The loan proceeds available under this program shall be limited to those cases where the property owners' income and net worth precludes home replacement financing through normal banking or other financial channels. Where loans are made available from the homeowners' replacement loan fund, they shall be subject to the following requirements and limitations:
(a) Loans may be made to owner-occupants whose verified income does not exceed the section 8 lower income limits for the Washington Metropolitan Area as established from time to time by the U.S. Department of Housing and Urban Development. The county executive may make exception to those limits if a finding is made that an otherwise good risk is unable to obtain a conventional loan.
(b) Loans shall carry an interest rate of from one (1) to six (6) percent per annum. Repayment provisions shall be based upon the financial circumstances of the individual property owner. In determining the initial rate of interest the property owner shall not be expected to allocate, based on a loan term of forty-five (45) years, more than thirty-five (35) percent of his family gross income to the monthly costs of shelter (principal, interest, taxes, insurance, maintenance and utilities).
(c) Terms of the loan shall be based upon the owner's financial circumstances at the time of the loan commitment. If the initial rate of interest is three (3) percent or less, the interest rate must be increased to a higher rate upon a determination that thirty-five (35) percent of the property owner's family gross income is sufficient to pay the monthly costs of shelter (principal, interest, taxes, insurance, maintenance and utilities) at such higher rate.
The initial interest rate may be decreased upon a determination that the property owner will pay more than thirty-five (35) percent of family gross income for the monthly costs of shelter (principal, interest, taxes, insurance, maintenance and utilities) and undue financial hardship would occur if the interest rate remained as previously established.
(d) Security for loans made pursuant to this fund shall be of such a nature as will best protect the interests of the county at minimum costs and shall be determined on an individual basis pursuant to regulations to be established by the county executive.
(e) Existing mortgagees or lien holders whose mortgages or liens are secured by the existing improvements must consent to the removal of the existing improvements. Such mortgagees or lien holders shall have the option to make a reconstruction loan to the applicant if the parties so desire.
(f) The interest rate shall be increased to the market rate if the property is sold except that if the property is purchased by the Montgomery County housing opportunities commission, the interest rate shall be three (3) percent. If the property is purchased by a person who meets the eligibility requirements of subsection (a) of section 56-5, the interest rate shall be determined by subsection (b) of section 56-5. (1979 L.M.C., ch. 10, § 1.)