1. A. The maximum insurable loan amount that the Fund can insure is 25 percent of the multifamily insurance reserve, unless:

   1. (1) Additional collateral is deposited with the Fund in accordance with §B of this regulation; or
   2. (2) For projects in which the Fund participates in reinsurance, coinsurance, or shared insurance, the Fund's maximum exposure is 25 percent of the multifamily reserve, with adjustments, if any, calculated in accordance with Regulation .15 of this chapter.

2. B. A loan may be insured even when the amount of the insurance by the Fund exceeds 25 percent of the multifamily reserve as of the date of making the loan, if the:

   1. (1) Principal portion of the loan being insured which is in excess of the reserve amount will be supported by collateral or security acceptable to the Fund in an amount equal to or greater than the excess loan amount;
   2. (2) Collateral or security is deposited with or held by the Fund for its benefit in the event of default for such period of time as determined necessary by the Fund; and

   3. (3) Acceptable forms of collateral or security are:

      1. (a) Cash;

      2. (b) Securities of the following types:

         1. (i) General obligations of or obligations guaranteed by the federal government,
         2. (ii) Certificates of deposit or other banking arrangements fully insured by the Federal Deposit Insurance Corporation, or
         3. (iii) Bonds or other obligations rated in one of the two highest rating categories by a nationally recognized credit rating agency and otherwise acceptable to the Fund;
      3. (c) Letters of credit which are irrevocable, unconditional, renewable, transferable, and drawable at sight on an investment-grade, rated financial institution with acceptable combined capital and surplus, with a minimum term and all other provisions acceptable to the Fund; or
      4. (d) Other collateral equivalent to that described in §B(3)(a), (b), or (c) of this regulation and otherwise acceptable to the Fund.

3. C. The Fund may insure two or more loans secured by mortgages on adjacent projects which are under common ownership or sponsorship when the combined loans exceed the maximum insurable loan amount, if the Fund determines in writing that the:

   1. (1) Adjacent projects have substantially different risks of insurance loss evidenced by each project having at least one of the following:

      1. (a) Federal, State, or local rent subsidies committed to the project for a term of not less than 5 years for not less than 35 percent of the units in the project, or non-rental subsidies which result in at least a 10 percent reduction in the debt service of the loan, or
      2. (b) Additional collateral or security deposited with the Fund for its benefit in the event of default, in one of the forms set forth in §B(3)(a), (b), (c), or (d) of this regulation, in an amount which, when added to the borrower's equity, equals 22.5 percent of the Fund-determined value for the second project to be insured;

   2. (2) Loan for each adjacent project contains cross-default provisions providing that upon monetary default of one adjacent project the insured lender would be required, at the Fund's election to:

      1. (a) Declare a default on either adjacent project, and
      2. (b) Operate, sell, or transfer the adjacent project rather than assign the project to the Fund unless the adjacent project itself was in monetary default; and
   3. (3) Likelihood of nonpayment of principal, interest, or other sums agreed to be paid to the mortgagee by the mortgagor is no greater than that of similar projects, taking into consideration all relevant factors, including the financial strength and experience of the developer and builder.
4. D. In the event of a default on a loan insured under the provisions of §B or C of this regulation, the terms of the loan are required to give the insured lender the right to call on any collateral or security provided and apply the proceeds to a reduction in the amount of the insurance claim to be paid by the Fund.

Authority: Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland

Effective date: November 15, 1972

Regulations .07A, .09A, B, and .17A amended as an emergency provision effective January 20, 1977 (4:4 Md. R. 276); emergency status expired June 14, 1977

Regulation .07A, B amended effective June 25, 1977 (4:13 Md. R. 1027)

Regulation .07D amended effective August 4, 1976 (3:16 Md. R. 848)

Regulation .07F amended effective October 27, 1976 (3:3 Md. R. 1249)

Regulation .07 amended effective October 29, 1975 (2:27 Md. R. 1626)

Regulation .09 amended effective June 25, 1977 (4:13 Md. R. 1027)

Regulation .09A amended effective April 13, 1977 (4:8 Md. R. 632)

Regulations .10—.20 amended effective August 20, 1975 (2:18 Md. R. 123)

Regulations .10 and .16 amended effective October 29, 1975 (2:27 Md. R. 16)

Regulations .10, .11C, .14—.16 amended effective August 30, 1974 (1:1 Md. R. 13)

Regulation .17 amended effective January 31, 1976 (3:4 Md. R. 214) and June 25, 1977 (4:13 Md. R. 1027)

Chapter revised as an emergency provision effective November 9, 1977 (4:22 Md. R. 1666); adopted permanently effective November 18, 1977 (4:24 Md. R. 1804)

Regulation .01C amended effective December 5, 1983 (10:24 Md. R. 2184)

Regulation .03E amended effective June 29, 1979 (6:13 Md. R. 1124)

Regulations .06A, .07A, and .09A amended effective October 20, 1978 (5:21 Md. R. 1585)

Regulations .06B, .09C, .10 adopted effective March 24, 1978 (5:6 Md. R. 464)

Regulation .06C adopted effective October 20, 1978 (5:21 Md. R. 1585)

Regulation .09A amended effective June 29, 1979 (6:13 Md. R. 1124); September 5, 1980 (7:18 Md. R. 1735)

Regulation .10 amended effective June 29, 1979 (6:13 Md. R. 1124)

Regulations .11K and .15N adopted as an emergency provision effective October 15, 1983 (10:22 Md. R. 1962); adopted permanently effective March 26, 1984 (11:6 Md. R. 548)

Regulation .15B amended effective September 5, 1980 (7:18 Md. R. 1735)

Regulation .15B amended as an emergency provision effective April 25, 1983 (10:15 Md. R. 1341); emergency status expired October 25, 1983

Regulation .17C repealed effective October 8, 1984 (11:20 Md. R. 1741)

Regulation .18 adopted as an emergency provision effective March 22, 1979 (6:7 Md. R. 574); emergency status expired October 3, 1979

Regulation .18 adopted effective June 29, 1979 (6:13 Md. R. 1124)

Regulation .18C adopted effective December 12, 1980 (7:25 Md. R. 2332)

Regulation .18D adopted as an emergency provision effective April 25, 1983 (10:15 Md. R. 1341); emergency status expired October 25, 1983; adopted permanently effective November 7, 1983 (10:22 Md. R. 1965)

Regulation .19 adopted as an emergency provision effective June 1, 1983 (10:12 Md. R. 1063); emergency status extended at 10:25 Md. R. 2262; adopted permanently effective December 5, 1983 (10:24 Md. R. 2184)

Chapter recodified from COMAR 05.01.02 to COMAR 05.06.01

Regulation .01C amended effective March 4, 1991 (18:4 Md. R. 446)

Regulation .02 amended effective November 14, 1988 (15:23 Md. R. 2657)

Regulations .02, .07, and .18 amended as an emergency provision effective April 30, 1991 (18:10 Md. R. 1114)

Regulation .02B amended effective September 16, 1991 (18:18 Md. R. 2003)

Regulations .03—.08 repealed effective May 23, 1994 (21:10 Md. R. 841)

Regulation .06 amended effective January 8, 1990 (16:26 Md. R. 2786)

Regulation .06D amended effective March 4, 1991 (18:4 Md. R. 446)

Regulation .07 amended effective September 16, 1991 (18:18 Md. R. 2003)

Regulation .09 repealed and new Regulation .09 adopted effective March 4, 1991 (18:4 Md. R. 446)

Regulation .10A amended effective March 4, 1991 (18:4 Md. R. 446)

Regulation .11C amended effective November 14, 1988 (15:23 Md. R. 2657)

Regulation .11L adopted effective November 14, 1988 (15:23 Md. R. 2657)

Regulation .15B and E amended effective November 14, 1988 (15:23 Md. R. 2657)

Regulation .16A amended effective April 30, 1990 (17:8 Md. R. 975)

Regulation .16F amended and G adopted effective October 28, 1991 (18:21 Md. R. 2304)

Regulation .16G amended effective June 22, 1992 (19:12 Md. R. 1132)

Regulation .18A amended as an emergency provision effective June 28, 1989 (16:14 Md. R. 1562); adopted permanently effective October 30, 1989 (16:21 Md. R. 2260)

Regulation .18 repealed and new Regulation .18 adopted effective September 16, 1991 (18:18 Md. R. 2003)

Regulation .18 repealed effective May 23, 1994 (21:10 Md. R. 841)

Chapter, Maryland Housing Fund, repealed and Regulations .01—.24, Maryland Housing Fund—Multifamily Program, adopted effective December 5, 1994 (21:24 Md. R. 1987)

Regulation .02B amended effective September 29, 2014 (41:19 Md. R. 1076)

Regulation .04A amended effective November 3, 2008 (35:22 Md. R. 1956)

Regulation .04A, C amended effective March 26, 2018 (45:6 Md. R. 317)

Regulation .05 amended effective April 5, 1999 (26:7 Md. R. 539)

Regulation .10C amended effective April 19, 2010 (37:8 Md. R. 614)