# COMAR Title 05 — Department of Housing and Community Development

## Subtitle 05 — Rental Housing Programs

### Chapter 01 — Rental Housing Program

**Authority:** Housing and Community Development Article, §§4-401—4-411, Annotated Code of Maryland

**Administrative History:** Effective date: November 19, 1984 (11:23 Md. R. 1991)

**Administrative History:** Chapter recodified from COMAR 05.01.17 to COMAR 05.05.01

**Administrative History:** Regulations .01—.13 repealed and new Regulations .01—.29 adopted effective March 4, 1991 (18:4 Md. R. 446)

**Administrative History:** Regulation .06 amended effective January 2, 1994 (20:25 Md. R. 1942); April 5, 1999 (26:7 Md. R. 538); January 21, 2002 (29:1 Md. R. 20)

**Administrative History:** Regulation .09E amended effective January 2, 1994 (20:25 Md. R. 1942)

**Administrative History:** Regulation .10 repealed and Regulation .11 amended and recodified to Regulation .10 as an emergency provision effective August 24, 1995 (22:19 Md. R. 1456); emergency status extended at 23:7 Md. R. 547)

**Administrative History:** Regulation .10 repealed effective August 26, 1996 (23:17 Md. R. 1246)

**Administrative History:** Regulation .11 amended effective August 26, 1996 (23:17 Md. R. 1246)

**Administrative History:** Regulation .16C amended effective May 31, 1999 (26:11 Md. R. 853)

**Administrative History:** Regulation .18D amended effective November 7, 1994 (21:22 Md. R. 1873)

**Administrative History:** Regulation .20 amended effective August 26, 1996 (23:17 Md. R. 1246)

**Administrative History:** Regulations .01—.23 Rental Housing Program repealed and new Regulations .01—.32 Multifamily Rental Financing Program adopted effective March 13, 2006 (33:5 Md. R. 518)

**Administrative History:** Regulation .15B amended effective April 19, 2010 (37:8 Md. R. 614)

**Administrative History:** Regulations .01—.32 Multifamily Rental Financing Program repealed and new Regulations .01—.34 Rental Housing Program adopted effective December 22, 2014 (41:25 Md. R. 1476)

**Administrative History:** Regulation .13 amended effective October 8, 2018 (45:20 Md. R. 917)

#### Regulation .01 Scope.

*COMAR 05.05.01.01*

A. This chapter prescribes the policies, procedures, and authorizations for making loans from and administering the Rental Housing Program.

B. This chapter is applicable to the Maryland HOME Program (rental housing development only) as set forth under COMAR 05.12.01.

C. Projects which receive funding under this chapter may also receive low-income housing tax credits, which are governed by COMAR 05.05.06 and by federal law. For these projects, if any provision of this chapter conflicts with any law or regulation related to low-income housing tax credits, the more restrictive provision shall apply.

#### Regulation .02 Objectives.

*COMAR 05.05.01.02*

The basic objectives of the Rental Housing Program are to:

A. Increase or preserve the supply of decent, safe, and sanitary rental housing in the State for occupancy by households of limited income by providing financial assistance for certain costs of acquiring, constructing, or rehabilitating rental housing; and

B. Revitalize designated neighborhoods through the conversion of office and other commercial space to rental housing.

#### Regulation .03 Definitions.

*COMAR 05.05.01.03*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Act” means Housing and Community Development Article, Annotated Code of Maryland, as amended.

  (2) “Administration” means the Community Development Administration, a unit of the Division of Development Finance of the Department.

  (3) “Annual income” means annual income as defined by HUD at 24 CFR §5.609, as amended.

  (4) “Applicable codes and standards” means:

    (a) The applicable construction, health, safety, fire, occupancy, and other codes and standards in force in the political subdivision in which a project is located; or

    (b) If the codes and standards under §B(4)(a) of this regulation do not exist or are determined by the Secretary to be insufficient to promote the purposes of the Act, then the codes and standards prescribed in COMAR 05.02.01.

  (5) “Applicant” means a person, partnership, corporation, limited liability company, or other entity applying for a loan under the Program.

  (6) “Bridge loan” means an interim loan used during the construction or rehabilitation of a project and repaid with cash proceeds realized from a syndicated sale of the project or with the proceeds of permanent loans from other sources.

  (7) “Capital assistance loan” means a loan to a sponsor to finance all or a portion of a project’s development costs.

  (8) “Closing costs” means:

    (a) Financing costs such as a credit report fee, title examination, loan origination fee, title insurance fee, application fee, survey fee, recording fees, State and local transfer taxes, and recording taxes;

    (b) Prepaid expenses such as property taxes, ground rent, and any mortgage insurance premiums to be paid at closing; and

    (c) Other costs incidental to the closing of a loan and acceptable to the Department.

  (9) “County” means a county of the State or Baltimore City.

  (10) Department.

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

    (b) “Department” includes the Administration.

  (11) “Development costs” means costs incurred to acquire, construct, or rehabilitate a project, as approved by the Department, including:

    (a) Necessary studies, surveys, plans, and specifications;

    (b) Reasonable fees for architectural, engineering, legal, accounting, or other special services;

    (c) Special studies, including:

      (i) Appraisals;

      (ii) Compaction tests;

      (iii) Test borings;

      (iv) Market analyses;

      (v) Construction cost estimates; and

      (vi) Environmental or other special engineering studies;

    (d) Acquisition of land and improvements;

    (e) Site preparation;

    (f) Cost of labor and materials for new construction or rehabilitation, ancillary demolition and installation of improvements as set forth in approved plans and specifications;

    (g) Acquisition of necessary machinery, equipment, and furnishings installed at the project, including household appliances normally supplied to tenants in the rental market;

    (h) Initial occupancy expenses of the project including marketing and advertising costs;

    (i) Indemnity and surety bonds;

    (j) Premiums on hazard and liability insurance;

    (k) Relocation expenses;

    (l) Closing costs;

    (m) Program administrative expenses; and

    (n) Other costs and fees acceptable to the Department.

  (12) “Development team” means the applicant, the sponsor, the developer or co-developer, the guarantors, and the owner, including general partners or managing members, but not including limited partners and nonmanaging members of the foregoing, and architects, general contractors, management agents, and consultants affiliated with the project and any officer, director, or principal of any of the foregoing.

  (13) “Director” means the Director of the Division of Development Finance of the Department.

  (14) “Elderly Household” means:

    (a) One or more individuals who occupy the same residential dwelling unit, at least one of whom is 62 years old or older;

    (b) For projects which also receive funding through one or more programs administered by HUD, an elderly family, elderly person, or elderly household, all as defined by HUD;

    (c) Such other definition established by the Secretary pursuant to Housing and Community Development Article, §4-101, Annotated Code of Maryland; or

    (d) Such other definition established for a specific project in accordance with the standards established in the Program Guide.

  (15) “Equity” means the difference between the total project costs and the aggregate amount of indebtedness of the project, whether secured by the project or otherwise, from all sources including the Program, all as determined by the Department.

  (16) “Fund” means the Rental Housing Fund established under Housing and Community Development Article, §4-504, Annotated Code of Maryland, which is a nonlapsing special fund consisting of all moneys appropriated or otherwise available and allocated to the Program.

  (17) Household.

    (a) “Household” means one or more individuals who occupy the same residential dwelling unit as their permanent residence.

    (b) “Household” includes a family as defined in 24 CFR §5.403, as amended.

  (18) “Household of limited income” means a household whose total household annual income does not exceed the upper income limits established by the Secretary in accordance with Housing and Community Development Article, §§4-402(c) and 4-404(b), Annotated Code of Maryland, and Regulation .11 of this chapter.

  (19) “Housing Finance Review Committee” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland.

  (20) “HUD” means the United States Department of Housing and Urban Development.

  (21) “Income-restricted project” means the acquisition, construction, rehabilitation, or operation of land and improvements that will be rented and occupied entirely or in part by households of limited income.

  (22) “Internal Revenue Code” means the Internal Revenue Code, Title 26 of the United States Code, as amended.

  (23) “Limited equity cooperative housing” means limited equity cooperative housing as defined in §143(K)(9)(C) of the Internal Revenue Code and the regulations adopted under it.

  (24) “Loan” means a loan made by the Department from the Fund under the Act and this chapter.

  (25) “Loan documents” means those documents required by the Department to evidence or secure the loan or enforce the requirements of the Act and this chapter.

  (26) Nonprofit Organization.

    (a) “Nonprofit organization” means a corporation, foundation, or other legal entity, no part of the net earnings of which inures to the benefit of a private shareholder or individual holding an interest in the entity.

    (b) “Nonprofit organization” includes a qualified nonprofit organization as defined in §42(h)(5)(C) of the Internal Revenue Code.

  (27) “Office or other commercial space conversion” means the conversion to rental housing of a building that:

    (a) Is located in a sustainable community as defined in Housing and Community Development Article, §§6-301(b) and 6-305,Annotated Code of Maryland;

    (b) Was built more than 30 years before an application is submitted to the Department to finance the conversion;

    (c) Consists of at least two floors at or above ground level; and

    (d) Was last used as office or other commercial space, including any improvements that might otherwise be considered residential rental property but were last used on a transient basis, such as hotels, motels, dormitories, fraternity and sorority houses, rooming houses, hospitals, nursing homes, sanitariums, rest homes, and assisted living facilities.

  (28) Office and Commercial Space Conversion Project.

    (a) “Office and commercial space conversion project” means the acquisition or rehabilitation, or both, of land and improvements for office or other commercial space conversion.

    (b) “Office and commercial space conversion project” includes a project that is part of a larger development that may include nonresidential uses.

  (29) “Operating assistance loan” means a loan to a sponsor to pay some or all of the operating expenses as described in Regulation .05A(3) of this chapter of a completed project.

  (30) “Political subdivision” means a county or municipal corporation of the State.

  (31) “Program” means the Rental Housing Program established under Housing and Community Development Article, Title 4, Subtitle 4, Annotated Code of Maryland.

  (32) “Program Director” means the Director of Multifamily Housing in the Division of Development Finance of the Department.

  (33) “Program Guide” means the Multifamily Rental Financing Program Guide adopted by the Department, as amended from time to time.

  (34) Project.

    (a) “Project” means the acquisition, construction, or rehabilitation of buildings and improvements.

    (b) “Project” includes income-restricted projects and office and commercial space conversion projects.

  (35) “Relocation expenses” means compensation given to tenants displaced either temporarily or permanently by the acquisition, demolition, or rehabilitation of existing structures in connection with a project.

  (36) “Residual receipts” means any cash remaining at the end of an annual fiscal period for a project after deducting from gross income all:

    (a) Sums due under the loan documents and any liens superior to the lien or other liens approved by the Department;

    (b) Operating costs necessary to maintain or operate the project, including real estate taxes but excluding reserve for replacement deposits and debt service payments; and

    (c) Amounts distributed to a sponsor as a permitted return on equity.

  (37) “Scattered site development” means noncontiguous residential units developed and operated under a common plan of ownership and financing.

  (38) “Secretary” means the Secretary of Housing and Community Development.

  (39) “Shared living unit facility” means a dwelling which will accommodate two or more households when some or all of the living, dining, kitchen, or sanitary facilities are to be shared by the households, which shall include a single room occupancy unit.

  (40) Sponsor.

    (a) “Sponsor” means all of the following:

      (i) A borrower or obligor on a loan made by the Department to finance a project;

      (ii) The person or entity principally responsible for the project and loan application before the loan closing;

      (iii) Any person or entity who has an ownership interest in, or identity of interest with, a person or entity under §B(40)(a)(i) or (ii) of this regulation; and

      (iv) An applicant that develops a project and qualifies under §B(40)(a)(i), (ii), or (iii) of this regulation.

    (b) “Sponsor” includes a nonprofit sponsor.

  (41) “State” means the State of Maryland.

#### Regulation .04 Eligible Sponsors.

*COMAR 05.05.01.04*

Sponsors shall meet the following minimum requirements to qualify for a loan:

A. Be in good standing and qualified to do business in the State;

B. Have the legal capacity and all necessary legal authorization to incur the obligations of the loan; and

C. Meet all threshold criteria under Regulation .22 of this chapter.

#### Regulation .05 Eligible Uses.

*COMAR 05.05.01.05*

A. Loan funds may be used for:

  (1) Capital assistance loans to sponsors for financing development costs of projects;

  (2) Loans to finance acquisition only of existing or completed:

    (a) Vacant projects; or

    (b) Occupied projects, if:

      (i) The rental units are not occupied before acquisition or rehabilitation by households of limited income;

      (ii) The number of units to be subject to income restrictions will be increased substantially;

      (iii) Existing income limits will be reduced from current levels;

      (iv) Units have been condemned or cited for code violations and the tenants are likely to be subject to displacement; or

      (v) Any existing federal capital or operating subsidies will be lost without financing through the Program;

  (3) Operating assistance loans to sponsors for existing or completed income-restricted projects including:

    (a) Buy down of the interest rate on a conventional permanent loan;

    (b) Payments of principal and interest on superior mortgage liens;

    (c) Maintenance and repair costs;

    (d) Property taxes;

    (e) Hazard and liability insurance premiums;

    (f) Utilities;

    (g) Permits and licenses;

    (h) Reasonable management fees and expenses as determined by the Department;

    (i) Rent subsidies;

    (j) Closing costs;

    (k) Department administrative expenses; and

    (l) Other project operating expenses or fees approved by the Department;

  (4) Acquisition by the Department of a completed project or the land for a project, and subsequent transfer of the project or land, or both, to a sponsor;

  (5) Purchase or lease by the Department of a project and, after construction or rehabilitation by the Department, sale or transfer of the project to a sponsor upon terms or conditions which make it economically feasible for the sponsor to rent to households of limited income; or

  (6) Bridge loans.

B. Loan funds may not be used for:

  (1) Work-out financing for troubled projects;

  (2) Refinancing of existing debt;

  (3) Financing for a project for which the application is received after:

    (a) Acquisition;

    (b) Assumption by the sponsor of the liability for the costs of acquisition or rehabilitation; or

    (c) Completion of rehabilitation intended to be financed in whole or in part by the loan;

  (4) Financing only minor improvements which are not required to make the housing decent, safe, and sanitary in accordance with applicable State and local codes;

  (5) Transaction costs and fees associated with the offering and syndication of a project; or

  (6) Developer fees.

#### Regulation .06 Eligible Projects.

*COMAR 05.05.01.06*

A. Land and Improvements.

  (1) Land and improvements comprising a project shall meet the following minimum requirements:

    (a) Be located within the State;

    (b) When the project is complete, be in compliance with zoning requirements and applicable codes and standards;

    (c) Be owned by the Department or a sponsor in fee simple or a leasehold estate, with title acceptable to the Department;

    (d) If the project is contained within a larger undertaking, provide equal access to tenants of the project to any amenities and common areas within the larger undertaking;

    (e) Provide:

      (i) Five or more traditional rental housing units;

      (ii) Two or more units in a shared living unit facility; or

      (iii) Emergency or temporary shelter to multiple persons.

  (2) Land and improvements comprising a project may be a scattered site development.

B. A project is eligible only if:

  (1) The Department has complied with COMAR 05.01.06.06; and

  (2) The Secretary has issued the written determination required under COMAR 05.01.06.07.

C. Loans for office and commercial space conversion projects shall meet the requirements of §§A and B of this regulation and the following additional requirements:

  (1) The sponsor shall have a commitment of funds for the project from private, local, or federal sources so that upon receipt of financial assistance from the Program there will be adequate funding to assure completion of the project;

  (2) Sufficient funds to complete the project would not be available to the sponsor without the financial assistance from the Program;

  (3) The financial assistance requested from the Program is the least amount of money necessary to complete the project as determined by the Department;

  (4) The project shall be ready to proceed upon receipt of financial assistance from the Program;

  (5) The project will provide substantial economic development to a sustainable community as defined in Housing and Community Development Article, §§6-301(b) and 6-305, Annotated Code of Maryland; and

  (6) The amount of the loan does not exceed the maximum loan amount in Regulation .14C of this chapter.

D. An income-restricted project may include structures suitable for use by households of limited income residing in the project or in surrounding communities such as cafeterias or dining halls, community rooms or buildings, and workshops or other essential services facilities.

E. A project may not be:

  (1) A nursing home;

  (2) A hospital;

  (3) A sanitarium;

  (4) A life care facility;

  (5) A retirement home providing significant services other than housing unless licensed under Maryland law as an assisted living facility;

  (6) A dormitory;

  (7) Housing solely for members of a social organization, such as a fraternity or sorority house;

  (8) Housing provided by an employer solely for its employees; or

  (9) A trailer park.

F. The project shall meet all threshold criteria under Regulation .22 of this chapter.

#### Regulation .07 Political Subdivisions; Notice and Contribution.

*COMAR 05.05.01.07*

A. Notice.

  (1) For each project for which an application is received under this chapter, the Department shall provide written notice and reasonable opportunity to comment on the project to the chief executive officer or the equivalent officer and the head or president of the legislative body of the political subdivision in which the proposed project is located.

  (2) If a proposed project is in a municipal corporation, the notice required under §A(1) of this regulation shall be sent to the chief executive officer and the head or president of the legislative body of the municipal corporation, not the surrounding county.

  (3) The notice provided under §A(1) of this regulation shall contain the following information about the proposed project:

    (a) Date of application;

    (b) Name and description of project;

    (c) Address of project;

    (d) Sponsor of the project and sponsor’s contact information;

    (e) Amount of funding requested;

    (f) Amount, type, and provider of other sources of funding;

    (g) Total number of units;

    (h) Number of units reserved for households of limited income, including the income and rent limits; and

    (i) Such other information as the Department deems relevant.

B. Contribution. In reviewing applications for funding under the Act and this chapter, the Department shall consider the degree of political subdivision support provided to the proposed project, including contribution of land, abatement of taxes or fees, direct or indirect rental subsidies, and grants.

#### Regulation .08 Geographic Distribution of Funds.

*COMAR 05.05.01.08*

A. It is the intent of the Department that Program funds be distributed and made available Statewide.

B. The Department shall undertake best efforts to ensure some Program funds are distributed Statewide, including the following geographic areas of the State:

  (1) Eastern Shore counties;

  (2) Western Maryland counties;

  (3) Baltimore metropolitan area counties; and

  (4) Washington, D.C., metropolitan area counties and Southern Maryland counties.

#### Regulation .09 Sponsor’s Equity Contribution.

*COMAR 05.05.01.09*

A. For income-restricted projects, the Department may establish requirements for the amount of equity a sponsor must contribute to a project which may vary for different types of sponsors, including nonprofit sponsors.

B. Sponsors of office and other commercial space conversion projects shall make an equity contribution of at least 10 percent of the residential development costs of the project.

#### Regulation .10 Limit on Return of Equity.

*COMAR 05.05.01.10*

A. Projects may be subject to a limitation on return of equity or an equity participation agreement, at the discretion of the Department.

B. Periodically, at the convenience and discretion of the Department, residual receipts held by the Department in connection with a limitation on return on equity imposed under this regulation, if any, shall be credited to the Fund. At the option of the Department, residual receipts may be disbursed for the project which generated the receipts or for any other project.

C. Sponsors of office and commercial space conversion projects are not subject to any limitation on return of equity.

#### Regulation .11 Income Limits.

*COMAR 05.05.01.11*

A. The Secretary shall establish income limits for households of limited income and may revise the limits from time to time. The Secretary may establish different limits for different areas of the State and may establish lower limits within any area or for a particular project.

B. In establishing or revising income limits under this regulation, the Secretary shall consider:

  (1) The median income for the area;

  (2) The minimum income needed to afford available standard rental units in the area;

  (3) Federal income guidelines, including the requirements of the federal low-income housing tax credit program; and

  (4) Any other relevant factor.

C. Limits for Shared Housing. For the purpose of determining compliance with the income limits, the Department may not aggregate the income of two or more individuals or households living together in one unit if the unit is to provide a shared living unit facility, group housing, congregate housing, or temporary shelters.

#### Regulation .12 Restrictions on Ownership and Occupancy.

*COMAR 05.05.01.12*

A. Change of Ownership. During the loan term, the sponsor of the project may not sell, cease to own, assign, transfer, or dispose of all or any part of the sponsor’s interest in the project or the real property on which it is situated, without the prior written consent of the Department, except for leases of individual units or as set forth in the loan documents.

B. Income-restricted projects are subject to the occupancy requirements set forth in §§C—G of this regulation, which occupancy restrictions shall be evidenced by a covenant running with the land which shall be recorded in the land records of the county where the project is located.

C. Minimum Restricted Occupancy Period. The project shall be maintained as rental housing for households of limited income for a minimum of the greater of:

  (1) 15 years; or

  (2) The number of years required by federal law.

D. Limited Income Occupancy Requirements.

  (1) The minimum number of rental units set aside under this regulation shall be the greater of:

    (a) The number that bears the same ratio to the whole number of rental units in the project as the amount the Program loan bears to the whole financing of the project or undertaking; or

    (b) The number of rental units chosen by the sponsor to satisfy federal occupancy requirements if the project receives federal low-income housing tax credits or is financed in part with government-issued, federally tax-exempt revenue bonds.

  (2) Units restricted for occupancy to meet other federal, State or local occupancy requirements may be counted toward the minimum number of units required under §D(1) of this regulation.

  (3) Units occupied by households that continue to meet applicable federal occupancy restrictions under §D(1) of this regulation shall be deemed to continue to meet the applicable restrictions of this regulation.

E. The maximum rent for each unit in a project shall equal the difference between:

  (1) 30 percent of the imputed tenant income as calculated in §F of this regulation; and

  (2) A utility allowance based on standards established by the Department in accordance with Treasury Regulation 1.42-10, as amended, for the low-income housing tax credit program.

F. The imputed tenant income shall equal the restricted unit income limit for:

  (1) A household which is considered to have a size of 1.5 times the number of bedrooms in the unit for units with one or more bedrooms; and

  (2) One person for efficiency and single room occupancy units.

G. For units occupied by elderly households, the imputed household size under §F(1) of this regulation may not exceed three persons regardless of the number of bedrooms.

H. If fewer than all of the units in a project are income-restricted, the location of the income-restricted units may change from time to time as tenants move, and the rental housing units in a project which are not income-restricted units are not required by the Program to be occupied by persons meeting income restrictions.

I. Limited Equity Cooperative Housing.

  (1) The units in a limited equity cooperative housing project shall be occupied by households of limited income at the time of initial occupancy, and following any subsequent sale, resale, or transfer of shares, or subletting which results in a change in the household occupying the unit.

  (2) If existing rental housing is converted to limited equity cooperative housing through the assistance of a loan from the Program, an existing tenant may not be required to vacate the premises solely because the tenant does not elect to become a stockholder in the corporation owning the limited equity cooperative housing.

#### Regulation .13 Prepayment.

*COMAR 05.05.01.13*

A. For an income-restricted project, if the prepayment operates to terminate the occupancy covenants for households of limited income, with the prior written approval of the Department, a sponsor may prepay a loan subject to any prohibition on prepayment contained in the loan documents and if the sponsor complies with the following requirements:

  (1) Provide written notice to each tenant residing in the project which describes the impact of the prepayment on the tenant, and, if applicable, any assistance to which the tenant is entitled;

  (2) Provide written notice of the prepayment to the Department, the political subdivision in which the project is located, and any interested parties registered with the Department;

  (3) Offer a right of first purchase to the Department, the political subdivision in which the project is located, the local public housing authority, if any, and any interested parties registered with the Department;

  (4) Provide a lease extension for at least 1 year following the notice of the prospective prepayment action to each tenant residing in an assisted unit;

  (5) Make relocation assistance payments to each tenant in an amount determined by the Department;

  (6) Provide 3-year lease extensions or 3 months rent equivalent payments to 20 percent of the tenants who live in assisted units and qualify as elderly households, disabled, or households with minors; and

  (7) Comply with any procedural requirements of the Department with respect to the right of first purchase, relocation payments, and lease extensions.

B. A sponsor of an office and commercial space conversion project may prepay a loan at any time.

#### Regulation .14 Loan Terms.

*COMAR 05.05.01.14*

A. Interest Rates.

  (1) Interest rates for each loan shall be established based on the underwriting of each project.

  (2) The maximum interest rate on a loan shall be a rate which does not impair the financial viability of the project or the capability of the sponsor to provide rents which are affordable to households of limited income. The interest rate on a loan may be as low as zero percent, based upon projected cash flows for the proposed project.

  (3) Bridge loans or portions of loans which will be repaid with the cash proceeds realized from a syndicated sale of the project shall have interest rates equal to private lending rates for bridge loans, unless in the determination of the Department a lower interest rate is required to ensure the financial feasibility and viability of the project. A lower rate approved by the Department under this subsection may not be less than the interest rates permitted under §A(1) and (2) of this regulation based upon the use and occupancy of the project.

  (4) For income-restricted projects, the Department may establish additional provisions related to interest rates in the Program Guide.

B. Repayment.

  (1) Terms for repayment of principal and interest shall be established based on the underwriting for each project and in a manner which does not impair the financial viability of the project or the capability of the sponsor to provide rents which are affordable to households of limited income.

  (2) Repayment of principal and interest may be deferred at the discretion of the Department to meet the goals of this regulation.

  (3) For income-restricted projects, the Department may establish additional provisions related to repayment terms in the Program Guide.

C. Maximum Loan Amount.

  (1) The maximum amount of funds to be provided to an income-restricted project from the Program or the Maryland HOME Program under COMAR 05.12.01 may not exceed $2,000,000, unless the Housing Finance Review Committee has recommended and the Secretary has approved an exception on the basis that:

    (a) The following three conditions are met:

      (i) Other potential sources of funds have been sought and clearly are unavailable;

      (ii) It is not feasible to reduce the size or scope of the project; and

      (iii) The project serves a high public purpose, such as serving a significant percentage of very low-income households or being located in a high cost area; or

    (b) An increase in the loan amount addresses administrative or programmatic needs of the Department and will result in an effective and appropriate use of DHCD resources.

  (2) The maximum amount of funds to be provided to an office and commercial space conversion project:

    (a) From the Program, shall be the lesser of:

      (i) 20 percent of the total costs for the project; or

      (ii) $1,500,000; and

    (b) From all State-funded and State-administered programs, may not exceed 30 percent of the total costs of the undertaking, with the following limitations:

      (i) State historic tax credits are excluded from the 30 percent limit; and

      (ii) No other funds from the Fund, federal low-income housing tax credits, or State bond-allocated funds may be used on the project.

D. Term.

  (1) The permanent loan term of each capital assistance loan may not exceed 40 years from the later of the date of acquisition or completion of construction or rehabilitation of the project, except when other sources of financing require a longer term.

  (2) The term of a bridge loan generally may not exceed the greater of 2 years or the equity payment schedule and shall be based on the size and complexity of the project.

  (3) The term of a loan during rehabilitation or construction generally may not exceed 2 years and shall be based on the size of the project and the nature of the rehabilitation or construction financed by the loan.

  (4) The term of an operating assistance loan generally may not exceed 15 years and may be subject to renewal at the Department’s discretion.

E. Late Charges. Late charges, as permitted by law, may be imposed.

#### Regulation .15 Insurance Requirements.

*COMAR 05.05.01.15*

A. Mortgage Insurance. Mortgage insurance is not required for loans made from the Program.

B. Property, Liability, and Other Insurance.

  (1) At or before closing of a loan, and at such other times as required by the Department, the sponsor shall provide evidence that the sponsor, contractor, and other parties, have obtained and maintained the following insurance:

    (a) Owner’s liability;

    (b) Owner’s property or hazard or contractor’s builder’s risk;

    (c) Contractor’s liability;

    (d) Architect’s errors and omissions;

    (e) Engineer’s errors and omissions; and

    (f) Flood insurance, if the project is located in a flood hazard zone.

  (2) All insurance required under §B(1) of this regulation shall meet the following requirements:

    (a) Be written by a company registered with the Maryland Insurance Administration;

    (b) Be in force at the time of closing;

    (c) Not be terminable without prior notification to the Department; and

    (d) Contain such other terms and coverage satisfactory to the Department.

  (3) In addition to the requirements of §B(2) of this regulation, owner’s liability insurance shall:

    (a) Name the Department as an additional insured; and

    (b) Remain in force for the duration of the loan.

  (4) In addition to the requirements of §B(2) of this regulation, contractor’s liability insurance shall:

    (a) Name the Department as an additional insured; and

    (b) Remain in place through final closing or such later date as the Department requires.

  (5) In addition to the requirements of §B(2) of this regulation, owner’s property or hazard or contractor’s builder’s risk insurance shall:

    (a) Name the Department as a loss payee, and mortgagee; and

    (b) Remain in force for the duration of the loan.

  (6) For sponsors that are political subdivisions, the Department shall evaluate any self-insurance program to determine if adequate coverage and terms acceptable to the Department can be provided and accept coverage under the self-insurance program subject to this determination.

#### Regulation .16 Environmental Review.

*COMAR 05.05.01.16*

A. Each project shall comply with applicable local, State, and federal environmental laws and regulations.

B. Sponsors may be required, at the discretion of the Department, to conduct a screening of the proposed site for environmental conditions, including man-made hazards, storm water runoff, underground storage tanks, lead-based paint, radon gas, PCBs, and asbestos.

C. If the initial screening indicates adverse or potentially adverse environmental conditions, the Department may require a more detailed physical investigation, review of historical records, testing and treatment, or abatement of the environmental condition as a requirement of the loan.

#### Regulation .17 Reserves and Security.

*COMAR 05.05.01.17*

A. Reserve for Replacement. The Department may require the sponsor to make periodic payments to the Department or a senior lender for a reserve for replacement account for future repairs, maintenance, and improvement of the project.

B. Appraisal. The sponsor or the Department, in the Department’s discretion, shall obtain an appraisal by an appraiser acceptable to the Department, showing the value of the land and any improvements on the land before and after the proposed rehabilitation or construction in a form and manner acceptable to the Department. The sponsor shall bear the cost of the appraisal.

C. Escrow Account. If there is no prior mortgage or deed of trust requiring the payment of expenses to the mortgagee, the mortgage or deed of trust securing the loan shall require monthly payments to the Department in escrow, consisting of 1/12 of annual real estate taxes, ground rent, property insurance premiums, and, when appropriate, other items for which payments are required by the Department. Interest may or may not be paid to the sponsors on escrows, in the Department’s discretion.

D. Additional Security.

  (1) The Department may require additional security from the sponsor both to assure completion of the construction or rehabilitation of the project, and to assure repayment of the loan.

  (2) The additional security may be in the form of one or more of the following:

    (a) A cash escrow;

    (b) A letter of credit in an amount, in a form, and from a financial institution acceptable to the Department;

    (c) Depository accounts pledged to the Department;

    (d) Payment and performance bonds from a surety acceptable to the Department;

    (e) A completion assurance agreement executed by the sponsor and backed by some form of monetary collateral;

    (f) A guaranty of completion or loan payments, or both, executed by a third party acceptable to the Department;

    (g) A pledge of syndication proceeds;

    (h) A pledge of the developer’s fee; or

    (i) Other collateral acceptable to the Department.

E. Superior Mortgagee’s Agreement. For loans secured by a subordinate lien, the sponsor shall obtain the written agreement of each superior lender:

  (1) Acknowledging and consenting to the subordinate lien of the Department;

  (2) Agreeing to provide timely notice to the Department in the event of default by the sponsor on the superior mortgage; and

  (3) Agreeing to either suspend acceleration and foreclosure of the superior lien for a reasonable period of time if the Department brings current and maintains timely payments due on the superior mortgage or permitting the Department to cure the event of default.

#### Regulation .18 Additional Requirements for Certain Loans.

*COMAR 05.05.01.18*

A. Capital assistance loans shall meet the following additional requirements:

  (1) Loans shall be secured by a mortgage lien, which may be subordinate to other mortgage liens; and

  (2) The Department shall require the sponsor to provide a standard American Land Title Association Loan Policy, or other form of title policy acceptable to the Department and the Office of the Attorney General, for an amount equal to the maximum principal amount of the loan:

    (a) Insuring the Department;

    (b) Evidencing that title to the improvements and the real property on which the improvements are located on the date of closing is vested in the sponsor; and

    (c) Containing only standard exceptions and encumbrances approved by the Department.

B. Operating Assistance Loans.

  (1) Security. The loans shall be made subject to either:

    (a) The terms of a loan and security agreement, which need not be recorded; or

    (b) A recorded mortgage lien which may be subordinate to other mortgage liens.

  (2) Investment Account. Loan funds disbursed subject to a loan and security agreement shall be deposited into an interest-bearing account for the benefit of the project and shall be invested, reinvested, and disbursed in accordance with the terms of an agreement between the sponsor and the Department. The Department shall maintain control over the investment account.

  (3) Insurance. At the discretion of the Department, a project receiving an operating assistance loan is not required to satisfy the insurance provisions of Regulation .15 of this chapter.

C. Deferred Payment Loans.

  (1) Amount of Deferred Payments. The Department may defer payments of principal or interest, or both, in the Department’s discretion, to the minimum extent necessary based on:

    (a) The sponsor’s ability to repay the loan and the financial feasibility and viability of the project;

    (b) Conformance with the requirements of the terms and conditions of any prior mortgage or deed of trust; or

    (c) Such additional provisions related to deferred payment loans established in the Program Guide.

  (2) Repayment of Deferred Loans.

    (a) The loan documents shall provide for repayment of deferred amounts at the maturity date or at any earlier date established by the Department, or upon any default, sale, or other transfer of the project, or sale or other transfer of any interest in the project. The Department may, but need not, charge interest on deferred interest.

    (b) The Department may, in its discretion, require sponsors who receive bridge loans and who receive and syndicate an allocation of federal low-income housing tax credits or historic investment tax credits to share a portion of the proceeds of the syndication of the tax credits with the Department to repay deferred interest or pay all or a portion of the principal amount of the loan.

#### Regulation .19 Application Submission.

*COMAR 05.05.01.19*

A. Applications for income-restricted projects shall be accepted:

  (1) In one or more competitive rounds to be announced by the Department annually in accordance with the procedures established in Regulation .20 of this chapter; and

  (2) At any time, subject to availability of funding for:

    (a) Projects requesting financing from the Department’s Multifamily Bond Program; or

    (b) Pilot programs or other special initiatives in accordance with processing procedures established by the Department.

B. Applications for office and commercial space conversion projects shall be accepted in accordance with processing procedures established by the Department and shall be submitted by the political subdivision in which the project is located. If the project is located in a municipal corporation, the application shall be submitted by the municipal corporation, not the surrounding county.

C. Forms. Applications shall be made upon standard forms prescribed by the Department.

D. Documentation. Applications shall be accompanied by all documentation in the form and containing the information specified by the application procedures adopted by the Department, which may vary depending on the type of loan.

E. Fees and Charges.

  (1) Amounts and time of payment of application fees, administration fees, financing fees, closing fees, and other fees as may be required by the Department shall be as provided in a fee schedule set forth in the Program Guide, or as otherwise provided by the Department.

  (2) The Department may charge sponsors for the following items, if initially paid for by the Department:

    (a) Market studies;

    (b) Construction cost estimates;

    (c) Recording fees and recording taxes or other charges incidental to recordation;

    (d) Survey;

    (e) Appraisal;

    (f) Title examination and title insurance; and

    (g) Investment fees.

  (3) The Department may charge penalties to applicants, lenders, servicers, sponsors, or other individuals or entities that participate in the Program. The Department may restrict the fees and charges that servicers, political subdivisions, or other Program participants obtain from sponsors.

  (4) Fees and charges referenced in this regulation may be financed by the Program loan.

#### Regulation .20 Application Review.

*COMAR 05.05.01.20*

A. Each application for an income-restricted project competing in a funding round pursuant to Regulation .19A(1) of this chapter shall be reviewed in accordance with Regulations .21 through .23 of this chapter.

B. Each application for an income-restricted project not competing in a funding round pursuant to Regulation .19A(2) of this chapter shall be reviewed in accordance with Regulation .22 of this chapter or such other procedures established by the Department.

C. Applications for office and commercial space conversion projects shall be reviewed in accordance with procedures established by the Department.

#### Regulation .21 Project Priority Categories.

*COMAR 05.05.01.21*

A. The Department may establish project priority categories which must be satisfied prior to review of a project for threshold criteria pursuant to Regulation .22 of this chapter.

B. The project priority categories under §A of this regulation shall be established by the Department in the Program Guide and may be modified from time to time to eliminate or add categories or criteria.

#### Regulation .22 Threshold Criteria.

*COMAR 05.05.01.22*

A. The Department shall establish detailed threshold criteria, including the following categories:

  (1) Development team requirements;

  (2) Occupancy requirements;

  (3) Marketing requirements;

  (4) Tenant services;

  (5) Provisions for persons with disabilities or special needs;

  (6) Other financing commitments;

  (7) Underwriting requirements;

  (8) Readiness to proceed;

  (9) Site requirements;

  (10) Market studies; and

  (11) Development quality.

B. The threshold criteria under §A of this regulation shall be established by the Department in the Program Guide and may be modified from time to time to eliminate or add categories or criteria.

#### Regulation .23 Project Evaluation Criteria; State Bonus Points.

*COMAR 05.05.01.23*

A. All projects in a round which meet the requirements of Regulations .21 and .22 of this chapter shall be evaluated on a point basis, which may include the following criteria:

  (1) Capacity of the development team;

  (2) Community context;

  (3) Public purpose;

  (4) Leveraging and cost-effectiveness; and

  (5) Development quality.

B. At the completion of the review of projects under §A of this regulation, the Department may award bonus points to one or more projects based on one or more of the following considerations:

  (1) Project priority categories;

  (2) Geographic distribution;

  (3) Unique or time sensitive financing opportunities;

  (4) Urgent or recent changes in housing needs;

  (5) Economic development opportunities;

  (6) Changes in the equity or debt market related to low-income housing tax credits or other funding sources;

  (7) Critical policy directives or goals; or

  (8) Fair housing considerations.

C. The project selection criteria and bonus points under §§A and B of this regulation shall be established by the Department in the Program Guide and may be modified from time to time to eliminate or add categories or criteria.

#### Regulation .24 Recommendation and Approval.

*COMAR 05.05.01.24*

A. For income-restricted projects competing in a competitive round, after considering the scores under the project evaluation criteria of Regulation .23 of this chapter and the availability of resources, the Program staff shall select projects for review and recommendation for funding by the Housing Finance Review Committee. The number of projects selected will vary depending on the availability of funds.

B. For income-restricted projects not competing in a competitive round, the Program staff shall select projects for review and recommendation for funding by the Housing Finance Review Committee based on the availability of funding and such other procedures established by the Department.

C. For office and commercial space conversion projects, the Program staff shall select projects for review and recommendation for funding by the Housing Finance Review Committee based on the availability of funding and such other procedures established by the Department.

D. The Housing Finance Review Committee shall review the projects selected by Program staff under §A, B, or C of this regulation and recommend projects to the Secretary for reservation of funds and loan commitments, as appropriate, pursuant to Regulation .25 of this chapter.

E. Upon receipt of the recommendation of the Housing Finance Review Committee, the Secretary shall approve or disapprove the loan and the terms of the loan. A written determination that each loan, regardless of the loan amount, is statutorily authorized and approved by the Secretary shall be executed before the issuance of a reservation of funds or loan commitment, as appropriate, pursuant to Regulation .25 of this chapter.

F. The Secretary may approve a loan without the recommendation of the Housing Finance Review Committee:

  (1) In an emergency, when urgent action is required; or

  (2) For loans below the minimum amount established by the Housing Finance Review Committee.

#### Regulation .25 Reservation and Commitment.

*COMAR 05.05.01.25*

A. Reservations. All projects competing in a funding round and approved by the Secretary pursuant to Regulation .24 of this chapter shall be issued a reservation letter by the Department. The reservation letter shall include basic proposed loan terms, a list of all additional information to be submitted for further review, and a processing schedule setting forth dates for the submission and review of all requested information and documentation.

B. Commitments.

  (1) For projects competing in a funding round, upon satisfaction of all requirements in the reservation letter and the Secretary’s determination, if any, or as otherwise required by the Program, the Program shall issue a commitment letter setting forth the terms and conditions of the loan.

  (2) For projects not competing in a funding round, upon satisfaction of the requirements in the Secretary’s determination, or as otherwise required by the Program, the Program shall issue a commitment letter setting forth the terms and conditions of the loan.

#### Regulation .26 Rejection, Reconsideration, Modification, and Withdrawal.

*COMAR 05.05.01.26*

A. Rejection. If a loan application is rejected, the Department shall notify the sponsor in writing. The rejection letter shall state the reason the loan is rejected.

B. Reconsideration.

  (1) A sponsor of an office and commercial space conversion project or an income-restricted project not competing in a round may request reconsideration of a rejection within 7 days of receipt of notice of the rejection. The request shall be in writing and submitted to the Program Director. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.

  (2) A sponsor of an income-restricted project competing in a round may not request reconsideration of a rejection but may resubmit an application in a subsequent round or in accordance with the procedures established by the Department for income-restricted projects not competing in a round.

C. Modifications.

  (1) A sponsor may not modify a project in a manner that affects any of the following factors without the prior review and approval of the Department:

    (a) The project cannot proceed in accordance with the schedule established by the Department and the sponsor;

    (b) The project changes substantially from the initial submission, including:

      (i) A change resulting in a score reduction of the lesser of 3 percent or an amount sufficient to lower the score below the cut off score for the round in which the project was approved;

      (ii) A significant change in the project’s design, financing, or amenities;

      (iii) A material reduction in the project’s income targeting or unit count;

      (iv) A change of the project’s sponsor or other member of the development team; or

      (v) A change in the project’s site;

    (c) The project no longer meets the requirements of Regulations .21 and .22 of this chapter, as applicable; or

    (d) Such other reasons as may be established in the Program Guide.

  (2) If a project is modified in violation of §C(1) of this regulation, the sponsor shall provide to the Department a detailed explanation of the modification, along with a written request for approval of the modification. After review of the sponsor’s request and explanation, the Department may permit the modification or notify the sponsor that the modification is not acceptable to the Department. If an unacceptable modification is not cured within a time period acceptable to the Department, the reservation or commitment, as applicable, shall be withdrawn from processing.

D. Withdrawal of Application.

  (1) An applicant may withdraw an application at any time before closing of the loan by written notice to the Department.

  (2) An applicant that withdraws its application may be required to bear any costs incurred by the Department, including, but not limited to:

    (a) Title examinations;

    (b) Credit reports;

    (c) Appraisals;

    (d) Market analyses;

    (e) Fees attributable to the Department’s processing costs; and

    (f) Legal fees.

  (3) The Department may withdraw an application from processing for the following reasons:

    (a) The project’s developer, sponsor, or owner or any general partner or managing member of the foregoing files for bankruptcy or is the subject of an involuntary bankruptcy;

    (b) The project is, for any other reason, no longer feasible;

    (c) The project’s developer, sponsor, or owner submits false, misleading, or incomplete information to the Department;

    (d) The sponsor has failed to cure a modification unacceptable to the Department in the time frame provided under §C of this regulation;

    (e) The project fails to meet the established time frames for processing or otherwise fails to make reasonable progress toward closing; or

    (f) Such other reasons as may be established in the Program Guide.

#### Regulation .27 Loan Closing and Processing.

*COMAR 05.05.01.27*

A. Initial Loan Closing. The sponsor shall furnish to the Department and its counsel satisfactory evidence of compliance with the terms and conditions of the loan before the closing of the loan. When all procedures and requirements are completed, a closing shall be arranged by counsel to the Department.

B. Loan Documents. The Department shall prescribe or approve the form and content of all documents, which may include a note, deed of trust, regulatory agreement, and other instruments that the Department may require to evidence or secure the loan or enforce the requirements of the Act or this chapter. The loan documents shall be executed at the loan closing.

C. Early Start.

  (1) Construction or rehabilitation undertaken by the sponsor before the closing of the loan is at the risk of the sponsor, and does not bind or obligate the Department to make the loan.

  (2) In certain circumstances and upon the request of a sponsor who has applied for a loan which has been approved by the Secretary, the Program may issue an early start letter which sets forth the conditions under which the Program may authorize the beginning of construction or rehabilitation of a project before the closing of the Department’s loan.

  (3) The early start approval letter sets forth various conditions, such as receipt by the Program of acceptable plans and specifications or scope of work and evidence of the availability of acceptable assurance of completion, which shall be complied with before beginning construction or rehabilitation. If the conditions are complied with and the Program approves the beginning of construction or rehabilitation, then, when the loan is closed, loan proceeds shall be used to reimburse the sponsor, as specified in the loan closing documents, for the approved costs incurred before loan closing.

D. Construction or Rehabilitation Period Disbursement. The Department shall:

  (1) Conduct regular on-site inspections of the construction or rehabilitation; and

  (2) Make loan disbursements on the basis of work in place plus materials acceptably stored on site, less a retention of 10 percent or any other amount required by the loan documents.

E. Disbursement. Loan funds shall be held by the Department and disbursed in accordance with a draw schedule approved by the Department before initial closing. The draw schedule, which may be revised at the discretion of the Department during construction, shall be based upon completion of specified items or a percentage of rehabilitation work. Payment of draws shall be requested by the sponsor and approved by the Department based on completed work. Loan funds may be withheld if there is any arrearage of interest payments or escrows required by the loan documents.

F. Final Closing. A final closing of the loan shall be arranged after completion of the rehabilitation or construction and cost certification, if required, according to the procedures and documentation required by the Department.

#### Regulation .28 Signs.

*COMAR 05.05.01.28*

If requested by the Department, each sponsor shall install a sign identifying the Department as a lender on the project. The sign, at the discretion of the Department, may be supplied by the Department, but in any case shall comply with the design specifications of the Department. The sponsor shall bear all costs of acquisition, delivery, and installation of a conforming sign, which costs may be included in the loan.

#### Regulation .29 Books and Accounts.

*COMAR 05.05.01.29*

A. Sponsors, contractors, and subcontractors shall maintain the books, accounts, and records, and shall file with the Department the financial and other reports that the Department may from time to time require.

B. The books, accounts, and records in §A of this regulation shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.

C. Books, accounts, and records of sponsors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the sponsor and the Department. Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between them and the sponsor.

#### Regulation .30 Certification of Income.

*COMAR 05.05.01.30*

A. Income-restricted projects are subject to the requirements set forth in §§B—F of this regulation.

B. The sponsor shall obtain signed certificates of annual income from all tenants occupying a project and shall certify annual incomes of all tenants to the Department. The Department may require annual recertifications of income as well as periodic occupancy reports containing the information required by the Department. Leases and certifications are subject to periodic review by the Department.

C. For projects where existing tenants continue in occupancy during rehabilitation, the sponsor shall obtain signed income certifications from income-eligible tenants of at least the number of units required by Regulation .12 of this chapter, before loan closing.

D. The purpose of the certification of annual income and the reports is to assure compliance with the upper income limits established in accordance with the Act and Regulation .11 of this chapter. In the case of a project which receives federal assistance, including low-income housing tax credits, the procedures for the certification of income prescribed by the federal agency are acceptable, including recertification waivers under §42(g)(8)(B) of the Internal Revenue Code.

E. The sponsor shall verify the information contained in the certificate of income, upon the consent of the individual, with the source of income, and file with the Department a report disclosing the income of all individuals selected for occupancy unless the sponsor obtained a waiver under the federal low-income housing tax credit program, as provided in §1.42-5 of the Federal Income Tax Regulations.

F. The sponsor shall retain all certificates of income and documents verifying the information contained in them for a period of at least 3 years from the date on which the income certification is submitted to the sponsor.

#### Regulation .31 Nondiscrimination; Drug and Alcohol Free Workplace.

*COMAR 05.05.01.31*

A. A sponsor or contractor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the Program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the Program.

B. A sponsor or contractor shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:

  (1) Title VI and VII of the Civil Rights Act of 1964, as amended;

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

  (3) The Fair Housing Amendments Act of 1988, as amended;

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

  (5) 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;

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

  (7) The Americans with Disabilities Act of 1990, as amended.

C. Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.

#### Regulation .32 Affirmative Fair Housing Marketing Plan.

*COMAR 05.05.01.32*

Each project shall submit for review and approval by the Department an affirmative fair housing marketing plan in accordance with the requirements of the Program Guide. The Department shall monitor the project’s compliance with the approved plan.

#### Regulation .33 False Statements.

*COMAR 05.05.01.33*

A sponsor who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department’s action, is subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-411, Annotated Code of Maryland.

#### Regulation .34 Waiver and Delegation.

*COMAR 05.05.01.34*

A. Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is consistent with the Act, if:

  (1) In the determination of the Secretary, the application of a regulation in a specific case, or in an emergency situation, would be inequitable or contrary to the purposes of the Act; or

  (2) Conformance to the requirements of any federal, State, or local agency in connection with any federal, State, or local assistance sought necessitates waiver or variance of a regulation.

B. Delegation. The Secretary may delegate to the Director, the Program Director, or any other official or employee of the Department the authority to execute or approve any loan documents, including loan commitments and early start letters, after approval of a loan by the Secretary.