These regulations prescribe the policies, procedures, and authorizations for making loans for improving migratory labor camps under the Act. The basic objective of the Program is to make plans at a preferred rate of interest to owners of migratory labor camps to finance health and safety improvements to housing facilities for migratory workers. The terms appearing in the Act have the meanings defined in the Act and, in addition, the meanings used in these regulations. Terms Defined. “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: Moves seasonally from one place to another for the purpose of employment; Is not a year-round employee; and Occupies living quarters other than his permanent home during the period of this work. “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. Borrowers shall meet the following requirements, which shall be met jointly and separately if there is more than one applicant: 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. If title to the migratory labor camp property to be improved is held by more than one individual, partnership, corporation, or business entity in any form of joint tenancy, each person having an interest in the property shall be deemed to be an applicant for purposes of these regulations. If the applicant for a loan is a business entity, personal guarantees will be required from the principals of the business in accordance with Regulation .06G of this chapter. An applicant may not receive more than $200,000 in total loans from the Program. This limitation shall apply both jointly and separately if there is more than one applicant. Migratory labor camps shall meet the following requirements: Be located within the State; Provide living accommodations for four or more migratory workers engaged in agricultural activities, including related food processing; and Be, in the determination of MDH and MOSHA, in need of health or safety improvements, or both, in conjunction with a plan. All loans shall be made for the terms, and conform to the requirements, set forth below: Interest Rate. The Department shall from time to time and, in accordance with the Act, establish the interest rate to be paid on all loans at a preferred rate. Term. The Department shall establish the term of all loans which: May include a construction period of generally not more than 4 months; and May not exceed 10 years from completion of construction. Loan Amount Restrictions. Restrictions on loan amounts are as follows: 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. Loan-to-Value Ratio. Notwithstanding the provisions of §C of this regulation, a loan may not exceed an amount which, when added to any outstanding debts secured by or relating to the eligible migratory labor camp property, would equal 67 percent of the appraised value of the property after the proposed improvements are completed. If the total amount of outstanding debt relating to the property exceeds 67 percent of the appraised value, the borrower may pledge other assets of the borrower to satisfy the loan-to-value ratio. If other assets are pledged to secure the loan, any outstanding debts secured by or relating to the pledged assets shall be considered in determining the loan-to-value ratio. Monthly Payment. The borrower shall repay the loan by single monthly payments which shall be applied to expenses, when applicable, interest, and principal, in that order. Late Charge. Late charges, as permitted by law, will be charged. Security for Loans. All loans shall be evidenced by a promissory note and any other documents that the Department may require. All loans shall be secured by a first lien, or in the discretion of the Department a second lien, mortgage, or deed of trust in a form required by the Department, which shall be recorded in the land records of the political subdivision in which the migratory labor camp property is located. Pursuant to §D of this regulation, the Department may require the borrower to provide additional security through an indemnity mortgage or a lien covering other assets of the borrower. If the borrower is a business entity, the principals of the business entity shall guarantee repayment of the loan and the performance of the borrower's obligations under the loan documents. Disbursement. The Department shall disburse loan funds in accordance with a draw schedule approved before or at the loan closing. The draw schedule shall be based upon completion of specified items or a percentage of work. Payment shall be requested by the borrower and approved by the Assistant Director or his designee based on completed work. Change of Ownership or Use. 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. Prepayment. Borrowers may prepay a loan, in whole or in part, without penalty, at any time during the term of the loan. Assumption. Loans may not be assumed without the prior written consent of the Department. However, an assumption may not be approved unless the proposed borrower qualifies as an eligible applicant in accordance with Regulation .04 of this chapter. Insurance. The borrower shall maintain fire and extended coverage insurance at the borrower's expense in an amount not less than the sum of the loan and any prior debts secured by the migratory labor camp property. The insurance policy or policies shall: Be written by companies authorized to transact business in the State; Be written by companies which are reputable and financially sound, as determined by the Department; Be in force at the time of the loan closing; Name the Department as mortgagee in a standard mortgagee clause attached to or printed in the policy; and Contain terms and coverage satisfactory to the Department. Flood Insurance. If the migratory labor camp is located in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, it shall be covered by a flood plain insurance policy in an amount equal to the loan, naming the Department as beneficiary. The policy may not be terminated without prior notification to the Department. Before initiation of construction of the improvements, the borrower shall secure all necessary flood plain permits from the Maryland Department of Natural Resources and the political subdivision in which the migratory labor camp is located. Title Insurance. The borrower shall provide a title insurance policy in standard ALTA form, or any other form approved by the Department naming the Department as an insured mortgagee, and containing only standard exceptions and encumbrances approved in writing by the Department. Appraisals. 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: A certified MAI, SREA, or SRA appraiser; or A person, financial institution, or entity acceptable to the Department with prior experience in appraising real property. 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. Escrow Account. If there is no prior mortgage on the migratory labor camp property requiring the payment of expenses to the mortgagee, the Program mortgage or deed of trust shall require the borrower to make monthly expense payments to the Program in escrow consisting of 1/12 of annual real estate taxes, property insurance premiums, and when appropriate, other items for which payments are required by the Department. Interest on the escrowed expense funds shall be credited to the escrow account at the rates and terms set forth in the documents evidencing and securing the loan. Eligible Costs. The proceeds of a loan may be used to finance the following eligible costs: Construction of necessary improvements; Architectural, planning, technical, or design fees. All closing costs, together with the cost of appraisals, and any other costs incidental to loan approval shall be paid by the borrower. Compliance with Laws. The borrower shall agree to comply with all applicable State and federal laws, orders, ordinances, and regulations, including, by way of example, the laws, orders, ordinances, and regulations relating to equal opportunity. Default. A loan is in default when: Any payment required by the loan documents is 90 days delinquent; There is a default in any other term or condition of any loan document; or As set forth in §T of this regulation, a representation made by the borrower in the application or any document submitted to the Program in connection with the loan is determined to have been untrue. 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. Any borrower who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's actions, shall be subject to the criminal penalties set forth in the Act in addition to immediate acceleration of the loan. Loan application shall be made on forms and in a manner prescribed by the Department and shall be submitted to the offices of the Program. The loan application shall include without limitation: 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. Applicants shall submit any additional documentation required by the Department in order to establish the eligibility and creditworthiness of the applicant. The Department shall issue a letter of commitment to an applicant to evidence the approval of a loan. The Department may not take action on a loan after issuance of a commitment letter until the applicant accepts the terms and conditions of the commitment letter by executing and returning a copy of the letter. The Department shall issue a letter of rejection to an applicant to evidence disapproval of a loan. The rejection letter shall state the reasons for disapproval and shall advise the applicant of his appeal rights. An applicant may withdraw a loan application at any time before loan closing by written notice to the Program. The applicant shall bear any costs incurred for items other than the Program's internal processing, including but not limited to title examination, credit reports, and appraisals. The loan closing shall be scheduled at a time acceptable to the applicant and the Department through an attorney selected by the applicant and approved by the Department. All taxes and assessments against the migratory labor camp property which are due and payable shall be paid at or before the loan closing. All contractors shall: 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: Comprehensive public liability insurance coverage protecting the borrower for not less than $100,000 for injuries sustained by any one person, and $300,000 for injuries sustained by two or more persons in any one accident, Property damage liability insurance of not less than $50,000 for each occurrence and $100,000 aggregate in the event of property damage arising out of work performed by the contractor, Workmen's compensation insurance, and With respect to loans of $50,000 or more, a payment and performance bond in an amount satisfactory to the Department and naming the Department and the borrower as dual obligees; Perform all work: In conformance with the contract and all applicable laws, local codes, ordinances, and regulations including, by way of example, those laws, local codes, ordinances and regulations relating to the protection and safety of persons and property, and In a competent, workmanlike manner equal to the standards of the industry; 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. The requirements of §A of this regulation shall also apply to subcontractors except that, with respect to §A(3), subcontractors may be included within the contractor's insurance coverage. General. 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. Disbursement. All disbursements of the loan shall be made: In accordance with a draw schedule approved before the loan closing; Only for work completed and in place, as determined by the Department; Only upon receipt of a certification by the borrower and the contractor of the costs for which loan funds are requested; and With respect to loans of less than $50,000, only upon receipt of a waiver of liens from all contractors, subcontractors, and materialmen under the contract for all work performed or materials included in the last previous request for disbursement within 30 days from the date of funding of the previous request for disbursement or before the next request for disbursement, whichever is earlier. The Department may not make any advances. The Department shall issue final payment after: The Department receives a certificate of completion executed by the borrower and the contractor certifying that all work has been completed and paid for in accordance with the contract; The Department makes a final inspection of the work performed and receives and approves the certificate of completion; The Department has verified and reconciled all disbursements and receipts or deposits by the borrower which may be required by the Department; The Department receives a certification by MDH and MOSHA that the improvements have been completed in accordance with the plan; and With respect to loans of less than $50,000 the Department receives final waivers of liens from all contractors, subcontractors, and materialmen under the contract. Any funds remaining in the loan account after final disbursement shall be applied to reduce the principal balance of the loan. Criteria for Appeal. A borrower or applicant may appeal to the Assistant Director from any action taken by the Department through the Program. Notice of Appeal. An appeal shall be initiated by submitting a notice of appeal to the Assistant Director, in writing, within 30 days of the action complained of or the date of the notice of the action complained of, if any, whichever is later. The notice of appeal shall: State the reason for disagreement with the action of the Department; Contain any additional information to be considered in support of the appeal, and a statement of why the information was not furnished with the original application; Attach supporting documents; State whether the borrower or applicant wants to meet with the Assistant Director; Contain the borrower's or applicant's name, address, telephone number, and, if known, the Program file number; Contain an affirmation, under oath, that the facts set forth in the notice of appeal are true and correct. Disposition. If requested, the Assistant Director will meet with the borrower or applicant to resolve the appeal. If a meeting is not requested, the Assistant Director shall decide the appeal based on the information contained in the notice of appeal and supplied to the Assistant Director by the Program staff. The Assistant Director shall issue a written decision within 15 days of receipt of the notice or the date of the meeting, if any, whichever is later. Action by the Director. 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. Appeal to the Secretary. 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. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if: Conformance to the requirements of any federal agency in connection with any improvements with respect to which federal assistance is sought necessitates waiver or variance of a regulation; or In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purpose of the Act. Housing and Community Development Article, §§4-910 and 4-928, Annotated Code of Maryland;Executive Order 01.01.1992.27C Effective date: June 6, 1983 (10:11 Md. R. 973) Chapter recodified from COMAR 05.01.14 to COMAR 05.04.03 Regulation .05 amended effective January 2, 1994 (20:25 Md. R. 1941); April 5, 1999 (26:7 Md. R. 537) Regulation .07B amended effective January 2, 1994 (20:25 Md. R. 1941)