Sec. 05.04.05.11. Loan Approval and Disapproval

A. Initial Eligibility Determination.

(1) Each application shall be submitted to the local administrator for an initial review to make a preliminary determination of the eligibility of the applicant and the project.

(2) If an applicant is determined preliminarily to be eligible, appropriate verification forms shall be distributed, credit reports shall be obtained, and the applicant may be provided with a letter from the local administrator in the form approved by the Program acknowledging receipt of the application and notifying the applicant of the ongoing review process.

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

B. Building Evaluation.

(1) Each building for which an application is received shall be inspected for the purpose of determining structural and mechanical soundness and evaluating the adequacy of the proposed improvements by:

(a) The Department;

(b) The local administrator;

(c) A nonprofit corporation acceptable to the Program or the local administrator; or

(d) A licensed contractor who is acceptable to the local administrator or the Department.

(2) The applicant shall be provided with a copy of an analysis of the contractor's proposal submitted as required in Regulation .10D(2)(g) of this chapter, and instructions for obtaining the contractor's proposals to complete the work.

C. Loan Approval.

(1) Upon receipt and approval of all acceptable contractor's proposals and all other data the Program considers relevant or necessary, the local administrator originating the loan shall undertake an analysis of each loan as to loan amount, interest rate, repayment provisions, and other loan terms and conditions.

(2) After completing the steps described in §C(1) of this regulation, a level I local administrator, or a level II local administrator evaluating a loan for more than $60,000, shall forward the application package and the analysis of the loan to the Department for approval, disapproval, or modification.

(3) Approval to make a loan is as follows:

(a) Loans in amounts of $60,000 or less may be approved by:

(i) The level II local administrator, when the level II local administrator originates the loan; or

(ii) The Program Director when a level I local administrator or the Department originates a loan;

(b) Loans in amounts over $60,000 and up to $250,000 may be approved by the Director;

(c) Loans in amounts over $250,000 shall be submitted to the Housing Finance Review Committee in accordance with COMAR 05.01.07; and

(d) In an emergency, when urgent action is required, the Secretary may approve loans by written determination without the recommendation of the Housing Finance Review Committee.

(4) Before a level II local administrator gives final approval and issues a loan commitment for a loan in the amount of $60,000 or less, the level II local administrator shall contact the Program and receive confirmation that funds for the loan are available.

D. Loan Commitments.

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

(2) Loan commitments shall specify a time limit for closing the loan. The time limit may be extended at the discretion of the local administrator with the approval of the Program.

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

E. Rejection. If a loan application is rejected, the Department, or the local administrator, as the case may be, shall notify the applicant in writing. The rejection letter shall state the reason the loan is rejected. Each month, the Program Director shall provide the Housing Finance Review Committee with a report listing all owner-landlord loan applications rejected by the Program during the preceding month.

F. Reconsideration. Applicants who are rejected may request reconsideration of a rejection in accordance with the procedures contained in the Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act, State Government Article, Title 10, Annotated Code of Maryland, or COMAR 05.01.01.

G. Withdrawal of Application.

(1) An applicant may withdraw a loan application at any time before closing by delivering written notice to the Department or the local administrator originating the loan. The applicant shall bear any costs incurred for items other than internal processing, including, but not limited to, title examinations, credit reports, and appraisals.

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

H. Cancellation of Application.

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

(2) Notification of the cancellation of an application shall be in writing.

(3) A canceled application may be reinstated upon the applicant's written request within 60 days following the date of the cancellation. After that time, a new application, together with supporting documents, may be required.