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Office of Homeownership
Policies and Procedures

One-on-One Homeownership Counseling Requirement
In order to secure funding from any of our Homeownership programs, the borrower must receive One-on-One Homeownership Counseling from a City-approved counseling agency. The borrower must also secure a Homeownership Counseling Certificate prior to executing a sales contract.

Home Inspection Requirement
In order to secure funding from any of our Homeownership programs, the borrower must provide a satisfactory home inspection from a licensed home inspection company. The home inspection company must be a member of either or both the National Association of Home Inspectors and/or the American Society of Home Inspectors.

Qualified Lenders
We strongly urge that you secure a mortgage loan from a Fannie Mae or Freddie Mac approved lending institution. If you should choose to use a mortgage broker, your mortgage broker must adhere to our written policy. Lenders must provide a good faith estimate to the borrower that includes: 1) any points, fees, or other charges; 2) any mortgage insurance fees; and 3) any monthly escrow amounts required for property taxes and homeowner's insurance. More specifically, lenders must not charge in excess of three (3) points--one (1) point for the origination fee and two (2) points for the mortgage interest rate discount. Lenders must charge only the actual fee incurred by the lender for obtaining the credit report and appraisal and any other documents and services required as part of the mortgage transaction. Lenders must adhere to the disclosure requirements of the Fair Credit Reporting Act as most recently amended.

Ineligible First Mortgage Finance Products
In order to secure funding from any of our Homeownership programs, the borrower may not utilize any of the following first mortgage products: 1) no documentation loan; 2) interest only loan; 3) conventional 80/20 loan; 4) adjustable rate loan. Any loans for which prepayment penalties or fees are applicable, or will be assessed, are not eligible for use with Baltimore Housing homeownership programs.

Refinancing and Release Policy
In order to secure funding from any of our Homeownership programs, the borrower must execute a Baltimore Housing Refinancing and Release Policy.

Please Note:
These policies may change subject to the discretion of the City's Office of Homeownership. Additional restrictions may be required for individual homeownership incentive programs. Refinancing within 5 years may require repayment of forgivable loans provided through Baltimore City homeownership programs.

Baltimore Housing Refinancing & Release Policy
Some homeowners with UDAG, NAC, CDBG, and City nd Mortgage Loans for Buying Into Baltimore trolley tours and City employee grants or Direct Homeownership Assistance grants and including rehabilitation loans may have relatively high interest rates on their first mortgages. The Financial Review Committee has received a number of recent requests to allow the homeowners to refinance the existing first mortgages for a lower interest rate, shorter term and/or lower monthly payment. Because of the variations in the homeowner requests, it has been determined that a policy governing such refinancing should be developed by the Committee with concurrence by the Deputy Commissioner and approval by the City Board of Estimates. (Approved March 1, 2004 )

The following are the guidelines established by the Committee, which must be met for approval:

1. The purpose of the request must be to obtain a lower interest rate and/or term in order to reduce principal and interest payments on the first mortgage.

2. The City lien must be current. Any account 60 days in arrears will not be considered for subordination. Modified/recast loans will be considered for subordination six (6) months after the loan modification is signed.

3. The homeowner shall not receive any proceeds from the refinancing.

4. The homeowner may include within the amount of the first mortgage refinanced the legal and related costs incurred in conjunction with the refinancing. However, if total settlement charges, points and fees exceed 10 percent of the balance of the existing first mortgage loan, the homeowner must pay off the City loan. On a case-by-case basis, the Committee may consider extenuating circumstances and will make a recommendation to the Deputy Commissioner for approval.

5. If the principal balance of the existing first mortgage is more than initially borrowed at settlement (i.e., there has been negative amortization), the original principal balance will be used in calculating the net proceeds of sale.

6. The property value should be equal to or more than the sum of all existing and proposed liens against the property (established by an independent appraisal).

7. The homeowner may be required to pay a $100 legal fee to the title attorney to cover the cost of preparing the Subordination Agreement as well as the cost of recording that document.

8. If additional debts are included in the proposed (refinanced) first mortgage, a minimum of 10 percent of those debts is required as a non-refundable partial prepayment of the city loan.

9. Any request for payoff that is not accompanied by a contract of sale will be considered a refinance. In this case, the homeowner must personally request the payoff/release with explanation and review the documents submitted in his behalf by the lender or title company to the Financial Review Committee.

10. A City-processing fee of $75 shall be charged to the homeowner for each request for the execution of subordination agreements, releases of note/mortgage, or deed of trust or promissory. With respect to the releases, the Legal Department will determine the appropriate amount for releases, but the amount will not be in excess of $75. Either the City for the Office of Rehabilitation notes or the title company will prepare the actual agreements and releases for processing and execution. Said processing fee in the form of a money order or certified check shall be made payable to the Director of Finance in care of the Department of Housing and Community Development, Office of Rehabilitation, Suite 1125, 417 E. Fayette Street, Baltimore, MD 21202 .