Sec. 05.06.01.18. Processing Procedures

A. Guidelines for underwriting applications for insurance of multifamily loans are those set forth by the Maryland Housing Fund.

B. Application.

(1) Applications for insurance shall:

(a) Be submitted by lenders on forms acceptable to or prescribed by the Fund;

(b) Be accompanied by all supporting documentation specified in the multifamily application checklist and the Fund's operating manual; and

(c) Include sufficient information and documentation to determine the extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the property.

(2) Applications are not required for continuing insurance or re-endorsement for insurance of an existing Fund-insured loan after a refunding of the revenue bonds which provided the source of funds for the loan.

(3) Each application for insurance shall have a maximum processing period of 18 months from the date the application and fee are received to the date the commitment is issued. If the application cannot satisfy commitment requirements by the end of the 18-month period, the application expires unless the period is extended in writing at the sole discretion of the Fund. If the application expires and is not extended, a new application is required to be submitted and a new application fee paid before renewed consideration by the Fund.

C. Review. Upon delivery of an application for insurance and all requisite documentation and payment of the required application fee, the Fund shall review the application to determine whether it complies with these regulations and underwriting guidelines, so as to determine the insurance amount, conditions, and terms.

D. Eligibility.

(1) The Fund may, in its sole discretion, participate in particular projects and decline to participate in otherwise eligible projects based on its assessment of each project's overall risks and merits and each project's risks and merits relative to competing alternatives.

(2) The Fund may issue a written notice of eligibility, but all notices of eligibility shall state that it is within the discretion of the Fund to not participate in an eligible loan, and the notice of eligibility is not in any way a commitment to insure a particular loan.

(3) If the Fund determines that a project, a borrower, or a loan is not eligible for insurance, the Fund shall issue a written notice of ineligibility.

(4) The Fund shall provide the Housing Finance Review Committee with a report listing all insurance applications rejected during the month preceding each committee meeting.

(5) A borrower may request reconsideration of a rejection of an application due to ineligibility, or a rejection at the discretion of the Fund, by making written request for reconsideration to the Secretary within 30 days of the notice of rejection. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.02.

E. Withdrawal of Application.

(1) A lender may withdraw an application for mortgage insurance at any time before the initial endorsement of the loan by providing written notice to the Fund.

(2) The borrower shall bear any costs incurred by the Fund for items other than internal processing including, without limitation, title examinations, credit reports, and appraisals.

F. Approval. The Fund shall submit all proposed insurance commitments to the Housing Finance Review Committee for review and recommendation to the Secretary, except for those applications for mortgage insurance in an amount below the minimum amount established by the Housing Finance Review Committee, or in the case of an emergency when urgent action is required.

G. Secretarial Determination.

(1) Applications for mortgage insurance in an amount below any minimum amount established by the Housing Finance Review Committee need not be submitted for review and recommendation.

(2) The Secretary shall consider the recommendation of the Housing Finance Review Committee and approve, disapprove, or approve with modifications the mortgage insurance and its terms. In an emergency when urgent action is required, the Secretary may act on an insurance request without the recommendation of the Housing Finance Review Committee.

(3) The Secretary shall execute a written determination that the insurance of the loan for the project is authorized by the Act and approve the insurance as recommended or with modifications before the issuance by the Fund of a commitment to insure a loan.

(4) A written Secretarial determination is required for the refinancing of an existing insured loan.

H. Commitment.

(1) Upon approval of the insurance and execution of a determination by the Secretary, the Fund shall issue a commitment letter to the lender setting forth the:

(a) Terms of the insured loan;

(b) Terms and conditions of the insurance by the Fund; and

(c) Requirements to be satisfied before the insurance of the loan by the Fund.

(2) The commitment may remain valid for a period not to exceed 12 months, unless renewed at the discretion of the Fund. The Fund may renew a commitment one or more times, and each renewal may not exceed 6 months. If the Fund insures a permanent mortgage only, the Fund may issue the commitment at any time during the construction period, and the commitment may remain valid for up to 6 months following the anticipated date for completion of the project unless renewed at the discretion of the Fund.

(3) The insurance commitment may not be assigned without the prior written approval of the Fund.

(4) The Secretary's determination and an approval letter signed by the Director setting forth any conditions the Fund requires before a continuation of insurance or re-endorsement for insurance by the Fund shall be issued when a Fund-insured loan is refinanced.

I. Effective Date of Insurance. At any time before the end of the commitment period and upon satisfaction of all conditions to the commitment, the Fund shall insure the loan. The insurance is effective as of the time the insured loan is endorsed for insurance, and upon receipt of the required premium by the Fund and certification by the lender that all conditions of the lender's loan commitment have been fulfilled.