2013 Maryland Code
HOUSING AND COMMUNITY DEVELOPMENT
§ 4-815 - Loan operation

§4-815.

(a) As to each loan, the Department may set:

(1) the principal amount, subject to subsection (f) of this section;

(2) the term of the loan, not to exceed 40 years except in the case of a reverse equity loan made under subsection (b)(3) of this section;

(3) the interest rate, which may be adjustable under subsection (g) of this section;

(4) the principal repayment terms, subject to subsections (b) and (c) of this section; and

(5) other terms that the Department considers necessary to achieve the purposes of the Program.

(b) (1) A loan may provide for immediate acceleration if the borrower violates § 4-816 of this subtitle or if the loan is in default.

(2) In the case of a preferred interest rate loan under § 4-804(1) of this subtitle, a loan may provide for full acceleration of principal after 5 years if the borrower:

(i) no longer qualifies as a household of limited income; and

(ii) can qualify for conventional mortgage financing.

(3) In the case of a reverse equity loan made under § 4-804(5) of this subtitle, a loan may provide for:

(i) full or partial deferral on payment of interest and principal until sale, conveyance in accordance with a will or trust instrument, or other transfer of the mortgaged property or a beneficial interest in the property; and

(ii) forgiveness of accrued interest in excess of the available equity in the mortgaged property when the conveyance occurs.

(4) In the case of an emergency assistance loan under § 4-804(4) of this subtitle, a loan may provide for full or partial deferral of payment of interest and principal until a stated date when the Department reasonably anticipates that the borrower will be able to make full or partial payments.

(c) A mortgage shall include the right of the Department to:

(1) foreclose the mortgage and take title to the foreclosed property or convey title to a buyer; and

(2) obtain a deficiency judgment.

(d) (1) Repayment of a loan shall be secured by a recorded lien on the real property.

(2) The lien may be a subordinate lien.

(3) A lien securing an emergency assistance loan may be released if the release is in the interest of the Department.

(e) The Department may require a mortgage to be insured at the borrower’s expense by a federal, State, or private instrumentality.

(f) (1) For a preferred interest loan under § 4-804(1) of this subtitle, the amount of the loan and any prior recorded liens outstanding may not exceed the value of the secured property, as determined by the Department when the loan is closed, plus settlement expenses.

(2) For a reverse equity loan under § 4-804(5) of this subtitle, the principal amount of the loan and any prior liens outstanding may not exceed the value of the secured property as determined by the Department from time to time.

(3) For a short-term loan under § 4-804(2) of this subtitle, the amount of the loan may not exceed the total commitments for permanent financing for buyers, including any commitments of federal, State, or local money to subsidize the cost of the dwelling units.

(4) For a preferred interest rate loan under § 4-804(6) of this subtitle, the Department may set the maximum amount of the loan, including the maximum amount that may be used for the transactional costs associated with the redemption.

(g) After full disclosure to the borrower when the loan is made, the Department may take as security an adjustable interest rate mortgage under which any rate adjustment must:

(1) follow written notice to the borrower; and

(2) be based on an increase or decrease in household income.

(h) On default, the Department may modify the interest rate, the time or amount of payment, or any other term of the loan to facilitate repayment of the loan and achieve the purposes of the Program.

(i) For a mortgage securing a loan under this subtitle, the Department may allow:

(1) the transfer of the mortgaged property or an interest in the property without monetary consideration:

(i) to a spouse, child, or other immediate family member; or

(ii) in connection with the death of a borrower, a divorce decree, or a legal separation agreement; and

(2) assumption of the mortgage by a transferee described in item (1)(i) of this subsection for monetary consideration and by any other transferee with or without consideration if the transferee qualifies as a household of limited income and satisfies all other Program requirements.

(j) For the developer of housing that will be priced so as to be affordable to households of limited income, the Department may commit to reserve for a fixed period a fixed amount of Program money to be available to finance preferred interest rate mortgage loans for households of limited income who seek to purchase from the developer fully constructed or rehabilitated homes.