"> <text>Other terms and conditions that the Fund considers appropriate for the insurance of the loan.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Rejection of Applications.</text> <paragraph num="(1)"> <text>If the Fund determines that a project or sponsor is not eligible for insurance, the Fund shall notify the lender.</text> </paragraph> <paragraph num="(2)"> <text>An applicant may request reconsideration of a rejection in accordance with the procedures contained in the Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.02.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Withdrawal of Application.</text> <paragraph num="(1)"> <text>The lender may withdraw an application or request for mortgage insurance at any time before closing of the loan by written notice to the Fund.</text> </paragraph> <paragraph num="(2)"> <text>The sponsor shall bear any costs incurred for items other than internal processing, including, but not limited to, title examinations, credit reports, and appraisals.</text> </paragraph> <paragraph num="(3)"> <text>There is no refund of a processing fee if the insured loan fails to close.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Claims Procedures."> <paragraph num="A."> <text>Notification. In the event of a default on an insured mortgage, the lender shall notify the Fund in writing within 30 days of the default.</text> </paragraph> <paragraph num="B."> <text>Preclaim Period.</text> <paragraph num="(1)"> <text>During the first 6 months after the loan is in default, the lender may not assign the mortgage loan and its rights under the mortgage to the Fund and make a claim for insurance unless it receives the prior written consent of the Fund.</text> </paragraph> <paragraph num="(2)"> <text>After the loan has been in default for 6 months, either the Fund or the lender may, without the written consent of the other, require filing of a claim and assignment of the loan to the Fund.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Preclaim Actions. Upon default and before assignment of the defaulted mortgage loan to the Fund:</text> <paragraph num="(1)"> <text>The Fund may require the lender to exercise any or all rights under the loan instruments including, but not limited to:</text> <paragraph num="(a)"> <text>The appointment of a receiver;</text> </paragraph> <paragraph num="(b)"> <text>Assignment of rents;</text> </paragraph> <paragraph num="(c)"> <text>Realization of collateral security, or rights of offset; and</text> </paragraph> <paragraph num="(d)"> <text>Enforcements of guarantees;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Action of forbearance may not be taken by the lender without the prior written approval of the Fund;</text> </paragraph> <paragraph num="(3)"> <text>The lender shall:</text> <paragraph num="(a)"> <text>Advise the Fund as to the possibility of loan modification agreements, recasting, or other methods of forbearance which would be helpful or appropriate; and</text> </paragraph> <paragraph num="(b)"> <text>Make a reasonable effort to cure a default before:</text> <paragraph num="(i)"> <text>Assigning the loan to the Fund,</text> </paragraph> <paragraph num="(ii)"> <text>Beginning foreclosure action, or</text> </paragraph> <paragraph num="(iii)"> <text>Accepting a deed instead of foreclosure.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Preclaim Payments.</text> <paragraph num="(1)"> <text>After receipt of notice of default, the Fund, upon request of the lender, shall make those periodic payments to the lender that are due under the terms of the insured mortgage, except late charges and mortgage insurance premiums.</text> </paragraph> <paragraph num="(2)"> <text>These periodic payments shall continue:</text> <paragraph num="(a)"> <text>From the later of the:</text> <paragraph num="(i)"> <text>Time of default, or</text> </paragraph> <paragraph num="(ii)"> <text>First day of the calendar month the lender notifies the Fund of the default;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>To the date:</text> <paragraph num="(i)"> <text>The insurance claim settlement is paid, or</text> </paragraph> <paragraph num="(ii)"> <text>All monetary events of default have been remedied.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Fund has the right of subrogation with respect to all periodic payments made by it under §D of this regulation, including mortgage insurance premiums not paid to the Fund by the lender on behalf of the sponsor. That right is additional to and cumulative with all rights arising from an assignment of an insured mortgage to the Fund and the rights specified in §C(1) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>Preclaim payments made to the lender by the Fund may not be considered a remedy of the sponsor's default under the terms of the insured mortgage or any collateral agreements.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Assignment.</text> <paragraph num="(1)"> <text>The assignment of the mortgage shall be in writing and in a form suitable for recording among the land records in the county where the project is located.</text> </paragraph> <paragraph num="(2)"> <text>The assignment shall include:</text> <paragraph num="(a)"> <text>An assignment to the Fund of all claims of the lender against the sponsor;</text> </paragraph> <paragraph num="(b)"> <text>An assignment of all State and local government contracts for reimbursement of operating costs; and</text> </paragraph> <paragraph num="(c)"> <text>All policies of title or other insurance or surety bonds or other guarantees and all claims under them.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Claims Payment."> <paragraph num="A."> <text>Limits.</text> <paragraph num="(1)"> <text>Coverage by the Fund does not include loss from:</text> <paragraph num="(a)"> <text>Casualty losses;</text> </paragraph> <paragraph num="(b)"> <text>Impaired title losses; or</text> </paragraph> <paragraph num="(c)"> <text>Default due to loss of tax-exempt status of the loan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Expenses incurred for property repair resulting from insurable causes including, but not limited to, negligence, flood, fire, infestation, vandalism, and defective construction are not eligible for claim payment.</text> </paragraph> <paragraph num="(3)"> <text>The repair of any damaged property by the lender is not a condition to payment of the lender's mortgage insurance claim by the Fund.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Form of Payment. The Fund shall pay the claims of the lender in cash in accordance with §C of this regulation, or by delivery of a promissory claim note in accordance with §D of this regulation.</text> </paragraph> <paragraph num="C."> <text>Cash Payments. If a claim is paid in cash, the payment is calculated as follows:</text> <paragraph num="(1)"> <text>The principal amount of the insured mortgage loan at the time of default; plus</text> </paragraph> <paragraph num="(2)"> <text>Interest at the mortgage rate from the date of assignment or claim through the date of claim settlement; plus</text> </paragraph> <paragraph num="(3)"> <text>Expenses paid by the lender during the period of default in connection with preserving the mortgaged premises, including:</text> <paragraph num="(a)"> <text>Property taxes,</text> </paragraph> <paragraph num="(b)"> <text>Insurance premiums,</text> </paragraph> <paragraph num="(c)"> <text>Other customary expenses; plus</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Any periodic payments, not including principal payments, which the lender would have been entitled to under Regulation .13D of this chapter, but for which no request was made; minus</text> </paragraph> <paragraph num="(5)"> <text>All amounts:</text> <paragraph num="(a)"> <text>Received by the lender after default from any source on behalf of the sponsor or the project, including all rental receipts or other income, after deducting actual and reasonable expenses for operating the mortgaged property, and</text> </paragraph> <paragraph num="(b)"> <text>Retained for the account of the sponsor from any source including undisbursed loan proceeds.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Promissory Claim Note Payments.</text> <paragraph num="(1)"> <text>A claim may be paid by delivery of a promissory claim note if all of the following conditions are satisfied:</text> <paragraph num="(a)"> <text>The insured mortgagee consents;</text> </paragraph> <paragraph num="(b)"> <text>The Fund makes a cash payment to the insured mortgagee equal to all delinquent principal and interest on the loan through the date of claim settlement, plus or minus the amounts set forth in §C of this regulation; and</text> </paragraph> <paragraph num="(c)"> <text>The principal amount of the claim note, when aggregated with the outstanding principal amounts of all other claim notes issued by the Fund, does not exceed 25 percent of the multifamily insurance reserve.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If payment by claim note is permitted under §D(1) of this regulation:</text> <paragraph num="(a)"> <text>The principal amount of the claim note may not be more than the insured principal balance of the loan which would have been outstanding at the date of claim settlement had all payments of principal and interest been made timely;</text> </paragraph> <paragraph num="(b)"> <text>The claim note shall require principal and interest payments equal to those required by the loan payable at the times payments were to have been made under the loan;</text> </paragraph> <paragraph num="(c)"> <text>The Fund's obligation to repay the claim note shall be backed generally by the multifamily insurance reserve and the unrestricted unallocated reserve;</text> </paragraph> <paragraph num="(d)"> <text>The Fund shall restrict an amount equal to the principal amount of the claim note in one or more of the following accounts:</text> <paragraph num="(i)"> <text>The cash operating account,</text> </paragraph> <paragraph num="(ii)"> <text>The unallocated reserve, or</text> </paragraph> <paragraph num="(iii)"> <text>The multifamily insurance reserve;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Funds restricted in the unallocated reserve or the cash operating account are not considered part of the multifamily insurance reserve for purposes of computing the leverage ratio under the Amended and Restated Multifamily Insurance Agreement dated August 30, 1988.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A note issued in payment of a claim shall mature and be paid upon the first to occur of the following:</text> <paragraph num="(a)"> <text>Sale of the project financed by the loan;</text> </paragraph> <paragraph num="(b)"> <text>Maturity of the loan;</text> </paragraph> <paragraph num="(c)"> <text>7 years from the date of issuance of the claim note; or</text> </paragraph> <paragraph num="(d)"> <text>The date on which the unrestricted amount of the multifamily insurance reserve is less than 75 percent of the unrestricted amount of the multifamily insurance reserve at the time the claim note was issued.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Books and Accounts."> <paragraph num="A."> <text>The lender shall require the sponsor and its contractors and subcontractors to maintain such books, accounts, and records, and shall file with the lender such financial and other reports as the Fund from time to time may require.</text> </paragraph> <paragraph num="B."> <text>The books, accounts, and records required by §A of this regulation to be maintained shall be open to the inspection of representatives of the Fund or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of the sponsor shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the borrower and the lender. Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between them and the sponsor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="General Provisions."> <paragraph num="A."> <text>Reinsurance. Mortgage loans insured by the Fund may be reinsured or coinsured by and with public or private mortgage insurers, or through federal guarantees, when available. Portions of risk on any mortgage loan insured by the Fund may be assigned to other eligible mortgage insurers on a participating basis.</text> </paragraph> <paragraph num="B."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or with agreements to which the Fund may be subject if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal agency in connection with any project with respect to which federal assistance is sought necessitates a waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary, the:</text> <paragraph num="(a)"> <text>Application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act,</text> </paragraph> <paragraph num="(b)"> <text>Waiver would not be materially adverse to bondholders or others relying on the same reserves of the Fund, and</text> </paragraph> <paragraph num="(c)"> <text>Office of the Attorney General has approved the form and legal sufficiency of the waiver.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>False Statements. A sponsor or lender who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to cancellation of insurance, in addition to the criminal penalties authorized by the Act.</text> </paragraph> <paragraph num="D."> <text>Delegation. The Secretary may delegate to the Director or to any other official or employee of the Department or the Fund the authority to execute or approve any program documents or loan documents, including commitments and letters of intent.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland;Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 22, 1992 (19:12 Md. R. 1132)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C, D amended effective November 7, 1994 (21:22 Md. R. 1874)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective January 2, 1993 (19:26 Md. R. 2283)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09E—G amended effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective January 2, 1994 (20:25 Md. R. 1943); April 5, 1999 (26:7 Md. R. 539)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10D amended effective June 5, 1995 (22:11 Md. R. 818)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10H adopted effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12A amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective March 31, 2003 (30:6 Md. R. 419)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> </annotations> </chapter> <chapter num="05" heading="Credit Assurance Review Committee" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: September 27, 1993 (20:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective January 2, 2006 (32:26 Md. R. 1995)</annotation> </annotations> </chapter> <chapter num="06" heading="Single Family Insurance Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations set forth the policies and procedures for issuance of mortgage insurance by the Maryland Housing Fund to insure single family residential property.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>Single Family Regular Program Reserve. Mortgage loans secured by residential real property may be insured by the Maryland Housing Fund under its Single Family Regular Program Reserve. Insurance for the following three programs is supported by the Single Family Regular Program Reserve:</text> <paragraph num="(1)"> <text>Single Family Lender Insurance—primary mortgage insurance coverage for public and private lenders;</text> </paragraph> <paragraph num="(2)"> <text>Single Family Public Mortgagee Insurance—primary and pool insurance coverage for public agency lenders; and</text> </paragraph> <paragraph num="(3)"> <text>Insurance of first mortgages purchased by public employee retirement systems or pension funds.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Lender Primary Mortgage Insurance Program. Under this mortgage insurance program, the Fund may insure for approved public and private lenders the top 35 percent of loss on eligible first mortgages having up to 100 percent loan-to-value ratios plus financing of the initial mortgage insurance premium. Eligibility requirements for this program are set forth in Regulations .05—.09 of this chapter. Premiums and insurance plans for this program are found in Regulation .14 of this chapter. Minimum and maximum mortgage amounts are established by Secretarial determination.</text> </paragraph> <paragraph num="C."> <text>Public Lender Primary and Pool Mortgage Insurance Program.</text> <paragraph num="(1)"> <text>Under this mortgage insurance program, the Fund may insure both primary and pool insurance for first mortgages for approved public agency lenders.</text> </paragraph> <paragraph num="(2)"> <text>The aggregate loss limit or stop loss for a mortgage pool insurance policy is set forth in a policy with the public agency lender and is expressed as either a specific dollar amount or specific percentage of the total insured mortgage loan amounts.</text> </paragraph> <paragraph num="(3)"> <text>The Fund's obligation to pay any claim for loss on any mortgage loan in a pool ceases at the point the aggregate loss limit is reached and does not reoccur until the aggregate losses are reduced below the aggregate loss limit.</text> </paragraph> <paragraph num="(4)"> <text>Premiums under a pool policy remain payable with respect to a period of 3 months after the aggregate loss limit is reached and after that are not payable unless aggregate losses are reduced below the limit.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Public Employee Retirement System or Pension Fund Program.</text> <paragraph num="(1)"> <text>Under this mortgage insurance program, the Fund may insure first mortgages financed by a public employee retirement system or pension fund. The requirements in Regulations .05—.09 of this chapter govern this insurance program, except as provided in §D(2)—(4) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The mortgage program shall assist persons or families whose income standards are determined by the public employees retirement system or pension fund and are acceptable to the Fund and approved by the Secretary.</text> </paragraph> <paragraph num="(3)"> <text>The Fund will insure up to 100 percent of the mortgage loan. Closing costs or prepaid items may not be mortgaged.</text> </paragraph> <paragraph num="(4)"> <text>The Fund is not liable for more than 3 months interest in arrears on any reimbursable claim.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Contents. The requirements for the programs insured under the Single Family Reserve are set forth in Regulations .04—.16 of this chapter.</text> </paragraph> <paragraph num="F."> <text>Applicability to Other Fund Regulations Under COMAR. The following regulations under this chapter apply to the Revitalization Program to the extent that their provisions do not conflict with the regulations for the Revitalization Program:</text> <paragraph num="(1)"> <text>Regulations .03, .06—.08, .10, .11, .15, and .16 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Regulation .05 of this chapter, except that Regulation .05D of this chapter does not apply to an insured mortgage that finances both the purchase and rehabilitation of the property securing the mortgage; and</text> </paragraph> <paragraph num="(3)"> <text>Regulation .09 of this chapter, except that Regulation .09C(6) of this chapter is subject to agreements between the Fund and insurers under the Revitalization Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, terms appearing in the Act have the meanings as defined in the Act, and, in addition, the meanings used in these regulations.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Aggregate loss limit” or “stop loss” means the maximum payout by the Fund in payment of claims under a particular mortgage pool insurance policy, whether stated as a dollar amount or a percentage of the total principal amount of mortgages insured by the policy.</text> </paragraph> <paragraph num="(3)"> <text>“Applicant” means an individual applying to a lender for a mortgage.</text> </paragraph> <paragraph num="(4)"> <text>“Appraisal” means a written evaluation of a property performed by a residential real estate appraiser licensed by the State.</text> </paragraph> <paragraph num="(5)"> <text>“Assignment of mortgage” means a transfer of ownership of a mortgage from one lender to another or to the Fund.</text> </paragraph> <paragraph num="(6)"> <text>“Assumption agreement” means an agreement by one borrower to pay an obligation originally incurred by another.</text> </paragraph> <paragraph num="(7)"> <text>“Beneficiary” means the lender named in a promissory note or any successor or assign of the lender.</text> </paragraph> <paragraph num="(8)"> <text>“Borrower” or “mortgagor” means the original borrower under a mortgage loan and that borrower's successors and assigns by operation of law or as approved by the Fund.</text> </paragraph> <paragraph num="(9)"> <text>“Claim” means the timely filed written request by an insured for payment by the Maryland Housing Fund on an insurance policy.</text> </paragraph> <paragraph num="(10)"> <text>“Closing costs” means:</text> <paragraph num="(a)"> <text>Financing costs such as the credit report fee, appraisal fee, home inspection fee, survey fee, title examination, loan origination fee, title insurance fee, and application fee; and</text> </paragraph> <paragraph num="(b)"> <text>Title fees such as the attorney's fee, documentation and preparation fee, recording fee, State and local transfer tax, and documentary stamps.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Co-insurance” means an agreement between two or more insurers regarding allocation of risk, and containing other terms or conditions agreed upon between the insurers.</text> </paragraph> <paragraph num="(12)"> <text>“Collateral” means the security given as a pledge for the fulfillment of an obligation.</text> </paragraph> <paragraph num="(13)"> <text>“Condominium” means a multi-unit structure or project subject to a condominium regime under Real Property Article, §11-102, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Condominium unit” means an individual unit in a condominium.</text> </paragraph> <paragraph num="(15)"> <text>“County” means a county of Maryland, including Baltimore City.</text> </paragraph> <paragraph num="(16)"> <text>“Deed of trust” means a written instrument, including a mortgage, creating a lien against real property for the purpose of securing repayment of a loan.</text> </paragraph> <paragraph num="(17)"> <text>“Default” means the failure of a borrower to repay the obligation of a note, or otherwise to fully perform according to the terms provided in a deed of trust.</text> </paragraph> <paragraph num="(18)"> <text>“FHLMC” means the Federal Home Loan Mortgage Corporation.</text> </paragraph> <paragraph num="(19)"> <text>“FNMA” means the Federal National Mortgage Association.</text> </paragraph> <paragraph num="(20)"> <text>“Forbearance” means the act of refraining from taking legal action against a borrower despite arrearage in a mortgage loan.</text> </paragraph> <paragraph num="(21)"> <text>“Foreclose” means legal action to deprive the borrower of all right, title, and interest in the collateral securing a loan in default.</text> </paragraph> <paragraph num="(22)"> <text>“Fund” or “MHF” means the Maryland Housing Fund.</text> </paragraph> <paragraph num="(23)"> <text>“Insurance” means protection against financial loss that may occur as a result of the collateral proving insufficient to repay a loan obligation that is secured by a mortgage.</text> </paragraph> <paragraph num="(24)"> <text>“Insurance endorsement” means the legally binding acceptance of an obligation to insure in accordance with the terms of the policy.</text> </paragraph> <paragraph num="(25)"> <text>“Lender” or “mortgagee” means the original lender of a mortgage loan and its successors and assigns.</text> </paragraph> <paragraph num="(26)"> <text>“Loan-to-value ratio” or “LTV” means the ratio of the mortgage loan amount to the appraised value of the property or the sales price of the property, whichever is less. The dollar amount of the mortgage loan is divided by the dollar amount of the appraised value of the property, or by the dollar amount of the sales price of the property, whichever is less. The resultant figure is expressed as a percent.</text> </paragraph> <paragraph num="(27)"> <text>“Manufactured home” means a structure designed to be used as a dwelling, which:</text> <paragraph num="(a)"> <text>Is a multisectional structure fabricated on or after June 15, 1976, in an off-site manufacturing facility for installation or assembly at the building site;</text> </paragraph> <paragraph num="(b)"> <text>Is not less than 24 feet in width and 40 feet in length;</text> </paragraph> <paragraph num="(c)"> <text>Is installed permanently on an engineered foundation in conformance with the code promulgated by the BOCA National Building Code, which is incorporated by reference under COMAR 05.02.05, or the standards set by the American National Standards Institute, Inc., which are incorporated by reference under COMAR 05.02.02, and is not independently capable of movement;</text> </paragraph> <paragraph num="(d)"> <text>Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;</text> </paragraph> <paragraph num="(e)"> <text>Is certified by:</text> <paragraph num="(i)"> <text>The United States Department of Housing and Urban Development as a manufactured home in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, or</text> </paragraph> <paragraph num="(ii)"> <text>The Department of Housing and Community Development as an industrialized building in accordance with Public Safety Article, §12-308, Annotated Code of Maryland;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Complies with all requirements set forth in COMAR 05.02.04 and Maryland Housing Fund minimum property and appraisal standards and requirements;</text> </paragraph> <paragraph num="(g)"> <text>Is installed on real property the borrower owns in fee simple or under a freely transferable ground rent lease, and the legal title to the improvements runs with the real property;</text> </paragraph> <paragraph num="(h)"> <text>Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks; and</text> </paragraph> <paragraph num="(i)"> <text>Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.</text> </paragraph> </paragraph> <paragraph num="(28)"> <text>“Mortgage loan” means a loan, repayment of which is secured by a mortgage or deed of trust.</text> </paragraph> <paragraph num="(29)"> <text>“Note” means a promissory note evidencing an obligation to repay a loan, repayment of which is secured by a mortgage or deed of trust, and setting forth the amount and terms for repayment of the loan.</text> </paragraph> <paragraph num="(30)"> <text>“Pool insurance” means insurance coverage subject to a policy of pool insurance which insures a lender against loss on a pool of mortgage loans, when losses exceed the limit of primary mortgage insurance coverage on loans within the pool.</text> </paragraph> <paragraph num="(31)"> <text>“Premium” means that amount paid for primary mortgage insurance coverage or for pool insurance coverage.</text> </paragraph> <paragraph num="(32)"> <text>“Prepaid expenses” means costs due at the time of closing which are required by the lender to be paid in connection with closing a mortgage loan, such as property taxes, ground rent, hazard insurance, condominium or homeowners association fees if applicable, and mortgage insurance premium.</text> </paragraph> <paragraph num="(33)"> <text>“Primary insurance” means mortgage insurance coverage which insures a lender against loss up to a percentage of the original mortgage loan amount, resulting from a borrower's default.</text> </paragraph> <paragraph num="(34)"> <text>“Project” means a group of eligible single family properties constructed or rehabilitated by a developer, which may be a:</text> <paragraph num="(a)"> <text>Subdivision or a portion of a subdivision; or</text> </paragraph> <paragraph num="(b)"> <text>Scattered-site project.</text> </paragraph> </paragraph> <paragraph num="(35)"> <text>“Public agency” means any Maryland county or municipal corporation, or any board, commission, agency, department, authority, or instrumentality of the State or of any Maryland county or municipal corporation.</text> </paragraph> <paragraph num="(36)"> <text>“Public mortgagee” means any qualified public agency that makes or purchases single family mortgages.</text> </paragraph> <paragraph num="(37)"> <text>“Qualified appraiser” means an appraiser who is licensed under applicable licensing requirements of the State and federal governments and submits work of a quality acceptable to the Maryland Housing Fund.</text> </paragraph> <paragraph num="(38)"> <text>“Real property” means land and the improvements on it, including the rights and benefits of ownership.</text> </paragraph> <paragraph num="(39)"> <text>“Reinsurance” means provision of insurance under an agreement between two or more insurers whereby a portion of risk is covered by the secondary insurer and having such other terms and conditions as the parties agree to.</text> </paragraph> <paragraph num="(40)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(41)"> <text>“Settlement costs” mean all closing costs and prepaid expenses.</text> </paragraph> <paragraph num="(42)"> <text>“Single family reserve” or “reserve” means the Single Family Regular Program Reserve as described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(43)"> <text>“Single family property” means owner-occupied one-to-four unit residential property.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Reserves."> <paragraph num="A."> <text>Types of Reserves.</text> <paragraph num="(1)"> <text>All insurance issued by the Fund is backed by an insurance reserve.</text> </paragraph> <paragraph num="(2)"> <text>There currently exist the following seven separate reserves:</text> <paragraph num="(a)"> <text>One for multifamily insurance;</text> </paragraph> <paragraph num="(b)"> <text>Three for single family insurance;</text> </paragraph> <paragraph num="(c)"> <text>One for general reserve insurance;</text> </paragraph> <paragraph num="(d)"> <text>One for business reserve insurance; and</text> </paragraph> <paragraph num="(e)"> <text>An unallocated reserve for moneys not yet transferred to a specific reserve.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The three separate reserve funds that have been established to back types of single family insurance are:</text> <paragraph num="(a)"> <text>Single family regular program insurance;</text> </paragraph> <paragraph num="(b)"> <text>Revitalization program insurance formerly known as pilot program insurance; and</text> </paragraph> <paragraph num="(c)"> <text>Single family home and energy loan insurance.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Claims on Reserves.</text> <paragraph num="(1)"> <text>Except for the unallocated reserve, each specified category of reserve is maintained as a reserve to pay claims, when necessary or desirable to do so, arising from its respective category of insurance, and is not subject to claims arising from other categories of insurance except as provided in §B(2) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>All reserves are subject to payment of claims arising from single family regular and revitalization program insurance issued before August 20, 1975.</text> </paragraph> <paragraph num="(3)"> <text>The unrestricted unallocated reserve may be used, as provided in §C of this regulation, for the payment of claims arising under any category of insurance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Earnings on the Reserves. All investment earnings on each of the seven reserves which are retained by the Fund are credited to the unallocated reserve. The moneys in the unallocated reserve may be:</text> <paragraph num="(1)"> <text>Allocated and transferred by the Secretary into any or each of the identified reserves;</text> </paragraph> <paragraph num="(2)"> <text>Restricted by the Secretary as a reserve for the payment of a claim or potential claim under any category of insurance;</text> </paragraph> <paragraph num="(3)"> <text>Used by the Fund to make payment of a claim, in whole or in part, under any category of insurance; or</text> </paragraph> <paragraph num="(4)"> <text>Retained in the unallocated reserve pending allocation, transfer, restriction, or use.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Allocations to Reserves. The Secretary may issue determinations from time to time to make the discretionary allocations, transfers, or restrictions to or within the reserve funds.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Property."> <text>Properties that are financed by mortgage loans insured by the Fund shall meet property eligibility requirements at the time of loan closing as follows:</text> <paragraph num="A."> <text>Be single family properties with not more than four units;</text> </paragraph> <paragraph num="B."> <text>Be located in the State;</text> </paragraph> <paragraph num="C."> <text>Have clear and merchantable title acceptable to the Fund;</text> </paragraph> <paragraph num="D."> <text>Conform to all applicable federal, State, and local building, zoning, environmental, health, and housing codes;</text> </paragraph> <paragraph num="E."> <text>Be insured with hazard insurance issued by a company that is approved by the State Insurance Commissioner and, when applicable, flood insurance;</text> </paragraph> <paragraph num="F."> <text>Have an appraisal and appraised value that are satisfactory to the Fund;</text> </paragraph> <paragraph num="G."> <text>Meet the minimum property standards of the Fund; and</text> </paragraph> <paragraph num="H."> <text>If the property is a condominium, meet the following requirements:</text> <paragraph num="(1)"> <text>Have either a:</text> <paragraph num="(a)"> <text>Certification that it is in compliance with FNMA or FHLMC standards, or</text> </paragraph> <paragraph num="(b)"> <text>Sales and management plan satisfactory to the Fund; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the condominium is a conversion from a rental housing development:</text> <paragraph num="(a)"> <text>There shall be in place a relocation plan for tenants acceptable to the Fund, unless the buyer is a current tenant,</text> </paragraph> <paragraph num="(b)"> <text>The buildings shall have been vacant at least 12 months before start of the conversion, or</text> </paragraph> <paragraph num="(c)"> <text>The Secretary shall have determined that the conversion serves an exceptional public purpose.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Borrowers."> <text>A person can be an eligible borrower subject to the following general requirements:</text> <paragraph num="A."> <text>The person shall be legally able to enter into contractual obligations;</text> </paragraph> <paragraph num="B."> <text>The borrower may not own any other real property at the time the insured mortgage loan closes, except a:</text> <paragraph num="(1)"> <text>Cemetery plot,</text> </paragraph> <paragraph num="(2)"> <text>Lot on which the residential housing unit to be financed with proceeds of the mortgage loan is to be built;</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the applicable loan program permits prior ownership of a borrower's principal residence, the prior or existing residence of the borrower shall be subject to a contract of sale at the time of application for mortgage insurance from the Fund, and shall be conveyed by the time the Fund-insured mortgage loan is closed;</text> </paragraph> <paragraph num="D."> <text>The borrower shall establish to the satisfaction of the Fund the capacity to meet the financial obligations of the loan;</text> </paragraph> <paragraph num="E."> <text>The borrower shall have maintained a credit standing and history of financial management which is acceptable to the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Mortgage Loans."> <paragraph num="A."> <text>Mortgage loans shall meet the general eligibility requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>Security.</text> <paragraph num="(1)"> <text>Mortgage loans shall be secured by a first lien against the mortgaged property.</text> </paragraph> <paragraph num="(2)"> <text>Mortgage loans insured by the Fund shall be secured by real property that meets the requirements of the Fund.</text> </paragraph> <paragraph num="(3)"> <text>Escrow accounts for payment of taxes, insurance, condominium fees, or other customary expenses related to the first mortgage loan, as applicable, shall be satisfactory to the Fund.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Types of Ownership.</text> <paragraph num="(1)"> <text>The borrower's interest may be either in fee simple or subject to a freely transferable ground rent leasehold with terms acceptable to the Fund.</text> </paragraph> <paragraph num="(2)"> <text>A leasehold mortgage shall have a remaining lease term of not less than the mortgage term plus 10 years. The leasehold estate shall be redeemable either by law or by negotiated agreements.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Mortgage Terms.</text> <paragraph num="(1)"> <text>Mortgages may not exceed a term of 40 years unless the Secretary, by written determination for a particular loan or category of loans, agrees to a term exceeding 40 years.</text> </paragraph> <paragraph num="(2)"> <text>Long-term mortgages shall contain amortization provisions approved by the Fund, including the complete amortization of the mortgage in monthly installments over a specific time period.</text> </paragraph> <paragraph num="(3)"> <text>Mortgages shall bear interest at the rate agreed upon by the lender and the borrower, and committed upon by the Fund.</text> </paragraph> <paragraph num="(4)"> <text>Mortgage terms or principal balance due on an insured mortgage may not be modified without prior written approval of the Fund.</text> </paragraph> <paragraph num="(5)"> <text>Mortgages shall conform to the required documentation and eligibility criteria required by the Fund under the mortgage insurance program for which insurance is being requested.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Eligible Lenders."> <paragraph num="A."> <text>A lender shall meet the eligibility requirements of §B or C of this regulation in order to be approved for mortgage insurance issued by the Fund under the Fund master policy for primary mortgage insurance.</text> </paragraph> <paragraph num="B."> <text>The Fund will approve mortgage lenders that execute a certification that they are:</text> <paragraph num="(1)"> <text>A financial institution which has accounts insured by any agency of the United States;</text> </paragraph> <paragraph num="(2)"> <text>An institutional lender approved under a federal mortgage loan insurance agency; or</text> </paragraph> <paragraph num="(3)"> <text>Any FNMA or FHLMC approved institutional conventional seller.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Any for-profit entity, nonprofit entity, or public agency which, in the opinion of the Fund, has as a primary or substantial function of its operation the making of residential mortgages, can be approved if it:</text> <paragraph num="(1)"> <text>Presents evidence satisfactory to the Fund of:</text> <paragraph num="(a)"> <text>Responsibility,</text> </paragraph> <paragraph num="(b)"> <text>Permanency,</text> </paragraph> <paragraph num="(c)"> <text>Financial adequacy, and</text> </paragraph> <paragraph num="(d)"> <text>Requisite administrative, technical, and mortgage servicing capabilities; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Submits an application and all supporting documentation that the Fund may require.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A servicer of a Fund-insured loan, whether the lender or its agent, shall comply with the loan servicing requirements contained in the Fund's servicing manual. Failure to comply with these requirements may result in denial or withdrawal of the Fund's approval to service the Fund-insured loans.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Primary Mortgage Insurance Conditions."> <paragraph num="A."> <text>Application.</text> <paragraph num="(1)"> <text>A lender shall submit an application in the form prescribed by the Maryland Housing Fund which shall contain a complete credit package and any other documentation required by the Fund. If documentation is incomplete, the credit evaluation may be delayed and may result in the application's being returned.</text> </paragraph> <paragraph num="(2)"> <text>If an application is denied, the lender may request reconsideration by the Director of the Maryland Housing Fund.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Underwriting and Appraisal. An application for mortgage insurance received from an approved lender is subject to underwriting and appraisal review in accordance with the requirements of the Fund.</text> </paragraph> <paragraph num="C."> <text>Limitations.</text> <paragraph num="(1)"> <text>Scope of Insurance Coverage.</text> <paragraph num="(a)"> <text>Mortgage insurance coverage is limited to economic loss due to a monetary default and does not include loss due to casualty or title risk.</text> </paragraph> <paragraph num="(b)"> <text>Expenses incurred for property repair resulting from casualty loss, including losses due to negligence, flood, fire, termites, vandalism, and defective construction are not eligible for coverage.</text> </paragraph> <paragraph num="(c)"> <text>Expenses incurred by the lender in the preservation and normal maintenance of an insured property are covered in accordance with the terms and conditions of the master insurance policy governing the insured mortgage.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Loan Assumptions. A transfer of title to a property that is the subject of an insured mortgage requires the prior approval of the Fund, except when the:</text> <paragraph num="(a)"> <text>Transfer cannot by law be prohibited; or</text> </paragraph> <paragraph num="(b)"> <text>Lender is without actual knowledge of the transfer.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Insurance Certificates.</text> <paragraph num="(a)"> <text>A primary mortgage insurance certificate issued by the Fund is conclusive evidence of the eligibility of the mortgage for insurance as of the effective date of the insurance coverage, if:</text> <paragraph num="(i)"> <text>Insurance premiums are paid as due; and</text> </paragraph> <paragraph num="(ii)"> <text>All conditions of the insurance are satisfied.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The Fund may refuse payment of a claim on the basis of fraud or misrepresentation or material error or omission with respect to any claim, notwithstanding the issuance of an insurance certificate by the Fund.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Deficiency Judgement. The right of the Fund to pursue the borrower for deficiency or loss shall exist in every case to the extent allowed by law, and may be enforced at the discretion of the Fund.</text> </paragraph> <paragraph num="(5)"> <text>Transfer of Property. The Fund shall be notified in advance of any transfer of the property, subject to the mortgage, indicating the identity of the purchaser. When the Fund is so notified, further approval of the Fund is not required if the original mortgagor remains liable. If the original mortgagor is to be released from liability, the assumption shall be underwritten by the mortgagee on the basis of the credit of the assumptor, with the underwriting being satisfactory to the Fund, and written approval of the Fund is required. The Fund's coverage is not impaired by reason of a transfer in violation of covenants of the mortgage, unless the mortgagee had actual advance knowledge of the transfer.</text> </paragraph> <paragraph num="(6)"> <text>Assignments. The sale by an insured lender of a Fund-insured mortgage does not impair coverage if the terms of the mortgage loan are not changed, and if the Fund has been advised of:</text> <paragraph num="(a)"> <text>The date of the sale;</text> </paragraph> <paragraph num="(b)"> <text>The name and address of the assignee;</text> </paragraph> <paragraph num="(c)"> <text>The name of the borrower;</text> </paragraph> <paragraph num="(d)"> <text>The certificate or policy number of the loan to be sold; and</text> </paragraph> <paragraph num="(e)"> <text>Whether servicing is to be transferred or retained.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Loan Modification. A loan modification or refinancing of an existing insured mortgage requires Fund review and approval for continued mortgage insurance coverage.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Default Procedures."> <paragraph num="A."> <text>Notice of Delinquency. Notice of delinquency shall be submitted by a lender or its servicing agent to the Fund in writing within:</text> <paragraph num="(1)"> <text>45 days if the first payment due under the loan is not paid when due; or</text> </paragraph> <paragraph num="(2)"> <text>10 days after the account is in default for 60 days.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Actions by Lender.</text> <paragraph num="(1)"> <text>General.</text> <paragraph num="(a)"> <text>The Fund may require a lender to take any of the actions described in Regulation .10 of this chapter in connection with a defaulted or delinquent mortgage.</text> </paragraph> <paragraph num="(b)"> <text>The right of the Fund to pursue a borrower for deficiency or loss exists in every case to the extent allowed by law, and may be enforced at the discretion of the Fund.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Cure. A lender shall make all reasonable efforts to cure a default before recommending foreclosure action or acceptance of a deed in lieu of foreclosure or assignment of the mortgage or mortgage modification.</text> </paragraph> <paragraph num="(3)"> <text>Forbearance.</text> <paragraph num="(a)"> <text>A lender may not engage in any action or agreement of forbearance without obtaining prior written approval from the Fund, except for actions or agreements that:</text> <paragraph num="(i)"> <text>Deal with delinquencies of 3 months or less; or</text> </paragraph> <paragraph num="(ii)"> <text>Provide for the loan to be brought current within 6 months.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Any action of forbearance by a lender which impairs the mortgage that is not approved as described in this section or in writing by the Fund may terminate insurance coverage.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Mortgage Modification. A lender shall advise the Fund in writing as to the advisability of entering into a mortgage modification agreement, a recasting of the mortgage, or methods of forbearance which the lender believes to be appropriate before pursuing further foreclosure measures.</text> </paragraph> <paragraph num="(5)"> <text>Deed in Lieu of Foreclosure.</text> <paragraph num="(a)"> <text>If all of a lender's efforts to bring the delinquent loan current fail, the lender shall recommend attempting to obtain a voluntary conveyance by means of a deed in lieu of foreclosure.</text> </paragraph> <paragraph num="(b)"> <text>If the Fund authorizes conveyance by a deed in lieu of foreclosure, it shall be on condition of conveyance by clear and marketable title.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Foreclosure.</text> <paragraph num="(a)"> <text>If all efforts to cure the delinquency or to establish forbearance procedures or obtain a deed in lieu of foreclosure fail, the lender shall recommend foreclosure.</text> </paragraph> <paragraph num="(b)"> <text>Foreclosure proceedings may not be initiated by the lender without written approval of the Fund, except as may be provided in the Fund's servicing manual.</text> </paragraph> <paragraph num="(c)"> <text>A lender shall notify the Fund in writing within 5 working days after:</text> <paragraph num="(i)"> <text>A foreclosure sale; or</text> </paragraph> <paragraph num="(ii)"> <text>Acquisition of title to the property by deed in lieu of foreclosure.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>Mortgage Assignment. Notwithstanding §B(1)—(6) of this regulation, the Fund may require a lender at any time to assign a delinquent mortgage to the Fund and file a claim in the full amount of the insurance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Termination of Insurance."> <text>Maryland Housing Fund insurance coverage may be terminated by the Fund at its discretion under the following conditions:</text> <paragraph num="A."> <text>The lender requests in writing cancellation of the insurance;</text> </paragraph> <paragraph num="B."> <text>A claim is satisfied by the Fund;</text> </paragraph> <paragraph num="C."> <text>The mortgage loan is paid in full;</text> </paragraph> <paragraph num="D."> <text>A renewal premium is not paid after receipt of written notice from the Maryland Housing Fund;</text> </paragraph> <paragraph num="E."> <text>Failure of the lender to comply with these regulations, the servicing manual provided by the Fund, or the Fund's primary or pool insurance policy, as applicable;</text> </paragraph> <paragraph num="F."> <text>Modification of mortgage terms without the Fund's prior approval; or</text> </paragraph> <paragraph num="G."> <text>Other action with respect to a defaulted mortgage loan without the Fund's prior approval.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Forward Insurance Commitments."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>The Fund may provide forward insurance commitments for permanent loans financing single family properties located in projects based upon a master appraisal for the project.</text> </paragraph> <paragraph num="(2)"> <text>The Fund may limit the number of single family units it will insure in any one project or subdivision.</text> </paragraph> <paragraph num="(3)"> <text>The Fund may require that approval of a project for a forward insurance commitment be obtained from the Fund if the Fund is expected to insure more than five mortgage loans in the project.</text> </paragraph> <paragraph num="(4)"> <text>Instead of providing a forward insurance commitment, the Fund may provide mortgage insurance certificates on a case-by-case or spot loan basis in a project based upon individual property appraisals at the time of application for permanent financing, if:</text> <paragraph num="(a)"> <text>The project involves diverse model types, pricing, staging, or phasing;</text> </paragraph> <paragraph num="(b)"> <text>The project is a scattered-site project; or</text> </paragraph> <paragraph num="(c)"> <text>Other circumstances are considered by the Fund to be appropriate for case-by-case consideration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>New Construction Projects.</text> <paragraph num="(1)"> <text>Projects of newly constructed residences which are to be constructed or are less than 1 year old may be considered for a forward commitment of mortgage insurance.</text> </paragraph> <paragraph num="(2)"> <text>Types of new construction projects eligible for forward reservations are:</text> <paragraph num="(a)"> <text>Stick-built housing;</text> </paragraph> <paragraph num="(b)"> <text>Manufactured housing; and</text> </paragraph> <paragraph num="(c)"> <text>Modular or panelized housing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Rehabilitation Projects. Projects involving rehabilitation are eligible for approval of insurance for permanent financing if:</text> <paragraph num="(1)"> <text>The proposed rehabilitation will correct all code violations and bring the property to a standard acceptable to the Maryland Housing Fund and the Department;</text> </paragraph> <paragraph num="(2)"> <text>The structures to be rehabilitated are unoccupied at the time of commitment, except in cases of:</text> <paragraph num="(a)"> <text>Occupancy by tenants who are to become homeowners, or</text> </paragraph> <paragraph num="(b)"> <text>Adoption of a relocation plan acceptable to the Maryland Housing Fund and the Department;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Except in cases of tenant conversion to homeownership, the buildings to be rehabilitated are owned or to be owned by the developer.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Project Application Process.</text> <paragraph num="(1)"> <text>Approval of a project for a forward insurance commitment shall be initiated by submission of an application on forms prescribed by the Maryland Housing Fund by a Fund-approved lender in conjunction with the developer of the project.</text> </paragraph> <paragraph num="(2)"> <text>Applications shall contain all information, documents, and items that the Maryland Housing Fund requires, including:</text> <paragraph num="(a)"> <text>Subdivision and site plans;</text> </paragraph> <paragraph num="(b)"> <text>Appraisals satisfactory to the Maryland Housing Fund;</text> </paragraph> <paragraph num="(c)"> <text>Condominium or homeowners association documents, as applicable;</text> </paragraph> <paragraph num="(d)"> <text>Plans and specifications for each model type to be built by the developer;</text> </paragraph> <paragraph num="(e)"> <text>Local government resolution of approval;</text> </paragraph> <paragraph num="(f)"> <text>Warranty certification;</text> </paragraph> <paragraph num="(g)"> <text>Opinion of counsel for the developer;</text> </paragraph> <paragraph num="(h)"> <text>Current and valid FNMA 1027c or FNMA 1028;</text> </paragraph> <paragraph num="(i)"> <text>Minimum property standard certificate; and</text> </paragraph> <paragraph num="(j)"> <text>Other information and documentation as may be required by the Maryland Housing Fund.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The lender or developer shall submit and satisfy all requirements of the application process. Factors which the Maryland Housing Fund may consider in approving a project include, but are not limited to:</text> <paragraph num="(a)"> <text>Cost, unit size, type of building, quality of construction, energy efficiency, and location of the project;</text> </paragraph> <paragraph num="(b)"> <text>Geographic distribution of all projects for which the Fund mortgage insurance has been made available;</text> </paragraph> <paragraph num="(c)"> <text>Regional demand and initial marketability of the product within its locale along with resale and distressed sale values;</text> </paragraph> <paragraph num="(d)"> <text>The number and amount of mortgages requested to be insured;</text> </paragraph> <paragraph num="(e)"> <text>The incomes of the households to be served; and</text> </paragraph> <paragraph num="(f)"> <text>The Maryland Housing Fund's prior experience with the developer and lender.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Arrangements with Other Insurers."> <paragraph num="A."> <text>The Fund is authorized to enter into reinsurance and coinsurance arrangements, as approved by the Secretary.</text> </paragraph> <paragraph num="B."> <text>The amount of any reinsurance or co-insurance may decrease the amount of the Fund reserves pledged to the Fund pool insurance policy only if the:</text> <paragraph num="(1)"> <text>Fund does not retain contingent liability under the reinsurance or co-insurance arrangement; or</text> </paragraph> <paragraph num="(2)"> <text>Reinsurer or coinsurer is a:</text> <paragraph num="(a)"> <text>Federal agency, or</text> </paragraph> <paragraph num="(b)"> <text>Private insurer having surplus as regards policy holders equal to at least $15,000,000, which is approved by FNMA or FHLMC.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Premiums and Types of Coverage."> <paragraph num="A."> <text>Premiums for Primary Mortgage Insurance and Coverage for Public and Private Lenders.</text> <paragraph num="(1)"> <text>The Maryland Housing Fund may insure permanent single family mortgages originated by public and private lenders that have been approved by the Maryland Housing Fund for mortgage insurance. The insurance is governed by Regulations .05—.09 of this chapter and by the provisions of the master policy for mortgage insurance issued to the lender.</text> </paragraph> <paragraph num="(2)"> <text>In general, primary mortgage insurance covers the top 35 percent of the original loan amount or such other amount as may be specified in a policy or certificate of insurance.</text> </paragraph> <paragraph num="(3)"> <text>Premiums for mortgage insurance shall be determined by the Maryland Housing Fund from time to time for various programs.</text> </paragraph> <paragraph num="(4)"> <text>Premiums may be set at different levels for different categories of loans and loan programs depending on the risk factors, which may include:</text> <paragraph num="(a)"> <text>Depth of insurance coverage;</text> </paragraph> <paragraph num="(b)"> <text>Length of mortgage term;</text> </paragraph> <paragraph num="(c)"> <text>Borrower's financial capabilities;</text> </paragraph> <paragraph num="(d)"> <text>Credit rating of borrowers; and</text> </paragraph> <paragraph num="(e)"> <text>Condition of property securing loan.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The Fund shall maintain a publicly available premium rate sheet with a stated effective date for the premiums.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Pool Insurance Coverage for Certain Public Agency Lenders.</text> <paragraph num="(1)"> <text>The Fund may offer insurance on mortgage loans eligible under Regulations .05—.09 of this chapter that are within a pool of mortgages as described in the applicable pool insurance policy.</text> </paragraph> <paragraph num="(2)"> <text>The pool insurance may cover the entire remaining loss after payment of primary mortgage insurance claims by the Fund or another private or governmental insurer or guarantor, as required by the pool insurance policy.</text> </paragraph> <paragraph num="(3)"> <text>Total coverage under a policy of pool insurance is subject to aggregate loss limits for the pool of mortgage loans, which may be described in relation to a single source of financing or collective sources, such as parity bonds issued under a common bond indenture.</text> </paragraph> <paragraph num="(4)"> <text>A pool insurance policy contains detailed claims computation, claims settlement procedures, and the aggregate loss limit for all loans covered by the pool policy. Coverage of individual mortgage loans in the pool is evidenced by endorsement or listing in a schedule.</text> </paragraph> <paragraph num="(5)"> <text>The annual premium for pool insurance and associated coverage is based on the original principal amount of the loan. It shall be determined from time to time and shall be maintained with a stated effective date for the premiums.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Premium Refunds. A premium, or any portion of a premium, is not refundable except when an insured mortgage is prepaid in full. In those cases, no further premiums are due and a portion of the premium paid for the year shall be refunded in accordance with the Fund's cancellation schedule as described in the policy. Refunds shall be forwarded to the borrower unless the lender has demonstrated to the satisfaction of the Fund that the lender is entitled to the refund. When a claim is pending or satisfied, the premium, whether paid by the borrower, the lender, or the servicing agent, is earned and a premium refund may not be made.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Claims."> <paragraph num="A."> <text>Filing.</text> <paragraph num="(1)"> <text>A claim may not be settled by the Fund until the lender has:</text> <paragraph num="(a)"> <text>Implemented the actions prescribed by the Fund to cure a defaulted mortgage loan; and</text> </paragraph> <paragraph num="(b)"> <text>Submitted to the Fund an application for settlement of a claim.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A lender shall submit its claims on the Fund forms within 30 calendar days from the date of:</text> <paragraph num="(a)"> <text>A written request from the Fund to file a claim in the case of loan assignment under §D(1) of this regulation or fixed percentage settlement under §D(2) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>The transfer of title under §D(3) or (4) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Computation of Claims. The computation of a claim shall be made by:</text> <paragraph num="(1)"> <text>Adding together the following amounts:</text> <paragraph num="(a)"> <text>Unpaid principal balance due under the mortgage;</text> </paragraph> <paragraph num="(b)"> <text>Interest at the mortgage rate, not at a default or penalty rate, through the following date, as applicable:</text> <paragraph num="(i)"> <text>Foreclosure sale,</text> </paragraph> <paragraph num="(ii)"> <text>Assignment to the Fund,</text> </paragraph> <paragraph num="(iii)"> <text>Execution of a deed to the lender in lieu of foreclosure, or</text> </paragraph> <paragraph num="(iv)"> <text>Settlement on a sale by the mortgagor to a third party;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Any expenses of foreclosure or title acquisition, including attorney's fees not exceeding 3 percent of the principal and interest components of the claim, which are actually and reasonably incurred;</text> </paragraph> <paragraph num="(d)"> <text>Expense items such as property taxes, hazard insurance premiums, and ground rent which are paid by the lender or servicing agent, prorated as applicable; and</text> </paragraph> <paragraph num="(e)"> <text>Other necessary expenses incurred by the lender for preservation of the property in accordance with the requirements of the insurance policy; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Subtracting the following:</text> <paragraph num="(a)"> <text>All amounts received by the lender or account of the mortgage after the institution of foreclosure proceedings or the acquisition of the mortgaged property;</text> </paragraph> <paragraph num="(b)"> <text>All amounts received by the lender from any source relating to the mortgaged property on account of rent or other income after deducting reasonable expenses incurred in handling the mortgaged property;</text> </paragraph> <paragraph num="(c)"> <text>All cash retained by the lender, including amounts held or deposited for the account of the borrower or to which the borrower is entitled under the mortgage transaction that have not been applied in reduction of the principal of the mortgage indebtedness or otherwise expended; and</text> </paragraph> <paragraph num="(d)"> <text>If the Fund is only the pool mortgage insurer, any benefit due under a primary mortgage insurance policy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Items Not Covered. Coverage does not include:</text> <paragraph num="(1)"> <text>Loss due to:</text> <paragraph num="(a)"> <text>Casualty, or</text> </paragraph> <paragraph num="(b)"> <text>Title risk;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Mortgage insurance premiums paid by the lender or servicing agent;</text> </paragraph> <paragraph num="(3)"> <text>Late charges;</text> </paragraph> <paragraph num="(4)"> <text>Expenses incurred for property repair resulting from:</text> <paragraph num="(a)"> <text>Accidental causes,</text> </paragraph> <paragraph num="(b)"> <text>Negligence or gross negligence,</text> </paragraph> <paragraph num="(c)"> <text>Flood,</text> </paragraph> <paragraph num="(d)"> <text>Fire,</text> </paragraph> <paragraph num="(e)"> <text>Termites,</text> </paragraph> <paragraph num="(f)"> <text>Vandalism,</text> </paragraph> <paragraph num="(g)"> <text>Defective construction,</text> </paragraph> <paragraph num="(h)"> <text>Undisclosed, preexisting conditions of environmental contamination,</text> </paragraph> <paragraph num="(i)"> <text>Physical damage, or</text> </paragraph> <paragraph num="(j)"> <text>Other causes except those permitted under §B(1)(e) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Settlement of Claims.</text> <paragraph num="(1)"> <text>The Fund shall settle mortgage insurance claims in cash.</text> </paragraph> <paragraph num="(2)"> <text>Settlement shall be by one of the four methods in §D(3)—(6) of this regulation, at the Fund's election.</text> </paragraph> <paragraph num="(3)"> <text>Loan Assignment. The Fund takes an assignment of the mortgage and pays the claim. The claim may include all items described in §B(1) of this regulation except expenses related to foreclosure and acquisition of title.</text> </paragraph> <paragraph num="(4)"> <text>Fixed Percentage Settlement. When the Fund provides only primary mortgage insurance on the loan, the Fund pays the policy's stated percentage of the outstanding loan amount before foreclosure sale, and waives any interest in the property.</text> </paragraph> <paragraph num="(5)"> <text>Lender Acquisition Settlement. When the lender acquires title at foreclosure or by deed in lieu of foreclosure, and transfers title to the Fund, the Fund pays the:</text> <paragraph num="(a)"> <text>Full amount of the claim, if the Fund is both primary and pool insurer; or</text> </paragraph> <paragraph num="(b)"> <text>Amount of claim up to the percentage coverage specified in the primary mortgage insurance policy, if the Fund is only the primary mortgage insurer.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Third Party Acquisition. When the property is sold to a third party under any of the following circumstances:</text> <paragraph num="(a)"> <text>At foreclosure;</text> </paragraph> <paragraph num="(b)"> <text>By the lender after taking title by deed in lieu of foreclosure; or</text> </paragraph> <paragraph num="(c)"> <text>By the borrower after the beginning of foreclosure proceedings, with the approval of the Fund in accordance with the following:</text> <paragraph num="(i)"> <text>If the Fund is both primary and pool insurer, the Fund pays the full amount of the claim as in §D(5)(a) of this regulation less net proceeds of the sale, or</text> </paragraph> <paragraph num="(ii)"> <text>If the Fund provides only the primary mortgage insurance, the Fund pays the lesser of the amount of the claim up to the percentage coverage specified in the primary mortgage insurance policy as in §D(5)(b) of this regulation, before crediting net proceeds of the sale, or the full claim after crediting net proceeds of the sale.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Access and Inspection. Before payment of a claim by the Fund, the insured shall provide access to the insured property for inspection by the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="General Provisions."> <paragraph num="A."> <text>Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or with agreements to which the Fund may be subject if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local program in connection with a loan necessitates a waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary, the:</text> <paragraph num="(a)"> <text>Application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act,</text> </paragraph> <paragraph num="(b)"> <text>Waiver would not be materially adverse to bondholders or others relying on the single family reserve of the Fund, and</text> </paragraph> <paragraph num="(c)"> <text>Office of the Attorney General has approved the form and legal sufficiency of the waiver.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>False Statements. A borrower or lender who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to cancellation of insurance, in addition to the criminal penalties authorized by the Act.</text> </paragraph> <paragraph num="C."> <text>Delegation. The Secretary may delegate to the Director of the Fund or to any other official or employee of the Department or the Fund the authority to execute or approve any insurance documents or the Fund certificates.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 23, 1994 (21:10 Md. R. 841)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A, B amended effective August 1, 2005 (32:15 Md. R. 1319)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02F amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2026); amended permanently effective July 1, 1996 (23:13 Md. R. 940)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended as an emergency provision effective December 8, 1995 (22:26 Md. R. 2026); amended permanently effective July 1, 1996 (23:13 Md. R. 940)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective November 3, 2008 (35:22 Md. R. 1956)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A, C amended effective March 26, 2018 (45:6 Md R. 317)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective August 1, 2005 (32:15 Md. R. 1319)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended and C adopted as an emergency provision effective December 8, 1995 (22:26 Md. R. 2026); amended permanently effective July 1, 1996 (23:13 Md. R. 940)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective August 1, 2005 (32:15 Md. R. 1319)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective August 1, 2005 (32:15 Md. R. 1319)</annotation> </annotations> </chapter> <chapter num="07" heading="Community Housing Support Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter describes the policies, procedures, and authorizations for selling single-family properties owned by the Department to eligible nonprofit organizations on terms defined in the regulations, for the purpose of resale to purchasers who will occupy the properties.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <text>The basic objectives of the Program are to:</text> <paragraph num="A."> <text>Provide for the sale of single-family properties owned by the Department as a result of the Department's acquisition at foreclosure sale or by deed in lieu of foreclosure following a borrower default under the several loan programs or mortgage insurance program operated by the Department;</text> </paragraph> <paragraph num="B."> <text>Encourage the health and vitality of communities where these properties are located by reducing the period of vacancy for these properties and facilitating renovation and homeownership of these properties; and</text> </paragraph> <paragraph num="C."> <text>Encourage the participation of nonprofit organizations that work in these communities by allowing the nonprofit organizations to purchase these properties in order to return them to homeownership status.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, §§3-205, 4-805, and 4-909, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Area of operation” means the geographic area the nonprofit organization states to be the area within which it carries out its activities.</text> </paragraph> <paragraph num="(3)"> <text>“Deed-in-lieu” means a deed given by a borrower to a lender to satisfy a debt and avoid foreclosure.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(5)"> <text>“Division” means the Division of Credit Assurance, a division of the Department.</text> </paragraph> <paragraph num="(6)"> <text>“Eligible property” means a single-family property owned by the Department that appears on a list of properties selected by the Division to be offered to eligible nonprofit organizations participating in the Program.</text> </paragraph> <paragraph num="(7)"> <text>“Internal Revenue Code” means the Federal Internal Revenue Code of 1986 and the regulations promulgated under it.</text> </paragraph> <paragraph num="(8)"> <text>“Nonprofit organization” means a not-for-profit corporation, foundation, or other legal entity that is exempt from federal income tax under §501(c)(3) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(9)"> <text>“Settlement costs” means the following costs:</text> <paragraph num="(a)"> <text>Attorney fees, including title examination fees, not to exceed $500;</text> </paragraph> <paragraph num="(b)"> <text>Document preparation fees;</text> </paragraph> <paragraph num="(c)"> <text>Recordation fees;</text> </paragraph> <paragraph num="(d)"> <text>State and local transfer and recordation taxes; and</text> </paragraph> <paragraph num="(e)"> <text>Other costs approved by the Division in its sole discretion.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Program” means the Community Housing Support Program.</text> </paragraph> <paragraph num="(11)"> <text>“Property taxes” means the taxes assessed and levied against the property annually by the State, county, and municipality.</text> </paragraph> <paragraph num="(12)"> <text>“Single-family property” means a one-unit to four-unit residential property.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Purchase and Loan Transaction."> <paragraph num="A."> <text>Offer to Purchase.</text> <paragraph num="(1)"> <text>An eligible nonprofit organization approved for participation in the Program as described in Regulation .05 of this chapter may make an offer to purchase an eligible property, as defined in Regulation .03B of this chapter, that is located in the operational area of the nonprofit organization.</text> </paragraph> <paragraph num="(2)"> <text>The offering price shall be the sales price set by the Division for that property.</text> </paragraph> <paragraph num="(3)"> <text>The purchase contract shall be in the form required by the Division.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Financing. The Department shall provide financing to the nonprofit purchaser on the following terms:</text> <paragraph num="(1)"> <text>The term of the loan shall be for 1 year from the date of purchase by the nonprofit organization, at which time the principal amount of the loan shall be repaid in full whether or not the nonprofit organization has sold the property as provided in §B(4) of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>The interest rate shall be zero percent per year;</text> </paragraph> <paragraph num="(3)"> <text>The loan shall be secured by a deed of trust constituting a first lien on the property in favor of the Department;</text> </paragraph> <paragraph num="(4)"> <text>On or before the end of the 1-year loan term, the property shall be sold to a person or persons who intend to occupy the property as their principal residence, except as provided in §B(6) of this regulation;</text> </paragraph> <paragraph num="(5)"> <text>Before the Department releases the deed of trust, the nonprofit organization shall provide a copy of the contract with its purchaser and a certification by the purchaser of the intention to occupy the property as the purchaser's principal residence;</text> </paragraph> <paragraph num="(6)"> <text>If the nonprofit organization demonstrates to the satisfaction of the Department that it is not feasible to sell the property to a purchaser as provided in §B(4) of this regulation, the property may be rented or retained by the nonprofit organization;</text> </paragraph> <paragraph num="(7)"> <text>Renovation, marketing, sales, and other matters are solely the responsibility of the nonprofit organization that purchases the property; and</text> </paragraph> <paragraph num="(8)"> <text>The nonprofit organization shall agree that if the nonprofit organization fails to repay the loan when due, the nonprofit organization shall offer the Department a deed-in-lieu in the form approved by the Department, and the Department shall have the option of whether to accept the deed-in-lieu.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Settlement and Payment Terms.</text> <paragraph num="(1)"> <text>The Department shall execute a deed in the form approved by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The nonprofit organization shall execute loan documents, including a note and deed of trust, in the form approved by the Department.</text> </paragraph> <paragraph num="(3)"> <text>The Department will pay settlement costs as defined in Regulation .03B(9) of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>The Department shall waive reimbursement by the nonprofit organization at settlement for the organization's pro rata share of property taxes paid in advance by the Department.</text> </paragraph> <paragraph num="(5)"> <text>Settlement shall occur within 45 days of the date of the purchase contract, at a date and time mutually acceptable to the Division and the purchaser.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Limit on Number of Homes. An eligible nonprofit organization may not own, at any one time, more than two properties purchased through the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Nonprofit Organizations."> <paragraph num="A."> <text>A nonprofit organization may apply for approval to participate in the Program by submitting the following documents for review by the Division:</text> <paragraph num="(1)"> <text>An application in the form required by the Division;</text> </paragraph> <paragraph num="(2)"> <text>A certification in the form required by the Department that the nonprofit organization shall abide by all requirements of:</text> <paragraph num="(a)"> <text>Titles VI and VII of the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 as amended, and, for nonresidential facilities, the Americans with Disabilities Act of 1990,</text> </paragraph> <paragraph num="(b)"> <text>The provisions of the Governor's Code of Fair Practices, as amended,</text> </paragraph> <paragraph num="(c)"> <text>The Department's Minority Business Enterprise Program, and</text> </paragraph> <paragraph num="(d)"> <text>Governor's Executive Order 01.01.1989.18 relating to drug-free and alcohol-free workplaces, and any Department regulations adopted to carry out the requirements of that order;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A contract affidavit in the form required by the Department;</text> </paragraph> <paragraph num="(4)"> <text>A copy of the following organizational documents for the nonprofit organization:</text> <paragraph num="(a)"> <text>A letter from the Internal Revenue Service granting tax-exempt status under §501(c)(3) of the Internal Revenue Code,</text> </paragraph> <paragraph num="(b)"> <text>Articles of incorporation or other applicable documents,</text> </paragraph> <paragraph num="(c)"> <text>Bylaws,</text> </paragraph> <paragraph num="(d)"> <text>Certificate of good standing, and</text> </paragraph> <paragraph num="(e)"> <text>A resolution authorizing application for participation in the Program and purchase and financing for a particular property where applicable, and the designation of the person or persons authorized to sign on behalf of the organization; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Any other information required by the Program.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Additional Requirements.</text> <paragraph num="(1)"> <text>The nonprofit organization shall be in good standing and may not be under suspension or debarment from any of the Department's programs in any action under COMAR 05.01.05.</text> </paragraph> <paragraph num="(2)"> <text>The nonprofit organization may not be in default under any loan from the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>At the time of settlement, the nonprofit organization shall have all necessary legal and corporate authorizations to purchase the property and incur the obligations of the Department loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Program Administration."> <paragraph num="A."> <text>An action or decision required or permitted to be taken or made by the Department under Housing and Community Development Article, §§3-205, 4-805, and 4-909, Annotated Code of Maryland, or this chapter, except for waiver under Regulation .07 of this chapter, may be taken by the Director of the Division or the Director's designee.</text> </paragraph> <paragraph num="B."> <text>The Department may establish from time to time operational handbooks or manuals governing matters relating to the Program, including descriptive statements of program procedures that do not affect the rights of, or the procedures available to, the public.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of Housing and Community Development Article, §§3-205, 4-805, and 4-909, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Power of the Department."> <paragraph num="A."> <text>The Department may:</text> <paragraph num="(1)"> <text>Assign a mortgage for value;</text> </paragraph> <paragraph num="(2)"> <text>Release a mortgage;</text> </paragraph> <paragraph num="(3)"> <text>Foreclose a mortgage;</text> </paragraph> <paragraph num="(4)"> <text>Acquire property securing a loan in default;</text> </paragraph> <paragraph num="(5)"> <text>Encumber, sell, or otherwise dispose of property acquired in connection with a loan in default; or</text> </paragraph> <paragraph num="(6)"> <text>Obtain and seek enforcement of a deficiency judgment.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In the event of default, as provided in the loan documents, or in the event of a prospective default, the Department, in its sole discretion, may:</text> <paragraph num="(1)"> <text>Modify the rate of interest;</text> </paragraph> <paragraph num="(2)"> <text>Modify the time or amount of payment;</text> </paragraph> <paragraph num="(3)"> <text>Modify the term of the loan;</text> </paragraph> <paragraph num="(4)"> <text>Modify the loan in any other way in order to promote repayment of the loan and achieve the purpose of the Program; or</text> </paragraph> <paragraph num="(5)"> <text>Accelerate the loan and foreclose on the deed of trust, or accept a deed in lieu of foreclosure.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article,§§3-205, 4-805, and 4-909, Annotated Code of Maryland; Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 30, 2000 (27:21 Md. R. 1974)</annotation> </annotations> </chapter> <chapter num="08" heading="General Reserve Insurance"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations set forth the policies, procedures, and authorization for:</text> <paragraph num="A."> <text>Issuance of mortgage insurance and credit enhancement under the general reserve established in COMAR 05.06.01.04A(5); and</text> </paragraph> <paragraph num="B."> <text>Agreements with mortgage lenders and mortgage insurers to share financial risk and insurance fees in connection with loans insured by the Maryland Housing Fund under its general reserve.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“FHLMC” means the Federal Home Loan Mortgage Corporation.</text> </paragraph> <paragraph num="(4)"> <text>“FNMA” means the Federal National Mortgage Association.</text> </paragraph> <paragraph num="(5)"> <text>“Fund” means the Maryland Housing Fund, and, when appropriate, its authorized officers or personnel.</text> </paragraph> <paragraph num="(6)"> <text>Mortgage.</text> <paragraph num="(a)"> <text>“Mortgage” means a written instrument evidencing or creating a lien against real property to provide collateral to secure the repayment of a debt.</text> </paragraph> <paragraph num="(b)"> <text>“Mortgage” includes a deed of trust.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Mortgagee” means the original lender under a mortgage and its successors and assigns.</text> </paragraph> <paragraph num="(8)"> <text>“Mortgagor” means the original borrower under a mortgage and the borrower's successors and assigns by operation of law or as approved by the Fund.</text> </paragraph> <paragraph num="(9)"> <text>Nonprofit Entity.</text> <paragraph num="(a)"> <text>“Nonprofit entity” means any organization exempt from taxation under the Internal Revenue Code of the United States, 26 U.S.C. §501(c).</text> </paragraph> <paragraph num="(b)"> <text>“Nonprofit entity” includes local development agencies and local development corporations, as defined in Housing and Community Development Article, §4-201, Annotated Code of Maryland, and organizations exempt by reason of a charitable or public purpose.</text> </paragraph> <paragraph num="(c)"> <text>“Nonprofit entity” does not include limited dividend corporations or partnerships.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Secretary” means the Secretary of Housing and Community Development or the Secretary's designee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Property."> <text>A property financed by mortgage loans insured by the Fund shall:</text> <paragraph num="A."> <text>Be a residential property or type of property permitted under the Act;</text> </paragraph> <paragraph num="B."> <text>Have clear and merchantable title acceptable to the Fund;</text> </paragraph> <paragraph num="C."> <text>Conform to all applicable federal, State, and local building, zoning, environmental, health, and housing codes;</text> </paragraph> <paragraph num="D."> <text>Be insured with hazard insurance issued by a company that is approved by the State Insurance Commissioner and, when applicable, flood insurance;</text> </paragraph> <paragraph num="E."> <text>Have an appraised value that is satisfactory to the Fund; and</text> </paragraph> <paragraph num="F."> <text>Meet any other standards of the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrower."> <paragraph num="A."> <text>A borrower shall establish to the satisfaction of the Fund the capacity to meet the financial obligations of the loan.</text> </paragraph> <paragraph num="B."> <text>A borrower shall have maintained a credit standing and history of financial management that is acceptable to the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Mortgage Loan."> <paragraph num="A."> <text>A mortgage loan shall be secured by a lien against the mortgaged property.</text> </paragraph> <paragraph num="B."> <text>Real property securing a loan shall meet the requirements of the Fund.</text> </paragraph> <paragraph num="C."> <text>An escrow account for payment of taxes, insurance, homeowner association fees, condominium fees, or other customary expenses related to a mortgage loan, as applicable, shall be satisfactory to the Fund.</text> </paragraph> <paragraph num="D."> <text>A mortgage may not exceed a term of 40 years unless the Secretary, by written determination for a particular loan or category of loans, agrees to a term exceeding 40 years.</text> </paragraph> <paragraph num="E."> <text>A mortgage shall bear interest at the rate agreed on by the lender and the borrower, and committed to by the Fund.</text> </paragraph> <paragraph num="F."> <text>A mortgage shall conform to the required documentation and eligibility criteria required by the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Lenders."> <paragraph num="A."> <text>The Department, or any agency of the Department, is an eligible lender approved for mortgage insurance issued by the Fund.</text> </paragraph> <paragraph num="B."> <text>All other lenders shall meet the eligibility requirements of §C or D of this regulation in order to be approved for mortgage insurance issued by the Fund.</text> </paragraph> <paragraph num="C."> <text>The Fund may approve a mortgage lender that is authorized to conduct business in Maryland and that executes a certification that it is:</text> <paragraph num="(1)"> <text>A financial institution that has accounts insured by any agency of the United States;</text> </paragraph> <paragraph num="(2)"> <text>An institutional lender approved under a federal mortgage loan insurance agency; or</text> </paragraph> <paragraph num="(3)"> <text>Any FNMA or FHLMC approved institutional conventional seller.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Any for-profit entity, nonprofit entity, or public agency that, in the opinion of the Fund, has as a primary or substantial function of its operation the making of residential mortgages, may be approved if it:</text> <paragraph num="(1)"> <text>Presents evidence satisfactory to the Fund of:</text> <paragraph num="(a)"> <text>Responsibility;</text> </paragraph> <paragraph num="(b)"> <text>Permanency;</text> </paragraph> <paragraph num="(c)"> <text>Financial adequacy; and</text> </paragraph> <paragraph num="(d)"> <text>Requisite administrative, technical, and mortgage servicing capabilities; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Submits an application and all supporting documentation that the Fund may require.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Mortgage Insurance."> <paragraph num="A."> <text>Application. If required by the Fund, a lender shall submit an application, in the form prescribed by the Fund, which shall contain a complete credit package and any other documentation required by the Fund. If documentation is incomplete, the credit evaluation may be delayed and may result in the rejection of the application.</text> </paragraph> <paragraph num="B."> <text>Underwriting and Appraisal. An application for mortgage insurance received from an approved lender may be subject to underwriting and appraisal review in accordance with the requirements of the Fund.</text> </paragraph> <paragraph num="C."> <text>Scope of Insurance Coverage.</text> <paragraph num="(1)"> <text>Mortgage insurance coverage is limited to economic loss due to a monetary default and does not include loss due to casualty or title risk.</text> </paragraph> <paragraph num="(2)"> <text>Expenses incurred for property repair resulting from casualty loss, including losses due to negligence, flood, fire, termites, vandalism, and defective construction, are not eligible for coverage.</text> </paragraph> <paragraph num="(3)"> <text>Expenses incurred by the lender in the preservation and normal maintenance of an insured property may be covered in accordance with the terms and conditions of the applicable insurance policy governing the insured mortgage.</text> </paragraph> </paragraph> <paragraph num="D."> <text>To maintain insurance coverage, the following transactions require prior approval of the Fund on terms and conditions acceptable to the Fund:</text> <paragraph num="(1)"> <text>A transfer of any interest in the secured property;</text> </paragraph> <paragraph num="(2)"> <text>An assignment of the insured mortgage loan;</text> </paragraph> <paragraph num="(3)"> <text>An assumption of an insured mortgage loan; or</text> </paragraph> <paragraph num="(4)"> <text>Any change or modification of the terms of the insured mortgage.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Premiums and Types of Coverage."> <paragraph num="A."> <text>Premiums for mortgage insurance shall be determined by the Fund from time to time for various programs and types of mortgage insurance.</text> </paragraph> <paragraph num="B."> <text>Premiums may be set at different levels for different categories of loans and loan programs depending on the risk factors, which may include the:</text> <paragraph num="(1)"> <text>Depth of insurance coverage;</text> </paragraph> <paragraph num="(2)"> <text>Length of mortgage term;</text> </paragraph> <paragraph num="(3)"> <text>Financial capability of the borrower;</text> </paragraph> <paragraph num="(4)"> <text>Credit rating of the borrower; and</text> </paragraph> <paragraph num="(5)"> <text>Condition of property securing loan.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Fund shall maintain a publicly available premium rate sheet with a stated effective date for the premiums.</text> </paragraph> <paragraph num="D."> <text>The Fund may offer insurance on mortgage loans that are within a pool of mortgages as described in the applicable insurance policy.</text> </paragraph> <paragraph num="E."> <text>The Fund may enter into reinsurance, coinsurance, and risk-sharing arrangements with other insurers and lenders, as approved by the Secretary.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Default Procedures."> <paragraph num="A."> <text>The insured lender shall follow the procedures contained in the mortgage insurance policy upon default of an insured mortgage.</text> </paragraph> <paragraph num="B."> <text>Mortgage Assignment. The Fund may require a lender at any time to assign a delinquent mortgage to the Fund and file a claim in the full amount of the insurance.</text> </paragraph> <paragraph num="C."> <text>The right of the Fund to pursue a borrower for deficiency or loss exists in every case to the extent allowed by law and may be enforced at the discretion of the Fund.</text> </paragraph> <paragraph num="D."> <text>The Fund may refuse payment of a claim on the basis of fraud, misrepresentation, or material error or omission with respect to any claim.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="General Provisions."> <paragraph num="A."> <text>Waiver. The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act or with agreements to which the Fund may be subject if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local program in connection with a loan necessitates a waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant or a financial institution may request reconsideration of a Fund decision that a loan or claim is not eligible under this chapter by submitting a written request to the Secretary within 30 days following the date of the Fund's written decision. The request for reconsideration shall address each reason for the decision and provide documentation that supports reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant's request for reconsideration within 30 days of receiving the request.</text> </paragraph> <paragraph num="(2)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary, in the Secretary's sole discretion, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a determination of ineligibility.</text> </paragraph> </paragraph> <paragraph num="C."> <text>False Statements. A borrower or lender who knowingly makes, or causes to be made, a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to cancellation of insurance, in addition to the criminal penalties authorized by the Act.</text> </paragraph> <paragraph num="D."> <text>Delegation. The Secretary may delegate to the Director of the Fund or to any other official or employee of the Department or the Fund the authority to execute or approve any insurance documents or Fund certificates.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article,§3-207(a), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 3, 2008 (35:22 Md. R. 1956)</annotation> </annotations> </chapter> <chapter num="09" heading="Business Reserve Insurance"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations set forth the policies, procedures, and authorization for issuance of loan insurance and credit enhancement under the business reserve established in COMAR 05.06.01.04A and 05.06.06.04A.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>Business Project.</text> <paragraph num="(a)"> <text>“Business project” means a project located in an area designated as a priority funding area under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Business project” means a project that is:</text> <paragraph num="(i)"> <text>Acquired, owned, developed, constructed, reconstructed, rehabilitated, or improved by a person or an entity for the purposes of carrying on a business whether or not for profit; or</text> </paragraph> <paragraph num="(ii)"> <text>Eligible for funding from the Neighborhood Business Development Fund under Housing and Community Development Article, §6-310, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(4)"> <text>“Fund” means the Maryland Housing Fund, and, when appropriate, its authorized officers or personnel.</text> </paragraph> <paragraph num="(5)"> <text>Mortgage.</text> <paragraph num="(a)"> <text>“Mortgage” means a written instrument evidencing or creating a lien against real property to provide collateral to secure the repayment of a debt.</text> </paragraph> <paragraph num="(b)"> <text>“Mortgage” includes a deed of trust.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Nonprofit Entity.</text> <paragraph num="(a)"> <text>“Nonprofit entity” means any organization exempt from taxation under the Internal Revenue Code of the United States, 26 U.S.C. §501(c).</text> </paragraph> <paragraph num="(b)"> <text>“Nonprofit entity” includes local development agencies and local development corporations, as defined in Housing and Community Development Article, §4-201, Annotated Code of Maryland, and organizations exempt by reason of a charitable or public purpose.</text> </paragraph> <paragraph num="(c)"> <text>“Nonprofit entity” does not include limited dividend corporations or partnerships.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Secretary” means the Secretary of Housing and Community Development or the Secretary's designee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Property."> <paragraph num="A."> <text>Real property financed by loans insured by the Fund shall:</text> <paragraph num="(1)"> <text>Have clear and merchantable title acceptable to the Fund;</text> </paragraph> <paragraph num="(2)"> <text>Conform to all applicable federal, State, and local building, zoning, environmental, health, and housing codes;</text> </paragraph> <paragraph num="(3)"> <text>Be insured with hazard insurance issued by a company that is approved by the State Insurance Commissioner and, when applicable, flood insurance;</text> </paragraph> <paragraph num="(4)"> <text>Have an appraised value that is satisfactory to the Fund;</text> </paragraph> <paragraph num="(5)"> <text>Be secured by a lien against the mortgaged property or other collateral acceptable to the Fund; and</text> </paragraph> <paragraph num="(6)"> <text>Meet any other standards of the Fund.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Personal property financed by loans insured by the Fund shall:</text> <paragraph num="(1)"> <text>Have clear and merchantable title acceptable to the Fund;</text> </paragraph> <paragraph num="(2)"> <text>Have an appraised value that is satisfactory to the Fund;</text> </paragraph> <paragraph num="(3)"> <text>Be secured by a lien against real property, personal property or other collateral acceptable to the Fund; and</text> </paragraph> <paragraph num="(4)"> <text>Meet any other standards of the Fund.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Loan to business project for credit, operating costs and administrative costs insured by the Fund shall:</text> <paragraph num="(1)"> <text>Be secured by a lien against real property, personal property or other collateral acceptable to the Fund; and</text> </paragraph> <paragraph num="(2)"> <text>Meet any other standards of the Fund.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Borrower."> <paragraph num="A."> <text>A borrower may be an individual, partnership, or any other type of legal entity.</text> </paragraph> <paragraph num="B."> <text>A borrower shall establish, to the satisfaction of the Fund, the capacity to meet the financial obligations of the loan.</text> </paragraph> <paragraph num="C."> <text>A borrower shall have maintained a credit standing and history of financial management that is acceptable to the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Lenders."> <paragraph num="A."> <text>The Department, or any agency of the Department, is an eligible lender approved for insurance issued by the Fund under this chapter.</text> </paragraph> <paragraph num="B."> <text>All other lenders shall meet the eligibility requirements of §C or D of this regulation in order to be approved for insurance issued by the Fund.</text> </paragraph> <paragraph num="C."> <text>The Fund may approve a lender that is authorized to conduct business in Maryland and that executes a certification that it is:</text> <paragraph num="(1)"> <text>A financial institution that has accounts insured by any agency of the United States; or</text> </paragraph> <paragraph num="(2)"> <text>An institutional lender approved under a federal mortgage or business loan insurance agency.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Any for-profit entity, nonprofit entity, or public agency that, in the opinion of the Fund, has as a primary or substantial function of its operation, the making of business project loans, may be approved if it:</text> <paragraph num="(1)"> <text>Presents evidence satisfactory to the Fund of:</text> <paragraph num="(a)"> <text>Responsibility;</text> </paragraph> <paragraph num="(b)"> <text>Financial adequacy;</text> </paragraph> <paragraph num="(c)"> <text>Requisite administrative, technical, and loan servicing capabilities; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Submits an application and all supporting documentation that the Fund may require.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Insurance."> <paragraph num="A."> <text>Application. A lender shall submit an application, in the form prescribed by the Fund, which shall contain a complete credit package and any other documentation required by the Fund.</text> </paragraph> <paragraph num="B."> <text>Underwriting and Appraisal. An application for insurance received from an approved lender may be subject to underwriting and appraisal review in accordance with the requirements of the Fund.</text> </paragraph> <paragraph num="C."> <text>Scope of Insurance Coverage.</text> <paragraph num="(1)"> <text>Insurance coverage is limited to economic loss due to a monetary default and does not include loss due to casualty or title risk.</text> </paragraph> <paragraph num="(2)"> <text>Expenses incurred for property repair or replacement resulting from casualty loss, including losses due to negligence, flood, fire, termites, vandalism, theft, and defective construction, are not eligible for coverage.</text> </paragraph> <paragraph num="(3)"> <text>Expenses incurred by the lender in the preservation and normal maintenance of an insured property may be covered in accordance with the terms and conditions of the applicable insurance policy governing the insured loan.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Insurance on business project loans may be offered in the following forms:</text> <paragraph num="(1)"> <text>Mortgage or loan insurance;</text> </paragraph> <paragraph num="(2)"> <text>Credit enhancement;</text> </paragraph> <paragraph num="(3)"> <text>Loan guaranty; or</text> </paragraph> <paragraph num="(4)"> <text>Other type of insurance as approved by the Fund covering economic loss due to monetary default.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Fund may offer insurance on loans that are within a pool of loans as described in the applicable insurance policy.</text> </paragraph> <paragraph num="F."> <text>The Fund may enter into reinsurance, coinsurance, and risk-sharing arrangements with other insurers and lenders, as approved by the Secretary.</text> </paragraph> <paragraph num="G."> <text>To maintain insurance coverage on an existing loan, the following transactions require prior approval of the Fund on terms and conditions acceptable to the Fund:</text> <paragraph num="(1)"> <text>A transfer of any interest in the secured property;</text> </paragraph> <paragraph num="(2)"> <text>An assignment of the insured loan;</text> </paragraph> <paragraph num="(3)"> <text>An assumption of an insured loan; or</text> </paragraph> <paragraph num="(4)"> <text>Any change or modification of the terms of the insured loan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Premiums."> <paragraph num="A."> <text>Premiums for insurance shall be determined by the Fund from time to time for various programs and types of insurance.</text> </paragraph> <paragraph num="B."> <text>Premiums may be set at different levels for different categories of loans and loan programs depending on the risk factors, which may include the:</text> <paragraph num="(1)"> <text>Depth of insurance coverage;</text> </paragraph> <paragraph num="(2)"> <text>Length of loan term;</text> </paragraph> <paragraph num="(3)"> <text>Financial capability of the borrower;</text> </paragraph> <paragraph num="(4)"> <text>Credit rating of the borrower; and</text> </paragraph> <paragraph num="(5)"> <text>Condition and type of collateral securing loan.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Fund shall maintain a publicly available premium rate sheet with a stated effective date for the premiums.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Default Procedures."> <paragraph num="A."> <text>The insured lender shall follow the procedures contained in the insurance policy or agreement upon default of an insured mortgage.</text> </paragraph> <paragraph num="B."> <text>The Fund may require a lender at any time to assign a delinquent loan to the Fund and file a claim in the full amount of the insurance.</text> </paragraph> <paragraph num="C."> <text>The right of the Fund to pursue a borrower for deficiency or loss exists in every case to the extent allowed by law and may be enforced at the discretion of the Fund.</text> </paragraph> <paragraph num="D."> <text>The Fund may refuse payment of a claim on the basis of fraud, misrepresentation, or material error or omission with respect to any claim.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="General Provisions."> <paragraph num="A."> <text>Waiver. The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act or with agreements to which the Fund may be subject if:</text> <paragraph num="(1)"> <text>Conformance to the requirements of any federal, State, or local program in connection with a loan necessitates a waiver or variance of a regulation; or</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant or a lender may request reconsideration of a Fund decision that a loan or claim is not eligible under this chapter by submitting a written request to the Secretary within 30 days following the date of the Fund's written decision. The request for reconsideration shall address each reason for the decision and provide documentation that supports reasons for reconsideration of the issues. The Secretary shall respond in writing to the request for reconsideration within 30 days of receiving the request.</text> </paragraph> <paragraph num="(2)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary, in the Secretary's sole discretion, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a determination of ineligibility.</text> </paragraph> </paragraph> <paragraph num="C."> <text>False Statements. A borrower or lender who knowingly makes, or causes to be made, a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to cancellation of insurance, in addition to the criminal penalties authorized by the Act.</text> </paragraph> <paragraph num="D."> <text>Delegation. The Secretary may delegate to the Director of the Fund or to any other official or employee of the Department or the Fund the authority to execute or approve any insurance documents or Fund certificates.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §3-207(a), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 26, 2018 (45:6 Md. R. 317)</annotation> </annotations> </chapter> </subtitle> <subtitle num="07" heading="Community Assistance Programs"> <chapter num="01" heading="Housing Development Assistance Program" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 adopted as an emergency provision effective</annotation> <annotation type="History" subtype="Administrative History">August 28, 1986 (13:20 Md. R. 2203); emergency status extended at 14:2</annotation> <annotation type="History" subtype="Administrative History">Md. R. 124</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13 adopted effective March 1, 1987 (14:4 Md. R. 415)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.26 to COMAR 05.07.01</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13 repealed and new Regulations .01—.11 adopted effective June 7, 1993 (20:11 Md. R. 912)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective April 5, 1999 (26:7 Md. R. 539)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective January 2, 1994 (20:25 Md. R. 1943); April 5, 1999 (26:7 Md. R. 539)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective January 2, 1994 (20:25 Md. R. 1943)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective September 6, 1999 (26:18 Md. R. 1373)</annotation> </annotations> </chapter> <chapter num="02" heading="Home Maintenance and Repair Program" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 adopted as an emergency provision effective</annotation> <annotation type="History" subtype="Administrative History">August 28, 1986 (13:20 Md. R. 2201); emergency status extended at 14:2</annotation> <annotation type="History" subtype="Administrative History">Md. R. 124; emergency status expired March 1, 1987</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 adopted effective March 1, 1987 (14:4 Md. R. 414)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.01.25 to COMAR 05.07.02</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective June 11, 1990 (17:11 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective June 11, 1990 (17:11 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective June 11, 1990 (17:11 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A—C amended effective June 11, 1990 (17:11 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 repealed and new Regulation .05 adopted effective June 11,</annotation> <annotation type="History" subtype="Administrative History">1990 (17:11 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 repealed and new Regulation .06 adopted effective June 11,</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A, B amended effective June 11, 1990 (17:11 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A—C amended effective May 29, 1989 (16:10 Md. R. 1105)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective February 18, 1991 (18:3 Md. R. 302)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 repealed and new Regulation .08 adopted effective June 11,</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective June 11, 1990 (17:11 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective June 11, 1990 (17:11 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10B amended effective February 18, 1991 (18:3 Md. R. 302)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective September 6, 1999 (26:18 Md. R. 1373)</annotation> </annotations> </chapter> <chapter num="03" heading="Weatherization Program" reason="Transferred to COMAR 05.04.14" /> <chapter num="04" heading="State Action Loans for Targeted Areas Program" reason="Transferred to COMAR 05.15.01" /> <chapter num="05" heading="Commercial District Management Authority Grant Program" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: December 11, 1989 (16:24 Md. R. 2617)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10B amended effective February 1, 1993 (20:2 Md. R. 111)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective September 6, 1999 (26:18 Md. R. 1373)</annotation> </annotations> </chapter> <chapter num="06" heading="Main Street Improvement Grant Program" reason="Transferred to COMAR 05.13.02" /> <chapter num="07" heading="Maryland Appalachian Housing Program" reason="Transferred to COMAR 05.05.10" /> <chapter num="08" heading="Maryland Town Manager Circuit Rider Grant Program" reason="Transferred to COMAR 05.13.03" /> </subtitle> <subtitle num="08" heading="Historical and Cultural Programs"> <chapter num="01" heading="Maryland Historical Trust Historic Preservation Grant Program" reason="Recodified to 34.04.01"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: December 8, 1976 (3:25 Md. R. 1465)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective June 22, 1977 (4:13 Md. R. 1030)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.03.01 to COMAR 05.08.01</annotation> <annotation type="History" subtype="Administrative History">Chapter, Maryland Historical Trust: Notification Procedures for Nomination to the National Register, repealed effective November 14, 1988 (15:23 Md. R. 2657)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13, Maryland Historical Trust Historic Preservation Grant Program, adopted effective May 14, 1990 (17:9 Md. R. 1087)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 2, 1994 (20:25 Md. R. 1944); April 5, 1999 (26:7 Md. R. 539); January 21, 2002 (29:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective January 2, 1994 (20:25 Md. R. 1944)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.08.01 to COMAR 34.04.01</annotation> </annotations> </chapter> <chapter num="02" heading="Maryland Historical Trust Historic Preservation Loan Program" reason="Recodified to 34.04.02"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: May 14, 1990 (17:9 Md. R. 1088)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 2, 1994 (20:25 Md. R. 1944); April 5, 1999 (26:7 Md. R. 540); January 21, 2002 (29:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective January 2, 1994 (20:25 Md. R. 1944)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.08.02 to COMAR 34.04.02</annotation> </annotations> </chapter> <chapter num="03" heading="Protection of Submerged Archeological Historic Property" reason="Recodified to 34.04.03"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: January 2, 1993 (19:26 Md. R. 2284)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.08.03 to COMAR 34.04.03</annotation> </annotations> </chapter> <chapter num="04" heading="Historical and Cultural Museum Assistance Program" reason="Recodified to 34.04.04"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: November 12, 1990 (17:22 Md. R. 2654)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 28, 1994 (21:4 Md. R. 273); December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective February 28, 1994 (21:4 Md. R. 273); December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C amended effective May 23, 1994 (21:10 Md. R. 841)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08D amended effective February 28, 1994 (21:4 Md. R. 273)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.08.04 to COMAR 34.04.04</annotation> </annotations> </chapter> <chapter num="05" heading="Maryland Register of Historic Properties" reason="Recodified to 34.04.05"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: November 11, 1991 (18:22 Md. R. 2393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.08.05 to COMAR 34.04.05</annotation> </annotations> </chapter> <chapter num="06" heading="Recognition of Maryland Indian Status" reason="Transferred to 07.08.01"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: May 11, 1992 (19:9 Md. R. 878)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective July 1, 1996 (23:13 Md. R. 940)</annotation> <annotation type="History" subtype="Administrative History">Transferred from COMAR 05.08.06 to COMAR 07.08.01</annotation> </annotations> </chapter> <chapter num="07" heading="Transfer of Human Remains and Associated Funerary Objects" reason="Recodified to 34.04.06"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: May 23, 1994 (21:10 Md. R. 841)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 adopted effective November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.08.07 to COMAR 34.04.06</annotation> </annotations> </chapter> <chapter num="08" heading="Certified Heritage Structure Rehabilitation Tax Credit Certifications" reason="Recodified to 34.04.07"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: January 14, 1999 (26:1 Md. R. 23)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended as an emergency provision effective January 3, 2005 (32:4 Md. R. 404); amended permanently effective April 11, 2005 (32:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective June 1, 2004 (31:16 Md. R. 1249); emergency status expired December 1, 2004</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective January 3, 2005 (32:4 Md. R. 404); amended permanently effective April 11, 2005 (32:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective November 24, 2003 (30:25 Md. R. 1841); emergency status expired May 22, 2004</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective June 1, 2004 (31:17 Md. R. 1249); emergency status expired December 1, 2004</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective January 3, 2005 (32:4 Md. R. 404); amended permanently effective April 11, 2005 (32:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E amended as an emergency provision effective June 29, 2005 (32:15 Md. R. 1313); amended permanently effective October 10, 2005 (32:20 Md. R. 1655)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended as an emergency provision effective January 3, 2005 (32:4 Md. R. 404); amended permanently effective April 11, 2005 (32:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.08.08 to COMAR 34.04.07</annotation> </annotations> </chapter> </subtitle> <subtitle num="09" heading="Infrastructure Programs"> <chapter num="01" heading="Local Government Infrastructure Financing Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for a program for financing or refinancing the acquisition, construction, and rehabilitation of local government infrastructure.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <paragraph num="A."> <text>The objective of the program is to provide an accessible and uncomplicated mechanism for local governments to secure financing or refinancing for the acquisition, construction, and rehabilitation of public infrastructure projects, including streets, bridges, buildings, utility systems, and other structures and facilities used for providing public services.</text> </paragraph> <paragraph num="B."> <text>Any financing or refinancing under the Program may be backed by the full faith and credit of the local government or the pledge of specifically identified revenues.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in the Act have the meanings defined there and, in addition, the meanings used in these regulations.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(3)"> <text>“Application” means the form and its attachments submitted by a local government in order to participate in the program.</text> </paragraph> <paragraph num="(4)"> <text>Repealed.</text> </paragraph> <paragraph num="(5)"> <text>“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated pursuant to the Code. Except when inappropriate, any reference to the Internal Revenue Code of 1986 shall include a reference to the provisions of law formerly known as the Internal Revenue Code of 1954.</text> </paragraph> <paragraph num="(6)"> <text>“Committee” means the Housing Finance Review Committee.</text> </paragraph> <paragraph num="(7)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Indenture” means any trust indenture, bond resolution, certificate, or other similar document, including amendments and supplements that authorize the issuance and sale of bonds, notes, or other obligations of the Administration, the proceeds of which finance the loans.</text> </paragraph> <paragraph num="(9)"> <text>“Interagency Committee on Economic Growth, Resource Protection, and Planning” or “Interagency Committee” means the Interagency Economic Growth, Resource Protection, and Planning Committee established under Executive Order 01.01.1992.27.</text> </paragraph> <paragraph num="(10)"> <text>“Loan” means any loan or other form of financial assistance provided by the Administration to a local government for the financing of a project, specifically excluding grants.</text> </paragraph> <paragraph num="(11)"> <text>“Local government” means any county in the State, the Mayor and City Council of the City of Baltimore, and any municipal corporation in the State subject to the provisions of Article XI-E of the Maryland Constitution.</text> </paragraph> <paragraph num="(12)"> <text>“Local obligation” means any bond, note, or other obligation, including a bond issued by the local government which is purchased by the Administration.</text> </paragraph> <paragraph num="(13)"> <text>“Program” or “infrastructure program” means the Administration's Local Government Infrastructure Financing Program.</text> </paragraph> <paragraph num="(14)"> <text>“Project” means an infrastructure project financed or refinanced by the Administration in accordance with the Act.</text> </paragraph> <paragraph num="(15)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(16)"> <text>“State Economic Growth, Resource Protection, and Planning Policy” or “State Growth Policy” means the State Economic Growth, Resource Protection, and Planning Policy established by State Finance and Procurement Article, §5-7A-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“State highway user revenues” means those funds allocated to a county under Transportation Article, §§8-401—8-413, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(18)"> <text>“State payments” means moneys the local government is entitled to receive from the State, including, without limitations, the local government's share of the State income tax.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Participants."> <text>A local government is eligible to participate in the program provided it:</text> <paragraph num="A."> <text>Possesses the legal capacity and all necessary legal authority to incur the obligations of the loan;</text> </paragraph> <paragraph num="B."> <text>Submits an application to the Department which identifies how the local government will construct, operate, and maintain the project;</text> </paragraph> <paragraph num="C."> <text>Is eligible to receive State payments in amounts satisfactory to the Administration, taking into consideration the amount of the loan;</text> </paragraph> <paragraph num="D."> <text>Needs to finance or refinance the acquisition, construction, or rehabilitation of a project; and</text> </paragraph> <paragraph num="E."> <text>Is acceptable to any entity which may be engaged to enhance the credit for a bond financing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Projects."> <paragraph num="A."> <text>A project shall provide one or more of the physical elements which are the basis of a public service system. Eligible projects include, but are not limited to:</text> <paragraph num="(1)"> <text>Water production, treatment, storage, and distribution systems;</text> </paragraph> <paragraph num="(2)"> <text>Sewer collection and treatment facilities;</text> </paragraph> <paragraph num="(3)"> <text>Solid waste transfer, conversion, and disposal facilities;</text> </paragraph> <paragraph num="(4)"> <text>Storm water control and drainage facilities;</text> </paragraph> <paragraph num="(5)"> <text>Bulkheads, piers, wharfs, and ramps;</text> </paragraph> <paragraph num="(6)"> <text>Bridges, streets, and roads;</text> </paragraph> <paragraph num="(7)"> <text>Facilities for police, fire, transportation, education, health and recreation, library and cultural facilities, and facilities for the delivery of other public services;</text> </paragraph> <paragraph num="(8)"> <text>Street lighting, landscaping, and other public space improvements;</text> </paragraph> <paragraph num="(9)"> <text>Sidewalks, curbs, and gutters;</text> </paragraph> <paragraph num="(10)"> <text>Governmental office, storage, and maintenance facilities;</text> </paragraph> <paragraph num="(11)"> <text>Acquisition of machinery and equipment for any of the projects described in this section.</text> </paragraph> </paragraph> <paragraph num="B."> <text>When a project is complete, it shall be in compliance with all applicable State and local laws, codes, regulations, and standards.</text> </paragraph> <paragraph num="C."> <text>The project shall have an expected useful life at least equal to the term of the corresponding local obligation, and otherwise satisfactory to the Administration.</text> </paragraph> <paragraph num="D."> <text>The project may not include any facilities for which the local obligations to be purchased by the Administration would be private activity bonds within the meaning of §141 of the Code, for which an allocation under §146 of the Code would be required.</text> </paragraph> <paragraph num="E."> <text>The local government shall provide a certificate that it has determined that the project is consistent with the local comprehensive plan or warranted by extraordinary circumstances with no reasonably feasible alternative, as required under State Finance and Procurement Article, §5-7A-02(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>The project shall be determined by the Department to be consistent generally with the State Economic Growth, Resource Protection, and Planning Policy, and demonstrate specifically that the project:</text> <paragraph num="(1)"> <text>Is located:</text> <paragraph num="(a)"> <text>On a site suitable for infill development or redevelopment which:</text> <paragraph num="(i)"> <text>Is occupied by a structure to be rehabilitated,</text> </paragraph> <paragraph num="(ii)"> <text>Was previously improved with a structure, or</text> </paragraph> <paragraph num="(iii)"> <text>Is surrounded by a development; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>In an area:</text> <paragraph num="(i)"> <text>Designated for growth,</text> </paragraph> <paragraph num="(ii)"> <text>Within an existing water and sewer service area or an area planned for service within the next 5 years under the adopted county water and sewerage plan, and (iii) With public facilities and services that are adequate under standards adopted by the local government;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>If in a rural area, is:</text> <paragraph num="(a)"> <text>Located in an existing population center or its designated growth area; and</text> </paragraph> <paragraph num="(b)"> <text>Sensitive to resource areas, including agricultural and forests lands; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Is designed with sensitivity for sensitive areas, including streams and stream buffers, 100-year floodplains, habitats of threatened or endangered species, and steep slopes; and</text> </paragraph> <paragraph num="(4)"> <text>Is consistent with the comprehensive plan of the local jurisdiction in which the project is located.</text> </paragraph> </paragraph> <paragraph num="G."> <text>If the project cannot meet the requirements in §F of this regulation, the project shall be determined by the Department to:</text> <paragraph num="(1)"> <text>Be warranted by extraordinary circumstances, which are defined as circumstances that:</text> <paragraph num="(a)"> <text>Require emergency action, or</text> </paragraph> <paragraph num="(b)"> <text>Provide a unique opportunity to promote the purposes of the Program consistent with the State Growth Policy; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Not have a reasonably feasible alternative, which is defined as an alternative that:</text> <paragraph num="(a)"> <text>Is capable of being carried out,</text> </paragraph> <paragraph num="(b)"> <text>Is readily identifiable by the Program,</text> </paragraph> <paragraph num="(c)"> <text>Is reasonably related to and will carry out the purposes of the State Growth Policy,</text> </paragraph> <paragraph num="(d)"> <text>Has reasonably ascertainable effects distinguishable from and less environmentally damaging than the project proposed,</text> </paragraph> <paragraph num="(e)"> <text>Is within the expertise of the local government,</text> </paragraph> <paragraph num="(f)"> <text>Can be implemented practically and effectively, not remotely or speculatively, and</text> </paragraph> <paragraph num="(g)"> <text>Is realistic and reasonably available within the time the local government intends to act.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>The determination under §F or G of this regulation shall be:</text> <paragraph num="(1)"> <text>Evidenced by a written project report signed by the Administration and the Secretary's designee; and</text> </paragraph> <paragraph num="(2)"> <text>Finalized in accordance with the procedures set forth in Regulation .08C(3) of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Uses and Costs."> <paragraph num="A."> <text>Proceeds of loans may be used to finance the costs associated with the planning, development, acquisition, construction, reconstruction, rehabilitation, or improvement of a project, including, without limitation, the following:</text> <paragraph num="(1)"> <text>Costs of appraisals and other necessary studies, including compaction tests, soil borings, market analysis studies, and construction cost estimates;</text> </paragraph> <paragraph num="(2)"> <text>Architectural and engineering costs for design and supervision;</text> </paragraph> <paragraph num="(3)"> <text>Acquisition of land and improvements, and site preparation;</text> </paragraph> <paragraph num="(4)"> <text>Costs of bonds, permits, and fees;</text> </paragraph> <paragraph num="(5)"> <text>Indemnity and surety bonds;</text> </paragraph> <paragraph num="(6)"> <text>Carrying costs during construction including construction interest, real estate taxes, and property insurance;</text> </paragraph> <paragraph num="(7)"> <text>Financing fees and charges imposed by the Administration;</text> </paragraph> <paragraph num="(8)"> <text>Legal, processing, packaging, and marketing fees and charges;</text> </paragraph> <paragraph num="(9)"> <text>The costs of surveys, title examinations, and title insurance; and</text> </paragraph> <paragraph num="(10)"> <text>Other costs authorized by Housing and Community Development Article, §4-201(e), Annotated Code of Maryland, and acceptable to the Administration.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Program funds may also be used for loans to:</text> <paragraph num="(1)"> <text>Purchase existing or completed projects;</text> </paragraph> <paragraph num="(2)"> <text>Refinance a project; and</text> </paragraph> <paragraph num="(3)"> <text>Pay closing costs for loans.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Loan Terms, Limits, and Requirements."> <paragraph num="A."> <text>Interest Rate.</text> <paragraph num="(1)"> <text>The Administration shall establish or determine an interest rate or rates for the loans and corresponding local obligations, and other charges and fees, if any, that together with other moneys made available for those purposes, are sufficient to meet the interest payable by the Administration for its revenue bonds, notes, or other obligations financing the loans, and, in the discretion of the Administration, the administrative expenses of the Program.</text> </paragraph> <paragraph num="(2)"> <text>The interest rate or rates on loans may not exceed the maximum permitted by §103 of the Code.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Term.</text> <paragraph num="(1)"> <text>The term of each loan and corresponding local obligation shall be proposed initially by the local government, based upon existing market conditions for the financing of similar projects.</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §B(3) of this regulation, the term may not exceed the lesser of the useful life of the applicable project or 30 years, and the final term shall be at the discretion of the Administration, taking into consideration the applicable requirements of the indenture and of Article 31, §11, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>In the case of any county transportation facility financed by the Administration and secured by a pledge of a county's share of State highway user revenues, the term may not exceed 15 years.</text> </paragraph> <paragraph num="(4)"> <text>The final term shall be at the discretion of the Administration, taking into consideration the applicable requirements of the indenture and of Article 31, §11, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Maximum Loan Amount. Loans may be made in any amounts that are necessary to finance eligible costs of a project, but may not exceed 100 percent of the eligible costs of the project.</text> </paragraph> <paragraph num="D."> <text>Prepayment. Loans, in most cases, may not be prepaid.</text> </paragraph> <paragraph num="E."> <text>Repayment Agreement.</text> <paragraph num="(1)"> <text>The local government shall, at the option of the Administration, execute a repayment agreement in the form prepared by the Administration, by which the local government pledges its full faith and credit, or pledges other revenues and assets acceptable to the Administration, to the repayment of the loan.</text> </paragraph> <paragraph num="(2)"> <text>If required by the Administration, the obligations of the local government shall be evidenced by a local obligation, which shall:</text> <paragraph num="(a)"> <text>Constitute an indebtedness of and a charge against the general credit and taxing powers of the local government; and</text> </paragraph> <paragraph num="(b)"> <text>Include a covenant by the local government to levy upon all property within its jurisdiction taxes in rates and amounts sufficient to make all payments under the local obligation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Under the terms of a repayment agreement, the local government shall be required to make, or cause to be made, payments semiannually or at other times as selected by the Administration in accordance with the indenture.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Pledge Agreement.</text> <paragraph num="(1)"> <text>Except as provided in §G of this regulation, the local government shall execute a pledge agreement in a form prepared by the Administration, pledging all or a portion, at the discretion of the Administration, of State payments as security for the repayment agreement to be used by the Administration in the event of a default under the loan by the local government, and other documents evidencing and securing the loan, in forms prepared by the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Under the pledge agreement, the local government shall authorize the Comptroller and Treasurer of Maryland to intercept State payments on behalf of the Administration in the event of a default under the loan.</text> </paragraph> <paragraph num="(3)"> <text>For a project from which revenue is intended to be generated, the local government may also be required to pledge this revenue to the Administration.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Participation Agreement.</text> <paragraph num="(1)"> <text>If the Administration finances a county transportation facility secured by a pledge of a county's share of State highway user revenues, the county shall execute a participation agreement meeting the requirements of this section, instead of the repayment and pledge agreements under §§E and F of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The participation agreement shall:</text> <paragraph num="(a)"> <text>Constitute a pledge of a county's share of State highway user revenues to the Administration in an amount sufficient to repay the Administration's revenue bonds, notes, or other obligations, with interest, in 15 years;</text> </paragraph> <paragraph num="(b)"> <text>Authorize the State Comptroller to withhold and deposit a county's share of State highway user revenues into a sinking fund maintained to pay the principal of and interest on the Administration's revenue bonds, notes, or other obligations due on the next payment date under the indenture;</text> </paragraph> <paragraph num="(c)"> <text>Require a county to use the proceeds of the Administration's bonds, notes, or other obligations solely for activities permitted by Transportation Article, §§8-401—8-413, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(d)"> <text>Describe any other terms of the financing required by the Administration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Opinion of Counsel. The local government shall submit an opinion of counsel acceptable to the Administration, in form and substance satisfactory to counsel to the Administration, stating:</text> <paragraph num="(1)"> <text>That local government has full power and authority to incur the loan and to issue the local obligation;</text> </paragraph> <paragraph num="(2)"> <text>That local government has duly and validly entered into the loan and has duly and validly issued the local obligation, and the loan and the local obligation together with their related documents and instruments are legal, valid, and binding obligations of the local government in accordance with their terms;</text> </paragraph> <paragraph num="(3)"> <text>That the project conforms with applicable laws and regulations; and</text> </paragraph> <paragraph num="(4)"> <text>Any other matters required by the Administration or its counsel.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Application and Processing Procedures."> <paragraph num="A."> <text>Applications for participation may be accepted on a continuing basis by the Administration.</text> </paragraph> <paragraph num="B."> <text>The form of the application shall be prescribed by the Administration and shall include all supporting documentation specified in the application, which may include:</text> <paragraph num="(1)"> <text>A narrative describing the local government and any special recognition accorded it by other levels of government or by professional organizations;</text> </paragraph> <paragraph num="(2)"> <text>A copy of the charter and other organizational materials;</text> </paragraph> <paragraph num="(3)"> <text>Detailed information about the project;</text> </paragraph> <paragraph num="(4)"> <text>Biographies of key officials;</text> </paragraph> <paragraph num="(5)"> <text>Demographic, geographical, assessment, tax, building, and similar data;</text> </paragraph> <paragraph num="(6)"> <text>Audited annual financial statements;</text> </paragraph> <paragraph num="(7)"> <text>Current operating and capital budgets;</text> </paragraph> <paragraph num="(8)"> <text>Multiyear capital improvement program;</text> </paragraph> <paragraph num="(9)"> <text>Schedule of existing debt service payments;</text> </paragraph> <paragraph num="(10)"> <text>Employee and pension information;</text> </paragraph> <paragraph num="(11)"> <text>Anticipated borrowing plans;</text> </paragraph> <paragraph num="(12)"> <text>Investment policy;</text> </paragraph> <paragraph num="(13)"> <text>If the local government will be issuing a local obligation in connection with a financing or refinancing under the Program, a copy of the local government's debt affordability policy, together with a resolution adopted by the governing body of the local government that the financing or refinancing conforms to the policy and is prudent under all of the circumstances; and</text> </paragraph> <paragraph num="(14)"> <text>A certificate that the local government has determined that the project is consistent with the local comprehensive plan or warranted by extraordinary circumstances with no reasonably feasible alternative, as required under State Finance and Procurement Article, §5-7A-02(b), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Review and Letter of Intent.</text> <paragraph num="(1)"> <text>Each application shall be reviewed by the Administration to make a determination of the eligibility of the local government and the project in accordance with Regulations .04—.06 of this chapter. The Administration will review each application as to loan amount and terms.</text> </paragraph> <paragraph num="(2)"> <text>Report Filing.</text> <paragraph num="(a)"> <text>The Secretary's designee shall file with the State Office of Planning the project report required under Regulation .05H of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>If the project report concludes that a project is an inconsistent project with extraordinary circumstances, the Secretary's designee shall submit with the report the documentation, if any, that the Program provided to any local government proposing the project.</text> </paragraph> <paragraph num="(c)"> <text>The Secretary's designee may withdraw a project report filed with the Office of Planning by filing a withdrawal with that Office at any time before the determination becomes final.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Finality. The determination evidenced by the project consistency report under §C(2) of this regulation shall become final and the Program may proceed with the sale of the bonds after:</text> <paragraph num="(a)"> <text>For a determination of consistency:</text> <paragraph num="(i)"> <text>The date the Interagency Growth, Resource Protection, and Planning Committee concurs in the determination, or</text> </paragraph> <paragraph num="(ii)"> <text>The date that is the later of 15 days from the date the project consistency report is filed with the Office of Planning, no Interagency Committee member has requested review by the Interagency Committee, or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For a determination of inconsistency with extraordinary circumstances:</text> <paragraph num="(i)"> <text>The date the Interagency Committee concurs in the determination, or</text> </paragraph> <paragraph num="(ii)"> <text>45 days from the date the project consistency report is filed with the Office of Planning, if the Interagency Committee has failed to act; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>For a determination of consistency or of inconsistency with extraordinary circumstances in which the Interagency Committee does not concur and which the Administration or the Interagency Committee refers to the Governor, the date the Governor determines the project is consistent or is inconsistent with extraordinary circumstances.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>When the Administration determines that there are sufficient, acceptable applications from local governments to enable the Administration to issue bonds, notes, or other obligations in an amount sufficient to finance economically the applicable projects under the Program, the Administration shall prepare a letter of intent.</text> </paragraph> <paragraph num="(5)"> <text>Before issuance of the bonds, the Administration shall issue a letter of intent to the local government setting forth the maximum interest rate on the loan, the repayment provisions, and any other terms and conditions that the Administration considers appropriate for the loan or the project. The letter of intent shall be executed by the local government and returned to the Administration, within the time limit set forth in the letter of intent.</text> </paragraph> <paragraph num="(6)"> <text>Each letter of intent shall be conditioned upon:</text> <paragraph num="(a)"> <text>Authorized execution by the local government;</text> </paragraph> <paragraph num="(b)"> <text>The sale of the Administration's bonds by a certain date;</text> </paragraph> <paragraph num="(c)"> <text>Recommendation by the Committee and approval by the Secretary;</text> </paragraph> <paragraph num="(d)"> <text>The occurrence before the sale of the Administration's bonds of any required voter referendum necessary in order for the local government to sell its local obligation to the Administration; and</text> </paragraph> <paragraph num="(e)"> <text>Finalization under §C(3) of this regulation of the project report required under Regulation .05H of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Loan Approval.</text> <paragraph num="(1)"> <text>Except in the case of an emergency when urgent action is required, all loans shall be submitted by the Administration to the Committee for review and recommendation to the Secretary for approval or disapproval of a loan and the terms of the loan.</text> </paragraph> <paragraph num="(2)"> <text>Upon receipt of a recommendation of the Committee, the Secretary shall approve or disapprove the loan and the terms of the loan. In an emergency when urgent action is required, the Secretary may approve a loan without the recommendation of the Committee.</text> </paragraph> <paragraph num="(3)"> <text>Before the closing of the sale of the Administration's bonds, notes, or other obligations, the Secretary shall execute a written determination that each loan, regardless of the loan amount:</text> <paragraph num="(a)"> <text>Is an infrastructure project authorized by the Act; and</text> </paragraph> <paragraph num="(b)"> <text>Complies with Regulation .05F or G of this chapter and has been finalized under §C(3) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the Secretary disapproves a loan, the Administration shall notify the local government in writing of the disapproval and the reasons for it.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Timing. The Administration will specify a time limit within which the closing of the loan shall occur, which time limit may be extended in the Administration's sole discretion. If closing does not occur within the time limit specified by the Administration, the Administration may use the monies committed for the loan for any other loan or purpose authorized by the Act.</text> </paragraph> <paragraph num="F."> <text>Rejection of Applications. If the Administration determines that a project or local government is not eligible for a loan, the Administration shall issue a written notice of ineligibility.</text> </paragraph> <paragraph num="G."> <text>Reconsideration. Local governments may request reconsideration of a rejection. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.04.02.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Loan Procedures."> <paragraph num="A."> <text>Loan Closing. Upon meeting all of the conditions stipulated for approval and the prerequisites to loan disbursement or settlement, the Administration's counsel shall prepare the required legal documents for closing prescribed by the Administration. The documents shall be forwarded to the local government. When all procedures and requirements are completed, and the bonds, notes, or other obligations of the Administration funding the loan have been issued, a closing shall be arranged by counsel to the Administration.</text> </paragraph> <paragraph num="B."> <text>Disbursement. The Administration shall disburse the proceeds of the loan upon receipt of a requisition from the local government and approved by the Administration. Each requisition shall include an itemization of the costs for which the local government requests payment, which shall be costs eligible under these regulations as determined by the Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Fees; Program Guidelines."> <paragraph num="A."> <text>Amounts and time of payment of any fees as may be required by the Administration shall be as provided in a fee schedule set forth and revised from time to time by the Administration.</text> </paragraph> <paragraph num="B."> <text>The Administration may establish from time to time detailed program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financing of loans or to the Program.</text> </paragraph> <paragraph num="C."> <text>Copies of the fee schedule and guidelines shall be available for examination at the Administration's principal office. The Administration, upon request, shall make copies available to the public.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Books and Accounts."> <paragraph num="A."> <text>Local governments shall maintain such books, accounts, and records, and shall file with the Administration such financial and other reports as the Administration may from time to time require. All of these books, accounts, and records shall be open to the inspection of representatives of the Administration, or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="B."> <text>Books, accounts, and records of the local government shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the local government and the Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Monitoring."> <paragraph num="A."> <text>The Administration shall pay the proceeds of the loan to the local government based upon a schedule of draws acceptable to the Administration.</text> </paragraph> <paragraph num="B."> <text>The local government shall be solely responsible for:</text> <paragraph num="(1)"> <text>Ensuring the adequacy and sufficiency of the design and construction of the project and for supervising the invoicing for and timeliness of the draws. The local government shall submit periodic construction status reports together with its requisitions for draws in a form satisfactory to the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Operating, maintaining, and managing the project, notwithstanding whether the project is managed under an operating agreement with a third party. Administration staff from time to time may conduct an inspection, announced or unannounced, to ascertain the status of the construction or operation of the project.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Issuance of Indentures and Notes."> <paragraph num="A."> <text>Timing. The Administration may obtain funds for loans to finance projects from any source authorized by law, and in particular may issue bonds, notes, or other obligations pursuant to an indenture payable from payments on the loans. The timing of any bond or note sale and the acceptability of the interest rate to be paid by the Administration are solely within the discretion of the Secretary.</text> </paragraph> <paragraph num="B."> <text>Rights of Bond and Note Holders. In the event of any conflict, whether or not expressly so stated, the rights of local governments under any loan, corresponding local obligation or accompanying agreement with the Administration, which loan is financed by bonds, notes, or other obligations issued pursuant to an indenture, are subject to the rights of the holders of the Administration's bonds, notes, or other obligations issued under that indenture.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Minority Contracting."> <text>The local government shall ensure compliance with the Department's Minority Business Enterprise Program or with the local government's own program, not substantially dissimilar from the Department's program for including minority contractors in the construction of the project.</text> </regulation> <regulation prefix="Regulation" num=".15" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A local government may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any local government in the construction, repair, or maintenance of any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each local government shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="False Statements."> <text>A local government which knowingly makes or causes to be made a false statement or report may be subject to exclusion from the Program and to immediate acceleration of the loan, and its officials shall be subject to the criminal penalties authorized by Housing and Community Development Article, §4-255, Annotated Code of Maryland, as amended.</text> </regulation> <regulation prefix="Regulation" num=".17" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or contrary to the provisions of any applicable indenture if:</text> <paragraph num="A."> <text>Adherence to the requirements of any federal, State, or local program used in connection with a project necessitates waiver or variance of a regulation; or</text> </paragraph> <paragraph num="B."> <text>In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Delegation."> <text>The Secretary may delegate to the Director of the Administration, the Director of the Program, or to any other official or employee of the Department or Administration the authority to execute or approve any Program documents or loan documents, including loan commitments.</text> </regulation> <regulation prefix="Regulation" num=".19" heading="Severability."> <text>The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-102(a)(7), 2-111 and 2-202 and Title 4, Subtitle 2; State Finance and Procurement Article, §5-7A-02; Annotated Code of Maryland; Executive Order 01.01.1992.27C</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 26, 1989 (16:12 Md. R. 1332)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 amended effective November 22, 1993 (20:23 Md. R. 1801)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> </subtitle> <subtitle num="10" heading="Assisted Housing Preservation"> <chapter num="01" heading="Purpose and Definitions"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>These regulations are intended to supplement and clarify the provisions of the Assisted Housing Preservation Act, Housing and Community Development Article, Title 7, Annotated Code of Maryland. These regulations should be read in conjunction with the Act.</text> </paragraph> <paragraph num="B."> <text>These regulations include the standards for granting, and procedures for requesting, exemptions from certain otherwise applicable requirements of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms shall have the meanings indicated and as defined in the Act.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means the Assisted Housing Preservation Act, Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Designated households” means the portion of assisted households described in § 7-213 of the Act.</text> </paragraph> <paragraph num="(4)"> <text>“Designated household assistance” means the 3-year lease extensions and other special assistance available to certain designated households in accordance with §§7-214—7-219 of the Act.</text> </paragraph> <paragraph num="(5)"> <text>“Developer” means any individual, partnership, corporation, or other legal entity with experience in the ownership or operation of low-income housing developments.</text> </paragraph> <paragraph num="(6)"> <text>“Director” means the Director of the Division of Credit Assurance of the Department.</text> </paragraph> <paragraph num="(7)"> <text>“Federally-assisted mortgage” means a mortgage securing a loan made, insured, or receiving assistance or subsidies under the federal assistance programs described under § 7-102(a)(1) of the Act, or held by HUD and formerly assisted under these federal programs.</text> </paragraph> <paragraph num="(8)"> <text>“HUD” means the United States Department of Housing and Urban Development.</text> </paragraph> <paragraph num="(9)"> <text>“Individual with disability” means a person within the definition of “person with disabilities” in §3(b)(3)(E) of the United States Housing Act of 1937, 42 U.S.C. §§ 1437a(b)(3)(E), which is incorporated herein by reference.</text> </paragraph> <paragraph num="(10)"> <text>“Material violation of a lease” means a violation of the lease for which the landlord has repossessed the unit by execution of a warrant of restitution:</text> <paragraph num="(a)"> <text>In an action under Real Property Article, §8-401, Annotated Code of Maryland, for failure to pay rent; or</text> </paragraph> <paragraph num="(b)"> <text>Following a final judicial determination under Real Property Article, §8-402.1, Annotated Code of Maryland, finding a substantial violation of the lease, violation of obligations under state or local landlord-tenant law, or other good cause warranting an eviction.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Minor” means a person younger than 18 years old on the date that a notice of intent is given, including unborn children of a member of an assisted household.</text> </paragraph> <paragraph num="(12)"> <text>“Nonprofit developer” means any developer that is exempt from taxation under §501(a) of the Internal Revenue Code of 1986, 26 U.S.C. §501(a), or the corresponding provision of any succeeding internal revenue law.</text> </paragraph> <paragraph num="(13)"> <text>“Public housing authority” means any housing authority authorized under the Housing Authorities Law, Housing and Community Development Article, Division II, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Reasonable relocation expenses” means the costs incurred by an assisted tenant who vacates an assisted unit under a protected action including costs to:</text> <paragraph num="(a)"> <text>Transport personal property;</text> </paragraph> <paragraph num="(b)"> <text>Pack and unpack personal property;</text> </paragraph> <paragraph num="(c)"> <text>Disconnect and reconnect utilities;</text> </paragraph> <paragraph num="(d)"> <text>Disconnect and install personal property;</text> </paragraph> <paragraph num="(e)"> <text>Insure personal property to be moved;</text> </paragraph> <paragraph num="(f)"> <text>File rental application; and</text> </paragraph> <paragraph num="(g)"> <text>Obtain new rental housing, including security deposits.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(16)"> <text>“Section 8 agreement” means any contract or agreement providing for project-based rental assistance under §8 of the United States Housing Act of 1937, 42 U.S.C. §1437f.</text> </paragraph> <paragraph num="(17)"> <text>“Senior citizen” means a person who is 62 years old or older on the date that a notice of intent is given.</text> </paragraph> <paragraph num="(18)"> <text>“Tenant association” means a group of tenants who reside in an assisted project organized for the purpose of protecting or advocating the rights of tenants in the project.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 18, 2011 (38:8 Md. R. 505)</annotation> </annotations> </chapter> <chapter num="02" heading="Exemptions"> <regulation prefix="Regulation" num=".01" heading="Federal Preemption."> <paragraph num="A."> <text>These regulations and the Act shall be read in conjunction with the federal Low Income Housing Preservation and Resident Homeownership Act of 1990, 12 U.S.C. §§4101—4125 (“LIHPRHA”). To the extent that §232(a)(1) of LIHPRHA, 12 U.S.C. §4122(a)(1), expressly preempts certain portions of the Act, actions subject to LIHPRHA are exempt from the Act.</text> </paragraph> <paragraph num="B."> <text>If a protected action is subject to LIHPRHA and, as required by §232(a)(1) of LIHPRHA, 12 U.S.C. §4122(a)(1), is exempt from the Act, the owner shall give written notice to the Secretary of the steps the owner has taken to comply with LIHPRHA.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Authorized Exemptions."> <text>The Secretary, by written determination, may grant exemptions from the following requirements:</text> <paragraph num="A."> <text>The right of first purchase under §§7-204—7-211 of the Act;</text> </paragraph> <paragraph num="B."> <text>Tenant relocation assistance under §7-212(b)(1) and (2) of the Act;</text> </paragraph> <paragraph num="C."> <text>One-year lease extensions under §7-212(b)(3) of the Act; and</text> </paragraph> <paragraph num="D."> <text>Designated household assistance of 3-year lease extensions and additional relocation assistance for certain households under §§7-214—7-219 of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Standards for Exemptions."> <paragraph num="A."> <text>The Secretary may grant exemptions under Regulation .02 of this chapter to:</text> <paragraph num="(1)"> <text>Diminish the burdens on a project owner of complying with similar requirements in federal law and in the Act when compliance with both sets of requirements would not provide any appreciable benefit to assisted tenants beyond compliance with the federal law; or</text> </paragraph> <paragraph num="(2)"> <text>Prevent the inconsistent or inequitable application of federal law and the Act to a property owner, when compliance with both sets of requirements would:</text> <paragraph num="(a)"> <text>Be impossible due to conflicts between the requirements;</text> </paragraph> <paragraph num="(b)"> <text>Impose inequitably duplicative high costs or burdens on the property owner; or</text> </paragraph> <paragraph num="(c)"> <text>Otherwise result in an unreasonable application of the requirements or procedures of the Act on the property owner considering full compliance with federal law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The following factors shall be taken into consideration in determining whether to grant an exemption:</text> <paragraph num="(1)"> <text>Type of protected action;</text> </paragraph> <paragraph num="(2)"> <text>Size and location of the project;</text> </paragraph> <paragraph num="(3)"> <text>Nature of the assisted households of the project;</text> </paragraph> <paragraph num="(4)"> <text>Availability of other assisted housing in the area, including whether tenant based rental assistance will be available and accepted at these projects;</text> </paragraph> <paragraph num="(5)"> <text>Extent of benefit to the assisted tenants which would be retained as a result of the exemption;</text> </paragraph> <paragraph num="(6)"> <text>Availability of alternative rental subsidies or other assistance to tenants for use at the project;</text> </paragraph> <paragraph num="(7)"> <text>Provision by the project owner of notices and other benefits to the tenants beyond the requirements of the Act;</text> </paragraph> <paragraph num="(8)"> <text>Compliance by the owner with requirements of federal law relating to the protected action or tenant benefits generally;</text> </paragraph> <paragraph num="(9)"> <text>Extent of conflicts which would result from the owner’s full compliance with federal law and the Act;</text> </paragraph> <paragraph num="(10)"> <text>Extent of costs or other burdens on the owner which would result from full compliance with federal law and the Act; or</text> </paragraph> <paragraph num="(11)"> <text>Other relevant factors as determined by the Secretary.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Additional Requirements.</text> <paragraph num="(1)"> <text>Provide a portion of the benefits set forth in the Act;</text> </paragraph> <paragraph num="(2)"> <text>Accept the use by assisted households of rental assistance at the project for a certain period following the protected action;</text> </paragraph> <paragraph num="(3)"> <text>Provide, as is appropriate, other benefits to all or a portion of the assisted households;</text> </paragraph> <paragraph num="(4)"> <text>Provide initial or supplemental notices to the tenants, containing some or all of the information required by §7-202(b) of the Act, as applicable to the exemption conditions being imposed and for such length of time before the protected action as the Secretary determines is necessary and desirable to carry out the purposes of the Act; or</text> </paragraph> <paragraph num="(5)"> <text>Execute a written agreement specifying, or provide other assurances of compliance by the owner with, any conditions required in connection with the granting of an exemption.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Failure by the owner to comply with any conditions shall be grounds for the Secretary to withdraw the exemption and require the owner to comply fully with all requirements of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Exemption Application Procedures."> <paragraph num="A."> <text>Requests for secretarial exemptions under this regulation shall include:</text> <paragraph num="(1)"> <text>A letter requesting the exemption and outlining the reasons why the property owner believes the exemption is appropriate under the Act and these regulations;</text> </paragraph> <paragraph num="(2)"> <text>A description of the nature of the proposed protected action;</text> </paragraph> <paragraph num="(3)"> <text>A list of the federal program or programs which govern the federally-assisted mortgage;</text> </paragraph> <paragraph num="(4)"> <text>A description of any federal project-based assistance;</text> </paragraph> <paragraph num="(5)"> <text>A description of any other state, local government, or other assistance to the project;</text> </paragraph> <paragraph num="(6)"> <text>Copies of the notices of intent given under §7-201 of the Act, and copies of all other notices delivered in connection with the proposed protected action, including notices to or required by HUD or other federal regulatory agencies, and any notices in connection with any state or local proceedings concerning the assisted households’ leases at the project;</text> </paragraph> <paragraph num="(7)"> <text>A statement as to the expected impact of the proposed protected action on rents and the continued occupancy by existing assisted households for 3 years following the date of the protected action;</text> </paragraph> <paragraph num="(8)"> <text>Data which shows the number of:</text> <paragraph num="(a)"> <text>Assisted households;</text> </paragraph> <paragraph num="(b)"> <text>Assisted households with senior citizens and handicapped persons; and</text> </paragraph> <paragraph num="(c)"> <text>Assisted households with minors;</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>An explanation of any provisions planned or previously given to provide assisted households with adequate alternative housing or other assistance, including any federal rental assistance;</text> </paragraph> <paragraph num="(10)"> <text>The timetable anticipated for taking any protected action;</text> </paragraph> <paragraph num="(11)"> <text>The anticipated dates on which the protected action would result in dispossession of any assisted households at the project;</text> </paragraph> <paragraph num="(12)"> <text>A statement certifying that the owner has not taken any of the following actions, or any other action before the date of the protected action in order to avoid the owner's obligations in conjunction with the protected action:</text> <paragraph num="(a)"> <text>Termination without cause of the lease of any tenant occupying an assisted unit;</text> </paragraph> <paragraph num="(b)"> <text>Alteration of any of the terms and conditions of executed leases of existing tenants;</text> </paragraph> <paragraph num="(c)"> <text>Interference with any existing rights of tenants to occupy their units in the assisted project under existing leases or under any applicable federal, state, or local law;</text> </paragraph> <paragraph num="(d)"> <text>Interference with the efforts of individual tenants to obtain housing subsidies or other public assistance; or</text> </paragraph> <paragraph num="(e)"> <text>Discrimination in the leasing of units in the project based on source of income or receipt of rent subsidies provided by governmental or other sources; and</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>Other supporting documentation required by the Director.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Timing for Requests for Exemption.</text> <paragraph num="(1)"> <text>To permit compliance with the notice requirements of the Act, requests for exemption should ordinarily be submitted at least 1 year and 60 days before the effective date of any protected action, except as permitted under §B(2) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>In an emergency situation when urgent action is required, requests for exemption may be considered in the discretion of the Secretary if submitted at least 90 days before the effective date of any protected action.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Requests for secretarial exemption shall be submitted to the Secretary of Housing and Community Development, Department of Housing and Community Development, Attn: Director, Division of Credit Assurance, 100 Community Place, Crownsville, Maryland 21032.</text> </paragraph> <paragraph num="D."> <text>Copies of Exemption Requests.</text> <paragraph num="(1)"> <text>Copies of the letter requesting an exemption described under §A(1) of this regulation shall be delivered to the following parties not later than 3 days after the request is made to the Secretary:</text> <paragraph num="(a)"> <text>The chief executive officers of each local jurisdiction in which the assisted project is located;</text> </paragraph> <paragraph num="(b)"> <text>Any public housing authority existing in any local jurisdiction where the assisted project is located; and</text> </paragraph> <paragraph num="(c)"> <text>Each assisted household of the assisted project.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Review and Determination of Exemption Requests."> <paragraph num="A."> <text>The Director or the Director’s designee shall review each request to determine if the request conforms to the standards for exemption. When reviewing the request, the Director or the Director’s designee shall consider the factors set forth in Regulation .03B of this chapter and any other information made available to the Director or the Director’s designee concerning the impact of the protected action on the property owner and the assisted households.</text> </paragraph> <paragraph num="B."> <text>Upon completion of the review, the Director shall make a recommendation to the Secretary for approval or disapproval of the request for exemption. Upon approval or disapproval of the request for exemption by the Secretary, a notification of the Secretary's determination shall be sent to the owner. The notification shall be issued within 30 days of receipt of the request for exemption and any required supplemental documentation.</text> </paragraph> <paragraph num="C."> <text>The determination by the Secretary or a redetermination of any decision to grant or not to grant an exemption from any requirements of the Act is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 18, 2011 (38:8 Md. R. 505)</annotation> </annotations> </chapter> <chapter num="03" heading="Notice of Intent to Take Protected Action"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>Each property owner who takes or intends to take a protected action shall send written notices of intent that comply with the requirements of §§7-201 and 7-202 of the Act and these regulations.</text> </paragraph> <paragraph num="B."> <text>The purpose of providing notices of intent is to:</text> <paragraph num="(1)"> <text>Inform appropriate government agencies of the proposed action, and its possible impact on the tenants, and the local stock of affordable housing;</text> </paragraph> <paragraph num="(2)"> <text>Provide the Department with information to determine if the proposed action is legally permissible;</text> </paragraph> <paragraph num="(3)"> <text>Inform assisted households of the proposed actions and their rights in the event federal assistance is discontinued; and</text> </paragraph> <paragraph num="(4)"> <text>If the project is to be sold, afford other parties the opportunity to exercise a right of first purchase in accordance with §§7-204—7-211 of the Act.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Requirement to Submit Notices to the State."> <text>The notices of intent required under the Act and Regulations .03 and .04 of this chapter shall be submitted to the Department and the other required parties in addition to any other notification requirements imposed by the federal government. Submission of a notice to the applicable federal agency only by the owner or any other party does not constitute compliance with the Act and these regulations.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Notice Requirements."> <text>In addition to any requirements specified in the Act, the notice of intent to the chief executive officers, public housing authority, tenant association, and Secretary shall be sent by certified mail, return receipt requested and include the following information or material:</text> <paragraph num="A."> <text>The nature of the proposed protected action;</text> </paragraph> <paragraph num="B."> <text>A list of the federal program or programs that govern the federally-assisted mortgage or any project-based assistance;</text> </paragraph> <paragraph num="C."> <text>For assisted projects that are subject to federally-assisted mortgages:</text> <paragraph num="(1)"> <text>A copy of the assisted mortgage, the secured note, and any regulatory agreement and other related mortgage documents; and</text> </paragraph> <paragraph num="(2)"> <text>A statement setting forth the:</text> <paragraph num="(a)"> <text>Maturity date of the mortgage;</text> </paragraph> <paragraph num="(b)"> <text>Original and current principal balance of the mortgage;</text> </paragraph> <paragraph num="(c)"> <text>Name and address of the mortgagee; and</text> </paragraph> <paragraph num="(d)"> <text>Number of assisted units regulated by the mortgage;</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>For assisted projects that have units subsidized by project based assistance:</text> <paragraph num="(1)"> <text>A copy of the federal agreement to enter into a household assistance payments contract (AHAP);</text> </paragraph> <paragraph num="(2)"> <text>A copy of the federal housing assistance payments contract (HAP) evidencing the Section 8 agreement and a statement setting forth the expiration date of the Section 8 agreement, including all extensions or renewal options;</text> </paragraph> <paragraph num="(3)"> <text>The name and address of the agency responsible for administering the Section 8 agreement; and</text> </paragraph> <paragraph num="(4)"> <text>The number of units for which assistance is provided;</text> </paragraph> </paragraph> <paragraph num="E."> <text>A statement as to the expected impact of the proposed protected action on rents and the continued occupancy by existing assisted households for 3 years following the date of the protected action, including:</text> <paragraph num="(1)"> <text>Any proposed rent increases over such period; and</text> </paragraph> <paragraph num="(2)"> <text>The size of any tenant waiting list on the project;</text> </paragraph> </paragraph> <paragraph num="F."> <text>For projects that receive project-based assistance for less than 100 percent of the units:</text> <paragraph num="(1)"> <text>The number of unsubsidized units;</text> </paragraph> <paragraph num="(2)"> <text>The current rents for unsubsidized units; and</text> </paragraph> <paragraph num="(3)"> <text>Any planned or projected rent increases for the unsubsidized units for 3 years following the date of the protected action;</text> </paragraph> </paragraph> <paragraph num="G."> <text>Financial statements:</text> <paragraph num="(1)"> <text>For projects encumbered by a federally assisted mortgage, copies of financial statements submitted to HUD or the United States Department of Agriculture or the Department; or</text> </paragraph> <paragraph num="(2)"> <text>For projects receiving project based assistance, audited financial statements, if available, or instead of these, compiled financial statements or certified copies of federal income tax returns;</text> </paragraph> <paragraph num="(3)"> <text>All financial statements or federal income tax returns shall be for the 3 fiscal years immediately preceding the date of the notice of intent;</text> </paragraph> </paragraph> <paragraph num="H."> <text>A statement under penalty of perjury certifying that the owner has not taken any of the following actions, or any other action before the date of the notice of intent to avoid the owner’s obligations in conjunction with the protected action:</text> <paragraph num="(1)"> <text>Termination without cause of the lease of any tenant occupying an assisted unit;</text> </paragraph> <paragraph num="(2)"> <text>Alteration of any of the terms and conditions of executed leases of existing tenants;</text> </paragraph> <paragraph num="(3)"> <text>Interference with any existing rights of tenants to occupy their units in the assisted project under existing leases or under any applicable federal, state, or local law;</text> </paragraph> <paragraph num="(4)"> <text>Interference with the rights of applicants or eligible prospective tenants to obtain housing in the assisted project in accordance with federal admission preferences, and other applicable federal, state, or local law governing admissions to subsidized housing or the allocation of housing subsidies;</text> </paragraph> <paragraph num="(5)"> <text>Interference with the efforts of individual tenants to obtain housing subsidies or other public assistance;</text> </paragraph> <paragraph num="(6)"> <text>Discrimination in the leasing of units in the project based on source of income or receipt of housing subsidies provided by governmental or other sources; and</text> </paragraph> </paragraph> <paragraph num="I."> <text>Any other supporting documentation required by the Director.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Form of Notice of Intent to Assisted Households."> <paragraph num="A."> <text>In addition to the notices of intent sent under Regulation .03 of this chapter, the owner shall send a notice of intent to each assisted household in accordance with §7-202(b) of the Act and this regulation.</text> </paragraph> <paragraph num="B."> <text>The owner shall submit a proposed notice of intent, application for extended tenancy, and extended tenancy lease to the Director for comment and approval at least 15 days before delivery to the assisted households. The notices, applications and leases shall be in a form approved by the Department.</text> </paragraph> <paragraph num="C."> <text>The Director shall develop and make available to an owner on request, samples of a notice of intent, application for extended tenancy, and extended tenancy lease.</text> </paragraph> <paragraph num="D."> <text>The Director will review a notice of intent and other forms received from an owner to determine whether:</text> <paragraph num="(1)"> <text>The notice of intent meets the requirements of the Act and these regulations;</text> </paragraph> <paragraph num="(2)"> <text>The owner is permitted to take the protected action in accordance with these regulations.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Director will complete the review and notify the owner of the results within 30 days of receipt of the notice.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Notices of Intent to Tenants — Delivery."> <paragraph num="A."> <text>The property owner shall send a notice of intent that complies with the requirements of Regulation .04 of this chapter to each assisted household by U.S. mail, postage prepaid.</text> </paragraph> <paragraph num="B."> <text>Simultaneously with the notice of intent, the owner shall send applications for extended tenancy and extended tenant leases to all assisted households that qualify as designated households.</text> </paragraph> <paragraph num="C."> <text>Within 5 days of sending the required notices and forms to the assisted households, the owner shall send the Department by certified mail, return receipt requested, an affidavit signed by the property owner or property manager certifying:</text> <paragraph num="(1)"> <text>That the notice of intent complied with the requirements of the Act and these regulations; and</text> </paragraph> <paragraph num="(2)"> <text>The names and addresses of each assisted household to whom a notice of intent was sent.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Time Frames."> <text>The notice periods and corresponding lease extension periods may not commence until a notice of intent, which accurately and completely provides all the information required by the Act and these regulations, is served. If the notice of intent fails to provide all required information, it does not become effective until that information is provided.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 18, 2011 (38:8 Md. R. 505)</annotation> </annotations> </chapter> <chapter num="04" heading="Owner's Offer of Right of First Purchase"> <regulation prefix="Regulation" num=".01" heading="Registration."> <paragraph num="A."> <text>The following entities may register with the Secretary at any time, including after a notice of intent and owner’s offer of right of first purchase have been sent to the Secretary, to receive owners’ offers of first purchase by sending a written request to the Secretary:</text> <paragraph num="(1)"> <text>Any legally organized tenant association or other group representing any of the tenants at any assisted project;</text> </paragraph> <paragraph num="(2)"> <text>Any nonprofit developer; and</text> </paragraph> <paragraph num="(3)"> <text>Any other developer unrelated to the owner and experienced in the ownership or operation of low income housing projects.</text> </paragraph> </paragraph> <paragraph num="B."> <text>On receipt of an owner’s offer of right of first purchase, the Director shall provide the owner with a list of all entities registered under this regulation.</text> </paragraph> <paragraph num="C."> <text>Not later than 10 days after the owner receives the list of entities registered to receive a copy of the offer, the owner shall send by certified mail, return receipt requested, the owner’s offer to any person or entity on the registration list.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Acceptance of Owner’s Offer of Right of First Purchase."> <paragraph num="A."> <text>The acceptance of an owner’s offer of a right of first purchase is governed by §§7-204—7-211 of the Act and this regulation.</text> </paragraph> <paragraph num="B."> <text>In determining which party’s acceptance will most benefit the assisted households, the Secretary shall consider the following factors as applicable to each prospective purchaser:</text> <paragraph num="(1)"> <text>The duration of the low income rental restrictions for the project following the purchase;</text> </paragraph> <paragraph num="(2)"> <text>The number of units to receive or continue to receive, project-based rental assistance or other subsidies, under the prospective purchaser’s ownership of the project;</text> </paragraph> <paragraph num="(3)"> <text>Projected tenant rents for a period of at least 5 years under the prospective purchaser’s ownership;</text> </paragraph> <paragraph num="(4)"> <text>Tenant ownership and operation or ownership and operation by a nonprofit developer, local government, or local housing authority;</text> </paragraph> <paragraph num="(5)"> <text>The experience and expertise of the purchasers in the ownership and operation of low income residential rental property;</text> </paragraph> <paragraph num="(6)"> <text>The economic feasibility of the project following purchase;</text> </paragraph> <paragraph num="(7)"> <text>The type, nature, and extent of any proposed physical improvements to the project;</text> </paragraph> <paragraph num="(8)"> <text>The extent of any tenant services proposed by the prospective purchaser;</text> </paragraph> <paragraph num="(9)"> <text>The extent to which the proposed ownership would minimize financial hardship and displacement to the tenants; or</text> </paragraph> <paragraph num="(10)"> <text>Any other relevant factor, including the preferences of the tenants, as determined by the Secretary.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Withdrawal of an Acceptance."> <paragraph num="A."> <text>The original party which accepts or is authorized to accept an offer of the right of first purchase by the Secretary may withdraw its acceptance by a written notice to the owner, with a copy to the Department.</text> </paragraph> <paragraph num="B."> <text>The party withdrawing its acceptance will forfeit the first $10,000 of its deposit, unless any remaining party submits an acceptance of the owner’s offer.</text> </paragraph> <paragraph num="C."> <text>In the event of a withdrawal, the owner, within 3 days of receipt of the notice of withdrawal shall notify in writing:</text> <paragraph num="(1)"> <text>All other parties who received a notice of a right of first purchase;</text> </paragraph> <paragraph num="(2)"> <text>All parties who submitted an acceptance; and</text> </paragraph> <paragraph num="(3)"> <text>The Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The withdrawal notice shall specify the terms of the owner’s offer and the rights of the parties receiving notice to submit an acceptance in accordance with the timeframes in the Act.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 18, 2011 (38:8 Md. R. 505)</annotation> </annotations> </chapter> <chapter num="05" heading="Tenant Protection Assistance"> <regulation prefix="Regulation" num=".01" heading="General."> <text>A tenant is entitled to tenant protection assistance, including relocation expenses and lease extensions, in accordance with §§7-212—7-219 of the Act.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Relocation Expenses."> <paragraph num="A."> <text>To receive the additional $475 for relocation expenses authorized in the Act, the tenant shall submit reasonable documentation of actual and reasonable relocation expenses to the owner within 60 days after the tenant vacates the unit.</text> </paragraph> <paragraph num="B."> <text>The owner shall pay the additional relocation expenses to the tenant within 15 days after the documented expenses are submitted to the owner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Lease Extensions."> <paragraph num="A."> <text>The owner shall offer a lease extension for a period of at least 1 year from the date of the notice of intent to each assisted household that has not committed a material violation of the lease.</text> </paragraph> <paragraph num="B."> <text>The owner shall include in each extended lease the criteria for early termination or cessation of the extended lease that are listed in §7-218 of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Designated Households."> <paragraph num="A."> <text>Designated households that do not receive an extended tenancy under the Act may be eligible for rental equivalent payments and relocation expense payments under §7-219(e) of the Act.</text> </paragraph> <paragraph num="B."> <text>All designated households are eligible upon vacating their assisted unit for reimbursement by the project owner for ordinary relocation expenses payable to all assisted households in accordance with §7-212(b)(1) and (2) of the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Designated Household Assistance — Records."> <paragraph num="A."> <text>The owner shall create and maintain accurate records that set forth:</text> <paragraph num="(1)"> <text>The relocation and reimbursement expenses paid to each assisted household;</text> </paragraph> <paragraph num="(2)"> <text>The rates of rent charged for the assisted units; and</text> </paragraph> <paragraph num="(3)"> <text>Any other information concerning tenant protection assistance provided by the owner.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The records shall be retained and available for inspection by the Department for five years after the date of the notice of intent delivered to the tenants.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 18, 2011 (38:8 Md. R. 505)</annotation> </annotations> </chapter> <chapter num="06" heading="Enforcement and Waivers"> <regulation prefix="Regulation" num=".01" heading="Due Diligence."> <paragraph num="A."> <text>Settlement agents conducting real estate settlements involving the sale of residential rental projects, or the release of federally-assisted mortgages or related documents encumbering the projects, shall make inquiries of the owner as to the nature of the project, and the possible termination of federal assistance which may be governed by the Act and these regulations.</text> </paragraph> <paragraph num="B."> <text>If responses to the agent’s inquiries, the nature of the transaction and related documents, or any information otherwise known to the settlement agent raises a reasonable possibility that a sworn statement under §7-307 of the Act is required, the settlement agent shall use its best efforts to procure and file a sworn statement with the Department, and if unable to comply, shall notify the Department in writing before the settlement of the circumstances of the failure to deliver the sworn statement.</text> </paragraph> <paragraph num="C."> <text>Settlement agents failing to comply with this regulation may be subject to civil liability and civil monetary penalties in accordance with the Act.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Waiver."> <text>The Secretary may, by written determination, waive or vary particular provisions of these regulations, provided that:</text> <paragraph num="A."> <text>The waiver is not inconsistent with the Act; and</text> </paragraph> <paragraph num="B."> <text>In the written determination of the Secretary, the application of the regulations in a specific case, or in an emergency situation, would be inequitable or contrary to the purposes of the Act, and would not substantially limit any significant protections to tenants required under the Act.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 18, 2011 (38:8 Md. R. 505)</annotation> </annotations> </chapter> </subtitle> <subtitle num="11" heading="Demonstration Programs"> <chapter num="01" heading="Operating and Technical Assistance Grants"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations describe the policies and procedures for making:</text> <paragraph num="A."> <text>Operating assistance grants to nonprofit organizations to promote the development and improvement of low income housing;</text> </paragraph> <paragraph num="B."> <text>Operating assistance grants to increase the capacity of nonprofit organizations to development low income housing using programs of the Department; and</text> </paragraph> <paragraph num="C."> <text>Technical assistance grants to nonprofit organizations, local governments, local development agencies, and local development corporations to obtain or provide advisory, consultative, training, information, and other services which will assist or carry out community development activities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objectives of the program are to:</text> <paragraph num="A."> <text>Make operating assistance grants to nonprofit organizations to:</text> <paragraph num="(1)"> <text>Encourage experienced nonprofit organizations to develop housing for low income persons and households,</text> </paragraph> <paragraph num="(2)"> <text>Encourage nonprofit organizations to assist individuals in applying for loans under the programs of the Department,</text> </paragraph> <paragraph num="(3)"> <text>Provide assistance to nonprofit organizations which provide lead paint testing or assessment services to homeowners or landlords who apply for housing loan programs of the Department, and</text> </paragraph> <paragraph num="(4)"> <text>Build the capacity of nonprofit organizations to develop housing for low income persons and households by using the housing loan programs of the Department; and</text> </paragraph> </paragraph> <paragraph num="B."> <text>Make technical assistance grants to nonprofit organizations, local governments, local development corporations, and local development agencies to be used for advisory, consultative, training, and educational services to initiate or enhance community development activities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in the Act have the meanings defined there and, in addition, the meanings used in this chapter.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, §§2-102 and 4-211 and Title 4, Subtitle 11, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Capacity building grant” means a grant to a nonprofit organization to enhance its ability and expertise to develop projects or activities financed under the homeownership programs, rental housing programs, or the special loan programs of the Department.</text> </paragraph> <paragraph num="(3)"> <text>Community-Based Organization.</text> <paragraph num="(a)"> <text>“Community-based organization” means a nonprofit organization that is:</text> <paragraph num="(i)"> <text>Headquartered in the same community as its projects or programs and provides services specific to the community; or</text> </paragraph> <paragraph num="(ii)"> <text>Not headquartered in the same community as its projects or programs, if at least one-third of its board of directors is composed of community residents or members of organizations located in the community, and those organizations can show a history of involvement in the community.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Community-based organization” does not include community housing development organizations (CHDO) under the federal HOME program.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Community development” means the community development purposes of the Department as provided in Housing and Community Development Article, §4-202, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>“Eligible housing” means housing occupied by income eligible households.</text> </paragraph> <paragraph num="(7)"> <text>“Homeownership programs” means the:</text> <paragraph num="(a)"> <text>Settlement Expense Loan Program authorized by Housing and Community Development Article, Title 4, Subtitle 3, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Maryland Home Financing Programs, authorized by Housing and Community Development Article, Title 4, Subtitle 8, Annotated Code of Maryland, which include the:</text> <paragraph num="(i)"> <text>Reverse Equity Mortgage Program,</text> </paragraph> <paragraph num="(ii)"> <text>Emergency Mortgage Assistance Program,</text> </paragraph> <paragraph num="(iii)"> <text>Preferred Interest Rate Loan Program, and</text> </paragraph> <paragraph num="(iv)"> <text>Construction Loan Program.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Homeownership Programs Fund” means the fund referred to in Housing and Community Development Article, §§4-501 and 4-502, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Household” means an individual or group of individuals who occupy a dwelling unit as their permanent residence.</text> </paragraph> <paragraph num="(10)"> <text>“Housing development” means any of the activities for which loans may be made under the rental housing programs, homeownership programs, and special loan programs.</text> </paragraph> <paragraph num="(11)"> <text>“Housing Finance Review Committee” means the seven individuals appointed by the Governor to review and make recommendations to the Secretary on financing requests in accordance with Housing and Community Development Article, §4-208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Housing programs” means the rental housing programs, homeownership programs, and special loan programs.</text> </paragraph> <paragraph num="(13)"> <text>“Income eligible households” means households which meet the income limits established by the Secretary for any particular housing program.</text> </paragraph> <paragraph num="(14)"> <text>“Legal entity” means a corporation, association, general partnership, limited partnership, joint venture, nonprofit organization, business, government or political subdivision thereof, or governmental agency.</text> </paragraph> <paragraph num="(15)"> <text>“Local development agency” means a board, commission, agency, department, or authority of a municipality or county designated by the chief executive officer of that municipality or county for the purpose of carrying out community development activities.</text> </paragraph> <paragraph num="(16)"> <text>“Local development corporation” means a corporation or foundation of which no part of the net earnings inures to the benefit of any private shareholder or individual, organized and operated primarily for the purposes of fostering, encouraging, and assisting community development within the State.</text> </paragraph> <paragraph num="(17)"> <text>“Local government” means any municipal corporation subject to the provisions of the State Constitution, Article XI-E, or any one of the 23 counties of the State or Baltimore City.</text> </paragraph> <paragraph num="(18)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity, no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(19)"> <text>“Operating assistance grants” means production grants and capacity building grants.</text> </paragraph> <paragraph num="(20)"> <text>“Production grant” means a grant to a nonprofit organization which:</text> <paragraph num="(a)"> <text>Produces eligible housing;</text> </paragraph> <paragraph num="(b)"> <text>Assists an individual homeowner or sponsor to apply for a loan under the homeownership or special loan programs; or</text> </paragraph> <paragraph num="(c)"> <text>Has provided lead paint testing or assessment services to an applicant under the Lead Hazard Reduction Grant and Loan Program.</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Program” means the Operating and Technical Assistance Grant Program.</text> </paragraph> <paragraph num="(22)"> <text>“Rental housing programs” means the loan programs funded with moneys in the Rental Housing Programs Fund, including the:</text> <paragraph num="(a)"> <text>Multifamily Rehabilitation Program of the Maryland Housing Rehabilitation Program authorized under Housing and Community Development Article, §4-201, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Nonprofit Rehabilitation Program authorized under Housing and Community Development Article, §4-929, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>Rental Housing Production Program under Housing and Community Development Article, §4-1502, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(d)"> <text>Elderly Rental Housing Program authorized under Housing and Community Development Article, §4-402, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Rental Housing Programs Fund” means the fund referred to in Housing and Community Development Article, §4-504, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(24)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(25)"> <text>“Special loan programs” means the loan programs funded with moneys in the Special Loan Programs Fund, including the:</text> <paragraph num="(a)"> <text>Regular Rehabilitation Program of the Maryland Housing Rehabilitation Program authorized under Housing and Community Development Article, §4-906, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Accessory, Shared, and Sheltered Housing Program authorized under Housing and Community Development Article, §4-926, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>Lead Hazard Reduction Grant and Loan Program authorized under Housing and Community Development Article, §§4-708 and 4-709, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Group Home Financing Program authorized under Housing and Community Development Article, §4-602, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(e)"> <text>Indoor Plumbing Program authorized under Housing and Community Development Article, §4-927, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(26)"> <text>“Special Loan Programs Fund” means the fund referred to in Housing and Community Development Article, §4-505, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(27)"> <text>“Technical assistance grant” means a grant to a nonprofit organization, local government, local development agency, or local development corporation to obtain or provide advisory, consultative, training, information, design, architectural, organization, or management assistance to plan, design, implement, expand, or improve a community development project or program or to strengthen the ability of the grantee or those assisted by the grantee to provide or promote community development activities.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Grantees."> <paragraph num="A."> <text>Production Grants. Nonprofit organizations shall meet the following requirements to qualify for a production grant:</text> <paragraph num="(1)"> <text>Have the legal capacity to enter into a grant agreement;</text> </paragraph> <paragraph num="(2)"> <text>Satisfy all legal requirements to operate in the State;</text> </paragraph> <paragraph num="(3)"> <text>Meet the performance standards of the Department, as follows:</text> <paragraph num="(a)"> <text>Not have defaulted on a prior loan from the Department;</text> </paragraph> <paragraph num="(b)"> <text>Not be currently barred or suspended from any of the Department's programs;</text> </paragraph> <paragraph num="(c)"> <text>Not have previously received a production grant and failed to complete the project in a timely manner; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Satisfy one of the following criteria:</text> <paragraph num="(a)"> <text>Have received a reservation or commitment of funds from the Department, or other source satisfactory to the Department, to finance the acquisition, construction, or rehabilitation of:</text> <paragraph num="(i)"> <text>Rental housing of the type which is eligible for financing through the rental housing programs or special loan programs,</text> </paragraph> <paragraph num="(ii)"> <text>A group home which is eligible for financing through the Group Home Financing Program of the special loan programs, or</text> </paragraph> <paragraph num="(iii)"> <text>Single family for-sale housing or an advance reservation of mortgage funds for income eligible households to purchase housing developed by the nonprofit organization which are eligible activities through the homeownership programs; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Assist a third party applicant by having provided:</text> <paragraph num="(i)"> <text>Technical assistance in applying for a loan under the special loan programs to individuals who reside in a dwelling located in a noncertified jurisdiction, or providing lead paint testing or assessment services to homeowners and landlords who have applied for a loan through the Lead Hazard Reduction Grant and Loan Program which is one of the special loan programs, and</text> </paragraph> <paragraph num="(ii)"> <text>The Department's certification that the organization's efforts were responsible for originating the application and that the application was not processed by a local government certified as a local administrator by the special loan programs.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Capacity Building Grants. A nonprofit organization shall meet the following requirements to qualify for a capacity building grant:</text> <paragraph num="(1)"> <text>Have the legal capacity to enter into the grant;</text> </paragraph> <paragraph num="(2)"> <text>Satisfy all legal requirements to operate in the State;</text> </paragraph> <paragraph num="(3)"> <text>Not have received a prior capacity building grant;</text> </paragraph> <paragraph num="(4)"> <text>Except as set forth in §C of this regulation, not have participated, within the 2 years before making application for a capacity building grant, in any projects or activities financed by the housing programs for which it is applying to develop capacity; and</text> </paragraph> <paragraph num="(5)"> <text>Meet the performance standards of the Department, as follows:</text> <paragraph num="(a)"> <text>Not have defaulted on a prior loan from the Department, and</text> </paragraph> <paragraph num="(b)"> <text>Not be currently barred or suspended from any of the Department's programs.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>A nonprofit organization may be eligible for a capacity building grant if the nonprofit organization has undertaken projects or activities with a housing program within the 2 years before making application for a capacity building grant for the same program, but has insufficient experience and expertise to undertake additional housing development, as determined in the sole discretion of the Department, based on:</text> <paragraph num="(1)"> <text>The frequency, scope, size, and complexity of the prior activity or project;</text> </paragraph> <paragraph num="(2)"> <text>The staffing, resources, and expertise of the nonprofit organization; and</text> </paragraph> <paragraph num="(3)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Joint Applications. Two or more nonprofit organizations may apply jointly for a capacity building grant provided each applicant qualifies as an eligible grantee. For example, a nonprofit organization with experience developing rental housing and a nonprofit organization with experience developing homeownership housing may apply jointly for a capacity building grant to increase the capacity of the former nonprofit organization to undertake homeownership development and the latter to undertake rental housing development.</text> </paragraph> <paragraph num="E."> <text>Nonprofit Status. Nonprofit organizations which are affiliated with or controlled by a for-profit organization shall not be eligible for operating assistance grants.</text> </paragraph> <paragraph num="F."> <text>Technical Assistance Grants. A nonprofit organization, local development agency, local government, or local development corporation shall meet the following requirements to qualify for a technical assistance grant:</text> <paragraph num="(1)"> <text>Have the legal capacity to enter into the grant;</text> </paragraph> <paragraph num="(2)"> <text>Satisfy all legal requirements to operate in the State; and</text> </paragraph> <paragraph num="(3)"> <text>Meet the performance standards of the Department, as follows:</text> <paragraph num="(a)"> <text>Not have defaulted on a prior loan from the Department, and</text> </paragraph> <paragraph num="(b)"> <text>Not be currently barred or suspended from any of the Department's programs.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Use of Grant Funds."> <paragraph num="A."> <text>Production Grants. Production grants may be used for any purpose for which the grantee is legally authorized to expend funds, including:</text> <paragraph num="(1)"> <text>General operating costs, salaries, benefits, organizational costs, rent, and utilities;</text> </paragraph> <paragraph num="(2)"> <text>Costs associated with applying for a loan or assisting individuals or legal entities in applying for a loan under the housing programs; and</text> </paragraph> <paragraph num="(3)"> <text>Costs associated with lead paint testing or assessment services under the Lead Hazard Reduction Grant and Loan Program, one of the special loan programs.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Capacity building grants may be used for any costs associated with enhancing or building the ability of the organization to participate successfully, or assisting others in participating successfully, in the housing programs, including:</text> <paragraph num="(1)"> <text>Staff salaries and benefits;</text> </paragraph> <paragraph num="(2)"> <text>The cost of consultants or services used to develop expertise in areas related to the housing programs;</text> </paragraph> <paragraph num="(3)"> <text>Training and education programs in areas which increase the nonprofit organization's capacity to undertake housing development, including market analysis, finance, construction, appraisal review, and management;</text> </paragraph> <paragraph num="(4)"> <text>A portion of general operating costs of the nonprofit organization reasonably associated with the activities related to a housing program for which the grant is awarded, including travel, administrative overhead, telephone, postage, office supplies, publications, and services;</text> </paragraph> <paragraph num="(5)"> <text>Furnishings and equipment for staff involved in housing development activities, including desks, chairs, calculators, and personal computers;</text> </paragraph> <paragraph num="(6)"> <text>Costs directly associated with undertaking housing development under the housing programs including options, appraisals, and market analyses; and</text> </paragraph> <paragraph num="(7)"> <text>Other costs approved by the Department in its sole discretion.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Technical assistance grants may be used for any costs associated with advisory, consultative, training, information, design, architectural, organization, or management assistance to plan, design, implement, expand, or improve a community development project or program or to strengthen the ability of the grantee or those assisted by the grantee to provide or promote community development activities, including:</text> <paragraph num="(1)"> <text>Staff salaries and benefits;</text> </paragraph> <paragraph num="(2)"> <text>The cost of consultants or services used to develop expertise in areas related to community development;</text> </paragraph> <paragraph num="(3)"> <text>Training and education programs in areas which increase the grantee's capacity to undertake or enhance community development, including market analysis, finance, construction, appraisal review, and management;</text> </paragraph> <paragraph num="(4)"> <text>A portion of general operating costs of the grantee reasonably associated with community development activities of the grantee, including travel, administrative overhead, telephone, postage, office supplies, publications, and services;</text> </paragraph> <paragraph num="(5)"> <text>Furnishings and equipment for staff involved in community development activities, including desks, chairs, calculators, and personal computers;</text> </paragraph> <paragraph num="(6)"> <text>Costs directly associated with undertaking community development; and</text> </paragraph> <paragraph num="(7)"> <text>Other costs approved by the Department in its sole discretion.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Grant Allocation and Criteria."> <paragraph num="A."> <text>Allocations.</text> <paragraph num="(1)"> <text>The amount of funds available in the fiscal year for operating assistance grants for each of the housing programs and for technical assistance grants shall be determined as of July 1 of each fiscal year.</text> </paragraph> <paragraph num="(2)"> <text>Initial determinations may be adjusted if appropriated funds available for the housing programs are increased or decreased after July 1 in any fiscal year.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall determine annually the proportions of available funds to be allocated to production grants, capacity building grants, and technical assistance grants. Within a State fiscal year any available funds which are not used for the type of grant for which the funds were allocated initially may be used for the other type of grant or for loans.</text> </paragraph> <paragraph num="(4)"> <text>The Department shall notify nonprofit organizations and local governments, and in the case of technical assistance grants, the Department shall also notify local development corporations and local development agencies, of allocations, fund availability, and application cycles.</text> </paragraph> <paragraph num="(5)"> <text>Best efforts shall be made to award grants to facilitate the full use of program funds in accordance with initial allocations of funds.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Production Grants.</text> <paragraph num="(1)"> <text>Production grants shall be evaluated in one or more funding rounds in each fiscal year, at the discretion of the Department, taking into consideration the following factors:</text> <paragraph num="(a)"> <text>Geographic area served by the nonprofit organization;</text> </paragraph> <paragraph num="(b)"> <text>The number of eligible housing units produced by the nonprofit organization;</text> </paragraph> <paragraph num="(c)"> <text>The number of individuals the nonprofit organization assisted in obtaining loans through the special loans program;</text> </paragraph> <paragraph num="(d)"> <text>The number of homeowners or landlords assisted by the nonprofit organization with lead paint testing or assessment services in connection with the Lead Hazard Reduction Grant and Loan Program; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Preference shall be given to community-based organizations in evaluating production grants.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Capacity Building Grants. Capacity building grants shall be evaluated on a competitive basis in one or more rounds of competition, at the discretion of the Department, taking into consideration the following factors:</text> <paragraph num="(1)"> <text>The number of housing units anticipated to be developed consistent with realistic organizational goals;</text> </paragraph> <paragraph num="(2)"> <text>Expected growth and expansion of the nonprofit organization in the area of housing development;</text> </paragraph> <paragraph num="(3)"> <text>The extent to which the proposed organizational and staffing plan supports potential growth in capacity to meet housing production goals;</text> </paragraph> <paragraph num="(4)"> <text>Geographic area served by the nonprofit organization;</text> </paragraph> <paragraph num="(5)"> <text>Performance of an existing nonprofit organization in carrying out nonhousing activities; and</text> </paragraph> <paragraph num="(6)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Technical Assistance Grants. Applications for technical assistance grants shall be evaluated on an ongoing basis, as applications are received in each fiscal year, taking into consideration the following factors:</text> <paragraph num="(1)"> <text>The need of the individuals or communities assisted by the applicant for community development projects or programs;</text> </paragraph> <paragraph num="(2)"> <text>The geographic area served by the applicant;</text> </paragraph> <paragraph num="(3)"> <text>The performance of the applicant in carrying out existing activities;</text> </paragraph> <paragraph num="(4)"> <text>The ability of the applicant to use the technical assistance grant to improve the ability of the applicant or those assisted by the applicant to provide or promote community development activities;</text> </paragraph> <paragraph num="(5)"> <text>Whether the proposed project has measurable outcomes; and</text> </paragraph> <paragraph num="(6)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Grant Terms and Conditions."> <paragraph num="A."> <text>Production Grant Amounts. Production grants may be made in the following amounts:</text> <paragraph num="(1)"> <text>For projects which produce rental housing, grants may not exceed an amount equal to 1 percent of the amount of the reservation or commitment of funds the applicant has received to produce rental housing, provided that a grant may not be less than $1,500 or more than $13,000;</text> </paragraph> <paragraph num="(2)"> <text>For projects which produce homeownership units, grants may be in an amount equal to $100 for each unit of housing identified by a nonprofit organization in a reservation or commitment of funds the applicant has received to produce homeownership units provided that a grant may not be less than $1,000 or more than $5,000;</text> </paragraph> <paragraph num="(3)"> <text>For projects financed under the Group Home Financing Program, grants shall be in an amount equal to $750 for each project for which the nonprofit organization makes application for a loan provided that the total amount of grants awarded for this purpose to a single nonprofit organization in one fiscal year may not exceed $1,500; and</text> </paragraph> <paragraph num="(4)"> <text>For nonprofit organizations which assist individuals in making applications for loans under the other special loan programs or provide lead paint testing or assessment services to individuals who apply for a lead abatement loan, a grant shall be in an amount not to exceed $150 for each individual application submitted to the Department provided that the total amount of funds awarded for this purpose to a single nonprofit organization in one fiscal year may not exceed $5,000.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Capacity Building Grant Terms. Capacity building grants shall be subject to the following terms and conditions:</text> <paragraph num="(1)"> <text>The total amount of a grant may not exceed $65,000;</text> </paragraph> <paragraph num="(2)"> <text>A grant may be disbursed over a 1-year, 2-year, or 3-year term;</text> </paragraph> <paragraph num="(3)"> <text>Grants payable over a multi-year period are subject to limitations in the amount of disbursements in each year as established by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Contribution for Capacity Building Grants.</text> <paragraph num="(1)"> <text>Nonprofit organizations shall be required to make a contribution to the activities funded by capacity building grants.</text> </paragraph> <paragraph num="(2)"> <text>A nonprofit organization's contribution may be in the form of:</text> <paragraph num="(a)"> <text>Cash;</text> </paragraph> <paragraph num="(b)"> <text>The in-kind value of:</text> <paragraph num="(i)"> <text>Office space,</text> </paragraph> <paragraph num="(ii)"> <text>Salaries and fringe benefits for administrative and support staff, and</text> </paragraph> <paragraph num="(iii)"> <text>A portion of general operating and administrative costs reasonably attributable to the housing development activities for which the grant is awarded; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Other contributions acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Production grants, technical assistance grants, or other State and federal funds administered by the Department may not be used to satisfy the contribution requirement of a nonprofit organization.</text> </paragraph> <paragraph num="(4)"> <text>The amount of the contribution of a nonprofit organization is as follows:</text> <paragraph num="(a)"> <text>For grants with a 1-year term, the contribution shall equal $1 to every $1 of grant funds;</text> </paragraph> <paragraph num="(b)"> <text>For grants with a term of more than 1 year, the contribution shall equal:</text> <paragraph num="(i)"> <text>In the first year of a grant, $1 to every $3 of grant funds,</text> </paragraph> <paragraph num="(ii)"> <text>In the second year of a grant, $1 for every $1 of grant funds, and</text> </paragraph> <paragraph num="(iii)"> <text>In the third year of a grant, $2 for every $1 of grant funds.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Limitations on Capacity Building Grants.</text> <paragraph num="(1)"> <text>Funding for capacity building grants with a term in excess of 1 year shall be subject to:</text> <paragraph num="(a)"> <text>The availability of grant funds for each year a grant agreement is in effect; and</text> </paragraph> <paragraph num="(b)"> <text>Performance of the grantee in accordance with the grantee's plan for building its capacity to develop housing.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A recipient of a capacity building grant may receive a production grant or technical assistance grant during the term of the capacity building grant.</text> </paragraph> <paragraph num="(3)"> <text>Grantees shall be required to identify the housing programs for which a grant is intended to build capacity.</text> </paragraph> <paragraph num="(4)"> <text>Only one capacity building grant, whether for a 1-year, 2-year, or 3-year term, may be made to any one nonprofit organization.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Technical Assistance Grant Terms.</text> <paragraph num="(1)"> <text>The total amount of a technical assistance grant may not exceed $50,000.</text> </paragraph> <paragraph num="(2)"> <text>A technical assistance grant shall be disbursed over a 1-year term.</text> </paragraph> <paragraph num="(3)"> <text>Grantees shall make a contribution to the activities funded by technical assistance grants, which may be in the form of:</text> <paragraph num="(a)"> <text>Cash;</text> </paragraph> <paragraph num="(b)"> <text>The in-kind value of:</text> <paragraph num="(i)"> <text>Office space,</text> </paragraph> <paragraph num="(ii)"> <text>Salaries and fringe benefits for administrative and support staff, and</text> </paragraph> <paragraph num="(iii)"> <text>A portion of general operating and administrative costs reasonably attributable to the community development activities for which the grant is awarded; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Other contributions acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The amount of the contribution of a grantee shall equal $1 to every $1 of grant funds.</text> </paragraph> <paragraph num="(5)"> <text>Production grants, capacity building grants, or other State and federal funds administered by the Department may not be used to satisfy the contribution requirement of a grantee.</text> </paragraph> <paragraph num="(6)"> <text>A recipient of a technical assistance grant may receive a production grant or capacity building grant during the term of the technical assistance grant.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Application and Processing Procedures."> <paragraph num="A."> <text>Production Grant Applications.</text> <paragraph num="(1)"> <text>Applications for production grants shall be on the form approved by the Department, including the following supporting documentation:</text> <paragraph num="(a)"> <text>Organizational documents of the applicant;</text> </paragraph> <paragraph num="(b)"> <text>Evidence of the number and type of housing units produced by the nonprofit organization;</text> </paragraph> <paragraph num="(c)"> <text>The source of funding for the housing units produced;</text> </paragraph> <paragraph num="(d)"> <text>The amount of funds the applicant is seeking; and</text> </paragraph> <paragraph num="(e)"> <text>Other documentation the Department considers necessary to evaluate the grant request.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Applications for production grants for nonprofit organizations which assist individuals applying for a loan under the homeownership or special loan programs or which provide lead paint testing or assessment services under the Lead Hazard Reduction Grant and Loan Program shall also include a description of the:</text> <paragraph num="(a)"> <text>Services to be provided;</text> </paragraph> <paragraph num="(b)"> <text>Geographic area in which the service will be provided;</text> </paragraph> <paragraph num="(c)"> <text>Expected number of applicants that will be assisted; and</text> </paragraph> <paragraph num="(d)"> <text>Expected types of housing or activities for which the applicants will seek loans.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Grants awarded based on expected applications shall be funded only after the individuals assisted by the grantee have filed application for a loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Capacity Building Grant Application.</text> <paragraph num="(1)"> <text>Applications for capacity building grants shall be on the form approved by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The application shall include the following information and supporting documentation:</text> <paragraph num="(a)"> <text>Organizational documents of the applicant;</text> </paragraph> <paragraph num="(b)"> <text>A comprehensive strategic development plan which details the organization's short-term and long-term housing development goals;</text> </paragraph> <paragraph num="(c)"> <text>A description of the applicant's participation in previous housing activities and projects with particular emphasis on the last 5 years;</text> </paragraph> <paragraph num="(d)"> <text>A description of the geographic area in which the applicant will concentrate the organization's efforts;</text> </paragraph> <paragraph num="(e)"> <text>Identification and description of matching funds and resources;</text> </paragraph> <paragraph num="(f)"> <text>The term and amount of funds the applicant is seeking; and</text> </paragraph> <paragraph num="(g)"> <text>Other documentation the Department considers necessary to evaluate the grant request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Technical Assistance Grant Application.</text> <paragraph num="(1)"> <text>Applications for technical assistance grants shall be on the form approved by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The application shall include the following information and supporting documentation:</text> <paragraph num="(a)"> <text>Organizational documents of the applicant;</text> </paragraph> <paragraph num="(b)"> <text>A description of the project or program to be funded with the technical assistance grant;</text> </paragraph> <paragraph num="(c)"> <text>A description of the geographic area in which the applicant will concentrate its efforts;</text> </paragraph> <paragraph num="(d)"> <text>An operating budget for the project or program, including the use of funds and the identification and description of matching funds and resources;</text> </paragraph> <paragraph num="(e)"> <text>The term and amount of funds the applicant is seeking; and</text> </paragraph> <paragraph num="(f)"> <text>Other documentation the Department considers necessary to evaluate the grant request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Production Grant Awards.</text> <paragraph num="(1)"> <text>Applications for production grants shall be evaluated by the Director of the Department's Division of Development Finance who shall make recommendations to the Secretary for awards of production grants.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary may disapprove or approve a grant either on the terms recommended by the Director of the Division of Development Finance or on other terms and conditions as the Secretary considers appropriate.</text> </paragraph> <paragraph num="(3)"> <text>Following approval by the Secretary, production grants shall be disbursed directly to the nonprofit organization.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Capacity Building Grant Awards.</text> <paragraph num="(1)"> <text>Applications for capacity building grants shall be evaluated by the Director of the Department's Division of Development Finance who shall make recommendations to the Secretary for awards of capacity building grants.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary may disapprove or approve a grant either on the terms recommended by the Director of the Division of Development Finance or on other terms and conditions as the Secretary considers appropriate.</text> </paragraph> <paragraph num="(3)"> <text>Following approval by the Secretary, the Department shall enter into a grant agreement with each successful applicant.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Technical Assistance Grant Awards.</text> <paragraph num="(1)"> <text>Applications for technical assistance grants shall be evaluated based on the criteria set forth in Regulation .06D of this chapter by the Director of the Department's Division of Development Finance who shall make recommendations to the Secretary for awards of technical assistance grants.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary may disapprove or approve a grant either on the terms recommended by the Director of the Division of Development Finance or on other terms and conditions as the Secretary considers appropriate.</text> </paragraph> <paragraph num="(3)"> <text>Following approval by the Secretary, the Department shall enter into a grant agreement with each successful applicant.</text> </paragraph> <paragraph num="(4)"> <text>In any fiscal year, the Secretary may reserve technical assistance funds for technical assistance projects or programs operated by the Department.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Housing Finance Review Committee.</text> <paragraph num="(1)"> <text>Except as provided in §G(2) of this regulation, all grants awarded by the Secretary under the program shall be reported to the Housing Finance Review Committee as an informational item only and not for approval, disapproval, or modification.</text> </paragraph> <paragraph num="(2)"> <text>Technical assistance grants made for commercial revitalization community development projects do not need to be reported to the Housing Finance Review Committee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Administration of Grants."> <paragraph num="A."> <text>Recipients of capacity building grants and technical assistance grants shall maintain accurate financial records, in a form acceptable to the Department, of all transactions which relate to the grant, and make these records available to the Department for review on request for a period of not less than 3 years following the expiration of the grant agreement.</text> </paragraph> <paragraph num="B."> <text>Grantees receiving capacity building grants and technical assistance grants shall submit a periodic progress report, in the form required by the Department and on the schedule specified in the grant agreement, which clearly shows progress of the grantee in relation to the grantee's strategic plan and proposed goals and objectives.</text> </paragraph> <paragraph num="C."> <text>Capacity building grantees and technical assistance grantees who do not show adequate progress in meeting goals may be required to accept technical assistance from the Department or may not be approved for funding in the subsequent years of the grant.</text> </paragraph> <paragraph num="D."> <text>All grantees under this program shall make their books, accounts, and records, their administrative offices and personnel, whether full-time, part-time, consultants, or volunteers, available to the Department during reasonable working hours, for the duration of the grant period and for a period of not less than 3 years following the expiration of the grant agreement.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>Grantees may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation or age except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the program, or in any aspect of employment by any grantee in the construction, repair, or maintenance of any property financed or assisted under the program.</text> </paragraph> <paragraph num="B."> <text>Each grantee shall comply with applicable federal, State, and local laws and Department policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department's Minority Business Enterprise Program, as amended.</text> </paragraph> <paragraph num="(5)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.</text> </paragraph> <paragraph num="(6)"> <text>The Fair Housing Amendments Act of 1988, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Program Administration."> <paragraph num="A."> <text>Except for waivers under §D of this regulation, any action or decision required or permitted to be taken or made by the Department under these regulations may be taken or made by the Director, Division of Development Finance, or the Director's designee.</text> </paragraph> <paragraph num="B."> <text>The Department may terminate a grant or refuse to make additional disbursements under a grant agreement if it finds that the grantee is not complying with any of the requirements of the Program or the grant agreement.</text> </paragraph> <paragraph num="C."> <text>The Department may establish from time to time operational handbooks or manuals governing matters relating to the Program including descriptive statements of Program procedures which do not directly affect the rights of the public or the procedures available to the public.</text> </paragraph> <paragraph num="D."> <text>The Secretary may waive or vary particular provisions of these regulations if:</text> <paragraph num="(1)"> <text>The waiver or variance is not inconsistent with the authorizing provisions of the Act;</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary, the application of the regulations in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act; and</text> </paragraph> <paragraph num="(3)"> <text>The Office of the Attorney General approves the waiver for form and legal sufficiency.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="False Statements."> <text>A person may not knowingly make or cause to be made any false statement or report in any documents required to be furnished to the Department by any agreement relating to the Program.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-102 and 4-211 and Title 4, Subtitle 11, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 adopted as an emergency provision effective April 8,</annotation> <annotation type="History" subtype="Administrative History">1991 (18:9 Md. R. 982); emergency status expired September 8, 1991</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 adopted effective September 16, 1991 (18:18 Md. R.</annotation> <annotation type="History" subtype="Administrative History">2003)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 5, 2012 (39:4 Md. R. 336)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08E amended effective October 4, 1999 (26:20 Md. R. 1544)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08G amended effective March 5, 2012 (39:4 Md. R. 336)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective October 4, 1999 (26:20 Md. R. 1544)</annotation> </annotations> </chapter> <chapter num="02" heading="Radium Pilot Grant Program"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of the Radium Pilot Grant Program is to provide financial assistance, together with a participating county, to eligible residential well owners who incur the cost of adding a water treatment system to remove radium or gross alpha from well water.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 13, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Agency” means a local administering agency, including a governmental unit, or other agent of a participating county that is designated to administer the Program.</text> </paragraph> <paragraph num="(3)"> <text>“Annual income” means annual income as defined by the United State Department of Housing and Urban Development (HUD) in 24 CFR §5.609 as amended.</text> </paragraph> <paragraph num="(4)"> <text>“Area median income” means the Statewide or Washington, D.C. metropolitan statistical area median income as established by HUD.</text> </paragraph> <paragraph num="(5)"> <text>“Business day” means Monday through Friday excluding State holidays.</text> </paragraph> <paragraph num="(6)"> <text>“County” means any of the 23 counties of this State and the city of Baltimore.</text> </paragraph> <paragraph num="(7)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(8)"> <text>“Effective date” means the effective date of this chapter.</text> </paragraph> <paragraph num="(9)"> <text>“Eligible resident” means a resident of a participating county that meets the requirements set forth in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(10)"> <text>“EPA” means the United States Environmental Protection Agency.</text> </paragraph> <paragraph num="(11)"> <text>“EPA threshold levels” means the following levels of radium and gross alpha above which the EPA has determined quantities are unsafe for household use and consumption:</text> <paragraph num="(a)"> <text>5 picocuries per liter (5 pCi/L) for combined radium 226 and 228; and</text> </paragraph> <paragraph num="(b)"> <text>15 picocuries per liter (15 pCi/L) for gross alpha.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“HUD” means the United States Department of Housing and Urban Development.</text> </paragraph> <paragraph num="(13)"> <text>“Participating county” means a county that has agreed to participate in the Program and has executed a memorandum of understanding with the Department in accordance with Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(14)"> <text>“Program” means the Radium Pilot Grant Program.</text> </paragraph> <paragraph num="(15)"> <text>“Secretary” means the Secretary of the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Participating Counties."> <text>Any county may participate in the Program after it has entered into a memorandum of understanding with the Department on a form provided by the Department which shall provide, without limitation, that the county shall:</text> <paragraph num="A."> <text>Process grant applications from well owners;</text> </paragraph> <paragraph num="B."> <text>Make determinations for eligible residents;</text> </paragraph> <paragraph num="C."> <text>Fund 50 percent of the grants to eligible residents; and</text> </paragraph> <paragraph num="D."> <text>Issue funds to eligible residents for the full amount of the grant, subject to reimbursement from the Department of 50 percent of the grant amount.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Residents."> <text>To be eligible for a grant under the Program, a resident shall:</text> <paragraph num="A."> <text>Reside on and own property in a participating county on which a well is situated;</text> </paragraph> <paragraph num="B."> <text>Have test results acceptable to the Agency indicating radium or gross alpha levels above the EPA threshold levels;</text> </paragraph> <paragraph num="C."> <text>Have installed, after the effective date, a water treatment system for the purpose of removing excess levels of radium or gross alpha from the resident's well water; and</text> </paragraph> <paragraph num="D."> <text>Have annual income that does not exceed 110 percent of the area median income.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application Process."> <paragraph num="A."> <text>An agency shall provide prospective well owners with information on the Program and application forms. An applicant shall submit a completed application to the agency in accordance with the agency's procedures.</text> </paragraph> <paragraph num="B."> <text>A completed application shall include:</text> <paragraph num="(1)"> <text>A completed application form provided by the agency;</text> </paragraph> <paragraph num="(2)"> <text>Certification with respect to annual income;</text> </paragraph> <paragraph num="(3)"> <text>Proof of home ownership of the property on which the well is situated;</text> </paragraph> <paragraph num="(4)"> <text>Test results indicating the presence of radium or gross alpha above the EPA threshold levels; and</text> </paragraph> <paragraph num="(5)"> <text>A paid invoice or receipt, dated after the effective date, indicating that payment has been made for installation of a water treatment system for the purpose of removing radium or gross alpha from the well water.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Agency Response to Application."> <paragraph num="A."> <text>If the application is not complete, the agency shall promptly notify the applicant. The notice shall inform the applicant:</text> <paragraph num="(1)"> <text>Of what items are required to complete the application; and</text> </paragraph> <paragraph num="(2)"> <text>That the application will be denied if the required information is not provided within 30 calendar days after the notice.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the application is complete and the resident is determined to be eligible, the agency shall promptly:</text> <paragraph num="(1)"> <text>Notify the applicant that the application has been accepted; and</text> </paragraph> <paragraph num="(2)"> <text>Indicate the amount of the grant to be awarded in accordance with §D of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the applicant is determined to be ineligible for the Program, the agency shall notify the applicant, within 5 business days, that:</text> <paragraph num="(1)"> <text>The applicant is ineligible for the Program; and</text> </paragraph> <paragraph num="(2)"> <text>The reason for that determination.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Grants shall be awarded to eligible residents based on the following formulas:</text> <paragraph num="(1)"> <text>Eligible residents with an annual income of 80 percent or less of area median income shall receive a grant of 25 percent of the cost of the water treatment system;</text> </paragraph> <paragraph num="(2)"> <text>Eligible residents with an annual income between 81 percent and 100 percent of area median income shall receive a grant of 15 percent of the cost of the water treatment system; and</text> </paragraph> <paragraph num="(3)"> <text>Eligible residents with an annual income between 100 percent and 110 percent of area median income shall receive a grant of 10 percent of the cost of the water treatment system.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Funding for each Program grant shall be provided in equal parts by:</text> <paragraph num="(1)"> <text>The participating county in which the eligible resident resides; and</text> </paragraph> <paragraph num="(2)"> <text>The Department.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The participating county or the agency representing the county shall issue one check in the amount of the aggregate Program grant to each eligible resident.</text> </paragraph> <paragraph num="G."> <text>The Department shall reimburse the participating county or agency for 50 percent of each Program grant in accordance with the memorandum of understanding between the Department and the participating county.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Request for Reconsideration."> <paragraph num="A."> <text>An applicant that is determined to be ineligible for a grant may make a written request for reconsideration.</text> </paragraph> <paragraph num="B."> <text>The request shall be:</text> <paragraph num="(1)"> <text>Made within 30 days of the date of the notice of ineligibility from the agency; and</text> </paragraph> <paragraph num="(2)"> <text>Delivered to the agency in accordance with the agency's procedures.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act and COMAR 05.01.01.02.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Books and Accounts."> <text>An agency and each grant recipient shall:</text> <paragraph num="A."> <text>Maintain accurate financial records of :</text> <paragraph num="(1)"> <text>All transactions which relate to the grant; and</text> </paragraph> <paragraph num="(2)"> <text>Any other books, accounts, and records the Department may require;</text> </paragraph> </paragraph> <paragraph num="B."> <text>File with the Department any reports the Department may require; and</text> </paragraph> <paragraph num="C."> <text>Make their records relating to the grant available to the Department for review on request for a period of not less than 3 years from the date of the grant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>Grant recipients, contractors, agencies, or subcontractors may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any grant recipient, contractor, agency, local administrator, and subcontractor in connection with any property assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each grant recipient, contractor, agency, local administrator, and subcontractor shall comply with all applicable federal, State, and local laws and the Department policies and programs regarding discrimination, equal opportunity in employment, housing and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Title VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(4)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order;</text> </paragraph> <paragraph num="(5)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Americans with Disabilities Act of 1990, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="False Statements."> <text>A person may not knowingly make or cause to be made any false statement or report in any documents required to be furnished to the agency or the Department in connection with the Program.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is consistent with the Act, if, in the determination of the Secretary, the application of a regulation in a specific case, or in an emergency situation, would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="General Provisions."> <paragraph num="A."> <text>The Department or an agency may establish detailed Program guidelines or procedures. Copies of these guidelines or procedures, if any, shall be available for examination at the Department or the agency's principal office, as applicable. The Department and the agency shall, upon request, provide copies to the public for a reasonable charge.</text> </paragraph> <paragraph num="B."> <text>Except for a waiver under Regulation .11 of this chapter, any action or decision required or permitted to be taken or made by the Department under these regulations may be made by the Director of the Division of Development Finance or the Director's designee.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Expiration."> <text>This chapter expires and is void when the Act expires.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitle 13, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 18, 2005 (32:14 Md. R. 1275)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> </subtitle> <subtitle num="12" heading="Federal Housing Programs"> <chapter num="01" heading="Maryland HOME Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations describe the policies and procedures the Department will use in the administration of the federal HOME Investment Partnerships Program to provide financial assistance to individuals, local governments, developers, and nonprofit organizations to promote affordable housing. These regulations describe the specific eligible uses and administrative procedures which will be used to implement and operate the HOME Program in the State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <text>The objectives of the Maryland HOME Program are to:</text> <paragraph num="A."> <text>Finance affordable housing in conjunction with the housing loan programs administered by the Department by awarding funds to local governments, nonprofit sponsors and developers, and for-profit sponsors and developers to:</text> <paragraph num="(1)"> <text>Promote the development or rehabilitation of rental housing for income eligible households,</text> </paragraph> <paragraph num="(2)"> <text>Promote homeownership opportunities for income eligible households,</text> </paragraph> <paragraph num="(3)"> <text>Facilitate nonprofit ownership of group housing for income eligible persons with special needs,</text> </paragraph> <paragraph num="(4)"> <text>Provide rehabilitation assistance to owners of one-to-four unit properties, and</text> </paragraph> <paragraph num="(5)"> <text>Provide assistance to facilitate the ability of senior citizens to remain in their housing;</text> </paragraph> </paragraph> <paragraph num="B."> <text>Finance programs, projects, and activities that fill a need not met by the Department’s housing programs, but that promote the development and rehabilitation of housing for homeowners, renters, and special populations; and</text> </paragraph> <paragraph num="C."> <text>Provide grants to nonprofit sponsors, developers, local governments, State agencies, and homeowners for certain eligible activities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>The terms appearing in 24 CFR Part 92 have the meanings defined there and, in addition, the meanings used in this chapter.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Community Development Administration, a unit of the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(2)"> <text>“Advance payment loan” means a short-term loan to a nonprofit sponsor to finance certain development costs incurred before the construction of the project, including appraisals, financing application fees, and architects', engineers' and attorneys' fees which are instrumental to the planning of a project and for which no other resources are available.</text> </paragraph> <paragraph num="(3)"> <text>“Annual income” has the meaning set forth in 24 CFR §92.203.</text> </paragraph> <paragraph num="(4)"> <text>“Community Housing Development Organization (CHDO)” means an entity that meets the criteria set forth in Regulation .09A of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Consolidated plan” means the planning document and funding application required to be submitted by the State annually and approved by HUD.</text> </paragraph> <paragraph num="(6)"> <text>Department.</text> <paragraph num="(a)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(b)"> <text>“Department” includes the Administration.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“DHCD housing programs” means collectively the Rental Housing Program, the Single Family Programs, the Multifamily Bond Program, the Low Income Housing Tax Credit Program, and the Shelter and Transitional Facilities Grant Program, all as authorized under the Housing and Community Development Article, Annotated Code of Maryland, and this title.</text> </paragraph> <paragraph num="(8)"> <text>“Director” means the Director of the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(9)"> <text>“Group home” or “group home project” means a housing facility offering:</text> <paragraph num="(a)"> <text>Common, shared, or independent living, dining, kitchen, sanitary, and sleeping facilities;</text> </paragraph> <paragraph num="(b)"> <text>Supportive services or supervisory personnel to individuals with special housing needs when the individuals are not related to the group home sponsor; and</text> </paragraph> <paragraph num="(c)"> <text>Except in the case of a shared bedroom, separate private space for each individual.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“HOME” means the federal HOME Investment Partnerships Program as implemented by the Department.</text> </paragraph> <paragraph num="(11)"> <text>“HOME Investment Trust Fund” or “Trust Fund” means the monies provided by HUD for investment in HOME projects by the Department contained in the federal treasury account and any HOME funds in the Department's local account.</text> </paragraph> <paragraph num="(12)"> <text>“Homeownership project” means housing owned and occupied by an income eligible household as their primary residence, including any project that would qualify for financing under any of the Single Family Programs.</text> </paragraph> <paragraph num="(13)"> <text>Household.</text> <paragraph num="(a)"> <text>“Household” means one or more individuals who occupy the same residential dwelling unit as their permanent residence.</text> </paragraph> <paragraph num="(b)"> <text>“Household” includes a family as defined in 24 CFR §5.403, as amended.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Housing Finance Review Committee” means the committee appointed by the Governor to review and make recommendations to the Secretary on financing requests in accordance with Housing and Community Development Article, §4-208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“HUD” means the United States Department of Housing and Urban Development.</text> </paragraph> <paragraph num="(16)"> <text>Income eligible household.</text> <paragraph num="(a)"> <text>“Income eligible household” means a household whose gross annual income does not exceed the income limits for low income families or very low income families as set forth in 24 CFR §92.2.</text> </paragraph> <paragraph num="(b)"> <text>“Income eligible household” does not include a student who is not eligible to receive Section 8 assistance under 24 CFR §5.612.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Maryland HOME Initiatives Program Fund” means that portion of the HOME Investment Trust Fund set aside to be competitively awarded to applicants in accordance with Regulation .20B of this chapter.</text> </paragraph> <paragraph num="(18)"> <text>“New construction” means the development and construction of a residential building, including any project which received its first certificate of occupancy within 1 year of receiving a commitment letter for HOME funds.</text> </paragraph> <paragraph num="(19)"> <text>“Operating deficit reserve” means funds that are set aside for use in the rent-up period and are restricted to payment for debt service, operating expenses, and reserve for replacement payments.</text> </paragraph> <paragraph num="(20)"> <text>“Participating jurisdiction” means a jurisdiction that:</text> <paragraph num="(a)"> <text>HUD determines from time to time to be entitled to an allocation of HOME funds; and</text> </paragraph> <paragraph num="(b)"> <text>As of October 1, 2013, consisted of Baltimore City and Anne Arundel, Baltimore, Harford, Howard, Montgomery, and Prince George’s counties.</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Program” means the Maryland HOME Program operated by the Department.</text> </paragraph> <paragraph num="(22)"> <text>“Program Guide” means the Multifamily Rental Financing Program Guide adopted by the Department, as amended from time to time.</text> </paragraph> <paragraph num="(23)"> <text>Project.</text> <paragraph num="(a)"> <text>“Project” means a site or one or more buildings, together with the site or sites on which the building or buildings are located, that are under common ownership, management, and financing and are to be assisted with HOME funds under a commitment by the owner.</text> </paragraph> <paragraph num="(b)"> <text>“Project” includes a site consisting of less than all units in a building, as calculated in accordance with Regulation .15 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(24)"> <text>Reconstruction.</text> <paragraph num="(a)"> <text>“Reconstruction” means the replacement of existing housing on the same lot.</text> </paragraph> <paragraph num="(b)"> <text>“Reconstruction” includes increasing or decreasing the number of rooms per housing unit, as long as the number of housing units is not increased or decreased.</text> </paragraph> <paragraph num="(c)"> <text>“Reconstruction” includes housing that was destroyed and is rebuilt on the same lot if HOME funds are committed within 12 months of the date of destruction.</text> </paragraph> </paragraph> <paragraph num="(25)"> <text>Rental Housing Development.</text> <paragraph num="(a)"> <text>“Rental housing development” means a development which provides housing to income eligible households pursuant to a lease or agreement with the owner.</text> </paragraph> <paragraph num="(b)"> <text>“Rental housing development” includes transitional housing and single room occupancy housing but does not include group homes.</text> </paragraph> </paragraph> <paragraph num="(26)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(27)"> <text>“Sanitary facilities” means a flush toilet in a separate, private room, a fixed basin with hot and cold running water, and a shower or tub with hot and cold running water, all in proper operating condition.</text> </paragraph> <paragraph num="(28)"> <text>“Single Family Programs” means the:</text> <paragraph num="(a)"> <text>Settlement Expense Loan Program authorized by Housing and Community Development Article, Title 4, Subtitle 3, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Maryland Home Financing Programs, authorized by Housing and Community Development Article, Title 4, Subtitle 8, Annotated Code of Maryland, which include the:</text> <paragraph num="(i)"> <text>Reverse Equity Mortgage Program;</text> </paragraph> <paragraph num="(ii)"> <text>Emergency Mortgage Assistance Program;</text> </paragraph> <paragraph num="(iii)"> <text>Preferred Interest Rate Loan Program; and</text> </paragraph> <paragraph num="(iv)"> <text>MHFP Construction Loan Program;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The Maryland Mortgage Program, authorized by Housing and Community Development Article, §§4-236—4-241, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Regular Rehabilitation Program of the Maryland Housing Rehabilitation Program authorized under Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>Accessory, Shared, and Sheltered Housing Program authorized under Housing and Community Development Article, §4-926, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(f)"> <text>Lead Hazard Reduction Grant and Loan Program authorized under Housing and Community Development Article, §4-701, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(g)"> <text>Indoor Plumbing Program authorized under Housing and Community Development Article, §4-927, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(h)"> <text>Group Home Financing Program authorized under Housing and Community Development Article, Title 4, Subtitle 6, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(i)"> <text>Home and Energy Loan Program (one-to-four units) authorized under Housing and Community Development Article, §§4-244—4-245, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(j)"> <text>Special Housing Opportunities Program authorized under Housing and Community Development Article, §§4-244—4-245, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(k)"> <text>Federal Lead Hazard Reduction Program authorized under Housing and Community Development Article, §4-211(a)(8) and (9), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(l)"> <text>Accessible Homes for Senior Homeowners Grant Program authorized under Housing and Community Development Article, §4-931, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(29)"> <text>“Single room occupancy housing” means housing consisting of single room dwelling units which are the primary residence of the occupant or occupants and, if:</text> <paragraph num="(a)"> <text>The housing is being:</text> <paragraph num="(i)"> <text>Newly constructed, converted from nonresidential space, or reconstructed, each unit contains food preparation facilities or sanitary facilities, or both; or</text> </paragraph> <paragraph num="(ii)"> <text>Acquired or rehabilitated, the building contains at least sanitary facilities for the use of occupants; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The project’s designation as single room occupancy housing is not inconsistent with the building’s zoning and building code classification.</text> </paragraph> </paragraph> <paragraph num="(30)"> <text>“Sponsor” means an eligible recipient under Regulation .06 of this chapter that has applied for funds under the program.</text> </paragraph> <paragraph num="(31)"> <text>Tenant-Based Rental Assistance.</text> <paragraph num="(a)"> <text>“Tenant-based rental assistance” means rental assistance in which the assisted tenant may move from a dwelling unit with a right to continued assistance.</text> </paragraph> <paragraph num="(b)"> <text>“Tenant-based rental assistance” includes security deposits for rental of dwelling units.</text> </paragraph> </paragraph> <paragraph num="(32)"> <text>“Transitional housing” means housing that:</text> <paragraph num="(a)"> <text>Provides housing, together with appropriate supportive services, to people, including deinstitutionalized people with disabilities, homeless individuals with disabilities, and homeless households with children; and</text> </paragraph> <paragraph num="(b)"> <text>Assists individuals and households to live independently within a certain time period.</text> </paragraph> </paragraph> <paragraph num="(33)"> <text>“Undertaking” means an entire rental housing or homeownership development, which may be a scattered site development, being acquired, constructed, or rehabilitated by an eligible recipient and being financed as a single development, but in which development only a portion of the rental housing units or homes is assisted with HOME funds. In this case, the project being assisted with HOME funds shall have fewer rental housing units or homes than the undertaking in accordance with the formula set forth in Regulation .13 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Projects and Activities — Federal Criteria."> <paragraph num="A."> <text>All projects and activities funded with HOME funds shall meet the general eligibility criteria in 24 CFR Part 92, which is incorporated by reference.</text> </paragraph> <paragraph num="B."> <text>The housing shall be:</text> <paragraph num="(1)"> <text>Of one of the following two types:</text> <paragraph num="(a)"> <text>Rental housing development, or</text> </paragraph> <paragraph num="(b)"> <text>Homeownership;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Rented, occupied, or sold to income eligible households in accordance with these regulations; and</text> </paragraph> <paragraph num="(3)"> <text>Nonluxury, but with suitable amenities.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Eligible activities are:</text> <paragraph num="(1)"> <text>Acquisition;</text> </paragraph> <paragraph num="(2)"> <text>Site improvements;</text> </paragraph> <paragraph num="(3)"> <text>New construction;</text> </paragraph> <paragraph num="(4)"> <text>Reconstruction;</text> </paragraph> <paragraph num="(5)"> <text>Rehabilitation;</text> </paragraph> <paragraph num="(6)"> <text>Relocation;</text> </paragraph> <paragraph num="(7)"> <text>Conversion;</text> </paragraph> <paragraph num="(8)"> <text>Demolition;</text> </paragraph> <paragraph num="(9)"> <text>Tenant-based rental assistance under the provisions of the Maryland HOME Initiatives Program Fund set forth in Regulation .05C of this chapter, including assistance with security deposits and utility deposit assistance, but only if utility deposit assistance is provided with tenant-based rental assistance or security deposit payment;</text> </paragraph> <paragraph num="(10)"> <text>Preconstruction costs under Regulation .09C and D of this chapter;</text> </paragraph> <paragraph num="(11)"> <text>Operating expenses of community housing development organizations (CHDOs); and</text> </paragraph> <paragraph num="(12)"> <text>Public housing projects, only to the extent permitted under 24 CFR §92.213.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Ineligible activities are:</text> <paragraph num="(1)"> <text>Except as permitted in Regulation .07I(9) of this chapter, project accounts for:</text> <paragraph num="(a)"> <text>Reserve for replacements,</text> </paragraph> <paragraph num="(b)"> <text>Project reserves for anticipated increases in operating costs, and</text> </paragraph> <paragraph num="(c)"> <text>Operating subsidies;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Tenant-based rental assistance for the purposes served by the existing §8 program or preventing displacement from projects assisted with rental rehabilitation grants;</text> </paragraph> <paragraph num="(3)"> <text>Matching requirements of any other federal program;</text> </paragraph> <paragraph num="(4)"> <text>Preservation of existing federally assisted projects; and</text> </paragraph> <paragraph num="(5)"> <text>Projects previously assisted by HOME funds (except for tenant-based rental assistance or assistance to first-time home buyers) during the period of affordability required under Regulation .15D of this chapter or the period specified in Regulation .17D(2) of this chapter, except within 1 year of completion if the total HOME funds in the project do not exceed the maximum allowable subsidy amount and except as permitted by 24 CFR §92.210 for troubled HOME assisted rental housing projects;</text> </paragraph> <paragraph num="(6)"> <text>Housing for students;</text> </paragraph> <paragraph num="(7)"> <text>Emergency shelters;</text> </paragraph> <paragraph num="(8)"> <text>Halfway houses;</text> </paragraph> <paragraph num="(9)"> <text>Dormitories (including farmworker dormitories); and</text> </paragraph> <paragraph num="(10)"> <text>Transaction costs of privately refinanced debt.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Projects and Activities — State Criteria."> <paragraph num="A."> <text>General. An allocation of HOME funds can be applied for through either DHCD housing programs or the Maryland HOME Initiatives Program Fund.</text> </paragraph> <paragraph num="B."> <text>DHCD Housing Programs. To be eligible for a HOME allocation through the DHCD housing programs, a project or activity shall meet the following requirements:</text> <paragraph num="(1)"> <text>In the case of a rental housing development project, the project shall:</text> <paragraph num="(a)"> <text>Comply with the requirements of COMAR 05.05.01.06A, B, E, and F, provided that this chapter shall prevail in the event of a conflict between any provision of COMAR 05.05.01.06A, B, E, and F and any provision of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Provide units for occupancy in accordance with Regulation .15C of this chapter;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In the case of homeownership projects:</text> <paragraph num="(a)"> <text>Be approved for a forward reservation of mortgage purchase moneys through a homeownership program; and</text> </paragraph> <paragraph num="(b)"> <text>Require that upon resale of a house assisted with HOME funds, all HOME funds be repaid in accordance with Regulation .17B(6) of this chapter;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In the case of group home projects:</text> <paragraph num="(a)"> <text>Be approved for a loan through the Group Home Financing Program or Special Housing Opportunities Program of the Single Family Programs; and</text> </paragraph> <paragraph num="(b)"> <text>Provide group homes for occupancy by income eligible households in accordance with Regulation .15C of this chapter;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In the case of rehabilitation of owner-occupied housing and one-to-four unit rental housing:</text> <paragraph num="(a)"> <text>If owner-occupied housing, be occupied by income eligible households in accordance with Regulation .17C of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>If one-to-four unit rental housing, be occupied by income eligible households in accordance with Regulation .15C of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Maryland HOME Initiatives Program Fund.</text> <paragraph num="(1)"> <text>To be eligible for an allocation of HOME funds from the Maryland HOME Initiatives Program Fund, a project or activity shall meet the requirements of this chapter, including the following requirements:</text> <paragraph num="(a)"> <text>Be ineligible for funding through the DHCD housing programs; or</text> </paragraph> <paragraph num="(b)"> <text>If eligible for funding through the DHCD housing programs be:</text> <paragraph num="(i)"> <text>Partially funded from sources of funds other than the DHCD housing programs, such as conventional financial institution loans, local government funding, other State programs, Farmers Home Administration loans, or funding from federal programs which may be used in conjunction with HOME, or</text> </paragraph> <paragraph num="(ii)"> <text>Eligible for one of the DHCD housing programs which the Department has elected as a matter of policy not to undertake or which does not have available funding.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department may elect to fund any application to the Maryland HOME Initiatives Program Fund from HOME funds allocated to any of the DHCD housing programs.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Political Subdivisions; Notice and Contribution.</text> <paragraph num="(1)"> <text>For rental housing development projects, the project shall comply with the political subdivision notice and contribution requirements in COMAR 05.05.01.07.</text> </paragraph> <paragraph num="(2)"> <text>For all other HOME projects, local contributions are encouraged, although not required.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Recipients."> <paragraph num="A."> <text>Eligible recipients shall include:</text> <paragraph num="(1)"> <text>The Department;</text> </paragraph> <paragraph num="(2)"> <text>The Administration;</text> </paragraph> <paragraph num="(3)"> <text>Other State agencies;</text> </paragraph> <paragraph num="(4)"> <text>Local governments;</text> </paragraph> <paragraph num="(5)"> <text>Public housing authorities;</text> </paragraph> <paragraph num="(6)"> <text>Nonprofit organizations;</text> </paragraph> <paragraph num="(7)"> <text>Community housing development organizations;</text> </paragraph> <paragraph num="(8)"> <text>Corporations;</text> </paragraph> <paragraph num="(9)"> <text>Limited dividend corporations;</text> </paragraph> <paragraph num="(10)"> <text>Individuals;</text> </paragraph> <paragraph num="(11)"> <text>Partnerships; and</text> </paragraph> <paragraph num="(12)"> <text>Limited liability companies.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Otherwise eligible recipients who are suspended or debarred from the Department’s or HUD’s programs may not be approved.</text> </paragraph> <paragraph num="C."> <text>If an eligible recipient engages in explicitly religious activities, including activities that involve overt religious content such as worship, religious instruction, or proselytization, then the recipient shall perform such activities and offer such services outside of programs that are supported with federal financial assistance and separately, in time or location, from the programs or services funded with HOME funds, and participation in any such explicitly religious activities shall be voluntary for the program beneficiaries of the HOME-funded programs or services.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Costs."> <text>HOME funds may be used to pay any costs permitted by 24 CFR Part 92. HOME funds generally may be used to pay for the following costs:</text> <paragraph num="A."> <text>The actual hard costs of new construction, including the costs of complying with Regulation .14 of this chapter;</text> </paragraph> <paragraph num="B."> <text>Rehabilitation hard costs to meet the property standards for rehabilitation projects in Regulation .14 of this chapter;</text> </paragraph> <paragraph num="C."> <text>The cost of refinancing existing debt secured by housing that is being rehabilitated with HOME funds:</text> <paragraph num="(1)"> <text>For single-family (one-to-four family) owner-occupied housing, if the overall housing costs of the sponsor will be reduced and made more affordable and if the rehabilitation cost is greater than the amount of debt that is refinanced; and</text> </paragraph> <paragraph num="(2)"> <text>For rental housing development projects, when lending HOME funds to rehabilitate the units if refinancing is necessary to permit or continue affordability;</text> </paragraph> </paragraph> <paragraph num="D."> <text>Site improvements of a type and quality in keeping with standard improvements in the area;</text> </paragraph> <paragraph num="E."> <text>Utility connections;</text> </paragraph> <paragraph num="F."> <text>Acquisition costs of improved real property;</text> </paragraph> <paragraph num="G."> <text>Cost of acquiring vacant land or the cost of demolishing improvements as permitted in 24 CFR §92.205;</text> </paragraph> <paragraph num="H."> <text>Reasonable and necessary soft costs related to the development of the project such as:</text> <paragraph num="(1)"> <text>Architectural, engineering, and related professional fees incurred not more than 24 months before the HOME funds were committed to the project;</text> </paragraph> <paragraph num="(2)"> <text>Financing and processing fees paid to lenders other than the Department;</text> </paragraph> <paragraph num="(3)"> <text>Appraisal and market study fees;</text> </paragraph> <paragraph num="(4)"> <text>Builders' and developers' fees;</text> </paragraph> <paragraph num="(5)"> <text>Building permit;</text> </paragraph> <paragraph num="(6)"> <text>Legal fees paid to lenders other than the Department;</text> </paragraph> <paragraph num="(7)"> <text>Project audit fees;</text> </paragraph> <paragraph num="(8)"> <text>Marketing costs including affirmative fair housing information;</text> </paragraph> <paragraph num="(9)"> <text>For new construction or rehabilitation of a rental housing development project, the cost of funding an initial operating deficit reserve to meet shortfalls in project income during an initial rent-up period of up to 18 months, provided that unexpended funds are returned to the HOME Investment Trust Fund; and</text> </paragraph> <paragraph num="(10)"> <text>For new construction or rehabilitation, costs for the payment of impact fees that are charged for all projects within a jurisdiction;</text> </paragraph> </paragraph> <paragraph num="I."> <text>Costs of relocation payments or assistance; and</text> </paragraph> <paragraph num="J."> <text>Operating expenses of CHDOs, if the Department does not:</text> <paragraph num="(1)"> <text>Use more than 5 percent of the Department's fiscal year HOME allocation for these expenses, which 5 percent may not be included within the Department's minimum CHDO set aside of 15 percent, as set forth in Regulation .09B(1) of this chapter, and</text> </paragraph> <paragraph num="(2)"> <text>Fund, in any fiscal year, more than the greater of 50 percent of, or $50,000 towards, the total operating expenses of a CHDO, including funds for organizational support, housing education, and operating expenses provided under 24 CFR §92.208.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Allocation of Funds—Generally."> <paragraph num="A."> <text>Initial Allocations. Upon receipt of a notification from HUD as to the availability and amount of HOME funding for administration by the State, the Department shall make recommendations on the amounts of HOME funds to be initially allocated to rental housing development projects, homeownership projects, and the Maryland HOME Initiatives Program Fund. The allocation recommendations shall be submitted to the Director for review and recommendation to the Secretary for approval, disapproval, or modification.</text> </paragraph> <paragraph num="B."> <text>Reallocations. The Director may periodically reallocate HOME funds initially allocated to rental housing development projects and homeownership projects among those types of projects. Reallocations of these HOME funds shall be based upon current demand and priorities. Generally, HOME funds may not be reallocated between the HOME funds initially allocated to rental housing development projects and homeownership projects and the HOME funds initially allocated to the Maryland HOME Initiatives Program Fund until at least 8 months following the initial allocations.</text> </paragraph> <paragraph num="C."> <text>Geographic Distribution.</text> <paragraph num="(1)"> <text>HOME funds shall be used primarily in jurisdictions throughout the State which are not participating jurisdictions.</text> </paragraph> <paragraph num="(2)"> <text>The State shall distribute HOME funds according to the needs identified in the Consolidated Plan. The State shall attempt to distribute HOME funds to nonmetropolitan areas, taking into account the population of the nonmetropolitan areas as compared to the total population of the State and objective measures of rural housing need. Therefore, the State shall use its best efforts to distribute at least 10 percent of HOME funds to nonmetropolitan areas.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Allocation of Funds — Community Housing Development Organizations."> <paragraph num="A."> <text>Eligible Organizations. Community housing development organizations are eligible if they meet the criteria set forth in 24 CFR §92.2.</text> </paragraph> <paragraph num="B."> <text>CHDO Set Asides.</text> <paragraph num="(1)"> <text>Fifteen percent of the total allocation to the HOME Investment Trust Fund shall be reserved for and used by CHDOs in accordance with 24 CFR §92.300. Up to 10 percent of the funds reserved for CHDOs may be reserved for loans made under §§C and D of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>To the extent not reserved for loans under §§C and D of this regulation, the reserved CHDO funds shall be allocated to the DHCD housing programs. If set asides are committed at a rate slower than the rate necessary to use the set aside within the required time period, the Administration may:</text> <paragraph num="(a)"> <text>Initiate aggressive marketing for set-aside eligible projects;</text> </paragraph> <paragraph num="(b)"> <text>Give priority to set-aside eligible projects;</text> </paragraph> <paragraph num="(c)"> <text>Provide expedited pipeline processing for set-aside eligible projects; or</text> </paragraph> <paragraph num="(d)"> <text>Restrict remaining funds for use only to meet the set-aside requirements.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Eligible Uses — Technical Assistance and Site Control.</text> <paragraph num="(1)"> <text>Loans under this section shall be processed and made by the Division of Development Finance.</text> </paragraph> <paragraph num="(2)"> <text>A CHDO may apply to use HOME funds for technical assistance and site control loans in the early stages of site development for an eligible project.</text> </paragraph> <paragraph num="(3)"> <text>Loans under this section may be used to pay:</text> <paragraph num="(a)"> <text>Project expenses necessary to determine project feasibility;</text> </paragraph> <paragraph num="(b)"> <text>Consulting fees;</text> </paragraph> <paragraph num="(c)"> <text>Costs of preliminary financial applications;</text> </paragraph> <paragraph num="(d)"> <text>Legal, architectural, and engineering fees;</text> </paragraph> <paragraph num="(e)"> <text>Engagement of a development team;</text> </paragraph> <paragraph num="(f)"> <text>Option to acquire property; and</text> </paragraph> <paragraph num="(g)"> <text>Site control and title clearance.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Loans under this section may not be used to pay for the general operational expenses of a CHDO.</text> </paragraph> <paragraph num="(5)"> <text>Loans under this section shall be repaid from construction loan proceeds or other project income, unless the Department finds that there are impediments to project development that are reasonably beyond the control of the CHDO, in which case the Department may waive repayment, in whole or in part.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Eligible Uses — Seed Money Loans.</text> <paragraph num="(1)"> <text>Loans under this section shall be processed and made by the Division of Development Finance.</text> </paragraph> <paragraph num="(2)"> <text>A CHDO may apply to use HOME funds to provide CHDOs with funds to pay reasonable and customary preconstruction costs of a project, including, but not limited to, the costs of:</text> <paragraph num="(a)"> <text>Obtaining firm construction loan commitments;</text> </paragraph> <paragraph num="(b)"> <text>Architectural plans and specifications;</text> </paragraph> <paragraph num="(c)"> <text>Zoning approvals;</text> </paragraph> <paragraph num="(d)"> <text>Engineering studies; and</text> </paragraph> <paragraph num="(e)"> <text>Legal fees.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In order to qualify for a loan under of this section, a CHDO is required to have:</text> <paragraph num="(a)"> <text>Control of the site evidenced by a deed, a sales contract, or an option contract to acquire the property;</text> </paragraph> <paragraph num="(b)"> <text>Obtained a preliminary financial commitment; and</text> </paragraph> <paragraph num="(c)"> <text>Formed a capable development team.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Loans under this section shall be repaid from construction loan proceeds or other project income, unless the Department finds that there are impediments to project development that are reasonably beyond the control of the CHDO, in which case the Department may waive repayment, in whole or in part.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Special Terms and Conditions — Tenant Rights and Obligations. A CHDO which receives HOME assistance shall:</text> <paragraph num="(1)"> <text>Adhere to a fair lease and grievance procedure approved by the Department; and</text> </paragraph> <paragraph num="(2)"> <text>Develop and follow a plan of tenant participation in CHDO management decisions.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Terms and Conditions of Financial Assistance — General."> <paragraph num="A."> <text>Form of Financial Assistance.</text> <paragraph num="(1)"> <text>The Department may offer HOME financial assistance in any of the following five forms:</text> <paragraph num="(a)"> <text>Interest-bearing and non-interest-bearing loans;</text> </paragraph> <paragraph num="(b)"> <text>Interest subsidies;</text> </paragraph> <paragraph num="(c)"> <text>Deferred payment loans;</text> </paragraph> <paragraph num="(d)"> <text>Equity investments; and</text> </paragraph> <paragraph num="(e)"> <text>Grants.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department expects to offer most financial assistance in the form of grants or non-interest-bearing, deferred payment loans.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Maximum Amount of Financial Assistance.</text> <paragraph num="(1)"> <text>The maximum amount of financial assistance to a single project or activity generally may not exceed the lesser of:</text> <paragraph num="(a)"> <text>$2,000,000; or</text> </paragraph> <paragraph num="(b)"> <text>An amount equal to the greater of the per unit dollar limits:</text> <paragraph num="(i)"> <text>Set under §221(d)(3)(iii) of the National Housing Act for elevator-type projects that apply to the area in which the housing is located; or</text> </paragraph> <paragraph num="(ii)"> <text>Approved by HUD.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>In the discretion of the Department, a higher amount than the amount identified in §B(1)(a) of this regulation may be approved if:</text> <paragraph num="(a)"> <text>It does not exceed the amount in §B(1)(b) of this regulation and no other resources are available;</text> </paragraph> <paragraph num="(b)"> <text>The project serves more than the required number of income eligible households;</text> </paragraph> <paragraph num="(c)"> <text>The project involves the preservation of federal subsidies;</text> </paragraph> <paragraph num="(d)"> <text>The project is in default on a loan from the Department and the default can be cured by using HOME funds; or</text> </paragraph> <paragraph num="(e)"> <text>The higher amount will facilitate meeting set-aside requirements.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Minimum Amount of Financial Assistance. If HOME funds are invested in a rental housing development or homeownership project, a minimum of $1,000 of HOME funds times the number of HOME assisted units in the project shall be invested.</text> </paragraph> <paragraph num="D."> <text>Term. The maximum term of financial assistance for HOME funds disbursed as loans is one of the following:</text> <paragraph num="(1)"> <text>If the HOME funds are used for development costs of the project, the earlier of the:</text> <paragraph num="(a)"> <text>Sale or discontinuance of use of the project to provide housing to income eligible households, or</text> </paragraph> <paragraph num="(b)"> <text>40 years from the date of acquisition, completion of construction, or rehabilitation of the project except when other sources of financing require a longer term;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A term not to exceed 18 months if the HOME funds are used to fund an operating deficit for a new construction or rehabilitation rental housing development project;</text> </paragraph> <paragraph num="(3)"> <text>Any term approved by the Department for HOME funds awarded from the Maryland HOME Initiatives Program Fund.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Interest Rate.</text> <paragraph num="(1)"> <text>For homeownership projects, in order to accomplish the public purpose of serving income eligible households, the interest rate for HOME funds disbursed as loans generally is zero percent. In its discretion, the Department may require interest on HOME funds which may be repayable on a scheduled basis, or may be deferred.</text> </paragraph> <paragraph num="(2)"> <text>For rental housing development projects, interest rates for each loan shall be established based on the underwriting for each project and in accordance with the Program Guide. The maximum interest rate on a loan shall be at a rate which does not impair the financial viability of the project or the capability of the sponsor to provide rents which are affordable to income eligible households. The interest rate may be as low as zero percent, based upon projected cash flows for the proposed project.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Repayment.</text> <paragraph num="(1)"> <text>Repayment shall be made in accordance with the loan documents.</text> </paragraph> <paragraph num="(2)"> <text>Interest and principal repayment may be deferred at the discretion of the Department, in accordance with the terms and provisions of the loan documents.</text> </paragraph> <paragraph num="(3)"> <text>In the case of repayments for terminated projects, a project shall be terminated and HOME funds disbursed as loans shall be repaid to the Department before maturity upon the earlier to occur of:</text> <paragraph num="(a)"> <text>Sale of all or any portion of, or interest in, the project;</text> </paragraph> <paragraph num="(b)"> <text>For rental housing developments, discontinuance of use of the project to provide housing to income eligible households; or</text> </paragraph> <paragraph num="(c)"> <text>For rental housing developments, termination of the project or activity before completion, unless the loan was to a CHDO under Regulation .09C or D of this chapter and the Department waives repayment, in whole or in part, under that regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Security for Capital Assistance Loans.</text> <paragraph num="(1)"> <text>Except as provided in §G(2) and (3) of this regulation, HOME funds disbursed as loans shall be secured by a recorded mortgage or deed of trust.</text> </paragraph> <paragraph num="(2)"> <text>If HOME funds are loaned to a local government as part of the funds for a project sponsored by a local government and a deed of trust transferring an interest in the property is not authorized, the funds may be secured by an instrument or agreement acceptable to the Department.</text> </paragraph> <paragraph num="(3)"> <text>Loans made to CHDOs under Regulation .09C and D of this chapter shall be required to be secured by a recorded mortgage, deed of trust, or declaration of covenants if the CHDO owns the site or obtains ownership of the site as a result of receipt of the loan.</text> </paragraph> </paragraph> <paragraph num="H."> <text>In the case of loans for rental housing development projects, the project shall comply with the loan terms indicated in COMAR 05.05.01.14—.18, provided that this chapter shall prevail in the event of a conflict between any provision of COMAR 05.05.01.14—.18 and any provision of this chapter.</text> </paragraph> <paragraph num="I."> <text>Reduction of Units. After project completion, the number of units designated as HOME-assisted may be reduced only in the following circumstances:</text> <paragraph num="(1)"> <text>In accordance with 24 CFR §92.210 with respect to troubled HOME projects; or</text> </paragraph> <paragraph num="(2)"> <text>In a project consisting of all HOME-assisted units, one unit may be subsequently converted to an on-site manager’s unit if:</text> <paragraph num="(a)"> <text>The conversion will contribute to the stability or effectiveness of the housing; and</text> </paragraph> <paragraph num="(b)"> <text>Notwithstanding the loss of one HOME-assisted unit, the costs charged to the HOME program do not exceed the actual costs of the HOME-assisted units and do not exceed the subsidy limit in §B of this regulation.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Terms and Conditions — Distribution of Sales Proceeds/Equity Sharing."> <paragraph num="A."> <text>As a condition to receipt of HOME funds disbursed as loans, a homeowner who receives HOME funds for house acquisition is required to enter into an agreement concerning the distribution of net proceeds upon the sale of the house as described in Regulation .17 §B(1) of this chapter.</text> </paragraph> <paragraph num="B."> <text>Recipients of HOME funds to rehabilitate owner-occupied houses and owner-occupied one-to-four unit rental projects may not be required to participate in equity sharing.</text> </paragraph> <paragraph num="C."> <text>Sponsors of group home projects which receive HOME funds may be required to enter into equity-sharing agreements as a condition to receipt of the HOME funds if, in the sole discretion of the Department, the HOME-assisted project is expected to have excess residual value. The equity-sharing agreement shall provide for payment of equity to the Department upon sale of the project or discontinuance of use of the project for income-eligible households.</text> </paragraph> <paragraph num="D."> <text>Payment under §C of this regulation shall be in an amount equal to the original HOME funds:</text> <paragraph num="(1)"> <text>Divided by the sum of:</text> <paragraph num="(a)"> <text>The total original costs of the project, and</text> </paragraph> <paragraph num="(b)"> <text>Documented capital improvement expenditures for the benefit of the project; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Multiplied by the:</text> <paragraph num="(a)"> <text>Net sales proceeds realized upon the sale of the project, or</text> </paragraph> <paragraph num="(b)"> <text>Imputed equity based on an appraisal if the project discontinues occupancy by income eligible households but is not sold.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>A sponsor of rental housing development projects which receives HOME funds may be subject to limits on return of equity as a condition to receipt of the HOME funds in accordance with COMAR 05.05.01.10.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="HOME Grants."> <paragraph num="A."> <text>The Department may offer HOME financial assistance as grants for the following purposes:</text> <paragraph num="(1)"> <text>Maryland HOME Initiatives Program Fund projects sponsored by nonprofit organizations, local governments, or State agencies, except that the Department reserves the right to make a conditional grant providing for repayment if there is a reasonable expectation of repayment;</text> </paragraph> <paragraph num="(2)"> <text>Projects for which federal or other funding agencies do not permit loans subordinate to their funds;</text> </paragraph> <paragraph num="(3)"> <text>Rehabilitation of owner-occupied housing;</text> </paragraph> <paragraph num="(4)"> <text>Activities which have a high public purpose, but do not result in an appreciably higher value in the property after the improvements, including, but not limited to:</text> <paragraph num="(a)"> <text>Lead paint abatement,</text> </paragraph> <paragraph num="(b)"> <text>Modifications required by the Maryland Historical Trust,</text> </paragraph> <paragraph num="(c)"> <text>Accessibility modifications, or</text> </paragraph> <paragraph num="(d)"> <text>Furnace and roof replacement; or</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Other eligible projects, activities, or costs as approved by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A grant shall be evidenced by a grant agreement setting forth the terms and conditions of the grant, including the applicable requirements of this chapter.</text> </paragraph> <paragraph num="C."> <text>Except as provided in §D of this regulation, for HOME funds which are disbursed as grants, the HOME obligations of the recipient shall be set forth in a recorded declaration of covenants or other instrument acceptable to the Department.</text> </paragraph> <paragraph num="D."> <text>A recorded declaration of covenants is not required for a grant of HOME funds for:</text> <paragraph num="(1)"> <text>Rehabilitation of owner-occupied single family houses or one-to-four family residences;</text> </paragraph> <paragraph num="(2)"> <text>Operating expenses for CHDOs; or</text> </paragraph> <paragraph num="(3)"> <text>Other purposes not related to the acquisition or rehabilitation of property.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Advance Payment Loans."> <text>The Department may make advance payment loans under the following conditions:</text> <paragraph num="A."> <text>The recipient shall be a nonprofit entity, which is not a CHDO;</text> </paragraph> <paragraph num="B."> <text>The nonprofit recipient shall demonstrate the intention and capacity to complete the project;</text> </paragraph> <paragraph num="C."> <text>Repayment of the loan is secured by a mortgage or deed of trust;</text> </paragraph> <paragraph num="D."> <text>The loan funds are for payment of early eligible costs under Regulation .07 of this chapter;</text> </paragraph> <paragraph num="E."> <text>The nonprofit recipient shall demonstrate that:</text> <paragraph num="(1)"> <text>There are no other funding alternatives,</text> </paragraph> <paragraph num="(2)"> <text>There are no other resources available to the nonprofit recipient to pay the costs,</text> </paragraph> <paragraph num="(3)"> <text>The payment of the costs cannot be deferred until closing of an operating or capital assistance loan; and</text> </paragraph> </paragraph> <paragraph num="F."> <text>The loan is due and payable in full if the project terminates before the project's completion.</text> </paragraph> <paragraph num="G."> <text>The loan complies with all federal requirements related to environmental review pursuant to 24 CFR §92.352 and 24 CFR Part 58.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Property Standards."> <paragraph num="A."> <text>Applicable Standards for Projects to Which Funds Are Committed Prior to January 24, 2015.</text> <paragraph num="(1)"> <text>All housing assisted with HOME funds shall meet the housing quality standards set forth in 24 CFR §982.401.</text> </paragraph> <paragraph num="(2)"> <text>Newly constructed or rehabilitated housing shall meet the standards set forth in 24 CFR §92.251 and all applicable local codes, ordinances, rehabilitation standards, and zoning ordinances.</text> </paragraph> <paragraph num="(3)"> <text>Before the transfer of a homeownership project that is to be rehabilitated after transfer, the Department or its designee shall:</text> <paragraph num="(a)"> <text>Inspect the housing for any defects which pose a danger to health or safety;</text> </paragraph> <paragraph num="(b)"> <text>Notify the prospective purchaser of any work required to cure any defects identified by the inspection; and</text> </paragraph> <paragraph num="(c)"> <text>State the time frame in which the cure will be accomplished, which time frame may not exceed 6 months following the transfer.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition, a homeownership project that is to be rehabilitated after transfer shall:</text> <paragraph num="(a)"> <text>Be free from all defects identified in the inspection required under §C of this regulation before occupancy and within 6 months of the transfer; and</text> </paragraph> <paragraph num="(b)"> <text>Meet the housing quality standards set forth in §A of this regulation within 2 years of the transfer.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The purchase or rehabilitation of manufactured housing is eligible for HOME funds if, upon completion, the unit:</text> <paragraph num="(a)"> <text>Is situated on a permanent foundation, except for assistance to owners of existing units who rent the lot on which their unit is placed;</text> </paragraph> <paragraph num="(b)"> <text>Is connected to permanent utility hookups;</text> </paragraph> <paragraph num="(c)"> <text>Is located on land which is held in fee-simple title or under a long-term ground lease with a term equal to the appropriate period of affordability;</text> </paragraph> <paragraph num="(d)"> <text>Meets either the:</text> <paragraph num="(i)"> <text>Construction standards set forth in 24 CFR 3280 if the unit was produced after June 15, 1976; or</text> </paragraph> <paragraph num="(ii)"> <text>Applicable State or local codes if the unit was produced before June 15, 1976;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Meets all the other requirements of these regulations, including, for rental units, Regulations .15 and .16 of this chapter, and, for homeownership units, Regulation .17 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Applicable Standards for Projects to Which Funds Are Committed on or After January 24, 2015.</text> <paragraph num="(1)"> <text>New construction projects. New construction projects shall meet the requirements set forth in 24 CFR §92.251(a).</text> </paragraph> <paragraph num="(2)"> <text>Rehabilitation Projects.</text> <paragraph num="(a)"> <text>Rehabilitation projects shall meet the Department’s rehabilitation property standards, which are available either directly from the Department or on the Department’s website.</text> </paragraph> <paragraph num="(b)"> <text>The construction contracts and construction documents shall describe the work to be undertaken in adequate detail so that inspections can be conducted. Written cost estimates shall be reviewed and shall be approved only if costs are determined to be reasonable.</text> </paragraph> <paragraph num="(c)"> <text>An initial property inspection shall be conducted to identify any deficiencies that must be addressed. The Department or its designee shall conduct progress and final inspections to determine that work was completed in accordance with work write-ups and the Department’s rehabilitation standards.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Acquisition of Existing Housing.</text> <paragraph num="(a)"> <text>Existing housing that is acquired with HOME assistance for rental housing, and that was newly constructed or rehabilitated less than 12 months before the date of commitment of HOME funds, shall meet the property standards of §B(1) or (2) of this regulation, as applicable. Compliance shall be documented based upon a review of approved building plans and certificates of occupancy, and an inspection that is conducted no earlier than 90 days before the commitment of HOME assistance.</text> </paragraph> <paragraph num="(b)"> <text>All other existing housing that is acquired with HOME assistance for rental housing shall meet the rehabilitation property standards requirements of §B(2) of this regulation. Compliance shall be documented based upon an inspection that is conducted no earlier than 90 days before the commitment of HOME assistance.</text> </paragraph> <paragraph num="(c)"> <text>Existing housing that is acquired for homeownership, including down-payment assistance, shall meet the Department’s homeownership property standards, which are available either directly from the Department or on the Department’s website. Compliance with these standards shall be documented based upon an inspection that is conducted no earlier than 90 days before the commitment of HOME assistance.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Housing occupied by tenants receiving HOME tenant-based rental assistance shall meet the standards contained in 24 CFR §982.401, or the successor requirements as established by HUD.</text> </paragraph> <paragraph num="(5)"> <text>Manufactured Housing. Construction of all manufactured housing including manufactured housing that replaces an existing substandard unit under the definition of “reconstruction” shall meet the requirements set forth in 24 CFR §92.251(e).</text> </paragraph> <paragraph num="(6)"> <text>Ongoing property condition standards for rental housing. All HOME-funded rental housing shall meet the Department’s ongoing property condition standards for rental housing throughout the affordability period. These standards are available either directly from the Department or on the Department’s website.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Affordable Rental Housing Requirements — Rent and Occupancy Restrictions."> <paragraph num="A."> <text>General. In order to quality for HOME funds, a rental housing development project shall meet the additional requirements of Regulations .15 and .16 of this chapter.</text> </paragraph> <paragraph num="B."> <text>Rent Limits.</text> <paragraph num="(1)"> <text>The rent limits in this section apply to rent plus utilities or utility allowance, as applicable.</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §B(3) of this regulation, to qualify as affordable housing and a recipient of HOME funds, project rents may not exceed the lesser of:</text> <paragraph num="(a)"> <text>Fair market rent established by HUD for the area;</text> </paragraph> <paragraph num="(b)"> <text>An amount that does not exceed 30 percent of the adjusted income of a household whose gross income equals 65 percent of median income as determined by HUD and adjusted for the number of bedrooms in the unit; or</text> </paragraph> <paragraph num="(c)"> <text>An amount that does not exceed limits, if any, established by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Unless a unit has been allocated federal low-income housing tax credits, if the income of an existing tenant of a HOME-assisted unit exceeds 80 percent of area median income adjusted for household size, the rent charged for the HOME unit shall be adjusted to the lesser of:</text> <paragraph num="(a)"> <text>The amount payable by the tenant under State or local law; or</text> </paragraph> <paragraph num="(b)"> <text>30 percent of the household’s adjusted monthly income, as recertified annually.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Additional Rent Limitations for Single Room Occupancy Housing.</text> <paragraph num="(1)"> <text>For single room occupancy housing that has both sanitary and food preparation facilities, the maximum HOME rent is based on the zero-bedroom fair market rent. The housing shall meet the requirements of §§A and B of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>For single room occupancy housing that has no sanitary or food preparation facilities or only one of the two, the maximum HOME rent is based on 75 percent of the zero-bedroom fair market rent. The project is not required to have low HOME rents in accordance with §B(1) or (2) of this regulation, but shall meet the occupancy requirements of §D of this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Occupancy Requirements.</text> <paragraph num="(1)"> <text>Multiple Unit HOME Projects.</text> <paragraph num="(a)"> <text>A HOME project with five or more rental units, or scattered multiple HOME projects under common ownership containing five or more rental units, is required to meet the requirements of §D(1)(b)—(e) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>At least 20 percent of the units in the project shall be occupied by income eligible households which qualify as very low income families as defined in 24 CFR §92.2.</text> </paragraph> <paragraph num="(c)"> <text>For the units described under §D(1)(b) of this regulation, rent [may not exceed the lesser of the following:</text> <paragraph num="(i)"> <text>The greater of 30 percent of the occupying household’s monthly adjusted income, or 30 percent of a gross family income equal to 50 percent of the median income for the area, as determined by HUD; and</text> </paragraph> <paragraph num="(ii)"> <text>The rent calculated under §B of this regulation] shall meet the requirements set forth in 24 CFR §92.252(b).</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>All units in the project which do not meet the requirements of §D(1)(b) and (c) of this regulation shall be occupied by households with annual incomes that do not exceed 80 percent of area median income adjusted for household size. However, a qualified household may continue to occupy a unit in a project if the household’s income exceeds 80 percent of area median income and the rent is adjusted as set forth in §B(2) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Regardless of changes in fair market rents and in median income over time, the rent limits set forth in §§B and D(1)(c) of this regulation are not required to be lower than the HOME rent for the project in effect at the time of project commitment.</text> </paragraph> <paragraph num="(3)"> <text>Small HOME Projects. A HOME project with one to four rental units shall be occupied by households with annual incomes that do not exceed 80 percent of area median income adjusted for household size.</text> </paragraph> <paragraph num="(4)"> <text>HOME Projects as Part of an Undertaking.</text> <paragraph num="(a)"> <text>If a loan is made for a project which is only a portion of the undertaking being acquired, constructed, or rehabilitated by an eligible recipient in part with HOME funds, the following formula shall be used to determine the minimum number of rental housing units which shall meet the occupancy requirements of §D(1) of this regulation:</text> <paragraph num="(i)"> <text>The amount of HOME funds;</text> </paragraph> <paragraph num="(ii)"> <text>Divided by the total cost of the undertaking;</text> </paragraph> <paragraph num="(iii)"> <text>Multiplied by the total number of units or homes in the undertaking;</text> </paragraph> <paragraph num="(iv)"> <text>Equals the number of units in the HOME project subject to the requirement of §D(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If the HOME project is contained within an undertaking, the recipient shall provide equal access to tenants of the project to any amenities and common areas within the undertaking.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Restrictive Covenants.</text> <paragraph num="(1)"> <text>The project shall be subjected to restrictive covenants containing the rent and occupancy restrictions, which covenants shall be set forth in a deed of trust, mortgage, deed, declaration of covenants, or other instrument acceptable to the Department.</text> </paragraph> <paragraph num="(2)"> <text>The covenants shall govern the property for a minimum period of 5—20 years, in addition to an anticipated construction or rehabilitation period, as follows:</text> <paragraph num="(a)"> <text>New construction, or acquisition of a newly constructed structure, 20 years;</text> </paragraph> <paragraph num="(b)"> <text>Rehabilitation or acquisition of an existing structure, when HOME funds per unit equal:</text> <paragraph num="(i)"> <text>Under $15,000, 5 years;</text> </paragraph> <paragraph num="(ii)"> <text>$15,000—$40,000, 10 years; and</text> </paragraph> <paragraph num="(iii)"> <text>Over $40,000 or rehabilitation involving refinancing, 15 years.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>The document setting forth the restrictive covenants specified in §E(1) and (2) of this regulation shall provide that, upon foreclosure by, or a deed in lieu of foreclosure to, an after recorded deed of trust securing the lender, the restrictive covenants shall be terminated if:</text> <paragraph num="(a)"> <text>The parties to the foreclosure, or deed in lieu of foreclosure, recognize in writing any statutory or contractual rights of the Department, other public agencies, nonprofit sponsors, or others to preserve affordable housing units;</text> </paragraph> <paragraph num="(b)"> <text>The foreclosure, or deed in lieu of foreclosure, is not for the purpose of avoiding the covenants; and</text> </paragraph> <paragraph num="(c)"> <text>At any time following foreclosure, or deed in lieu of foreclosure, if the owner or any entity in which the owner or the owner's family or business associates owns an interest, obtains any interest in the HOME project or property, the covenants shall be revived according to their original terms.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>HOME-assisted rental housing shall be occupied by income eligible households within 6 months following the date of project completion.</text> </paragraph> <paragraph num="G."> <text>Records and Reports. The owner of rental housing shall annually provide the Department with information on rents and occupancy of HOME-assisted units to demonstrate compliance with §§A—F of this regulation. If the rental housing project has floating HOME units, the owner shall provide the Department with information regarding unit substitution and filling vacancies so that the project remains in compliance with HOME rental occupancy requirements.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Rental Housing Requirements — Landlord Obligations."> <paragraph num="A."> <text>Nondiscrimination. Households having vouchers under the Section 8 Tenant-Based Assistance: Housing Choice Voucher Program (24 CFR Part 982) or other tenant-based rental assistance, including the HOME tenant-based rental assistance program, may not be excluded from units in the HOME project because of the status of the prospective tenant as a holder of such voucher or other tenant-based assistance document.</text> </paragraph> <paragraph num="B."> <text>Annual Review.</text> <paragraph num="(1)"> <text>Tenant Income.</text> <paragraph num="(a)"> <text>Owners shall examine the income of each tenant household annually.</text> </paragraph> <paragraph num="(b)"> <text>Unless a unit has been allocated federal low-income housing tax credits, tenants who no longer qualify as income eligible households shall pay rent equal to the lesser of:</text> <paragraph num="(i)"> <text>The amount payable by the tenant under State or local law; or</text> </paragraph> <paragraph num="(ii)"> <text>30 percent of the household's adjusted monthly income as recertified annually.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>If noncompliance with the occupancy requirements is caused by an increase in tenant income, all vacancies shall be filled with eligible households until the noncompliance is corrected.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Rent Increases.</text> <paragraph num="(a)"> <text>Maximum monthly rent shall be recalculated by the owner annually.</text> </paragraph> <paragraph num="(b)"> <text>The Department shall review and approve the proposed adjustments to rent before they are implemented.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Lease Terms.</text> <paragraph num="(1)"> <text>Minimum Term. Leases for HOME units are for 1 year or more unless the owner and tenant mutually agree otherwise.</text> </paragraph> <paragraph num="(2)"> <text>The lease shall be reviewed and approved by the Department to confirm that it does not contain an agreement by the tenant:</text> <paragraph num="(a)"> <text>To be sued, to admit guilt, or confess judgment in favor of the owner in a legal proceeding related to the lease;</text> </paragraph> <paragraph num="(b)"> <text>That the owner may take, hold, or sell personal property of household members without notice and a court decision on the rights of the parties;</text> </paragraph> <paragraph num="(c)"> <text>To waive any legal liability arising from the owner's or the owner's agents' intentional or negligent acts or failure to act;</text> </paragraph> <paragraph num="(d)"> <text>That the owner may initiate a lawsuit against the tenant without notice to the tenant;</text> </paragraph> <paragraph num="(e)"> <text>That the owner may evict the tenant, or any household member, without obtaining a court decision on the merits, in which the tenant had the opportunity to present a defense;</text> </paragraph> <paragraph num="(f)"> <text>To waive any right to trial by jury;</text> </paragraph> <paragraph num="(g)"> <text>To waive any appeal rights or otherwise challenge a court decision concerning the lease;</text> </paragraph> <paragraph num="(h)"> <text>To pay legal fees or costs if the tenant wins in court; and</text> </paragraph> <paragraph num="(i)"> <text>To accept supportive services that are offered (other than a tenant in transitional housing).</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Lease Termination. A lease may only be terminated or a renewal be refused upon 30 days written notice and after:</text> <paragraph num="(a)"> <text>Serious or repeated violations of the lease terms;</text> </paragraph> <paragraph num="(b)"> <text>A violation of applicable law;</text> </paragraph> <paragraph num="(c)"> <text>Completion of the tenancy period for transitional housing or failure to follow any required transitional housing supportive services plan; or</text> </paragraph> <paragraph num="(d)"> <text>Other good cause, which does not include an increase in the tenant’s income or refusal of the tenant to purchase the housing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Property Maintenance.</text> <paragraph num="(1)"> <text>During the period of affordability, the owner of HOME-assisted rental housing shall maintain the premises in compliance with Regulation .14 §A(1) or B(6) of this chapter, as applicable.</text> </paragraph> <paragraph num="(2)"> <text>The Department or its designee shall inspect the property in accordance with the requirements contained in 94 CFR §92.504.</text> </paragraph> <paragraph num="(3)"> <text>The property owner shall annually certify to the Department that each building and all HOME-assisted units in the project are suitable for occupancy and are in compliance with the Department’s property standards.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Tenant Selection. The owner of a rental housing development project assisted with HOME funds shall comply with the Department’s affirmative marketing requirements, including the adoption of written tenant selection policies and criteria that:</text> <paragraph num="(1)"> <text>Limit the housing to income eligible households;</text> </paragraph> <paragraph num="(2)"> <text>Are reasonably related to the tenant’s ability to perform the obligations of the lease;</text> </paragraph> <paragraph num="(3)"> <text>Provide for selection of tenants from a written evaluation used in chronological order of application; and</text> </paragraph> <paragraph num="(4)"> <text>Provide prompt written notification to any rejected applicant and the grounds for the rejection.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Affirmative Fair Housing Marketing Plan. Each project shall submit for review and approval by the Department an affirmative fair housing marketing plan in accordance with the requirements of the Program Guide. The Department shall monitor the project’s compliance with the approved plan.</text> </paragraph> <paragraph num="G."> <text>Prohibited Fees. Project owners may not charge fees that are not customarily charged in rental housing, except that rental project owners may charge:</text> <paragraph num="(1)"> <text>Reasonable application fees to prospective tenants;</text> </paragraph> <paragraph num="(2)"> <text>Parking fees to tenants only if such fees are customary for rental housing projects in the neighborhood; and</text> </paragraph> <paragraph num="(3)"> <text>Fees for services such as bus transportation or meals, as long as the services are voluntary and fees are charged for services provided.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Affordable Homeownership Requirements."> <paragraph num="A."> <text>General. In order to qualify for HOME funds, a homeownership project shall meet the requirements of §D of this regulation and either §B or C of this regulation, as applicable.</text> </paragraph> <paragraph num="B."> <text>Acquisition of a House.</text> <paragraph num="(1)"> <text>A single family house or one-to-four family residence, the purchase of which is to be assisted with HOME funds, shall meet the criteria set forth in §§B(2)—B-1 of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The purchase price of a single family home or one-to-four family residence may not exceed the lesser of:</text> <paragraph num="(a)"> <text>The upper house prices set by the Secretary for the Maryland Mortgage Program from time to time; or</text> </paragraph> <paragraph num="(b)"> <text>95 percent of the median purchase price for the type of house in the State, as determined by HUD.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The estimated appraised value at acquisition or after any repairs required to meet the standards of Regulation .14 of this chapter may not exceed the limit described in §B(2) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The house is expected to be the principal residence of an income eligible household at the time of purchase.</text> </paragraph> </paragraph> <paragraph num="B-1."> <text>Resale of Houses.</text> <paragraph num="(1)"> <text>The calculations as stated in §B-1(2)—(6) of this regulation shall be used to determine the amount of HOME funds due, if any, upon the sale of a house assisted with HOME funds.</text> </paragraph> <paragraph num="(2)"> <text>The Department shall determine initially whether the loan of HOME funds has been forgiven because the homeowner has owned and occupied the house for a required minimum period of 5, 10, or 15 years in accordance with Regulation .17D(2) of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>If the Department has not forgiven the loan, then the calculations as stated in §B-1(4)—(6) of this regulation shall be used to determine the amount of HOME funds due.</text> </paragraph> <paragraph num="(4)"> <text>Repay HOME Loan.</text> <paragraph num="(a)"> <text>The HOME loan shall be repaid in full out of net proceeds from the sale of the house if the net proceeds are greater than or equal to the sum of:</text> <paragraph num="(i)"> <text>The original principal amount of the HOME loan made to a homeowner; and</text> </paragraph> <paragraph num="(ii)"> <text>The homeowner payments as defined in §B-1(7) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Net proceeds” means the proceeds from the sale of the house less the unpaid principal balance of any superior and subordinate nongovernmental or private loans to the HOME loan.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Forgive HOME Loan.</text> <paragraph num="(a)"> <text>The Department shall forgive a portion of the HOME loan if the net proceeds are less than the sum of:</text> <paragraph num="(i)"> <text>The original principal amount of the HOME loan made to a homeowner; and</text> </paragraph> <paragraph num="(ii)"> <text>The homeowner payments as defined in §B-1(7) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The portion of the HOME loan to be forgiven shall equal the original principal amount of the HOME loan made to the homeowner multiplied by the number of years the homeowner owned and occupied the house multiplied by the applicable fraction based on the following chart:</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The amount of the HOME loan to be forgiven may not exceed the original principal amount of the HOME loan.</text> </paragraph> <paragraph num="(7)"> <text>For purposes of §B-1(4) and (5) of this regulation, “homeowner payments” means, with respect to loans made with HOME funds to home buyers, the:</text> <paragraph num="(a)"> <text>Amount of the down payment made by the homeowner on the house;</text> </paragraph> <paragraph num="(b)"> <text>Amount of any payments or prepayments of principal on any loan secured by the property; and</text> </paragraph> <paragraph num="(c)"> <text>Cost of all capital improvements to the house made by the homeowner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Rehabilitation of Existing Houses.</text> <paragraph num="(1)"> <text>An existing house, the rehabilitation of which is to be assisted with HOME funds, shall meet the criteria of this section.</text> </paragraph> <paragraph num="(2)"> <text>The value of the currently owned single family house or one-to-four family residence after rehabilitation may not exceed 95 percent of the median purchase price for the type of house in the State as determined by HUD.</text> </paragraph> <paragraph num="(3)"> <text>The house shall be the principal residence of an owner whose family is an income eligible household at the time HOME funds are committed.</text> </paragraph> <paragraph num="(4)"> <text>Income Eligibility.</text> <paragraph num="(a)"> <text>In determining whether a household is an income eligible household for the purposes of this section, the Department shall use its best efforts to require that the household meets the State requirement of 55 percent of State median income as identified in Regulation .03B(16)(a) of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>Notwithstanding §C(4)(a) of this regulation, if, in the determination of the Program, the financial viability of a homeownership project or activity so requires, a household may meet the federal requirement of 80 percent of area median income as identified in Regulation .03B(16)(b) of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Loan Terms.</text> <paragraph num="(1)"> <text>In addition to other forms of HOME assistance authorized under Regulation .10A of this chapter, repayment of HOME funds lent in connection with a homeownership project may be secured by a subordinated mortgage or deed of trust.</text> </paragraph> <paragraph num="(2)"> <text>A loan of HOME funds made to assist a home buyer may be forgiven by the Department, after a minimum period of 5, 10, or 15 years, if the homeowner owns and occupies the house for:</text> <paragraph num="(a)"> <text>5 years if the HOME loan is under $15,000;</text> </paragraph> <paragraph num="(b)"> <text>10 years if the HOME loan is $15,000 to $40,000; and</text> </paragraph> <paragraph num="(c)"> <text>15 years if the HOME loan is over $40,000.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Tenant-Based Rental Assistance Requirements."> <paragraph num="A."> <text>General. In order to qualify for tenant-based rental assistance, a tenant-based rental assistance project or program shall meet the applicable requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>Tenant-Based Rental Assistance — General Conditions.</text> <paragraph num="(1)"> <text>Tenant-based rental assistance may only be provided to income-eligible households.</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §B(3) of this regulation, recipients of tenant-based rental assistance shall be selected on the basis of written tenant selection criteria, developed by the Department or its designee.</text> </paragraph> <paragraph num="(3)"> <text>Relocation Exception for HOME-Assisted Units.</text> <paragraph num="(a)"> <text>The Department or its designee may select income eligible households who currently reside in units that are designated for rehabilitation or acquisition under the HOME program without requiring that the household meet the written tenant selection criteria.</text> </paragraph> <paragraph num="(b)"> <text>Households selected under §B(3)(a) of this regulation may use the tenant-based rental assistance in the rehabilitated or acquired unit or in any other qualified housing.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Tenant-based rental assistance shall be used within the boundaries of the State.</text> </paragraph> <paragraph num="(5)"> <text>The Department or its designee shall enter into a rental assistance contract or agreement with an owner leasing a unit to an assisted household or directly with an eligible household.</text> </paragraph> <paragraph num="(6)"> <text>Before entry into a rental assistance contract or agreement, the Department or its designee shall review each lease and shall disapprove a lease if the:</text> <paragraph num="(a)"> <text>Rent is not reasonable, based on rents that are charged for comparable unassisted rental units; or</text> </paragraph> <paragraph num="(b)"> <text>Lease does not comply with the requirements in Regulation .16C of this chapter.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Housing occupied by a household receiving HOME tenant-based rental assistance under this regulation shall meet the housing quality standards set forth in 24 CFR §982.401 or the successor requirements as established by HUD.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Rental Assistance.</text> <paragraph num="(1)"> <text>Rental assistance shall meet the requirements in §C(2)—(5) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The term of assistance shall begin on the 1st day of the term of the lease and may not exceed 24 months, except if renewed by the Department or its designee.</text> </paragraph> <paragraph num="(3)"> <text>The term of a rental assistance contract or other agreement shall provide that if the contract or agreement is with:</text> <paragraph num="(a)"> <text>An owner, assistance shall end upon termination of the lease;</text> </paragraph> <paragraph num="(b)"> <text>A household, assistance need not end upon termination of the lease, but payments may not be made after termination of the lease until the household enters into a new lease.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Monthly Assistance.</text> <paragraph num="(a)"> <text>The amount of the monthly assistance may not exceed the difference between:</text> <paragraph num="(i)"> <text>A rent standard for the unit size established by the Department or its designee, which standard shall be based on the Section 8 Housing Choice Voucher Program (24 CFR Part 982) or on local market conditions; and</text> </paragraph> <paragraph num="(ii)"> <text>30 percent of the household's monthly adjusted income, subject to a minimum tenant contribution to rent established by the Department or its designee.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The Department may approve, on a unit-by-unit basis, a subsidy based on a rent standard that exceeds the applicable fair market rent by up to 10 percent for 20 percent of units assisted.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In any case when assistance under §8 of the United States Housing Act of 1937 becomes available, recipients of tenant-based rental assistance under this regulation shall qualify for tenant selection preferences to the same extent as when they received the HOME tenant-based rental assistance under this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Security Deposits. Tenant-based rental assistance for security deposits shall meet the following requirements:</text> <paragraph num="(1)"> <text>Assistance shall be in the form of loans or grants to income eligible households for security deposits for rental of dwelling units;</text> </paragraph> <paragraph num="(2)"> <text>Assistance provided in the form of a loan shall be evidenced by a promissory note, which may or may not be secured;</text> </paragraph> <paragraph num="(3)"> <text>HOME security deposit assistance may not exceed the equivalent of 2 months rent for the dwelling unit;</text> </paragraph> <paragraph num="(4)"> <text>Only the prospective tenant may apply for HOME assistance under this regulation, although assistance may be paid directly to the tenant or to the landlord.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Application Procedures."> <paragraph num="A."> <text>Housing Program Applications. Applications for HOME funds for a project under one of the DHCD housing programs shall be part of the DHCD loan application and shall include the information and supporting documentation specified on the application form.</text> </paragraph> <paragraph num="B."> <text>Maryland HOME Initiatives Program Fund Applications.</text> <paragraph num="(1)"> <text>Application for Maryland HOME Initiatives Program Funds shall be made on the application form approved by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The application shall include the following information and supporting documentation:</text> <paragraph num="(a)"> <text>A detailed description of the proposed project or activity;</text> </paragraph> <paragraph num="(b)"> <text>Organizational documents of the applicant unless the applicant is a local government;</text> </paragraph> <paragraph num="(c)"> <text>Sufficient information and documentation to determine the extent, if any, to which the project or activity will change the type of use or increase the intensity of the existing use of the property;</text> </paragraph> <paragraph num="(d)"> <text>For projects:</text> <paragraph num="(i)"> <text>Preliminary plans and specifications including summary scope of work, preliminary drawings, and cost estimates,</text> </paragraph> <paragraph num="(ii)"> <text>Proposed operating budgets, development budgets, and rents or sale prices,</text> </paragraph> <paragraph num="(iii)"> <text>Evidence of zoning compliance or, if a zoning variance or exception is required, evidence that the request for variance or exception has been filed and a hearing date has been scheduled,</text> </paragraph> <paragraph num="(iv)"> <text>Evidence of site control including a deed, contract of sale, lease with purchase option, or other form of site control acceptable to the Administration,</text> </paragraph> <paragraph num="(v)"> <text>Evidence of compliance with local planning requirements, if applicable, and</text> </paragraph> <paragraph num="(vi)"> <text>Evidence of the availability of financing including commitment, feasibility, or conditional commitment letters from lenders or grantor which establish that the lender or grantor has determined that the project is feasible and state the amount and terms and conditions of funding for the project;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>For programs:</text> <paragraph num="(i)"> <text>Detailed outline of policies, procedures, and eligibility requirements for the Program, and</text> </paragraph> <paragraph num="(ii)"> <text>Evidence satisfactory to the Department of demand for the Program including demographic and market data, if available.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Timing.</text> <paragraph num="(1)"> <text>Applications for HOME through the DHCD housing programs shall be made at the times specified during the year by the applicable housing program.</text> </paragraph> <paragraph num="(2)"> <text>Maryland HOME Initiatives Program Fund applications shall be made in accordance with application and competition cycles published by the Department. The Department shall notify nonprofit organizations, CHDO, developers, local governments, and other interested persons of application cycles. Notification may be by direct mailing, notices in newspapers with major Statewide circulation, or other methods selected by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Processing Procedures."> <paragraph num="A."> <text>Home applications through the Single Family Programs or for a homeownership project will be processed in accordance with the published processing procedures for the appropriate Single Family Program.</text> </paragraph> <paragraph num="B."> <text>Maryland HOME Initiatives Program Fund Processing.</text> <paragraph num="(1)"> <text>Applications for the Maryland HOME Initiatives Program Fund shall be processed in accordance with the procedures of this section.</text> </paragraph> <paragraph num="(2)"> <text>Threshold Requirements. Applications may not be considered for funding unless they meet the following minimum requirements:</text> <paragraph num="(a)"> <text>The application shall be consistent with 24 CFR Part 92;</text> </paragraph> <paragraph num="(b)"> <text>The application shall demonstrate that the project or activity will serve income eligible households; and</text> </paragraph> <paragraph num="(c)"> <text>The project or activity shall be:</text> <paragraph num="(i)"> <text>Ineligible for funding under the DHCD housing programs, or</text> </paragraph> <paragraph num="(ii)"> <text>Eligible for a DHCD housing program which the Department has elected not to fund or undertake;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Projects shall be ready to proceed as evidenced by:</text> <paragraph num="(i)"> <text>Documentation of the availability of financing,</text> </paragraph> <paragraph num="(ii)"> <text>Evidence of zoning compliance and, if applicable, compliance with local planning requirements,</text> </paragraph> <paragraph num="(iii)"> <text>Evidence of site control, and</text> </paragraph> <paragraph num="(iv)"> <text>Completion of preliminary plans and specifications, drawings, and cost estimates;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Programs shall be ready to implement as evidenced by:</text> <paragraph num="(i)"> <text>Detailed outline of policies, procedures, and eligibility requirements, and</text> </paragraph> <paragraph num="(ii)"> <text>Documentation of demand for the Program;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>The Department shall determine, based on the documentation provided with the application, if the project or program is feasible; the Department’s review will include financial, construction, and management reviews; and</text> </paragraph> <paragraph num="(g)"> <text>The applicant shall demonstrate:</text> <paragraph num="(i)"> <text>That the project or program meets all of the requirements of 24 CFR Part 92;</text> </paragraph> <paragraph num="(ii)"> <text>The availability of funding for administrative costs associated with implementing and operating the project or program; and</text> </paragraph> <paragraph num="(iii)"> <text>The ability to satisfy all long-term monitoring, record-keeping, and reporting requirements which are required by 24 CFR Part 92.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Evaluation. Applications which meet the threshold criteria shall be evaluated based upon the extent that the projects or programs:</text> <paragraph num="(a)"> <text>Address unmet need, with extra consideration given to programs or projects which:</text> <paragraph num="(i)"> <text>Currently are not undertaken in the State,</text> </paragraph> <paragraph num="(ii)"> <text>Fill a need not met by the DHCD housing programs or other programs of the Department, or</text> </paragraph> <paragraph num="(iii)"> <text>Propose new ideas that would provide insights and experience that may lead to new programs or changes to the DHCD housing programs;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Include nonprofit participation, with the first priority given to applications from CHDOs with CHDO-eligible activities, second priority to applications from nonprofit organizations, and third priority to coapplications with nonprofit organizations and joint ventures with nonprofit organizations depending on the role and involvement of the nonprofit organization;</text> </paragraph> <paragraph num="(c)"> <text>Promote geographic distribution among eligible jurisdictions, with extra consideration given to nonentitlement jurisdictions or regions of the State underserved by HOME funds; and</text> </paragraph> <paragraph num="(d)"> <text>Promote new ideas which provide insight and experience that would lead to new programs or changes in existing programs of the Department.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Approval to commit HOME funds from the Maryland HOME Initiatives Program Fund shall be as follows:</text> <paragraph num="(a)"> <text>The Director or the Deputy Director of the Division of Development Finance shall approve, disapprove, or modify loans or grants in amounts less than $100,000;</text> </paragraph> <paragraph num="(b)"> <text>Except in the case of an emergency when urgent action is required, all loans or grants in amounts greater than or equal to $100,000 shall be submitted to the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland, for review and recommendation to the Secretary;</text> </paragraph> <paragraph num="(c)"> <text>For loans or grants in amounts greater than or equal to $100,000 but less than $250,000, the recommendation of the Housing Finance Review Committee constitutes approval unless the loan or grant is specifically disapproved by the Secretary;</text> </paragraph> <paragraph num="(d)"> <text>For loans or grants in amounts greater than or equal to $250,000, the Secretary shall approve, disapprove, or modify the terms of the loan or grant after receipt of the recommendation of the Housing Finance Review Committee; and</text> </paragraph> <paragraph num="(e)"> <text>In an emergency when urgent action is required, the Secretary may approve loans or grants without the recommendation of the Housing Finance Review Committee.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Upon approval of financial assistance, the Department shall issue a commitment letter setting forth the terms and conditions of the financial assistance. The commitment letter shall specify a time limit within which the sponsor shall accept the terms and conditions of the approval by executing the approval letter.</text> </paragraph> <paragraph num="(6)"> <text>The Department shall specify a time limit within which that loan shall be closed in the case of projects or funds shall be committed and expended in the case of programs, which time limit may be extended in the Department’s sole discretion. If closing does not occur within the time limit specified in the commitment or if the recipient fails to commit and expend the funds within the time limit provided in the commitment letter, the Department may use the funds committed for the loan or program for any other loan or program permitted by this chapter and 24 CFR Part 92.</text> </paragraph> </paragraph> <paragraph num="C."> <text>All applications for projects to use HOME funds through the rental housing program or for rental housing development projects shall be processed in accordance with the published processing procedures as stated in COMAR 05.05.01.19—.26, provided that this chapter shall prevail in the event of a conflict between any provision under COMAR 05.05.01.19—.26 and any provision of this chapter.</text> </paragraph> <paragraph num="D."> <text>Rejection.</text> <paragraph num="(1)"> <text>If an application for HOME funds through the Single Family Programs or the Maryland HOME Initiatives Program Fund or for a homeownership project is rejected, the director of the Single Family Programs shall notify the applicant in writing of the rejection.</text> </paragraph> <paragraph num="(2)"> <text>In addition to the notice to the applicant pursuant to §D(1) of this regulation, the director of the Single Family Programs shall also notify the Housing Finance Review Committee of all applications for HOME funds through the Maryland HOME Initiatives Program Fund not recommended for funding.</text> </paragraph> <paragraph num="(3)"> <text>If an application for HOME funds through the rental housing program or for a rental housing development project is rejected, the project sponsor shall be notified in accordance with COMAR 05.05.01.26.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>Applicants rejected under §D(1) of this regulation may request reconsideration of a rejection in accordance with the procedures contained in the HOME guidelines or the Single Family Programs.</text> </paragraph> <paragraph num="(2)"> <text>Applicants rejected under §D(3) of this regulation may request reconsideration of a rejection in accordance with COMAR 05.05.01.26.</text> </paragraph> <paragraph num="(3)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Loan and Grant Documents.</text> <paragraph num="(1)"> <text>The Department shall provide the applicant with copies of standard form documents for all awards of funds for HOME projects for homeownership projects or financed through the single family programs or the Maryland HOME Initiatives Program Fund. In the case of Maryland HOME Initiatives Program Fund awards for programs, the Administration shall approve the documents to be entered into between the HOME recipient and the ultimate borrower.</text> </paragraph> <paragraph num="(2)"> <text>For HOME loans made for rental housing development projects, the loan documents shall comply with COMAR 05.05.01.27.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Nondiscrimination and Drug-Free and Alcohol-Free Workplace."> <paragraph num="A."> <text>A sponsor or other recipient of HOME funds or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the program.</text> </paragraph> <paragraph num="B."> <text>Each sponsor or other recipient of HOME funds or contractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Fair Housing Amendments Act of 1988, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department regulations adopted or to be adopted to carry out the requirements of that Order and any regulations promulgated under it.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Program Administration."> <paragraph num="A."> <text>Except for waivers under §D of this regulation, any action or decision required or permitted to be taken or made by the Department under these regulations may be taken or made by the Director or the Director's designee.</text> </paragraph> <paragraph num="B."> <text>The Department may terminate an approval of funds or refuse to make additional disbursements under a loan agreement if the Department finds that the borrower is not complying with any of the requirements of the Program or the financing documents.</text> </paragraph> <paragraph num="C."> <text>The Department may establish from time to time operational handbooks or manuals governing matters relating to the Program including descriptive statements of Program procedures which do not directly affect the rights of the public or the procedures available to the public.</text> </paragraph> <paragraph num="D."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver or variance is not inconsistent with the provisions of 24 CFR Part 92 and the HOME Investments Partnerships Act, Title 11 of the Cranston-Gonzalez National Affordable Housing Act, as amended, 42 U.S.C. §12701 et seq., if:</text> <paragraph num="(1)"> <text>In the written determination of the Secretary, the application of the regulations in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Program or 24 CFR Part 92 or 42 U.S.C. §12701 et seq.; or</text> </paragraph> <paragraph num="(2)"> <text>Conformance with the requirements of any federal, State, or local programs in connection with the HOME Program necessitates waiver or variance of a regulation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Secretary may delegate to the Director or Deputy Director of the Division of Development Finance, any Program Director, or any other official or employee of the Department the authority to execute or approve any Program documents or loan documents, including loan commitments.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="False Statements."> <text>A person may not knowingly make or cause to be made any false statement or report in any documents required to be furnished to the Department by any agreement relating to the program.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-111(b) and 4-211(a)(8) and (10); State Finance and Procurement Article, §§5-7B-01—5-7B-10; Annotated Code of MarylandExecutive Order 01.01.1998.04</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 2, 1993 (19:26 Md. R. 2285)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective December 5, 1994 (21:24 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C amended effective April 5, 1999 (26:7 Md. R. 540)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09C, D amended effective September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10B amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective July 1, 1996 (23:13 Md. R. 940)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective March 24, 1997 (24:6 Md. R. 483)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B, C amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16B amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18C amended effective September 25, 1995 (22:19 Md. R. 1471)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20C amended as an emergency provision effective August 24, 1995 (22:19 Md. R. 1459); emergency status extended at 23:7 Md. R. 548; amended permanently effective August 26, 1996 (23:17 Md. R. 1247)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective June 26, 2000 (27:12 Md. R. 1137)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective January 21, 2002 (29:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective March 13, 2006 (33:5 Md. R. 519)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B, C amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18B, C amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19C amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .21 amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .22D amended effective December 22, 2014 (41:25 Md. R. 1476)</annotation> </annotations> </chapter> <chapter num="02" heading="Financing Adjustment Factor Funds"> <regulation prefix="Regulation" num=".01" heading="General."> <paragraph num="A."> <text>This chapter describes the policies and procedures the Community Development Administration will use to administer financing adjustment factor funds granted to the State under the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, P.L. 100-628, as amended, to provide financial assistance to individuals, local governments, developers, and nonprofit organizations to provide decent, safe, and sanitary housing affordable to very low-income families or persons.</text> </paragraph> <paragraph num="B."> <text>This chapter describes the specific eligible uses, restrictions, and procedures used to administer financing adjustment factor funds in the State.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <text>The objectives of the Administration in its use of Financing Adjustment Factor Funds are to:</text> <paragraph num="A."> <text>Finance affordable housing in conjunction with housing loan programs administered by the Department by awarding funds to local governments, nonprofit sponsors, and developers, and for-profit sponsors and developers to:</text> <paragraph num="(1)"> <text>Promote the development or rehabilitation of rental housing for households of very low income;</text> </paragraph> <paragraph num="(2)"> <text>Promote homeownership opportunities for households of very low income; or</text> </paragraph> <paragraph num="(3)"> <text>Facilitate nonprofit ownership of group housing for persons of very low income with special need;</text> </paragraph> </paragraph> <paragraph num="B."> <text>Finance programs, projects, and activities that fill a need not met by other DHCD housing programs, but that promote the development and rehabilitation of housing for households of very low income for homeowners, renters, and special populations; and</text> </paragraph> <paragraph num="C."> <text>Provide grants to local governments, local development corporations, local development agencies, municipalities, and nonprofit organizations for certain eligible activities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Community Development Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Community development project” has the meaning stated in Housing and Community Development Article, §4-217, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Community Legacy Program” means the program authorized by Housing and Community Development Article, Title 6, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Decent, safe, and sanitary housing” means housing that meets the standards determined under 24 CFR §5.703.</text> </paragraph> <paragraph num="(5)"> <text>“Distressed area” has the meaning stated in Housing and Community Development Article, §4-221(e), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Energy conservation project” has the meaning stated in Housing and Community Development Article, §4-218, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“FAF funds” means funds:</text> <paragraph num="(a)"> <text>Realized from the refunding of tax-exempt bonds of the Administration secured by mortgages on projects that receive assistance from the United States of America, acting through HUD under Section 8 of the United States Housing Act of 1937, 42 U.S.C. §1437, as amended; and</text> </paragraph> <paragraph num="(b)"> <text>Granted to the State under the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, P.L. 100-628, as amended.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Families of limited incomes” means families or persons whose annual incomes do not exceed upper income limits established by the Secretary in accordance with COMAR 05.05.02.04B.</text> </paragraph> <paragraph num="(9)"> <text>“Home improvement project” has the meaning stated in Housing and Community Development Article, §4-219, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Household” means one or more persons occupying a housing unit.</text> </paragraph> <paragraph num="(11)"> <text>“Local development agency” has the meaning stated in Housing and Community Development Article, §4-201(l), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Local development corporation” has the meaning stated in Housing and Community Development Article, §4-201(m), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“HUD” means the United States Department of Housing and Urban Development.</text> </paragraph> <paragraph num="(14)"> <text>“Multifamily programs” means the:</text> <paragraph num="(a)"> <text>Elderly Rental Housing Program authorized under Housing and Community Development Article, §4-402, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Low Income Housing Tax Credit Program authorized under Housing and Community Development Article, §2-111 and State Finance and Procurement Article, §§5-7B-01—5-7B-10, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>Multifamily Bond Program and Multfamily Home and Energy Loan Program authorized under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Multifamily Rehabilitation Program of the Maryland Housing Rehabilitation Program authorized under Housing and Community Development Article, §4-906, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>Nonprofit Rehabilitation Program authorized under Housing and Community Development Article, §4-929, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(f)"> <text>Partnership Rental Housing Program authorized under Housing and Community Development Article, Title 4, Subtitle 12, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(g)"> <text>Rental Housing Production Program authorized under Housing and Community Development Article, §4-1502, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(h)"> <text>Shelter and Transitional Facilities Grant Program authorized under Ch. 73, Acts of 1993; Ch. 115, Acts of 1994; Ch. 131, Acts of 1995; Ch. 125, Acts of 1996; Ch. 600, Acts of 1997; Ch. 109 and Ch. 138, Acts of 1998; Ch. 118 and Ch. 212, Acts of 1999.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Maryland HOME Program” means the program authorized under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Municipality” means a municipal corporation in the State subject to the provisions of Article XI-E of the Constitution of the State, the Mayor and City Council of Baltimore, or one of the 23 counties of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity, no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(18)"> <text>“Public purpose project” has the meaning stated in Housing and Community Development Article, §4-221(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(19)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(20)"> <text>“Single Family Programs” means the:</text> <paragraph num="(a)"> <text>Accessory, Shared, and Sheltered Housing Program authorized under Housing and Community Development Article, §4-926, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Federal Lead Hazard Reduction Program authorized under Housing and Community Development Article, §§4-211(a)(8) and (9), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>Group Home Financing Program authorized under Housing and Community Development Article, §4-602, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Home and Energy Loan Program (one-to-four units) authorized under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>Indoor Plumbing Program authorized under Housing and Community Development Article, §4-927, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(f)"> <text>Lead Hazard Reduction Grant Program and Lead Hazard Reduction Loan Program authorized under Housing and Community Development Article, Title 4, Subtitle 7, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(g)"> <text>Maryland Home Financing Programs, authorized by Housing and Community Development Article, Title 4, Subtitle 8, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(h)"> <text>The Maryland Mortgage Program, authorized by Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(i)"> <text>Regular Rehabilitation Program of the Maryland Housing Rehabilitation Program authorized under Housing and Community Development Article, §4-906, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(j)"> <text>Settlement Expense Loan Program authorized by Housing and Community Development Article, Title 4, Subtitle 3, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(k)"> <text>Special Housing Opportunities Program authorized under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Solar energy project” has the meaning stated in Housing and Community Development Article, §4-201(s), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(22)"> <text>“Special housing facility” has the meaning stated in Housing and Community Development Article, §4-201(t), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(23)"> <text>“Sponsor” means an applicant that develops a project and receives a loan or grant of FAF funds.</text> </paragraph> <paragraph num="(24)"> <text>“Very low-income households” means very low-income families as provided in 42 U.S.C. §1437a.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Projects."> <paragraph num="A."> <text>The Administration may use FAF funds to finance the following:</text> <paragraph num="(1)"> <text>Rental housing;</text> </paragraph> <paragraph num="(2)"> <text>Homeownership;</text> </paragraph> <paragraph num="(3)"> <text>Housing for persons with special housing needs; or</text> </paragraph> <paragraph num="(4)"> <text>Accessory, shared, or sheltered housing facilities.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The housing financed with FAF funds shall be rented, occupied, or sold to very low-income households in accordance with this chapter.</text> </paragraph> <paragraph num="C."> <text>The projects financed with FAF funds shall be community development projects, public purpose projects, energy conservation projects, solar energy projects, home improvement projects, or special housing facilities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Activities."> <text>FAF funds may be used for the following:</text> <paragraph num="A."> <text>Activities identified in 24 CFR §811.110, as amended;</text> </paragraph> <paragraph num="B."> <text>Interest rate subsidies;</text> </paragraph> <paragraph num="C."> <text>Direct rental subsidies;</text> </paragraph> <paragraph num="D."> <text>Grants or loans for housing very low-income households, including housing in mixed income or mixed use projects;</text> </paragraph> <paragraph num="E."> <text>Interest subsidies, grants, or loans to enable very low-income households to acquire ownership of single family housing units; and</text> </paragraph> <paragraph num="F."> <text>Funds to assist in the acquisition, construction, and rehabilitation of housing for homeless persons, very low-income households, or persons at risk of becoming homeless, and other special needs populations consisting of very low-income households.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Costs."> <paragraph num="A."> <text>FAF funds may be used only to pay the development costs of dwelling units to the extent they are or would be chargeable for federal income tax purposes to the project's capital account with a proper election by a taxpayer.</text> </paragraph> <paragraph num="B."> <text>FAF funds may be used toward the development costs of mixed-income or mixed-use projects, if the costs:</text> <paragraph num="(1)"> <text>Would be properly includable in an FHA-insured mortgage loan insured under the National Housing Act, 12 U.S.C. §1715l(d)(4); and</text> </paragraph> <paragraph num="(2)"> <text>Are allocable to dwelling units to be occupied by very low-income households and facilities related and subordinate to a FHA insured mortgage loan under the National Housing Act, 12 U.S.C. §1715l(d)(4).</text> </paragraph> </paragraph> <paragraph num="C."> <text>Any allocation shall be made under §B(2) of this regulation on a basis that reasonably reflects the actual costs of the dwelling units to be occupied by very low-income households as a percentage of the overall development costs of such mixed-income or mixed-use project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Terms and Conditions of Financial Assistance."> <paragraph num="A."> <text>Occupancy Requirements and Income Restrictions.</text> <paragraph num="(1)"> <text>For residential rental projects, all of the residential rental units financed with FAF funds shall be rented only to very low-income households.</text> </paragraph> <paragraph num="(2)"> <text>For homeownership projects, the recipients of FAF Funds shall be very low-income households.</text> </paragraph> <paragraph num="(3)"> <text>For homeownership projects subsidized with FAF Funds, if the Administration makes ongoing grants or subsidies from FAF Funds, the Administration shall recertify every 2 years that the recipients continue to be very low-income households and continue to occupy the unit.</text> </paragraph> <paragraph num="(4)"> <text>Term of Income Restrictions.</text> <paragraph num="(a)"> <text>All residential rental projects subsidized with FAF Funds shall be income-restricted for a minimum of 10 years.</text> </paragraph> <paragraph num="(b)"> <text>All homeownership units subsidized with FAF Funds shall be owned and occupied by the recipient of the FAF funds at the time the financial assistance is received.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Inspection by HUD. The sponsor shall agree to permit HUD to inspect the units financed with FAF funds at reasonable times during business hours and under reasonable conditions.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Repayment.</text> <paragraph num="(1)"> <text>Repayment shall be made as provided in the loan documents.</text> </paragraph> <paragraph num="(2)"> <text>Interest and principal repayment may be deferred at the discretion of the Department, in accordance with the terms and provisions of the loan documents.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Lien Priority. Except for liens held in connection with public purpose projects, any lien held by the Administration on property is a lien superior to all other liens on the property except liens for taxes owed to the State or any subdivision of the State, and earlier mortgage liens. The Administration, in its discretion, may require the release and repayment of any liens.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Use of FAF Funds by the Administration."> <paragraph num="A."> <text>The Administration, in its discretion, may use FAF funds in connection with a project financed under a single family program, multifamily program, community legacy program, or Maryland HOME program if the project complies with this chapter and the regulations of the single family program, multifamily program, community legacy program, or Maryland HOME program, as applicable.</text> </paragraph> <paragraph num="B."> <text>The Administration, in its discretion, may use FAF funds for the programs identified in §A of this regulation instead of funds provided under a single family program, multifamily program, community legacy program, or Maryland HOME program, if the sponsor:</text> <paragraph num="(1)"> <text>Identifies a specific single family program, multifamily program, or Maryland HOME program, or identifies the community legacy program for which the project qualifies;</text> </paragraph> <paragraph num="(2)"> <text>Agrees to comply with the regulations of the specific identified program; and</text> </paragraph> <paragraph num="(3)"> <text>Agrees to comply with this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If there is a conflict between the regulations of the specific identified program and this chapter, the more restrictive regulation applies to the project to maintain compliance with this chapter and the regulations of the specific identified program.</text> </paragraph> <paragraph num="D."> <text>The sponsor receiving FAF funds shall agree to comply with any program guidelines, manuals, or policies established for the specific identified program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of this chapter if:</text> <paragraph num="A."> <text>The waiver is consistent with the Act;</text> </paragraph> <paragraph num="B."> <text>Any necessary approvals from HUD are obtained; and</text> </paragraph> <paragraph num="C."> <text>The Secretary determines that:</text> <paragraph num="(1)"> <text>An emergency exists; or</text> </paragraph> <paragraph num="(2)"> <text>The application of a regulation in a specific case would be inequitable or contrary to the purposes of the Act.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-102, 2-211, and 4-211(a)(8) and (9), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 15, 2004 (31:5 Md. R. 447)</annotation> </annotations> </chapter> </subtitle> <subtitle num="13" heading="Neighborhood Business Development"> <chapter num="01" heading="Business Development Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter prescribes the policies, procedures, and authorizations for providing financial assistance to eligible small businesses, nonprofit organizations, and microenterprises from the Neighborhood Business Development Fund and for administering the Business Development Program, also known as the Neighborhood Business Works Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <text>The purposes of the Program as set forth in the Act are:</text> <paragraph num="A."> <text>In priority funding areas or eligible opportunity zones, to:</text> <paragraph num="(1)"> <text>Help develop, redevelop, or expand small businesses and microenterprises;</text> </paragraph> <paragraph num="(2)"> <text>Stimulate investment by the private sector;</text> </paragraph> <paragraph num="(3)"> <text>Invest in revitalization projects for small businesses and microenterprises; and</text> </paragraph> <paragraph num="(4)"> <text>Stimulate political subdivisions to participate in developing and expanding small businesses and microenterprises; and</text> </paragraph> </paragraph> <paragraph num="B."> <text>In food deserts or parts of priority funding areas or eligible opportunity zones that serve food deserts, to help create small businesses and other food–related enterprises that provide fresh fruits, vegetables, and other healthy foods to residents in the food desert.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following words have the meanings indicated and as defined in the Act.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Business” means a commercial or industrial enterprise.</text> </paragraph> <paragraph num="(3)"> <text>“Business project” means a project that is:</text> <paragraph num="(a)"> <text>Both:</text> <paragraph num="(i)"> <text>Located in a priority funding area or eligible opportunity zone; and</text> </paragraph> <paragraph num="(ii)"> <text>Acquired, owned, developed, constructed, reconstructed, rehabilitated, or improved by a person or an entity for the purposes of carrying on a business whether or not for profit; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Eligible for funding from the Fund.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(5)"> <text>“Development costs” means the costs incurred to develop, redevelop, or expand a business project and include the costs of:</text> <paragraph num="(a)"> <text>Necessary studies, surveys, plans, and specifications;</text> </paragraph> <paragraph num="(b)"> <text>Architectural, engineering, or other special services, including flood plain studies, environmental audits, and critical area or wetland assessments;</text> </paragraph> <paragraph num="(c)"> <text>Land and improvements;</text> </paragraph> <paragraph num="(d)"> <text>Site preparation;</text> </paragraph> <paragraph num="(e)"> <text>Construction, reconstruction, and rehabilitation;</text> </paragraph> <paragraph num="(f)"> <text>Machinery, equipment, and furnishings;</text> </paragraph> <paragraph num="(g)"> <text>Essential operating costs, including working capital and initial occupancy expenses;</text> </paragraph> <paragraph num="(h)"> <text>Indemnity and surety bonds and premiums on insurance;</text> </paragraph> <paragraph num="(i)"> <text>Temporary relocation expenses; and</text> </paragraph> <paragraph num="(j)"> <text>Other costs determined to be acceptable by the Department.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Eligible opportunity zone” means an area designated as a qualified opportunity zone under §1400 Z-1 of the Internal Revenue Code that is located in Allegany County, Garrett County, Somerset County, or Wicomico County.</text> </paragraph> <paragraph num="(7)"> <text>“Financial assistance” means any form of grant, loan, loan participation, assurance, guarantee, or other credit enhancement, reduction in the principal obligation of or in the rate of interest payable on a loan or portion of a loan, and prepayment of interest on a subordinate or superior loan or portion of a loan.</text> </paragraph> <paragraph num="(8)"> <text>“Financial assistance documents” means those documents executed by an approved applicant and the Department which set forth the terms and conditions of financial assistance under the Program.</text> </paragraph> <paragraph num="(9)"> <text>“Food desert” means that part of a priority funding area or eligible opportunity zone designated by the Secretary in accordance with COMAR 05.13.06.05.</text> </paragraph> <paragraph num="(10)"> <text>“Food desert project” means a project that is located in a food desert or a part of a priority funding area or eligible opportunity zone that serves a food desert for the purpose of providing fresh fruits, vegetables, and other healthy foods to residents in the food desert.</text> </paragraph> <paragraph num="(11)"> <text>“Fund” means the Neighborhood Business Development Fund under Housing and Community Development Article, §6-310, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>Local Jurisdiction.</text> <paragraph num="(a)"> <text>“Local jurisdiction” means:</text> <paragraph num="(i)"> <text>A municipal corporation subject to the provisions of the State Constitution, Article XI-E, if a project is located entirely within the boundaries of the municipal corporation; or</text> </paragraph> <paragraph num="(ii)"> <text>Any of the 23 counties of this State and the City of Baltimore within which a project is located.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Local jurisdiction” includes each local jurisdiction within which any part of a project is located, if part of the project is located within one local jurisdiction while the remainder of the project is located in a different local jurisdiction.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Microenterprise” means a business that employs a number of employees or has annual gross receipts no greater than the limits set forth by the U.S. Small Business Administration for microenterprises.</text> </paragraph> <paragraph num="(14)"> <text>“Mixed use” means a use which includes commercial, retail, residential or any other uses approved by the Department.</text> </paragraph> <paragraph num="(15)"> <text>“Nonprofit organization” means a corporation, foundation, or other entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of any private shareholder or individual holding any interest in the entity.</text> </paragraph> <paragraph num="(16)"> <text>“Priority funding area” means an area designated as a priority funding area under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Program” means the Business Development Program, also known as the Neighborhood Business Works Program.</text> </paragraph> <paragraph num="(18)"> <text>“Program funds” means monies from the Program that are used to provide financial assistance.</text> </paragraph> <paragraph num="(19)"> <text>“Project” means a project or activity which qualifies for financial assistance under the Program.</text> </paragraph> <paragraph num="(20)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(21)"> <text>“Small business” means a business that employs a number of employees or has annual gross receipts no greater than the limits set forth by the U.S. Small Business Administration for small businesses.</text> </paragraph> <paragraph num="(22)"> <text>“Sustainable community” means the part of a priority funding area or eligible opportunity zone that:</text> <paragraph num="(a)"> <text>Has been designated as a sustainable community in accordance with COMAR 05.17.02;</text> </paragraph> <paragraph num="(b)"> <text>Has been designated as a BRAC Revitalization and Incentive Zone under Economic Development Article, Title 5, Subtitle 13, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>Has been designated as a transit-oriented development under Transportation Article, §7-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Applicants."> <text>Applicants shall meet the following minimum requirements to be eligible to apply for financial assistance under the Program:</text> <paragraph num="A."> <text>Be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="B."> <text>Be a small business, nonprofit organization, or microenterprise; and</text> </paragraph> <paragraph num="C."> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Uses."> <paragraph num="A."> <text>Financial assistance may be used for:</text> <paragraph num="(1)"> <text>Loans or grants for project development costs including, but not limited to:</text> <paragraph num="(a)"> <text>The acquisition of:</text> <paragraph num="(i)"> <text>Land;</text> </paragraph> <paragraph num="(ii)"> <text>Structures;</text> </paragraph> <paragraph num="(iii)"> <text>Equipment; or</text> </paragraph> <paragraph num="(iv)"> <text>Furnishings which are or will be a part of a project;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Construction;</text> </paragraph> <paragraph num="(c)"> <text>Reconstruction;</text> </paragraph> <paragraph num="(d)"> <text>Rehabilitation;</text> </paragraph> <paragraph num="(e)"> <text>Reasonable fees, as determined by the Program, for:</text> <paragraph num="(i)"> <text>Architectural services;</text> </paragraph> <paragraph num="(ii)"> <text>Engineering services;</text> </paragraph> <paragraph num="(iii)"> <text>Legal services; or</text> </paragraph> <paragraph num="(iv)"> <text>Other special services acceptable to the Program;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Special studies such as:</text> <paragraph num="(i)"> <text>Market and feasibility studies;</text> </paragraph> <paragraph num="(ii)"> <text>Property appraisals;</text> </paragraph> <paragraph num="(iii)"> <text>Test borings;</text> </paragraph> <paragraph num="(iv)"> <text>Flood plain studies;</text> </paragraph> <paragraph num="(v)"> <text>Critical area or wetland assessments; and</text> </paragraph> <paragraph num="(vi)"> <text>Other studies acceptable to the Department;</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>Site preparation;</text> </paragraph> <paragraph num="(h)"> <text>Environmental audits;</text> </paragraph> <paragraph num="(i)"> <text>Essential operating costs, which are related to an activity necessary to the operation of a project, including:</text> <paragraph num="(i)"> <text>Working capital;</text> </paragraph> <paragraph num="(ii)"> <text>Occupancy expenses, such as taxes, rent, tenant buildup of leased space, and inventory;</text> </paragraph> <paragraph num="(iii)"> <text>Development costs; and</text> </paragraph> <paragraph num="(iv)"> <text>Business expenses;</text> </paragraph> </paragraph> <paragraph num="(j)"> <text>Acquisition of machinery and equipment necessary to the operation of an enterprise;</text> </paragraph> <paragraph num="(k)"> <text>Indemnity and surety bonds;</text> </paragraph> <paragraph num="(l)"> <text>Premiums for hazard, liability, title, and mortgage insurance;</text> </paragraph> <paragraph num="(m)"> <text>Necessary fees, licenses, and permits related to construction, project review, and approval;</text> </paragraph> <paragraph num="(n)"> <text>Necessary studies, surveys, plans, and specifications;</text> </paragraph> <paragraph num="(o)"> <text>Payment and performance bonds;</text> </paragraph> <paragraph num="(p)"> <text>Relocation expenses; and</text> </paragraph> <paragraph num="(q)"> <text>Other necessary costs and fees acceptable to the Department;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Assurances, guarantees, or any other form of credit enhancement;</text> </paragraph> <paragraph num="(3)"> <text>Reduction in the principal obligation of or rate of interest payable on a loan or portion of a loan;</text> </paragraph> <paragraph num="(4)"> <text>Prepayment of interest on a subordinate or superior loan or portion of a loan; or</text> </paragraph> <paragraph num="(5)"> <text>Fees charged by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Financial assistance may not be made available for any of the following businesses as a principal use of a project:</text> <paragraph num="(1)"> <text>Adult bookstore, adult video shop, or other adult entertainment facility;</text> </paragraph> <paragraph num="(2)"> <text>Check cashing facility;</text> </paragraph> <paragraph num="(3)"> <text>Gambling facility;</text> </paragraph> <paragraph num="(4)"> <text>Gun shop;</text> </paragraph> <paragraph num="(5)"> <text>Liquor store;</text> </paragraph> <paragraph num="(6)"> <text>Massage parlor;</text> </paragraph> <paragraph num="(7)"> <text>Pawn shop;</text> </paragraph> <paragraph num="(8)"> <text>Tanning salon; or</text> </paragraph> <paragraph num="(9)"> <text>Tattoo parlor.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Financial assistance may not be made available for the furtherance of sectarian religious instruction, or in connection with the design, acquisition, or construction of any building used or to be used as a place of sectarian religious worship or instruction, or in connection with any program or department of divinity for any religious denomination, including but not limited to religious services, religious instruction, or other activities that have an explicitly religious content. A project is not eligible for financial assistance under the Program if all or any part of the project includes these activities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Projects."> <text>In order to be eligible for financial assistance, a project shall satisfy the following requirements:</text> <paragraph num="A."> <text>The project is located within the State;</text> </paragraph> <paragraph num="B."> <text>The project is located in a priority funding area or eligible opportunity zone;</text> </paragraph> <paragraph num="C."> <text>As determined by the Department, the financial assistance from the Program and the financial assistance requested is the least amount of money necessary to make the project financially feasible;</text> </paragraph> <paragraph num="D."> <text>The project is ready to proceed upon receipt of financial assistance under the Program;</text> </paragraph> <paragraph num="E."> <text>Food desert projects:</text> <paragraph num="(1)"> <text>Include a plan to seek out sources of Maryland-grown produce and Maryland-produced foods; and</text> </paragraph> <paragraph num="(2)"> <text>Are located in a food desert or a priority funding area or eligible opportunity zone that serves food deserts;</text> </paragraph> </paragraph> <paragraph num="F."> <text>The political subdivision in which the project is located has:</text> <paragraph num="(1)"> <text>Approved the project by adopting a local resolution of support;</text> </paragraph> <paragraph num="(2)"> <text>Approved the project through a letter of support delivered to the Program by an authorized designee; or</text> </paragraph> <paragraph num="(3)"> <text>Allowed at least 45 days to lapse following receipt of written notice of the proposed project to the highest elected official without denying the application;</text> </paragraph> </paragraph> <paragraph num="G."> <text>The operating income and expenses projected for the project show income sufficient, in the sole discretion of the Department, to repay on schedule any loans authorized or guaranteed by the Program; and</text> </paragraph> <paragraph num="H."> <text>Upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Terms and Conditions of Financial Assistance."> <paragraph num="A."> <text>The financial assistance from the Program shall be on such terms as the Department considers necessary to make the project financially feasible.</text> </paragraph> <paragraph num="B."> <text>The Department may require an approved applicant to make a cash contribution or other form of contribution to the project.</text> </paragraph> <paragraph num="C."> <text>Secured or Unsecured Loans.</text> <paragraph num="(1)"> <text>The Program may offer financial assistance as secured or unsecured loans.</text> </paragraph> <paragraph num="(2)"> <text>Secured Loans.</text> <paragraph num="(a)"> <text>Financial assistance in the form of a loan from the Program may be secured, at the discretion of the Department.</text> </paragraph> <paragraph num="(b)"> <text>The security shall be acceptable to the Department and may be:</text> <paragraph num="(i)"> <text>A mortgage or deed of trust lien;</text> </paragraph> <paragraph num="(ii)"> <text>A cash escrow;</text> </paragraph> <paragraph num="(iii)"> <text>A letter of credit;</text> </paragraph> <paragraph num="(iv)"> <text>A pledge of depository accounts;</text> </paragraph> <paragraph num="(v)"> <text>A pledge of accounts receivable;</text> </paragraph> <paragraph num="(vi)"> <text>An assignment of income;</text> </paragraph> <paragraph num="(vii)"> <text>A security interest in machinery and equipment; or</text> </paragraph> <paragraph num="(viii)"> <text>Any other form of security or collateral acceptable to the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Repayment. The principal and interest of a loan made or guaranteed under the Program shall:</text> <paragraph num="(a)"> <text>Be repayable out of revenues specified by an approved applicant;</text> </paragraph> <paragraph num="(b)"> <text>Bear interest at a rate determined to be necessary and reasonable for the project which may be as low as zero percent; and</text> </paragraph> <paragraph num="(c)"> <text>Be repayable in accordance with a schedule determined by the Department, including a deferred payment schedule.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Modification. In order to facilitate the successful completion or operation of a project, the Department may modify:</text> <paragraph num="(a)"> <text>The rate of interest;</text> </paragraph> <paragraph num="(b)"> <text>The time or amount of payment; or</text> </paragraph> <paragraph num="(c)"> <text>Any other term of a loan.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Default. In the event of default, the Department shall have the right to modify the rate of interest, the time or amount of payment, or any other term of financial assistance in order to ensure repayment and achieve the purposes of the Program.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Insurance. At or before closing of the financial assistance, or at such other times as required by the Department, the applicant shall provide evidence acceptable to the Department that the applicant, contractor, and other parties, have obtained and maintained property, liability, and other insurance.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Applications and Processing."> <paragraph num="A."> <text>An application for financial assistance shall be submitted to the Department and shall be made upon standard forms prescribed by the Department. Each application shall:</text> <paragraph num="(1)"> <text>Be submitted by an eligible applicant as described in Regulation .04 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Contain the applicant’s organizational documents, including, as applicable, its articles of incorporation and bylaws, its articles of organization and operating agreement, its certificate of limited partnership and limited partnership agreement, or its partnership or joint venture agreement;</text> </paragraph> <paragraph num="(3)"> <text>Contain a description of the project;</text> </paragraph> <paragraph num="(4)"> <text>Contain a description of all sources of funding the applicant has obtained for the project;</text> </paragraph> <paragraph num="(5)"> <text>Contain sufficient information to determine that the:</text> <paragraph num="(a)"> <text>Project is located in a priority funding area or eligible opportunity zone;</text> </paragraph> <paragraph num="(b)"> <text>Project is eligible in accordance with Regulation .06 of this chapter;</text> </paragraph> <paragraph num="(c)"> <text>Terms and requirements of financial assistance as set forth in Regulation .07 of this chapter can be met; and</text> </paragraph> <paragraph num="(d)"> <text>Applicant is eligible in accordance with Regulation .04 of this chapter; and</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Contain the following additional information:</text> <paragraph num="(a)"> <text>The estimated number and types of jobs to be created or retained by the project;</text> </paragraph> <paragraph num="(b)"> <text>The amount, size, and types of space to be created or retained;</text> </paragraph> <paragraph num="(c)"> <text>The cost of the project;</text> </paragraph> <paragraph num="(d)"> <text>A project budget identifying all sources and uses of funds;</text> </paragraph> <paragraph num="(e)"> <text>A pro forma showing anticipated project revenue, expenses, and debt service and other indebtedness of the project;</text> </paragraph> <paragraph num="(f)"> <text>Identification of the revenues which can be used to repay the financial assistance provided by the Program; and</text> </paragraph> <paragraph num="(g)"> <text>Other and further information as the Program may request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Application Evaluation.</text> <paragraph num="(1)"> <text>Each application submitted shall be reviewed by the Program to determine whether all of the information required under §A of this regulation is contained in the application.</text> </paragraph> <paragraph num="(2)"> <text>Upon submission of all required information, the Program shall undertake an analysis of each application and make a recommendation to the Secretary, as to whether, in accordance with this section, a project is eligible for financial assistance, the amount of financial assistance, and any special terms and conditions for a project.</text> </paragraph> <paragraph num="(3)"> <text>The Program may take the information set forth in an application and the following factors into consideration in recommending an award of financial assistance:</text> <paragraph num="(a)"> <text>The ratio of Program and other State funds to both private and other non-State public funds;</text> </paragraph> <paragraph num="(b)"> <text>The relationship of a project to area revitalization plans, efforts, and strategies;</text> </paragraph> <paragraph num="(c)"> <text>The capability of an applicant to administer a project;</text> </paragraph> <paragraph num="(d)"> <text>The potential of the business to serve the needs of the priority funding area or eligible opportunity zone in which it is situated; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors which the Program determines are desirable in fostering commercial and economic revitalization within a local jurisdiction.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Geographical Distribution. In evaluating and recommending a project, the Program shall make reasonable efforts to ensure that financial assistance is equitably distributed among all of the local jurisdictions.</text> </paragraph> <paragraph num="D."> <text>Approval of Applications.</text> <paragraph num="(1)"> <text>The Program shall evaluate each application for financial assistance. If the Program recommends approval of a project for financial assistance, the Program shall present the project to the Secretary. The Secretary shall approve, disapprove, or approve with modifications all financial assistance to be provided under the Program according to procedures established by the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications financial assistance provided under the Program.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Rejection of Applications. If the Program does not recommend approval of a project for financial assistance, the Program shall issue a written notice of rejection with an evaluation and explanation for rejection.</text> </paragraph> <paragraph num="F."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request reconsideration of a rejection by submitting a written request, to the Secretary, which is received within 30 days following the date of the rejection notice. The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant’s request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration.</text> </paragraph> <paragraph num="(2)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a rejection under the Program.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Closing. The closing of an award of financial assistance shall be scheduled at a time acceptable to the Department and the Office of the Attorney General.</text> </paragraph> <paragraph num="H."> <text>Disbursement of Financial Assistance. Financial assistance may be disbursed in accordance with the terms and conditions set forth in the financial assistance documents.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Books and Accounts."> <paragraph num="A."> <text>Applicants, contractors, and subcontractors shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the contractor and the applicant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Program Administration."> <paragraph num="A."> <text>The Program may establish from time to time detailed Program guidelines containing underwriting standards, processing requirements, and other requirements or matters relating to providing financial assistance.</text> </paragraph> <paragraph num="B."> <text>The Program shall make a reasonable, good faith effort to make 25 percent of Program loans and grants to microenterprises.</text> </paragraph> <paragraph num="C."> <text>In accordance with the Act, the Department shall, for each State fiscal year, reserve at least the lesser of $5,000,000 or the annual capital appropriation for the Fund to make financial assistance available to projects located in sustainable communities.</text> </paragraph> <paragraph num="D."> <text>The Department may charge and collect from an applicant or recipient of financial assistance under this title:</text> <paragraph num="(1)"> <text>Origination, application, and processing fees; and</text> </paragraph> <paragraph num="(2)"> <text>Any other charges, fees, or reimbursements incidental to a project application or providing financial assistance.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Department shall ensure that Program guidelines, fee information, and application forms are publically available on its website and at its offices.</text> </paragraph> <paragraph num="F."> <text>The Department may:</text> <paragraph num="(1)"> <text>Sell, assign, or otherwise dispose of any Program loan or revenue from a loan on terms and conditions acceptable to the Department, including selling loans at a discount;</text> </paragraph> <paragraph num="(2)"> <text>Apply the proceeds received from any sale, assignment, or other disposition to the Fund; and</text> </paragraph> <paragraph num="(3)"> <text>Pledge a program loan as security for any:</text> <paragraph num="(a)"> <text>Business project loan, bond, or security that is issued, made, or purchased by the community development administration of the Department under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>Insurance, guaranty, or credit enhancement on a program loan or business project under Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>The maximum sale proceeds in any fiscal year may not exceed 20 percent of the total outstanding balance of loans in the Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Approved Entities."> <paragraph num="A."> <text>General. The Department may approve an entity to originate and administer financial assistance in accordance with this chapter.</text> </paragraph> <paragraph num="B."> <text>To be eligible to administer a financial assistance program, the entity shall submit an application to the Department and meet the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(1)"> <text>Provide evidence satisfactory to the Department supporting the entity’s demonstrated ability to:</text> <paragraph num="(a)"> <text>Manage a performing portfolio of business loans;</text> </paragraph> <paragraph num="(b)"> <text>Evaluate applications for financial assistance, underwrite loans, and administer financial assistance programs;</text> </paragraph> <paragraph num="(c)"> <text>Leverage Program proceeds with other private or public sources of funding;</text> </paragraph> <paragraph num="(d)"> <text>Comply with Program statutes, regulations, guidelines, and policies;</text> </paragraph> <paragraph num="(e)"> <text>Provide adequate resources and staff to implement the Program, including staff trained to efficiently:</text> <paragraph num="(i)"> <text>Process loan applications, draw schedules, and other loan documentation;</text> </paragraph> <paragraph num="(ii)"> <text>Evaluate loan portfolio performance; and</text> </paragraph> <paragraph num="(iii)"> <text>Monitor the work performed with the Program proceeds;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Provide substantive technical assistance to recipients of financial assistance;</text> </paragraph> <paragraph num="(g)"> <text>Obtain coverage by a fidelity bond or employee dishonesty liability insurance as determined by the Department; and</text> </paragraph> <paragraph num="(h)"> <text>Be duly organized and in good standing in the State of Maryland; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Provide audited financial statements that demonstrate the entity’s ability to maintain consistent:</text> <paragraph num="(a)"> <text>Revenues;</text> </paragraph> <paragraph num="(b)"> <text>Operating reserves;</text> </paragraph> <paragraph num="(c)"> <text>Net assets;</text> </paragraph> <paragraph num="(d)"> <text>Unrestricted assets; and</text> </paragraph> <paragraph num="(e)"> <text>Portfolio delinquency rates.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>An approved entity shall execute and comply with the terms of an administration agreement, loan agreement, loan note, assignment, and other documents governing the duties of the entity under the Program, as required by the Department.</text> </paragraph> <paragraph num="D."> <text>An approved entity shall be directly responsible for fulfilling all of its duties and responsibilities under the Program and may not assign its responsibilities without the prior written consent of the Department.</text> </paragraph> <paragraph num="E."> <text>The Department may monitor an approved entity’s administration of loans funded by the Department, and may enforce its remedies under the Program loan documents, including revoking the entity’s approval to administer a loan program under this chapter.</text> </paragraph> <paragraph num="F."> <text>Other Requirements.</text> <paragraph num="(1)"> <text>An approved entity shall;</text> <paragraph num="(a)"> <text>Maintain financial records of Program proceeds for at least 5 years, and shall make them available for review by the Department at all reasonable times; and</text> </paragraph> <paragraph num="(b)"> <text>Provide the Department with periodic reporting on:</text> <paragraph num="(i)"> <text>Loan disbursements to loan borrowers; and</text> </paragraph> <paragraph num="(ii)"> <text>Other information required by the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Upon notice to an approved entity, and during normal business hours, the Department may inspect the files of an approved entity relating to any loans originated under the Program.</text> </paragraph> </paragraph> <paragraph num="G."> <text>To fund financial assistance under this regulation the Department may:</text> <paragraph num="(1)"> <text>Directly fund the financial assistance that is originated by an approved entity;</text> </paragraph> <paragraph num="(2)"> <text>Provide financial assistance to an approved entity for the purpose of the approved entity making the financial assistance to another entity;</text> </paragraph> <paragraph num="(3)"> <text>Purchase or commit to purchase from approved entities any form of financial assistance that meets the requirements of this chapter; and</text> </paragraph> <paragraph num="(4)"> <text>Enter into agreements with approved entities to collectively lend money on a project that meets the requirements of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Nondiscrimination and Drug-Free and Alcohol-Free Workplace."> <paragraph num="A."> <text>An applicant or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the Program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>An applicant or contractor shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Title VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Waiver."> <text>The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="False Statements."> <paragraph num="A."> <text>A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department by an agreement relating to financial assistance.</text> </paragraph> <paragraph num="B."> <text>A person applying for or benefiting from financial assistance under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Department on an application or for the purpose of influencing the action of the Department affecting financial assistance already provided.</text> </paragraph> <paragraph num="C."> <text>A person who violates §A or B of this regulation is:</text> <paragraph num="(1)"> <text>Subject to immediate cancellation or acceleration of the form of financial assistance provided by the Program; and</text> </paragraph> <paragraph num="(2)"> <text>Guilty of a misdemeanor and upon conviction is subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-201 and 2-111, Title 4, Subtitle 5, and Title 6, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 25, 1995 (22:19 Md. R. 1472)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective May 19, 1997 (24:10 Md. R. 709); September 6, 1999 (26:18 Md. R. 1374)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B, C amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 17, 2001 (28:18 Md. R. 1619)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 25, 2005 (32:8 Md. R. 741)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective April 7, 2008 (35:7 Md. R. 747); January 20, 2014 (41:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective January 20, 2014 (41:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07E amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08C, D amended effective April 7, 2008 (35:7 Md. R. 747)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 repealed effective January 20, 2014 (41:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A,B amended effective January 20, 2014 (41:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective December 22, 2014 (41:25 Md. R. 1477)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.19 repealed and new Regulations .01—.14 adopted effective October 7, 2019 (46:20 Md. R. 843)</annotation> </annotations> </chapter> <chapter num="02" heading="Main Street Improvement Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter describes the policies and procedures for:</text> <paragraph num="A."> <text>Making Main Street Improvement Program grants to local jurisdictions and nonprofits to promote the development and revitalization of business districts in local jurisdictions; and</text> </paragraph> <paragraph num="B."> <text>Designating Maple Street communities that will benefit from Main Street Improvement Program grants to help promote revitalization of residential areas adjacent to designated Main Streets.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Approved nonprofit organization” means a nonprofit organization that has been designated by a local jurisdiction to apply for Program funding on behalf of that local jurisdiction.</text> </paragraph> <paragraph num="(2)"> <text>“Business district” means a geographically specified area, located within a sustainable community of a local jurisdiction, in which the predominant activity carried on is the operation of trades and businesses.</text> </paragraph> <paragraph num="(3)"> <text>“County” means any of the 23 counties of this State, and the Mayor and City Council of Baltimore.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(5)"> <text>“Designated jurisdiction” means a local jurisdiction that is, or that contains, an officially approved and recognized Main Street Maryland community.</text> </paragraph> <paragraph num="(6)"> <text>Repealed.</text> </paragraph> <paragraph num="(7)"> <text>“Director” means the Director of the Division.</text> </paragraph> <paragraph num="(8)"> <text>“Division” means the Division of Neighborhood Revitalization.</text> </paragraph> <paragraph num="(9)"> <text>“Local jurisdiction” means a county or municipality.</text> </paragraph> <paragraph num="(10)"> <text>“Main Street Maryland community” means a commercial area in a local jurisdiction designated by the Secretary as a Main Street Maryland community under the Main Street Maryland Program.</text> </paragraph> <paragraph num="(11)"> <text>“Main Street Maryland Program” means the program for local jurisdictions operated by the Department since 1998.</text> </paragraph> <paragraph num="(12)"> <text>“Maple Street community” means an area designated by the Secretary under Regulation .08 of this chapter.</text> </paragraph> <paragraph num="(13)"> <text>“Nonprofit organization” means a corporation, foundation, or other entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of any private shareholder or individual holding any interest in that entity.</text> </paragraph> <paragraph num="(14)"> <text>“Program” means the Main Street Improvement Program.</text> </paragraph> <paragraph num="(15)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(16)"> <text>“Sustainable community” means the part of a priority funding area that:</text> <paragraph num="(a)"> <text>Has been designated as a sustainable community in accordance with COMAR 05.17.02;</text> </paragraph> <paragraph num="(b)"> <text>Has been designated as a BRAC Revitalization and Incentive Zone under Economic Development Article, Title 5, Subtitle 13, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>Has been designated as a transit-oriented development under Transportation Article, §7-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Grantees."> <paragraph num="A."> <text>Local jurisdictions and approved nonprofit organizations are eligible to receive grants under the Program.</text> </paragraph> <paragraph num="B."> <text>Applicants shall meet the following minimum requirements to qualify for a Program grant:</text> <paragraph num="(1)"> <text>Have the legal capacity to enter into a grant agreement;</text> </paragraph> <paragraph num="(2)"> <text>Satisfy all legal requirements to operate in the State;</text> </paragraph> <paragraph num="(3)"> <text>Not have defaulted on any prior assistance from the Department; and</text> </paragraph> <paragraph num="(4)"> <text>Not be currently barred or suspended from any of the Department's programs.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Priority for Main Street Improvement Program grants shall be given to existing designated Main Street Maryland communities and existing designated Maple Street communities. If Program funds remain unobligated at the end of the 6th month of a fiscal year, priority thereafter shall be given also to local jurisdictions or nonprofit organizations, or both, that are operating downtown revitalization projects in business districts with a significant number of historic commercial buildings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Uses of Funds."> <paragraph num="A."> <text>Grant funds may be used to pay for costs associated with projects which support the development or revitalization of business districts, including:</text> <paragraph num="(1)"> <text>Gateway, directional, or highway signage associated with a business district;</text> </paragraph> <paragraph num="(2)"> <text>Acquisition, development, or improvement of property associated with projects which will assist the development or revitalization of a business district;</text> </paragraph> <paragraph num="(3)"> <text>Facade improvement programs;</text> </paragraph> <paragraph num="(4)"> <text>Public improvements to business districts, such as:</text> <paragraph num="(a)"> <text>Sidewalk repair and replacement;</text> </paragraph> <paragraph num="(b)"> <text>Thoroughfare and public lighting;</text> </paragraph> <paragraph num="(c)"> <text>Street furniture;</text> </paragraph> <paragraph num="(d)"> <text>Landscaping;</text> </paragraph> <paragraph num="(e)"> <text>Trash cans; and</text> </paragraph> <paragraph num="(f)"> <text>Banners;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Engineering and architectural design studies for:</text> <paragraph num="(a)"> <text>Key properties;</text> </paragraph> <paragraph num="(b)"> <text>Parking; and</text> </paragraph> <paragraph num="(c)"> <text>Market and business recruitment strategies which will improve a business district;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Demolition of vacant and abandoned buildings;</text> </paragraph> <paragraph num="(7)"> <text>Promotional materials, such as:</text> <paragraph num="(a)"> <text>Advertising campaigns;</text> </paragraph> <paragraph num="(b)"> <text>Brochures;</text> </paragraph> <paragraph num="(c)"> <text>Banners; and</text> </paragraph> <paragraph num="(d)"> <text>Shopping bags;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Other projects that have been identified in the applicant's work plans as key to its Main Street efforts; and</text> </paragraph> <paragraph num="(9)"> <text>Operating assistance for Main Street Maryland managing organizations.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Grant funds may be used to pay for costs associated with projects that support the development or revitalization of residential areas in Maple Street communities, including:</text> <paragraph num="(1)"> <text>Operating assistance for Maple Street managing organizations;</text> </paragraph> <paragraph num="(2)"> <text>Developing and implementing a mixed-income strategy for acquisition and rehabilitation of residential properties;</text> </paragraph> <paragraph num="(3)"> <text>Developing and implementing strategies for improving the physical appearance of the neighborhood;</text> </paragraph> <paragraph num="(4)"> <text>Attracting development to reuse vacant or underutilized properties for mixed-use and mixed-income purposes;</text> </paragraph> <paragraph num="(5)"> <text>Increasing community safety;</text> </paragraph> <paragraph num="(6)"> <text>Improving streetscapes;</text> </paragraph> <paragraph num="(7)"> <text>Increasing the number of parks and open spaces;</text> </paragraph> <paragraph num="(8)"> <text>Improving existing parks and open spaces;</text> </paragraph> <paragraph num="(9)"> <text>Improving public infrastructure that serves Maple Street communities; and</text> </paragraph> <paragraph num="(10)"> <text>Other projects that have been identified in the applicant's work plans as key to its Maple Street community efforts.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A project shall be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Grant Allocation System and Award Cycle."> <paragraph num="A."> <text>Grant Allocation.</text> <paragraph num="(1)"> <text>Grant funds shall be allocated in accordance with the criteria set forth in Regulation .07B of this chapter. Grant awards to eligible applicants shall take into consideration the need to fund a variety of projects, and to serve as many geographic areas of the State as possible.</text> </paragraph> <paragraph num="(2)"> <text>The Department may refuse to consider applications with incomplete information.</text> </paragraph> <paragraph num="(3)"> <text>The Department may make grant awards to particular projects and decline to make awards to otherwise eligible projects, based on the Department's assessment of the project's overall merit and its merit relative to competing applicants.</text> </paragraph> <paragraph num="(4)"> <text>The Department may fund projects at levels less than requested based on the:</text> <paragraph num="(a)"> <text>Number of applications;</text> </paragraph> <paragraph num="(b)"> <text>Merit of each project; and</text> </paragraph> <paragraph num="(c)"> <text>Amount of funding available.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Application Solicitation.</text> <paragraph num="(1)"> <text>The Department shall solicit applications for grants under the Program, subject to the availability of Program funds.</text> </paragraph> <paragraph num="(2)"> <text>At the beginning of each fiscal year in which Program funds are available, the Department shall issue announcements of the availability of funds under the Program to active Main Street Maryland communities.</text> </paragraph> <paragraph num="(3)"> <text>If any Program funds remain unobligated at the end of the 6th month of a fiscal year, the Department shall issue announcements of the availability of any remaining funds under the Program to:</text> <paragraph num="(a)"> <text>Active Main Street Maryland communities; and</text> </paragraph> <paragraph num="(b)"> <text>Local jurisdictions or nonprofit organizations, or both, which are operating downtown revitalization projects in business districts with a significant number of historic commercial buildings.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The announcements in §B(2) and (3) of this regulation shall consist of a description of the application process, total anticipated funding available for eligible grantees, and activities eligible for funding.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Grant Awards.</text> <paragraph num="(1)"> <text>A single local jurisdiction may not be awarded more than 25 percent of the total Program funds for a fiscal year unless, at the end of the 8th month of a fiscal year, all of the Program funds have not been committed.</text> </paragraph> <paragraph num="(2)"> <text>Local jurisdictions may not receive more than two grants in a fiscal year.</text> </paragraph> <paragraph num="(3)"> <text>The maximum amount of any one grant may not exceed the amount indicated in §C(1) of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Grant Terms and Conditions."> <paragraph num="A."> <text>Local Contributions.</text> <paragraph num="(1)"> <text>A local contribution of cash from or on behalf of the local jurisdiction is required.</text> </paragraph> <paragraph num="(2)"> <text>The local contribution shall equal or exceed the grant amount.</text> </paragraph> <paragraph num="(3)"> <text>The local contribution may be derived from private funds or public funds other than State funds.</text> </paragraph> <paragraph num="(4)"> <text>The local contribution shall be used in the project funded by a grant under the Program.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The period of a grant may not exceed 12 months, unless the Director agrees in writing to an additional grant period. Extensions may be granted in the Director's discretion only for one period of not more than 3 months.</text> </paragraph> <paragraph num="C."> <text>With the approval of the Department, a local jurisdiction may distribute all or a portion of a grant to a property owner or business in a business district, or other nonpublic entities which will be involved in a project. The local jurisdiction, however, shall remain responsible for the proper utilization, distribution, and administration of grant funds.</text> </paragraph> <paragraph num="D."> <text>The Department may establish any other reasonable and necessary terms and conditions in an agreement evidencing the grant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Applications and Processing."> <paragraph num="A."> <text>Applications shall be made upon standard forms prescribed by the Department. Each application shall include sufficient information and documentation to determine the:</text> <paragraph num="(1)"> <text>Type of project;</text> </paragraph> <paragraph num="(2)"> <text>Cost of a project;</text> </paragraph> <paragraph num="(3)"> <text>Support for a project by a local jurisdiction, the property owners and businesses in a business district, and the community surrounding a business district; and</text> </paragraph> <paragraph num="(4)"> <text>Type and amount of the local contribution required under Regulation .06A of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Department shall undertake a review of each application. The Department shall take the following factors into consideration in reviewing applications:</text> <paragraph num="(1)"> <text>Cost of a project;</text> </paragraph> <paragraph num="(2)"> <text>Relationship of a project to existing revitalization programs and plans in the local jurisdiction;</text> </paragraph> <paragraph num="(3)"> <text>Support of a local jurisdiction for a project;</text> </paragraph> <paragraph num="(4)"> <text>Support of the business district and the community surrounding a business district for a project;</text> </paragraph> <paragraph num="(5)"> <text>Time frame for completion of a project;</text> </paragraph> <paragraph num="(6)"> <text>Benefit of a project to the business district and the surrounding community; and</text> </paragraph> <paragraph num="(7)"> <text>Other factors which the Department considers relevant.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Director shall recommend grants to the Secretary for approval.</text> </paragraph> <paragraph num="D."> <text>Upon the Secretary's approval of a grant, the Director is authorized to issue an award letter to the successful applicant setting forth the amount of the grant.</text> </paragraph> <paragraph num="E."> <text>The Department shall enter into a grant agreement with each successful applicant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Designation of a Maple Street Community."> <paragraph num="A."> <text>A community must be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland, to be eligible for a Maple Street community designation.</text> </paragraph> <paragraph num="B."> <text>An application submitted to the Department for designation as a Maple Street community shall:</text> <paragraph num="(1)"> <text>Be on a form approved by the Department, which may be in electronic or paper form;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by a date to be determined by the Department; and</text> </paragraph> <paragraph num="(3)"> <text>Contain the information and supporting documentation required by the Department.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In evaluating applications for a Maple Street community designation, the Department will take into consideration the following factors:</text> <paragraph num="(1)"> <text>Demonstration that the residential revitalization strategy will build upon and reinforce the progress of the Main Street Maryland revitalization strategy;</text> </paragraph> <paragraph num="(2)"> <text>The relationship of the proposed Maple Street community boundary to the existing Main Street community;</text> </paragraph> <paragraph num="(3)"> <text>An adequate local budget of at least 3 years and evidence of continuous funding commitment from public and private organizations;</text> </paragraph> <paragraph num="(4)"> <text>Strength of the commitment from local government and private sector organizations to provide sustained support for a local Maple Street community program;</text> </paragraph> <paragraph num="(5)"> <text>Organizational and financial capacity of the applicant;</text> </paragraph> <paragraph num="(6)"> <text>Experience of the applicant to implement a residential revitalization strategy and the value of that strategy on the community;</text> </paragraph> <paragraph num="(7)"> <text>Population and housing stock of the community;</text> </paragraph> <paragraph num="(8)"> <text>Historic architectural resources of the community and evidence of a local historic preservation ethic and commitment to historic preservation;</text> </paragraph> <paragraph num="(9)"> <text>Willingness of sponsors to develop and implement a mixed-income housing strategy as evidenced by the strategies and goals outlined in the Maple Street framework provided in the application; and</text> </paragraph> <paragraph num="(10)"> <text>Presence of revitalization designations.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Application Review.</text> <paragraph num="(1)"> <text>Applications will be reviewed by a selection committee approved by the Department for consistency with selection criteria.</text> </paragraph> <paragraph num="(2)"> <text>The selection committee will forward recommendations to the Secretary.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary may approve, reject, or accept with modifications the selection committee's recommendations.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Program Administration."> <paragraph num="A."> <text>Except as otherwise set forth in this chapter, the Department designates the Division to administer all aspects of the Program, and to be a party to each agreement executed in connection with a grant.</text> </paragraph> <paragraph num="B."> <text>Except as otherwise set forth in this chapter, the Department designates the Division to administer all aspects of the Maple Street Program, and to be a party to each agreement executed in connection with a grant.</text> </paragraph> <paragraph num="C."> <text>Other action or decision required or permitted to be taken by the Department under this chapter may be taken by the Director, or the designees of the Director.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Books and Accounts."> <text>Local jurisdictions shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may require. All of these books, accounts, and records shall be open to the inspection of the Department or other agencies of the State during reasonable working hours.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>Local jurisdictions and approved nonprofit organizations may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any local jurisdiction and approved nonprofit organization in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each local jurisdiction and approved nonprofit organization shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Waiver."> <text>The Secretary may waive or vary the provisions of this chapter to the extent that the waiver or variance is consistent with the legal authorizations for the Program, if, in the written determination of the Secretary, the application of a regulation in a specific case, or in an emergency situation, would be inequitable or contrary to the purposes of the Program.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="False Statements."> <text>A person may not knowingly make or cause to be made any false statement or report in a document required to be furnished to the Department by any agreement relating to the Program.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §6-102, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 16, 1990 (17:7 Md. R. 847)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 28, 1994 (21:4 Md. R. 273)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C amended effective February 1, 1993 (20:2 Md. R. 112); February 28, 1994 (21:4 Md. R. 273)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective February 28, 1994 (21:4 Md. R. 273)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08C and D amended effective February 1, 1993 (20:2 Md. R. 112)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08-1 adopted effective February 28, 1994 (21:4 Md. R. 273)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective February 1, 1993 (20:2 Md. R. 112)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.07.06 to COMAR 05.13.02 effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13, Main Street Improvement Grant Program, repealed effective October 15, 2001 (28:20 Md. R. 1779)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12, Main Street Improvement Program, adopted effective October 15, 2001 (28:20 Md. R. 1779)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 20, 2008 (35:21 Md. R. 1823)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 20, 2014 (41:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="03" heading="Maryland Town Manager Circuit Rider Grant Program"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of the Maryland Town Manager Circuit Rider Grant Program is to provide grants to assist eligible municipal governments to build their management capabilities by supplying needed managerial expertise through circuit riding managers.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Circuit” means a group of two or more municipalities that agree to share the services of a circuit rider, or a municipality and a county that agree to share an individual who will provide circuit rider services to the municipality.</text> </paragraph> <paragraph num="(2)"> <text>“Circuit rider” means the individual or individuals who provide managerial services to a circuit.</text> </paragraph> <paragraph num="(3)"> <text>“Circuit sponsor” means a corporation, foundation, county, municipality or governmental entity of it, regional agency, or other legal entity no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(4)"> <text>“County” means any of the 23 counties of this State.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>“Director” means the Director of the Division.</text> </paragraph> <paragraph num="(7)"> <text>“Division” means the Division of Neighborhood Revitalization, an organizational unit of the Department.</text> </paragraph> <paragraph num="(8)"> <text>“Existing circuit” means a circuit comprised of two or more municipalities that has received a grant under the Program within 2 years of the circuit's most recent application.</text> </paragraph> <paragraph num="(9)"> <text>“Municipality” means a municipal corporation in Maryland subject to the provisions of Article XI-E of the Maryland Constitution.</text> </paragraph> <paragraph num="(10)"> <text>“Program” means the Maryland Town Manager Circuit Rider Grant Program.</text> </paragraph> <paragraph num="(11)"> <text>“Proposed circuit” means a circuit applying for a grant under the Program for the first time or that has not received a grant within 2 years of the circuit's most recent application.</text> </paragraph> <paragraph num="(12)"> <text>“Regional agency” means a multicounty or multistate agency established for the purpose of supporting development of an area or areas, no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(13)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Grantees."> <text>Circuit sponsors are eligible grantees under the Program.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Use of Funds."> <paragraph num="A."> <text>The Department may provide grants under the Program to eligible grantees for the purpose of defraying the costs associated with:</text> <paragraph num="(1)"> <text>The managerial services of a circuit rider as described in the budget of an applicant that has been approved by the Department and these costs may include:</text> <paragraph num="(a)"> <text>Salary,</text> </paragraph> <paragraph num="(b)"> <text>Fringe benefits,</text> </paragraph> <paragraph num="(c)"> <text>Travel,</text> </paragraph> <paragraph num="(d)"> <text>Administrative costs of the circuit sponsor and the circuit rider, or</text> </paragraph> <paragraph num="(e)"> <text>Training; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Other services or needs of a circuit considered acceptable to the Department including expertise in the areas of code enforcement, community revitalization, planning, economic development, and grant management.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Department may also use Program funds to pay for activities which enhance the managerial skills of circuit riders, including group training and group meetings for the circuit riders. The Department may directly pay for the activities or reimburse circuit sponsors for eligible costs.</text> </paragraph> <paragraph num="C."> <text>The Department may not use more than 15 percent of the monies appropriated in a fiscal year for the purposes set forth in §B of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="General Grant Allocation Procedures and Award Cycle."> <paragraph num="A."> <text>The Department's financial participation in the Program shall be subject to available funding.</text> </paragraph> <paragraph num="B."> <text>Grant funds shall be allocated in accordance with the procedures set forth in these regulations, and the Department may give priority to applications on behalf of existing circuits.</text> </paragraph> <paragraph num="C."> <text>The Department shall request, in writing, applications from existing circuits each fiscal year in accordance with the procedures set forth in Regulation .07 of this chapter. The written request from the Department may contain a deadline for submission of applications by existing circuits as well as a proposed grant amount for all existing circuits.</text> </paragraph> <paragraph num="D."> <text>The procedures for grants to proposed circuits shall be made in accordance with the provisions in Regulation .07 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Grant Terms and Conditions."> <paragraph num="A."> <text>Existing and proposed circuits applying for a grant shall be represented by a circuit sponsor acceptable to the Department. The circuit sponsor shall:</text> <paragraph num="(1)"> <text>Be responsible for the administration of grant funds and the collection of the local contribution from each member of a circuit required by §E of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Perform any other duties that may be required by an agreement evidencing the grant.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Each applicant shall demonstrate that its circuit or proposed circuit has a need for services sufficient to justify hiring at least one full-time circuit rider. An applicant may request funds to hire more than one full-time circuit rider if the applicant can demonstrate a work load warranting the additional personnel.</text> </paragraph> <paragraph num="C."> <text>Each applicant shall demonstrate the inability of each member of the circuit to afford qualified management staff with its own resources.</text> </paragraph> <paragraph num="D."> <text>Members of a circuit shall be located within reasonable proximity of each other.</text> </paragraph> <paragraph num="E."> <text>Contributions of Circuit Members.</text> <paragraph num="(1)"> <text>A circuit shall make a cash or in-kind contribution of a type acceptable to the Department. It is the preference of the Department that the local contribution be an amount at least equal to the amount of the grant. Each member of the circuit shall pay a share of the local contribution proportionate to the amount of the circuit rider's time allocated to that member. The local contribution shall be used to pay for costs associated with the managerial services and training of the circuit rider, or for other costs considered appropriate by the Department that are associated with the duties of the circuit rider.</text> </paragraph> <paragraph num="(2)"> <text>In evaluating the adequacy of a local contribution, the Department may examine the combined financial resources of the members of a circuit. In no event, however, shall the local contribution requirement be completely eliminated.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Employment of Circuit Rider.</text> <paragraph num="(1)"> <text>Before entering into an employment agreement with a circuit rider, a circuit shall:</text> <paragraph num="(a)"> <text>Utilize the selection process set forth in its grant application that is approved by the Department; and</text> </paragraph> <paragraph num="(b)"> <text>Obtain the Department's approval of the proposed circuit rider.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In granting approval of the proposed circuit rider, the Department shall consider with respect to:</text> <paragraph num="(a)"> <text>Proposed circuits, among other things, the qualifications of the circuit rider; or</text> </paragraph> <paragraph num="(b)"> <text>Existing circuits, among other things, the past performance of the circuit rider.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The employment agreement between the circuit sponsor and the circuit rider shall provide, among other things, the services to be provided to each member of the circuit and that the circuit sponsor shall be responsible for hiring, terminating, and paying the circuit rider.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The Department may establish any other reasonable and necessary terms and conditions governing the use of grant funds in an agreement evidencing the grant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Applications, Letters of Intent, and Processing."> <paragraph num="A."> <text>Existing Circuits.</text> <paragraph num="(1)"> <text>On or before May 1 of each calendar year, the Program shall notify the circuit sponsor of each existing circuit that the Department is accepting applications for the upcoming fiscal year.</text> </paragraph> <paragraph num="(2)"> <text>The notification may contain a deadline for submission of applications as well as the proposed amount of the grant.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Proposed Circuits.</text> <paragraph num="(1)"> <text>The Department may consider letters of intent requesting assistance under the Program on behalf of a proposed circuit.</text> </paragraph> <paragraph num="(2)"> <text>The letter of intent shall be submitted by the prospective members of a circuit and shall contain the following information:</text> <paragraph num="(a)"> <text>Names of prospective municipalities that are willing to be circuit members;</text> </paragraph> <paragraph num="(b)"> <text>Tentative administrative arrangements; and</text> </paragraph> <paragraph num="(c)"> <text>Prospective circuit sponsor.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Before approving or rejecting a proposed circuit, the Department, in its discretion, may provide the prospective members with technical assistance to develop an acceptable circuit and an acceptable circuit sponsor.</text> </paragraph> <paragraph num="(4)"> <text>If the circuit described in the letter of intent is approved by the Department, the circuit sponsor may submit an application for a grant on behalf of the circuit.</text> </paragraph> <paragraph num="(5)"> <text>The Director is authorized to certify the establishment of new circuits.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Applications for a grant shall be submitted by the circuit sponsor. The application shall be signed by the chief executive officer of the circuit sponsor. Each member of the circuit shall provide a resolution or other acceptable form of approval by the governing body of the municipality evidencing the commitment of the member to pay its share of the circuit costs.</text> </paragraph> <paragraph num="D."> <text>The Department may refuse to consider applications with incomplete information.</text> </paragraph> <paragraph num="E."> <text>The Department may make grant awards to benefit particular circuits and decline to make awards to benefit otherwise eligible circuits based on the assessment by the Department of the overall merit of the application of a circuit and its relative merit to competing applications.</text> </paragraph> <paragraph num="F."> <text>The Department may fund a circuit based on the:</text> <paragraph num="(1)"> <text>Number of applications received;</text> </paragraph> <paragraph num="(2)"> <text>Merit of each application;</text> </paragraph> <paragraph num="(3)"> <text>Demonstration of special managerial needs and limited financial resources; and</text> </paragraph> <paragraph num="(4)"> <text>Amount of funding available.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The Department may require applicants to pay an application fee to cover some or all of the cost of processing an application.</text> </paragraph> <paragraph num="H."> <text>Applications shall be made on standard forms provided by the Department.</text> </paragraph> <paragraph num="I."> <text>The Program staff shall evaluate each application based on the following criteria:</text> <paragraph num="(1)"> <text>Manageable number of municipalities in a circuit;</text> </paragraph> <paragraph num="(2)"> <text>Reasonable distance between the members of a circuit;</text> </paragraph> <paragraph num="(3)"> <text>The amount of the prospective work load of a circuit;</text> </paragraph> <paragraph num="(4)"> <text>The ability of the circuit sponsor to provide administrative and other services to the circuit;</text> </paragraph> <paragraph num="(5)"> <text>The ability of a circuit to make the local contribution required under Regulation .06E(1) of this chapter; and</text> </paragraph> <paragraph num="(6)"> <text>Such other criteria the Department considers appropriate.</text> </paragraph> </paragraph> <paragraph num="J."> <text>The Program shall recommend to the Director the circuits to be funded and the level of funding.</text> </paragraph> <paragraph num="K."> <text>The Director shall recommend grant awards to the Secretary for approval.</text> </paragraph> <paragraph num="L."> <text>The Secretary shall approve all grant awards.</text> </paragraph> <paragraph num="M."> <text>A grant agreement shall be executed for each circuit that receives a grant. The grant agreement shall be signed by the circuit sponsor and the Secretary, or the Secretary's designee, on behalf of the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Program Administration."> <text>Except for powers reserved to the Secretary or the Secretary's designee under these regulations, actions or decisions to be taken or made by the Department with respect to the operation of the Program may be taken or made by the Director, or the Director's designee.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Books and Accounts."> <text>Circuit sponsors shall maintain such books, accounts, and records, and shall file with the Department such financial reports, progress reports, and other reports as the Department may from time to time require. All of these books, accounts, and records shall be open to the inspection of the Department or other agencies of the State during reasonable working hours.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>Circuits and circuit sponsors may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any circuit or circuit sponsor in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each circuit and circuit sponsor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in the grant agreement between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Waiver."> <text>The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is consistent with the legal authorizations for the Program, if:</text> <paragraph num="A."> <text>In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act; and</text> </paragraph> <paragraph num="B."> <text>The Secretary's determination is approved for form and legal sufficiency by the Office of the Attorney General.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="False Statements."> <text>A person may not knowingly make or cause to be made any false statement or report in any document required to be furnished to the Department by any contract or agreement relating to the Program.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-102 and 2-111, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 20, 1995 (22:23 Md. R. 1800)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.07.08 to COMAR 05.13.03 effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective August 20, 2001 (28:16 Md. R. 1481)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective August 20, 2001 (28:16 Md. R. 1481)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="04" heading="Capital Access Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter describes the policies, procedures, and authorizations for providing financial assistance to eligible small businesses from the Neighborhood Business Development Fund through the Capital Access Program, and for administering the Capital Access Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <paragraph num="A."> <text>The objectives of the Capital Access Program as set forth in Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland, are to foster economic growth and development in the State by:</text> <paragraph num="(1)"> <text>Stimulating the provision of private capital to small businesses; and</text> </paragraph> <paragraph num="(2)"> <text>Offering an incentive to each lender participating in the Program to make loans to borrowers that otherwise might not qualify for conventional loans, through a reserve account established for the exclusive benefit of that lender.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Loans made under the Program are to be slightly riskier than conventional loans, but will still offer a high degree of soundness in connection with the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following words have the meanings indicated, and also as defined in Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Amount”, as used in this chapter in connection with a loan, means only the amount covered under a participation agreement, unless the context clearly requires otherwise.</text> </paragraph> <paragraph num="(2)"> <text>“Borrower” means the recipient of a loan that is, has been, or will be filed by the lender for enrollment under the Capital Access Program.</text> </paragraph> <paragraph num="(3)"> <text>“Business” means a commercial or industrial enterprise.</text> </paragraph> <paragraph num="(4)"> <text>“Claim” means a claim filed by the lender under Regulation .19 of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>“Early loan” means an enrolled loan where, at the time of enrollment, the aggregate amount of previously enrolled loans made by the lender under the Capital Access Program was less than $2,000,000.</text> </paragraph> <paragraph num="(7)"> <text>“Eligible loan” means a loan made by the lender to a borrower that meets the requirements of Regulations .09, .10, and .11 of this chapter.</text> </paragraph> <paragraph num="(8)"> <text>“Enrolled loan” means a loan enrolled by the Department under the terms of Regulation .14 of this chapter.</text> </paragraph> <paragraph num="(9)"> <text>“Financial assistance” means any form of assurance, guarantee, or other credit enhancement offered with respect to a loan made and enrolled under the Program.</text> </paragraph> <paragraph num="(10)"> <text>“Fund” means the Neighborhood Business Development Fund under Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Lender” means a federally insured financial institution as defined in Financial Institutions Article, §1-101(i), Annotated Code of Maryland, or other institution regulated by the Commissioner of Financial Regulation, that has entered into a participation agreement with the Department to participate in the Capital Access Program.</text> </paragraph> <paragraph num="(12)"> <text>Local Jurisdiction.</text> <paragraph num="(a)"> <text>“Local jurisdiction” means:</text> <paragraph num="(i)"> <text>A municipal corporation subject to the provisions of the State Constitution, Article XI-E, if a project is located entirely within the boundaries of the municipal corporation; or</text> </paragraph> <paragraph num="(ii)"> <text>The Mayor and City Council of Baltimore and any of the 23 counties of this State within which a project is located.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If part of a project is located within one local jurisdiction while the remainder of the project is located in a different local jurisdiction, then for that project, “local jurisdiction” includes each local jurisdiction within which any part of the project is located.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Mixed use” means a use that combines residential and business uses in the same building.</text> </paragraph> <paragraph num="(14)"> <text>“Participation agreement” means an agreement between a lender and the Department under which a lender may participate in the Program.</text> </paragraph> <paragraph num="(15)"> <text>Passive Real Estate Ownership.</text> <paragraph num="(a)"> <text>“Passive real estate ownership” means ownership of real estate for the purpose of deriving income from speculation, trade, or rentals.</text> </paragraph> <paragraph num="(b)"> <text>“Passive real estate ownership” does not include the following:</text> <paragraph num="(i)"> <text>Ownership of that part of real estate being used or intended to be used for the operation of the business of the owner of the real estate; or</text> </paragraph> <paragraph num="(ii)"> <text>Ownership of real estate for the purpose of construction or renovation until the completion of the construction or renovation phase.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Priority funding area” means a priority funding area as stated in State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Proceeds”, as used in this chapter in connection with a loan, means only the proceeds covered under a participation agreement, unless the context clearly requires otherwise.</text> </paragraph> <paragraph num="(18)"> <text>“Program” means the Capital Access Program.</text> </paragraph> <paragraph num="(19)"> <text>“Project” means a project or activity that qualifies for a loan made under the Program.</text> </paragraph> <paragraph num="(20)"> <text>“Reserve account” means an account established by the Department:</text> <paragraph num="(a)"> <text>With funds accumulated under this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>To cover claims made by the lender under this chapter.</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(22)"> <text>“Small business” means a business that employs a number of employees, or has annual gross receipts, no greater than the limits set forth by the U.S. Small Business Administration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Lender; Inspection of Lender Files by Department."> <paragraph num="A."> <text>A lender is eligible to participate in the Program upon entering into a participation agreement with the Department that governs the duties of the Department and the lender under the Program. Each participation agreement shall specify that the enrollment of the lender's loans under the Program does not pledge the faith, credit, or taxing power of the State, the Department, the Program, or the Fund.</text> </paragraph> <paragraph num="B."> <text>The lender shall provide the Department with the information regarding the lender's participation in the Program that the Department reasonably requires. Upon notice to the lender, and during normal business hours of the lender, the Department may inspect the files of the lender relating to any loans enrolled under the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="No Legal or Equitable Interest by Department."> <text>Except upon the exercise of the Department's right of subrogation under this chapter, the Department has no legal or equitable interest in any collateral, security, or other right of recovery in connection with any loan enrolled in the Program, and the Department's consent is not necessary for any amendment to the lender's loan documents.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Creation of Reserve Account."> <text>Upon execution of a participation agreement between the Department and the lender, the Department shall establish a federally insured reserve account with the lender in the name of the Department, for the purpose of receiving all:</text> <paragraph num="A."> <text>Required premium charges to be paid by the lender and the borrower;</text> </paragraph> <paragraph num="B."> <text>Transfers made by the Department under this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Control of Money in Reserve Account by Department."> <paragraph num="A."> <text>All money deposited or otherwise credited to the reserve account is under the exclusive control of the Department. The Department may not withdraw money from the reserve account, except as specifically provided in this chapter.</text> </paragraph> <paragraph num="B."> <text>If money in the reserve account is not deposited by the Department in a federally insured account with the lender, the money shall be invested or reinvested by the Department in one of the following:</text> <paragraph num="(1)"> <text>Direct obligations of the United States, the principal and interest of which are unconditionally guaranteed by the United States; or</text> </paragraph> <paragraph num="(2)"> <text>A deposit account at a depository institution whose deposits are insured by the Federal Deposit Insurance Corporation or National Credit Union Administration.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the reserve account for a given lender is not maintained with that lender, the Department shall provide to the lender quarterly transaction reports indicating the following:</text> <paragraph num="(1)"> <text>The balance in the reserve account;</text> </paragraph> <paragraph num="(2)"> <text>Payments and transfers into the reserve account;</text> </paragraph> <paragraph num="(3)"> <text>Withdrawals from the reserve account; and</text> </paragraph> <paragraph num="(4)"> <text>Interest or income earned on the money credited to the reserve account.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The records of the Department are available to the lender at the offices of the Department, during normal business hours of the Department, with respect to:</text> <paragraph num="(1)"> <text>Payments and transfers into the reserve account;</text> </paragraph> <paragraph num="(2)"> <text>Withdrawals from the reserve account; and</text> </paragraph> <paragraph num="(3)"> <text>Interest or income earned on the money credited to the reserve account.</text> </paragraph> </paragraph> <paragraph num="E."> <text>All interest earned in a reserve account shall be credited to that account. Fifty percent of the interest earned may be withdrawn by the Department from that account and used for any purpose.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Pledge to Lender by Department."> <paragraph num="A."> <text>The Department shall pledge the following to the lender:</text> <paragraph num="(1)"> <text>The money in the reserve account is available to pay claims under Regulation .19 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The lender has a first security interest in the money in the reserve account to pay the claims; and</text> </paragraph> <paragraph num="(3)"> <text>The Department will not encumber or pledge the money to any other party.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Assurances, guarantees, or other credit enhancements provided under the Program do not pledge the faith, credit, or taxing power of the State, the Department, the Program, or the Fund, and hence are payable only to the extent of the reserve account established for any given lender.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Eligible Borrowers."> <paragraph num="A."> <text>An applicant shall meet the following minimum requirements to be an eligible borrower for loans made under the Program:</text> <paragraph num="(1)"> <text>Be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Be a small business;</text> </paragraph> <paragraph num="(3)"> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program; and</text> </paragraph> <paragraph num="(4)"> <text>Not be a government entity, including without limitation a local housing authority.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A borrower shall meet the following minimum requirements:</text> <paragraph num="(1)"> <text>The borrower shall be authorized to conduct business in the State as:</text> <paragraph num="(a)"> <text>A corporation,</text> </paragraph> <paragraph num="(b)"> <text>A limited liability company,</text> </paragraph> <paragraph num="(c)"> <text>A partnership,</text> </paragraph> <paragraph num="(d)"> <text>A joint venture,</text> </paragraph> <paragraph num="(e)"> <text>A sole proprietorship,</text> </paragraph> <paragraph num="(f)"> <text>A cooperative, or</text> </paragraph> <paragraph num="(g)"> <text>Another form of business entity;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The borrower shall be a for-profit or nonprofit small business; and</text> </paragraph> <paragraph num="(3)"> <text>The borrower may not be:</text> <paragraph num="(a)"> <text>An executive officer, a director, or a principal shareholder of the lender,</text> </paragraph> <paragraph num="(b)"> <text>A member of the immediate family of a person described in §B(3)(a) of this regulation, or</text> </paragraph> <paragraph num="(c)"> <text>An entity controlled by a person described in §B(3)(a) or (b) of this regulation.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Eligible Loans."> <paragraph num="A."> <text>The following types of loans are eligible loans under the Program:</text> <paragraph num="(1)"> <text>Loans for industrial or commercial purposes;</text> </paragraph> <paragraph num="(2)"> <text>Loans to refinance loans made for the purposes in §A(1) of this regulation; and</text> </paragraph> <paragraph num="(3)"> <text>Loans for line of credit agreements established between the lender and the borrower that are used for the purposes in §A(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Eligible loans shall meet the following criteria:</text> <paragraph num="(1)"> <text>The lender has not made the loan to enroll in the Program a prior debt that is not covered under the Program and that is or was owed by the borrower to the lender;</text> </paragraph> <paragraph num="(2)"> <text>The proceeds of the loan will not be used for a project or development devoted to housing, except as provided under Regulation .11C of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>The proceeds of the loan will not be used to finance passive real estate ownership; and</text> </paragraph> <paragraph num="(4)"> <text>The proceeds of the loan will not be used for any of the following businesses or uses:</text> <paragraph num="(a)"> <text>Adult bookstore, adult video shop, or other adult entertainment facility,</text> </paragraph> <paragraph num="(b)"> <text>Check-cashing facility,</text> </paragraph> <paragraph num="(c)"> <text>College or university,</text> </paragraph> <paragraph num="(d)"> <text>Community hall,</text> </paragraph> <paragraph num="(e)"> <text>Fire station,</text> </paragraph> <paragraph num="(f)"> <text>Gambling facility,</text> </paragraph> <paragraph num="(g)"> <text>Hospital,</text> </paragraph> <paragraph num="(h)"> <text>Liquor store,</text> </paragraph> <paragraph num="(i)"> <text>Massage parlor,</text> </paragraph> <paragraph num="(j)"> <text>Multi-family or single-family housing development including the development of rental properties other than mixed use projects permitted under COMAR 05.13.01.06A(10),</text> </paragraph> <paragraph num="(k)"> <text>Nursing home,</text> </paragraph> <paragraph num="(l)"> <text>Passive real estate ownership,</text> </paragraph> <paragraph num="(m)"> <text>Pawn or gun shop,</text> </paragraph> <paragraph num="(n)"> <text>Tanning salon, or</text> </paragraph> <paragraph num="(o)"> <text>Tattoo parlor.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The proceeds of an eligible loan may not be used for the furtherance of sectarian religious instruction, or in connection with the design, acquisition, or construction of any building used or to be used as a place of sectarian religious worship or instruction, or in connection with any program or department of divinity for any religious denomination, including but not limited to religious services, religious instruction, or other activities that have an explicitly religious content.</text> </paragraph> <paragraph num="D."> <text>An eligible loan may provide for an interest rate, fees, security, and other terms and conditions agreed to by the lender and the borrower. If the loan amount to be borrowed is determined by a commitment agreement that establishes a line of credit, the amount of the loan is the maximum amount available to the borrower under the agreement.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Eligible Projects."> <text>In order to be eligible for a loan under the Program, a project shall satisfy the following requirements:</text> <paragraph num="A."> <text>The project is located within a priority funding area in the State;</text> </paragraph> <paragraph num="B."> <text>Upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located; and</text> </paragraph> <paragraph num="C."> <text>If the project is a mixed use project, it has a commercial or retail use at street level.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Enrollment Requirements."> <paragraph num="A."> <text>To enroll a loan under the Program, the lender shall file a completed loan enrollment form with the Department. The lender shall also certify the following to the Department as part of the filing:</text> <paragraph num="(1)"> <text>The lender has no substantial reason to believe that the loan is being made to a borrower who does not meet the requirements of Regulation .09 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The lender has received from the borrower a written representation, warranty, pledge, and waiver stating that the borrower has no legal, beneficial, or equitable interest in the nonrefundable premium charges or any other funds credited to the reserve account established to cover losses sustained by the lender on enrolled loans;</text> </paragraph> <paragraph num="(3)"> <text>The loan being filed for enrollment is an eligible loan under Regulations .10 and .11 of this chapter; and</text> </paragraph> <paragraph num="(4)"> <text>Premium charges required of the borrower and the lender under Regulation .16 of this chapter have been deposited in the reserve account.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The lender shall file the enrollment form not later than 45 business days after the lender makes the loan.</text> </paragraph> <paragraph num="C."> <text>The date on which the lender makes a loan is the earlier of:</text> <paragraph num="(1)"> <text>The date on which the lender first disburses proceeds of the loan to the borrower; or</text> </paragraph> <paragraph num="(2)"> <text>The date on which the loan documents have been executed and the lender has obligated itself to disburse proceeds of the loan.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The filing date of a loan enrollment form is the date on which the lender does any of the following:</text> <paragraph num="(1)"> <text>Delivers the required documentation to the Department;</text> </paragraph> <paragraph num="(2)"> <text>Delivers the required documentation to a professional courier service for delivery to the Department; or</text> </paragraph> <paragraph num="(3)"> <text>Mails the required documentation to the Department by certified mail.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Specified Amount To Be Covered Under the Program."> <paragraph num="A."> <text>When filing a loan enrollment form, the lender shall specify an amount to be covered under the Program. The amount may be less than, but not greater than, the total principal amount of the loan.</text> </paragraph> <paragraph num="B."> <text>In the case of a loan to refinance a loan that was previously made by the lender to the borrower but that was not enrolled under the Program, the lender may obtain coverage under the Program for an amount not exceeding the amount of additional financing.</text> </paragraph> <paragraph num="C."> <text>If an enrolled loan is refinanced and the total amount to be covered under the Program does not exceed the covered amount of the loan as previously enrolled, the refinanced loan may continue as an enrolled loan without payment of additional premium charges or transfers by the Department to the reserve account.</text> </paragraph> <paragraph num="D."> <text>If an enrolled loan is refinanced in an amount that exceeds the amount of the loan as previously enrolled, the lender may obtain coverage of the amount that exceeds the amount covered when the loan was previously enrolled by refiling the loan for enrollment under Regulation .12 of this chapter.</text> </paragraph> <paragraph num="E."> <text>Fluctuations in the outstanding balance of a line of credit, without increasing the enrolled amount under the Program, are not a refinancing of the loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Acknowledgment of Enrollment by Department."> <paragraph num="A."> <text>When the Department receives a loan enrollment form, the Department shall enroll the loan if the information provided under Regulation .12 of this chapter indicates that the loan is an eligible loan. Within 10 business days after receipt of a loan enrollment form for an eligible loan, the Department shall deliver to the lender an acknowledgment of enrollment signed by the Secretary or the Secretary's designee, including documentation of the amount being transferred by the Department into the reserve account under this chapter.</text> </paragraph> <paragraph num="B."> <text>The enrollment of a loan under the Program does not pledge the faith, credit, or taxing power of the State or of the Department with respect to that loan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Restriction on Acceptance of Loans."> <text>The Department may not accept loans for enrollment in the Program if the Department does not have sufficient money to make the necessary transfer from the Fund to the reserve account described in Regulation .16 of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".16" heading="Reserve Account Premium Charges."> <paragraph num="A."> <text>The Secretary may, from time to time, by written determination, establish minimum and maximum premium charges payable by borrowers in connection with loans filed for enrollment.</text> </paragraph> <paragraph num="B."> <text>Lender Premium Deposit Into the Reserve Account.</text> <paragraph num="(1)"> <text>The lender shall deposit into the reserve account the premium charges payable by the lender and the borrower in connection with a loan filed for enrollment.</text> </paragraph> <paragraph num="(2)"> <text>The premium paid by the borrower shall be not less than the minimum premium charge, and not more than the maximum premium charge, established by the Secretary under §A of this regulation. The lender may contribute any portion of the borrower's premium payment, and may recover the cost of this contribution from the borrower in any manner on which the lender and borrower agree.</text> </paragraph> <paragraph num="(3)"> <text>The premium paid by the lender shall be equal to the premium paid by the borrower, including any portion of the borrower's premium that may be contributed by the lender under §B(2) of this regulation. The lender may recover the cost of the lender's premium payment from the borrower in any manner on which the lender and borrower agree.</text> </paragraph> </paragraph> <paragraph num="C."> <text>When enrolling a loan, the Department shall transfer from the Fund into the reserve account a premium amount equal to the combined premiums paid into the reserve account by the borrower and the lender for each enrolled loan.</text> </paragraph> <paragraph num="D."> <text>The Secretary may, from time to time, by written determination, designate one or more areas lying within priority funding areas as CAP targeted areas, and may authorize the Department to make an increased premium payment for an enrolled loan made with respect to a project located in a CAP targeted area. The increased premium payment may, in the discretion of the Secretary, be in addition to, or in lieu of, the premium paid by the borrower under §B of this regulation.</text> </paragraph> <paragraph num="E."> <text>Unless money is paid out of the reserve account according to the specific terms of this chapter, all money paid into the reserve account by the lender shall remain in that account.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Limitations on Financial Assistance."> <paragraph num="A."> <text>Minimum and Maximum Amount of Financial Assistance.</text> <paragraph num="(1)"> <text>The minimum amount of an enrolled loan for which assurance may be provided under the Program to a project is $1,000.</text> </paragraph> <paragraph num="(2)"> <text>The maximum aggregate amount of enrolled loans for any one borrower, or any group of borrowers among which a common enterprise exists, is $1,000,000, unless, pursuant to a written request by a lender, the Secretary (or those authorized officers of the Department that the Secretary may designate in writing) approves a waiver of this maximum on the basis that:</text> <paragraph num="(a)"> <text>Other potential sources of funds have been sought and clearly are unavailable;</text> </paragraph> <paragraph num="(b)"> <text>It is not feasible to reduce or increase the size or scope of the project; and</text> </paragraph> <paragraph num="(c)"> <text>The project serves a high public purpose.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>For purposes of §A(2) of this regulation, the term “common enterprise” has the meaning stated in 12 CFR 32.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Reduction of Outstanding Balance of Loan to Zero."> <paragraph num="A."> <text>Effect of Outstanding Balance of Zero.</text> <paragraph num="(1)"> <text>If the outstanding balance of an enrolled loan that is not a line of credit is reduced to $0, the loan is no longer an enrolled loan.</text> </paragraph> <paragraph num="(2)"> <text>If an enrolled loan that is a line of credit has an outstanding balance of $0 for a period of 12 months, the line of credit is no longer an enrolled loan, unless, before the expiration of the 12-month period, the lender reaffirms in writing to the borrower that the line of credit will remain open and the borrower acknowledges the reaffirmation in writing.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Notwithstanding §A of this regulation, any amount recovered from a lender by a trustee in bankruptcy, or a similar representative of creditors, as a preference under 11 U.S.C. §547, remains an enrolled loan for the purpose of filing a claim against the reserve account.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Claims for Charge Off."> <paragraph num="A."> <text>If the lender charges off all or part of an enrolled loan, the lender may file a claim with the Department. If the lender files a claim, it shall be filed contemporaneously with the charge off, and must be received by the Department within 30 days after the charge off.</text> </paragraph> <paragraph num="B."> <text>The lender's claim may include, in addition to the amount of principal charged off plus accrued interest, 1/2 of the reasonable and documented out-of-pocket expenses incurred in pursuing collection efforts, including preservation of collateral. The amount of principal included in the claim may not exceed the amount of principal covered under the Program. The amount of accrued interest included in the claim may not exceed the amount of accrued interest attributable to the covered principal amount.</text> </paragraph> <paragraph num="C."> <text>The lender shall determine when and how much to charge off on an enrolled loan in a manner consistent with the lender's normal method for making these determinations on similar loans that are not enrolled loans.</text> </paragraph> <paragraph num="D."> <text>If the lender files two or more claims contemporaneously and there are insufficient funds in the reserve account at that time to cover the entire amount of the claims, the lender may designate the order of priority in which the Department shall pay the claims, except that a claim made with respect to an early loan always has priority of payment over all other claims that are not made with respect to an early loan or loans.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Withdrawal from Reserve Account by Lender; Effect of Insufficient Funds."> <paragraph num="A."> <text>Upon receipt by the Department of a claim filed by the lender, the Department shall, within 10 business days, pay from the reserve account, or authorize the lender to withdraw from the reserve account, the amount of the claim as submitted, unless the Department reasonably determines that the lender:</text> <paragraph num="(1)"> <text>Provided information to the Department under this chapter that the lender knew to be false; or</text> </paragraph> <paragraph num="(2)"> <text>Is not otherwise in substantial compliance with this chapter or with the participation agreement with the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Result of Insufficient Money in Reserve Account.</text> <paragraph num="(1)"> <text>If there is insufficient money in the reserve account to cover the entire amount of the lender's claim, the Department shall pay to the lender, or authorize the lender to withdraw an amount equal to, the current balance in the reserve account.</text> </paragraph> <paragraph num="(2)"> <text>For the purposes of §B(1) of this regulation, the following shall apply:</text> <paragraph num="(a)"> <text>If the enrolled loan for which the claim has been filed is not an early loan, the payment fully satisfies the claim, and the lender has no right to receive any further amount from the reserve account with respect to that claim; or</text> </paragraph> <paragraph num="(b)"> <text>If the enrolled loan for which the claim has been filed is an early loan, the Department, upon request of the lender, shall, out of any future funds that are transferred into the reserve account on subsequently enrolled loans, pay the remaining balance of the claim, upon a finding that:</text> <paragraph num="(i)"> <text>The partial payment has not satisfied the lender's claim, and</text> </paragraph> <paragraph num="(ii)"> <text>The remaining balance of the claim is not greater than 75 percent of the balance in the reserve account at the time the request for payment is received by the Department.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The Department and the Fund are not liable for any claim if there is insufficient money in the reserve account to cover the entire amount of the claim.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Effect of Recovery from Borrower."> <text>If, after payment of a claim by the Department, the lender recovers from a borrower any amount for which payment of the claim was made, the following apply:</text> <paragraph num="A."> <text>If the recovered amount, when added to the claim previously paid by the Department in connection with an enrolled loan, exceeds the lender's loss on that enrolled loan, the lender shall promptly pay to the Department for deposit in the reserve account the amount of the excess; and</text> </paragraph> <paragraph num="B."> <text>For the purposes of §A of this regulation and Regulation .22 of this chapter, the lender's loss on an enrolled loan is the amount of principal charged off by the lender plus accrued interest plus 1/2 of the reasonable and documented out-of-pocket expenses incurred by the lender in pursuing collection efforts.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Right of Subrogation by Department; Effect of Assignment."> <paragraph num="A."> <text>If the payment of a claim has fully covered the lender's loss on an enrolled loan, or if the payment of a claim when combined with any recovery from the borrower has fully covered the lender's loss, the Department, upon its own request, is subrogated to the rights of the lender with respect to any collateral, security, or other right of recovery in connection with the loan that has not been realized by the lender. The lender thereafter shall assign to the Department any right, title, or interest in or to any collateral, security, or other right of recovery in connection with the loan.</text> </paragraph> <paragraph num="B."> <text>If an assignment has been made under §A of this regulation, the Department is not required to undertake the obligations of the lender under the lender's loan documents, except for obligations directly related to the Department's assigned rights of recovery in connection with the loan. The lender shall fulfill any other obligations the lender has under the loan documents in the same manner and to the same degree as would be required if the assignment had not been made. The lender shall provide the Department with all reasonable assistance the Department requests in proceeding with respect to any collateral, security, or other right of recovery, except that the lender does not need to incur any out-of-pocket expenses.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="Reports by Lender; Withdrawal of Excess Funds."> <paragraph num="A."> <text>Reports by Lender.</text> <paragraph num="(1)"> <text>On or before July 15 of each year, the lender shall file a year-end report with the Department indicating the number and aggregate outstanding balances of all enrolled loans for the period comprising the 12 months ending on June 30.</text> </paragraph> <paragraph num="(2)"> <text>On or before October 15, January 15, and April 15 of each year, the lender shall file a quarterly report with the Department indicating the number and aggregate outstanding balances of all enrolled loans for the period comprising the 3 preceding calendar months.</text> </paragraph> <paragraph num="(3)"> <text>A quarterly report is not required for a quarter that ends with a balance in the reserve account of $0, but a year-end report shall be filed before July 15 for the period comprising the 12 months ending on June 30.</text> </paragraph> <paragraph num="(4)"> <text>In the computation of the aggregate outstanding balance of all enrolled loans, the balance of a loan may not be greater than the covered amount of the loan as enrolled.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If a year-end report filed under §A of this regulation indicates that, for the immediately preceding 12-month period ending on June 30, the balance in the reserve account continuously exceeded 100 percent of the aggregate outstanding balance of all enrolled loans, including unfunded portions of enrolled loans that are lines of credit, the Department may make a withdrawal from the reserve account. The amount of the withdrawal may not be greater than the minimum amount of any excess as continuously maintained over the immediately preceding 12-month period ending on June 30. Withdrawals of excess sums by the Department under this section may be used for any purpose.</text> </paragraph> <paragraph num="C."> <text>If a year-end report is not filed within 30 days of the original due date of the report, the Department may make a withdrawal from the reserve account on the basis of the Department's determination from an inspection of the lender's files that, for the immediately preceding 12-month period ending on June 30, the balance in the reserve account continuously exceeded 100 percent of the aggregate outstanding balance of all enrolled loans, including unfunded portions of enrolled loans that are lines of credit. If the lender fails or refuses to make all or any part of its files available to the Department for inspection for this purpose, the Department may make a withdrawal from the reserve account on the basis of the Department's determination from a review of the Department's own records that, for the immediately preceding 12-month period ending on June 30, the balance in the reserve account continuously exceeded 100 percent of the aggregate outstanding balance of all enrolled loans, including unfunded portions of enrolled loans that are lines of credit. The amount of the withdrawal may not be greater than the minimum amount of any excess as continuously maintained over the immediately preceding 12-month period ending on June 30. Withdrawals of excess sums by the Department under this section may be used for any purpose.</text> </paragraph> <paragraph num="D."> <text>The right of the Department to make a withdrawal from the reserve account under §B or C of this regulation is subject to the following provisions:</text> <paragraph num="(1)"> <text>If a year-end report is filed by July 15 or not more than 30 days after that, the Department has the right of withdrawal for a period of 90 days from the date of the filing of the report with the Department; and</text> </paragraph> <paragraph num="(2)"> <text>If a year-end report is not filed within 30 days after the original due date, the Department has the right of withdrawal for a period of 90 days from the date the Department determines from an inspection of the lender's files (or, if the lender fails or refuses to make all or any part of its files available to the Department for inspection for this purpose, then from the date the Department determines from a review of the Department's own records) that the Department is entitled to make a withdrawal from the reserve account under this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Termination of Obligation to Lender."> <text>The Department may terminate the obligation to a lender to enroll loans under the Program if the Department determines that the lender is not in substantial compliance with the requirements of the Program or the requirements of this chapter. The termination takes effect on the date specified in the notice of termination, except that the termination does not apply to a loan made on or before the date on which the notice of termination is received by the lender. If the Department is terminating the enrollment of loans for all participating lenders under the Program, the Department shall provide at least 90 days notice to the lender. A termination under this regulation is prospective only and does not apply to a loan previously refinanced. After termination, the amount covered under the Program may not be increased beyond the covered amount as previously enrolled.</text> </regulation> <regulation prefix="Regulation" num=".25" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A lender or borrower under the Program may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any borrower in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>A lender or borrower shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties, and between lenders and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".26" heading="Program Administration."> <paragraph num="A."> <text>The Department shall manage, supervise, and administer the Program.</text> </paragraph> <paragraph num="B."> <text>The Department shall market the Program to businesses and other persons in the State in cooperation with financial institutions and Statewide associations representing financial institutions.</text> </paragraph> <paragraph num="C."> <text>The Department shall make every effort to ensure that loans under the Program are reasonably available to qualified borrowers throughout the State.</text> </paragraph> <paragraph num="D."> <text>Reserve Accounts.</text> <paragraph num="(1)"> <text>If the reserve accounts are not maintained in an account with the lender, upon execution of a participation agreement the Department shall establish a reserve account at the Department for the lender for the purpose of receiving all required premium charges to be paid by the lender and the borrower and transfers made by the Department under this chapter.</text> </paragraph> <paragraph num="(2)"> <text>If the reserve accounts are maintained in an account with the lender, upon execution of a participation agreement the Department shall establish a reserve account with the lender in the name of the Department for the purpose of receiving all required premium charges to be paid by the lender and the borrower and transfers made by the Department under this chapter.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Department shall develop the Program, in cooperation with financial institutions and Statewide associations representing financial institutions, so that the degree of flexibility for the Department and the participating lenders is maximized, the State oversight of individual loans is minimized, and the fiscal integrity of the Program is maintained.</text> </paragraph> <paragraph num="F."> <text>The Department shall enter into any contracts necessary to carry out the Program.</text> </paragraph> <paragraph num="G."> <text>The Department shall take any action reasonably necessary to ensure compliance with the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Fund Administration."> <paragraph num="A."> <text>The Program shall be operated with moneys in the Neighborhood Business Development Fund, which is a continuing, nonlapsing special fund consisting of those items as provided for in Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>In connection with the Program, the Department may use moneys from the Fund to make premium payments under the Program and to pay expenses of the Program.</text> </paragraph> <paragraph num="C."> <text>At any time following the first 8 months of a fiscal year, the Department may transfer, subject to approval of the Legislative Policy Committee and subject to the provisions of State Finance and Procurement Article, §7-209, Annotated Code of Maryland, unencumbered moneys in the Fund to any other fund under Housing and Community Development Article, Title 4, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".28" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter:</text> <paragraph num="A."> <text>To the extent that the waiver or variance is consistent with Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="B."> <text>If, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".29" heading="False Statements."> <paragraph num="A."> <text>A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department in connection with a loan under the Program.</text> </paragraph> <paragraph num="B."> <text>A person applying for or benefiting from a loan under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Department on an application or for the purpose of influencing the action of the Department affecting financial assistance already provided.</text> </paragraph> <paragraph num="C."> <text>A person who violates §A or B of this regulation is subject to the following penalties:</text> <paragraph num="(1)"> <text>Immediate cancellation or acceleration of the form of financial assistance provided by the Program; and</text> </paragraph> <paragraph num="(2)"> <text>Upon conviction of a misdemeanor is subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-102 and 4-504, and Title 6, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C amended effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12B amended effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17A amended effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .25 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="05" heading="Linked Deposit Program"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>This chapter provides policies and procedures for the Department to certify and enroll loans from financial institutions to eligible minority business enterprises and small businesses under the Linked Deposit Program, established pursuant to the State Finance and Procurement Article, §§6-211 and 6-212, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following words have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Certified minority business enterprise” means a minority business enterprise certified under State Finance and Procurement Article, Title 14, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Financial institution” has the meaning stated in State Finance and Procurement Article, §6-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Program” means the Linked Deposit Program established under State Finance and Procurement Article, §6-211, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Program loan” means a loan made under this chapter.</text> </paragraph> <paragraph num="(6)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(7)"> <text>“Small business” means a business that is qualified under State Finance and Procurement Article, Title 14, Subtitle 5, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Treasurer's Office” means the Office of the State Treasurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Loans."> <paragraph num="A."> <text>A loan is eligible under the Program if the loan:</text> <paragraph num="(1)"> <text>Is made by a financial institution that is eligible to participate in the Program under Regulation .04B of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Meets the financial institution's lending criteria;</text> </paragraph> <paragraph num="(3)"> <text>Has a term not exceeding 10 years;</text> </paragraph> <paragraph num="(4)"> <text>Is made to a certified minority business enterprise or a small business that will use the proceeds for a project or activity primarily located in Maryland;</text> </paragraph> <paragraph num="(5)"> <text>Has an interest rate that is lower than the interest rate the financial institution would charge for a loan for a similar purpose and term by at least:</text> <paragraph num="(a)"> <text>2 percentage points; or</text> </paragraph> <paragraph num="(b)"> <text>The difference between the financial institution’s rate on a 60-month certificate of deposit and the interest rate acceptable to the Treasurer’s Office for its deposits;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Does not exceed $1,000,000 when added to any other loans the borrower received under the Program;</text> </paragraph> <paragraph num="(7)"> <text>Has points or fees charged by the financial institution at closing not exceeding 1 percent of the loan amount; and</text> </paragraph> <paragraph num="(8)"> <text>Complies with all terms and conditions of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The proceeds of a Program loan may not be used:</text> <paragraph num="(1)"> <text>For the furtherance of sectarian religious instruction;</text> </paragraph> <paragraph num="(2)"> <text>In connection with the design, acquisition, or construction of any building used or to be used as a place of sectarian religious worship or instruction; or</text> </paragraph> <paragraph num="(3)"> <text>In connection with any program or department of divinity for any religious denomination, including but not limited to religious services, religious instruction, or other activities that have an explicitly religious purpose.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Program Eligibility."> <paragraph num="A."> <text>To be eligible to receive a Program loan, an applicant shall be a certified minority business enterprise or a small business.</text> </paragraph> <paragraph num="B."> <text>To be eligible to make Program loans, a financial institution shall be designated by the Treasurer's office as a depository for State money and as eligible to participate in the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Initial Loan Application."> <paragraph num="A."> <text>An applicant may choose to submit an application directly to:</text> <paragraph num="(1)"> <text>One or more participating financial institutions; or</text> </paragraph> <paragraph num="(2)"> <text>The Department, to be forwarded to all participating financial institutions.</text> </paragraph> </paragraph> <paragraph num="B."> <text>For an application submitted directly to a financial institution under §A(1) of this regulation, the following procedures apply:</text> <paragraph num="(1)"> <text>Before making a loan commitment to the applicant, the financial institution shall submit an application to the Department on forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>The Department may require that the application be submitted in electronic form; and</text> </paragraph> <paragraph num="(3)"> <text>After receipt of a completed application, the Department shall either:</text> <paragraph num="(a)"> <text>Confirm that the applicant is a certified minority business enterprise or a small business and notify the applicant and the financial institution in writing that the applicant meets the program requirement that it be a certified minority business enterprise or a small business; or</text> </paragraph> <paragraph num="(b)"> <text>Notify the applicant and the financial institution in writing that the application has been denied because the applicant is not a certified minority business enterprise or a small business.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>For an application submitted to the Department under §A(2) of this regulation, the following procedures apply:</text> <paragraph num="(1)"> <text>An applicant shall submit a completed application to the Department on forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>An applicant may submit the application in electronic form or written form;</text> </paragraph> <paragraph num="(3)"> <text>After the receipt of a completed application, the Department shall either:</text> <paragraph num="(a)"> <text>Confirm that the applicant is a certified minority business enterprise or a small business; or</text> </paragraph> <paragraph num="(b)"> <text>Notify the applicant in writing if its application has been denied because it is not a certified minority business enterprise or a small business; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the Department confirms that the applicant is a certified minority business enterprise or a small business, the Department shall provide:</text> <paragraph num="(a)"> <text>All financial institutions eligible to participate in the Program with a copy of the completed application; and</text> </paragraph> <paragraph num="(b)"> <text>The applicant with a list of all financial institutions that received a copy of the application.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Financial Institution Application."> <paragraph num="A."> <text>If a financial institution decides to offer the applicant a loan, it shall:</text> <paragraph num="(1)"> <text>Provide the applicant and the Department with a commitment letter describing the terms and conditions of the loan, including the interest rate and fees charged by the financial institution; and</text> </paragraph> <paragraph num="(2)"> <text>Certify to the Department on forms approved by the Department that the loan will meet the requirements of Regulation .03 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If a financial institution declines to offer the applicant a loan, it shall:</text> <paragraph num="(1)"> <text>Notify the applicant and Department in writing; and</text> </paragraph> <paragraph num="(2)"> <text>Comply with all State and federal requirements regarding the denial of a loan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Closing and Enrollment Procedures."> <paragraph num="A."> <text>Notification. Within 3 business days of receiving a Program loan, the borrower shall notify the Department that the loan has closed.</text> </paragraph> <paragraph num="B."> <text>Forms. Applications for enrollment of a loan under the Program by the financial institutions shall be made on forms prescribed by the Department.</text> </paragraph> <paragraph num="C."> <text>Submission of Documentation. Within 10 business days of making a Program loan, the financial institution shall submit all loan documents, forms, and other documentation required by the Department.</text> </paragraph> <paragraph num="D."> <text>Review by Department.</text> <paragraph num="(1)"> <text>Within 10 business days of receipt of all forms and documentation from the financial institution, the Department shall determine if the loan closed in conformity with the criteria of Regulation .03 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>If the Department determines that a loan is eligible, it shall enroll the loan in the Program and notify the Treasurer's Office and the financial institution in writing of its decision.</text> </paragraph> <paragraph num="(3)"> <text>If the Department determines that a loan is not eligible, it shall notify the financial institution in writing stating the reason the loan is not eligible. An applicant or financial institution may request that the Department reconsider its decision in accordance with Regulation .07E of this chapter.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant or a financial institution may request reconsideration of a Department decision that a loan is not eligible for the Program by submitting a written request to the Secretary or the Secretary's designee within 30 days following the date of the Department's written decision. The request for reconsideration shall address each reason for the decision and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant's request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration.</text> </paragraph> <paragraph num="(2)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary, in the Secretary's sole discretion, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a determination of ineligibility under the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Maintaining Certified Minority Business or Small Business Status."> <paragraph num="A."> <text>A borrower that receives a Program loan shall maintain its status as a certified minority business enterprise or a small business for the term of the Program loan.</text> </paragraph> <paragraph num="B."> <text>The Department shall notify the Treasurer's Office in writing if the borrower is decertified as a minority business enterprise or no longer meets the definition of a small business for any reason during the term of the Program loan.</text> </paragraph> <paragraph num="C."> <text>If a borrower is decertified as a minority business enterprise or disqualified as a small business during the term of the Program loan and upon written notification:</text> <paragraph num="(1)"> <text>The Treasurer's Office shall reduce the amount of the certificate of deposit purchased from the financial institution under the Program by the amount of the outstanding principal balance of the specified Program loan; and</text> </paragraph> <paragraph num="(2)"> <text>If permitted by the loan documents, the financial institution may increase the interest rate of the Program loan by the lesser of:</text> <paragraph num="(a)"> <text>2 percent; or</text> </paragraph> <paragraph num="(b)"> <text>The difference between the financial institution’s rate on a 60-month certificate of deposit and the interest rate acceptable to the Treasurer’s Office for its deposits, as determined as of the date that the loan closed.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>A minority business enterprise that loses its certification or a small business that no longer qualifies as a small business due to revenue or employee growth may not be considered decertified for purposes of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Other Laws."> <text>The requirements of this chapter are in addition to any other State, federal, and local laws or regulations that are applicable to the financial institution, and do not preempt or supersede any of those requirements.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Program Administration."> <paragraph num="A."> <text>The Secretary may waive or vary provisions of this chapter:</text> <paragraph num="(1)"> <text>To the extent that the waiver or variance is consistent with State Finance and Procurement Article, §6-211, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>If, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of State Finance and Procurement Article, §6-211, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Electronic Means. The Department may require the financial institution to submit any written documentation required in this chapter by electronic means.</text> </paragraph> <paragraph num="C."> <text>Subject to all State and federal privacy requirements, the Department may require a participating financial institution to provide reports that contain:</text> <paragraph num="(1)"> <text>The number of loans made under the Program;</text> </paragraph> <paragraph num="(2)"> <text>The dollar value of loans made under the Program;</text> </paragraph> <paragraph num="(3)"> <text>The performance of the loans made under the Program;</text> </paragraph> <paragraph num="(4)"> <text>The type of business that received loans; and</text> </paragraph> <paragraph num="(5)"> <text>Any other information requested by the Department related to the Program.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Program Guidelines. The Department may establish from time to time Program guidelines containing procedures, required reports, forms, and other matters related to the Program.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">State Finance and Procurement Article, §§6-211 and 6-212, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 22, 2007 (34:21 Md. R. 1913)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 repealed and new Regulation .05 adopted effective November 2, 2009 (36:22 Md. R. 1722)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B, C amended effective September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08D adopted effective November 2, 2009 (36:22 Md. R. 1722)</annotation> </annotations> </chapter> <chapter num="06" heading="Food Desert Designation and Financing"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter prescribes the policies, procedures, and authorizations for designating areas as food deserts and providing financial assistance to eligible small businesses and other food-related enterprises that provide fresh fruits, vegetables, and other healthy foods to residents in food deserts.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following words have the meanings indicated and as defined in the Act.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Advisory Committee” means the Interagency Food Desert Advisory Committee established under Housing and Community Development Article, §6-308.2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Business” means a commercial or industrial enterprise.</text> </paragraph> <paragraph num="(3)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(4)"> <text>“Financial assistance” means any form of grant, loan, assurance, guarantee, or other credit enhancement, reduction in the principal obligation of or in the rate of interest payable on a loan or portion of a loan, and prepayment of interest on a subordinate or superior loan or portion of a loan.</text> </paragraph> <paragraph num="(5)"> <text>“Financial assistance documents” means those documents executed by an approved applicant and the Department which set forth the terms and conditions of financial assistance under the Program.</text> </paragraph> <paragraph num="(6)"> <text>“Food desert” means that part of priority funding area designated by the Secretary under Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(7)"> <text>“Food desert project” or “project” means a project or activity which qualifies for financial assistance under the Program.</text> </paragraph> <paragraph num="(8)"> <text>“Local jurisdiction” means:</text> <paragraph num="(a)"> <text>A municipal corporation subject to the provisions of the State Constitution, Article XI-E; or</text> </paragraph> <paragraph num="(b)"> <text>Any of the 23 counties of the State and the Mayor and City Council of Baltimore.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Nonprofit organization” means a corporation, foundation, or other entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of any private shareholder or individual holding any interest in the entity.</text> </paragraph> <paragraph num="(10)"> <text>“Program” means the Business Development Program, also known as the Neighborhood Business Works Program.</text> </paragraph> <paragraph num="(11)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(12)"> <text>“Small business” means a business that employs a number of employees, or has annual gross receipts, no greater than the limits set forth by the U.S. Small Business Administration.</text> </paragraph> <paragraph num="(13)"> <text>“State” means the State of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Food Desert Designation Application."> <paragraph num="A."> <text>An application for a food desert designation shall be submitted by a local government or local governments.</text> </paragraph> <paragraph num="B."> <text>An application for a food desert designation shall be submitted to the Department on forms prescribed by the Department and in accordance with the schedule that the Department establishes.</text> </paragraph> <paragraph num="C."> <text>An application for a designation shall provide:</text> <paragraph num="(1)"> <text>A detailed map and description of the proposed food desert demonstrating the proposed areas within a priority funding area;</text> </paragraph> <paragraph num="(2)"> <text>Information and data on the:</text> <paragraph num="(a)"> <text>Availability of fresh fruit, vegetables, and other healthy foods in the area;</text> </paragraph> <paragraph num="(b)"> <text>Income levels of local residents; and</text> </paragraph> <paragraph num="(c)"> <text>Transportation needs of local residents and the availability of public transportation;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Any comments the applicant has received from the local governments or community; and</text> </paragraph> <paragraph num="(4)"> <text>Any other information that the Department considers relevant.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Food Desert Designation Application Processing."> <paragraph num="A."> <text>Application Evaluation.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the Department to determine whether all of the information required under Regulation .03 of this chapter is contained in the application.</text> </paragraph> <paragraph num="(2)"> <text>Upon receipt of all required information, the Department shall:</text> <paragraph num="(a)"> <text>Convene the Advisory Committee to:</text> <paragraph num="(i)"> <text>Review applications;</text> </paragraph> <paragraph num="(ii)"> <text>Provide assistance and guidance to applicants; and</text> </paragraph> <paragraph num="(iii)"> <text>Make recommendations to the Secretary;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Refer the application to other State agencies for comment, as the Department considers appropriate;</text> </paragraph> <paragraph num="(c)"> <text>Consider any recommendation from a State unit; and</text> </paragraph> <paragraph num="(d)"> <text>Analyze each application to determine whether the proposed food desert merits designation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Advisory Committee or the Department may request additional information from the applicant concerning an application, including oral presentations.</text> </paragraph> <paragraph num="(4)"> <text>Upon completion of the requirements in §A(1)—(3) of this regulation, the Advisory Committee shall make a recommendation on the application to the Secretary after considering the:</text> <paragraph num="(a)"> <text>Availability of fresh fruit, vegetables, and other healthy foods in the area;</text> </paragraph> <paragraph num="(b)"> <text>Income levels of local residents;</text> </paragraph> <paragraph num="(c)"> <text>Transportation needs of local residents and the availability of public transportation;</text> </paragraph> <paragraph num="(d)"> <text>Comments from local governments and other State agencies; and</text> </paragraph> <paragraph num="(e)"> <text>Any other factors that the Advisory Committee considers relevant.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Upon receipt of the recommendation from the Advisory Committee, the Secretary may request additional information from the applicant concerning the application, including oral presentations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Designation of a Food Desert."> <paragraph num="A."> <text>The Secretary, on the recommendation of the Advisory Committee, may designate an area as a food desert.</text> </paragraph> <paragraph num="B."> <text>If the Secretary determines not to designate all or part of an area as a food desert, the Secretary shall issue a written notice of denial with an evaluation and explanation of the denial.</text> </paragraph> <paragraph num="C."> <text>Reconsiderations.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration must be received within 30 days following the date of the denial notice.</text> </paragraph> <paragraph num="(3)"> <text>The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application.</text> </paragraph> <paragraph num="(4)"> <text>The Secretary shall respond in writing to the applicant’s request for reconsideration within 90 days of receipt of the request for reconsideration.</text> </paragraph> <paragraph num="(5)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Modification of a Food Desert Designation."> <paragraph num="A."> <text>An applicant may submit modifications to a food desert designation to the Department in accordance with the schedule that the Department establishes.</text> </paragraph> <paragraph num="B."> <text>The Secretary, on the recommendation of the Advisory Committee, may approve modifications to a food desert designation.</text> </paragraph> <paragraph num="C."> <text>Regulations .03—.05 of this chapter shall apply to the procedures and approval process for modifying a food desert designation.</text> </paragraph> <paragraph num="D."> <text>The Department may establish an abbreviated application for modifying a food desert designation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Projects."> <text>In order to be eligible for financial assistance, a project shall satisfy the following requirements:</text> <paragraph num="A."> <text>The project is in a food desert;</text> </paragraph> <paragraph num="B."> <text>The project will provide fresh fruits, vegetables, and other healthy foods to residents in food deserts;</text> </paragraph> <paragraph num="C."> <text>The project has a commitment of monies from private, local, or federal funds so that upon receipt of financial assistance under the Program there will be adequate funding to assure completion of the project;</text> </paragraph> <paragraph num="D."> <text>As determined by the Department, the project is not feasible but for the financial assistance from the Program and the financial assistance requested is the least amount of money necessary to complete the project;</text> </paragraph> <paragraph num="E."> <text>The financial assistance from all State government sources, including but not limited to the Program, may not exceed 50 percent of total project costs;</text> </paragraph> <paragraph num="F."> <text>The project is ready to proceed upon receipt of financial assistance under the Program;</text> </paragraph> <paragraph num="G."> <text>Each local jurisdiction in which the project is located has adopted a local resolution, or its authorized designee has delivered a letter to the Program, expressing support for the project;</text> </paragraph> <paragraph num="H."> <text>The operating income and expenses projected for the project show income sufficient, in the sole discretion of the Department, to repay on schedule any loans authorized or guaranteed by the Program; and</text> </paragraph> <paragraph num="I."> <text>Upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Terms and Conditions of Financial Assistance."> <paragraph num="A."> <text>The financial assistance from the Program shall be on such terms as the Department considers necessary to make the project financially feasible.</text> </paragraph> <paragraph num="B."> <text>Financial assistance in the form of a loan from the Program may be secured, at the discretion of the Department, by a security instrument described in §C of this regulation, which may be subordinate to other security interests.</text> </paragraph> <paragraph num="C."> <text>The security shall be acceptable to the Department and may be:</text> <paragraph num="(1)"> <text>A mortgage or deed of trust lien;</text> </paragraph> <paragraph num="(2)"> <text>A cash escrow;</text> </paragraph> <paragraph num="(3)"> <text>A letter of credit;</text> </paragraph> <paragraph num="(4)"> <text>A pledge of depository accounts;</text> </paragraph> <paragraph num="(5)"> <text>A pledge of accounts receivable;</text> </paragraph> <paragraph num="(6)"> <text>An assignment of income;</text> </paragraph> <paragraph num="(7)"> <text>A security interest in machinery and equipment; or</text> </paragraph> <paragraph num="(8)"> <text>Any other form of security or collateral acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The principal and interest of a loan made or guaranteed under the Program shall:</text> <paragraph num="(1)"> <text>Be repayable out of revenues specified by an approved applicant;</text> </paragraph> <paragraph num="(2)"> <text>Bear interest at a rate determined to be necessary and reasonable for the project which may be as low as zero percent; and</text> </paragraph> <paragraph num="(3)"> <text>Be repayable in accordance with a schedule determined by the Department and may be on a deferred payment schedule.</text> </paragraph> </paragraph> <paragraph num="E."> <text>In order to facilitate the successful completion or operation of a project, the Department may modify:</text> <paragraph num="(1)"> <text>The rate of interest;</text> </paragraph> <paragraph num="(2)"> <text>The time or amount of payment; or</text> </paragraph> <paragraph num="(3)"> <text>Any other term of a loan.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Default. In the event of default, the Department shall have the right to modify the rate of interest, the time or amount of payment, or any other term of financial assistance in order to ensure repayment and achieve the purposes of the Program.</text> </paragraph> <paragraph num="G."> <text>Property, Liability, and Other Insurance.</text> <paragraph num="(1)"> <text>At or before closing of the financial assistance, and at such other times as required by the Department, the applicant shall provide evidence that the applicant, contractor, and other parties have obtained and maintained the following insurance:</text> <paragraph num="(a)"> <text>Owner’s liability;</text> </paragraph> <paragraph num="(b)"> <text>Owner’s property or hazard or contractor’s builder’s risk;</text> </paragraph> <paragraph num="(c)"> <text>Contractor’s liability;</text> </paragraph> <paragraph num="(d)"> <text>Business income;</text> </paragraph> <paragraph num="(e)"> <text>Architect’s errors and omissions; and</text> </paragraph> <paragraph num="(f)"> <text>Engineer’s errors and omissions.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All insurance required under §G(1) of this regulation shall meet the following requirements:</text> <paragraph num="(a)"> <text>Be written by a company registered with the Maryland Insurance Administration, or a company approved by the Department in the event the property and company are located out of State;</text> </paragraph> <paragraph num="(b)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(c)"> <text>Not be terminable without prior notification to the Department; and</text> </paragraph> <paragraph num="(d)"> <text>Contain such other terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition to the requirements of §G(2) of this regulation, owner’s liability and business income insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition to the requirements of §G(2) of this regulation, contractor’s liability insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in place through final closing or such later date as the Department requires.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In addition to the requirements of §G(2) of this regulation, owner’s property or hazard insurance and builder’s risk insurance shall:</text> <paragraph num="(a)"> <text>Name the Department as an additional insured, loss payee, and mortgagee; and</text> </paragraph> <paragraph num="(b)"> <text>Remain in force for the duration of the loan.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Limitations on Financial Assistance."> <paragraph num="A."> <text>Minimum Amount of Financial Assistance.</text> <paragraph num="(1)"> <text>The minimum amount of financial assistance from the Program to a project is $1,000.</text> </paragraph> <paragraph num="(2)"> <text>The maximum amount of financial assistance from the Program to a project may not exceed 50 percent of total project costs.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Disbursement of Financial Assistance. Financial assistance may be disbursed in accordance with the terms and conditions set forth in the financial assistance documents.</text> </paragraph> <paragraph num="C."> <text>The Secretary may approve an exception to the maximum amount of the financial assistance, up to 65 percent of total project costs, on the basis that other potential sources of funds have been sought and clearly are not available and it is not feasible to reduce the size or scope of the project.</text> </paragraph> <paragraph num="D."> <text>The Secretary may approve an exception to the minimum amount of the financial assistance on the basis that it is not feasible to increase the size or scope of the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Food Desert Project Applications and Processing."> <paragraph num="A."> <text>An application for financial assistance shall be submitted to the Department and shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="B."> <text>Each application shall:</text> <paragraph num="(1)"> <text>Contain the applicant’s organizational documents, including as applicable its articles of incorporation and bylaws, its articles of organization and operating agreement, its certificate of limited partnership and limited partnership agreement, or its partnership or joint venture agreement;</text> </paragraph> <paragraph num="(2)"> <text>Contain a description of the project;</text> </paragraph> <paragraph num="(3)"> <text>Contain proof of the dollar amount committed to the project from private and non-State public resources, and proof of any applications submitted to private and non-State public sources of financing for the project except that if the applicant is not applying to any private or non-State public resources, the Program may request additional information which would have been contained in those applications;</text> </paragraph> <paragraph num="(4)"> <text>Contain sufficient information to determine that the:</text> <paragraph num="(a)"> <text>Project is located in a food desert;</text> </paragraph> <paragraph num="(b)"> <text>Project is eligible in accordance with Regulation .07 of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>Terms and requirements of financial assistance as set forth in Regulation .08 of this chapter can be met; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Contain the following additional information:</text> <paragraph num="(a)"> <text>The number and types of jobs to be created or retained by the project;</text> </paragraph> <paragraph num="(b)"> <text>The amount, size, and types of commercial or industrial space to be created or retained;</text> </paragraph> <paragraph num="(c)"> <text>The cost of the project;</text> </paragraph> <paragraph num="(d)"> <text>A project budget identifying all sources and uses of project development funds;</text> </paragraph> <paragraph num="(e)"> <text>Except for projects seeking financial assistance for minor rehabilitation, a pro forma showing anticipated project revenue, expenses, and debt service and other indebtedness of the project;</text> </paragraph> <paragraph num="(f)"> <text>Identification of the revenues which can be used to repay the financial assistance provided by the Program; and</text> </paragraph> <paragraph num="(g)"> <text>Other and further information as the Program may request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Application Evaluation.</text> <paragraph num="(1)"> <text>Each application submitted shall be reviewed by the Program to determine whether all of the information required under §B of this regulation is contained in the application.</text> </paragraph> <paragraph num="(2)"> <text>Upon submission of all required information, the Program shall undertake an analysis of each application and make a recommendation to the Secretary, as to whether, in accordance with this section, a project is eligible for financial assistance, the amount of financial assistance, and any special terms and conditions for a project.</text> </paragraph> <paragraph num="(3)"> <text>The Program may take the information set forth in an application and the following factors into consideration in recommending an award of financial assistance:</text> <paragraph num="(a)"> <text>The ratio, as permitted under Regulation .07E of this chapter, of Program and other State funds to both private and other non-State public funds;</text> </paragraph> <paragraph num="(b)"> <text>The relationship of a project to area revitalization plans, efforts, and strategies;</text> </paragraph> <paragraph num="(c)"> <text>The capability of an applicant to administer a project;</text> </paragraph> <paragraph num="(d)"> <text>The potential of the business to serve the needs of the food desert in which it is situated;</text> </paragraph> <paragraph num="(e)"> <text>A plan to seek out sources of Maryland-grown produce and Maryland-produced foods;</text> </paragraph> <paragraph num="(f)"> <text>A strategy to encourage hiring local residents; and</text> </paragraph> <paragraph num="(g)"> <text>Other factors which the Program determines are desirable in fostering commercial and economic revitalization within each local jurisdiction in which the project is located.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Approval of Applications.</text> <paragraph num="(1)"> <text>If the Program determines to recommend approval of a project for financial assistance, the Program shall present the project to the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications financial assistance provided under the Program.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Rejection of Applications. If the Program determines not to recommend approval of a project for financial assistance, the Program shall issue a written notice of rejection with an evaluation and explanation for rejection.</text> </paragraph> <paragraph num="F."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request reconsideration of a rejection by submitting a written request, to the Secretary, which is received within 30 days following the date of the rejection notice. The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant’s request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration.</text> </paragraph> <paragraph num="(2)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a rejection under the Program.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Closing. The closing of an award of financial assistance shall be scheduled at a time acceptable to the Department and the Office of the Attorney General.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Books and Accounts."> <text>Applicants, contractors, and subcontractors shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may from time to time require. All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours. Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the contractor and the applicant.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Fees and Charges."> <text>The Department may charge fees related to the processing of an application for financial assistance and servicing of financial assistance.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Loan Administration by Approved Entities."> <paragraph num="A."> <text>General. The Department may approve non-profit and for-profit entities to originate and administer loans to food desert projects in accordance with this chapter.</text> </paragraph> <paragraph num="B."> <text>To be eligible to administer a loan program, the entity must submit an application to the Department and meet the following minimum criteria to the satisfaction of the Department:</text> <paragraph num="(1)"> <text>Provide evidence satisfactory to the Department supporting the entity’s demonstrated ability to:</text> <paragraph num="(a)"> <text>Manage a performing portfolio of business loans for a minimum period of 5 years;</text> </paragraph> <paragraph num="(b)"> <text>Evaluate loan applications, underwrite loans, and administer a loan program;</text> </paragraph> <paragraph num="(c)"> <text>Leverage Program proceeds with other private or public sources of funding;</text> </paragraph> <paragraph num="(d)"> <text>Comply with Program statutes, regulations, guidelines, and policies;</text> </paragraph> <paragraph num="(e)"> <text>Provide adequate resources and staff to implement the Program, including staff trained to efficiently:</text> <paragraph num="(i)"> <text>Process loan applications, draw schedules, and other loan documentation;</text> </paragraph> <paragraph num="(ii)"> <text>Evaluate loan portfolio performance; and</text> </paragraph> <paragraph num="(iii)"> <text>Monitor the work performed with the loan proceeds;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Provide substantive technical assistance to borrowers;</text> </paragraph> <paragraph num="(g)"> <text>Obtain coverage by a fidelity bond or employee dishonesty liability insurance in an amount to be determined by the Department; and</text> </paragraph> <paragraph num="(h)"> <text>Be duly organized and in good standing in the State of Maryland; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Provide audited financial statements for a period of 3 years that demonstrates the entity’s ability to maintain consistent:</text> <paragraph num="(a)"> <text>Revenues;</text> </paragraph> <paragraph num="(b)"> <text>Operating reserves;</text> </paragraph> <paragraph num="(c)"> <text>Net assets;</text> </paragraph> <paragraph num="(d)"> <text>Unrestricted assets; and</text> </paragraph> <paragraph num="(e)"> <text>Portfolio delinquency rates.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>An approved entity shall execute and comply with the terms of an administration agreement, loan agreement, loan note, assignment, and other documents governing the duties of the entity under the Program, as required by the Department.</text> </paragraph> <paragraph num="D."> <text>An approved entity shall be directly responsible for fulfilling all of its duties and responsibilities under the Program and may not assign its responsibilities without the prior written consent of the Department.</text> </paragraph> <paragraph num="E."> <text>The Department may monitor an approved entity’s administration of loans funded by the Department, and may enforce its remedies under the Program loan documents including revoking the entity’s approval to administer a loan program under this chapter.</text> </paragraph> <paragraph num="F."> <text>Other Requirements.</text> <paragraph num="(1)"> <text>An approved entity shall:</text> <paragraph num="(a)"> <text>Maintain financial records of loan disbursements for at least 5 years, and shall make them available for review by the Department at all reasonable times; and</text> </paragraph> <paragraph num="(b)"> <text>Provide the Department with periodic reporting on:</text> <paragraph num="(i)"> <text>Loan disbursements; and</text> </paragraph> <paragraph num="(ii)"> <text>Other information required by the Department.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Upon notice to an approved entity, and during normal business hours, the Department may inspect the files of an approved entity relating to any loans originated under the Program.</text> </paragraph> </paragraph> <paragraph num="G."> <text>To fund loans under this regulation the Department may:</text> <paragraph num="(1)"> <text>Directly fund a loan that is originated by an approved entity; or</text> </paragraph> <paragraph num="(2)"> <text>Provide financial assistance to an approved entity for the purpose of the approved entity making a loan for a food desert project.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Program Administration."> <text>The Program may establish, from time to time, detailed Program guidelines containing underwriting standards, processing requirements, and other requirements or matters relating to providing financial assistance.</text> </regulation> <regulation prefix="Regulation" num=".15" heading="Nondiscrimination."> <paragraph num="A."> <text>An applicant may not discriminate against a person on the basis of race, color, religion, national origin, sex, sexual orientation, marital status, physical or mental disability, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, in any aspect of the Program.</text> </paragraph> <paragraph num="B."> <text>An applicant shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Governor’s Executive Order 01.01.1989.18 on Drug and Alcohol Free Workplaces, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Waiver."> <text>The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".17" heading="False Statements."> <paragraph num="A."> <text>A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department by an agreement relating to financial assistance.</text> </paragraph> <paragraph num="B."> <text>A person applying for or benefiting from financial assistance under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Department on an application or for the purpose of influencing the action of the Department affecting financial assistance already provided.</text> </paragraph> <paragraph num="C."> <text>A person who violates §A or B of this regulation is:</text> <paragraph num="(1)"> <text>Subject to immediate cancellation or acceleration of the form of financial assistance provided by the Program; and</text> </paragraph> <paragraph num="(2)"> <text>Guilty of a misdemeanor and upon conviction is subject to a fine not exceeding $50,000, imprisonment not exceeding 5 years, or both.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §6-308(a)(2), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 11, 2015 (42:9 Md. R. 646)</annotation> </annotations> </chapter> <chapter num="07" heading="Business Lending Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter prescribes the policies, procedures, and authorizations for providing financial assistance to eligible business projects from the Community Development Administration, an agency in the Division of Development Finance of the Department of Housing and Community Development.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated and as defined in the Act.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(3)"> <text>“Borrower” means a recipient of any type of financial assistance from the Administration under this chapter.</text> </paragraph> <paragraph num="(4)"> <text>“Business project” means a project that is located in a priority funding area or an eligible opportunity zone and:</text> <paragraph num="(a)"> <text>Is acquired, owned, developed, constructed, reconstructed, rehabilitated, or improved by a person or an entity for the purposes of carrying on a business, whether or not for profit; or</text> </paragraph> <paragraph num="(b)"> <text>Is eligible for funding from the Neighborhood Business Development Fund under Housing and Community Development Article, §6-310, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>Development Costs.</text> <paragraph num="(a)"> <text>“Development costs” means the costs incurred in acquiring, developing, operating, and expanding a business that the Department considers reasonable and necessary for the project.</text> </paragraph> <paragraph num="(b)"> <text>“Development costs” includes the costs for:</text> <paragraph num="(i)"> <text>Acquisition of land, equipment, and machinery;</text> </paragraph> <paragraph num="(ii)"> <text>Operating costs;</text> </paragraph> <paragraph num="(iii)"> <text>Necessary studies, surveys, plans, and specifications;</text> </paragraph> <paragraph num="(iv)"> <text>Architectural, engineering, or special services;</text> </paragraph> <paragraph num="(v)"> <text>Site preparation and development;</text> </paragraph> <paragraph num="(vi)"> <text>Labor and materials for construction;</text> </paragraph> <paragraph num="(vii)"> <text>Fees and closing costs incurred in connection with financing the project;</text> </paragraph> <paragraph num="(viii)"> <text>Indemnity and surety bonds;</text> </paragraph> <paragraph num="(ix)"> <text>Premiums on insurance; and</text> </paragraph> <paragraph num="(x)"> <text>Other costs the Administration deems reasonable and necessary.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Eligible opportunity zone” means an area designated as a qualified opportunity zone under §1400 Z-1 of the Internal Revenue Code that is located in Allegany County, Garrett County, Somerset County, or Wicomico County.</text> </paragraph> <paragraph num="(8)"> <text>Financial Assistance.</text> <paragraph num="(a)"> <text>“Financial assistance” means any form of assurance, guarantee, grant, payment, loan, loan participation, loan insurance, credit enhancement, or other assistance.</text> </paragraph> <paragraph num="(b)"> <text>“Financial assistance” includes a reduction in the principal obligation of, or in the rate of interest payable on, a loan or portion of a loan.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Nonprofit organization” means a corporation, foundation, or other entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of any private shareholder or individual holding any interest in the entity.</text> </paragraph> <paragraph num="(10)"> <text>“Priority funding area” means an area designated as a priority funding area under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Program” means the business lending program within the Administration.</text> </paragraph> <paragraph num="(12)"> <text>“Project” means a business project.</text> </paragraph> <paragraph num="(13)"> <text>“Secretary” means the Secretary of Housing and Community Development of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Applicants."> <text>To qualify as an eligible recipient of financial assistance, an applicant shall:</text> <paragraph num="A."> <text>If a nonprofit organization, corporation, or partnership, be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="B."> <text>Have the legal capacity and all necessary authorization to incur the obligations of the financial assistance;</text> </paragraph> <paragraph num="C."> <text>Own the project or have a valid contract to purchase or lease the project;</text> </paragraph> <paragraph num="D."> <text>Demonstrate credit worthiness and repayment ability acceptable to the Department; and</text> </paragraph> <paragraph num="E."> <text>Demonstrate the ability to complete and operate the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Projects."> <text>To be eligible for financial assistance, business projects shall be:</text> <paragraph num="A."> <text>Properly zoned for the proposed use;</text> </paragraph> <paragraph num="B."> <text>If involving construction or renovation, rehabilitated, constructed, and operated in accordance with the applicable federal, State, and local building, zoning, environmental, health, and safety standards; and</text> </paragraph> <paragraph num="C."> <text>Licensed and registered as applicable.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="General Requirements."> <paragraph num="A."> <text>Financial assistance may be used for the development costs of a business project.</text> </paragraph> <paragraph num="B."> <text>The Administration shall establish interest rates and fees for the financial assistance based on the underwriting of each project.</text> </paragraph> <paragraph num="C."> <text>Terms for repayment of principal and interest shall be established based on the underwriting for each project.</text> </paragraph> <paragraph num="D."> <text>A loan shall be evidenced by a promissory note and secured by deed of trust or other security agreement in the form acceptable to the Administration.</text> </paragraph> <paragraph num="E."> <text>Financial assistance shall be disbursed in accordance with a draw schedule approved by the Administration, which may include releasing funds upon successful inspections.</text> </paragraph> <paragraph num="F."> <text>Borrowers shall pay any servicing fees, loan insurance premiums, bond insurance premiums, late charges, or other fees that the Administration or the loan insurer may require and that are permitted by State law.</text> </paragraph> <paragraph num="G."> <text>Escrow Accounts. The Administration may require the borrower to make monthly deposits with the Administration for real estate taxes, insurance, mortgage insurance premiums, a reserve for replacements, and other expenses of the project.</text> </paragraph> <paragraph num="H."> <text>Appraisal. Borrowers may be required to provide or pay for an appraisal performed by an appraiser acceptable to the Administration which shows the current value of the property and the expected value of the property after completion of the improvements.</text> </paragraph> <paragraph num="I."> <text>The Administration may require certified financial statements for all partners, corporate borrowers, or any other individuals or entities having an interest in the project, in a form acceptable to the Administration.</text> </paragraph> <paragraph num="J."> <text>The recipient of financial assistance shall agree not to sell, cease to own, assign, transfer, or dispose of all or any part of the business project or their interest in it, without the prior written consent of the Administration.</text> </paragraph> <paragraph num="K."> <text>Taxes and assessments against the property which are due and payable shall be paid at or before closing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Liability and Other Insurance."> <paragraph num="A."> <text>The borrower shall maintain property, fire, and extended coverage insurance on the real and personal property comprising a project both during and after construction.</text> </paragraph> <paragraph num="B."> <text>If the project is located on real property in the 100-year flood plain, as designated by the United States Administration of Housing and Urban Development, the project shall be covered by a flood plain insurance policy.</text> </paragraph> <paragraph num="C."> <text>For all secured loans, the borrower shall provide a standard American Land Title Association (ALTA) Loan policy or other form of title policy approved by the Administration.</text> </paragraph> <paragraph num="D."> <text>The Administration may require the borrower to obtain any of the following types of insurance, depending on the size of the project and risks to the Administration:</text> <paragraph num="(1)"> <text>Owner's liability;</text> </paragraph> <paragraph num="(2)"> <text>Owner's property or hazard or contractor's builder's risk;</text> </paragraph> <paragraph num="(3)"> <text>Contractor's liability;</text> </paragraph> <paragraph num="(4)"> <text>Architect's errors and omissions; and</text> </paragraph> <paragraph num="(5)"> <text>Engineer's errors and omissions.</text> </paragraph> </paragraph> <paragraph num="E."> <text>All insurance required under this regulation shall meet the following requirements:</text> <paragraph num="(1)"> <text>Be written by a company registered with the Maryland Insurance Administration;</text> </paragraph> <paragraph num="(2)"> <text>Name the Administration as an additional insured;</text> </paragraph> <paragraph num="(3)"> <text>Be in force at the time of closing;</text> </paragraph> <paragraph num="(4)"> <text>Not be terminable without prior notification to the Administration;</text> </paragraph> <paragraph num="(5)"> <text>Be in force for the duration of the financial assistance; and</text> </paragraph> <paragraph num="(6)"> <text>Contain such other terms and coverage satisfactory to the Administration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Additional Requirements."> <paragraph num="A."> <text>In addition to a promissory note and security agreement, the Administration may require the borrower to execute or provide additional loan documents, which may include any of the following:</text> <paragraph num="(1)"> <text>A loan agreement;</text> </paragraph> <paragraph num="(2)"> <text>An agreement and declaration of covenants and restrictions;</text> </paragraph> <paragraph num="(3)"> <text>A disbursement agreement;</text> </paragraph> <paragraph num="(4)"> <text>A guaranty of completion or loan payments;</text> </paragraph> <paragraph num="(5)"> <text>A completion assurance agreement;</text> </paragraph> <paragraph num="(6)"> <text>An assignment of the construction contract;</text> </paragraph> <paragraph num="(7)"> <text>An opinion of borrower's counsel;</text> </paragraph> <paragraph num="(8)"> <text>An opinion of contractor's counsel;</text> </paragraph> <paragraph num="(9)"> <text>A contractor's letter and certification;</text> </paragraph> <paragraph num="(10)"> <text>An assurance of compliance with civil rights requirements;</text> </paragraph> <paragraph num="(11)"> <text>A fair practices certification; and</text> </paragraph> <paragraph num="(12)"> <text>Such other documents as the Administration may find it desirable or necessary to require.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Administration, at its sole discretion, may require additional security or collateral from the borrower to assure completion of the construction of the project or repayment of the loan.</text> </paragraph> <paragraph num="C."> <text>The collateral may be in the form of one or more of the following:</text> <paragraph num="(1)"> <text>A cash escrow;</text> </paragraph> <paragraph num="(2)"> <text>A letter of credit in an amount and form and from a financial institution acceptable to the Administration;</text> </paragraph> <paragraph num="(3)"> <text>Depository accounts pledged to the Administration;</text> </paragraph> <paragraph num="(4)"> <text>Performance and payment bonds from a surety acceptable to the Administration;</text> </paragraph> <paragraph num="(5)"> <text>A completion assurance agreement executed by the borrower and backed by some form of monetary collateral;</text> </paragraph> <paragraph num="(6)"> <text>A guaranty of completion or loan payments, or both, executed by a third party who is financially able and willing to back the guarantee by some collateral acceptable to the Administration;</text> </paragraph> <paragraph num="(7)"> <text>A pledge of the developer's fee; or</text> </paragraph> <paragraph num="(8)"> <text>Other collateral acceptable to the Administration.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Credit Enhancement.</text> <paragraph num="(1)"> <text>After consideration of underwriting and the requirements of any bond issuance, the Administration shall determine and notify the borrower whether the borrower will be required to insure or guarantee the proposed loan, or otherwise insure or enhance the bonds financing the loan.</text> </paragraph> <paragraph num="(2)"> <text>If required by the Administration, the borrower shall engage a credit enhancer and secure a commitment to insure or guarantee the proposed loan, or otherwise insure or enhance any bonds financing the loan.</text> </paragraph> <paragraph num="(3)"> <text>The borrower shall comply with any conditions of the insurance or guarantee commitment so that the insurance or guarantee will be in effect from the time of loan closing, with respect to loan insurance, or from the time of the issuance of the bonds, with respect to bond insurance.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Disclosure.</text> <paragraph num="(1)"> <text>All directors, officers, principals, members, general partners, and limited partners of the borrower shall be identified, and the proportionate share of each in the proposed project so indicated in the application.</text> </paragraph> <paragraph num="(2)"> <text>Subsequent changes in either a general partner, a limited partner having more than a 25 percent interest in the borrower, a managing member, or member owning more than a 20 percent interest in the borrower shall be subject to the written approval of the Administration.</text> </paragraph> <paragraph num="(3)"> <text>The borrower is responsible for providing any disclosure required by the Administration or any credit enhancer relating to the project, the borrower, the syndication, and the construction team.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Applications and Processing."> <paragraph num="A."> <text>An application for financial assistance shall be submitted to the Department and shall be made upon standard forms prescribed by the Department.</text> </paragraph> <paragraph num="B."> <text>Each application shall:</text> <paragraph num="(1)"> <text>Be submitted by an eligible applicant as described in Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Contain the applicant's organizational documents, including, as applicable, its articles of incorporation, bylaws, articles of organization, operating agreement, certificate of partnership, partnership agreement, or joint venture agreement;</text> </paragraph> <paragraph num="(3)"> <text>Contain a description of the project;</text> </paragraph> <paragraph num="(4)"> <text>Contain a description of all sources of funding the applicant has obtained for the project;</text> </paragraph> <paragraph num="(5)"> <text>Contain sufficient information to determine that the:</text> <paragraph num="(a)"> <text>Project is located in a priority funding area;</text> </paragraph> <paragraph num="(b)"> <text>Project is eligible in accordance with Regulation .04 of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>Terms and requirements of financial assistance as set forth in Regulation .05 of this chapter can be met; and</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Contain the following additional information:</text> <paragraph num="(a)"> <text>The estimated number and types of jobs to be created or retained by the project;</text> </paragraph> <paragraph num="(b)"> <text>The amount, size, and types of space to be created or retained;</text> </paragraph> <paragraph num="(c)"> <text>The cost of the project;</text> </paragraph> <paragraph num="(d)"> <text>A project budget identifying all sources and uses of funds;</text> </paragraph> <paragraph num="(e)"> <text>A pro forma showing anticipated project revenue, expenses, and debt service and other indebtedness of the project;</text> </paragraph> <paragraph num="(f)"> <text>Identification of the revenues which can be used to repay the financial assistance provided by the Administration; and</text> </paragraph> <paragraph num="(g)"> <text>Other information as the Administration may request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Application Evaluation.</text> <paragraph num="(1)"> <text>Each application submitted shall be reviewed by the Administration to determine whether all of the information required is contained in the application.</text> </paragraph> <paragraph num="(2)"> <text>Upon submission of all required information, the Administration shall undertake an analysis of each application and make a recommendation to the Secretary as to whether, in accordance with this section, a project is eligible for financial assistance, the amount of financial assistance, and any special terms and conditions for a project.</text> </paragraph> <paragraph num="(3)"> <text>The Administration may take the information set forth in an application and the following factors into consideration in recommending an award of financial assistance:</text> <paragraph num="(a)"> <text>The ratio of Program and other State funds to both private and other non-State public funds;</text> </paragraph> <paragraph num="(b)"> <text>The relationship of a project to area revitalization plans, efforts, and strategies;</text> </paragraph> <paragraph num="(c)"> <text>The capability of an applicant to administer a project;</text> </paragraph> <paragraph num="(d)"> <text>The potential of the business to serve the needs of the priority funding area in which it is situated; and</text> </paragraph> <paragraph num="(e)"> <text>Other factors which the Administration determines are desirable in fostering commercial and economic revitalization within a local jurisdiction.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Approval of Applications.</text> <paragraph num="(1)"> <text>The Administration shall evaluate each application for financial assistance. If the Administration recommends approval of a project for financial assistance, the Administration shall present the project to the Secretary. The Secretary shall approve, disapprove, or approve with modifications all financial assistance to be provided under the Program.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department and Administration the authority to recommend approval, approve, disapprove, or approve with modifications financial assistance provided under the Program.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Rejection of Applications. If the Administration does not recommend approval of a project for financial assistance, the Administration shall issue a written notice of rejection with an evaluation and explanation for rejection.</text> </paragraph> <paragraph num="F."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request reconsideration of a rejection by submitting a written request, to the Secretary, which is received within 30 days following the date of the rejection notice. The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant's request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration.</text> </paragraph> <paragraph num="(2)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a rejection under the Program.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Closing. The closing of an award of financial assistance shall be scheduled at a time acceptable to the Department and the Office of the Attorney General.</text> </paragraph> <paragraph num="H."> <text>Disbursement of Financial Assistance. Financial assistance may be disbursed in accordance with the terms and conditions set forth in the financial assistance documents.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Books and Accounts."> <paragraph num="A."> <text>Applicants, contractors, and subcontractors shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>All of the books, accounts, and records under §A of this regulation shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the contractor and the applicant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Program Administration."> <paragraph num="A."> <text>The Administration may establish from time to time detailed Program guidelines containing underwriting standards, processing requirements, and other requirements or matters relating to providing financial assistance.</text> </paragraph> <paragraph num="B."> <text>The Department may charge and collect from an applicant or recipient of financial assistance under this title:</text> <paragraph num="(1)"> <text>Origination, application, and processing fees; and</text> </paragraph> <paragraph num="(2)"> <text>Any other charges, fees, or reimbursements incidental to a project application or providing financial assistance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Department shall ensure that Program guidelines, fee information, and application forms are publically available on its website and at its offices.</text> </paragraph> <paragraph num="D."> <text>The Administration may:</text> <paragraph num="(1)"> <text>Sell, assign, or otherwise dispose of all or a portion of any Program loan or revenue from a loan on terms and conditions acceptable to the Administration; and</text> </paragraph> <paragraph num="(2)"> <text>Pledge a program loan as security for any:</text> <paragraph num="(a)"> <text>Business project loan, bond, or security that is issued, made, or purchased by Administration under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>Insurance, guaranty, or credit enhancement on a program loan or bond issued to fund a program loan.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Nondiscrimination and Drug-Free and Alcohol-Free Workplace."> <paragraph num="A."> <text>An applicant or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the Program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>An applicant or contractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug-free and alcohol-free workplaces, including:</text> <paragraph num="(1)"> <text>Title VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order;</text> </paragraph> <paragraph num="(6)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Administration and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Waiver."> <text>The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="False Statements."> <text>An applicant or recipient of financial assistance who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by the Act.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-111 and 3-206 and Title 4, Subtitle 2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 16, 2020 (47:14 Md. R. 674)</annotation> </annotations> </chapter> </subtitle> <subtitle num="14" heading="Neighborhood and Community Assistance Program"> <chapter num="01" heading="Community Investment Tax Credit Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter prescribes the policies, procedures, and authorizations for allocating tax credits to business entities and individuals that contribute to approved projects of nonprofit organizations that provide services to priority funding areas.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Purpose and Objectives."> <paragraph num="A."> <text>The purpose of the Program is to improve the well-being of people and the health of communities in priority funding areas by strengthening the ability of nonprofit organizations serving those areas to build partnerships with private sector businesses.</text> </paragraph> <paragraph num="B."> <text>The objectives of the Program are to:</text> <paragraph num="(1)"> <text>Assist nonprofit organizations in carrying out approved projects to improve the welfare, health, and economic conditions in priority funding areas;</text> </paragraph> <paragraph num="(2)"> <text>Encourage businesses and individuals to invest in priority funding areas; and</text> </paragraph> <paragraph num="(3)"> <text>Strengthen public/private partnerships.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>In this chapter, the following terms have the meanings indicated and as defined in the Act.</text> </paragraph> <paragraph num="(2)"> <text>Any terms also appearing in the Internal Revenue Code have the meanings defined there as well.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means the Neighborhood and Community Assistance Program established in Housing and Community Development Article, Title 6, Subtitle 4, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Approved project” means a project approved by the Department in accordance with Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Business entity” means a person that:</text> <paragraph num="(a)"> <text>Conducts or operates a trade or business in the State; and</text> </paragraph> <paragraph num="(b)"> <text>Is subject to the:</text> <paragraph num="(i)"> <text>State income tax on individuals or corporations,</text> </paragraph> <paragraph num="(ii)"> <text>Financial institution franchise tax,</text> </paragraph> <paragraph num="(iii)"> <text>Public service company franchise tax, or</text> </paragraph> <paragraph num="(iv)"> <text>Insurance premiums tax.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Contribution” means a donation by a business entity or an individual of money, goods, or real property of at least $500 in value to an approved project.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>“Designated neighborhood conservation area ”means a geographically defined area that has been designated a neighborhood conservation area under COMAR 05.17.03.</text> </paragraph> <paragraph num="(6-1)"> <text>“Individual” has the meaning stated in Tax-General Article, §10-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Individual of limited income” means an individual whose income does not exceed the upper income limits established by the Secretary under Housing and Community Development Article, §4-212, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Internal Revenue Code” means the federal Internal Revenue Code of 1986 and the regulations promulgated under it.</text> </paragraph> <paragraph num="(9)"> <text>“Nonprofit organization” means a not-for-profit corporation, foundation, or other legal entity that is exempt from federal income tax under §501(c)(3) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(10)"> <text>“Program” means the Community Investment Tax Credit Program.</text> </paragraph> <paragraph num="(11)"> <text>“Priority funding area” has the meaning stated in State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Redevelopment assistance” means the expenditure of funds by nonprofit organizations for labor and materials used directly in the physical improvements of any part or all of a priority funding area.</text> </paragraph> <paragraph num="(13)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(14)"> <text>“State fiscal year” means July 1 through June 30.</text> </paragraph> <paragraph num="(15)"> <text>“Sustainable community” means the part of a priority funding area that:</text> <paragraph num="(a)"> <text>Has been designated as a sustainable community in accordance with COMAR 05.17.02;</text> </paragraph> <paragraph num="(b)"> <text>Has been designated as a BRAC Revitalization and Incentive Zone under Economic Development Article, Title 5, Subtitle 13, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>Has been designated as a transit-oriented development under Transportation Article, §7-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligibility Standards for Approved Projects."> <paragraph num="A."> <text>A project shall be submitted for approval by a nonprofit organization.</text> </paragraph> <paragraph num="B."> <text>In order to be eligible for approval under the Program, the project shall satisfy the following requirements:</text> <paragraph num="(1)"> <text>The project shall provide services to a priority funding area;</text> </paragraph> <paragraph num="(2)"> <text>The project shall provide services including:</text> <paragraph num="(a)"> <text>Community services, such as child care, recreational services, and economic development services,</text> </paragraph> <paragraph num="(b)"> <text>Redevelopment assistance,</text> </paragraph> <paragraph num="(c)"> <text>Job training for individuals of limited income and related job placement services,</text> </paragraph> <paragraph num="(d)"> <text>Education,</text> </paragraph> <paragraph num="(e)"> <text>Crime prevention, or</text> </paragraph> <paragraph num="(f)"> <text>Other services approved by the Program; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The project shall have the written approval of the governing body of each:</text> <paragraph num="(a)"> <text>County in which the priority funding area benefited by the project is located, and</text> </paragraph> <paragraph num="(b)"> <text>Municipal corporation in which the priority funding area benefited by the project is located.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Project Proposals and Processing."> <paragraph num="A."> <text>Number of Proposals. A nonprofit organization may submit only one project proposal in any State fiscal year.</text> </paragraph> <paragraph num="B."> <text>Forms and Documentation. A project proposal shall be made on standard forms provided by the Program and shall include:</text> <paragraph num="(1)"> <text>The name and a description of the project to be conducted, and the amount of the tax credit allocation requested;</text> </paragraph> <paragraph num="(2)"> <text>A description of the problem to be addressed by the project and who will benefit from the project;</text> </paragraph> <paragraph num="(3)"> <text>A description of the project goals and the measurable objectives;</text> </paragraph> <paragraph num="(4)"> <text>The priority funding area benefited by the project, together with a statement whether the priority funding area includes, in whole or in part, a sustainable community or a designated neighborhood conservation area;</text> </paragraph> <paragraph num="(5)"> <text>A description of the experience and capabilities of the nonprofit organization and its key staff members:</text> <paragraph num="(a)"> <text>In carrying out similar projects, and</text> </paragraph> <paragraph num="(b)"> <text>In general;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The proposed budget for the project;</text> </paragraph> <paragraph num="(7)"> <text>A description of the plans for implementing the project;</text> </paragraph> <paragraph num="(8)"> <text>A copy of the following organizational documentation for the nonprofit organization:</text> <paragraph num="(a)"> <text>The letter from the Internal Revenue Service granting tax-exempt status under §501(c)(3) of the Internal Revenue Code,</text> </paragraph> <paragraph num="(b)"> <text>Articles of incorporation,</text> </paragraph> <paragraph num="(c)"> <text>Bylaws, and</text> </paragraph> <paragraph num="(d)"> <text>A corporate resolution authorizing submission of the application and designating the person or persons authorized to sign documents in connection with the approval of the project, allocation of tax credits, and certification for contributions;</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>As required by the Program, financial statements, annual operating budget, list of major contributors, and current and anticipated funding sources;</text> </paragraph> <paragraph num="(10)"> <text>Written approval for the project of the governing body of each:</text> <paragraph num="(a)"> <text>County in which the priority funding area benefited by the project is located; and</text> </paragraph> <paragraph num="(b)"> <text>Municipal corporation in which the priority funding area benefited by the project is located; and</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>Any other information considered necessary by the Program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Timing. Applications shall be made in accordance with application and competition cycles publicized to nonprofit organizations, local governments, and other interested persons by direct mailing, press release, or other methods selected by the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Project Review and Selection Procedures."> <paragraph num="A."> <text>Threshold Requirements. Each project shall meet the following threshold requirements:</text> <paragraph num="(1)"> <text>The application shall be complete, providing all of the items and information required in Regulations .04 and .05 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The service or services proposed shall be consistent with the Program purpose and eligible under this chapter and any guidelines issued by the Program;</text> </paragraph> <paragraph num="(3)"> <text>The application shall identify the priority funding area in which the project will operate; and</text> </paragraph> <paragraph num="(4)"> <text>If the applicant was awarded an allocation of tax credits for a project during a previous State fiscal year, the applicant shall, in the discretion of the Program, have made substantial progress toward utilizing its previous award of tax credits and satisfying all other Program requirements for the previous project.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Additional Project Review. In approving or disapproving a proposal, and in determining the maximum amount of contributions to an approved project that will be eligible for the Program tax credits, the Department shall consider:</text> <paragraph num="(1)"> <text>The need for the project in relation to the need for other projects proposed;</text> </paragraph> <paragraph num="(2)"> <text>The anticipated benefit to the priority funding area and the anticipated effect on the problem to be addressed;</text> </paragraph> <paragraph num="(3)"> <text>The ability of the applicant to complete the project in a timely and cost-effective manner;</text> </paragraph> <paragraph num="(4)"> <text>The capacity of the applicant to raise funds for the project, which may include any commitment from a business entity or an individual to make a contribution to the project;</text> </paragraph> <paragraph num="(5)"> <text>The readiness of the applicant to proceed with the project;</text> </paragraph> <paragraph num="(6)"> <text>Geographic distribution of projects;</text> </paragraph> <paragraph num="(7)"> <text>Proposed involvement of local residents or businesses, or both, in the planning or implementation, or both, of the project;</text> </paragraph> <paragraph num="(8)"> <text>Feasibility of the project, financially, in terms of staffing, and in other respects as determined by the Program; and</text> </paragraph> <paragraph num="(9)"> <text>Any other relevant factors.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In reviewing applications, the Program may request data and assistance from other units of State government.</text> </paragraph> <paragraph num="D."> <text>Minimum and Maximum Amounts of Tax Credits.</text> <paragraph num="(1)"> <text>The Program may set guidelines for minimum and maximum amounts of tax credits per project for each round of applications.</text> </paragraph> <paragraph num="(2)"> <text>The sum of contributions eligible for tax credits for all projects approved for each State fiscal year may not exceed $3,500,000.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Time Period for Using Tax Credits Allocated to a Project.</text> <paragraph num="(1)"> <text>The Program may establish a deadline for receiving contributions eligible for tax credits.</text> </paragraph> <paragraph num="(2)"> <text>If, by the Program deadline, the nonprofit organization has not received the maximum amount of contributions for the tax credits allocated to the project, then the remaining tax credits may be used in the discretion of the Secretary:</text> <paragraph num="(a)"> <text>By extending the deadline for that project; or</text> </paragraph> <paragraph num="(b)"> <text>For a reserve of tax credits to be allocated by the Secretary to projects approved by the Secretary, all in the Secretary's discretion, with or without review by the evaluation committee described in §F of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Selection.</text> <paragraph num="(1)"> <text>The Secretary shall designate members of the committee to evaluate project applications.</text> </paragraph> <paragraph num="(2)"> <text>The committee shall evaluate the project proposals based on the guidelines described above and make recommendations to the Secretary for project approval and allocation amounts.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary shall make all final decisions on project approval and the tax credit allocations.</text> </paragraph> <paragraph num="(4)"> <text>A decision concerning project approval and tax credit allocation is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> <paragraph num="(5)"> <text>The Secretary may delegate to the Assistant Secretary for Neighborhood Revitalization or the Deputy Secretary of the Department the authority to issue the notification letter and execute any agreement required by the Department.</text> </paragraph> <paragraph num="(6)"> <text>In approving or disapproving a proposal, and in determining the maximum amount of contributions to an approved project that will be eligible for tax credits, the Secretary may give preference to a proposal that benefits a sustainable community or a neighborhood conservation area.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Notification.</text> <paragraph num="(1)"> <text>Each nonprofit applicant shall receive notice in writing whether or not the project was approved. An approval notice also shall state the maximum amount of contributions to the approved project eligible for the tax credits under the Program.</text> </paragraph> <paragraph num="(2)"> <text>Notice of approval may be accompanied by an agreement to be entered into by the nonprofit applicant, as required by the Program.</text> </paragraph> <paragraph num="(3)"> <text>Approval is not effective until the nonprofit applicant has signed and returned the notice and any agreement required by the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Procedures for Claiming and Using Tax Credits."> <paragraph num="A."> <text>Certification of Contribution.</text> <paragraph num="(1)"> <text>In order to claim a tax credit for a contribution under the Act, the business entity or individual shall submit a request for certification through the nonprofit organization on forms provided by the Program, together with any documentation of the contribution as required by the Program.</text> </paragraph> <paragraph num="(2)"> <text>Each request for certification of a contribution shall contain:</text> <paragraph num="(a)"> <text>The name of the approved project for which the contribution was made, the project identification number, and the name of the nonprofit organization to which the contribution was made;</text> </paragraph> <paragraph num="(b)"> <text>A receipt from the nonprofit organization for the contribution; and</text> </paragraph> <paragraph num="(c)"> <text>In the case of a:</text> <paragraph num="(i)"> <text>Cash contribution, proof of the amount of the contribution;</text> </paragraph> <paragraph num="(ii)"> <text>Contribution of new goods, an invoice or receipt provided by the business entity or individual as certification of the contribution's net cost, consistent with Internal Revenue Service Publication 561;</text> </paragraph> <paragraph num="(iii)"> <text>Nonmonetary contribution not described in §A(2)(c)(ii) of this regulation, a certification by an independent and unrelated third party as to the value of the contribution consistent with Internal Revenue Service Publication 561; or</text> </paragraph> <paragraph num="(iv)"> <text>Contribution of real property, a properly executed and recorded deed, evidence that the property was conveyed free and clear of all liens and encumbrances, a recent property appraisal, and evidence that the contributed property will be used for the approved use described in the application; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Any other information considered necessary by the Program.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Notice of certification may be made by the Assistant Secretary for Neighborhood Revitalization.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Timing.</text> <paragraph num="(1)"> <text>A request for certification may not be accepted for contributions received before January 1, 1997.</text> </paragraph> <paragraph num="(2)"> <text>An initial claim for a tax credit shall be made for the taxable year in which the contribution is made.</text> </paragraph> <paragraph num="(3)"> <text>The contribution shall be received by the nonprofit organization within the deadline set by the Program.</text> </paragraph> <paragraph num="(4)"> <text>A request for certification shall be submitted by the nonprofit organization and received by the Program by the later of:</text> <paragraph num="(a)"> <text>The end of the taxable year; or</text> </paragraph> <paragraph num="(b)"> <text>1 month after the contribution is made.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Refusal to Certify Contribution. The Program may refuse a request for certification of a contribution if it determines that:</text> <paragraph num="(1)"> <text>The maximum amount of contributions eligible for Program tax credits for that project would be exceeded by the sum of:</text> <paragraph num="(a)"> <text>The amount of the proposed contribution; and</text> </paragraph> <paragraph num="(b)"> <text>The total amount of contributions previously certified for that project for the State's fiscal year;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The business entity or individual has overstated the value of any nonmonetary contribution included; or</text> </paragraph> <paragraph num="(3)"> <text>The request for certification is not made in a timely manner.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Calculating the Tax Credit.</text> <paragraph num="(1)"> <text>The tax credit allowed to a business entity or an individual shall be equal to 50 percent of the amount of the contribution that:</text> <paragraph num="(a)"> <text>Was made in the taxable year of the business entity or individual; and</text> </paragraph> <paragraph num="(b)"> <text>Has been certified by the Program.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For any taxable year, the sum of all Program tax credits, including any carryover credits, may not exceed the lesser of:</text> <paragraph num="(a)"> <text>$250,000; or</text> </paragraph> <paragraph num="(b)"> <text>The total amount of tax otherwise payable by the business entity or individual for the taxable year.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Any excess credit that would have been allowed but for the limitations of §D(2) of this regulation may be carried over and applied as a credit for succeeding taxable years until the earlier of:</text> <paragraph num="(a)"> <text>The full amount of the excess tax credit is used; or</text> </paragraph> <paragraph num="(b)"> <text>The expiration of the fifth taxable year after the taxable year in which the contribution was made.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>The same tax credit may not be applied more than once against different taxes by the same taxpayer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Taxes Against Which Tax Credits May Be Applied."> <paragraph num="A."> <text>General Description. The Program tax credits described in the Act authorizing the Program are credits against taxes:</text> <paragraph num="(1)"> <text>For certain insurance companies, under Article 48A, §634, Annotated Code of Maryland, or Insurance Article, §6-105, (effective October 1, 1997) Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>For certain financial institutions against the financial institution franchise tax, under Tax-General Article, §8-214, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>For certain public service companies against the public service franchise tax, under Tax-General Article, §8-411, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(4)"> <text>For certain corporations against income tax under Tax-General Article, §10-704.4, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(5)"> <text>For individuals against income tax under Tax-General Article, §10-704.6, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Disclaimer of Liability. The Department makes no representation, and accepts no responsibility, as to any tax or other consequences to a business entity, an individual, or any other party, arising out of the approval of a project, the allocation of credits, or the certification of a contribution.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Program Administration."> <paragraph num="A."> <text>Handbooks and Manuals. The Program may adopt a handbook containing internal guidelines related to the administration of the Program or establishing other requirements relating to the Program. The handbook shall be available for public examination at the Department's principal office. The Department, upon request, shall make copies available to the public.</text> </paragraph> <paragraph num="B."> <text>Delegation of Authority. An action or decision required to be taken or permitted to be made by the Department under the Act, or by the Secretary or the Department under these regulations, may be delegated by the Secretary.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Record Keeping and Record Retention; Semiannual Reports."> <paragraph num="A."> <text>Record Keeping. Nonprofit organizations receiving an allocation of tax credits for an approved project shall keep the following records:</text> <paragraph num="(1)"> <text>Financial records in connection with the approved project;</text> </paragraph> <paragraph num="(2)"> <text>Records in connection with contributions from business entities or individuals that claim or expect to claim tax credits; and</text> </paragraph> <paragraph num="(3)"> <text>Semiannual reports described in §C of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Record Retention. The records described in §A of this regulation shall be kept for at least 7 years from the completion of the project.</text> </paragraph> <paragraph num="C."> <text>Semiannual Reports.</text> <paragraph num="(1)"> <text>Nonprofit organizations receiving an allocation of tax credits for an approved project shall provide the Program with reports on the project on a semiannual basis.</text> </paragraph> <paragraph num="(2)"> <text>Each semiannual report shall contain the information and be in the form required by the Program.</text> </paragraph> <paragraph num="(3)"> <text>The Program may elect to change the frequency of reporting from time to time, in its discretion.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <text>In order to participate in the Program, the nonprofit organization shall comply with the following requirements:</text> <paragraph num="A."> <text>A nonprofit organization may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any nonprofit organization in connection with any project financed or assisted under the Program;</text> </paragraph> <paragraph num="B."> <text>A nonprofit organization shall comply with all applicable federal, State, and local laws, and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order;</text> </paragraph> <paragraph num="(6)"> <text>The Fair Housing Amendments Act of 1988, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements with the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="False Statements."> <paragraph num="A."> <text>A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department or in any agreement relating to the Program.</text> </paragraph> <paragraph num="B."> <text>A nonprofit organization, a business entity, or an individual that knowingly makes or causes to be made a false statement or report is subject to cancellation and withdrawal of an allocation of credits, or cancellation and withdrawal of a certification of a contribution, in addition to any other penalties authorized by law.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 6, Subtitle 4, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 13, 1997 (24:1 Md. R. 28)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective May 13, 2002 (29:9 Md. R. 744); January 1, 2010 (36:21 Md. R. 1590)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective May 13, 2002 (29:9 Md. R. 744)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 1, 2010 (36:21 Md. R. 1590)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective September 17, 2001 (28:18 Md. R. 1619); May 13, 2002 (29:9 Md. R. 744); December 20, 2004 (31:25 Md. R. 1790); January 1, 2007 (33:26 Md. R. 1995); January 1, 2010 (36:21 Md. R. 1590); September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective May 13, 2002 (29:9 Md. R. 744); December 20, 2004 (31:25 Md. R. 1790)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective May 13, 2002 (29:9 Md. R. 744); December 20, 2004 (31:25 Md. R. 1790); September 11, 2006 (33:18 Md. R. 1505); September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective September 17, 2001 (28:18 Md. R. 1619); May 13, 2002 (29:9 Md. R. 744); September 11, 2006 (33:18 Md. R. 1505)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective May 13, 2002 (29:9 Md. R. 744); January 1, 2010 (36:21 Md. R. 1590)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06F amended effective May 13, 2002 (29:9 Md. R. 744); September 1, 2014 (41:17 Md. R. 970)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective January 1, 2010 (36:21 Md. R. 1590)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective September 17, 2001 (28:18 Md. R. 1619); January 1, 2007 (33:26 Md. R. 1995)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective January 1, 2007 (33:26 Md. R. 1995)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective January 1, 2010 (36:21 Md. R. 1590)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective September 11, 2006 (33:18 Md. R. 1505)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective January 1, 2010 (36:21 Md. R. 1590)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13B amended effective January 1, 2010 (36:21 Md. R. 1590)</annotation> </annotations> </chapter> <chapter num="02" heading="Endow Maryland"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter prescribes the policies, procedures, and authorizations for allocating tax credits to taxpayers that donate to qualified permanent endowment funds of eligible community foundations for the benefit of charitable causes in the State of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>In this chapter, the following terms have the meanings indicated and as defined in the Act.</text> </paragraph> <paragraph num="(2)"> <text>Any terms also appearing in the Internal Revenue Code have the meanings defined there as well.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means the Tax-General Article, Title 10, Subtitle 7, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(3)"> <text>“Donation” means a donation by a taxpayer of money or publicly traded securities of at least $500 in value to a qualified permanent endowment fund.</text> </paragraph> <paragraph num="(4)"> <text>“Eligible community foundation” means an organization that:</text> <paragraph num="(a)"> <text>Is exempt from taxation under §501(c)(3) of the Internal Revenue Code;</text> </paragraph> <paragraph num="(b)"> <text>Is commonly known as a community trust, fund, endowment, or foundation or by another similar name that conveys the concept of a capital or endowment fund to support charitable activities in the community or area that it serves;</text> </paragraph> <paragraph num="(c)"> <text>Satisfies the public support test of §170(b)(1)(a)(vi) of the Internal Revenue Code and regulations adopted under that section; and</text> </paragraph> <paragraph num="(d)"> <text>Is in compliance with national standards for United States community foundations established by the Community Foundations National Standards Board within the Council on Foundations.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Internal Revenue Code” means the federal Internal Revenue Code of 1986 and the regulations promulgated under it.</text> </paragraph> <paragraph num="(6)"> <text>“Qualified permanent endowment fund” means a fund that:</text> <paragraph num="(a)"> <text>Is held in perpetuity by an eligible community foundation;</text> </paragraph> <paragraph num="(b)"> <text>Is used for the benefit of charitable causes in the State; and</text> </paragraph> <paragraph num="(c)"> <text>Has an annual spending rate of 5 percent or less calculated using at least a 12-quarter trailing average of the total amount of the fund.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Redevelopment assistance” means the expenditure of funds by community foundations for labor and materials used directly in physical improvements.</text> </paragraph> <paragraph num="(8)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(9)"> <text>“State fiscal year” means July 1 through June 30.</text> </paragraph> <paragraph num="(10)"> <text>“Taxpayer” means a business entity or individual that is subject to the State income tax on individuals or corporations.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligibility Standards for Approved Qualified Permanent Endowment Funds."> <paragraph num="A."> <text>Qualified permanent endowment funds shall be submitted for approval by an eligible community foundation.</text> </paragraph> <paragraph num="B."> <text>In order to be eligible for approval, a qualified permanent endowment fund shall satisfy the following requirements:</text> <paragraph num="(1)"> <text>The qualified permanent endowment fund shall be held in perpetuity by an eligible community foundation;</text> </paragraph> <paragraph num="(2)"> <text>The qualified permanent endowment fund shall be used for the benefit of charitable causes in the State, including:</text> <paragraph num="(a)"> <text>Community services, such as child care, recreational services, and economic development services;</text> </paragraph> <paragraph num="(b)"> <text>Redevelopment assistance;</text> </paragraph> <paragraph num="(c)"> <text>Job training for individuals of limited income and related job placement services;</text> </paragraph> <paragraph num="(d)"> <text>Education;</text> </paragraph> <paragraph num="(e)"> <text>Crime prevention; or</text> </paragraph> <paragraph num="(f)"> <text>Other services approved by the Act and the Department; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The qualified permanent endowment fund shall have an annual spending rate of 5 percent or less calculated using at least a 12-quarter trailing average of the total amount of the fund.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Qualified Permanent Endowment Fund Proposals and Processing."> <paragraph num="A."> <text>Number of Proposals. A community foundation may propose more than one qualified permanent endowment fund in any State fiscal year.</text> </paragraph> <paragraph num="B."> <text>Forms and Documentation. A proposal shall be made on standard forms provided by the Department and shall include, for each proposed qualified permanent endowment fund:</text> <paragraph num="(1)"> <text>The name and a description of the qualified permanent endowment fund;</text> </paragraph> <paragraph num="(2)"> <text>A description of the problem to be addressed by the qualified permanent endowment fund and who will benefit from the qualified permanent endowment fund;</text> </paragraph> <paragraph num="(3)"> <text>A description of the qualified permanent endowment fund goals and the measurable objectives;</text> </paragraph> <paragraph num="(4)"> <text>The geographic area benefited by the qualified permanent endowment fund, together with a statement of whether the geographic area includes, in whole or in part, a designated neighborhood conservation area;</text> </paragraph> <paragraph num="(5)"> <text>A copy of the following organizational documentation for the qualified permanent endowment fund:</text> <paragraph num="(a)"> <text>The letter from the Internal Revenue Service granting tax-exempt status under §501(c)(3) of the Internal Revenue Code;</text> </paragraph> <paragraph num="(b)"> <text>Articles of incorporation or articles of organization;</text> </paragraph> <paragraph num="(c)"> <text>Bylaws or operating agreement; and</text> </paragraph> <paragraph num="(d)"> <text>A corporate resolution authorizing submission of the proposal and designating the person or persons authorized to sign documents in connection with the approval of the allocation of tax credits and certification for donations;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>As required by the Department, financial statements, annual operating budget, list of major contributors, and current and anticipated funding sources; and</text> </paragraph> <paragraph num="(7)"> <text>Any other information considered necessary by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Procedures for Claiming and Using Tax Credits."> <paragraph num="A."> <text>Requests for Certification of Donation.</text> <paragraph num="(1)"> <text>In order to claim a tax credit for a donation under the Act, the taxpayer shall submit a request for certification through the community foundation on forms provided by the Department, together with any documentation of the donation as required by the Department.</text> </paragraph> <paragraph num="(2)"> <text>Each request for certification of a donation shall contain:</text> <paragraph num="(a)"> <text>The name of the taxpayer;</text> </paragraph> <paragraph num="(b)"> <text>The community foundation to which the donation will be made;</text> </paragraph> <paragraph num="(c)"> <text>The community foundation identification number;</text> </paragraph> <paragraph num="(d)"> <text>The qualified permanent endowment fund to which the donation will be made; and</text> </paragraph> <paragraph num="(e)"> <text>The amount of the donation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Approval of Certification of Donation.</text> <paragraph num="(1)"> <text>The Department shall:</text> <paragraph num="(a)"> <text>Approve all applications that qualify for a tax credit certificate under this section on a first-come, first-served basis and in a timely manner; and</text> </paragraph> <paragraph num="(b)"> <text>Reserve for each taxable year at least 10 percent of the available credits for donations of $30,000 or less.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Within 30 days of the approval of a proposed donation:</text> <paragraph num="(a)"> <text>The taxpayer shall submit to the Department a receipt from the community foundation for the donation;</text> </paragraph> <paragraph num="(b)"> <text>In the case of:</text> <paragraph num="(i)"> <text>A cash donation, proof of the amount of the donation; or</text> </paragraph> <paragraph num="(ii)"> <text>Publicly marketed securities, a certification by an independent and unrelated third party as to the value of the donation consistent with Internal Revenue Service Publication 561; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Any other information considered necessary by the Department.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Notice of certification may be made by the Assistant Secretary for Neighborhood Revitalization.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Timing.</text> <paragraph num="(1)"> <text>A request for certification may not be accepted for donations received before January 1, 2015.</text> </paragraph> <paragraph num="(2)"> <text>An initial claim for a tax credit shall be made for the taxable year in which the donation is made.</text> </paragraph> <paragraph num="(3)"> <text>The donation shall be received by the community foundation within the deadline set by the Department.</text> </paragraph> <paragraph num="(4)"> <text>A request for certification shall be submitted by the community foundation and received by the Department by the later of:</text> <paragraph num="(a)"> <text>The end of the taxable year; or</text> </paragraph> <paragraph num="(b)"> <text>One month after the donation is made.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Refusal to Certify Donation. The Department may refuse a request for certification of a donation if it determines that:</text> <paragraph num="(1)"> <text>The maximum amount of donations eligible for tax credits for a qualified permanent endowment fund would be exceeded by the sum of:</text> <paragraph num="(a)"> <text>The amount of the proposed donation; and</text> </paragraph> <paragraph num="(b)"> <text>The total amount of donations previously certified as eligible for tax credits for the State's fiscal year;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The taxpayer has overstated the value of any publicly traded securities included;</text> </paragraph> <paragraph num="(3)"> <text>The request for certification is not made in a timely manner; or</text> </paragraph> <paragraph num="(4)"> <text>The request for certification does not comply with the Act or the Department’s policies and procedures regarding the tax credits.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Calculating the Tax Credit.</text> <paragraph num="(1)"> <text>The tax credit allowed to a taxpayer shall be equal to 25 percent of the amount of the donation that:</text> <paragraph num="(a)"> <text>Was made in the taxable year of the taxpayer; and</text> </paragraph> <paragraph num="(b)"> <text>Has been certified by the Department.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For any taxable year, the sum of all tax credits for any taxpayer, including any carryover credits, may not exceed the lesser of:</text> <paragraph num="(a)"> <text>$50,000; or</text> </paragraph> <paragraph num="(b)"> <text>The total amount of tax otherwise payable by the taxpayer for the taxable year.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Any excess credit that would have been allowed but for the limitations of §D(2) of this regulation may be carried over and applied as a credit for succeeding taxable years until the earlier of:</text> <paragraph num="(a)"> <text>The full amount of the excess tax credit is used; or</text> </paragraph> <paragraph num="(b)"> <text>The expiration of the fifth taxable year after the taxable year in which the donation was made.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>The same tax credit may not be applied more than once against different taxes by the same taxpayer.</text> </paragraph> <paragraph num="G."> <text>The sum of donations eligible for tax credits for all qualified permanent endowment funds approved for each State fiscal year may not exceed $250,000.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Taxes Against Which Tax Credits May Be Applied."> <paragraph num="A."> <text>General Description. The tax credits described in the Act are credits against State income taxes under Tax-General Article, §10-704.4, Annotated Code of Maryland, for business entities and under Tax-General Article, §10-704.6, Annotated Code of Maryland, for individuals.</text> </paragraph> <paragraph num="B."> <text>Disclaimer of Liability. The Department makes no representation, and accepts no responsibility, as to any tax or other consequences to a taxpayer or any other party, arising out of the approval of a qualified permanent endowment fund, the allocation of credits, or the certification of a donation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Administration."> <paragraph num="A."> <text>Handbooks and Manuals. The Department may adopt a handbook containing internal guidelines related to the administration of the Act or establishing other requirements relating to the Act.</text> </paragraph> <paragraph num="B."> <text>The Department shall ensure that the application forms are publically available on its website and at its offices.</text> </paragraph> <paragraph num="C."> <text>Delegation of Authority. An action or decision required to be taken or permitted to be made by the Department under the Act, or by the Secretary or the Department under these regulations, may be delegated by the Secretary.</text> </paragraph> <paragraph num="D."> <text>The Department shall designate members of the Department and other State agencies to evaluate proposals.</text> </paragraph> <paragraph num="E."> <text>The members of the Department shall evaluate the proposals based upon the guidelines described in this chapter and the Act.</text> </paragraph> <paragraph num="F."> <text>The Secretary shall make all final decisions on approval of the proposals.</text> </paragraph> <paragraph num="G."> <text>A decision concerning the eligibility of a community foundation or a qualified permanent endowment fund is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Record Keeping and Record Retention; Quarterly Reports."> <paragraph num="A."> <text>Record Keeping. Community foundations receiving an allocation of tax credits for an approved qualified permanent endowment fund shall keep the following records:</text> <paragraph num="(1)"> <text>Financial records in connection with the approved qualified permanent endowment fund;</text> </paragraph> <paragraph num="(2)"> <text>Records in connection with donations from taxpayers that claim or expect to claim tax credits; and</text> </paragraph> <paragraph num="(3)"> <text>Quarterly reports described in §C of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Record Retention. The records described in §A of this regulation shall be kept for at least 7 years from the allocation of the tax credits.</text> </paragraph> <paragraph num="C."> <text>Quarterly Reports.</text> <paragraph num="(1)"> <text>Community foundations receiving an allocation of tax credits for donations to an approved qualified permanent endowment fund shall provide the Department with reports on the qualified permanent endowment fund on a quarterly basis.</text> </paragraph> <paragraph num="(2)"> <text>Each quarterly report shall contain the information and be in the form required by the Department.</text> </paragraph> <paragraph num="(3)"> <text>The Department may elect to change the frequency of reporting from time to time, in its discretion.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <text>In order to participate in the allocation of tax credits, the community foundation shall comply with the following requirements:</text> <paragraph num="A."> <text>A community foundation may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age in any aspect of the allocation of the tax credits, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, or in any aspect of employment by any community foundation in connection with any qualified permanent endowment fund financed or assisted under the Act;</text> </paragraph> <paragraph num="B."> <text>A community foundation shall comply with all applicable federal, State, and local laws, and Department policies regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department's Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>Executive Order 01.01.1989.18 Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order;</text> </paragraph> <paragraph num="(6)"> <text>The Fair Housing Amendments Act of 1988, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements with the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="False Statements."> <paragraph num="A."> <text>A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department or in any agreement relating to the tax credits.</text> </paragraph> <paragraph num="B."> <text>A community foundation, taxpayer, or any other party that knowingly makes or causes to be made a false statement or report is subject to cancellation and withdrawal of an allocation of credits, or cancellation and withdrawal of a certification of a donation, in addition to any other penalties authorized by law.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §10-736, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 21, 2015 (42:25 Md. R. 1542)</annotation> </annotations> </chapter> </subtitle> <subtitle num="15" heading="State Action Loans for Targeted Areas"> <chapter num="01" heading="State Action Loans for Targeted Areas Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations prescribe the policies, procedures, and authorizations for administering existing loans under the State Action Loans for Targeted Areas Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objectives."> <text>The objectives of the Program are to provide financial assistance for the purposes of:</text> <paragraph num="A."> <text>Creating housing and jobs in targeted areas through support of private sector initiatives;</text> </paragraph> <paragraph num="B."> <text>Promoting commercial redevelopment and economic revitalization efforts in targeted areas;</text> </paragraph> <paragraph num="C."> <text>Supporting retention of housing stock and existing businesses;</text> </paragraph> <paragraph num="D."> <text>Providing a source of funds for emergency housing and business assistance;</text> </paragraph> <paragraph num="E."> <text>Supporting development efforts for projects undertaken jointly by the public and private sectors; and</text> </paragraph> <paragraph num="F."> <text>Providing financial assistance for projects which would not be undertaken otherwise.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, §§2-102 and 2-111, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration of the Division of Development Finance, a division of the Department.</text> </paragraph> <paragraph num="(3)"> <text>“Area” means a geographic area within a local jurisdiction described by a closed perimeter boundary.</text> </paragraph> <paragraph num="(4)"> <text>“Business entity” means a person operating or conducting a trade or business.</text> </paragraph> <paragraph num="(5)"> <text>“County” means any of the 23 counties of this State and the Mayor and City Council of Baltimore.</text> </paragraph> <paragraph num="(6)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(7)"> <text>“Emergency housing” means short term or temporary housing, the demand for which arises out of a natural disaster declared by the Governor of the State or certified by the appropriate State or federal agency. “Emergency housing” does not include shelter for the homeless, battered men or women, or for other special populations.</text> </paragraph> <paragraph num="(8)"> <text>“Family” means all individuals who occupy a housing unit including individuals who are related by birth, marriage, or adoption, one person living alone, or any other group of related or unrelated individuals who share living arrangements.</text> </paragraph> <paragraph num="(9)"> <text>“Fiduciary representative” means a legal entity designated by a local jurisdiction and approved by the Department to receive and disburse on behalf of the Department, the financial assistance provided by the Program.</text> </paragraph> <paragraph num="(10)"> <text>“Financial assistance” means any form of assurance, guarantee, payment, credit enhancement, or other assistance, and may include a loan, loan guarantee (including insurance and coinsurance), reduction in the rate of interest payable on a loan or portion of a loan, and prepayment of interest on a loan or portion of a loan. “Financial assistance” does not include grants.</text> </paragraph> <paragraph num="(11)"> <text>“Financial assistance documents” means those documents executed by and among the local jurisdiction, sponsor, and the Department which set forth the terms and conditions of financial assistance under the Program.</text> </paragraph> <paragraph num="(12)"> <text>“Fund” means the State Action Loans for Targeted Areas Fund.</text> </paragraph> <paragraph num="(13)"> <text>“Housing Finance Review Committee” means the Housing Finance Review Committee established pursuant to Housing and Community Development Article, §4-208, Annotated Code of Maryland, as amended.</text> </paragraph> <paragraph num="(14)"> <text>“Legal entity” means a corporation, association, general partnership, limited partnership, joint venture, organization, business, government or political subdivision thereof, or governmental agency.</text> </paragraph> <paragraph num="(15)"> <text>“Local jurisdiction” means a county or municipality.</text> </paragraph> <paragraph num="(16)"> <text>“Long-term leasehold interest” means a lease for a period at least 3 years longer than the repayment period of any financial assistance.</text> </paragraph> <paragraph num="(17)"> <text>“Low-income persons” means an individual or household whose income does not exceed 60 percent of the State or area wide income for a household of like size.</text> </paragraph> <paragraph num="(18)"> <text>“Minor rehabilitation” means nonstructural improvements to interior or exterior of buildings, including but not limited to such items as facade improvements or repair of signage, doors, windows, trims, cornices, siding, awnings, roofing, interior walls, and ceilings.</text> </paragraph> <paragraph num="(19)"> <text>“Moderate-income persons” means an individual or household whose income does not exceed 80 percent of the State or area-wide median income for a household of like size.</text> </paragraph> <paragraph num="(20)"> <text>“Municipality” means a municipal corporation subject to the provisions of the State Constitution, Article XI-E.</text> </paragraph> <paragraph num="(21)"> <text>“Nonprofit organization” means a:</text> <paragraph num="(a)"> <text>Legal entity no part of the earnings of which inures to the benefit of any private shareholder or individual holding an interest in that entity; or</text> </paragraph> <paragraph num="(b)"> <text>Limited partnership if:</text> <paragraph num="(i)"> <text>Each of the general partners qualifies as a nonprofit organization, or</text> </paragraph> <paragraph num="(ii)"> <text>The limited partnership is a wholly owned subsidiary of a nonprofit organization,</text> </paragraph> <paragraph num="(iii)"> <text>The limited partnership is formed for the purpose of undertaking a SALT project that is eligible in whole or in part for federal programs or incentives, including low-income housing tax credits, and</text> </paragraph> <paragraph num="(iv)"> <text>An organization that meets the criteria set forth in §B(23)(a) of this regulation is managing the project or will be the recipient of net cash flow or the residual sale proceeds upon sale of the project.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(22)"> <text>“Program” means the State Action Loans for Targeted Areas Program (SALT).</text> </paragraph> <paragraph num="(23)"> <text>“Program funds” means monies from the Program that are used to provide financial assistance.</text> </paragraph> <paragraph num="(24)"> <text>“Program income” means any interest or other form of income generated by the Fund.</text> </paragraph> <paragraph num="(25)"> <text>“Project” means a residential, commercial, industrial, or mixed-use development which qualifies for financial assistance under the Program.</text> </paragraph> <paragraph num="(26)"> <text>“Reasonable proximity” means that the location of a project in relation to a targeted area is such that the project has a substantial impact on the provision of jobs, housing, or overall commercial revitalization to a targeted area, but a project may not be located more than 1/2 mile from the boundary of a targeted area.</text> </paragraph> <paragraph num="(27)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(28)"> <text>“Sponsor” means any individual, local jurisdiction, legal entity, or nonprofit organization, that is eligible to receive financial assistance under the Program.</text> </paragraph> <paragraph num="(29)"> <text>“Targeted area” means an area which has been designated in accordance with Regulation .10 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Sponsors."> <text>Sponsors shall meet the following minimum requirements to be eligible to apply for financial assistance under the Program:</text> <paragraph num="A."> <text>If a sponsor is a legal entity other than a local jurisdiction, be in good standing and qualified to do business in Maryland;</text> </paragraph> <paragraph num="B."> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program; and</text> </paragraph> <paragraph num="C."> <text>Demonstrate site control as evidenced by the following:</text> <paragraph num="(1)"> <text>Own the project,</text> </paragraph> <paragraph num="(2)"> <text>Have a long-term leasehold interest in the project,</text> </paragraph> <paragraph num="(3)"> <text>Have a valid sales contract to purchase the project,</text> </paragraph> <paragraph num="(4)"> <text>Have an option on or agreement of understanding acceptable to the Department to purchase the project, or</text> </paragraph> <paragraph num="(5)"> <text>Have some other form of interest in the project acceptable to the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Uses."> <paragraph num="A."> <text>Financial assistance may be used for:</text> <paragraph num="(1)"> <text>Loans for project development costs including, but not limited to:</text> <paragraph num="(a)"> <text>The acquisition of land, structures, equipment, or furnishings which are or will be a part of a project;</text> </paragraph> <paragraph num="(b)"> <text>Reasonable fees, as determined by the Program, for architectural, engineering, legal, or other special services;</text> </paragraph> <paragraph num="(c)"> <text>Preparation of title binders, surveys, plans, and specifications as approved by the program;</text> </paragraph> <paragraph num="(d)"> <text>Special studies such as:</text> <paragraph num="(i)"> <text>Market and feasibility studies,</text> </paragraph> <paragraph num="(ii)"> <text>Property appraisals,</text> </paragraph> <paragraph num="(iii)"> <text>Test borings, and</text> </paragraph> <paragraph num="(iv)"> <text>Other studies acceptable to the Department;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Site preparation and extension of utilities on-site;</text> </paragraph> <paragraph num="(f)"> <text>Cost of labor and materials for new construction or rehabilitation or installation of improvements as set forth in approved plans and specifications for a project;</text> </paragraph> <paragraph num="(g)"> <text>Acquisition of machinery and equipment necessary to the operation of a commercial/industrial enterprise as set forth in approved plans and specifications;</text> </paragraph> <paragraph num="(h)"> <text>Indemnity and surety bonds;</text> </paragraph> <paragraph num="(i)"> <text>Premiums on hazard, liability, title, and mortgage insurance;</text> </paragraph> <paragraph num="(j)"> <text>Necessary fees, licenses, and permits related to construction, project review, and approval;</text> </paragraph> <paragraph num="(k)"> <text>Payment and performance bonds;</text> </paragraph> <paragraph num="(l)"> <text>Other direct project costs and fees acceptable to the Department;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Assurances, guarantees, loan guarantees, or other credit enhancement;</text> </paragraph> <paragraph num="(3)"> <text>Buy-down of the rate of interest payable on a loan or a portion of a loan made by a third party;</text> </paragraph> <paragraph num="(4)"> <text>Prepayment of interest on a loan or portion of a loan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Fund may be used to pay the expenses of the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Eligible Projects."> <paragraph num="A."> <text>In order to be eligible for financial assistance, a project shall satisfy the following requirements:</text> <paragraph num="(1)"> <text>The project is located within the State;</text> </paragraph> <paragraph num="(2)"> <text>The project is located in a targeted area or in reasonable proximity to a targeted area;</text> </paragraph> <paragraph num="(3)"> <text>The project has a commitment of monies from private, local, federal, or other State funds so that upon receipt of financial assistance under the Program there will be adequate funding to assure completion of the project;</text> </paragraph> <paragraph num="(4)"> <text>The project will not be feasible but for the financial assistance from the Program and the financial assistance from the Program may not exceed:</text> <paragraph num="(a)"> <text>50 percent of the project costs anticipated to be financed with private funds or public funds not appropriated by the State, or</text> </paragraph> <paragraph num="(b)"> <text>60 percent of the project costs anticipated to be financed with private funds or public funds not appropriated by the State when funds from the federal Small Cities Community Development Block Grant Program for nonentitlement jurisdictions will be used to pay for a portion of project costs;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The local jurisdiction in which the project is located has agreed to make a material and substantial contribution to the project contributed pursuant to the provisions of Regulation .07 of this chapter;</text> </paragraph> <paragraph num="(6)"> <text>The financial assistance requested is the least amount of money necessary to complete the project as determined by the Department;</text> </paragraph> <paragraph num="(7)"> <text>Financial assistance provided by the Program will not be used as a local jurisdiction's contribution to a project, nor shall the financial assistance be used as a local match for other State assistance programs;</text> </paragraph> <paragraph num="(8)"> <text>The projected operating income and expense statements for the project show income sufficient to repay on schedule any loans authorized or guaranteed by the Program;</text> </paragraph> <paragraph num="(9)"> <text>The project will not facilitate the relocation of industrial plants or commercial facilities from one area within the State to another;</text> </paragraph> <paragraph num="(10)"> <text>Upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Projects funded in whole or in part with monies from the Administration also shall constitute a community development project or public purpose project as defined in Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, as amended.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Local Contributions."> <paragraph num="A."> <text>The local jurisdiction in which the proposed project is situated shall make or agree to make a local contribution which materially reduces the development costs or operating costs, or otherwise significantly supports the project.</text> </paragraph> <paragraph num="B."> <text>In evaluating the local contribution for the project, the Department shall take into consideration the significance of the local contribution in relation to the:</text> <paragraph num="(1)"> <text>Local jurisdiction's ability to contribute; and</text> </paragraph> <paragraph num="(2)"> <text>Needs of the project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A local contribution may be a contribution which:</text> <paragraph num="(1)"> <text>Reduces development costs, such as:</text> <paragraph num="(a)"> <text>The donation or leasing of a site,</text> </paragraph> <paragraph num="(b)"> <text>Capital funds for acquisitions, construction, rehabilitation, or development costs, and</text> </paragraph> <paragraph num="(c)"> <text>Locally installed infrastructure which reduces off-site costs attributable to the project;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Reduces operating costs, such as:</text> <paragraph num="(a)"> <text>Real estate tax deferral, abatement, or payment instead of taxes,</text> </paragraph> <paragraph num="(b)"> <text>Operating subsidies for the project, or</text> </paragraph> <paragraph num="(c)"> <text>Long-term agreements for a local government to provide services at no cost to a project such as trash collection, road maintenance, or grounds care;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Otherwise supports a project such as:</text> <paragraph num="(a)"> <text>Allocation of rent subsidies,</text> </paragraph> <paragraph num="(b)"> <text>Guarantees of deficits or completion of construction,</text> </paragraph> <paragraph num="(c)"> <text>Long-term provision of needed social services for special use projects, or</text> </paragraph> <paragraph num="(d)"> <text>Sponsorship or solicitation of local or community services, materials, or funds which benefit the project and make a material impact on the feasibility of a project and which may, in some cases, be acceptable local contributions.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Local Contributions.</text> <paragraph num="(1)"> <text>Local jurisdictions whose taxes are below tax capacity and which do not have access to discretionary federal funds are expected to contribute directly of their own assets.</text> </paragraph> <paragraph num="(2)"> <text>The Department's preferred local contributions are:</text> <paragraph num="(a)"> <text>Donation of, or long-term leasing of, land and buildings;</text> </paragraph> <paragraph num="(b)"> <text>Contribution of capital funds from local appropriations or discretionary federal funds;</text> </paragraph> <paragraph num="(c)"> <text>Locally installed infrastructure and site improvements; or</text> </paragraph> <paragraph num="(d)"> <text>Real estate tax deferral, abatement, or payment instead of taxes.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Less Preferred Type of Contribution. If a political subdivision can demonstrate that it is taxing at capacity, does not have discretionary surplus funds, and does not have discretionary federal resources to allocate to specific projects, it may provide a less preferred type of contribution such as:</text> <paragraph num="(1)"> <text>Sponsorship or solicitation of local services, materials, or funds for the benefit of the project;</text> </paragraph> <paragraph num="(2)"> <text>Guarantee of construction;</text> </paragraph> <paragraph num="(3)"> <text>Assistance with or packaging of a successful project-specific award of federal funds; and</text> </paragraph> <paragraph num="(4)"> <text>Long-term provision of local services such as trash collection, road or grounds maintenance, or necessary social services.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Other Local Resources and Assets.</text> <paragraph num="(1)"> <text>Local resources and assets are preferred sources for contributions when the local jurisdiction has total discretion in allocating the resources.</text> </paragraph> <paragraph num="(2)"> <text>Federal funds such as Housing Development Action Grants and Urban Development Action Grants, or federal subsidies such as §8 Moderate Rehabilitation, which are awarded at the federal level for a specific project, may not be eligible to be used as a local contribution unless the local jurisdiction qualifies to make a less preferred type of contribution under §D of this regulation, and is instrumental in the application for and administration of the federal resources.</text> </paragraph> <paragraph num="(3)"> <text>Local contributions which are made in conjunction with grants from the Department's Small Cities Community Development Block Grant Program may be counted toward or may satisfy the local contribution requirement if the grant is used for the project.</text> </paragraph> <paragraph num="(4)"> <text>Other State funds may not be permitted as a local contribution even if the local government has discretion in allocating the funds.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Terms and Conditions of Financial Assistance."> <paragraph num="A."> <text>The local jurisdiction in which a project is located shall make a material and substantial contribution to the project which may take the form of:</text> <paragraph num="(1)"> <text>Cash;</text> </paragraph> <paragraph num="(2)"> <text>A site for a project;</text> </paragraph> <paragraph num="(3)"> <text>Provision of or improvements to on-site project-related facilities;</text> </paragraph> <paragraph num="(4)"> <text>Provision of or improvements to off-site facilities such as related streets, utilities, or other public improvements;</text> </paragraph> <paragraph num="(5)"> <text>Payment of predevelopment costs such as market studies, preliminary architectural or site plans, engineering studies, or feasibility studies; and</text> </paragraph> <paragraph num="(6)"> <text>A tax abatement or waiver of taxes or fees imposed by a local jurisdiction.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Department will determine on a case-by-case basis what constitutes a material and substantial contribution by a particular local jurisdiction and what form the contribution may take.</text> </paragraph> <paragraph num="C."> <text>Security. The security or collateral to assure repayment of financial assistance shall be acceptable to the Department and may be:</text> <paragraph num="(1)"> <text>A mortgage lien;</text> </paragraph> <paragraph num="(2)"> <text>A cash escrow;</text> </paragraph> <paragraph num="(3)"> <text>A letter of credit;</text> </paragraph> <paragraph num="(4)"> <text>A pledge of depository accounts;</text> </paragraph> <paragraph num="(5)"> <text>A pledge of accounts receivable;</text> </paragraph> <paragraph num="(6)"> <text>An assignment of income;</text> </paragraph> <paragraph num="(7)"> <text>A pledge of syndication proceeds; or</text> </paragraph> <paragraph num="(8)"> <text>Any other form of security or collateral acceptable to the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Repayment. The principal and interest of a loan made or guaranteed under the Program shall:</text> <paragraph num="(1)"> <text>Be repayable out of revenues specified by a sponsor;</text> </paragraph> <paragraph num="(2)"> <text>Bear interest at a rate determined to be necessary and reasonable for the project which in exceptional circumstances and at the discretion of the Secretary may be as low as zero percent; and</text> </paragraph> <paragraph num="(3)"> <text>Be repayable in accordance with a schedule determined by the Department and may, at the discretion of the Secretary, be on a deferred payment schedule.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Default. In the event of default, the Department shall have the right to modify the rate of interest, the time or amount of payment, or any other term of financial assistance in order to ensure repayment and achieve the purposes of the Program.</text> </paragraph> <paragraph num="F."> <text>Insurance.</text> <paragraph num="(1)"> <text>Multi-Peril Insurance. The sponsor shall maintain fire and extended coverage insurance on the project both during and after construction or rehabilitation. The insurance coverage shall include such endorsements as the Department may require, including:</text> <paragraph num="(a)"> <text>Collapse;</text> </paragraph> <paragraph num="(b)"> <text>Explosion;</text> </paragraph> <paragraph num="(c)"> <text>Loss of rents; and</text> </paragraph> <paragraph num="(d)"> <text>Vandalism.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Liability Insurance. Comprehensive general liability insurance shall be maintained with such endorsements as the Department may require, both during and after construction or rehabilitation of a project.</text> </paragraph> <paragraph num="(3)"> <text>Flood Insurance. If the project is located on real property which is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the project shall be covered by a flood plain insurance policy. Before closing of financial assistance for a project, permits shall be secured from the Maryland Department of Natural Resources and the political subdivision in which the project is located.</text> </paragraph> <paragraph num="(4)"> <text>Contractor's Insurance. If a project involves construction or rehabilitation of a building or improvements of any kind, the general contractor shall provide insurance coverage for comprehensive public liability, property damage, and workers' compensation in form and amounts required by the Department.</text> </paragraph> <paragraph num="(5)"> <text>Other Insurance. The sponsor shall provide at closing of the financial assistance such other insurance as the Department may require, including builder's risk, boiler insurance, comprehensive automobile liability, and broad form workers' compensation.</text> </paragraph> <paragraph num="(6)"> <text>Terms and Conditions. Insurance coverage shall meet the following minimum requirements plus any additional requirements which may be set by the Department:</text> <paragraph num="(a)"> <text>Be provided by:</text> <paragraph num="(i)"> <text>Companies or other legal entities which are authorized to transact business in the State and which are reputable and financially sound, as determined by the Department, or</text> </paragraph> <paragraph num="(ii)"> <text>With respect to local jurisdictions, self-insurance programs acceptable to the Department;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>To the extent applicable, be in force upon the closing of the financial assistance;</text> </paragraph> <paragraph num="(c)"> <text>To the extent applicable, contain a standard mortgagee endorsement attached to or printed in the policy naming the Department as mortgagee;</text> </paragraph> <paragraph num="(d)"> <text>To the extent required by the Department, name the Department as loss payee and additional insured;</text> </paragraph> <paragraph num="(e)"> <text>Provide for notification to the Department before termination; and</text> </paragraph> <paragraph num="(f)"> <text>Contain terms and coverage satisfactory to the Department.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Projects seeking financial assistance for minor rehabilitation may not be required to maintain multi-peril insurance, liability insurance, or flood insurance unless the Department, in its discretion, feels that the insurance is necessary.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Limitations on Financial Assistance."> <text>Any interest earned on Program funds held by a sponsor or local jurisdiction shall be considered Program income and shall be returned to the Department in accordance with the terms specified in the financial assistance documents.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Books and Accounts."> <text>Sponsors, local jurisdictions, contractors, and subcontractors shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may from time to time require. All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours. Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the contractor and the sponsor and local jurisdiction.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Fees and Charges."> <text>If the form of financial assistance is a loan or guarantee of a loan, the Department may charge a local jurisdiction or sponsor an administrative fee, which may be financed by the loan, to cover the costs of making, servicing, or settling a loan.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>Neither local jurisdictions nor sponsors may discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any local jurisdiction or sponsor in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each local jurisdiction and sponsor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out that Order; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Waiver."> <text>The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="False Statements."> <paragraph num="A."> <text>A person may not knowingly make or cause to be made any false statement or report in any document required to be furnished to the Department by any agreement relating to financial assistance.</text> </paragraph> <paragraph num="B."> <text>A person applying for or benefiting from financial assistance under the Program may not knowingly make or cause to be made any false statement or report for the purpose of influencing the action of the Department on an application or for the purpose of influencing the action of the Department affecting financial assistance already provided.</text> </paragraph> <paragraph num="C."> <text>A person who violates §A or B of this regulation shall be subject to the following penalties:</text> <paragraph num="(1)"> <text>Immediate cancellation or acceleration of the form of financial assistance provided by the Program; and</text> </paragraph> <paragraph num="(2)"> <text>Guilty of a misdemeanor and upon conviction shall be subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Severability."> <text>The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to a person or circumstance is invalid, does not affect the validity of the remaining provisions of the regulations or any other application of these regulations which may be taken by the Secretary.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-102 and 2-111, Annotated Code of Maryland; Chapter 654, Acts of 1996</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.17 adopted as an emergency provision effective</annotation> <annotation type="History" subtype="Administrative History">October 31, 1988 (15:24 Md. R. 2760); emergency status extended at 16:10 Md. R. 1101; adopted permanently effective August 7, 1989 (16:15 Md. R. 1650)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 15, 1991 (18:7 Md. R. 771)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective February 1, 1993 (20:2 Md. R. 111)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B amended effective February 1, 1993 (20:2 Md. R. 111)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.07.04 to COMAR 05.15.01 effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 6, 1999 (26:18 Md. R. 1373)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> </subtitle> <subtitle num="16" heading="Maryland Building Rehabilitation Code"> <chapter num="01" heading="Maryland Building Rehabilitation Code Regulations" reason="Recodified to COMAR 09.12.58"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 1, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.09 repealed and new Regulations .01—.13 adopted effective July 16, 2007 (34:14 Md. R. 1245)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective July 1, 2010 (37:13 Md. R. 851)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective July 1, 2010 (37:13 Md. R. 851)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13 repealed and new Regulations .01—.08 adopted effective April 1, 2013 (40:6 Md. R. 472)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective April 11, 2016 (43:7 Md. R. 448)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective April 11, 2016 (43:7 Md. R. 448)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 05.16.01 to COMAR 09.12.58 effective March 25, 2019 (46:6 Md. R. 345)</annotation> </annotations> </chapter> <chapter num="02" heading="Repairs" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 1, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective July 16, 2007 (34:14 Md. R. 1245)</annotation> </annotations> </chapter> <chapter num="03" heading="Renovations" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 1, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective July 16, 2007 (34:14 Md. R. 1245)</annotation> </annotations> </chapter> <chapter num="04" heading="Modifications" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 1, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective July 16, 2007 (34:14 Md. R. 1245)</annotation> </annotations> </chapter> <chapter num="05" heading="Reconstruction" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 1, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective July 16, 2007 (34:14 Md. R. 1245)</annotation> </annotations> </chapter> <chapter num="06" heading="Change of Use and Occupancy" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 1, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective July 16, 2007 (34:14 Md. R. 1245)</annotation> </annotations> </chapter> <chapter num="07" heading="Additions" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 1, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective July 16, 2007 (34:14 Md. R. 1245)</annotation> </annotations> </chapter> <chapter num="08" heading="Historic Buildings" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 1, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective July 16, 2007 (34:14 Md. R. 1245)</annotation> </annotations> </chapter> </subtitle> <subtitle num="17" heading="Community Legacy"> <chapter num="01" heading="Community Legacy Program"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures for providing financial assistance for community legacy projects, and for administering the Community Legacy Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 6, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Application” means an application to the Department as described in Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Community development financial institution (CDFI)” means a certified community development financial institution as defined under 12 U.S.C. §4702, as amended.</text> </paragraph> <paragraph num="(4)"> <text>“Community development organization (CDO)” means a nonprofit organization that operates for the purpose of improving the physical, economic, or social environment of its geographic areas of operation.</text> </paragraph> <paragraph num="(5)"> <text>“Community legacy agreement” means an agreement between the Department and a Sponsor to implement one or more community legacy projects in a designated Sustainable Community.</text> </paragraph> <paragraph num="(6)"> <text>“Community legacy project” or “project” means a project submitted by a Sponsor to the Secretary for approval in accordance with the Act and this chapter for one or more of the following purposes:</text> <paragraph num="(a)"> <text>Create, improve, or preserve housing opportunities, including the acquisition, construction, rehabilitation, or improvement of new or existing homeownership or rental properties;</text> </paragraph> <paragraph num="(b)"> <text>Strategically demolish buildings or improvements that are dangerous for use or occupancy, or so deteriorated that rehabilitation is not feasible, to prepare the property for redevelopment or sale;</text> </paragraph> <paragraph num="(c)"> <text>Create, improve, or preserve mixed use or commercial development, including any appropriate combination of properties related to business, housing, open space, and institutional uses;</text> </paragraph> <paragraph num="(d)"> <text>Develop public infrastructure supporting the implementation of other revitalized projects, such as streets, parking, public utilities, landscaping, lighting, and improvements to pedestrian and bicycle circulation;</text> </paragraph> <paragraph num="(e)"> <text>Encourage and develop cooperative ownership and control of open space;</text> </paragraph> <paragraph num="(f)"> <text>Develop or create strategies targeted at increasing investment in existing communities, including outreach activities designed to attract business, capital, residents, and visitors, and the development and maintenance of resources directly related to the implementation of a community legacy project;</text> </paragraph> <paragraph num="(g)"> <text>Acquire or improve vacant buildings or unimproved land, including the practice of land banking;</text> </paragraph> <paragraph num="(h)"> <text>Provide financial assistance for a neighborhood intervention project; or</text> </paragraph> <paragraph num="(i)"> <text>Develop or implement any other community legacy project that the Department considers necessary to further the purposes of the Act.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(8)"> <text>“Financial assistance” means a grant, loan, assurance, guarantee, other credit enhancement, reduction in the principal obligation of or in the rate of interest payable on a loan or portion of a loan, or prepayment of interest on a subordinate or superior loan or portion of a loan.</text> </paragraph> <paragraph num="(9)"> <text>“Fund” means the Community Legacy Financial Assistance Fund established under Housing and Community Development Article, §6-213, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Land banking” means the acquisition and holding of improved or unimproved property in anticipation of future development of the property, or to ensure that the future use of the property and improvements remains affordable.</text> </paragraph> <paragraph num="(11)"> <text>“Local government” means any of the 23 counties of the State, the City of Baltimore, a municipal corporation of the State subject to the provisions of the State Constitution, Article XI-E, or any of their duly authorized agencies or instrumentalities.</text> </paragraph> <paragraph num="(12)"> <text>“Mixed use” means a use that combines commercial, business, institutional, open space, and residential uses, or some combination of those uses, in the same building or on the same site.</text> </paragraph> <paragraph num="(13)"> <text>“Neighborhood intervention project” means a project sponsored by a local government or a CDFI that is for the purpose of:</text> <paragraph num="(a)"> <text>Buying properties that need rehabilitation and redeveloping the properties through rehabilitation, demolition, reconstruction, or reuse; or</text> </paragraph> <paragraph num="(b)"> <text>Demolishing property improvements and preparing properties for revitalization, redevelopment, or reuse.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of a private shareholder or individual holding any interest in the entity.</text> </paragraph> <paragraph num="(15)"> <text>“Priority funding area” means an area designated as a priority funding area under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Program” means the Community Legacy Program established under the provisions of the Act.</text> </paragraph> <paragraph num="(17)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(18)"> <text>“Sponsor” means a local government, a group of local governments, a CDO, or a CDFI.</text> </paragraph> <paragraph num="(19)"> <text>“Subcabinet” means the smart growth subcabinet established under Chapter .02 of the Act.</text> </paragraph> <paragraph num="(20)"> <text>“Sustainable community” means the part of a priority funding area that has been designated a sustainable community in accordance with Chapter .02 of the Act.</text> </paragraph> <paragraph num="(21)"> <text>“Sustainable community plan” means a plan consisting of one or more community legacy projects or other revitalization projects that are located in a sustainable community.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Minimum Eligibility Requirements."> <paragraph num="A."> <text>A Sponsor, or a Sponsor's designated third party, shall meet the following minimum requirements:</text> <paragraph num="(1)"> <text>Be a local government, a group of local governments, a CDO, or a CDFI, except as provided in Regulation .05(C)(2) of this chapter with respect to Neighborhood Intervention Projects;</text> </paragraph> <paragraph num="(2)"> <text>Not have defaulted on any prior financial assistance from the Department;</text> </paragraph> <paragraph num="(3)"> <text>Not be currently barred or suspended from any of the Department's programs;</text> </paragraph> <paragraph num="(4)"> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program;</text> </paragraph> <paragraph num="(5)"> <text>In the case of CDOs or other business entities, be in good standing and qualified to do business in Maryland; and</text> </paragraph> <paragraph num="(6)"> <text>In the case of CDFIs, be certified in compliance with 12 U.S.C. §4702.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Any recipient of financial assistance from a Sponsor as permitted under Regulation .04C of this chapter shall satisfy the minimum requirements of §A(2)—(5) of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Uses of Financial Assistance."> <paragraph num="A."> <text>Except as limited by §B of this regulation, financial assistance may be used for any costs and expenses related to the development or implementation of a community legacy project as approved by the Secretary.</text> </paragraph> <paragraph num="B."> <text>Total noncapital expenditures from the Fund to Sponsors may not exceed 15 percent of total annual Program funds.</text> </paragraph> <paragraph num="C."> <text>A Sponsor may grant or lend all or a portion of the financial assistance the Sponsor receives from the Program to a designated third party to carry out the Project in accordance with the terms and conditions of the financial assistance awarded to the Sponsor. The Sponsor shall provide evidence to the Department that a designated third party complies with the minimum eligibility requirements of Regulation .03 of this chapter.</text> </paragraph> <paragraph num="D."> <text>Financial assistance from the Program may be used in conjunction with financial assistance from other divisions or programs of the State or the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application Requirements."> <paragraph num="A."> <text>An application submitted to the Department shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by a Sponsor;</text> </paragraph> <paragraph num="(3)"> <text>Be for a project that:</text> <paragraph num="(a)"> <text>Is located within a sustainable community; and</text> </paragraph> <paragraph num="(b)"> <text>Is part of and serves to implement a sustainable community plan;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Describe the proposed project in detail;</text> </paragraph> <paragraph num="(5)"> <text>State the amount and type of financial assistance requested;</text> </paragraph> <paragraph num="(6)"> <text>Specify the ability of a Sponsor to carry out the proposed project, as well as the strength and quality of partnerships created among federal, State, and local governments, community development organizations, or other private organizations for implementing the project, including:</text> <paragraph num="(a)"> <text>Financial support;</text> </paragraph> <paragraph num="(b)"> <text>Dedication of staff and resources; and</text> </paragraph> <paragraph num="(c)"> <text>The local government's commitment to and development of local smart growth policies;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Propose benchmarks for evaluating whether the proposed project results in a desired outcome such as community stabilization or reversing the social, economic, and physical decline of the sustainable community in which the project is located;</text> </paragraph> <paragraph num="(8)"> <text>Describe the process used to solicit and receive public input on the proposed project, including the nature and extent of the public support for or in opposition to the proposed project;</text> </paragraph> <paragraph num="(9)"> <text>Demonstrate that the project can be completed within the time period of the grant award agreement, as determined by the Department;</text> </paragraph> <paragraph num="(10)"> <text>Include a budget, in a form acceptable to the Department, that at a minimum shows anticipated project costs and expenses, anticipated sources of project revenue, and identification of the revenues that can be used to repay the financial assistance provided by the Program if provided as a loan;</text> </paragraph> <paragraph num="(11)"> <text>For projects that include the ownership, acquisition, demolition, construction, or rehabilitation of land or improvements:</text> <paragraph num="(a)"> <text>Demonstrate that, upon completion, the project will be in compliance with all applicable zoning requirements and standards, as well as the applicable building code of the local government in which jurisdiction the project is located; and</text> </paragraph> <paragraph num="(b)"> <text>Demonstrate site control through ownership, leasehold interest, contract, option, or other written agreement satisfactory to the Department that evidences the legal right of the Sponsor or its approved designated third party to acquire, occupy, or demolish the property in furtherance of the project;</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Provide a projected timeline for implementation of the project;</text> </paragraph> <paragraph num="(13)"> <text>Contain written approval for the proposed project from the local government in whose jurisdiction the project is located, as follows:</text> <paragraph num="(a)"> <text>Either:</text> <paragraph num="(i)"> <text>A resolution of support for the proposed project from the local government in whose jurisdiction the project is located; or</text> </paragraph> <paragraph num="(ii)"> <text>A letter of support for the proposed project delivered to the Department by the authorized designee of the local government in whose jurisdiction the project is located;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If the project affects a sustainable community located entirely within a municipal corporation, the resolution or the authorized designee’s letter of support shall come from the municipal corporation rather than the surrounding county; and</text> </paragraph> <paragraph num="(c)"> <text>If the project affects a sustainable community located within the territory of more than one local government, the Sponsor shall obtain a resolution or a letter of support from the authorized designee from each local government in which the community legacy project is located or will be operated; and</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>Include other information or documentation the Department may require.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An application for financial assistance may be submitted for the following purposes:</text> <paragraph num="(1)"> <text>To fund one or more community legacy projects; or</text> </paragraph> <paragraph num="(2)"> <text>To fund a neighborhood intervention project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In addition to the requirements of §A of this regulation, an application for financial assistance for one or more neighborhood intervention projects shall satisfy the following requirements:</text> <paragraph num="(1)"> <text>Unless waived under Regulation .06C(4) of this chapter, provide evidence that the neighborhood in which the project is located is in a sustainable community and is part of a sustainable community plan;</text> </paragraph> <paragraph num="(2)"> <text>The Sponsor shall be either a local government or a CDFI. If the Sponsor is a CDFI, it shall:</text> <paragraph num="(a)"> <text>Certify that the financial assistance will be made to individuals or businesses that are owner-occupants, CDOs, or local governments; and</text> </paragraph> <paragraph num="(b)"> <text>Certify that it will use the financial assistance, and any repayments and prepayments, primarily to make loans for the purposes set forth in this chapter;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Unless waived under Regulation .06C(3) of this chapter, for a neighborhood intervention project involving demolition, the Sponsor shall agree to repay the financial assistance to the fund, up to the amount received by the Sponsor from:</text> <paragraph num="(a)"> <text>The net proceeds of the sale of the property on which the demolition took place; or</text> </paragraph> <paragraph num="(b)"> <text>Any payment to the Sponsor relating to the property, including any payment for the cost incurred in demolishing the improvements on the property;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Provide information that the property will be revitalized, redeveloped, sold, or reused as part of a Board-approved redevelopment strategy or plan;</text> </paragraph> <paragraph num="(5)"> <text>Provide evidence that the Sponsor has complied with the requirements of State Finance and Procurement Article, §§5A-325—5A-326, Annotated Code of Maryland, and Financial Institutions Article, §13-1112(b), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(6)"> <text>Provide evidence that the financial assistance from the program is the least amount necessary to complete the project; and</text> </paragraph> <paragraph num="(7)"> <text>Include other information or assurances as requested by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A Sponsor may file one or more applications in accordance with schedules established by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Application Processing."> <paragraph num="A."> <text>Application Evaluation.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the Department to determine whether all of the information required under Regulation .05 of this chapter is contained in the application.</text> </paragraph> <paragraph num="(2)"> <text>Upon receipt of all required information, the Department shall:</text> <paragraph num="(a)"> <text>Accept public input on the application;</text> </paragraph> <paragraph num="(b)"> <text>Undertake an analysis of each application as to the following considerations:</text> <paragraph num="(i)"> <text>Whether the financial assistance for the proposed project should be approved;</text> </paragraph> <paragraph num="(ii)"> <text>The amount and type of financial assistance the Sponsor should receive for the proposed project;</text> </paragraph> <paragraph num="(iii)"> <text>Any special terms and conditions which should be imposed on the project;</text> </paragraph> <paragraph num="(iv)"> <text>What other Department or State programs or resources could be used in conjunction with the financial assistance from the Program;</text> </paragraph> <paragraph num="(v)"> <text>The geographical balance of the application in relation to other applications previously received or approved by the Department;</text> </paragraph> <paragraph num="(vi)"> <text>The likelihood of repayment of the financial assistance provided; and</text> </paragraph> <paragraph num="(vii)"> <text>Other matters that the Department considers relevant; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Refer the application to members of the subcabinet and other State agencies, as the Department considers appropriate, to undertake the analysis in §A(2)(c) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Department, in its discretion, may request from the Sponsor additional information concerning an application, including oral presentations.</text> </paragraph> <paragraph num="(4)"> <text>Upon completion of the requirements in §A(1)—(3) of this regulation, the Department shall make a recommendation on the application to the Secretary.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Approval of Applications.</text> <paragraph num="(1)"> <text>Upon receipt of the Department's recommendation, the Secretary:</text> <paragraph num="(a)"> <text>May request additional information from the Sponsor concerning the application, including oral presentations; and</text> </paragraph> <paragraph num="(b)"> <text>Shall act on the application by approving, disapproving, or approving such application with modifications.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In approving applications and awarding financial assistance, the Department shall give priority to applications that provide for the likely repayment of the financial assistance to a CDFI or to the Fund.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary shall award financial assistance to a Sponsor, or a third party designated by a Sponsor and approved by the Department, in an amount and type determined by the Secretary, and under the terms and conditions of a community legacy agreement and such other documents as the Department considers necessary to evidence the financial assistance and to secure any security interest taken by the State with respect to a project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Neighborhood Intervention Projects.</text> <paragraph num="(1)"> <text>The Secretary may not:</text> <paragraph num="(a)"> <text>Allocate annually more than 15 percent of the Fund to neighborhood intervention projects; or</text> </paragraph> <paragraph num="(b)"> <text>Award more than $500,000 in financial assistance for any one neighborhood intervention project.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The restrictions in §C(1) of this regulation do not apply to projects approved by the Secretary under Regulation .13 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary, acting under §B of this regulation or Regulation .13 of this chapter, may waive, in whole or in part, the requirements of Regulation .05C(3)(a) or (b) of this chapter regarding the repayment of financial assistance in connection with a neighborhood intervention project involving demolition.</text> </paragraph> <paragraph num="(4)"> <text>The Secretary, acting under §B of this regulation or Regulation .13 of this chapter, may waive, in whole or in part, the requirements of Regulation .05C(1) of this chapter that the project be located in a sustainable community and be part of a sustainable community plan.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Denial of Applications. If the Secretary determines not to approve all or part of an application, the Department shall issue a written notice of denial.</text> </paragraph> <paragraph num="E."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the Department, which must be received by the Department within 30 days following the date of the denial notice. The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application. The Department shall respond in writing to the applicant's request for reconsideration within 90 days of receipt by the Department of the request for reconsideration.</text> </paragraph> <paragraph num="(2)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Program Administration."> <paragraph num="A."> <text>The Department may establish from time to time detailed Program guidelines containing application schedules, procedures, underwriting standards, processing requirements, and other requirements or matters relating to the Program.</text> </paragraph> <paragraph num="B."> <text>The Department.</text> <paragraph num="(1)"> <text>After financial assistance has been awarded to a Sponsor, the Department may:</text> <paragraph num="(a)"> <text>Determine specific terms and conditions, including length of term and rate of interest, for the financial assistance, which may be awarded as grants, recoverable grants, unsecured loans, or loans secured by a mortgage or other lien or security interest, which security interest may be superior or subordinate to other mortgages, liens, or other security interests on the collateral;</text> </paragraph> <paragraph num="(b)"> <text>Enforce the terms of grants, loans, or other financial assistance according to their terms and conditions;</text> </paragraph> <paragraph num="(c)"> <text>Notwithstanding any other provision of law, with respect to loans or grants secured by first or subordinate mortgages or other liens:</text> <paragraph num="(i)"> <text>Commence and pursue any action to protect or enforce any right conferred by law, contract, or other agreement;</text> </paragraph> <paragraph num="(ii)"> <text>Foreclose on property that the Department has a security interest in, and which is the subject of a community legacy agreement;</text> </paragraph> <paragraph num="(iii)"> <text>Bid for and purchase such property at any foreclosure or at any other sale, or acquire or take possession of the property through conveyance in lieu of foreclosure or otherwise, and convey property after acquisition;</text> </paragraph> <paragraph num="(iv)"> <text>Settle or compromise any debt or obligation to the Department;</text> </paragraph> <paragraph num="(v)"> <text>Pay the principal of and interest on any obligations incurred in connection with the property, and dispose of or otherwise deal with the property, in any manner necessary or desirable to protect the interest of the Program; or</text> </paragraph> <paragraph num="(vi)"> <text>Release or sell any mortgage, obligation, or property held by the Department at public or private sale, with or without public bidding;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Require and obtain appraisals, credit information, and other information related to making loans and enforcing the terms and conditions;</text> </paragraph> <paragraph num="(e)"> <text>Enter into contracts with any governmental or private party for the furnishing of property or services necessary to the operation of the Program or the implementation of community legacy projects, including private property managers, mortgage servicers, architects, engineers, or other consultants;</text> </paragraph> <paragraph num="(f)"> <text>Enter into agreements with other government agencies, including local, State, or federal agencies, for the purpose of establishing partnerships to carry out the Program;</text> </paragraph> <paragraph num="(g)"> <text>Modify any provision of any grant, loan, or other financial assistance in order to facilitate the successful completion or operation of a project;</text> </paragraph> <paragraph num="(h)"> <text>Contract for and accept any grant, contribution, or loan of funds, property, or other aid from the federal government or other sources and, subject to the provisions of the Act, do all things necessary to qualify for, participate in, or administer any federal program consistent with the purposes of the Act;</text> </paragraph> <paragraph num="(i)"> <text>Modify the scope of work, location, or other aspect of a community legacy project; or</text> </paragraph> <paragraph num="(j)"> <text>Exercise all powers necessary or desirable for the implementation of the Program.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Books and Accounts."> <paragraph num="A."> <text>Sponsors, contractors, and subcontractors shall maintain such books, accounts, and records, and shall file with the Department such financial and other reports as the Department may from time to time require. All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours. Books, accounts, and records of designated third parties, contractors, and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between a designated third party, contractor, or subcontractor and the Sponsor.</text> </paragraph> <paragraph num="B."> <text>Sponsors shall submit quarterly reports to the Department on the progress or implementation of a community legacy project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Fees and Charges."> <paragraph num="A."> <text>The Department may establish application fees.</text> </paragraph> <paragraph num="B."> <text>The Department may establish other fees to be paid to the Department related to the processing of applications and servicing of financial assistance.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A Sponsor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any Sponsor in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>A Sponsor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties, and between Sponsors and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="False Statements."> <paragraph num="A."> <text>An individual may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Secretary or the Department by an agreement relating to financial assistance.</text> </paragraph> <paragraph num="B."> <text>An individual applying for or benefiting from financial assistance under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Secretary or the Department on an application or for the purpose of influencing the action of the Secretary or the Department affecting financial assistance already provided.</text> </paragraph> <paragraph num="C."> <text>An individual who violates §A or B of this regulation is subject to immediate cancellation or acceleration of the financial assistance provided by the Program and any other penalties authorized by law.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Urgent or Emergency Projects Reserve."> <paragraph num="A."> <text>In any fiscal year, the Secretary may hold up to 10 percent of the money in the Fund in reserve for emergency use or urgent projects.</text> </paragraph> <paragraph num="B."> <text>After determining an emergency or urgent project exists, the Secretary may approve a community legacy project or a neighborhood intervention project.</text> </paragraph> <paragraph num="C."> <text>Any funds held in reserve that are not used for emergency use or urgent projects shall be administered in accordance with the Act.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 6, Subtitle 2, Annotated Code of Maryland;Ch. 567, Acts of 2001</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 29, 2001 (28:21 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective December 11, 2003 (30:24 Md. R. 1739)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 17, 2005 (32:1 Md. R. 26)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective March 22, 2010 (37:6 Md. R. 476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective March 22, 2010 (37:6 Md. R. 476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective March 22, 2010 (37:6 Md. R. 476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05E, F amended effective March 22, 2010 (37:6 Md. R. 476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B, C amended effective March 22, 2010 (37:6 Md. R. 476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective March 22, 2010 (37:6 Md. R. 476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective March 22, 2010 (37:6 Md. R. 476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 adopted effective March 22, 2010 (37:6 Md. R. 476)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective February 20, 2012 (39:3 Md. R. 258)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective January 20, 2014 (41:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> <chapter num="02" heading="Designation of Sustainable Community"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures for designating sustainable communities by the Subcabinet or the Secretary.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 6, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Application” means an application to the Department as described in Regulation .03 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Community development financial institution (CDFI)” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(4)"> <text>“Community development organization (CDO)” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(5)"> <text>“Community legacy project” or “project” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(6)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(7)"> <text>“Local government” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(8)"> <text>“Nonprofit organization” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(9)"> <text>“Priority funding area” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(10)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(11)"> <text>“Sponsor” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(12)"> <text>“Subcabinet” means the smart growth cabinet defined in State Government Article, §9-1406, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Sustainable community” means the part of a priority funding area that:</text> <paragraph num="(a)"> <text>Has been designated as a sustainable community in accordance with this chapter;</text> </paragraph> <paragraph num="(b)"> <text>Has been designated as a BRAC Revitalization and Incentive Zone under Economic Development Article, Title 5, Subtitle 13, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>Has been designated as a transit-oriented development under Transportation Article, §7-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Sustainable community plan” means a plan, consisting of one or more community legacy projects or other revitalization projects, to prevent or reverse the decline of or disinvestment in a sustainable community through improvements in residential, commercial, or other public or private properties.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Application Requirements."> <paragraph num="A."> <text>An application for a sustainable community designation shall be submitted to the Department in accordance with the schedule that the Department establishes.</text> </paragraph> <paragraph num="B."> <text>An application shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department and Subcabinet;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by a local government or local governments that comply with the minimum eligibility requirements set forth in COMAR 05.17.01.03A(2)—(4);</text> </paragraph> <paragraph num="(3)"> <text>Provide a detailed map and description of the proposed sustainable community;</text> </paragraph> <paragraph num="(4)"> <text>Provide a sustainable community plan;</text> </paragraph> <paragraph num="(5)"> <text>Specify the ability of a Sponsor to carry out the proposed sustainable community plan;</text> </paragraph> <paragraph num="(6)"> <text>Describe the strength and quality of partnerships created among the federal government, the State government, local governments, political subdivisions, community development organizations, and other private organizations to develop the sustainable community plan, including:</text> <paragraph num="(a)"> <text>Financial support;</text> </paragraph> <paragraph num="(b)"> <text>Dedication of staff and resources; and</text> </paragraph> <paragraph num="(c)"> <text>Commitment to and development of local smart growth policies;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Describe proposed benchmarks for evaluating whether the proposed sustainable community plan results in a desired outcome for a proposed sustainable community, such as:</text> <paragraph num="(a)"> <text>Stabilization;</text> </paragraph> <paragraph num="(b)"> <text>Reversal of social, economic, or physical decline; or</text> </paragraph> <paragraph num="(c)"> <text>Development of social, economic, or physical improvements;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Describe the process used to seek and receive public input on the proposed sustainable community plan or community legacy project, including the nature and extent of public support or opposition; and</text> </paragraph> <paragraph num="(9)"> <text>Contain a resolution of support for the proposed area from the local government(s) in whose jurisdiction(s) the area is located.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In addition to the requirements of §B of this regulation, an application or initial designation of a sustainable community shall demonstrate that:</text> <paragraph num="(1)"> <text>The sustainable community is in a priority funding area;</text> </paragraph> <paragraph num="(2)"> <text>Past and current trends in homeownership, property values, commercial and residential vacancy, and business or housing investment indicate that there is a need for reinvestment in the proposed area; and</text> </paragraph> <paragraph num="(3)"> <text>The sustainable community satisfies one or more of the following criteria:</text> <paragraph num="(a)"> <text>Entities in the community such as local governments, employers, educational institutions, civic organizations, community organizations, or cultural organizations support the proposed sustainable community plan or community legacy project and have pledged resources to its development or implementation;</text> </paragraph> <paragraph num="(b)"> <text>The proposed sustainable community plan addresses the need for reinvestment in the area and enhances the area, including providing individuals of different incomes with a range of housing options, employment opportunities, or other amenities;</text> </paragraph> <paragraph num="(c)"> <text>There is a cultural or historical significance in the community or communities located in the proposed area;</text> </paragraph> <paragraph num="(d)"> <text>The proposed area is close to a town center or a transportation center;</text> </paragraph> <paragraph num="(e)"> <text>The proposed sustainable community plan is consistent with and complements other existing or proposed projects for housing, commercial or community development, education, historic preservation, neighborhood revitalization, transportation, or other factors significant to the comprehensive enhancement of the community; or</text> </paragraph> <paragraph num="(f)"> <text>There is a demonstrated need for financing assistance for small businesses, nonprofit organizations, or microenterprises.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Application Processing."> <paragraph num="A."> <text>Application Evaluation.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the Department to determine whether all of the information required under Regulation .03 of this chapter is contained in the application.</text> </paragraph> <paragraph num="(2)"> <text>Upon receipt of all required information, the Department shall:</text> <paragraph num="(a)"> <text>Convene an interagency review team from the agencies of the Subcabinet to:</text> <paragraph num="(i)"> <text>Review applications and plans;</text> </paragraph> <paragraph num="(ii)"> <text>Provide assistance and guidance to applicants; and</text> </paragraph> <paragraph num="(iii)"> <text>Make recommendations to the Secretary.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Accept public input on the application;</text> </paragraph> <paragraph num="(c)"> <text>Refer the application to other State agencies for comment, as the Department considers appropriate;</text> </paragraph> <paragraph num="(d)"> <text>Consider any recommendation from a State unit or member of the Subcabinet;</text> </paragraph> <paragraph num="(e)"> <text>Consider geographic balance when reviewing applications; and</text> </paragraph> <paragraph num="(f)"> <text>Analyze each application as to determine whether the proposed sustainable community merits designation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Department, in its discretion, may request additional information from the Sponsor concerning an application, including oral presentations.</text> </paragraph> <paragraph num="(4)"> <text>Upon completion of the requirements in §A(1)—(3) of this regulation, the Department shall make a recommendation on the application to the Secretary.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Recommendation by the Secretary. Upon receipt of the Department’s recommendation, the Secretary:</text> <paragraph num="(1)"> <text>May request additional information from the Sponsor concerning the application, including oral presentations; and</text> </paragraph> <paragraph num="(2)"> <text>Shall make a recommendation to the Subcabinet on whether it should approve, disapprove, or approve with modifications the designation of the area as a sustainable community.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Designation of a Sustainable Community."> <paragraph num="A."> <text>The Subcabinet, on the recommendation of the Secretary, may designate an area as a sustainable community.</text> </paragraph> <paragraph num="B."> <text>If the Subcabinet has not acted within 90 days of a recommendation from the Secretary, the Secretary may designate an area as a sustainable community without the approval of the Subcabinet.</text> </paragraph> <paragraph num="C."> <text>Denial of Applications. If the Subcabinet or the Secretary, acting under §B of this regulation, determines not to designate all or part of an area as a sustainable community, such party shall issue a written notice of denial with an evaluation and explanation of the denial.</text> </paragraph> <paragraph num="D."> <text>Reconsiderations.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the party that issued the denial notice.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration must be received within 30 days following the date of the denial notice.</text> </paragraph> <paragraph num="(3)"> <text>The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application.</text> </paragraph> <paragraph num="(4)"> <text>The Subcabinet or Secretary, as applicable, shall respond in writing to the applicant’s request for reconsideration within 90 days of receipt of the request for reconsideration.</text> </paragraph> <paragraph num="(5)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Maintaining a Sustainable Community Designation."> <paragraph num="A."> <text>To maintain a sustainable community designation, a local government or local governments shall file an updated plan and application with the Department every 5 years</text> </paragraph> <paragraph num="B."> <text>Regulations .03—.05 of this chapter shall apply to the procedures and approval process for redesignating and maintaining a sustainable community designation.</text> </paragraph> <paragraph num="C."> <text>The Department may establish an abbreviated application for redesignating and maintaining a sustainable community designation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Modification of a Sustainable Community Designation."> <paragraph num="A."> <text>A local government or local governments may submit modifications to a sustainable community designation to the Department in accordance with the schedule that the Department establishes.</text> </paragraph> <paragraph num="B."> <text>The subcabinet, on the recommendation of the Secretary, may approve modifications to a sustainable community designation.</text> </paragraph> <paragraph num="C."> <text>Regulations .03—.05 of this chapter shall apply to the procedures and approval process for modifying a sustainable community designation.</text> </paragraph> <paragraph num="D."> <text>The Department may establish an abbreviated application for modifying a sustainable community designation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 6, Subtitle 2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: February 20, 2012 (39:3 Md. R. 258)</annotation> </annotations> </chapter> <chapter num="03" heading="Designation of Neighborhood Conservation Areas"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the procedure for designating Neighborhood Conservation Areas by the Department upon request of a local government under Tax-Property Article, §9-255, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Application” means an application to the Department as described in Regulation .03 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(4)"> <text>“Local government” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(5)"> <text>“Priority funding area” has the meaning stated in COMAR 05.17.01.02.</text> </paragraph> <paragraph num="(6)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(7)"> <text>“Sustainable community” means the part of a priority funding area that:</text> <paragraph num="(a)"> <text>Has been designated as a sustainable community in accordance with Title 6, Subtitle 02 of the Act;</text> </paragraph> <paragraph num="(b)"> <text>Has been designated as a BRAC Revitalization and Incentive Zone under Economic Development Article, Title 5, Subtitle 13, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>Has been designated as a transit-oriented development under Transportation Article, §7-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Application Requirements."> <paragraph num="A."> <text>An application for Neighborhood Conservation Area designation shall be submitted by a local government to the Department in accordance with the schedule that the Department establishes.</text> </paragraph> <paragraph num="B."> <text>An application shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Provide a detailed map of the proposed neighborhood conservation area including electronic geographic information system (GIS) shape files;</text> </paragraph> <paragraph num="(3)"> <text>Provide a description of the proposed neighborhood conservation area including:</text> <paragraph num="(a)"> <text>The concentration of foreclosure activity;</text> </paragraph> <paragraph num="(b)"> <text>The concentration of blighted or vacant properties; and</text> </paragraph> <paragraph num="(c)"> <text>Housing market trends over time;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Describe whether the proposed neighborhood conservation area includes a sustainable community or is located near a sustainable community; and</text> </paragraph> <paragraph num="(5)"> <text>Describe the process used to seek and receive public input on the proposed neighborhood conservation area, including the nature and extent of public support or opposition.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An application for a designation of a neighborhood conservation area shall demonstrate that:</text> <paragraph num="(1)"> <text>The neighborhood conservation area:</text> <paragraph num="(a)"> <text>Is located within a priority funding area;</text> </paragraph> <paragraph num="(b)"> <text>Has a concentration of foreclosure activity; and</text> </paragraph> <paragraph num="(c)"> <text>Has a concentration of blighted or vacant properties;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The local government either;</text> <paragraph num="(a)"> <text>Included an area in the proposed area located in or near a sustainable community; or</text> </paragraph> <paragraph num="(b)"> <text>Evaluated areas in or near sustainable communities and determined that the proposed area was more desirable as a neighborhood conservation area; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The proposed neighborhood conservation area has housing market trends that are weaker than average for the jurisdiction.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Application Processing."> <paragraph num="A."> <text>Application Evaluation.</text> <paragraph num="(1)"> <text>Each application shall be submitted to the Department to determine whether all of the information required under Regulation .03 of this chapter is contained in the application.</text> </paragraph> <paragraph num="(2)"> <text>Upon receipt of all required information, the Department shall:</text> <paragraph num="(a)"> <text>Convene a review team to:</text> <paragraph num="(i)"> <text>Review the applications;</text> </paragraph> <paragraph num="(ii)"> <text>Provide assistance and guidance to applicants; and</text> </paragraph> <paragraph num="(iii)"> <text>Make recommendations to the Secretary;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Refer the application to other State agencies for comment, as the Department considers appropriate;</text> </paragraph> <paragraph num="(c)"> <text>Consider any recommendation from a State agency; and</text> </paragraph> <paragraph num="(d)"> <text>Analyze each application as to determine whether the proposed neighborhood conservation area merits designation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Department, in its discretion, may request additional information from the local government concerning an application, including oral presentations.</text> </paragraph> <paragraph num="(4)"> <text>Upon completion of the requirements in §A(1)—(3) of this regulation, the Department shall make a recommendation on the application to the Secretary.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Recommendation by the Department. Upon receipt of the Department’s recommendation, the Secretary:</text> <paragraph num="(1)"> <text>May request additional information from the local government concerning the application, including oral presentations; and</text> </paragraph> <paragraph num="(2)"> <text>Shall make a determination to approve, disapprove, or approve with modifications the designation of the area as a community conservation area.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Designation of a Neighborhood Conservation Area."> <paragraph num="A."> <text>The Secretary may designate an area as a Neighborhood Conservation Area.</text> </paragraph> <paragraph num="B."> <text>Denial of Applications. If the Secretary, acting under §A of this regulation, determines not to designate all or part of an area as a neighborhood conservation area, the Secretary shall issue a written notice of denial with an evaluation and explanation of the denial.</text> </paragraph> <paragraph num="C."> <text>Reconsiderations.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration must be received within 30 days following the date of the denial notice.</text> </paragraph> <paragraph num="(3)"> <text>The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application.</text> </paragraph> <paragraph num="(4)"> <text>The Department, as applicable, shall respond in writing to the applicant’s request for reconsideration within 90 days of receipt of the request for reconsideration.</text> </paragraph> <paragraph num="(5)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Modification of a Neighborhood Conservation Area Designation."> <paragraph num="A."> <text>A local government or local governments may submit modifications to a neighborhood conservation area designation to the Department in accordance with the schedule that the Department establishes.</text> </paragraph> <paragraph num="B."> <text>The Secretary may approve modifications to a Neighborhood Conservation Area designation.</text> </paragraph> <paragraph num="C."> <text>Regulations .03—.05 of this chapter shall apply to the procedures and approval process for modifying a neighborhood conservation area designation.</text> </paragraph> <paragraph num="D."> <text>The Department may establish an abbreviated application for modifying a neighborhood conservation area designation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax Property Article, §9-255(a)(2), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 15, 2013 (40:7 Md. R. 609)</annotation> </annotations> </chapter> </subtitle> <subtitle num="18" heading="Self-Help Technical Assistance"> <chapter num="01" heading="Self-Help Homeownership Technical Assistance Program"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter describes the policies and procedures for making technical assistance grants to nonprofit organizations and local jurisdictions under the Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objectives of the Program are to make technical assistance grants to expand:</text> <paragraph num="A."> <text>The production of decent, affordable housing for families of limited income through the use of self-help methods of rehabilitation and construction;</text> </paragraph> <paragraph num="B."> <text>Homeownership opportunities for those families for whom it would otherwise not be available without the cost savings achieved by using the self-help methods of rehabilitation and construction; and</text> </paragraph> <paragraph num="C."> <text>Self-reliance, pride of ownership, and sense of community for families who participate in the Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated and as defined in the Act.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 17, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Community Development Administration, an agency within the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(3)"> <text>“Applicant” means any eligible local jurisdiction or nonprofit organization who applies for a technical assistance grant from the Program.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(5)"> <text>“Director” means the Director of the Division of Development Finance of the Department.</text> </paragraph> <paragraph num="(6)"> <text>“Family of limited income” means one or more individuals residing as a household in a dwelling unit whose total combined annual income does not exceed income limits established from time to time by the Secretary, in accordance with Housing and Community Development Article, §4-1706, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Legal entity” means a corporation, association, general partnership, limited partnership, joint venture, nonprofit organization, business, government or political subdivision thereof, or governmental agency.</text> </paragraph> <paragraph num="(8)"> <text>Local Jurisdiction.</text> <paragraph num="(a)"> <text>“Local jurisdiction” means any municipal corporation in Maryland subject to the provisions of the State Constitution, Article XI-E, or any one of the 23 counties of the State or Baltimore City.</text> </paragraph> <paragraph num="(b)"> <text>“Local jurisdiction” includes any board, commission, agency, department, or authority of any municipal corporation, county, or Baltimore City with authority to carry out the rehabilitation or construction of housing.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(10)"> <text>“Owner-builder” means an individual or family who provides all, or a substantial amount as determined by the Department, of the labor necessary to build a housing unit that will be the principal residence of that individual or family as part of a project under the Program.</text> </paragraph> <paragraph num="(11)"> <text>“Owner-building” means the process engaged in by owner-builders in the construction of a principal residence as part of a project under the Program.</text> </paragraph> <paragraph num="(12)"> <text>“Program” means the Self-Help Homeownership Technical Assistance Program of the Department.</text> </paragraph> <paragraph num="(13)"> <text>“Project” means six or more housing units in close proximity to one another as determined by the Department which are built or rehabilitated using the self-help methods and with which the owner-builders or self-help rehabilitators work as a team on the construction or rehabilitation of each others' units.</text> </paragraph> <paragraph num="(14)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(15)"> <text>“Self-help rehabilitator” means an individual or family who provides all, or a substantial amount as determined by the Department, of the labor necessary to rehabilitate, renovate, or improve the principal residence of the individual or the family as part of a project under the Program.</text> </paragraph> <paragraph num="(16)"> <text>“Self-help rehabilitation” means the process engaged in by self-help rehabilitators in the rehabilitation, renovation, or improvement of their principal residences as part of a project under the Program.</text> </paragraph> <paragraph num="(17)"> <text>“Technical assistance grant” or “grant” means a grant awarded by the Program which enables a local jurisdiction or a nonprofit organization to provide technical assistance to owner-builders and self-help rehabilitators.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Grantees."> <text>A nonprofit organization or local jurisdiction shall meet the following requirements to qualify for a grant under the Program:</text> <paragraph num="A."> <text>Have the legal capacity to enter into the grant agreement;</text> </paragraph> <paragraph num="B."> <text>Satisfy all legal requirements to operate in the State; and</text> </paragraph> <paragraph num="C."> <text>Meet the performance standards of the Department, as follows:</text> <paragraph num="(1)"> <text>Not have defaulted on a prior loan or grant from the Department, including a default by failure to complete a project funded by a grant made under the Program within the required time period; and</text> </paragraph> <paragraph num="(2)"> <text>Not be currently barred or suspended from any of the Department's programs.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Use of Grant Funds."> <paragraph num="A."> <text>Grants for construction activities and techniques may be made to local jurisdictions and nonprofit organizations to provide assistance to families of limited income who are owner-builders or self-help rehabilitators for the following purposes:</text> <paragraph num="(1)"> <text>To assist, train, and supervise on self-help construction activities and techniques;</text> </paragraph> <paragraph num="(2)"> <text>To assist in project development, including but not limited to:</text> <paragraph num="(a)"> <text>Preparation of plans for self-help housing;</text> </paragraph> <paragraph num="(b)"> <text>Preparation of contracts for professional services;</text> </paragraph> <paragraph num="(c)"> <text>Application for project funding;</text> </paragraph> <paragraph num="(d)"> <text>Packaging households' applications for assistance;</text> </paragraph> <paragraph num="(e)"> <text>Preparation of subdivision maps;</text> </paragraph> <paragraph num="(f)"> <text>Review of engineering plans and specifications for construction and rehabilitation projects; and</text> </paragraph> <paragraph num="(g)"> <text>Compliance with appropriate requirements of funding agencies and local government;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Administrative costs of providing technical assistance for the activity funded by the Department; and</text> </paragraph> <paragraph num="(4)"> <text>Any other costs approved by the Department in its sole discretion.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Grants for information and technical assistance may be made in connection with a project receiving a grant from the Program for construction activities and techniques, to local jurisdictions and nonprofit organizations to provide owner-builders and self-help rehabilitators information and technical assistance, including:</text> <paragraph num="(1)"> <text>The cost savings of owner-building and self-help rehabilitation;</text> </paragraph> <paragraph num="(2)"> <text>Construction materials and methods;</text> </paragraph> <paragraph num="(3)"> <text>The identity of local material sources and technical resources;</text> </paragraph> <paragraph num="(4)"> <text>Financing requirements and opportunities;</text> </paragraph> <paragraph num="(5)"> <text>Site acquisition;</text> </paragraph> <paragraph num="(6)"> <text>Insurance and legal requirements;</text> </paragraph> <paragraph num="(7)"> <text>Building codes, standards, and housing codes;</text> </paragraph> <paragraph num="(8)"> <text>Other available housing alternatives; and</text> </paragraph> <paragraph num="(9)"> <text>Any other information or technical assistance determined by the Department to further the purposes of the Program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Grants may only be awarded in connection with a project.</text> </paragraph> <paragraph num="D."> <text>Grants may not be used for the purchase of land, materials, tools, and construction equipment or for any costs of construction.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Grant Allocation and Criteria."> <paragraph num="A."> <text>Allocations.</text> <paragraph num="(1)"> <text>The amount of funds available in the fiscal year for Program grants shall be determined as of July 1 of each fiscal year.</text> </paragraph> <paragraph num="(2)"> <text>The Department shall notify local nonprofit organizations engaged in housing-related activities and local jurisdictions of allocations, fund availability, and application cycles.</text> </paragraph> <paragraph num="(3)"> <text>Best efforts shall be made to award grants to facilitate the full use of Program funds in accordance with initial allocations of funds.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Grant Applications. Grants shall be evaluated on a competitive basis in one or more rounds of competition, at the discretion of the Department, taking into consideration the following factors:</text> <paragraph num="(1)"> <text>The extent to which the request for funds serves the largest proportion of families of limited income;</text> </paragraph> <paragraph num="(2)"> <text>The extent to which the applicant uses available federal, State, and local programs and resources in the project;</text> </paragraph> <paragraph num="(3)"> <text>The organizational capacity of the applicant to carry out the project;</text> </paragraph> <paragraph num="(4)"> <text>The feasibility of the project;</text> </paragraph> <paragraph num="(5)"> <text>The cost effectiveness of the project in terms of per unit self-help housing fund costs as determined by the Department;</text> </paragraph> <paragraph num="(6)"> <text>The extent to which project participants use self-help labor; and</text> </paragraph> <paragraph num="(7)"> <text>Any other factors considered relevant by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Grant Terms and Conditions."> <paragraph num="A."> <text>Grant Agreement. Each grantee shall be required to execute a grant agreement with the Department which shall contain such terms as the Department determines to be necessary to ensure compliance with this chapter, any special conditions imposed by grant approval, and any other terms and conditions specified by the Department.</text> </paragraph> <paragraph num="B."> <text>Grant Amount. The grant amount awarded for a project may not exceed, for each housing unit, 20 percent of the average purchase price, over the last 3 fiscal years for which data are available, of a residence financed by a residential mortgage loan purchased by the Administration under the Maryland Mortgage Program in the geographic region where the grant is to be awarded. The Department may provide in its policies for a lower maximum grant amount per project or per housing unit which will be awarded in any given fiscal year under the Program.</text> </paragraph> <paragraph num="C."> <text>Grant Term and Project Completion. The grantee shall complete the project within 2 years from the effective date of the grant agreement unless the Department, in its discretion, permits an extension of the grant term in the event of delays in project implementation beyond the reasonable control of the grantee. The grant shall be disbursed over the term as provided in the grant agreement.</text> </paragraph> <paragraph num="D."> <text>Repayment. The Department may require that a grant made under the Program be repaid, in whole or in part, upon the occurrence of:</text> <paragraph num="(1)"> <text>Default under the terms of a grant agreement;</text> </paragraph> <paragraph num="(2)"> <text>Failure of the recipient to complete the project within the time period specified in this regulation; or</text> </paragraph> <paragraph num="(3)"> <text>Other conditions specified by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Application and Processing Procedures."> <paragraph num="A."> <text>Grant Applications. Applications for grants shall be on the form approved by the Department and shall include the following supporting documentation:</text> <paragraph num="(1)"> <text>Organizational documents of the applicant;</text> </paragraph> <paragraph num="(2)"> <text>Evidence of good standing of the applicant to transact business with the Maryland State Department of Assessments and Taxation and the applicant's state of organization, if different from Maryland;</text> </paragraph> <paragraph num="(3)"> <text>An authorizing resolution of a nonprofit organization's governing body to undertake the grant;</text> </paragraph> <paragraph num="(4)"> <text>Evidence of the number and type of housing units produced by the applicant;</text> </paragraph> <paragraph num="(5)"> <text>The source of funding for the housing units produced;</text> </paragraph> <paragraph num="(6)"> <text>The amount of funds the applicant is seeking;</text> </paragraph> <paragraph num="(7)"> <text>The number of units in the project proposed by the applicant;</text> </paragraph> <paragraph num="(8)"> <text>Description of services to be provided with the grant;</text> </paragraph> <paragraph num="(9)"> <text>Expected types of activities to be conducted with the grant;</text> </paragraph> <paragraph num="(10)"> <text>Geographic area in which the service or activity will be provided;</text> </paragraph> <paragraph num="(11)"> <text>A budget setting forth the kinds and amounts of allowable expenditures to be made with the grant;</text> </paragraph> <paragraph num="(12)"> <text>The proposed manner, timing, and conditions for disbursement of the grant;</text> </paragraph> <paragraph num="(13)"> <text>A timetable for completion of each stage of the project and for final project completion;</text> </paragraph> <paragraph num="(14)"> <text>A proposed form of agreement between the applicant and project participants to be used in connection with the project; and</text> </paragraph> <paragraph num="(15)"> <text>Other documentation the Department considers necessary to evaluate the grant request.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Grant Evaluation and Approval.</text> <paragraph num="(1)"> <text>The Director or the Director's designee shall approve, disapprove, or modify grants in amounts of $250,000 or less.</text> </paragraph> <paragraph num="(2)"> <text>For grants in amounts greater than $250,000, the Secretary shall approve, disapprove, or modify grants upon recommendation of the Director or the Director's designee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Administration of Grants."> <paragraph num="A."> <text>Grantees shall maintain accurate financial records, in a form acceptable to the Department, of all transactions which relate to the grant, and make these records available to the Department for review on request for a period of not less than 3 years after the expiration of the grant agreement.</text> </paragraph> <paragraph num="B."> <text>Grantees shall submit a periodic progress report, in the form required by the Department and on the schedule specified in the grant agreement, which clearly shows progress of the grantee in relation to the grantee's strategic plan and proposed goals and objectives.</text> </paragraph> <paragraph num="C."> <text>Grantees under this Program shall make their books, accounts and records, their administrative offices and personnel, whether full-time, part-time, consultants, or volunteers, available to the Department during reasonable working hours, for the duration of the grant period and for a period of not fewer than 3 years after the expiration of the grant agreement.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>Grantees may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the Program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>Each grantee shall comply with applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Americans with Disabilities Act of 1990, as amended;</text> </paragraph> <paragraph num="(4)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(5)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that order;</text> </paragraph> <paragraph num="(6)"> <text>The Fair Housing Amendments Act of 1988, as amended; and</text> </paragraph> <paragraph num="(7)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Program Administration."> <paragraph num="A."> <text>Except for waivers under §D of this regulation, any action or decision required or permitted to be taken or made by the Department under these regulations may be taken or made by the Director or the Director's designee.</text> </paragraph> <paragraph num="B."> <text>The Department may terminate a grant or refuse to make additional disbursements under a grant agreement if it finds that the grantee is not complying with any of the requirements of the Program or the grant agreement.</text> </paragraph> <paragraph num="C."> <text>The Department may establish from time to time operational handbooks or manuals governing matters relating to the Program including descriptive statements of Program procedures which do not directly affect the rights of the public or the procedures available to the public.</text> </paragraph> <paragraph num="D."> <text>The Secretary may waive or vary particular provisions of these regulations if:</text> <paragraph num="(1)"> <text>The waiver or variance is not inconsistent with the authorizing provisions of the Act;</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary, the application of the regulations in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act; and</text> </paragraph> <paragraph num="(3)"> <text>The Office of the Attorney General approves the waiver for form and legal sufficiency.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="False Statements."> <text>A person may not knowingly make or cause to be made any false statement or report in any documents required to be furnished to the Department by any agreement relating to the Program.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, Title 4, Subtitle 17, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 21, 2002 (29:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective March 16, 2015 (42:5 Md. R. 485)</annotation> </annotations> </chapter> </subtitle> <subtitle num="19" heading="Homebuyer Education and Counseling"> <chapter num="01" heading="Required Notice of Housing Counseling Programs and Services"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Borrower” has the meaning stated in Financial Institutions Article, §11–501, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(3)"> <text>“Homebuyer education or housing counseling” means instruction on preparing for home ownership, shopping for a home, obtaining a mortgage, loan closing, and life as a homeowner.</text> </paragraph> <paragraph num="(4)"> <text>“Initial application” means when:</text> <paragraph num="(a)"> <text>An applicant requests that a mortgage loan be made or obtained on the applicant's behalf; and</text> </paragraph> <paragraph num="(b)"> <text>The person to whom the request was made agrees to begin processing the loan application.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Lender” has the meaning stated in Commercial Law Article, §12–1301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Mortgage loan” has the meaning stated in Financial Institutions Article, §11–501, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Owner-occupied residential real property” means real property that is a one- to four-family home occupied or to be occupied by the borrower as the borrower's primary residence.</text> </paragraph> <paragraph num="(8)"> <text>“Secondary mortgage loan” has the meaning stated in Commercial Law Article, §12-1301, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Application."> <paragraph num="A."> <text>This chapter applies to any lender that makes a mortgage loan secured by owner–occupied residential real property located in the State.</text> </paragraph> <paragraph num="B."> <text>This chapter does not apply to:</text> <paragraph num="(1)"> <text>Any mortgage loan in which the initial application was completed prior to January 1, 2011;</text> </paragraph> <paragraph num="(2)"> <text>A secondary mortgage loan;</text> </paragraph> <paragraph num="(3)"> <text>An open–end or revolving home equity line of credit;</text> </paragraph> <paragraph num="(4)"> <text>A construction loan;</text> </paragraph> <paragraph num="(5)"> <text>An individual who takes back a deferred purchase money mortgage in connection with the sale of residential real property owned by, and titled in the name of, the individual; or</text> </paragraph> <paragraph num="(6)"> <text>An individual who makes a mortgage loan to a borrower who is the individual’s spouse, child, child’s spouse, parent, sibling, grandparent, grandchild, or grandchild’s spouse.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Notice of Housing Counseling Programs and Services."> <paragraph num="A."> <text>Form. Unless the lender is otherwise required by federal or State law to refer a borrower to housing counseling, a lender shall provide a notice of homebuyer education or housing counseling in substantially the following form to a borrower to comply with the requirements set forth in Commercial Law Article, §12-1303, Annotated Code of Maryland:</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Timing of Notice."> <paragraph num="A."> <text>The notice required under Regulation .03 of this chapter shall be provided to a borrower within 10 business days after initial application.</text> </paragraph> <paragraph num="B."> <text>A lender may require borrower to complete a written application before agreeing to begin processing the loan, if that requirement is explained to the applicant.</text> </paragraph> <paragraph num="C."> <text>A lender may not close on a mortgage loan unless the lender has provided the notice required under §A of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Maintaining and Providing Information."> <text>The Department shall:</text> <paragraph num="A."> <text>Maintain information about nonprofit homebuyer education and housing counseling programs and services provided by nonprofit and government organizations certified by the U.S. Department of Housing and Urban Development that are available to residents of the State;</text> </paragraph> <paragraph num="B."> <text>Assemble the information into a form that can be used as the required attachment under Regulation .03A(2) of this chapter; and</text> </paragraph> <paragraph num="C."> <text>Provide the form to lenders and the general public at:</text> <paragraph num="(1)"> <text>The Department’s website addresses:</text> <paragraph num="(a)"> <text>http://www.mdhousing.org/Website/Housing/Counseling/Default.aspx; and</text> </paragraph> <paragraph num="(b)"> <text>http://www.mdhousing.org/Website/Housing/Default.aspx;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Department of Housing and Community Development, 100 Community Place, Crownsville, Maryland 20736; and</text> </paragraph> <paragraph num="(3)"> <text>The Maryland Department of Labor’s website address, http://www.dllr.state.md.us/finance/.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Commercial Law Article, §12-1303, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 2011 (37:20 Md. R. 1392)</annotation> </annotations> </chapter> <chapter num="02" heading="Housing Counseling Certification for Prefile Mediation"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(2)"> <text>“Housing counseling services” means assistance provided to mortgagors or grantors by nonprofit and governmental entities that are identified on a list maintained by the Department of Housing and Community Development under COMAR 05.19.01.05.</text> </paragraph> <paragraph num="(3)"> <text>“Prefile mediation” means foreclosure mediation that occurs in accordance with Real Property Article, §7-105.1(d), Annotated Code of Maryland, before the date on which the order to docket or complaint to foreclose is filed.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Purpose."> <text>The purpose of this chapter is to prescribe the timing and form of certification of a mortgagor or grantor’s participation in housing counseling services as a precondition to prefile mediation in accordance with Real Property Article, §7-105.1(d), Annotated Code of Maryland .</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Providing Information on Housing Counseling Services."> <text>The Department shall:</text> <paragraph num="A."> <text>Maintain information on housing counseling programs and services provided by nonprofit and government organizations certified by the U.S. Department of Housing and Urban Development that are available to residents of the State; and</text> </paragraph> <paragraph num="B."> <text>Provide the information on housing counseling services and a sample of the form under Regulation .04 of this chapter to the general public at:</text> <paragraph num="(1)"> <text>The Department’s website address, http://www.mdhousing.org/Website/Housing/Default.aspx;</text> </paragraph> <paragraph num="(2)"> <text>Department of Housing and Community Development, 100 Community Place Crownsville, Maryland 20736; and</text> </paragraph> <paragraph num="(3)"> <text>The Maryland Department of Labor’s website address, http://www.dllr.state.md.us/finance/.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Timing and Certification of Housing Counseling Services."> <paragraph num="A."> <text>A mortgagor or grantor that has elected to participate in prefile mediation offered by a secured party must:</text> <paragraph num="(1)"> <text>Regardless if they have previously completed housing counseling services, either:</text> <paragraph num="(a)"> <text>Obtain housing counseling services after their election to be participate in prefile mediation; or</text> </paragraph> <paragraph num="(b)"> <text>Be receiving housing counseling services at the time of their election to participate in prefile mediation; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Complete the housing counseling services prior to the prefile mediation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Upon completion of housing counseling services, the entity that provided the services shall provide the mortgagor or grantor with a certificate of housing counseling services in substantially the following form:</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Real Property Article, §7-105.1(d)(4)(ii), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 adopted as an emergency provision effective October 1, 2012 (39:21 Md. R. 1375); emergency status extended to September 30, 2013 (40:9 Md. R. 788); adopted permanently effective August 5, 2013 (40:15 Md. R. 1228)</annotation> </annotations> </chapter> <chapter num="03" heading="Foreclosure Prevention and Housing Counseling Grant Programs"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations describe the policies and procedures for making:</text> <paragraph num="A."> <text>Operating assistance grants under the National Foreclosure Mitigation Counseling Program (NFMC);</text> </paragraph> <paragraph num="B."> <text>Operating assistance grants under the Housing Counseling and Foreclosure Mediation Fund (HCFMF); and</text> </paragraph> <paragraph num="C."> <text>Other housing counseling grants.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Objective."> <text>The objectives of the Programs are to:</text> <paragraph num="A."> <text>Make NFMC operating assistance grants to eligible entities that:</text> <paragraph num="(1)"> <text>Provide housing counseling assistance to owner-occupants of single-family properties, primarily in areas of the State with high rates of defaults and foreclosures; and</text> </paragraph> <paragraph num="(2)"> <text>Provide housing counseling assistance in other areas when there is a demonstrated need for such assistance;</text> </paragraph> </paragraph> <paragraph num="B."> <text>Make HCFMF operating assistance grants to eligible entities that provide housing counseling services to existing and prospective owner-occupants of single-family properties across the State; and</text> </paragraph> <paragraph num="C."> <text>Make other operating and housing counseling assistance grants to eligible entities as resources become available.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(3)"> <text>“Eligible entities” means professional nonprofit housing counseling agencies, legal service providers, United States Department of Housing and Urban Development (HUD) certified housing counseling agencies and other eligible entities appearing on the list of nonprofit and government agencies that provide housing counseling, which list is maintained by the Department pursuant to Commercial Law Article, §12-1303(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Foreclosure mediation” means a conference at which the parties in a foreclosure action, their attorneys, additional representatives of the parties, or a combination of those persons appear before an impartial individual to discuss the positions of the parties in an attempt to reach agreement on a loss mitigation program for the mortgagor or grantor as set forth in the Real Property Act.</text> </paragraph> <paragraph num="(5)"> <text>“Fund” means the Housing Counseling and Foreclosure Mediation Fund established under Housing and Community Development Article, §4-507, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Housing counseling services” means professional pro bono housing counseling services, including foreclosure prevention assistance, foreclosure mediation assistance, legal counseling, post-mitigation and foreclosure counseling, loss mitigation and analysis assistance, credit repair, financial literacy counseling, homebuyer education, and prepurchase counseling provided to mortgagors or grantors by the Eligible Entities.</text> </paragraph> <paragraph num="(7)"> <text>“Local government” means any municipal corporation subject to the provisions of the State Constitution, Article XI-E, or any one of the 23 counties of the State or Baltimore City.</text> </paragraph> <paragraph num="(8)"> <text>“Loss mitigation analysis” means an evaluation of the facts and circumstances of a loan secured by owner-occupied single-family property to determine, as defined in the Real Property Act:</text> <paragraph num="(a)"> <text>Whether a mortgagor or grantor qualifies for a loan modification; and</text> </paragraph> <paragraph num="(b)"> <text>If there will be no loan modification, whether any other loss mitigation program may be made available to the mortgagor or grantor.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity, no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity.</text> </paragraph> <paragraph num="(10)"> <text>“Operating assistance grants” means NMFC and HCFMF grants, or grants funded with other resources, made to eligible entities pursuant to this chapter.</text> </paragraph> <paragraph num="(11)"> <text>“Programs” means the National Foreclosure Mitigation Program and the Housing Counseling and Foreclosure Mediation Fund Grant Programs, or other housing counseling grant programs implemented by the Department.</text> </paragraph> <paragraph num="(12)"> <text>“Real Property Act” means Real Property Article, §7-105.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(14)"> <text>“Single-family property” means residential property of four or fewer single-family dwelling units in which at least one unit is occupied by an individual who, as defined in the Real Property Act:</text> <paragraph num="(a)"> <text>Has an ownership interest in the property; and</text> </paragraph> <paragraph num="(b)"> <text>Uses the property as the individual's primary residence.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“State” means the State of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Grantees."> <text>Eligible entities shall meet the following requirements to qualify for an operating assistance grant:</text> <paragraph num="A."> <text>Have all requisite legal capacity and due authority to enter into the grant;</text> </paragraph> <paragraph num="B."> <text>Satisfy all legal requirements to operate in the State; and</text> </paragraph> <paragraph num="C."> <text>Meet the performance standards of the Department, as follows:</text> <paragraph num="(1)"> <text>Not have defaulted on a prior grant or loan from the Department; and</text> </paragraph> <paragraph num="(2)"> <text>Not be currently barred or suspended from any of the Department's programs.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Eligible Use of Grant Funds."> <paragraph num="A."> <text>NFMC grants may be used for costs associated with providing housing counseling services primarily in areas of the State with high rates of defaults and foreclosures, or in other areas, based on demonstrated need, to owner-occupants of single-family properties who are:</text> <paragraph num="(1)"> <text>Delinquent or are at risk of becoming delinquent on their mortgages; and</text> </paragraph> <paragraph num="(2)"> <text>At risk of default and foreclosure.</text> </paragraph> </paragraph> <paragraph num="B."> <text>HCFMF grants may be used for costs associated with providing housing counseling services to existing or prospective owner-occupants of single-family properties across the State who are:</text> <paragraph num="(1)"> <text>Delinquent or are at risk of becoming delinquent on their mortgages;</text> </paragraph> <paragraph num="(2)"> <text>At risk of default and foreclosure; or</text> </paragraph> <paragraph num="(3)"> <text>In need of homebuyer education, housing advice, or financial counseling.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Eligible costs include:</text> <paragraph num="(1)"> <text>Staff salaries and benefits;</text> </paragraph> <paragraph num="(2)"> <text>A portion of general operating costs of the grantee reasonably associated with the approved activities of the grantee, including travel, administrative overhead, telephone, postage, office supplies, publications, and services;</text> </paragraph> <paragraph num="(3)"> <text>Costs directly associated with undertaking approved activities; and</text> </paragraph> <paragraph num="(4)"> <text>Other costs approved by the Department in its sole discretion.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Ineligible Costs. No funds made available under NFMC or HCFMF may be provided directly to lenders, homeowners, or occupants to discharge outstanding mortgage balances or for any other direct debt reduction payments unless it is permitted by the source of the grant funds made available to the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Grant Allocation and Criteria."> <paragraph num="A."> <text>Allocations.</text> <paragraph num="(1)"> <text>The amount of funds available in the fiscal year for grants shall be determined as of July 1 of each fiscal year.</text> </paragraph> <paragraph num="(2)"> <text>Initial determinations may be adjusted if appropriated funds available for the Programs are increased or decreased after July 1 in any fiscal year.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall notify eligible entities of allocations, fund availability, and application cycles by advertisement posted on the Department’s website and other statewide housing partners’ websites, direct mailings, press releases, or other methods selected by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Grants. Applications for grants shall be evaluated on the following factors, to the extent applicable:</text> <paragraph num="(1)"> <text>The need for services provided by the applicant in the applicant’s service area;</text> </paragraph> <paragraph num="(2)"> <text>The geographic area and client base demographics served by the applicant;</text> </paragraph> <paragraph num="(3)"> <text>The applicant’s experience and performance in carrying out existing housing counseling and foreclosure prevention activities;</text> </paragraph> <paragraph num="(4)"> <text>The ability of the applicant to use the grant to improve the ability of the applicant to provide Programs services;</text> </paragraph> <paragraph num="(5)"> <text>Whether the applicant’s proposed services have measurable outcomes;</text> </paragraph> <paragraph num="(6)"> <text>The applicant’s staffing and capacity, including bilingual and technology capacity and client management software capacity;</text> </paragraph> <paragraph num="(7)"> <text>The applicant’s other funding resources dedicated to carrying out the approved activities;</text> </paragraph> <paragraph num="(8)"> <text>The level of activities, number of clients served, and anticipated outcomes that the applicant proposes to achieve; and</text> </paragraph> <paragraph num="(9)"> <text>Other factors considered relevant by the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Grant Terms and Conditions."> <text>The Department shall establish grant terms and conditions in accordance with the terms of the funding source.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Application and Processing Procedures."> <paragraph num="A."> <text>Grant Applications.</text> <paragraph num="(1)"> <text>Applications for grants shall be on forms approved by the Department.</text> </paragraph> <paragraph num="(2)"> <text>The applications shall include the following information and supporting documentation:</text> <paragraph num="(a)"> <text>Organizational documents of the applicant;</text> </paragraph> <paragraph num="(b)"> <text>A description of the services to be funded with the applicable grant;</text> </paragraph> <paragraph num="(c)"> <text>A description of the geographic area in which the applicant will concentrate its efforts;</text> </paragraph> <paragraph num="(d)"> <text>An operating budget for the services, including the use of funds and the identification and description of leveraged funds and other resources;</text> </paragraph> <paragraph num="(e)"> <text>The term and amount of funds the applicant is seeking; and</text> </paragraph> <paragraph num="(f)"> <text>Other documentation the Department considers necessary to evaluate the grant request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Grant Awards.</text> <paragraph num="(1)"> <text>Applications for grants shall be evaluated based on the criteria set forth in Regulation .06B of this chapter by the Department's Division of Neighborhood Revitalization, which shall make recommendations to the Secretary for awards of grants.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary or the Secretary’s designee may disapprove or approve a grant either on the terms recommended by the Division of Neighborhood Revitalization or on other terms and conditions as the Secretary considers appropriate.</text> </paragraph> <paragraph num="(3)"> <text>Following approval by the Secretary, the Department shall enter into a grant agreement with each successful applicant.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Administration of Grants."> <paragraph num="A."> <text>Recipients of grants shall maintain accurate financial records, in forms acceptable to the Department, of all transactions which relate to the grants, and make these records available to the Department for review on request for a period of not less than 3 years following the expiration of the grant agreements.</text> </paragraph> <paragraph num="B."> <text>Grantees receiving grants shall submit periodic progress reports, in forms required by the Department and on schedules specified in the grant agreements, which clearly show progress of the grantee in relation to the grantee's strategic plan and proposed goals and objectives.</text> </paragraph> <paragraph num="C."> <text>Grantees that do not show adequate progress in meeting goals may not be approved for funding in the subsequent years of the grants.</text> </paragraph> <paragraph num="D."> <text>All grantees under the Programs shall make their books, accounts, records, administrative offices, and personnel, whether full-time, part-time, consultants, or volunteers, available to the Department during reasonable working hours for the duration of the grant period and for a period of not less than 3 years following the expiration of the grant agreements.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Assurance of Compliance with Law."> <paragraph num="A."> <text>Grantees may not discriminate against any person on the basis of race, color, religion, national origin, sex, marital status, physical or mental handicap, or age in any aspect of their projects.</text> </paragraph> <paragraph num="B."> <text>Each grantee shall comply with applicable federal, State, and local laws regarding discrimination and equal opportunity in employment, housing, and credit practices including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Act of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>For nonresidential properties, the Americans with Disabilities Act of 1990; and</text> </paragraph> <paragraph num="(4)"> <text>The Department's Minority Business Enterprise Program, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Grantees shall comply with the provisions of the Governor's Executive Order 01.01.1989.18 regarding a drug and alcohol free workplace and any regulations promulgated under it.</text> </paragraph> <paragraph num="D."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and the grantee.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Programs Administration."> <paragraph num="A."> <text>Except for waivers under §D of this regulation, any action or decision required or permitted to be taken or made by the Department under these regulations may be taken or made by the Assistant Secretary, Division of Neighborhood Revitalization, or the Assistant Secretary's designee.</text> </paragraph> <paragraph num="B."> <text>The Department may terminate a grant or refuse to make additional disbursements under a grant agreement if it finds that the grantee is not complying with any of the requirements of a Program or the grant agreement.</text> </paragraph> <paragraph num="C."> <text>The Department may establish from time to time operational handbooks or manuals governing matters relating to the Programs, including descriptive statements of Programs’ procedures which do not directly affect the rights of the public or the procedures available to the public.</text> </paragraph> <paragraph num="D."> <text>The Secretary may waive or vary particular provisions of these regulations if:</text> <paragraph num="(1)"> <text>The waiver or variance is not inconsistent with the authorizing provisions of the Act or the Real Property Act;</text> </paragraph> <paragraph num="(2)"> <text>In the written determination of the Secretary, the application of the regulations in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act or the Real Property Act; and</text> </paragraph> <paragraph num="(3)"> <text>The Office of the Attorney General approves the waiver for form and legal sufficiency.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="False Statements."> <text>A person may not knowingly make or cause to be made any false statement or report in any documents required to be furnished to the Department by any agreement relating to the Programs.</text> </regulation> <annotations> <annotation type="Authority">Commercial Law Article, §12-1303; Housing and Community Development Article, §§2-102, 2-111, and 4-507; Real Property Article, §7-105.1; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 13, 2014 (41:20 Md. R. 1111)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective December 10, 2015 (42:24 Md. R. 1504)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective December 10, 2015 (42:24 Md. R. 1504)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective December 10, 2015 (42:24 Md. R. 1504)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B, D amended effective December 10, 2015 (42:24 Md. R. 1504)</annotation> </annotations> </chapter> </subtitle> <subtitle num="20" heading="Revitalization Programs"> <chapter num="01" heading="Strategic Demolition and Smart Growth Impact Program"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures for providing financial assistance for neighborhood revitalization projects, and for administering the Strategic Demolition and Smart Growth Impact Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, §4-508, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Application” means an application to the Department as described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Community development organization (CDO)” means a nonprofit organization that operates for the purpose of improving the physical, economic, or social environment of its geographic areas of operation.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(5)"> <text>“Financial assistance” means a grant or a loan.</text> </paragraph> <paragraph num="(6)"> <text>“Fund” means the Strategic Demolition and Smart Growth Impact Fund established under Housing and Community Development Article, §4-508, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of a private shareholder or individual holding any interest in the entity.</text> </paragraph> <paragraph num="(8)"> <text>“Program” means the Strategic Demolition and Smart Growth Impact Program.</text> </paragraph> <paragraph num="(9)"> <text>“Project” means a neighborhood revitalization project consisting of predevelopment activities, including demolition, land assembly, architecture and engineering studies, and site development in a sustainable community.</text> </paragraph> <paragraph num="(10)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(11)"> <text>“Sustainable community” means the area that has been designated a sustainable community in accordance with Housing and Community Development Article, §6-202, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Applicants and Uses."> <paragraph num="A."> <text>To be eligible to receive financial assistance under the Program, an applicant shall meet the following minimum requirements:</text> <paragraph num="(1)"> <text>Be a government agency or a CDO;</text> </paragraph> <paragraph num="(2)"> <text>Not have defaulted on any prior financial assistance from the Department;</text> </paragraph> <paragraph num="(3)"> <text>Not be currently barred or suspended from any of the Department's programs;</text> </paragraph> <paragraph num="(4)"> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program; and</text> </paragraph> <paragraph num="(5)"> <text>If the applicant is a CDO, be in good standing and qualified to do business in Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Financial assistance may be used for the following predevelopment costs and expenses on a project:</text> <paragraph num="(1)"> <text>Demolition;</text> </paragraph> <paragraph num="(2)"> <text>Land assembly;</text> </paragraph> <paragraph num="(3)"> <text>Architecture and engineering; and</text> </paragraph> <paragraph num="(4)"> <text>Site development.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A recipient of financial assistance may grant or lend all or a portion of the financial assistance it receives from the Program to a designated third party to carry out the project in accordance with the terms and conditions of an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Applications."> <paragraph num="A."> <text>Applications for financial assistance shall be accepted in one or more competitive rounds to be announced by the Department annually.</text> </paragraph> <paragraph num="B."> <text>An application submitted to the Department shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by an applicant that meets the requirements of Regulation .03A of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>Be for a project that is located within a sustainable community;</text> </paragraph> <paragraph num="(4)"> <text>State the amount and type of financial assistance requested;</text> </paragraph> <paragraph num="(5)"> <text>Provide a comprehensive description of the applicant and project including:</text> <paragraph num="(a)"> <text>The public purpose of the project and the revitalization needs of the community that will be served;</text> </paragraph> <paragraph num="(b)"> <text>The compatibility of the project with local development plans or redevelopment plans;</text> </paragraph> <paragraph num="(c)"> <text>A projected timeline for implementation of the project;</text> </paragraph> <paragraph num="(d)"> <text>The ability of the applicant to carry out the proposed project in accordance with the projected timeline;</text> </paragraph> <paragraph num="(e)"> <text>Other public and private resources available for implementing the project; and</text> </paragraph> <paragraph num="(f)"> <text>The social and economic opportunities created by the project;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Provide a budget, in a form acceptable to the Department, that at a minimum shows anticipated project costs and expenses, anticipated sources of project revenue, and identification of the revenues that can be used to repay the financial assistance provided by the Program if provided as a loan;</text> </paragraph> <paragraph num="(7)"> <text>Propose benchmarks for evaluating whether the proposed project results in a desired outcome such as community stabilization or reversing the social, economic, and physical decline of the sustainable community in which the project is located;</text> </paragraph> <paragraph num="(8)"> <text>Describe any public input the applicant has received on the proposed project, including the nature and extent of the public support for or in opposition to the proposed project;</text> </paragraph> <paragraph num="(9)"> <text>Demonstrate that, upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located;</text> </paragraph> <paragraph num="(10)"> <text>Demonstrate the ability to gain site control of the project through ownership, leasehold interest, contract, option, or other written agreement satisfactory to the Department;</text> </paragraph> <paragraph num="(11)"> <text>Provide evidence that the applicant has matching funds available for the project in the amounts required by Housing and Community Development Article, §4-508(g)(2), Annotated Code of Maryland, or in the competitive application round announcement;</text> </paragraph> <paragraph num="(12)"> <text>Describe whether historic properties or districts will be impacted and how the applicant will comply with the requirements of State Finance and Procurement Article, §§5A-325—5A-326, Annotated Code of Maryland, and Financial Institutions Article, §13-1112(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(13)"> <text>Include other information or documentation the Department may require.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An application for financial assistance may be submitted to fund one or more projects.</text> </paragraph> <paragraph num="D."> <text>A recipient of financial assistance may file one or more applications in accordance with schedules established by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application Processing."> <paragraph num="A."> <text>Each application shall be submitted to the Department to determine whether all of the information required under Regulation .04 of this chapter is contained in the application.</text> </paragraph> <paragraph num="B."> <text>All complete project applications will be competitively evaluated by the Department on a point basis, which shall include the following criteria:</text> <paragraph num="(1)"> <text>Capacity of the applicant to carry out the project;</text> </paragraph> <paragraph num="(2)"> <text>Community context;</text> </paragraph> <paragraph num="(3)"> <text>Public purpose;</text> </paragraph> <paragraph num="(4)"> <text>Leveraging and cost-effectiveness;</text> </paragraph> <paragraph num="(5)"> <text>Geographic distribution;</text> </paragraph> <paragraph num="(6)"> <text>Unique or time-sensitive projects;</text> </paragraph> <paragraph num="(7)"> <text>Revitalization needs of the community;</text> </paragraph> <paragraph num="(8)"> <text>Economic development and revitalization opportunities created by the project; and</text> </paragraph> <paragraph num="(9)"> <text>Other factors established by the Department in the competitive round announcement.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Department, in its discretion, may:</text> <paragraph num="(1)"> <text>Accept public input on each application;</text> </paragraph> <paragraph num="(2)"> <text>Request from the applicant additional information concerning an application, including oral presentations; and</text> </paragraph> <paragraph num="(3)"> <text>Consider recommendations from other State units on each application.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Upon the Department’s completion of the review and scoring of the applications, the Department shall make a recommendation to the Secretary on the applications.</text> </paragraph> <paragraph num="E."> <text>Upon receipt of the Department's recommendation, the Secretary:</text> <paragraph num="(1)"> <text>May request additional information from the applicant or Department concerning the application, including oral presentations;</text> </paragraph> <paragraph num="(2)"> <text>May give priority to applications that provide for the likely repayment of the financial assistance; and</text> </paragraph> <paragraph num="(3)"> <text>Shall act on the application by approving it, disapproving it, or approving it with modifications.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If the Secretary determines not to approve all or part of an application, the Department shall issue a written notice of denial.</text> </paragraph> <paragraph num="G."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the Department, which must be received by the Department within 30 days following the date of the denial notice.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall respond in writing to the applicant's request for reconsideration within 90 days of receipt by the Department of the request for reconsideration.</text> </paragraph> <paragraph num="(4)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Program Administration."> <paragraph num="A."> <text>The Department may establish from time to time detailed program guidelines containing application schedules, procedures, underwriting standards, processing requirements, and other requirements or matters relating to the Program.</text> </paragraph> <paragraph num="B."> <text>The Department may establish fees related to the processing of applications, underwriting, and servicing of financial assistance.</text> </paragraph> <paragraph num="C."> <text>The Department shall ensure that program guidelines, fee information, and application forms are publicly available on its website and at its offices.</text> </paragraph> <paragraph num="D."> <text>After financial assistance has been awarded to a recipient of financial assistance, the Department may:</text> <paragraph num="(1)"> <text>Determine specific terms and conditions, including length of term and rate of interest, for the financial assistance, which may be awarded as grants, recoverable grants, unsecured loans, or loans secured by a mortgage or other lien or security interest, including a security interest that may be superior or subordinate to other mortgages, liens, or other security interests on the collateral;</text> </paragraph> <paragraph num="(2)"> <text>Require and obtain appraisals, credit information, and other information related to making loans and enforcing the terms and conditions;</text> </paragraph> <paragraph num="(3)"> <text>Enforce the terms of grants, loans, or other financial assistance according to their terms and conditions;</text> </paragraph> <paragraph num="(4)"> <text>Commence and pursue any action to protect or enforce any right conferred by law, contract, or other agreement;</text> </paragraph> <paragraph num="(5)"> <text>Modify any provision of any grant, loan, or other financial assistance in order to facilitate the successful completion or operation of a project; and</text> </paragraph> <paragraph num="(6)"> <text>Exercise all powers authorized under the Act that are necessary or desirable for the implementation of the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Books and Accounts."> <paragraph num="A."> <text>A recipient of financial assistance and the recipient’s contractors and subcontractors shall maintain the books, accounts, and records and shall file with the Department the financial and other reports the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of designated third parties, contractors, and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between a contractor or subcontractor and a recipient of financial assistance.</text> </paragraph> <paragraph num="D."> <text>A recipient of financial assistance shall submit reports to the Department on the progress or implementation of a project in accordance with an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A recipient of financial assistance may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any recipient of financial assistance in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>A recipient of financial assistance shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and the recipient of financial assistance.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="False Statements."> <paragraph num="A."> <text>An individual may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Secretary or the Department by an agreement relating to financial assistance.</text> </paragraph> <paragraph num="B."> <text>An individual who violates §A of this regulation is subject to immediate cancellation or acceleration of the financial assistance provided by the Program and any other penalties authorized by law.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-111(a) and 4-508, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 14, 2017 (44:16 Md. R. 808)</annotation> </annotations> </chapter> <chapter num="02" heading="Baltimore Regional Neighborhood Initiative"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures for providing financial assistance for administering the Baltimore Regional Neighborhood Initiative Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 6, Subtitle 5, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Application” means an application to the Department as described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Community development organization (CDO)” means a nonprofit corporation, foundation, or any other nonprofit legal entity whose purpose is to implement a clear revitalization strategy in a neighborhood or set of neighborhoods within Baltimore City or the inner-beltway communities of Baltimore County or Anne Arundel County.</text> </paragraph> <paragraph num="(4)"> <text>“Community enhancement project” or “project” means a project submitted by an applicant to the Secretary for approval in accordance with the Act and this chapter for one or more of the following purposes:</text> <paragraph num="(a)"> <text>Down payment assistance for homebuyers to purchase and rehabilitate homes;</text> </paragraph> <paragraph num="(b)"> <text>Programs to acquire or rehabilitate vacant or blighted properties;</text> </paragraph> <paragraph num="(c)"> <text>Programs to improve existing residential and business properties;</text> </paragraph> <paragraph num="(d)"> <text>Programs to achieve energy efficiency through weatherization and energy retrofits;</text> </paragraph> <paragraph num="(e)"> <text>Development of mixed-use projects that combine housing, retail, and office space;</text> </paragraph> <paragraph num="(f)"> <text>Development or enhancement of community open space or public infrastructure;</text> </paragraph> <paragraph num="(g)"> <text>Workforce and employment development programs;</text> </paragraph> <paragraph num="(h)"> <text>Strategic demolition; and</text> </paragraph> <paragraph num="(i)"> <text>Development or implementation of any other community enhancement project that the Department considers necessary to further the purposes of the Act.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>“Financial assistance” includes a grant, loan, assurance, guarantee, other credit enhancement, reduction in the principal obligation of or in the rate of interest payable on a loan or portion of a loan, or prepayment of interest on a subordinate or superior loan or portion of a loan.</text> </paragraph> <paragraph num="(7)"> <text>“Fund” means the Baltimore Regional Neighborhood Initiative Fund established under Housing and Community Development Article, §6-510, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Local government” means any of the 23 counties of the State, the City of Baltimore, a municipal corporation of the State subject to the provisions of the State Constitution, Article XI-E, or any of their duly authorized agencies or instrumentalities.</text> </paragraph> <paragraph num="(9)"> <text>“Mixed use” means a use that combines commercial, business, institutional, open space, and residential uses, or some combination of those uses, in the same building or on the same site.</text> </paragraph> <paragraph num="(10)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of a private shareholder or individual holding any interest in the entity.</text> </paragraph> <paragraph num="(11)"> <text>“Program” means the Baltimore Regional Neighborhood Initiative established under the provisions of the Act.</text> </paragraph> <paragraph num="(12)"> <text>“Program agreement” means an agreement or agreements between the Department and a recipient of financial assistance to implement one or more community enhancement projects in a designated Sustainable Community.</text> </paragraph> <paragraph num="(13)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(14)"> <text>“Sustainable community” means the part of a priority funding area that has been designated a sustainable community under Housing and Community Development Article, §6-205, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Sustainable community plan” means a plan consisting of one or more community enhancement projects or other revitalization projects that are located in a sustainable community.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Applicants and Uses."> <paragraph num="A."> <text>A recipient of financial assistance shall meet the following minimum requirements:</text> <paragraph num="(1)"> <text>Be a CDO;</text> </paragraph> <paragraph num="(2)"> <text>Not have defaulted on any prior financial assistance from the Department;</text> </paragraph> <paragraph num="(3)"> <text>Not be currently barred or suspended from any of the Department's programs;</text> </paragraph> <paragraph num="(4)"> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program; and</text> </paragraph> <paragraph num="(5)"> <text>Be in good standing and qualified to do business in Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Financial assistance may be used for any costs and expenses related to the development or implementation of a community enhancement project as approved by the Secretary.</text> </paragraph> <paragraph num="C."> <text>Total noncapital expenditures from the Fund to applicants may not exceed 40 percent of a Program agreement.</text> </paragraph> <paragraph num="D."> <text>A recipient of financial assistance may grant or lend all or a portion of the financial assistance it receives from the Program to a designated third party to carry out the project in accordance with the terms and conditions of an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Applications."> <paragraph num="A."> <text>Applications for financial assistance shall be accepted in one or more competitive rounds to be announced by the Department annually.</text> </paragraph> <paragraph num="B."> <text>An application submitted to the Department shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by a CDO;</text> </paragraph> <paragraph num="(3)"> <text>Be for a project that:</text> <paragraph num="(a)"> <text>Is located within Baltimore City or the inner-beltway communities of Baltimore County or Anne Arundel County; and</text> </paragraph> <paragraph num="(b)"> <text>Is part of and serves to implement a community enhancement project;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>State the amount and type of financial assistance requested;</text> </paragraph> <paragraph num="(5)"> <text>Provide a comprehensive description of the applicant and project including:</text> <paragraph num="(a)"> <text>The neighborhood revitalization plan that includes community enhancement projects located in sustainable communities;</text> </paragraph> <paragraph num="(b)"> <text>A description of the community conditions and how the project or applicant will address those conditions;</text> </paragraph> <paragraph num="(c)"> <text>The ability of the project to address identified challenges within the community;</text> </paragraph> <paragraph num="(d)"> <text>A projected timeline for implementation of the project;</text> </paragraph> <paragraph num="(e)"> <text>The ability of the applicant to carry out the proposed project in accordance with the projected timeline;</text> </paragraph> <paragraph num="(f)"> <text>Other public and private resources available for implementing the project; and</text> </paragraph> <paragraph num="(g)"> <text>The social and economic opportunities created by the project;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Provide a budget, in a form acceptable to the Department, that at a minimum shows anticipated project costs and expenses, anticipated sources of project revenue, and identification of the revenues that can be used to repay the financial assistance provided by the Program if provided as a loan;</text> </paragraph> <paragraph num="(7)"> <text>Propose benchmarks for evaluating whether the proposed project results in a desired outcome such as community stabilization or reversing the social, economic, and physical decline of the sustainable community in which the project is located;</text> </paragraph> <paragraph num="(8)"> <text>Describe any public input the applicant has received on the proposed project, including the nature and extent of the public support for or in opposition to the proposed project;</text> </paragraph> <paragraph num="(9)"> <text>If the project involves the applicant undertaking demolition, development, or rehabilitation, demonstrate:</text> <paragraph num="(a)"> <text>That, upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located; and</text> </paragraph> <paragraph num="(b)"> <text>The ability to gain site control of the project through ownership, leasehold interest, contract, option, or other written agreement satisfactory to the Department;</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Demonstrate that the project can be completed within the time period of the Program agreement, as determined by the Department;</text> </paragraph> <paragraph num="(11)"> <text>Contain the organizational documents of the applicant;</text> </paragraph> <paragraph num="(12)"> <text>Describe whether historic properties or districts will be impacted and how the applicant will comply with the requirements of State Finance and Procurement Article, §§5A-325—5A-326, Annotated Code of Maryland, and Financial Institutions Article, §13-1112(b), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(13)"> <text>Contain written approval for the proposed project in the form of a local government resolution or letter of support; and</text> </paragraph> <paragraph num="(14)"> <text>Include other information or documentation the Department may require.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An application for financial assistance may be submitted to fund one or more projects.</text> </paragraph> <paragraph num="D."> <text>A CDO may submit an application with another CDO or with a community development financial institution that has the capacity and experience to assist in the financing of real estate projects within the community.</text> </paragraph> <paragraph num="E."> <text>A recipient of financial assistance may file one or more applications in accordance with schedules established by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application Processing."> <paragraph num="A."> <text>Each application shall be submitted to the Department to determine whether all of the information required under Regulation .04 of this chapter is contained in the application.</text> </paragraph> <paragraph num="B."> <text>Upon receipt of all required information, the Department shall:</text> <paragraph num="(1)"> <text>Accept public input on each application;</text> </paragraph> <paragraph num="(2)"> <text>Consider recommendations from other State units on each application;</text> </paragraph> <paragraph num="(3)"> <text>Provide written notice and a reasonable opportunity to comment to the political subdivision where the proposed community enhancement project is located as follows:</text> <paragraph num="(a)"> <text>If the application affects a neighborhood entirely within a municipal corporation, the Department must provide notice and a reasonable opportunity to comment to the municipal corporation and not the surrounding county; or</text> </paragraph> <paragraph num="(b)"> <text>If an application affects a neighborhood within more than one political subdivision, the Department must provide notice and a reasonable opportunity to comment to each political subdivision; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Undertake an analysis of each application.</text> </paragraph> </paragraph> <paragraph num="C."> <text>All complete applications which meet the requirements of Regulations .03 and .04 of this chapter shall be evaluated on a point basis.</text> </paragraph> <paragraph num="D."> <text>The Department shall award up to a maximum of 200 total points across the following categories:</text> <paragraph num="(1)"> <text>The neighborhood revitalization plan and how the plan relates to the goals outlined in the community’s larger sustainable communities plan;</text> </paragraph> <paragraph num="(2)"> <text>The description of the community conditions and the appropriateness of outlined strategies to address those conditions;</text> </paragraph> <paragraph num="(3)"> <text>The ability of each proposed community enhancement project to address identified challenges within the community; and</text> </paragraph> <paragraph num="(4)"> <text>The capacity and experience of the applicant and the applicant’s partners to complete the proposals and leverage additional financing.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Upon the Department’s completion of the review and scoring of the applications, the Department shall make a recommendation to the Secretary on the applications.</text> </paragraph> <paragraph num="F."> <text>Upon receipt of the Department's recommendation, the Secretary:</text> <paragraph num="(a)"> <text>May request additional information from the applicant or Department concerning the application, including oral presentations; and</text> </paragraph> <paragraph num="(b)"> <text>Shall act on the application by approving it, disapproving it, or approving it with modifications.</text> </paragraph> </paragraph> <paragraph num="G."> <text>If the Secretary determines not to approve an application, the Department shall issue a written notice of denial.</text> </paragraph> <paragraph num="H."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the Department, which must be received by the Department within 30 days following the date of the denial notice.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall respond in writing to the applicant's request for reconsideration within 90 days of receipt by the Department of the request for reconsideration.</text> </paragraph> <paragraph num="(4)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Program Administration."> <paragraph num="A."> <text>The Department may establish from time to time detailed program guidelines containing application schedules, procedures, underwriting standards, processing requirements, and other requirements or matters relating to the Program.</text> </paragraph> <paragraph num="B."> <text>The Department may establish fees related to the processing of applications, underwriting, and servicing of financial assistance.</text> </paragraph> <paragraph num="C."> <text>The Department shall ensure that program guidelines, fee information, and application forms are publicly available on its website and at its offices.</text> </paragraph> <paragraph num="D."> <text>After financial assistance has been awarded to a recipient of financial assistance, the Department may:</text> <paragraph num="(1)"> <text>Determine specific terms and conditions, including length of term and rate of interest, for the financial assistance, which may be awarded as grants, recoverable grants, unsecured loans, or loans secured by a mortgage or other lien or security interest, including a security interest that may be superior or subordinate to other mortgages, liens, or other security interests on the collateral;</text> </paragraph> <paragraph num="(2)"> <text>Require and obtain appraisals, credit information, and other information related to making loans and enforcing the terms and conditions;</text> </paragraph> <paragraph num="(3)"> <text>Enforce the terms of grants, loans, or other financial assistance according to their terms and conditions;</text> </paragraph> <paragraph num="(4)"> <text>Commence and pursue any action to protect or enforce any right conferred by law, contract, or other agreement;</text> </paragraph> <paragraph num="(5)"> <text>Modify any provision of any grant, loan, or other financial assistance in order to facilitate the successful completion or operation of a project; and</text> </paragraph> <paragraph num="(6)"> <text>Exercise all powers authorized under the Act that are necessary or desirable for the implementation of the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Books and Accounts."> <paragraph num="A."> <text>A recipient of financial assistance and the recipient’s contractors and subcontractors shall maintain the books, accounts, and records and shall file with the Department the financial and other reports the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of designated third parties, contractors, and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between a contractor or subcontractor and a recipient of financial assistance.</text> </paragraph> <paragraph num="D."> <text>A recipient of financial assistance shall submit reports to the Department on the progress or implementation of a project in accordance with an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>An Applicant may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any applicant in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>An Applicant shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties, and between applicants and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="False Statements."> <paragraph num="A."> <text>An individual may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Secretary or the Department by an agreement relating to financial assistance.</text> </paragraph> <paragraph num="B."> <text>An individual applying for or benefiting from financial assistance under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Secretary or the Department on an application or for the purpose of influencing the action of the Secretary or the Department affecting financial assistance already provided.</text> </paragraph> <paragraph num="C."> <text>An individual who violates §A or B of this regulation is subject to immediate cancellation or acceleration of the financial assistance provided by the Program and any other penalties authorized by law.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-111, 5-508, and 6-505(b), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 14, 2017 (44:16 Md. R. 808)</annotation> </annotations> </chapter> <chapter num="03" heading="Seed Community Development Anchor Institution Program"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures for providing financial assistance under and for administering the Seed Community Development Anchor Institution Program.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, §4-509, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Anchor institution” means:</text> <paragraph num="(a)"> <text>An institution of higher education in the State, including departments, foundations, and other entities of the institution; or</text> </paragraph> <paragraph num="(b)"> <text>A hospital institution in the State, including departments, foundations, and other entities of the institution that:</text> <paragraph num="(i)"> <text>Has a group of at least five physicians who are organized as a medical staff for the institution;</text> </paragraph> <paragraph num="(ii)"> <text>Maintains facilities to provide, under the supervision of the medical staff, diagnostic and treatment services for two or more unrelated individuals; and</text> </paragraph> <paragraph num="(iii)"> <text>Admits or retains the individuals for overnight care.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Application” means an application to the Department as described in Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>“Blighted area” means an area in which a majority of buildings have declined in productivity by reason of obsolescence, depreciation, or other causes to an extent that they no longer justify fundamental repairs and adequate maintenance.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>“Financial assistance” means a grant or a loan.</text> </paragraph> <paragraph num="(7)"> <text>“Fund" means the Seed Community Development Anchor Institution Fund established under Housing and Community Development Article, §4-509, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Matching funds” means funds that are contributed to the project in an amount that equals the amount of financial assistance received from the Fund.</text> </paragraph> <paragraph num="(9)"> <text>“Program” means the Seed Community Development Anchor Institution Program established under the provisions of the Act.</text> </paragraph> <paragraph num="(10)"> <text>“Project” means a project submitted by an anchor institution to the Secretary for approval in accordance with the Act and this chapter.</text> </paragraph> <paragraph num="(11)"> <text>“Recipient of financial assistance” means an anchor institution approved by the Department to receive financial assistance under the Program.</text> </paragraph> <paragraph num="(12)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(13)"> <text>“Sustainable community” means an area designated as a sustainable community under Housing and Community Development Article, §6–205, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Applicants and Uses."> <paragraph num="A."> <text>A recipient of financial assistance shall meet the following minimum requirements:</text> <paragraph num="(1)"> <text>Be an anchor institution;</text> </paragraph> <paragraph num="(2)"> <text>Not have defaulted on any prior financial assistance from the Department;</text> </paragraph> <paragraph num="(3)"> <text>Not be currently barred or suspended from any of the Department's programs;</text> </paragraph> <paragraph num="(4)"> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program; and</text> </paragraph> <paragraph num="(5)"> <text>Be in good standing and qualified to do business in Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Financial assistance may be used for any costs and expenses related to community development projects in sustainable communities or in blighted areas of the State.</text> </paragraph> <paragraph num="C."> <text>A recipient of financial assistance may grant or lend all or a portion of the financial assistance it receives from the Program to a designated third party to carry out the project in accordance with the terms and conditions of an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Application Requirements."> <paragraph num="A."> <text>Applications for financial assistance shall be accepted in one or more competitive rounds to be announced by the Department annually.</text> </paragraph> <paragraph num="B."> <text>An application submitted to the Department shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by an applicant that meets the requirements of Regulation .03A of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>Be for a project that is located within a sustainable community or within a blighted area;</text> </paragraph> <paragraph num="(4)"> <text>State the amount and type of financial assistance requested;</text> </paragraph> <paragraph num="(5)"> <text>Provide a comprehensive description of the applicant and project including:</text> <paragraph num="(a)"> <text>The public purpose of the project and the needs of the community that will be served;</text> </paragraph> <paragraph num="(b)"> <text>A projected timeline for implementation of the project;</text> </paragraph> <paragraph num="(c)"> <text>The ability of the applicant to carry out the proposed project in accordance with the projected timeline;</text> </paragraph> <paragraph num="(d)"> <text>Other public and private resources available for implementing the project; and</text> </paragraph> <paragraph num="(e)"> <text>The social and economic benefits created by the project;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Provide a budget, in a form acceptable to the Department, that at a minimum shows anticipated project costs and expenses, anticipated sources of project revenue, and identification of the revenues that can be used to repay the financial assistance provided by the program if provided as a loan;</text> </paragraph> <paragraph num="(7)"> <text>Propose benchmarks for evaluating whether the proposed project results in a desired outcome for the sustainable community or blighted area, such as community stabilization or reversing economic, social, and physical decline of the community in which the project is located;</text> </paragraph> <paragraph num="(8)"> <text>Describe any public input the applicant has received on the proposed project, including the nature and extent of the public support for or in opposition to the proposed project;</text> </paragraph> <paragraph num="(9)"> <text>Demonstrate that, upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located;</text> </paragraph> <paragraph num="(10)"> <text>Demonstrate the ability to gain site control if applicable to the project through ownership, leasehold interest, contract, option or other agreement satisfactory to the Department;</text> </paragraph> <paragraph num="(11)"> <text>Provide evidence that the applicant has matching funds available for the project in the amounts required by Housing and Community Development Article, §4-509(g)(2), Annotated Code of Maryland, or in the competitive application round announcement;</text> </paragraph> <paragraph num="(12)"> <text>Describe whether historic properties or districts will be impacted and how the applicant will comply with the requirements of State Finance and Procurement Article, §§5A-325—5A-326, Annotated Code of Maryland, and Financial Institutions Article, §13-1112(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(13)"> <text>Include other information or documentation the Department may require.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An application for financial assistance may be submitted to fund one or more projects.</text> </paragraph> <paragraph num="D."> <text>A recipient of financial assistance may file one or more applications in accordance with schedules established by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application Processing."> <paragraph num="A."> <text>The Department shall determine whether information required under Regulation .04 of this chapter is contained in the application.</text> </paragraph> <paragraph num="B."> <text>All complete applications will be competitively evaluated by the Department on a point basis, which shall include the following criteria:</text> <paragraph num="(1)"> <text>Capacity of the applicant to carry out the project;</text> </paragraph> <paragraph num="(2)"> <text>Community context;</text> </paragraph> <paragraph num="(3)"> <text>Public purpose;</text> </paragraph> <paragraph num="(4)"> <text>Leveraging and cost-effectiveness;</text> </paragraph> <paragraph num="(5)"> <text>Geographic distribution;</text> </paragraph> <paragraph num="(6)"> <text>Unique or time-sensitive projects;</text> </paragraph> <paragraph num="(7)"> <text>Revitalization needs of the community;</text> </paragraph> <paragraph num="(8)"> <text>Economic development and revitalization opportunities created by the project; and</text> </paragraph> <paragraph num="(9)"> <text>Other factors established by the Department in the competitive round announcement.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Department, in its discretion, may:</text> <paragraph num="(1)"> <text>Accept public input on an application;</text> </paragraph> <paragraph num="(2)"> <text>Request from the applicant additional information concerning an application, including oral presentations; and</text> </paragraph> <paragraph num="(3)"> <text>Refer the application to other State agencies, as the Department considers appropriate, to undertake the analysis of the application.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Upon the Department’s completion of the review and scoring of the applications, the Department shall make a recommendation to the Secretary on the applications.</text> </paragraph> <paragraph num="E."> <text>Upon receipt of the Department's recommendation, the Secretary:</text> <paragraph num="(1)"> <text>May request additional information from the applicant or Department concerning the application, including oral presentations;</text> </paragraph> <paragraph num="(2)"> <text>May give priority to applications that provide for the likely repayment of the financial assistance; and</text> </paragraph> <paragraph num="(3)"> <text>Shall act on the application by approving it, disapproving it, or approving it with modifications.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If the Secretary determines not to approve all or part of an application, the Department shall issue a written notice of denial.</text> </paragraph> <paragraph num="G."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the Department, which must be received by the Department within 30 days following the date of the denial notice.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall respond in writing to the applicant's request for reconsideration within 90 days of receipt by the Department of the request for reconsideration.</text> </paragraph> <paragraph num="(4)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Program Administration."> <paragraph num="A."> <text>The Department may establish from time to time detailed program guidelines containing application schedules, procedures, underwriting standards, processing requirements, and other requirements or matters relating to the program.</text> </paragraph> <paragraph num="B."> <text>The Department may establish fees related to the processing of applications, underwriting, and servicing of financial assistance.</text> </paragraph> <paragraph num="C."> <text>The Department shall ensure that program guidelines, fee information, and application forms are publicly available on its website and at its offices.</text> </paragraph> <paragraph num="D."> <text>After financial assistance has been awarded to a recipient of financial assistance, the Department may:</text> <paragraph num="(1)"> <text>Determine specific terms and conditions, including length of term and rate of interest, for the financial assistance, which may be awarded as grants, recoverable grants, unsecured loans, or loans secured by a mortgage or other lien or security interest, including a security interest that may be superior or subordinate to other mortgages, liens, or other security interests on the collateral;</text> </paragraph> <paragraph num="(2)"> <text>Require and obtain appraisals, credit information, and other information related to making loans and enforcing the terms and conditions;</text> </paragraph> <paragraph num="(3)"> <text>Enforce the terms of grants, loans, or other financial assistance according to their terms and conditions;</text> </paragraph> <paragraph num="(4)"> <text>Commence and pursue any action to protect or enforce any right conferred by law, contract, or other agreement;</text> </paragraph> <paragraph num="(5)"> <text>Modify any provision of any grant, loan, or other financial assistance in order to facilitate the successful completion or operation of a project; and</text> </paragraph> <paragraph num="(6)"> <text>Exercise all powers authorized under the Act that are necessary or desirable for the implementation of the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Books and Accounts."> <paragraph num="A."> <text>A recipient of financial assistance and the recipient’s contractors and subcontractors shall maintain the books, accounts, and records and shall file with the Department the financial and other reports the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of designated third parties, contractors, and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between a contractor or subcontractor and a recipient of financial assistance.</text> </paragraph> <paragraph num="D."> <text>A recipient of financial assistance shall submit reports to the Department on the progress or implementation of a project in accordance with an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A recipient of financial assistance may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any recipient of financial assistance in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>A recipient of financial assistance shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and the recipient of financial assistance.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="False Statements."> <paragraph num="A."> <text>An individual may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Secretary or the Department by an agreement relating to financial assistance.</text> </paragraph> <paragraph num="B."> <text>An individual who violates §A of this regulation is subject to immediate cancellation or acceleration of the financial assistance provided by the Program and any other penalties authorized by law.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §4-509, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 14, 2017 (44:16 Md. R. 808)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 5, 2026 (52:26 Md. R. 1309)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective January 5, 2026 (52:26 Md. R. 1309)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective January 5, 2026 (52:26 Md. R. 1309)</annotation> </annotations> </chapter> <chapter num="04" heading="National Capital Strategic Economic Development Fund"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures for providing grants for administering the National Capital Strategic Economic Development Fund.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 4, Subtitle 5, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Application” means an application to the Department as described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Commercial or residential development project” may include renovation and rehabilitation of single family homes, acquisition and rehabilitation of vacant homes for resale to new homebuyers, improvements to business properties, enhancement of community open space or public infrastructure, workforce and employment development programs, and such other projects as the Department may approve.</text> </paragraph> <paragraph num="(4)"> <text>“Community development organization (CDO)” means a nonprofit corporation, foundation, or any other nonprofit legal entity whose purpose is to implement a clear revitalization strategy.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>“Fund” means the National Capital Strategic Economic Development Fund established under Housing and Community Development Article, §4-510, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Grant agreement” means an agreement or agreements between the Department and a grantee to implement one or more projects.</text> </paragraph> <paragraph num="(8)"> <text>“Grantee” means a recipient of funds under the Program.</text> </paragraph> <paragraph num="(9)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of a private shareholder or individual holding any interest in the entity.</text> </paragraph> <paragraph num="(10)"> <text>“Program” means the National Capital Strategic Economic Development Fund established under the provisions of the Act.</text> </paragraph> <paragraph num="(11)"> <text>“Project” means a commercial or residential development project submitted by an applicant to the Secretary for approval in accordance with the Act and this chapter for site acquisition, land assembly, architecture and engineering, and site development for revitalization.</text> </paragraph> <paragraph num="(12)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(13)"> <text>“Sustainable community” means the part of a priority funding area that has been designated a sustainable community under Housing and Community Development Article, §6-205, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Applicants and Uses."> <paragraph num="A."> <text>A grantee shall meet the following minimum requirements:</text> <paragraph num="(1)"> <text>Be a community development organization or a government agency;</text> </paragraph> <paragraph num="(2)"> <text>Not have defaulted on any prior financial assistance from the Department;</text> </paragraph> <paragraph num="(3)"> <text>Not be currently barred or suspended from any of the Department’s programs;</text> </paragraph> <paragraph num="(4)"> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the grant agreement;</text> </paragraph> <paragraph num="(5)"> <text>If a community development organization, be in good standing and qualified to do business in Maryland; and</text> </paragraph> <paragraph num="(6)"> <text>Provide evidence that the applicant has matching funds available for the project in the amounts required by Housing and Community Development Article, §4-510(g)(2), Annotated Code of Maryland, or in the competitive application round announcement.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Grants may be used for any predevelopment costs and expenses related to the development or implementation of a project as approved by the Department.</text> </paragraph> <paragraph num="C."> <text>Appropriations to the Fund shall be allocated as follows:</text> <paragraph num="(1)"> <text>85% for projects in those areas of the State located between Interstate Highway 495 and the District of Columbia; and</text> </paragraph> <paragraph num="(2)"> <text>15% for projects throughout the State.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Applications."> <paragraph num="A."> <text>Applications for grants shall be accepted in one or more competitive rounds to be announced by the Department annually or as otherwise set forth in the Program guidelines.</text> </paragraph> <paragraph num="B."> <text>An application submitted to the Department shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by a community development organization or government agency;</text> </paragraph> <paragraph num="(3)"> <text>Be for a project that:</text> <paragraph num="(a)"> <text>Is located within a designated sustainable community; and</text> </paragraph> <paragraph num="(b)"> <text>Is for an eligible purpose;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>State the amount of grant requested;</text> </paragraph> <paragraph num="(5)"> <text>Provide a comprehensive description of the applicant and project including:</text> <paragraph num="(a)"> <text>The neighborhood revitalization plan that includes projects located in sustainable communities;</text> </paragraph> <paragraph num="(b)"> <text>A description of the community conditions and how the project or applicant will address those conditions;</text> </paragraph> <paragraph num="(c)"> <text>The ability of the project to address identified challenges within the community;</text> </paragraph> <paragraph num="(d)"> <text>A projected timeline for implementation of the project;</text> </paragraph> <paragraph num="(e)"> <text>The ability of the applicant to carry out the proposed project in accordance with the projected timeline;</text> </paragraph> <paragraph num="(f)"> <text>Other public and private resources available for implementing the project; and</text> </paragraph> <paragraph num="(g)"> <text>The social and economic opportunities created by the project;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Provide a budget, in a form acceptable to the Department, that at a minimum shows anticipated project costs and expenses and anticipated sources of project revenue;</text> </paragraph> <paragraph num="(7)"> <text>Propose benchmarks for evaluating whether the proposed project results in a desired outcome such as community stabilization or reversing the social, economic, and physical decline of the sustainable community in which the project is located;</text> </paragraph> <paragraph num="(8)"> <text>Describe any public input the applicant has received on the proposed project, including the nature and extent of the public support for or in opposition to the proposed project;</text> </paragraph> <paragraph num="(9)"> <text>If the project involves the applicant undertaking demolition, development, or rehabilitation, demonstrate:</text> <paragraph num="(a)"> <text>That, upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located; and</text> </paragraph> <paragraph num="(b)"> <text>The ability to gain site control of the project through ownership, leasehold interest, contract, option, or other written agreement satisfactory to the Department;</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Demonstrate that the project can be completed within the time period of the grant agreement, as determined by the Department;</text> </paragraph> <paragraph num="(11)"> <text>Contain the organizational documents of any applicant that is a community development organization;</text> </paragraph> <paragraph num="(12)"> <text>Describe whether historic properties or districts will be impacted and how the applicant will comply with the requirements of State Finance and Procurement Article, §§5A-325—5A-326, Annotated Code of Maryland, and Financial Institutions Article, §13-1112(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(13)"> <text>Include other information or documentation the Department may require.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An application for a grant may be submitted to fund one or more projects.</text> </paragraph> <paragraph num="D."> <text>An applicant may file one or more applications in accordance with schedules established by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application Processing."> <paragraph num="A."> <text>Each application shall be submitted to the Department to determine whether all of the information required under Regulation .04 of this chapter is contained in the application.</text> </paragraph> <paragraph num="B."> <text>Each application shall include:</text> <paragraph num="(1)"> <text>The neighborhood revitalization plan and how the plan relates to the goals outlined in the community’s larger sustainable communities plan;</text> </paragraph> <paragraph num="(2)"> <text>The description of the community conditions and the appropriateness of outlined strategies to address those conditions;</text> </paragraph> <paragraph num="(3)"> <text>The ability of each proposed project to address identified challenges within the community; and</text> </paragraph> <paragraph num="(4)"> <text>The capacity and experience of the applicant and the applicant’s partners to complete the proposals and leverage additional financing.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Upon the Department’s completion of the review and scoring of the applications, the Department shall make a recommendation to the Secretary on the applications.</text> </paragraph> <paragraph num="D."> <text>Upon receipt of the Department’s recommendation, the Secretary:</text> <paragraph num="(1)"> <text>May request additional information from the applicant or Department concerning the application, including oral presentations; and</text> </paragraph> <paragraph num="(2)"> <text>Shall act on the application by approving it, disapproving it, or approving it with modifications.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If the Secretary determines not to approve an application, the Department shall issue a written notice of denial.</text> </paragraph> <paragraph num="F."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the Department, which must be received by the Department within 30 days following the date of the denial notice.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall respond in writing to the applicant’s request for reconsideration within 90 days of receipt by the Department of the request for reconsideration.</text> </paragraph> <paragraph num="(4)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Program Administration."> <paragraph num="A."> <text>The Department may establish, from time to time, detailed program guidelines containing application schedules, procedures, underwriting standards, processing requirements, and other requirements or matters relating to the Program.</text> </paragraph> <paragraph num="B."> <text>The Department may establish fees related to the processing of applications, underwriting, and servicing of grants.</text> </paragraph> <paragraph num="C."> <text>The Department shall ensure that program guidelines, fee information, and application forms are publicly available on its website and at its offices.</text> </paragraph> <paragraph num="D."> <text>After a grant has been awarded, the Department may:</text> <paragraph num="(1)"> <text>Determine specific terms and conditions of the grant;</text> </paragraph> <paragraph num="(2)"> <text>Enforce the terms of the grants according to their terms and conditions;</text> </paragraph> <paragraph num="(3)"> <text>Commence and pursue any action to protect or enforce any right conferred by law, contract, or other agreement;</text> </paragraph> <paragraph num="(4)"> <text>Modify any provision of any grant in order to facilitate the successful completion or operation of a project; and</text> </paragraph> <paragraph num="(5)"> <text>Exercise all powers authorized under the Act that are necessary or desirable for the implementation of the Program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Books and Accounts."> <paragraph num="A."> <text>A grantee and the grantee’s contractors and subcontractors shall maintain books, accounts, and records and shall file with the Department the financial and other reports the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of designated third parties, contractors, and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between a contractor or subcontractor and a grantee.</text> </paragraph> <paragraph num="D."> <text>A grantee shall submit reports to the Department on the progress or implementation of a project in accordance with an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>An applicant may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, gender identity, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any applicant in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>An applicant shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties, and between applicants and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="False Statements."> <paragraph num="A."> <text>An individual may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Secretary or the Department by a grant agreement or any other document relating to financial assistance from the Department.</text> </paragraph> <paragraph num="B."> <text>An individual applying for or benefiting from a grant agreement under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Secretary or the Department on an application or for the purpose of influencing the action of the Secretary or the Department affecting financial assistance already provided.</text> </paragraph> <paragraph num="C."> <text>An individual who violates §A or B of this regulation is subject to immediate termination of the grant agreement provided by the Program and any other penalties authorized by law.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-102(a)(7) and 4-510, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 1, 2019 (46:13 Md. R. 589)</annotation> </annotations> </chapter> <chapter num="05" heading="Business Façade Improvement Programs"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures for administering the Business Facade Improvement Program Fund to assist qualified businesses with improving the outside appearance of buildings and facilities.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Title 6, Subtitle 11, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Application” means an application to the Department as described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Business” means a commercial or industrial enterprise.</text> </paragraph> <paragraph num="(4)"> <text>“Community development organization” means an organization that meets the requirements of Housing and Community Development Article, §6-203, Annotated Code of Maryland</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(6)"> <text>“Grant agreement” means an agreement or agreements between the Department and a grantee to implement one or more projects.</text> </paragraph> <paragraph num="(7)"> <text>“Grantee” means a political subdivision or community development organization that receives funds under the Program.</text> </paragraph> <paragraph num="(8)"> <text>“Local project” means a project to improve the outside appearance of a qualified business’s building or facility.</text> </paragraph> <paragraph num="(9)"> <text>“Political subdivision” means a county of the State, Baltimore City, or a municipal corporation of the State.</text> </paragraph> <paragraph num="(10)"> <text>“Program” means the Business Façade Improvement Program established under the provisions of the Act.</text> </paragraph> <paragraph num="(11)"> <text>“Project” means a program submitted by a political subdivision to the Department for approval in accordance with the Act and this chapter that describes the process for qualified businesses to apply to the political subdivision for funding for local projects.</text> </paragraph> <paragraph num="(12)"> <text>“Qualified business” means a business that is located in a sustainable community and submits an application to a grantee to fund a local project.</text> </paragraph> <paragraph num="(13)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(14)"> <text>“Sustainable community” means the part of a priority funding area that has been designated a sustainable community under Housing and Community Development Article, §6-205, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Applicants and Uses."> <paragraph num="A."> <text>A grantee shall meet the following minimum requirements:</text> <paragraph num="(1)"> <text>Be a political subdivision or a community development organization;</text> </paragraph> <paragraph num="(2)"> <text>Not have defaulted on any prior financial assistance from the Department;</text> </paragraph> <paragraph num="(3)"> <text>Not be currently barred or suspended from any of the Department’s programs;</text> </paragraph> <paragraph num="(4)"> <text>Serve at least one sustainable community; and</text> </paragraph> <paragraph num="(5)"> <text>Submit an application to the Department in accordance with the Act and this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Grants may be used to implement projects approved by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Applications."> <paragraph num="A."> <text>Applications for grants shall be accepted in one or more competitive rounds to be announced by the Department annually or as otherwise set forth in the Program guidelines.</text> </paragraph> <paragraph num="B."> <text>An application submitted to the Department shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by an eligible applicant;</text> </paragraph> <paragraph num="(3)"> <text>Identify the sustainable communities within its jurisdiction or service area;</text> </paragraph> <paragraph num="(4)"> <text>State the amount of grant requested;</text> </paragraph> <paragraph num="(5)"> <text>Provide a comprehensive description of the:</text> <paragraph num="(a)"> <text>Application process for qualified businesses seeking to participate in the Program;</text> </paragraph> <paragraph num="(b)"> <text>Criteria for rating qualified businesses that apply for grants; and</text> </paragraph> <paragraph num="(c)"> <text>Criteria for awarding grants to qualified businesses;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Provide a budget, in a form acceptable to the Department, that at a minimum shows anticipated project costs and expenses and anticipated sources of project revenue;</text> </paragraph> <paragraph num="(7)"> <text>Propose benchmarks for evaluating whether the proposed project results in a desired outcome such as community stabilization or reversing the social, economic, and physical decline of the sustainable community in which the project is located;</text> </paragraph> <paragraph num="(8)"> <text>Describe any public input the applicant has received on the proposed project, including the nature and extent of the public support for or in opposition to the proposed project;</text> </paragraph> <paragraph num="(9)"> <text>Demonstrate:</text> <paragraph num="(a)"> <text>That, upon completion, the local projects will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the local project is located; and</text> </paragraph> <paragraph num="(b)"> <text>The ability of the qualified business to gain site control of the local project through ownership, leasehold interest, contract, option, or other written agreement satisfactory to the Department;</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Demonstrate that the project can be completed within the time period of the grant agreement, as determined by the Department;</text> </paragraph> <paragraph num="(11)"> <text>Describe whether historic properties or districts will be impacted and how the qualified businesses will comply with the requirements of State Finance and Procurement Article, §§5A-325—5A-326, and Financial Institutions Article, §13-1112(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(12)"> <text>Include other information or documentation the Department may require.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An application for a grant may be submitted to fund one or more projects.</text> </paragraph> <paragraph num="D."> <text>An applicant may file one or more applications in accordance with schedules established by the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application Processing."> <paragraph num="A."> <text>The Department shall determine whether information required under Regulation .04 of this chapter is contained in the application.</text> </paragraph> <paragraph num="B."> <text>All complete applications will be competitively evaluated by the Department on a point basis, which shall include the following criteria:</text> <paragraph num="(1)"> <text>Capacity of the applicant to carry out the project;</text> </paragraph> <paragraph num="(2)"> <text>Community context;</text> </paragraph> <paragraph num="(3)"> <text>Public purpose;</text> </paragraph> <paragraph num="(4)"> <text>Leveraging and cost-effectiveness;</text> </paragraph> <paragraph num="(5)"> <text>Geographic distribution;</text> </paragraph> <paragraph num="(6)"> <text>Unique or time-sensitive projects;</text> </paragraph> <paragraph num="(7)"> <text>Revitalization needs of the community;</text> </paragraph> <paragraph num="(8)"> <text>Economic development and revitalization opportunities created by the project; and</text> </paragraph> <paragraph num="(9)"> <text>Other factors established by the Department in the competitive round announcement.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Department, in its discretion, may:</text> <paragraph num="(1)"> <text>Accept public input on an application;</text> </paragraph> <paragraph num="(2)"> <text>Request from the applicant additional information concerning an application, including oral presentations; and</text> </paragraph> <paragraph num="(3)"> <text>Refer the application to other State agencies, as the Department considers appropriate, to undertake the analysis of the application.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Upon the Department’s completion of the review and scoring of the applications, the Department shall make a recommendation to the Secretary on the applications.</text> </paragraph> <paragraph num="E."> <text>Upon receipt of the Department's recommendation, the Secretary:</text> <paragraph num="(1)"> <text>May request additional information from the applicant or Department concerning the application, including oral presentations; and</text> </paragraph> <paragraph num="(2)"> <text>Shall act on the application by approving it, disapproving it, or approving it with modifications.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If the Secretary determines not to approve all or part of an application, the Department shall issue a written notice of denial.</text> </paragraph> <paragraph num="G."> <text>Reconsideration.</text> <paragraph num="(1)"> <text>An applicant may request initial reconsideration of a denial by submitting a written request to the Department, which shall be received by the Department within 30 days following the date of the denial notice.</text> </paragraph> <paragraph num="(2)"> <text>The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application.</text> </paragraph> <paragraph num="(3)"> <text>The Department shall respond in writing to the applicant's request for reconsideration within 90 days of receipt by the Department of the request for reconsideration.</text> </paragraph> <paragraph num="(4)"> <text>An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Books and Accounts."> <paragraph num="A."> <text>A recipient of financial assistance and the recipient’s contractors and subcontractors shall maintain the books, accounts, and records and shall file with the Department the financial and other reports the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of designated third parties, contractors, and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between a contractor or subcontractor and a recipient of financial assistance.</text> </paragraph> <paragraph num="D."> <text>A recipient of financial assistance shall submit reports to the Department on the progress or implementation of a project in accordance with an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>A recipient of financial assistance may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any recipient of financial assistance in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>A recipient of financial assistance shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and the recipient of financial assistance.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="False Statements."> <paragraph num="A."> <text>An individual may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Secretary or the Department by a grant agreement or any other document relating to financial assistance.</text> </paragraph> <paragraph num="B."> <text>An individual applying for or benefitting from a grant agreement under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Secretary or the Department on an application or for the purpose of influencing the action of the Secretary or Department affecting financial assistance already provided.</text> </paragraph> <paragraph num="C."> <text>An individual who violates §A of this regulation is subject to immediate cancellation or acceleration of the financial assistance provided by the Program and any other penalties authorized by law.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§2-102(a)(7) and 6-1103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 15, 2024 (51:7 Md. R. 332)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 17, 2025 (52:3 Md. R. 159)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective February 17, 2025 (52:3 Md. R. 159)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective February 17, 2025 (52:3 Md. R. 159)</annotation> </annotations> </chapter> <chapter num="06" heading="Catalytic Revitalization Project Tax Credit"> <regulation prefix="Regulation" num=".01" heading="General."> <text>This chapter prescribes the policies, procedures, and authorizations for allocating the Catalytic Revitalization Project Tax Credit described in this chapter.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated and as defined in the Act.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means the Housing and Community Development Article, Title 6, Subtitle 9, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Affordable” means housing costs do not exceed 30 percent of a household's annual income.</text> </paragraph> <paragraph num="(3)"> <text>“Catalytic revitalization project” means the substantial rehabilitation of a property in the State:</text> <paragraph num="(a)"> <text>That was formerly owned by the State or the federal government;</text> </paragraph> <paragraph num="(b)"> <text>In which rehabilitation will foster economic, housing, and community development within the community in which the property is located; and</text> </paragraph> <paragraph num="(c)"> <text>That is out of service and was formerly used as a college or university, K–12 school, hospital, mental health facility, or military facility or installation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Costs” means the costs incurred to develop a catalytic revitalization project and includes the costs of:</text> <paragraph num="(a)"> <text>Necessary studies, surveys, plans, and specifications;</text> </paragraph> <paragraph num="(b)"> <text>Architectural, engineering, or other special services, including flood plain studies, environmental audits, and critical area or wetland assessments;</text> </paragraph> <paragraph num="(c)"> <text>Land and improvements;</text> </paragraph> <paragraph num="(d)"> <text>Site preparation;</text> </paragraph> <paragraph num="(e)"> <text>Construction and rehabilitation, as applicable;</text> </paragraph> <paragraph num="(f)"> <text>Indemnity and surety bonds and premiums on insurance;</text> </paragraph> <paragraph num="(g)"> <text>Temporary relocation expenses of residents, if applicable; and</text> </paragraph> <paragraph num="(h)"> <text>Other costs determined to be acceptable by the Department.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Department” means the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(6)"> <text>“New construction costs” means the costs associated with the construction of new structures that connect, expand, or integrate the existing structures to be rehabilitated.</text> </paragraph> <paragraph num="(7)"> <text>“Owned” means a prior ownership interest in real property pursuant to a:</text> <paragraph num="(a)"> <text>Deed;</text> </paragraph> <paragraph num="(b)"> <text>Long-term lease;</text> </paragraph> <paragraph num="(c)"> <text>Federal or State law or legal authority that allowed use and occupation of real property for a governmental purpose; or</text> </paragraph> <paragraph num="(d)"> <text>Other legal instrument.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Rehabilitation costs” means the costs associated with the rehabilitation of existing structures.</text> </paragraph> <paragraph num="(9)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(10)"> <text>“State tax credit” means the Catalytic Revitalization Project Tax Credit allowed under the Act and this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Applicants."> <paragraph num="A."> <text>An individual, nonprofit organization, or business entity that is proposing a catalytic revitalization project may apply to the Department for an allocation of the available State tax credit.</text> </paragraph> <paragraph num="B."> <text>An applicant shall be in good standing and qualified to do business in Maryland.</text> </paragraph> <paragraph num="C."> <text>An applicant shall have the legal authority to execute an enforceable agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Applications."> <paragraph num="A."> <text>The Department may accept applications on a first-come, first-served basis or in competitive rounds to be announced by the Department when the State tax credit is available under the Act.</text> </paragraph> <paragraph num="B."> <text>The Department shall consider the following factors when reviewing an application with an emphasis on applications that promote affordable housing:</text> <paragraph num="(1)"> <text>Historic preservation;</text> </paragraph> <paragraph num="(2)"> <text>Community development; and</text> </paragraph> <paragraph num="(3)"> <text>Economic development.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An application submitted to the Department shall:</text> <paragraph num="(1)"> <text>Be on standard application forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by an eligible applicant under Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>Be for a catalytic revitalization project;</text> </paragraph> <paragraph num="(4)"> <text>Provide a description of how the project will promote the factors listed in §B of this regulation;</text> </paragraph> <paragraph num="(5)"> <text>Describe if the project will be completed in phases; and</text> </paragraph> <paragraph num="(6)"> <text>Include any other information required by the Department.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Applications shall be accompanied by all documentation in the form and containing the information specified by the application procedures adopted by the Department, which may vary depending on the type of project.</text> </paragraph> <paragraph num="E."> <text>Application Evaluation.</text> <paragraph num="(1)"> <text>Each application submitted shall be reviewed by the Department to determine whether all of the information required under this chapter is contained in the application.</text> </paragraph> <paragraph num="(2)"> <text>Upon submission of all required information, the Department shall undertake an analysis of each application and make a recommendation to the Secretary as to whether a project is eligible for an initial allocation of the State tax credit and any special terms and conditions for a project</text> </paragraph> <paragraph num="(3)"> <text>The Department shall identify if a project will be in phases and eligible for multiple final tax credit certificates.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Approval of Applications.</text> <paragraph num="(1)"> <text>If the Department recommends approval of a project for an initial State tax credit allocation, the Department shall present the project to the Secretary.</text> </paragraph> <paragraph num="(2)"> <text>The Secretary shall approve, disapprove, or approve with modifications an initial State tax credit allocation to be provided according to procedures established by the Secretary.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications an initial State tax credit allocation.</text> </paragraph> <paragraph num="(4)"> <text>The Secretary may require that the applicant execute an enforceable agreement related to the construction and rehabilitation of a catalytic revitalization project and issuance of the State tax credit.</text> </paragraph> </paragraph> <paragraph num="G."> <text>If the Department does not recommend approval of a project for an initial State tax credit allocation, the Department shall issue a written notice of rejection with an evaluation and explanation for rejection.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Allocation and Calculation of the Credit."> <paragraph num="A."> <text>Upon the approval of an application, the Department shall issue an initial tax credit certificate to the applicant:</text> <paragraph num="(1)"> <text>Allocating the initial amount of the State tax credit for the project; and</text> </paragraph> <paragraph num="(2)"> <text>Specifying the terms and conditions of the State tax credit.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Subject to the limitations of §C of this regulation:</text> <paragraph num="(1)"> <text>An initial State tax credit certificate shall equal 20 percent of the applicant’s estimated new construction costs and rehabilitation costs for the project; and</text> </paragraph> <paragraph num="(2)"> <text>Upon completion of the project or a phase of the project, a final tax credit certificate shall equal 20 percent of the applicant’s actual new construction costs and rehabilitation costs for the completed phase of the project.</text> </paragraph> </paragraph> <paragraph num="C."> <text>For purposes of calculating the credit authorized under §B of this regulation, the portion of costs that are attributed to new construction costs may not exceed 50 percent of the total costs of the catalytic revitalization project or phase.</text> </paragraph> <paragraph num="D."> <text>A final tax credit certificate may not be issued for more than 20 percent of the project’s eligible expenses to date.</text> </paragraph> <paragraph num="E."> <text>A final tax credit certificate may not be issued that would exceed the aggregated limit of a project’s initial tax credit certificate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Notice and Certification."> <paragraph num="A."> <text>Sixty days before the last day of the taxable year in which a catalytic revitalization project that has been issued an initial State tax credit allocation is completed or a phase of the project is completed, the applicant shall:</text> <paragraph num="(1)"> <text>Notify the Secretary that the project or project phase has been completed; and</text> </paragraph> <paragraph num="(2)"> <text>Certify that the project is a catalytic revitalization project eligible for the State tax credit.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The notice and certification to the Secretary shall be in a form prescribed by the Department and contain documentation required by the Department.</text> </paragraph> <paragraph num="C."> <text>Upon final review and verification of the notice and certification, the Secretary shall issue to the applicant a final credit certificate for the project or project phase before or by the last day of the taxable year in which the project or a phase of the project was completed, stating the final State tax credit amount for the project or project phase, not to exceed the aggregated credit amount initially allocated to the project.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Use of Tax Credit."> <paragraph num="A."> <text>The State tax credit is a credit against State income taxes that may be used in accordance with the Act, this chapter, and Tax-General Article, §10-753, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>If the State tax credit allowed under this chapter in any taxable year exceeds the total tax otherwise payable by the individual, nonprofit organization, or business entity for that taxable year, the individual, nonprofit organization, or business entity may claim a refund in the amount of the excess.</text> </paragraph> <paragraph num="C."> <text>The credit allowed under this chapter may be allocated among the partners, members, or shareholders of a business entity in any manner agreed to by those persons in writing.</text> </paragraph> <paragraph num="D."> <text>The amount of the tax credit allowed, but not claimed, under this chapter may be transferred, by written instrument, in whole or in part, to any individual, nonprofit organization, or business entity.</text> </paragraph> <paragraph num="E."> <text>For the taxable year of any transfer under §D of this regulation, the transferee may apply the tax credit against the total tax otherwise payable by the transferee in that taxable year.</text> </paragraph> <paragraph num="F."> <text>If the tax credit exceeds the total tax otherwise payable by the transferee in any taxable year, the transferee:</text> <paragraph num="(1)"> <text>May claim a refund in the amount of the excess;</text> </paragraph> <paragraph num="(2)"> <text>May carry forward and apply the excess credit for succeeding taxable years until the full amount of the credit is used; or</text> </paragraph> <paragraph num="(3)"> <text>May transfer the remainder of the tax credit to an individual, a nonprofit organization, or a business entity in accordance with §D of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Compliance."> <paragraph num="A."> <text>The Department may monitor a project for compliance and require reports from the applicant demonstrating compliance with this chapter, the Act and any agreement with the Department.</text> </paragraph> <paragraph num="B."> <text>The Comptroller or the Secretary may not recapture a State tax credit authorized under this chapter if:</text> <paragraph num="(1)"> <text>The catalytic revitalization project is transferred, in whole or in part, by fee simple transfer of real property or by transfer of an ownership interest in the entity that owns the project to a new owner; and</text> </paragraph> <paragraph num="(2)"> <text>The Secretary has issued a final tax credit certificate for the catalytic revitalization project under Regulation .06C of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>After 30 days of providing written notice to the Department, the original recipient of an initial tax credit issued under this chapter may transfer the initial tax credit certificate to one or more other individuals, nonprofit organization, or business entities.</text> </paragraph> <paragraph num="D."> <text>The transfer of an initial tax credit need not involve a transfer of the catalytic revitalization project, whether by fee simple transfer of real property or a transfer of a portion or all of the ownership interest that the original recipient holds in the entity that owns the real property to a new owner or owners.</text> </paragraph> <paragraph num="E."> <text>An initial tax credit certificate may not be transferred to another person without the express written consent of the original recipient or be transferred as part of the involuntary transfer of the real property ownership interest in an entity that owns the real property without the prior written consent of the original recipient of the certificate and the Secretary.</text> </paragraph> <paragraph num="F."> <text>The Secretary may revoke an initial credit certificate on a finding by the Secretary that the recipient is not in compliance with the initial credit certificate or an agreement with the Department regarding the initial credit certificate.</text> </paragraph> <paragraph num="G."> <text>If the Secretary revokes an initial credit certificate under §F of this regulation, the Secretary may award an initial credit certificate to another applicant, provided that the award does not exceed the amount of the revoked initial credit certificate.</text> </paragraph> <paragraph num="H."> <text>The Secretary may not revoke a tax credit certificate awarded on or before July 1, 2024 unless the individual, nonprofit organization, or business entity that received the tax credit certificate ceases rehabilitation of the catalytic revitalization project for which the tax credit was awarded.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Administration."> <paragraph num="A."> <text>Guidelines and Manuals. The Department may adopt guidelines and manuals related to the administration of this chapter and the Act.</text> </paragraph> <paragraph num="B."> <text>The Department shall ensure that the application forms, guidelines and manuals are publicly available on its website and at its offices.</text> </paragraph> <paragraph num="C."> <text>Delegation of Authority. An action or decision required to be taken or permitted to be made by the Department under the Act, or by the Secretary or the Department under this chapter, may be delegated by the Secretary to an employee of the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="False Statements."> <text>A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department or in any agreement relating to the tax credits.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Tax Credit Availability."> <text>Except as provided in Regulation .08 of this chapter, the Secretary may not:</text> <paragraph num="A."> <text>Accept applications and award an initial credit certificate for more than one catalytic revitalization project within a 2-year period; or</text> </paragraph> <paragraph num="B."> <text>Issue tax credit certificates for credit amounts in the aggregate totaling more than $15,000,000 within a 2-year period.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §6-904, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 17, 2025 (52:5 Md. R. 236)</annotation> </annotations> </chapter> </subtitle> <subtitle num="21" heading="Homelessness Solutions Programs"> <chapter num="01" heading="Homelessness Solutions Programs"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures for providing grants for administering the Homelessness Solutions Programs, including:</text> <paragraph num="A."> <text>The Rental Allowance Program, as set forth in Housing and Community Development Article, §4-1401 et seq., Annotated Code of Maryland;</text> </paragraph> <paragraph num="B."> <text>The Homeless Women — Crisis Shelter Home Program, as set forth in Housing and Community Development Article, §4-2201 et seq., Annotated Code of Maryland;</text> </paragraph> <paragraph num="C."> <text>The Housing Navigator and Aftercare Program, as set forth in Housing and Community Development Article, §4-2301 et seq., Annotated Code of Maryland; and</text> </paragraph> <paragraph num="D."> <text>Other homelessness programs that are funded by State, federal, or other sources.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Housing and Community Development Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Application” means an application by a prospective recipient of services.</text> </paragraph> <paragraph num="(3)"> <text>“At risk of homelessness” means a household with an annual income below 30 percent of the area median income and does not have sufficient resources or support networks immediately available to prevent household members from becoming homeless.</text> </paragraph> <paragraph num="(4)"> <text>“Client” means a recipient of services.</text> </paragraph> <paragraph num="(5)"> <text>“Continuum of Care” means the regional or local planning body that coordinates housing and services funding for homeless families and individuals as defined in 24 CFR §578.3.</text> </paragraph> <paragraph num="(6)"> <text>“Crisis shelter home” means an emergency shelter that provides assistance in moving households from homelessness into permanent housing and provides shelter, meals, information and referral service, and counseling to households.</text> </paragraph> <paragraph num="(7)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(8)"> <text>“Dwelling unit” means a room, apartment, house, or mobile home.</text> </paragraph> <paragraph num="(9)"> <text>“Eligible dwelling unit” means a dwelling unit that:</text> <paragraph num="(a)"> <text>Is subject to a physical inspection under a federal, another State, or a local affordable housing program, including the federal low-income housing tax credit program; or</text> </paragraph> <paragraph num="(b)"> <text>Meets the dwelling unit standards established by the Secretary in accordance with Housing and Community Development Article, §4-1403, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Family shelter” means any shelter that serves children under the age of 18.</text> </paragraph> <paragraph num="(11)"> <text>“Grant” means the funds awarded by the Department to a grantee from available program funds.</text> </paragraph> <paragraph num="(12)"> <text>“Grant application” means an application for grant funds from the Department.</text> </paragraph> <paragraph num="(13)"> <text>“Grantee” means a nonprofit entity or local government that receives a grant from the Department under a program.</text> </paragraph> <paragraph num="(14)"> <text>“Homeless” means a household who lacks a fixed, regular, and adequate nighttime residence.</text> </paragraph> <paragraph num="(15)"> <text>“Homelessness Solutions Programs” means any of the programs set forth in Regulation .01 of this chapter.</text> </paragraph> <paragraph num="(16)"> <text>“Household” means an individual or one or more adults and children living together as a family.</text> </paragraph> <paragraph num="(17)"> <text>“Housing assistance payments” means rental assistance payments that are used, for a period not to exceed 24 months, to pay:</text> <paragraph num="(a)"> <text>Rent;</text> </paragraph> <paragraph num="(b)"> <text>Security deposits;</text> </paragraph> <paragraph num="(c)"> <text>Utilities; and</text> </paragraph> <paragraph num="(d)"> <text>Housing-related expenses.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Local government” means any of the 23 counties of the State, the City of Baltimore, a municipal corporation of the State subject to the provisions of the State Constitution, Article XI-E, or any of their duly authorized agencies, departments, or instrumentalities.</text> </paragraph> <paragraph num="(19)"> <text>“Nonprofit organization” means a corporation, foundation, or other legal entity that is exempt from federal income tax under §501(c)(3) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(20)"> <text>“Program” means any of the Homelessness Solutions Programs.</text> </paragraph> <paragraph num="(21)"> <text>“Program agreement” means an agreement or agreements between the Department and a grantee to implement one or more programs.</text> </paragraph> <paragraph num="(22)"> <text>“Provider” means an entity that:</text> <paragraph num="(a)"> <text>Is a nonprofit entity, a local government, or a public housing authority; and</text> </paragraph> <paragraph num="(b)"> <text>Contracts with the Department or a grantee to provide services under a program.</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Resident of the State” means a person who is living in the State voluntarily and not for temporary purposes, with no immediate intention of moving from the State at the time of application.</text> </paragraph> <paragraph num="(24)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Eligible Grant Applicants."> <paragraph num="A."> <text>A grantee shall meet the following minimum requirements:</text> <paragraph num="(1)"> <text>Not be currently barred or suspended from any of the Department’s programs;</text> </paragraph> <paragraph num="(2)"> <text>Have the legal capacity and all necessary legal authority to incur the obligations involved in the grant;</text> </paragraph> <paragraph num="(3)"> <text>Be in good standing and qualified to do business in Maryland; and</text> </paragraph> <paragraph num="(4)"> <text>Be a continuum of care, a nonprofit organization, or a local government.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Department may give priority to any applicant that is a continuum of care.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligible Recipients and Requirements."> <paragraph num="A."> <text>Rental Allowance Program.</text> <paragraph num="(1)"> <text>Eligible recipients are:</text> <paragraph num="(a)"> <text>Households with an annual income below 30 percent of the area median income and are homeless; and</text> </paragraph> <paragraph num="(b)"> <text>Households who are at risk of homelessness.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Funds provided under this program shall be used for housing assistance payments.</text> </paragraph> <paragraph num="(3)"> <text>Housing assistance payments shall be made only on behalf of clients who have rented an eligible dwelling unit and where the lease or sublease is in the name of the client.</text> </paragraph> <paragraph num="(4)"> <text>Dwelling units that are not already subject to a physical inspection under a federal, another State, or a local affordable housing program, including the federal low-income housing tax credit program:</text> <paragraph num="(a)"> <text>Shall be inspected for conformance with the requirements of this regulation; and</text> </paragraph> <paragraph num="(b)"> <text>Shall be maintained by the dwelling unit owner so as to comply with the requirements of this section.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Homeless Women — Crisis Shelter Home Program.</text> <paragraph num="(1)"> <text>Eligible recipients are women who are:</text> <paragraph num="(a)"> <text>Homeless; and</text> </paragraph> <paragraph num="(b)"> <text>Residents of the State.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The crisis shelter home shall provide clients with a temporary residence for not more than 12 weeks.</text> </paragraph> <paragraph num="(3)"> <text>The temporary residence may be a room in a hotel or motel.</text> </paragraph> <paragraph num="(4)"> <text>Clients shall have cooperative responsibility for housekeeping duties in a crisis shelter home as follows:</text> <paragraph num="(a)"> <text>Housekeeping duties shall be limited to the immediate area where the client sleeps; and</text> </paragraph> <paragraph num="(b)"> <text>Additional housekeeping duties shall be voluntary and not a valid reason for termination from the program.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Crisis shelter homes may not charge a fee to clients.</text> </paragraph> <paragraph num="(6)"> <text>Admission policies of crisis shelter homes shall be accepting of households in need of shelter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Housing Navigator and Aftercare Program.</text> <paragraph num="(1)"> <text>Eligible recipients are households who are the recipient of or in the process of applying for temporary cash assistance, as defined in Human Services Article, §5-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Funds provided under this program shall be used for:</text> <paragraph num="(a)"> <text>Salary and FICA for housing navigators and aftercare case managers;</text> </paragraph> <paragraph num="(b)"> <text>Client-related expenses, including:</text> <paragraph num="(i)"> <text>First and final months’ rent;</text> </paragraph> <paragraph num="(ii)"> <text>Transportation for housing searches;</text> </paragraph> <paragraph num="(iii)"> <text>Moving expenses;</text> </paragraph> <paragraph num="(iv)"> <text>Essential furnishings;</text> </paragraph> <paragraph num="(v)"> <text>Storage;</text> </paragraph> <paragraph num="(vi)"> <text>Arrearages;</text> </paragraph> <paragraph num="(vii)"> <text>Credit checks and housing application fees;</text> </paragraph> <paragraph num="(viii)"> <text>Security deposits;</text> </paragraph> <paragraph num="(ix)"> <text>Utility deposits; and</text> </paragraph> <paragraph num="(x)"> <text>Other identified needs; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Other items that the Department designates.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>In addition to the eligible uses set forth in §§A—C of this regulation, the Department may allow additional uses of funds for costs and expenses related to reducing, eliminating, or preventing homelessness that are consistent with the funding source the Department receives for any other programs that serve the homeless.</text> </paragraph> <paragraph num="E."> <text>A grantee may grant all or a portion of the funds it receives from the Department to a provider to carry out the program with approval from the Department and in accordance with the terms and conditions of an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Grant Applications."> <paragraph num="A."> <text>Grant applications shall be accepted in one or more rounds to be announced by the Department.</text> </paragraph> <paragraph num="B."> <text>A grant application submitted to the Department shall:</text> <paragraph num="(1)"> <text>Be on standard forms prescribed by the Department;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted by an eligible applicant;</text> </paragraph> <paragraph num="(3)"> <text>Be for an eligible use;</text> </paragraph> <paragraph num="(4)"> <text>Detail the need for homeless services in the applicant’s area, including:</text> <paragraph num="(a)"> <text>The proposed plan for addressing those needs;</text> </paragraph> <paragraph num="(b)"> <text>The services for which funding is requested; and</text> </paragraph> <paragraph num="(c)"> <text>The providers who will be receiving funding under the applicant’s proposed plan;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Provide a budget, acceptable to the Department that at a minimum shows anticipated project costs and expenses;</text> </paragraph> <paragraph num="(6)"> <text>Contain the organizational documents of the applicant unless applicant is a local government; and</text> </paragraph> <paragraph num="(7)"> <text>Include other information or documentation that the Department may require.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A grant application may be submitted for one or more programs.</text> </paragraph> <paragraph num="D."> <text>An applicant may file one or more applications in accordance with schedules established by the Department.</text> </paragraph> <paragraph num="E."> <text>Each grant application shall be submitted to the Department to determine whether all of the information required under this regulation is contained in the application.</text> </paragraph> <paragraph num="F."> <text>The Secretary shall establish a procedure for distributing grant funds that takes into consideration the need to serve eligible clients on a Statewide basis.</text> </paragraph> <paragraph num="G."> <text>The Secretary shall, in evaluating grant applications, take into consideration the prospective grantee’s or provider’s use of evidence-based best practices and conformity to a low-barrier housing first approach in providing services to clients.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Program Administration."> <paragraph num="A."> <text>The Department may establish from time to time detailed program guidelines or manuals containing application schedules, procedures, processing requirements, and other requirements or matters relating to the Programs.</text> </paragraph> <paragraph num="B."> <text>The Department shall ensure that program guidelines and application forms are publicly available on its website and at its offices.</text> </paragraph> <paragraph num="C."> <text>After a grant has been awarded to a grantee, the Department may:</text> <paragraph num="(1)"> <text>Commence and pursue any action to protect or enforce any right conferred by law, contract, or other agreement;</text> </paragraph> <paragraph num="(2)"> <text>Modify any provision of any grant in order to facilitate the successful completion or operation of a program; and</text> </paragraph> <paragraph num="(3)"> <text>Exercise all powers authorized under the Act that are necessary or desirable for the implementation of the program, including, but not limited to, termination of a grant or refusal to make additional disbursements under a grant agreement if the Department finds that the grantee is not complying with any of the requirements of the program or the grant agreement.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Any action or decision required or permitted to be taken or made by the Department pursuant to the Act or this chapter may be taken by the Assistant Secretary of the Division of Neighborhood Revitalization.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Delivery of Services."> <paragraph num="A."> <text>The provider shall use an application document substantially similar to application documents used for other clients of the provider.</text> </paragraph> <paragraph num="B."> <text>The provider shall assess the application document and determine eligibility.</text> </paragraph> <paragraph num="C."> <text>The provider or grantee shall create a client-centered case plan for all clients receiving services.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Books and Accounts."> <paragraph num="A."> <text>A grantee and its contractors and subcontractors shall maintain books, accounts, and records and shall file with the Department financial and other reports as the Department may from time to time require.</text> </paragraph> <paragraph num="B."> <text>All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.</text> </paragraph> <paragraph num="C."> <text>Books, accounts, and records of designated third parties, contractors, and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between a provider, contractor, or subcontractor and the grantee.</text> </paragraph> <paragraph num="D."> <text>Grantees shall submit reports to the Department on the progress or implementation of a project in accordance with an agreement with the Department.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Reports and Forms."> <paragraph num="A."> <text>The Department shall provide to the grantee all instructions, data elements, and other components necessary to carry out program requirements.</text> </paragraph> <paragraph num="B."> <text>The grantee shall transmit to providers the forms that are applicable to the providers.</text> </paragraph> <paragraph num="C."> <text>The grantee shall make reports required by the Department.</text> </paragraph> <paragraph num="D."> <text>The grantee shall retain all records relating to services for a period of time defined by the program guide, and for a minimum of 3 years.</text> </paragraph> <paragraph num="E."> <text>Confidentiality.</text> <paragraph num="(1)"> <text>The grantee may not disclose identifying information regarding an applicant or client without written authorization to do so from the applicant or client, except to the Department’s employees authorized to monitor or audit the program.</text> </paragraph> <paragraph num="(2)"> <text>The grantee shall maintain all written records regarding applicants and clients in a secure, locked location.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Grievance Procedures."> <paragraph num="A."> <text>This section applies to grantees and providers identified under Regulation .04E of this chapter.</text> </paragraph> <paragraph num="B."> <text>Written Grievance Procedures.</text> <paragraph num="(1)"> <text>Grantees and providers shall maintain written grievance procedures for termination and denial of benefits.</text> </paragraph> <paragraph num="(2)"> <text>The written procedures shall be submitted with grant applications under Regulation .05 of this chapter and shall be approved by the Department.</text> </paragraph> <paragraph num="(3)"> <text>A copy of the written procedures shall be provided to applicants upon application for benefits, and to recipients upon award of benefits.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Requirements for Grievance Procedures by a Grantee or Provider.</text> <paragraph num="(1)"> <text>Informal Hearing for Termination of Housing Subsidy and Housing Shelter Benefits.</text> <paragraph num="(a)"> <text>Grounds for Termination of Benefits. The grantee or provider shall identify grounds for termination of benefits, which shall be approved by the Department prior to enforcement.</text> </paragraph> <paragraph num="(b)"> <text>Notice of Termination. Before terminating benefits, the grantee or provider shall provide the recipient with notice and opportunity for an informal hearing. The notice shall include:</text> <paragraph num="(i)"> <text>The date that termination of benefits will be effective;</text> </paragraph> <paragraph num="(ii)"> <text>A statement of reasons for the decision to terminate benefits;</text> </paragraph> <paragraph num="(iii)"> <text>Notification that if the client does not agree with the decision, the client may request an informal hearing for review of the decision;</text> </paragraph> <paragraph num="(iv)"> <text>The procedures for requesting an informal hearing; and</text> </paragraph> <paragraph num="(v)"> <text>The deadline for requesting an informal hearing, which shall provide no fewer than 14 days for the client to submit the request.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Notice of Hearing. Upon receipt of a timely request for an informal hearing, the grantee or provider shall, within 7 days, schedule an informal hearing and provide notice to the client. The notice shall include:</text> <paragraph num="(i)"> <text>The date of issuance of the notice;</text> </paragraph> <paragraph num="(ii)"> <text>The date, time, and location of informal hearing, which shall be conducted within 14 days after the date of the notice;</text> </paragraph> <paragraph num="(iii)"> <text>The issue to be heard during the informal hearing;</text> </paragraph> <paragraph num="(iv)"> <text>Notice that the failure to appear will result in the termination decision being upheld;</text> </paragraph> <paragraph num="(v)"> <text>The client’s right to bring evidence, witnesses, and legal representation to the hearing, at the client’s own expense;</text> </paragraph> <paragraph num="(vi)"> <text>The client’s right to review relevant documents in the possession of the grantee or provider, prior to the hearing; and</text> </paragraph> <paragraph num="(vii)"> <text>Notice that the grantee or provider may request to review relevant documents in the possession of the client prior to the hearing.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Conduct of Hearing.</text> <paragraph num="(i)"> <text>Any hearing under this section shall be conducted by a person who neither made nor approved of the termination decision and is not subordinate to the person that made or approved the termination decision.</text> </paragraph> <paragraph num="(ii)"> <text>A client shall have the opportunity to provide an opening statement.</text> </paragraph> <paragraph num="(iii)"> <text>A client shall have the opportunity to present evidence.</text> </paragraph> <paragraph num="(iv)"> <text>A client shall have the opportunity to question witnesses.</text> </paragraph> <paragraph num="(v)"> <text>A client shall have the opportunity to examine the documents that are the basis for the termination decision.</text> </paragraph> <paragraph num="(vi)"> <text>A client shall have the opportunity to request that grantee or provider staff be present to answer questions.</text> </paragraph> <paragraph num="(vii)"> <text>A client shall have the opportunity to present legal argument.</text> </paragraph> <paragraph num="(viii)"> <text>The grantee or provider shall have the same opportunities provided to the client in §C(1)(d)(ii)—(vii) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Decision.</text> <paragraph num="(i)"> <text>The person conducting the hearing shall issue a written decision within 30 days after the hearing. Benefits under this section may not be terminated until a decision is issued under this section affirming the termination decision.</text> </paragraph> <paragraph num="(ii)"> <text>Any decision affirming termination of benefits shall provide information to the client on the procedure for requesting an appeal.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Informal Review for Termination of Other Benefits.</text> <paragraph num="(a)"> <text>Grounds for Termination of Benefits. The grantee or provider shall identify grounds for termination of other benefits, which shall be approved by the Department prior to enforcement.</text> </paragraph> <paragraph num="(b)"> <text>Notice of Termination of Benefits. The grantee or provider shall provide clients with notice of termination of benefits and the opportunity for an informal review relating to termination of nonwelfare benefits. Benefits may be terminated prior to conduct of the informal review. The notice shall inform the client of the following:</text> <paragraph num="(i)"> <text>The action being taken, the reasons for the action being taken, and the effective date of the action;</text> </paragraph> <paragraph num="(ii)"> <text>Notification that if the client does not agree with the decision, the client may request an informal review of the decision;</text> </paragraph> <paragraph num="(iii)"> <text>The procedures for requesting an informal review of the decision; and</text> </paragraph> <paragraph num="(iv)"> <text>The time for requesting the informal review of the decision.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Notice of Informal Review. Upon receipt of a timely request for informal review under this section, the grantee or provider shall provide the client with a notice of scheduling the informal review. The notice shall include:</text> <paragraph num="(i)"> <text>The date of notice;</text> </paragraph> <paragraph num="(ii)"> <text>The date, time, and location of informal review;</text> </paragraph> <paragraph num="(iii)"> <text>The issue to be heard during the informal review and the client’s right to present information in support of client’s objections; and</text> </paragraph> <paragraph num="(iv)"> <text>That the failure to appear for the informal review will result in the decision being upheld.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Conduct of Informal Review. The informal review will be conducted by a person that neither made nor approved of the termination decision and is not subordinate to the person that made or approved the termination decision.</text> </paragraph> <paragraph num="(e)"> <text>Decision.</text> <paragraph num="(i)"> <text>The decision resulting from the informal review may be provided orally at the informal review or in writing no later than 30 days after the informal review.</text> </paragraph> <paragraph num="(ii)"> <text>If the decision resulting from the informal review does not uphold the termination of benefits, and benefits have already been terminated, the grantee or provider shall provide retroactive benefits to cover any loss in benefits during the period between the termination and reinstatement of benefits.</text> </paragraph> <paragraph num="(iii)"> <text>The decision shall provide information to the client on the procedure for requesting an appeal.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Appeal of Grievance Decisions.</text> <paragraph num="(a)"> <text>The client may appeal a decision provided under §C(1)(e) and (2)(e) within 30 days after issuance of the decision.</text> </paragraph> <paragraph num="(b)"> <text>Appeals under this section shall be made in writing to the Department.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Nondiscrimination; Drug and Alcohol Free Workplace."> <paragraph num="A."> <text>An applicant may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, gender identity, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any applicant in connection with any project financed or assisted under the Program.</text> </paragraph> <paragraph num="B."> <text>An applicant shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:</text> <paragraph num="(1)"> <text>Titles VI and VII of the Civil Rights Act of 1964, as amended;</text> </paragraph> <paragraph num="(2)"> <text>Title VIII of the Civil Rights Acts of 1968, as amended;</text> </paragraph> <paragraph num="(3)"> <text>The Fair Housing Amendments Act of 1988, as amended;</text> </paragraph> <paragraph num="(4)"> <text>State Government Article, Title 20, Annotated Code of Maryland, as amended;</text> </paragraph> <paragraph num="(5)"> <text>The Department’s Minority Business Enterprise Program, as amended;</text> </paragraph> <paragraph num="(6)"> <text>The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and</text> </paragraph> <paragraph num="(7)"> <text>The Americans with Disabilities Act of 1990, as amended.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The provider or grantee may not require the client to participate in religious activities as a condition of receiving services.</text> </paragraph> <paragraph num="D."> <text>Family shelters shall serve all households regardless of the sex, sexual orientation, gender identity, or age of any members of the family.</text> </paragraph> <paragraph num="E."> <text>Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties, and between the grantees and other parties.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Waiver."> <text>The Secretary may waive or vary provisions of this chapter to the extent that the waiver or variance is consistent with the Act and if, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="False Statements."> <paragraph num="A."> <text>An individual may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Secretary or the Department by an agreement relating to the grant.</text> </paragraph> <paragraph num="B."> <text>An individual applying for or benefiting from a grant under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Secretary or the Department on a grant application or for the purpose of influencing the action of the Secretary or the Department affecting the grant already provided.</text> </paragraph> <paragraph num="C."> <text>An individual who violates §A or B of this regulation is subject to immediate cancellation of the grant provided by the Program and any other penalties authorized by law.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Severability."> <text>The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.</text> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §§4-1403(g), 4-1406, 4-2108, 4-2205(a)(4), and 4-2209(b), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 13, 2018 (45:16 Md. R. 774)</annotation> </annotations> </chapter> </subtitle> <subtitle num="22" heading="Tenant’S Exclusive Negotiation Period and Right of First Refusal"> <chapter num="01" heading="Procedure"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures relating to the tenant’s exclusive negotiation period and right of first refusal as outlined in Real Property Article, §8-119, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Commercially reasonable” means terms and pricing that are reasonably consistent with what an experienced real estate professional would expect to see in similar transactions.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(3)"> <text>“Material terms” includes the sales price, settlement date, inspection terms, financing terms, escrow deposit, seller credit to buyer (if any), and seller repairs.</text> </paragraph> <paragraph num="(4)"> <text>“Offer to purchase” means a good faith offer for the purchase of a residential rental property for a price that a willing buyer would pay to a willing seller in an arm’s length transaction, with neither party under any compulsion to buy or sell.</text> </paragraph> <paragraph num="(5)"> <text>“Office” means the Office of Tenant and Landlord Affairs within the Department of Housing and Community Development.</text> </paragraph> <paragraph num="(6)"> <text>“Secretary” means the Secretary of Housing and Community Development.</text> </paragraph> <paragraph num="(7)"> <text>“Tenant” means an individual who has occupied a residential rental property for at least 6 months and who is a named lessee in the written lease.</text> </paragraph> <paragraph num="(8)"> <text>“Tenant’s exclusive negotiation period” means the period of time prescribed in Real Property Article, §8-119(c), Annotated Code of Maryland, after a tenant is notified about the tenant’s right to purchase a residential rental property during which the tenant may negotiate exclusively with the owner to enter into a contract of sale.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Notice Requirements in Tenant’s Exclusive Negotiation Period."> <paragraph num="A."> <text>Before a residential rental property may be offered for sale to the public or a third party, including through a listing for sale, the owner of the property shall send each tenant of the property a written notice of the tenant’s right to deliver an offer to purchase the property.</text> </paragraph> <paragraph num="B."> <text>A notice sent to a tenant under this chapter shall be delivered by:</text> <paragraph num="(1)"> <text>First-class U.S. Mail, with a certificate of mailing; or</text> </paragraph> <paragraph num="(2)"> <text>A delivery service providing delivery tracking and confirmation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The owner shall send a copy of a notice sent to a tenant under this chapter to the Office by a submission form on the Office’s website.</text> </paragraph> <paragraph num="D."> <text>The owner shall notify the Office by submission form on the Office’s website if:</text> <paragraph num="(1)"> <text>A tenant delivers a timely written offer to purchase the property that contains the same or more favorable material terms as those contained in the notice sent under this chapter;</text> </paragraph> <paragraph num="(2)"> <text>A tenant fails to make an offer to purchase in response to the notice sent under this chapter within the time prescribed by law;</text> </paragraph> <paragraph num="(3)"> <text>A tenant affirmatively declines to make an offer to purchase the property;</text> </paragraph> <paragraph num="(4)"> <text>A tenant fails to make a timely response to, or rejects, a counteroffer made by the owner under Real Property Article, §8-119(c)(5)(ii), Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(5)"> <text>A tenant accepts a counteroffer made by the owner under Real Property Article, §8-119(c)(5)(ii), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Form of Notice and Counteroffer."> <paragraph num="A."> <text>The notice delivered to tenants at the commencement of the tenant’s exclusive negotiation period shall contain, at minimum, the following information:</text> <paragraph num="(1)"> <text>The material terms that the owner would agree to incorporate into a contract of sale with the tenant;</text> </paragraph> <paragraph num="(2)"> <text>A conspicuous statement that the notice is a solicitation of an offer to purchase and is not intended as and may not be construed as a binding contract of sale; and</text> </paragraph> <paragraph num="(3)"> <text>Any information regarding deadlines for the tenant to submit an offer to purchase, including the duration of the tenant’s exclusive negotiation period.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The material terms stated in the notice delivered to tenants under this chapter:</text> <paragraph num="(1)"> <text>Shall be commercially reasonable and made in good faith;</text> </paragraph> <paragraph num="(2)"> <text>Shall adhere to generally accepted residential real estate practices; and</text> </paragraph> <paragraph num="(3)"> <text>May not include restrictions on financing methods or the right of inspection.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The notice delivered to tenants under this chapter shall be in the form provided in Appendix A of this subtitle.</text> </paragraph> <paragraph num="D."> <text>A counteroffer delivered to tenants under Real Property Article, §8-119(c)(5)(ii), Annotated Code of Maryland, shall be in the form provided in Appendix B of this subtitle.</text> </paragraph> <paragraph num="E."> <text>The Office shall make the forms provided in Appendix A and Appendix B of this subtitle available on its public website in a format allowing residential rental property owners to populate the blank sections of the forms, download the forms, and print the forms for delivery to tenants.</text> </paragraph> <paragraph num="F."> <text>The Office may, from time to time, with the approval of the Secretary, edit or amend the forms provided in Appendix A and Appendix B of this subtitle to facilitate compliance with Real Property Article, §§8-119(c) and 8-120, Annotated Code of Maryland, or other applicable law, as appropriate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Notice Requirements for Tenant’s Right of First Refusal."> <paragraph num="A."> <text>Before accepting an offer to purchase a residential rental property from a third party, the owner of the property shall provide written notice to any tenants of the property of the tenants’ right of first refusal, and give the tenant an opportunity to exercise the right of first refusal within 30 days after receipt of the notice, if:</text> <paragraph num="(1)"> <text>The proposed transfer to the third party is not a transfer listed in Real Property Article, §8-119(b), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>The owner intends to accept an offer from a third party to purchase the property for an amount at least 10 percent lower than the lowest price offered to the tenant in any previous notice, offer, or counteroffer made during the tenant’s exclusive negotiation period; or</text> </paragraph> <paragraph num="(3)"> <text>The owner, without having offered the property for sale to the public or any third party, receives an offer to purchase the property from a third party.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A notice sent to a tenant under this chapter shall be delivered by:</text> <paragraph num="(1)"> <text>First-class U.S. Mail, with a certificate of mailing; or</text> </paragraph> <paragraph num="(2)"> <text>A delivery service providing delivery tracking and confirmation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The owner shall send a copy of a notice sent to a tenant under this chapter to the Office by a submission form on the Office’s website.</text> </paragraph> <paragraph num="D."> <text>The owner shall notify the Office by submission form on the Office’s website if:</text> <paragraph num="(1)"> <text>A tenant delivers a timely written offer to purchase at the same sales price as the third-party offer;</text> </paragraph> <paragraph num="(2)"> <text>A tenant does not deliver a timely offer to purchase the property at the same sales price as the third-party offer; or</text> </paragraph> <paragraph num="(3)"> <text>The owner accepts an offer to purchase from a tenant and enters into a contract of sale, but the contract of sale is terminated before settlement.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Form of Notice of Right of First Refusal."> <paragraph num="A."> <text>The notice delivered to tenants under this chapter shall contain, at minimum, the following information:</text> <paragraph num="(1)"> <text>The sales price proposed in the third-party offer to purchase;</text> </paragraph> <paragraph num="(2)"> <text>A conspicuous statement that the notice is a solicitation of an offer to purchase and is not intended as and may not be construed as a binding contract of sale; and</text> </paragraph> <paragraph num="(3)"> <text>Any information regarding deadlines for the tenant to submit an offer to purchase.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The notice delivered to tenants under this chapter shall be in the form provided in Appendix C of this subtitle.</text> </paragraph> <paragraph num="C."> <text>The Office shall make the form provided in Appendix C of this subtitle available on its public website in a format allowing residential rental property owners to populate the blank sections of the form, download the form, and print the form for delivery to tenants.</text> </paragraph> <paragraph num="D."> <text>The Office may, from time to time, with the approval of the Secretary, edit or amend the form provided in Appendix C of this subtitle to facilitate compliance with Real Property Article, §§8-119(d) and 8-120, Annotated Code of Maryland, or other applicable law, as appropriate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Information Provided to Department."> <text>Upon entry into a contract of sale with a tenant to purchase a residential rental property, the termination of a tenant’s exclusive negotiation period, or the termination of a tenant’s right of first refusal as provided in Real Property Article, §8-119, Annotated Code of Maryland, the owner shall provide the following information to the Office by submission form on the Office’s website:</text> <paragraph num="A."> <text>The physical address of the property, including the county (or Baltimore City) in which the property is located;</text> </paragraph> <paragraph num="B."> <text>The legal description of the property;</text> </paragraph> <paragraph num="C."> <text>The material terms proposed in any notice, offer, or counteroffer made to or by the tenant under Real Property Article, §8-119(c), Annotated Code of Maryland, whether accepted or rejected;</text> </paragraph> <paragraph num="D."> <text>If applicable, the material terms of the contract of sale;</text> </paragraph> <paragraph num="E."> <text>The length of time the tenant resided in the property before the owner sent the notice required by this chapter; and</text> </paragraph> <paragraph num="F."> <text>The periodic rent amount under the most recent lease entered by the tenant.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Housing and Community Development Article, §5-104; Real Property Article, §8-119, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 14, 2024 (51:20 Md. R. 898)</annotation> </annotations> </chapter> </subtitle> <subtitle num="23" heading="Public Health Impact Assessments"> <chapter num="01" heading="Procedure"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to prescribe the policies and procedures relating to public health impact statements as required by Land Use Article, §7-509, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Area median income” means the median household income for the area adjusted for household size as calculated annually by the United States Department of Housing and Urban Development.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(3)"> <text>“Environmental professional” means a person meeting the definition in Title 40, Part 312, of the Code of Federal Regulations.</text> </paragraph> <paragraph num="(4)"> <text>“Health hazard” means a chemical, physical, biological, or ergonomic factor in the environment that may have a negative impact on human health.</text> </paragraph> <paragraph num="(5)"> <text>“Public health impact assessment” means a written evaluation of potential negative impacts on public health associated with the proximity of a qualified project to any health hazards within an area zoned for nonresidential use.</text> </paragraph> <paragraph num="(6)"> <text>“Qualified project” means a residential project that meets the definition in Land Use Article, §§7-502, 7-503, or 7-504, Annotated Code of Maryland, as applicable.</text> </paragraph> <paragraph num="(7)"> <text>“Secretary” means the Secretary of the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Public Health Impact Assessment Required."> <paragraph num="A."> <text>Before a qualified project is authorized to exceed the density in an area zoned for nonresidential use under Land Use Article Title 7, Subtitle 5, Annotated Code of Maryland, the entity responsible for the qualified project shall:</text> <paragraph num="(1)"> <text>Conduct a public health impact assessment;</text> </paragraph> <paragraph num="(2)"> <text>Submit the public health impact assessment to the Department; and</text> </paragraph> <paragraph num="(3)"> <text>Receive approval of the public health impact assessment from the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A public health impact statement submitted to the Department under this chapter shall include:</text> <paragraph num="(1)"> <text>An environmental assessment;</text> </paragraph> <paragraph num="(2)"> <text>A project overview; and</text> </paragraph> <paragraph num="(3)"> <text>An area overview.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An entity responsible for a qualified project that has applied for funding or financing from the Department shall only be required to submit the information required for the project overview and the area overview to the extent that the information has not been provided to the Department in its application and/or market study.</text> </paragraph> <paragraph num="D."> <text>An environmental assessment under this chapter shall be completed by a qualified environmental professional and shall include:</text> <paragraph num="(1)"> <text>An examination of the method of water supply and sewage disposal for the project;</text> </paragraph> <paragraph num="(2)"> <text>A review of available documentation describing existing and previous building uses and building materials used on the project site;</text> </paragraph> <paragraph num="(3)"> <text>Interviews with previous owners and/or occupants of the project site to determine any prior use of the site;</text> </paragraph> <paragraph num="(4)"> <text>Interviews with owners and/or occupants of other properties in the immediate area to determine historical neighboring land use and the probability of contamination;</text> </paragraph> <paragraph num="(5)"> <text>An evaluation of the project site for pertinent environmental issues, including:</text> <paragraph num="(a)"> <text>Foundation conditions;</text> </paragraph> <paragraph num="(b)"> <text>Man-made hazards;</text> </paragraph> <paragraph num="(c)"> <text>Stormwater runoff;</text> </paragraph> <paragraph num="(d)"> <text>Underground storage tanks; and</text> </paragraph> <paragraph num="(e)"> <text>Potential for hazards involving lead-based paint, radon gas, mold, asbestos, and PCBs;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>An evaluation of any other potential health hazards on or in close proximity to the project site;</text> </paragraph> <paragraph num="(7)"> <text>An evaluation of any environmental conditions particular to the project site;</text> </paragraph> <paragraph num="(8)"> <text>An evaluation of the proximity of the project site to any industrial facilities or other features that could potentially create a health hazard; and</text> </paragraph> <paragraph num="(9)"> <text>An evaluation of any mitigation of potential hazards.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A project overview under this chapter shall include detailed information regarding:</text> <paragraph num="(1)"> <text>The proposed design of the project;</text> </paragraph> <paragraph num="(2)"> <text>The number and type of housing units in the project;</text> </paragraph> <paragraph num="(3)"> <text>The number of housing units affordable to families at or below 60 percent of the local area median income;</text> </paragraph> <paragraph num="(4)"> <text>The monthly rent for market-rate and affordable units in the project;</text> </paragraph> <paragraph num="(5)"> <text>Amenities and other project details; and</text> </paragraph> <paragraph num="(6)"> <text>A summary of the zoning for the project site.</text> </paragraph> </paragraph> <paragraph num="F."> <text>An area overview under this chapter shall include detailed information regarding:</text> <paragraph num="(1)"> <text>The demographics of the area surrounding the project site, including:</text> <paragraph num="(a)"> <text>Age;</text> </paragraph> <paragraph num="(b)"> <text>Race and ethnicity;</text> </paragraph> <paragraph num="(c)"> <text>Educational attainment;</text> </paragraph> <paragraph num="(d)"> <text>Financial status;</text> </paragraph> <paragraph num="(e)"> <text>Life expectancy;</text> </paragraph> <paragraph num="(f)"> <text>Infant mortality; and</text> </paragraph> <paragraph num="(g)"> <text>Population density;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Proximity of the project site to highways and transit;</text> </paragraph> <paragraph num="(3)"> <text>Proximity of the project site to other local amenities; and</text> </paragraph> <paragraph num="(4)"> <text>Access of the project site to services including:</text> <paragraph num="(a)"> <text>Hospitals;</text> </paragraph> <paragraph num="(b)"> <text>Fire departments; and</text> </paragraph> <paragraph num="(c)"> <text>Schools, including institutions of higher education.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>An entity responsible for a qualified project subject to this chapter shall submit its public health impact assessment to the Department:</text> <paragraph num="(1)"> <text>For projects for which the entity has applied for funding or financing through the Department:</text> <paragraph num="(a)"> <text>If applicable, as part of the Viability or Viability/Commitment package submitted to the Department; or</text> </paragraph> <paragraph num="(b)"> <text>For tax credit-only projects, at least 90 days before closing;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For projects for which the entity has not applied for funding or financing through the Department, at the time the density bonus is requested via form available on the Department’s Multifamily Library web page.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Evaluation of Public Health Impact Assessment by Department."> <paragraph num="A."> <text>Upon receipt of a public health impact assessment under this chapter, the Department shall:</text> <paragraph num="(1)"> <text>Review the public health impact assessment, including any relevant information submitted by an entity responsible for a qualified project as part of its initial application or Viability or Viability/Commitment Package; and</text> </paragraph> <paragraph num="(2)"> <text>Make an initial determination as to the sufficiency of the information provided in the public health impact statement.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the Department determines that the information submitted does not meet the requirements of Regulation .03 of this chapter or is insufficient to make a final determination, it shall promptly:</text> <paragraph num="(1)"> <text>Notify the entity responsible for the qualified project;</text> </paragraph> <paragraph num="(2)"> <text>Provide the entity responsible for the qualified project with documentation showing what additional information is requested; and</text> </paragraph> <paragraph num="(3)"> <text>Set a reasonable deadline for the submission of the requested additional information.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the Department determines that the information submitted meets the requirements of Regulation .03 of this chapter, it shall make a determination as to whether further environmental assessment is necessary as a result of potential health hazards that have been identified.</text> </paragraph> <paragraph num="D."> <text>The Department shall require a further environmental assessment if:</text> <paragraph num="(1)"> <text>The initial environmental assessment indicates health hazards on, or reasonably likely to affect, the project site; or</text> </paragraph> <paragraph num="(2)"> <text>The qualified project is a renovation project, unless the environmental professional who completed the initial environmental assessment has sufficiently demonstrated via written statement that a further environmental assessment should not be provided.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If the Department determines that a further environmental assessment is necessary, it shall:</text> <paragraph num="(1)"> <text>Promptly notify the entity responsible for the qualified project;</text> </paragraph> <paragraph num="(2)"> <text>Provide the entity responsible for the qualified project with documentation showing what additional information is requested, which may include specialized studies or reviews of, as applicable, such as:</text> <paragraph num="(a)"> <text>Asbestos and lead paint samplings and testing;</text> </paragraph> <paragraph num="(b)"> <text>Site and record reviews of any underground storage tanks and associated supply lines;</text> </paragraph> <paragraph num="(c)"> <text>Soil sampling and analysis;</text> </paragraph> <paragraph num="(d)"> <text>Groundwater or aquifer sampling;</text> </paragraph> <paragraph num="(e)"> <text>Testing for PCB contamination;</text> </paragraph> <paragraph num="(f)"> <text>In-depth investigation of neighboring properties;</text> </paragraph> <paragraph num="(g)"> <text>Radon testing; and</text> </paragraph> <paragraph num="(h)"> <text>Mold testing;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Notify the Maryland Department of the Environment and request that the Department of the Environment provide the entity responsible for the qualified project with specific instructions on how to address or mitigate any health hazards found; and</text> </paragraph> <paragraph num="(4)"> <text>Set a reasonable deadline for the submission of the requested additional information.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Any further environmental assessment, if required by the Department under this chapter, shall meet the requirements described in Standard E1903-11 published by the American Society for Testing and Materials.</text> </paragraph> <paragraph num="G."> <text>When the Department determines that an entity responsible for a qualified project has sufficiently addressed or mitigated any health hazards as determined by an environmental assessment performed under this chapter, the Secretary or the Secretary’s designee shall certify so in writing.</text> </paragraph> <paragraph num="H."> <text>When the Secretary or the Secretary’s designee has certified in writing that there are no unmitigated health hazards that could reasonably affect the project or its residents, the public health impact assessment is considered approved and the qualified project may proceed to underwriting or the density bonus application, as applicable.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Land Use Article, §7-509, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 6, 2025 (51:26 Md. R. 1186)</annotation> </annotations> </chapter> </subtitle> <subtitle num="24" heading="Energy Programs"> <chapter num="01" heading="Leased or Rented Residences Benefiting from Weatherization Assistance"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide requirements relating to leased or rented residences benefitting from weatherization assistance performed by the Department of Housing and Community Development pursuant to Public Utilities Article, §7-224(e), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Building owner” means an owner of a low-income residential property, including the owner’s agents and assignees.</text> </paragraph> <paragraph num="(2)"> <text>“Department” means the Department of Housing and Community Development, a principal department of the State.</text> </paragraph> <paragraph num="(3)"> <text>“Lease” means any oral or written agreement, express or implied, creating a landlord and tenant relationship, including any “sublease.”</text> </paragraph> <paragraph num="(4)"> <text>“Low-income program” means a program of the Department that provides funds or services to provide energy efficiency and energy conservation measures, including weatherization assistance, to buildings occupied by income-eligible households, causing those buildings to become more energy efficient or to increase energy conservation.</text> </paragraph> <paragraph num="(5)"> <text>“Low-income residential property” means a unit, building, or community of buildings, with residents who qualify for the low-income programs.</text> </paragraph> <paragraph num="(6)"> <text>“Tenant” means a person lawfully occupying a low-income residential property pursuant to a lease.</text> </paragraph> <paragraph num="(7)"> <text>“Weatherization assistance” means the installation of materials to protect the interior of a building from outside elements.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <text>The regulations in this chapter apply to building owners who lease low-income residential properties to tenants and who obtain weatherization assistance through the low-income programs for those properties.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Requirements Applicable to Building Owners."> <paragraph num="A."> <text>When a building owner obtains weatherization assistance for a low-income residential property, the benefits thereof, including utility bill reduction and preservation of affordable housing stock, must accrue primarily to tenants.</text> </paragraph> <paragraph num="B."> <text>After a building owner obtains weatherization assistance for a unit of a low-income residential property, a building owner may not:</text> <paragraph num="(1)"> <text>Increase rent for the unit as a result of the weatherization assistance; or</text> </paragraph> <paragraph num="(2)"> <text>Terminate a lease or evict any tenant as a result of the weatherization assistance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Violation of any part of this section by the building owner may result in the building owner being required to repay the Department for the low-income program’s share of the cost of the weatherization assistance.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Public Utilities Article, §7-224(e), Annotated Code of</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 1, 2025 (52:17 Md. R. 874)</annotation> </annotations> </chapter> </subtitle>