COMAR 05.03.02.08. Refinancing

A. Tax-Exempt Bond Refinancing. In order to comply with the Code, mortgage loans financed with tax-exempt mortgage revenue bonds may not be used to refinance an existing mortgage or a land installment contract except:

(1) In limited circumstances involving construction of a home on a lot owned by the borrower, or to refinance temporary bridge financing, or in connection with a qualified rehabilitation loan, in any case as may be approved by the Administration; or

(2) For refinance loans permitted by the Code, if any, and the applicable bond documents, to the extent offered by the Administration.

B. Financing from Taxable Bonds or Other Sources.

(1) Mortgage loans financed with taxable mortgage revenue bonds or other sources may be used to refinance an existing mortgage.

(2) A refinancing loan may be used to pay for:

(a) The payoff and release of existing mortgages and all liens; and

(b) Closing costs, settlement costs, real property taxes, homeowners and mortgage insurance premiums, homeowner association fees, and other closing expenses as determined by the Program.

(3) A refinancing loan may not be used to provide money directly to the borrower or pay debts that are not secured by the residence.

(4) The Program may set terms and conditions for refinancing loans, including:

(a) A requirement that the borrower's current first mortgage have an interest rate subject to change or a balloon payment; or

(b) A maximum or minimum on the loan-to-value ratio, including all existing debt secured by the residence.

(5) The Program may set interest rates for loans financed by taxable bonds or other sources that are higher than rates for tax-exempt mortgage loans.