HARRY HUGHES, Governor                               1877

(c) (6) Loans may not exceed an amount the Secretary
shall establish by regulation and they may not be made where
comparable private financing is available to the prospective
borrowers. Loans over $5,000 shall be secured by a recorded
mortgage or deed of trust on the property. Loans shall be
made from the fund to families of limited income owning and
occupying the building to be rehabilitated, or to sponsors.
Loans may be either insured or uninsured as the Department
requires, and shall be at a rate of interest that is, AS
LONG AS THE STATE COMPLIES WITH ANY APPLICABLE FEDERAL
TREASURY REGULATIONS GOVERNING THE BORROWING OF MONEYS BY
THE STATE:

(i) At least sufficient to cover:

1.  All administrative and other
expenses of the program;

2.  Reasonably expected losses due to
defaults on loans; and

3.  The interest cost of moneys used
to fund the program, which may be the actual interest cost
of moneys borrowed by the State and appropriated to the
program, or the imputed interest cost of general funds or
loan repayments appropriated to the program; and

(ii) Not less than a rate that is 5
percentage points below the prevailing rate on comparable
loans made by private lenders as determined by the
Department, unless:

1.   [the] THE Department also
determines that the prevailing rate is so high that this
condition is not compatible with both prudent loan
underwriting standards and with the income limits
established under § 257L(b)(4) of this subtitle; OR

2.  THE DEPARTMENT ALSO DETERMINES
THAT A RATE THAT IS MORE THAN 5 PERCENTAGE POINTS BELOW THE
PREVAILING RATE IS NECESSARY TO COMPLY WITH FEDERAL TREASURY
REGULATIONS GOVERNING THE BORROWING OF MONEYS BY THE STATE.

(g) (1) The program shall operate as a continuing,
nonlapsing, special fund, that consists of moneys
appropriated by the State to the program.

(2)  The Department shall use the fund to make
loans and to pay expenses of the program INCLUDING RESERVES
FOR ANTICIPATED FUTURE LOSSES DIRECTLY RELATED TO THE
PROGRAM, as provided in the annual budget of the State or
other act appropriating moneys.

(3)  The State Treasurer shall hold and the State
Comptroller shall account for the fund. The fund shall be
invested and reinvested in the same manner as other State
funds. Any investment earnings of the fund shall be paid
into the State General Treasury.