Md. Code Regs. 05.04.01.16 – Loan Administration — Certification of Local Governments as Local Administrator.

A. General. The Department recognizes that the most effective housing rehabilitation programs are those administered at the local level. Therefore, each political subdivision is encouraged and expected to develop the capacity to originate and administer loans from its allocation. While the Department may originate and administer loans from its reserve or from the allocation to a political subdivision that is not certified under §B or C of this regulation, the Department may not operate a program for that political subdivision, and shall make loans in that case only if, and to the extent that, the Department at its sole discretion determines it to be feasible.
B. Certification of Level I Local Administrators. The Department may certify a political subdivision to originate and administer loans when the political subdivision meets the following minimum criteria to the satisfaction of the Department:
1. (1) The political subdivision shall be able to perform adequately the functions of the following positions:
  1. (a) A rehabilitation director, experienced in operating a rehabilitation program, supervising employees, and dealing with the public;
  2. (b) A building inspector, experienced in residential rehabilitation, cost estimation, writing specifications, blueprint reading, residential inspections, and trained to understand and apply the appropriate codes and rehabilitation standards;
  3. (c) A loan underwriter, experienced in mortgage lending and financial processing of loans; and
  4. (d) Clerical and administrative staff trained to ensure prompt and efficient processing of applications, draw schedules, and other required items;
2. (2) The rehabilitation staff or the political subdivision shall be capable of:
  1. (a) Determining local rehabilitation needs evidenced by completion of a consolidated plan, a local comprehensive plan, or a local housing plan;
  2. (b) Establishing a rehabilitation program, evidenced by prior experience in the development and operation of a rehabilitation program;
  3. (c) Evaluating loan applications; and
  4. (d) Monitoring both the loans and the work done under those loans; and
3. (3) The political subdivision shall execute and comply with the terms of an agreement required by the Department.
C. Certification of Level II Local Administrators: The Department may certify a political subdivision to originate and administer loans in any amount as well as approve loans in the amount of $60,000 or less, when:
1. (1) The political subdivision meets the criteria outlined in §B of this regulation to the Department's satisfaction; and
2. (2) The Department determines that the rehabilitation staff of the political subdivision is capable of:
  1. (a) Evaluating, recommending, approving, or rejecting loans;
  2. (b) Scheduling and executing loan closings;
  3. (c) Monitoring construction activities;
D. Subcontracting Program Administration.
1. (1) A political subdivision may subcontract its duties and responsibilities as a local administrator under this chapter, except as provided in §D(2) and (3) of this regulation, with the approval of the Department. The duties described in §§B and C of this regulation may be carried out by staff of the local administrator or its subcontractor.
2. (2) A political subdivision may not subcontract the holding and disbursement of loan funds described in Regulation .15B and H of this chapter except to a subcontractor which meets the following criteria to the satisfaction of the Department:
  1. (a) The subcontractor meets the criteria of §§B and C of this regulation;
  2. (b) Any employee of the subcontractor with access to the loan funds shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000;
  3. (c) If required by the Department, the subcontractor provides the local administrator and the Department with periodic statements of:
    1. (i) All loan funds held and disbursed by the subcontractor under Regulation .15 of this chapter, and
    2. (ii) The balance of funds on hand;
  4. (d) The subcontractor provides the local administrator and the Department with an annual audit conducted by an independent certified public accountant and prepared in accordance with generally accepted auditing standards; and
  5. (e) The subcontractor complies with any other requirements established by the Department.
3. (3) Regardless of any subcontracting, the Department shall continue to hold the political subdivision directly responsible for fulfilling all of its duties and responsibilities as a local administrator.
E. Revocation of Certification. The Department reserves the right and expects to monitor periodically the loan administration of certified local administrators, and may revoke certification upon determination that a local administrator is administering the loans in a manner inconsistent with the intent of the Program.
F. Special Requirements for Certified Local Administrators and Their Subcontractors.
1. (1) Certified local administrators and their subcontractors shall maintain financial records of loan disbursements for at least 3 years, and shall make them available for review by the Department at all reasonable times and as set forth in Regulation .20 of this chapter.
2. (2) A noncomplying loan approved by a level II local administrator shall either be amended, with the borrower's concurrence, to comply with the Program's requirements, or purchased from the Department by the political subdivision.
G. Local Administration Fee. The Department may, at its sole discretion, pay a local administrator an annual fee for administering loans made under the Program.
H. Department Authority. When the Department, in its sole discretion, administers a loan, the Department has the authority that a local administrator would have under these regulations, in addition to its authority as the Department.

Authority: Housing and Community Development Article, Title 4, Subtitles 5 and 9, §§4-704—4-706,Annotated Code of Maryland;
Executive Order 01.01.1992.27C

Effective date: August 3, 1977 (4:16 Md. R. 1207)

Regulations .03, .04A, C, .05B, .06A, .07H, .08B, .09A amended effective June 16, 1978 (5:12 Md. R. 965)

Regulations .03, .04A, .05B, .06A, .07G, .08, .09A, F, .10C amended effective March 23, 1979 (6:6 Md. R. 509)

Regulations .03E, M, .04C, .05B, .06A, B, .07I, .08B amended effective October 5, 1979 (6:20 Md. R. 1627)

Regulations .03G, M; .06A; .08B; .10C; and .12B amended effective September 5, 1980 (7:18 Md. R. 1737)

Regulation .05C adopted effective June 16, 1978 (5:12 Md. R. 965)

Regulation .14D repealed effective September 5, 1980 (7:18 Md. R. 1737)

Chapter revised effective October 25, 1982 (9:21 Md. R. 2104)

Regulation .02A amended effective February 11, 1985 (12:3 Md. R. 243)

Regulation .03B amended effective February 11, 1985 (12:3 Md. R. 243); April 22, 1985 (12:8 Md. R. 800)

Regulation .04 amended effective February 11, 1985 (12:3 Md. R. 243)

Regulation .05B, C, E amended effective February 11, 1985 (12:3 Md. R. 243)

Regulation .05D amended effective April 22, 1985 (12:8 Md. R. 800)

Regulations .06—.10 amended effective February 11, 1985 (12:3 Md. R. 243)

Regulation .10A amended effective April 22, 1985 (12:8 Md. R. 800)

Regulations .11—.13 amended effective February 11, 1985 (12:3 Md. R. 243)

Regulation .15B amended effective February 11, 1985 (12:3 Md. R. 243)

Regulations .17 and .18 repealed and new Regulations .17 and .18 adopted effective February 11, 1985 (12:3 Md. R. 243)

Chapter recodified from COMAR 05.01.08 to COMAR 05.04.01

Regulations .01—.18 repealed and new Regulations .01—.21 adopted effective July 22, 1991 (18:14 Md. R. 1609)

Regulation .02 amended effective February 22, 1999 (26:4 Md. R. 272)

Regulations .02—.19 and .21 amended effective November 9, 1992 (19:22 Md. R. 1986)

Regulation .03B amended effective February 22, 1999 (26:4 Md. R. 272); November 29, 1999 (26:24 Md. R. 1855)

Regulation .04B amended effective February 22, 1999 (26:4 Md. R. 272)

Regulation .05A amended effective January 2, 1994 (20:25 Md. R. 1941); February 22, 1999 (26:4 Md. R. 272); April 5, 1999 (26:7 Md. R. 537)

Regulation .08E amended effective February 22, 1999 (26:4 Md. R. 272); November 29, 1999 (26:24 Md. R. 1855)

Regulation .09D amended effective January 2, 1994 (20:25 Md. R. 1941); February 22, 1999 (26:4 Md. R. 272)

Regulation .10C amended effective February 22, 1999 (26:4 Md. R. 272); September 29, 2003 (30:19 Md. R. 1329)

Regulation .11E amended effective September 29, 2003 (30:19 Md. R. 1329)

Regulation .12 amended effective February 22, 1999 (26:4 Md. R. 272)

Regulation .14B amended effective September 29, 2003 (30:19 Md. R. 1329)

Regulation .15 amended effective February 22, 1999 (26:4 Md. R. 272)

Regulation .15E amended effective September 29, 2003 (30:19 Md. R. 1329)

Regulation .16C amended effective September 29, 2003 (30:19 Md. R. 1329)

Regulation .16D amended effective February 22, 1999 (26:4 Md. R. 272)

Regulation .19A amended effective February 22, 1999 (26:4 Md. R. 272)

Chapter revised effective April 5, 2010 (37:7 Md. R. 569)

Regulation .06D amended effective July 4, 2016 (43:13 Md. R. 712)

Regulation .07-1 adopted effective July 4, 2016 (43:13 Md. R. 712)

Regulation .15D amended effective July 4, 2016 (43:13 Md. R. 712)

Regulation .19 amended effective March 16, 2015 (42:5 Md. R. 485)