Title 05 — Subtitle 04. Special Loan Programs

“Accessory dwelling unit” means a dwelling unit which is:

“Act” means Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.

“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.

Amortizing Loans.

“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits less:

“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.

“Applicant” means any person or entity applying for a loan under the Program.

“Borrower” means a single family owner-occupant, nonprofit sponsor, or sponsor who receives a loan to rehabilitate an eligible building.

“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.

“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.

“County” means any of the 23 counties in the State and the City of Baltimore.

“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.

“Department” means the Department of Housing and Community Development.

“Director” means the Director of Single Family Housing Programs of the Department.

“Elderly” means the age limit specified by the Secretary that is 55 years old or older.

Family of Limited Income.

Family of Lower Income.

Family of Very Low Income.

“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.

“Household” means an individual or a group of individuals who occupy a dwelling unit as their permanent residence.

“Level I local administrator” means a political subdivision certified by the Department under Regulation .16 of this chapter.

“Level II local administrator” means a political subdivision certified by the Department under Regulation .16C of this chapter.

“Local administrator” means a level I or level II local administrator.

“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.

“Nonprofit sponsor” means either a:

“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.

“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.

“Program” means the Regular Rehabilitation Program of the Maryland Housing Rehabilitation Program.

“Program Director” means the Assistant Director of Special Loan Programs in the Division of Development Finance of the Department.

Repealed.

“Secretary” means the Secretary of Housing and Community Development.

“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.

Single Family Owner-Occupant.

“Special Loan Programs Fund” means the special fund created under Housing and Community Development Article, §4-501(a)(1), Annotated Code of Maryland.

“Sponsor” means an owner who receives a loan to rehabilitate a building with four or fewer units used for residential rental purposes.

“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.

“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.

“Work write-up” means a description of the structural, mechanical, electrical, and other work items needed for the rehabilitation of an eligible building.

Be a “family of limited income” as defined in Regulation .03B(15) of this chapter;

Intend to reside in the property to be rehabilitated;

Own the eligible property in fee simple or under a freely transferable ground rent lease;

Have the legal capacity to incur the obligations of the loan;

Demonstrate credit worthiness and repayment ability acceptable to the Department; and

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.

If a business, be in good standing and be qualified to do business in Maryland;

Own the eligible property in fee simple or under a ground rent;

Have the legal capacity and all necessary legal and corporate authorizations to incur the obligations of the loan;

Demonstrate credit worthiness and repayment ability acceptable to the Department;

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;

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:

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;

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;

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;

Agree in writing to assist with relocation of tenants to the extent required by the Department; and

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.

Be located within the State;

Contain not more than four residential units or shared living unit facilities for more than four households;

Be properly zoned for the proposed use;

Be in need of repairs or modifications considered eligible under this chapter;

Have the potential to be rehabilitated, reconstructed, renovated, redeveloped, improved, or modified as determined by the local administrator;

Be owned by an eligible borrower who shall provide assurance of title or evidence of ownership acceptable to the Department; and

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:

Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;

Is not less than 24 feet in width and 40 feet in length;

Is not independently capable of movement and is installed permanently on an engineered foundation in conformance with COMAR 05.02.04;

Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;

Is certified by the:

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;

Meets all applicable zoning requirements as to number of dwelling units, lot size, and building setbacks;

Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.

On which the payment of all principal and any interest on the loan is made; or

15 years after completion of rehabilitation.

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.

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.

The Department may establish different interest rates available on loans serving occupants who are families of:

The interest rates charged on loans may not be more than private lending rates for comparable loans.

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.

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.

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.

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.

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.

Loans of $5,000 or less shall be evidenced by a promissory note and such other documents as may be required by the Department.

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.

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.

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.

Adjustments to the interest rate of the loan upward or downward;

Suspension or debarment from the Department's programs;

Foreclosure;

Accepting a deed instead of foreclosure;

Appointment of a receiver; and

Other legal action which protects the Department's interests.

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

As determined by the Secretary, any category of borrowers necessary to achieve the purposes of the Act.

Own and occupy the dwelling;

Be a family of very low income; and

Be unable to undertake the rehabilitation project without a grant as determined by the Department.

No required payments;

The deferral of payments; or

The reduction of the principal balance owed over a period of time.

On the percentage of allocations and the percentage of the annual funding appropriated to the Program which may be used for grants; and

On the maximum grant amount that may be awarded for a dwelling.

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.

The insurance policy or policies shall:

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.

Applicants shall bear the costs of appraisals, which may be financed by the loan for single family owner-occupants.

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.

An applicant shall submit supporting documentation specified in the checklist attached to the application, which may include any of the following:

In addition, all sponsor and nonprofit sponsor applicants shall submit the following documentation:

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.

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.

If an applicant is ineligible for a loan, the applicant shall be informed in writing of the determination and the reasons for it.

Each building for which an eligible application is received shall be inspected for the purpose of preparing a work write-up by:

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.

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.

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.

Approval to make a loan is as follows:

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.

Loan commitments shall be made on forms provided by the Program.

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.

If the loan closing does not occur within the specified time, the local administrator shall notify the applicant that the commitment is officially canceled.

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.

Notification of the cancellation of an application shall be made in writing.

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.

Loan document forms shall be provided by the Program and may not be altered by the local administrator.

Loan documents shall be executed on behalf of the Department by the officer or employee authorized to do so by the Department.

Credit reports;

Appraisal fee, if applicable;

Recording fees and recording taxes or other charges incident to recordation;

Required survey charges, if applicable;

Cost of title examination and title insurance, if required;

Administrative fee;

Property and judgment report fees;

Inspection fees; and

Other reasonable and customary charges or fees authorized by the Department.

Closing costs, program charges, and fees may be allowed as 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 fees.

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.

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.

Health and safety violations, including structural defects;

Major system deficiencies;

Exterior deficiencies;

Interior deficiencies;

Weatherization and energy conservation;

Handicapped modifications; or

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.

General property improvements may:

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.

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.

Shall be licensed by the Maryland Home Improvement Commission or meet other State and local licensing requirements necessary to do the rehabilitation.

Shall be qualified to do business in Maryland.

Shall be able to demonstrate the capability to complete the rehabilitation as determined by the Department as evidenced by previous professional rehabilitation experience.

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.

Shall agree in the contract to:

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.

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.

An owner-occupant may not act as a general contractor.

Performance and payment bonds;

A letter of credit in the amount of 25 percent of the rehabilitation contract cost and an assurance of completion agreement; or

Other assurances of completion acceptable to the Department.

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.

Contract documents include without limitation:

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:

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.

Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during rehabilitation taking into consideration:

The local administrator may charge borrowers a fee for inspections during rehabilitation, as approved by the Department.

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.

The local administrator or the subcontractor shall disburse the loan proceeds in accordance with the requirements of §B(3)—(5) of this regulation.

Loan funds may not be disbursed if payments of interest or escrows required by the loan documents are in arrears.

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.

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.

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:

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.

The Department may revoke, at any time, its approval of any loan account established under this regulation.

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.

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.

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.

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.

Upon final inspection and receipt and approval of the certificate of completion, final payment shall be processed.

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:

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.

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.

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:

The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the Department.

The political subdivision shall be able to perform adequately the functions of the following positions:

The rehabilitation staff or the political subdivision shall be capable of:

The political subdivision shall execute and comply with the terms of an agreement required by the Department.

The political subdivision meets the criteria outlined in §B of this regulation to the Department's satisfaction; and

The Department determines that the rehabilitation staff of the political subdivision is capable of:

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.

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:

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.

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.

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.

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.

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.

The allocations to the political subdivisions shall take into account those factors in Housing and Community Development Article, §4-911, Annotated Code of Maryland.

The Department shall notify, in writing, each political subdivision of its allocation.

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.

Titles VI and VII of the Civil Rights Act of 1964, as amended;

Title VIII of the Civil Rights Act of 1968, as amended;

The Fair Housing Amendments Act of 1988, as amended;

The Department’s Minority Business Enterprise Program, as amended;

The Americans with Disabilities Act of 1990, as amended;

State Government Article, Title 20, Annotated Code of Maryland, as amended; and

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.

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

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.

“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.

“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.

“Alley” means a service way providing a secondary public means of access to abutting properties.

“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.

Area.

“Attic” means the accessible space between the top of the uppermost ceiling and the underside of the roof. Inaccessible spaces are considered structural cavities.

“Building line” means a line established by law or agreement usually parallel to the property line, beyond which a structure may not extend.

“Carport” means a roofed space having at least one side open to the weather, primarily designed or used for motor vehicles.

“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.

“Chase” means an enclosed shaft in a masonry or other wall providing for the accommodation of pipes, ducts, or conduits.

Construction Classification.

Court.

“Damp-proofing” means a treatment of a surface or structure which retards the passage of water.

“Driveway” means a private way for the use of vehicles and pedestrians.

Dwelling.

“Dwelling unit” (see “living unit”).

“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.

“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.

“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.

“Fire resistance” means that property of construction assemblies which under fire conditions prevents or retards the passage of excessive heat, hot gases, or flames.

“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.

“Fire resistive” means that quality of materials and assemblies to resist fire and prevent its spread.

“Fire retardant treated wood” means lumber or plywood treated by a recognized impregnation process to reduce its combustibility.

“Fire separation” means a construction of specified fire resistance separating parts of a building horizontally or vertically as required.

“Firestopping” means a barrier within concealed spaces which is effective against the spread of flames or hot gases.

“Flame-resistant” means that property of a material which is flame resistant by nature or has been made so by an accepted method.

“Flame spread” means the propagation of flame over a surface.

“Flashing” means sheet metal or other impervious materials used in roof and wall construction to protect a building from the seepage of water.

“Floor” (see “story”).

“Foundation” means construction, below or partly below grade, which provides support for exterior walls or other structural parts of the building.

Garage.

“Grade, finish” means the top surface elevation of lawns, walks, drives, or other improved surfaces after completion of construction or grading operations.

“Habitable room” (see “room”).

“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.

“Joists” means a series of floor, roof, or ceiling framing members spaced not more than 30 inches on center.

“Kitchen” means a space, 50 square feet or more in area, used for cooking and preparation of food.

“Kitchenette” means a space, less than 50 square feet in area, used for cooking and preparation of food.

“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.

Loads.

Lot.

Lot coverage" means that percentage of the plot area covered by the total of all building areas.

“Lot line” means a line bounding the lot as described in the title to the property.

“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.

“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.

“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.

“Property” means a lot or plot, including all buildings and improvements on it.

“Property line” means a recorded boundary of a plot.

“Rafters” means a series of roof framing members, spaced not more than 30 inches on center in roofs having slopes over 3 in 12.

“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.

“Rehabilitation construction” means all the following:

“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.

“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.

Room.

“Shaft” means a vertical opening or enclosed space extending through two or more floors of a building, or through a floor and roof.

“Shall” is a term that imposes obligation to act.

“Should” is a term that indicates minimum good practice but does not impose an obligation to act.

“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.

Story.

“Street” means a public or private way which affords principal means of vehicular access to properties which abut on it.

“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.

Ventilation.

Wall.

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.

When a local code, regulation, or requirement exists, it shall apply unless a political subdivision chooses to use these standards.

Utilities shall be provided for each property or project.

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.

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.

Access to Each Living Unit. Access to each living unit shall be provided without passing through any other living unit.

Each dwelling or portions of a dwelling providing complete living facilities for one family shall be counted as a living unit.

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.

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.

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.

The property should not be subject to hazards such as objectionable smoke, noxious odors, unusual noise, or the probability of flooding.

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.

General.

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.

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.

Privacy and Arrangement.

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.

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.

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.

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.

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.

Habitable Rooms.

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.

Public Spaces. Artificial light shall be provided in all public spaces.

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.

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.

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.

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.

Exterior Doors. Exterior doors shall have safe locks.

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.

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.

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.

New Stairways. New stairways to be constructed shall comply with standards of good practice and be appropriate to the building and occupant load.

Every dwelling and multifamily building shall be supplied with a means of disposal or removal of trash and garbage.

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.

When practical, functional areas of high noise should be separated from areas of quiet. Clothes or storage closets are useful separators.

Partitions should extend to solid floor-ceiling construction and should not terminate at hung ceilings.

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.

Motors, fans, and other mechanical equipment should be balanced and mounted.

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.

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.

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:

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.

Every below-grade living unit shall have direct and convenient access to the outside of the building at grade level.

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.

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.

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.

Interior Finish.

Exterior Stairways.

Roof Covering.

Exclude windows, trim, and doors not more than 25 square-foot area from flame spread calculations.

Finish floors and floor coverings are not included in flame spread requirements but may not be a fire hazard.

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.

Kitchen cabinets and counter tops should not exceed a 200 flame spread rating.

Classification in accordance with NFPA No. 101, “Life Safety Code,” as follows:

ASTM E84 (Tunnel Test)

ASTM E162-62T (Radiant Panel Test)

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.

Ceiling insulation shall be provided over all heated areas in locations having 2500 or more annual winter degree days as follows:

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.

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.

Weatherproofing.

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.

Basement and Foundation Walls.

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.

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.

Each building and all exterior appurtenances on the site shall be effectively protected against rodents, termites, or other vermin infestation, using approved methods.

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.

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.

Acceptably prevent the entrance or penetration of moisture and weather;

Be protected from damage by decay, corrosion, insects, and other destructive elements; and

Provide reasonable durability and economy of maintenance.

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.

Roof Covering. All roofs shall have a suitable, watertight, and reasonably durable covering free of holes, cracks, excessively worn surfaces, or other defects.

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.

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.

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.

All interior walls and ceilings shall provide the following:

Exterior surfaces shall be treated, if necessary, to eliminate the hazards of leadbased paint poisoning in the manner determined by the Program.

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.

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.

All mechanical equipment should be installed so that maintenance and replacement can be performed without the removal of other equipment.

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.

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.

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.

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.

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.

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).

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.

Required Fixtures. For required plumbing fixtures see Regulation .05B(5) and (6).

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.

Each building and living unit within the building shall have domestic hot water in quantities sufficient for the needs of the occupants.

Existing water heating and storage equipment shall be in good serviceable condition.

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.

All fuel burning water heaters shall be connected to a vent leading to the exterior of the building.

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.

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.

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.

“Act” means Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.

“ALTA” means the American Land Title Association.

“Applicant” means any individual, partnership, corporation, or other business entity which applies for a loan under the Program.

“Approved plan” means a plan which has been approved by the Department.

“Assistant Director” means the Assistant Director for Home Improvement Programs, Community Development Administration.

“Borrower” means an owner of a migratory labor camp who receives a loan under the Program.

“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.

“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.

“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.

“Department” means the Department of Housing and Community Development.

“Director” means the Director of the Community Development Administration.

“Loan” means a migratory housing facilities loan.

“MAI” means a member of the Appraisal Institute of the American Institute of Real Estate Appraisers.

"MDH" means the Maryland Department of Health.

“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.

“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.

“Migratory worker” means any person from within or outside the State who:

“MOSHA” mean Maryland Occupational Safety and Health Administration.

“Owner” means any individual, partnership, corporation, or other business entity which owns in fee simple a migratory labor camp located in the State.

“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.

“Program” means the Migratory Worker Housing Facilities Program.

“Secretary” means the Secretary of Housing and Community Development.

“SRA” means a Senior Residential Appraiser of the Society of Real Estate Appraisers.

“SREA” means a member of the Society of Real Estate Appraisers.

Be an owner as defined in these regulations;

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;

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;

Submit a plan; and

Have the legal capacity or, if applicable, all necessary legal and corporate authorization to incur the obligations of the loan.

May include a construction period of generally not more than 4 months; and

May not exceed 10 years from completion of construction.

The minimum approvable loan amount shall be not less than $2,000;

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;

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;

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

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.

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.

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.

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.

The insurance policy or policies shall:

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:

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.

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.

The proceeds of a loan may be used to finance the following eligible costs:

All closing costs, together with the cost of appraisals, and any other costs incidental to loan approval shall be paid by the borrower.

A loan is in default when:

Remedies for default shall include all remedies provided for in the loan documents, in the Act, or by law.

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.

A plan which shall be approved by the Department before the loan closing;

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;

An application fee in an amount to be determined by the Department;

An appraisal of the migratory labor camp property pursuant to Regulation .06O of this chapter; and

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.

Be licensed by the appropriate authority governing the type of work to be performed and meet all other State and local licensing requirements;

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;

Furnish evidence of the following:

Perform all work:

Furnish all labor, materials, and equipment, and obtain and pay for all permits and licenses necessary for execution and completion of the work;

Not assign the contract without the prior written consent of the Department;

Agree to permit the Department or its designee to examine and inspect the work;

Agree to complete all work within the completion date specified in the loan documents;

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;

Defend all claims and suits involving §A(9) at its sole cost and expense;

Use its best efforts to employ contractors which are minority business enterprises; and

Meet any other requirements that the Department may reasonably establish.

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.

Work done, materials supplied, and construction procedures shall comply with the approved plan, the contract, and all applicable laws, local codes, ordinances, and regulations.

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.

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.

All disbursements of the loan shall be made:

The Department may not make any advances.

The Department shall issue final payment after:

Any funds remaining in the loan account after final disbursement shall be applied to reduce the principal balance of the loan.

A borrower or applicant may appeal to the Assistant Director from any action taken by the Department through the Program.

Notice of Appeal.

Disposition.

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.

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.

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.

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.

Procedure. The procedure for the taking of an appeal to the Secretary is set forth in COMAR 05.01.01.

“Act” refers to Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.

“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits less:

“Borrower” means an applicant who receives a loan under the Program.

“Building” means any structure which satisfies the requirements of Regulation .05 of this chapter.

“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.

“Deferred payment loan” means a loan which permits the deferral of principal or interest, or both principal and interest.

“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.

“Director” means the Director of Single Housing Programs of the Department.

Family of Extremely Low Income.

Family of Limited Income.

Family of Lower Income.

Family of Very Low Income.

“Level I local administrator” means a political subdivision certified by the Department under Regulation .16B of this chapter.

“Level II local administrator” means a political subdivision certified by the Department under Regulation .16C of this chapter.

“Loan” means a loan made under the Program.

“Local administrator” means a level I or level II local administrator.

"MDE" means the Maryland Department of the Environment.

“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.

“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.

“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.

“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.

“Program” means the Indoor Plumbing Loan Program.

“Program Director” means the Assistant Director of Special Loan Programs in the Division of Development Finance of the Department.

“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.

“Secretary” means the Secretary of Housing and Community Development.

“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.

“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.

Be a family of limited income;

Reside, or intend to reside, in the building;

Hold title to the building for which the loan is made in fee simple or under a freely transferable ground rent lease;

Demonstrate repayment ability, in the estimation of the Department; and

Have income at a level that the Secretary has determined renders the applicant unable to afford or secure private financing to rehabilitate the property.

If a business entity, be in good standing and qualified to do business in Maryland;

Hold title to the building in fee simple or under a freely transferable ground rent lease;

Have the legal capacity, and all necessary legal and corporate authorizations, to incur the obligations of the loan;

Demonstrate credit worthiness and repayment ability in the estimation of the Department;

In the estimation of the Department, be unable to afford or secure a loan from a private lending institution to finance the improvements;

Agree in writing that all of the dwelling units improved with the loan proceeds shall be occupied by and rented to either:

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;

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;

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;

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;

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

Agree in writing to assist with relocation of tenants to the extent required by the Department.

Be located within the State;

Be a structurally and mechanically sound building except as permitted under §B of this regulation;

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;

Have:

Be owned by an eligible borrower who shall provide assurance of title or evidence of ownership acceptable to the Department; and

Contain not more than 20 dwelling units.

Is a multisectional structure fabricated after June 14, 1976, in an off-site manufacturing facility for installation or assembly at the building site;

Is not less than 24 feet in width and 40 feet in length;

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;

Has brick, wood, aluminum, or cosmetically equivalent exterior siding and a pitched composition shingle or wood shake roof;

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;

Complies with all requirements set forth in COMAR 05.02.04;

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;

Meets all applicable zoning requirements as to the number of dwelling units, lot size, and building setbacks; and

Is reasonably expected to have an economic life equal to or greater than the term of the mortgage.

Wells;

Septic tanks and drain fields;

Piping from the system into the buildings;

Connection fees and assessments;

Plumbing fixtures and equipment, including fixtures for the handicapped;

Additions, modifications, and alterations required to provide adequate private space for toilet and bath facilities;

Sand mound systems;

Water treatment systems;

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

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.

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.

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.

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.

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.

The Department may establish different interest rates for loans serving occupants who are families of:

The interest rates charged on loans may not be more than private lending rates for comparable loans.

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:

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:

Loans of $5,000 or less shall be evidenced by a promissory note and such other documents as may be required by the Department.

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.

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.

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.

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.

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.

Applicants shall bear the costs of appraisals, which may be financed in the case of a loan made to an owner-occupant.

Increase the interest rate up to a rate set by the Program from time to time;

Accelerate the payment of the entire principal and interest due; or

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.

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.

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:

Adjustments to the interest rate of the loan upward or downward;

Suspension or debarment from the Department's programs;

Foreclosure;

Accepting a deed in lieu of foreclosure;

Appointment of a receiver; and

Other legal action which protects the Department's interests.

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

As determined by the Secretary, any category of borrowers necessary to achieve the purposes of the Act.

The borrower is a family of extremely low income;

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

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.

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.

Applicants shall submit supporting documentation specified in the checklist attached to the application, which may include any of the following:

In addition, owner-landlord applicants shall submit the following documentation:

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.

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.

If the applicant is ineligible for a loan, the applicant shall be informed in writing of the determination and the reasons for it.

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:

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.

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.

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.

Approval to make a loan is as follows:

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.

Loan commitments shall be made on forms provided by the Program.

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.

If the loan closing does not occur within the time specified, the local administrator shall notify the applicant that the commitment is officially canceled.

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.

Withdrawn applications may not be reinstated. A new application is required.

The Program or the local administrator may cancel an application at any time during processing if the applicant fails to provide any information requested.

Notification of the cancellation of an application shall be in writing.

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.

Loan document forms shall be provided by the Program and may not be altered by the local administrator.

Loan documents shall be executed on behalf of the Department by the officer or employee authorized to do so by the Department.

Credit reports;

Appraisal fees, if applicable;

Recording fees, taxes, and charges, if applicable;

Required survey charges, if applicable;

The cost of title examination and title insurance premiums, if required;

Administrative fees;

The cost of property and judgment reports;

Inspection fees; and

Other reasonable and customary charges or fees authorized by the Department.

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;

Shall be qualified to do business in the State of Maryland;

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;

May not be suspended or debarred from the Department's programs pursuant to any action under COMAR 05.01.05;

Shall agree in the contract to:

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.

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.

Copies of the Department's plan shall be made available to sponsors and contractors.

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.

An owner-occupant may not act as general contractor.

100 percent performance and 100 percent payment bonds;

A letter of credit in the amount of 25 percent of the rehabilitation contract cost, and an assurance of completion agreement; or

Other assurances of completion acceptable to the Department.

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;

May not be disbarred or suspended pursuant to COMAR 05.01.05; and

Shall have performed all previous work financed by the Program in a manner satisfactory to the Director.

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:

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:

The borrower and the contractor shall cooperate to facilitate timely performance of the rehabilitation work and selection of materials.

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.

The borrower is responsible for removing and replacing rugs, furnishings, and other personal property, unless otherwise provided in the contract documents.

The borrower and the contractor shall protect and maintain the property and improvements in accordance with the contract documents.

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.

Communications relating to content or performance of the contract shall be in writing, and copies sent to the Program.

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.

Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during rehabilitation, taking into consideration the:

The local administrator may charge borrowers a fee for inspections during rehabilitation, as approved by the Department.

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.

The local administrator or the subcontractor shall disburse the loan proceeds in accordance with the following requirements:

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:

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.

The Department may revoke, at any time, its approval of any loan account established under this regulation.

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.

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.

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.

Final payment shall be made as set forth in §F(2)—(5) of this regulation.

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.

Final payment shall be processed upon final inspection and receipt and approval of the certificate of completion.

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:

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.

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.

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:

The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the local administrator.

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.

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.

After final payment or payout is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements.

A copy of the closeout statement shall be forwarded to the Program and the servicer.

The political subdivision shall be able to provide staff to perform adequately the functions of the following positions:

The rehabilitation staff of the political subdivision shall be capable of:

The political subdivision shall execute and comply with the terms of an agreement required by the Department.

Political subdivision meets the criteria outlined in §B of this regulation to the Department's satisfaction; and

The Department determines that the rehabilitation staff of the political subdivision is capable of:

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.

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:

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.

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.

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.

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.

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.

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.

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.

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.

Titles VI and VII of the Civil Rights Act of 1964, as amended;

Title VIII of the Civil Rights Act of 1968, as amended;

The Fair Housing Amendments Act of 1988, as amended;

The Department’s Minority Business Enterprise Program;

The Americans with Disabilities Act of 1990, as amended;

State Government Article, Title 20, Annotated Code of Maryland, as amended; and

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.

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

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.

“Act” means Housing and Community Development Article, Title 4, Subtitle 7, Annotated Code of Maryland.

“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:

“Applicant” means a person or entity who applies for a loan or grant under the Program.

“Borrower” means an owner who receives a loan under the Program.

“Building” means a structure which satisfies the requirements of Regulation .04 of this chapter.

“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.

“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.

“Deferred payment loan” means a loan described in Regulation .07 of this chapter.

“Department” means the Department of Housing and Community Development, a principal department of the State.

“Director” means the Director of Single Family Housing Programs of the Department.

“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.

“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.

“Grant” means a grant made under the Program.

“Grantee” means the recipient of a grant under the Program.

“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.

“Lead hazard reduction activity” means an activity described in Regulation .05A of this chapter.

“Lead Poisoning Prevention Program” means the Program set forth in Environment Article, §§6-801—6-852, Annotated Code of Maryland.

“Level I local administrator” means a political subdivision certified by the Department under Regulation .16B of this chapter.

“Level II local administrator” means a political subdivision certified by the Department under Regulation .16C of this chapter.

“Loan” means a loan made under the Program.

“Local administrator” means a level I or level II local administrator.

"MDE" means the Maryland Department of the Environment, a principal department of the State.

“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.

“Owner-occupant” means an owner who resides or intends to reside in a building which contains one dwelling unit.

“Political subdivision” means:

“Program” means the Lead Hazard Reduction Grant and Loan Program described in this chapter.

“Program Director” means the Assistant Director of Special Loan Programs in the Division of Development Finance of the Department.

“Secretary” means the Secretary of Housing and Community Development.

“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.

“Target area” means an area determined by the Secretary to be an area with a concentration of families of limited income and either:

Hold title to the property in fee simple or under a perpetually renewable lease;

If an owner-occupant, reside, or intend to reside, in the building where the lead hazard reduction activity will take place;

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:

Not have been suspended or debarred from the Department's programs under any action under COMAR 05.01.05.

In order to be eligible for a loan, an applicant shall:

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.

Be located within the State;

Be one of the following:

Be in need of lead hazard reduction activity as demonstrated by meeting the following criteria:

Be owned by an eligible borrower who shall provide evidence of ownership acceptable to the Department;

Meet one of the following criteria:

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.

Window replacement, which may include new wells, sills, and frames;

Lead hazard treatment for existing windows, such as installation of new guides, guides and channels, and new well aluminum coil stock;

Wall encapsulation or enclosure;

Encapsulation or enclosure of lead-painted floors, stair risers, and treads;

Treatment of floors and stairs to provide a smooth, clean surface that can easily be cleaned;

Stabilization, repair, encapsulation, or enclosure of deteriorated or damaged lead-painted surfaces, whether interior or exterior;

Repainting of all surfaces;

Treatment of doors and door frames;

Cleaning and HEPA vacuuming in accordance with MDE regulations;

Post-treatment cleanup;

Post-treatment clearance testing;

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;

Activities designed to test innovative or unproven methods of lead hazard reduction, as approved by MDE and the Program for the particular project; and

Any other lead hazard reduction activity, including full abatement, relocation, or other activity authorized by the Act and approved by the Program.

Describes the lead hazard reduction activity or activities to be undertaken; and

Meets the other requirements of this regulation.

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.

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.

The Program may require a risk assessment or lead paint survey to determine all lead hazards present in a project.

For an owner-occupant borrower who is a family of limited income, the following additional costs may be financed:

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.

MDE, as set forth in COMAR 26.16.01, 26.16.02, 26.16.03, and 26.02.07; and

The local jurisdiction.

The interest rate to be paid on each loan may not be more than private lending rates for comparable loans.

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.

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:

Flood Insurance. If a building is in a 100-year flood plain, as designated by the Federal Emergency Management Agency:

Adjustments to the interest rate of the loan upward or downward;

Conversion of a deferred payment loan to a loan that suspends terms of deferral and requires periodic payments;

Suspension or debarment from the Department's programs;

Foreclosure;

Accepting a deed instead of foreclosure;

Appointment of a receiver;

Modification of loan terms to facilitate repayment; and

Other legal action which protects the Department's interest.

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.

The loan shall be secured in accordance with the requirements set forth in Regulation .08 of this chapter.

The Program may forgive a deferred payment loan at the time of transfer, to the extent that the loan exceeds equity in the property.

The Program may forgive a deferred payment loan after 20 years.

Amortizing loans of $5,000 or less shall be evidenced by a promissory note and other documents as may be required by the Department.

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.

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.

The lien of the mortgage or deed of trust:

A grantee shall meet the requirements of Regulation .03A of this chapter;

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

A grantee shall provide evidence satisfactory to the Program to show that either:

An owner-landlord shall demonstrate that 20 percent of the funds for the project come from another source.

If the owner-landlord is a nonprofit organization, the percentage of matching funds required is 10 percent rather than 20 percent.

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.

A grant for a residential building may not exceed $25,000 per dwelling unit.

A grant for a child care center that is not located in the operator's single family residence may not exceed $25,000.

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.

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.

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.

The required insurance shall be in force at the time the grant is closed.

The Department shall enter into a grant agreement with each grantee.

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.

The applicant shall submit with the application any documentation that the Department requires.

The applicant ;may submit supporting documentation specified in the checklist attached to the application, including but not limited to, the following:

A loan applicant shall submit the following additional documentation:

In addition, an owner-landlord applicant shall submit the following documentation:

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.

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.

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.

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.

The Department;

The local administrator; or

Another inspector acceptable to the Department.

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:

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.

Approval to make a loan, grant, or combination of loan and grant shall be as follows:

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.

A commitment for a loan and grant shall be made on the form provided by the Program.

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.

If the closing does not occur within the time limit, the local administrator shall notify the applicant that the commitment is officially canceled.

The Program or the local administrator may cancel an application at any time during processing if the applicant fails to provide any information requested.

Notification of the cancellation of an application, and the reasons for it, shall be in writing.

A canceled application may be reinstated upon the applicant's written request within 60 days following the date of the cancellation.

Loan and grant document forms shall be provided by the Program and may not be altered by the local administrator.

Loan and grant documents shall be executed on behalf of the Department by the officer or employee authorized to do so by the Department.

Credit reports;

Application fees;

Appraisal fees, if applicable;

Recording fees, taxes, and charges, if applicable;

Required survey charges, if applicable;

The cost of title examination and title insurance premiums, if required;

Loan administrative fees;

The cost of property and judgment reports;

Inspection fees; and

Other reasonable and customary charges or fees authorized by the Department.

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;

Shall be licensed by the Maryland Home Improvement Commission, if applicable, or otherwise meet all other State and local licensing requirements;

Shall be qualified to do business in the State;

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;

May not be suspended or debarred from the Department's programs under any action under COMAR 05.01.05;

Shall agree in the contract to:

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.

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.

Copies of the Department's plan shall be made available to sponsors and contractors.

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.

An owner-occupant may not act as general contractor.

100 percent performance and 100 percent payment bonds;

A letter of credit in the amount of 25 percent of the rehabilitation contract cost, and an assurance of completion agreement; or

Other assurances of completion acceptable to the Department.

May not be on the unacceptable risk determination list of the Department of Housing and Urban Development or the Development;

May not be disbarred or suspended under COMAR 05.01.05; and

Shall have performed all previous work financed by the Program in a manner satisfactory to the Director.

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:

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:

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.

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.

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.

The local administrator shall make at least two inspections of the project, an initial inspection and an inspection before any disbursement of funds.

Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during lead hazard reduction work, taking into consideration:

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.

The local administrator or the subcontractor shall disburse loan and grant proceeds in accordance with the following requirements:

Payments may be made for material delivered to the site but not yet installed in the project.

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:

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.

The Department may revoke, at any time, its approval of any loan account established under this regulation.

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.

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.

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;

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;

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;

Final payment shall be processed upon satisfactory final inspection and receipt of the certificate of completion;

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:

The local administrator may retain 10 percent of the loan amount until final payment.

The retainage shall be released at final payment upon confirmation that:

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.

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.

The Department may provide MDE with a list of all buildings which undertake lead hazard reduction through the Program.

After final payment or payout is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements.

A copy of the closeout statement shall be forwarded to the Program and the servicer.

The political subdivision shall be able to provide staff to perform adequately the functions of the following positions:

The rehabilitation staff of the political subdivision shall be capable of:

The political subdivision shall execute and comply with the terms of an agreement required by the Department.

The political subdivision meets the criteria outlined in §B of this regulation to the Department's satisfaction; and

The Department determines that the rehabilitation staff of the political subdivision is capable of:

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.

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:

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.

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.

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.

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.

The nonprofit sponsor shall be engaged in a project to provide affordable housing or medical treatment for lead poisoning.

Titles VI and VII of the Civil Rights Act of 1964, as amended;

Title VIII of the Civil Rights Act of 1968, as amended;

The Fair Housing Amendments Act of 1988, as amended;

The Department’s Minority Business Enterprise Program, as amended;

The Americans with Disabilities Act of 1990, as amended;

State Government Article, Title 20, Annotated Code of Maryland, as amended; and

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.

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

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.

“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.

“Act” means Housing and Community Development Article, Title 4, Subtitle 9, Annotated Code of Maryland, as amended.

“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits less:

“Borrower” means an applicant who receives a loan under the Program.

“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.

“Contract” means the written agreement between a borrower and a licensed general contractor or licensed home improvement contractor that:

“Deferred payment loan” means a loan which permits the deferral of principal or interest, or both principal and interest.

“Department” means the Department of Housing and Community Development, a principal department of the State.

“Director” means the Director of the Division of Development Finance of the Department.

“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.

“Elderly” means a person who is 62 years old or older.

“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.

“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.

“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.

“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.

“Level I local administrator” means a political subdivision certified by the Department under Regulation .16B of this chapter.

“Level II local administrator” means a political subdivision certified by the Department under Regulation .16C of this chapter.

“Loan” means a loan made under the Program.

“Local administrator” means a level I or level II local administrator.

“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.

“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.

“Program” means the Accessory, Shared, and Sheltered Housing Program.

“Program Director” means the Director of Special Loan Programs in the Division of Development Finance of the Department.

“Project” means the modification, addition, repair, renovation, or improvement to an existing property in order to provide accessory, shared, or sheltered housing.

“Rehabilitation plan” means the rehabilitation plan described in Regulation .20 of this chapter.

Related Costs.

“Secretary” means the Secretary of Housing and Community Development.

“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.

“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.

“Sheltered housing sponsor” means an owner residing or intending to reside upon completion of the project in a sheltered housing facility.

“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.

Reside, or intend to reside, in the property after completion of the rehabilitation;