Sec. 05.12.01.17. Affordable Homeownership Requirements

A. General. In order to qualify for HOME funds, a homeownership project shall meet the requirements of §D of this regulation and either §B or C of this regulation, as applicable.

B. Acquisition of a House.

(1) A single family house or one-to-four family residence, the purchase of which is to be assisted with HOME funds, shall meet the criteria set forth in §§B(2)-B-1 of this regulation.

(2) The purchase price of a single family home or one-to-four family residence may not exceed the lesser of:

(a) The upper house prices set by the Secretary for the Maryland Mortgage Program from time to time; or

(b) 95 percent of the median purchase price for the type of house in the State, as determined by HUD.

(3) The estimated appraised value at acquisition or after any repairs required to meet the standards of Regulation .14 of this chapter may not exceed the limit described in §B(2) of this regulation.

(4) The house is expected to be the principal residence of an income eligible household at the time of purchase.

B-1. Resale of Houses.

(1) The calculations as stated in §B-1(2)-(6) of this regulation shall be used to determine the amount of HOME funds due, if any, upon the sale of a house assisted with HOME funds.

(2) The Department shall determine initially whether the loan of HOME funds has been forgiven because the homeowner has owned and occupied the house for a required minimum period of 5, 10, or 15 years in accordance with Regulation .17D(2) of this chapter.

(3) If the Department has not forgiven the loan, then the calculations as stated in §B-1(4)-(6) of this regulation shall be used to determine the amount of HOME funds due.

(4) Repay HOME Loan.

(a) The HOME loan shall be repaid in full out of net proceeds from the sale of the house if the net proceeds are greater than or equal to the sum of:

(i) The original principal amount of the HOME loan made to a homeowner; and

(ii) The homeowner payments as defined in §B-1(7) of this regulation.

(b) "Net proceeds" means the proceeds from the sale of the house less the unpaid principal balance of any superior and subordinate nongovernmental or private loans to the HOME loan.

(5) Forgive HOME Loan.

(a) The Department shall forgive a portion of the HOME loan if the net proceeds are less than the sum of:

(i) The original principal amount of the HOME loan made to a homeowner; and

(ii) The homeowner payments as defined in §B-1(7) of this regulation.

(b) The portion of the HOME loan to be forgiven shall equal the original principal amount of the HOME loan made to the homeowner multiplied by the number of years the homeowner owned and occupied the house multiplied by the applicable fraction based on the following chart:

Original Principal Amount of HOME Loan	Applicable Fraction
Less than $15,000	1/5
$15,000 to $40,000	1/10
Greater than $40,000	1/15

(6) The amount of the HOME loan to be forgiven may not exceed the original principal amount of the HOME loan.

(7) For purposes of §B-1(4) and (5) of this regulation, "homeowner payments" means, with respect to loans made with HOME funds to home buyers, the:

(a) Amount of the down payment made by the homeowner on the house;

(b) Amount of any payments or prepayments of principal on any loan secured by the property; and

(c) Cost of all capital improvements to the house made by the homeowner.

C. Rehabilitation of Existing Houses.

(1) An existing house, the rehabilitation of which is to be assisted with HOME funds, shall meet the criteria of this section.

(2) The value of the currently owned single family house or one-to-four family residence after rehabilitation may not exceed 95 percent of the median purchase price for the type of house in the State as determined by HUD.

(3) The house shall be the principal residence of an owner whose family is an income eligible household at the time HOME funds are committed.

(4) Income Eligibility.

(a) In determining whether a household is an income eligible household for the purposes of this section, the Department shall use its best efforts to require that the household meets the State requirement of 55 percent of State median income as identified in Regulation .03B(16)(a) of this chapter.

(b) Notwithstanding §C(4)(a) of this regulation, if, in the determination of the Program, the financial viability of a homeownership project or activity so requires, a household may meet the federal requirement of 80 percent of area median income as identified in Regulation .03B(16)(b) of this chapter.

D. Loan Terms.

(1) In addition to other forms of HOME assistance authorized under Regulation .10A of this chapter, repayment of HOME funds lent in connection with a homeownership project may be secured by a subordinated mortgage or deed of trust.

(2) A loan of HOME funds made to assist a home buyer may be forgiven by the Department, after a minimum period of 5, 10, or 15 years, if the homeowner owns and occupies the house for:

(a) 5 years if the HOME loan is under $15,000;

(b) 10 years if the HOME loan is $15,000 to $40,000; and

(c) 15 years if the HOME loan is over $40,000.