Code of Maryland Regulations › Title 05 - DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT › Subtitle 06 - HOUSING INSURANCE › Chapter 05.06.01 - Maryland Housing Fund-Multifamily Program › Section 05.06.01.08 - Eligible Loans-Generally

Current through Register Vol. 51, No. 14, July 12, 2024
A. To qualify as an eligible loan for a project, a loan shall meet the general terms in B-----J of this regulation.
B. Eligible Lender. The loan shall be originated by a lender who has been determined eligible under Regulation .06 of this chapter.
C. First Lien. The loan shall be secured by a first lien upon the property. The loan shall be evidenced and secured using such documentation as is approved by the Office of the Attorney General, as counsel to the Fund.
D. Insured Loan-to-Value Ratio.
(1) The maximum loan-to-value ratio of a loan insured by the Fund may not exceed 90 percent of the property's appraised value as of completion of the project, except as provided in §D(2)-----(5) of this regulation.
(2) Notwithstanding the maximum insured loan-to-value ratio set forth in §D(1) of this regulation, 15 percent of the multifamily reserve may be used to back the outstanding principal of loans which have a maximum loan-to-value ratio of between 90 and 100 percent if the loan qualifies under §D(3), (4), or (5) of this regulation.
(3) The permitted loan-to-value ratio of an insured project may be over 90 percent if:
(a) A materially significant number of the units in the project are subsidized by federal rent subsidies and the rent subsidy contract extends to or beyond the time when the project is expected to achieve a 90 percent loan-to-value ratio; or
(b) The first 10 percent of the insured loss is covered by a:
(i) Governmental agency other than the Fund,
(ii) Financial institution acceptable to the Fund, or
(iii) Letter of credit from a financial institution acceptable to the Fund; or
(c) The loan being insured is a refinancing of an existing Fund-insured project and the reinsurance or continuation of insurance is essential to bring the loan current or otherwise avoid a claim to the Fund.
(4) A loan may be insured with a loan-to-value ratio up to 100 percent in order to achieve the public purposes of the Fund, if the:
(a) Project meets all other underwriting standards of the Fund; and
(b) Secretary has executed a determination of exceptional public purpose.
(5) The permitted loan-to-value ratio for insurance of a permanent loan for a project with an operating history, but not previously insured by the Fund, may be up to 100 percent of the property's appraised value if the project satisfies the following criteria:
(a) The loan is secured by a completed and occupied project;
(b) The project has a minimum of 5 years' operating history and has positive cash flow for a minimum of 3 years immediately before the application for insurance;
(c) The project has no greater than 5 percent annual average vacancy rate during the 3 years immediately before the application for insurance;
(d) The project has been assessed by an independent construction analyst or building engineer and requires no major systems or structural rehabilitation; and
(e) The borrower will not be receiving any cash or other return on equity from the project at the time the loan is insured.