HARRY HUGHES, Governor

3065

13-307.

(A)  The Department periodically shall set a preferred
interest rate that, as long as moneys borrowed by the State are
appropriated to the program, complies with any applicable federal
treasury regulations governing the borrowing of moneys by the
State.

(B)  The preferred interest rate shall be[:

(1)  At] AT least sufficient to cover:

[(i)] (1) All administrative and other expenses
of the program; AND

[(ii)] (2) Reasonably expected losses due to
defaults on loans[ ; and

(iii) (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

(2)  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:

(i) 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 § 13-306(d) of this subtitle; or

(ii) 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].

(C) THE DEPARTMENT MAY SET A LOWER RATE OR RATES OF
INTEREST IF:

(1) THE LOANS SERVE BORROWERS WHOSE INCOMES DO NOT
EXCEED 80 PERCENT OF THE MAXIMUM INCOME LIMITS THAT THE
DEPARTMENT MAY ESTABLISH;

(2) THE LOWER RATE OR RATES ARE NOT LESS THAN THE
GREATER OF 60 PERCENT OF THE ACTUAL INTEREST COST OF MONEYS USED
TO FUND THE PROGRAM OR A RATE OF 4 PERCENT; AND

(3) THE SECRETARY DETERMINES THAT THE BORROWERS
SERVED BY THESE LOANS DO NOT HAVE SUFFICIENT INCOME TO REPAY A
LOAN AT A HIGHER RATE.

(D) THE DEPARTMENT SHALL INCLUDE IN ITS REQUEST FOR
APPROPRIATIONS FOR THE PROGRAM ANY INFORMATION REQUESTED BY THE