Sec. 05.06.06.14. Premiums and Types of Coverage

A. Premiums for Primary Mortgage Insurance and Coverage for Public and Private Lenders.

(1) The Maryland Housing Fund may insure permanent single family mortgages originated by public and private lenders that have been approved by the Maryland Housing Fund for mortgage insurance. The insurance is governed by Regulations .05-.09 of this chapter and by the provisions of the master policy for mortgage insurance issued to the lender.

(2) In general, primary mortgage insurance covers the top 35 percent of the original loan amount or such other amount as may be specified in a policy or certificate of insurance.

(3) Premiums for mortgage insurance shall be determined by the Maryland Housing Fund from time to time for various programs.

(4) Premiums may be set at different levels for different categories of loans and loan programs depending on the risk factors, which may include:

(a) Depth of insurance coverage;

(b) Length of mortgage term;

(c) Borrower's financial capabilities;

(d) Credit rating of borrowers; and

(e) Condition of property securing loan.

(5) The Fund shall maintain a publicly available premium rate sheet with a stated effective date for the premiums.

B. Pool Insurance Coverage for Certain Public Agency Lenders.

(1) The Fund may offer insurance on mortgage loans eligible under Regulations .05-.09 of this chapter that are within a pool of mortgages as described in the applicable pool insurance policy.

(2) The pool insurance may cover the entire remaining loss after payment of primary mortgage insurance claims by the Fund or another private or governmental insurer or guarantor, as required by the pool insurance policy.

(3) Total coverage under a policy of pool insurance is subject to aggregate loss limits for the pool of mortgage loans, which may be described in relation to a single source of financing or collective sources, such as parity bonds issued under a common bond indenture.

(4) A pool insurance policy contains detailed claims computation, claims settlement procedures, and the aggregate loss limit for all loans covered by the pool policy. Coverage of individual mortgage loans in the pool is evidenced by endorsement or listing in a schedule.

(5) The annual premium for pool insurance and associated coverage is based on the original principal amount of the loan. It shall be determined from time to time and shall be maintained with a stated effective date for the premiums.

C. Premium Refunds. A premium, or any portion of a premium, is not refundable except when an insured mortgage is prepaid in full. In those cases, no further premiums are due and a portion of the premium paid for the year shall be refunded in accordance with the Fund's cancellation schedule as described in the policy. Refunds shall be forwarded to the borrower unless the lender has demonstrated to the satisfaction of the Fund that the lender is entitled to the refund. When a claim is pending or satisfied, the premium, whether paid by the borrower, the lender, or the servicing agent, is earned and a premium refund may not be made.