Program Overview
This program provides affordable home improvement loans to income qualified homeowners located within Washington County, Maryland. The Maryland Housing Rehabilitation Program (MHRP) is a state program that is administered by the Washington County Department of Planning & Community Development. Health, safety, structural, and code violations will receive first priority before general improvements can be considered. Most improvements are eligible under this program; however, general property improvements (see MHRP Eligible Work Items on Page 2) are limited to no more than 40% of the amortizing loan.

Determining Eligibility & Interest Rates
The interest rate is determined by yearly household income and household size. To determine the interest rate, refer to the chart below attached chart of income limits. First identify the household size (left side column), then locate the income (using the column to the right). The interest rate is located at the top of each category. The following are examples of a household size of 4 persons:

• If the household income is under $32,150, borrowers are eligible for a deferred loan (only if they can't afford to make a payment).
• If the household income is more than $32,150 and under $38,580, the interest rate will fall between 0 and 4.5%.
• If the household income is more than $38,580 and under $51,450, the interest rate will fall between 4.5% and 7%.

Appraisals:
An after-improvement appraisal may need to be obtained on your property. This appraisal will determine the value of the property after the repairs and improvements have been made. Homeowners may borrow up to 95% of the equity in their property less any mortgages and liens currently against the property. The appraisal must be obtained from a licensed appraiser.

Other Financial Information:
Borrowers will be required to escrow their taxes and insurance if they don=t already do so. In most cases, MHRP loans are secured through a mortgage on the property.

MHRP Eligible Work Items:
The purpose of the MHRP loan is to eliminate health, safety, and property maintenance deficiencies and to bring properties in conformance to applicable codes. Priority shall be given to the following items:

• Health & safety violations (foundation, structural, code deficiencies, etc.)
• Major system deficiencies (heating systems, electrical, plumbing, etc.)
• Interior & exterior deficiencies (walls, ceilings, exterior porches railings, soffits, etc.)
• Weatherization & energy conservation (primary & storm windows, insulation, etc.)
• Handicapped modifications (ramps, special plumbing fixtures, etc.)

• Additions provided the addition does not exceed 240 square feet exclusive of passageways and bathrooms.
• Alterations & remodeling.
• Enlargements of rooms.
• Finishing of spaces within the building such as the attic, porch, or basement; remodeling kitchens, including the purchase of appliances.
• Fences and landscaping.

Building Evaluation / Site Visit:
A rehabilitation specialist will inspect the property to determine if the building is structurally sound and to determine the scope of work required to bring the property into compliance with local housing codes. If the building is not structurally sound, the rehabilitation specialist must include repairs in the work write-up. During the initial site visit, the rehabilitation specialist will discuss the bidding process and answer any questions owners may have.

Work Write-Ups:
The rehabilitation specialist will prepare a work write-up in consultation with the homeowner. The work write-up defines the construction details to the contractor for bidding and performing the construction work. The work write-up will clearly delineate priority, required items, and general property improvements. Each write-up will be made up of detailed specifications which will have a complete materials list, finishing details, and trade work (electrical, plumbing, heating, etc.).

Construction Drawings:
The rehabilitation specialist may prepare drawings when additions, major alterations or facade work are proposed. The drawings will be to scale and as detailed as possible.

Lead Paint Notification:
The house may contain lead-based paint. At the time of inspection, the rehabilitation specialist will determine the likelihood of lead-base paint and it=s hazards. If, based on the age and the condition of the property, there is a likelihood of a lead-based paint problem, the rehabilitation specialist will discuss the problem with the borrower. All applicants will need to sign a lead based paint notification stating that they are aware that there could be hazards on your property. Borrowers may include lead paint reduction work with an MHRP loans.

Maryland Historic Trust:
The administering agency (Washington County Planning & Community Development) must obtain a determination as to whether or not your property is of historical significance. The rehabilitation specialist will submit a memorandum requesting a historical review. If the Maryland Historic Trust (MHT) designates the property as being of historic significance, the rehabilitation specialist must ensure that the construction work complies with The Secretary of the Interior's Standards for Rehabilitation.

Choosing a Contractor:
The borrower is responsible for securing bids to renovate their property. All general contractors and sub-contractors performing work must have a valid Maryland Home Improvement License (MHIC), and there must not be any current or unresolved complaints filed against the them with the MHIC. Borrowers may call general contractors of their choice or those on the County's list. The Department of Planning & Community Development does not recommend these contractors, but maintains a list of contractors who have shown an interest in providing contracting services for housing rehabilitation programs. Borrowers are encouraged to obtain two, preferably three bids, to get the best possible price for the job. The rehabilitation specialist will assist the owner to confirm that contractors are qualified. In some cases, the department may assist the homeowner, when asked, in securing bids and help with the bid procurememnt process.

Rehabilitation Contracts:
This is a legal and binding contract between the borrower and the general contractor which includes specific details that pertain to your construction project. After the loan package has been approved by the State of Maryland, the contract must be signed before work can start. The rehabilitation specialist will prepare the contract and issue a ANotice to Proceed to the general contractor.

Change Orders:
All changes to the scope of the work after closing must be made on a change order form that is signed by the owner, general contractor, and the rehabilitation specialist. No payments can be made without prior approval of a written change order. Change orders detail all additions to and deletions from the approved scope of work and corresponding increases or decreases in cost. The rehabilitation specialist will prepare this document for the borrower.

Building Permits:
If required by local codes, a building permit must be obtained and posted at the project before starting work on the project. It is the contractors responsibility to obtain necessary permits.

How Contractors are Paid:
Contractors are paid for work in place; and in most cases, no deposits are given up-front for materials or labor. Progress payments are generally made upon the completion of 25 percent, 50 percent, 75 percent, and 100 percent excluding retainage and punch list items. The contractor submits a completed pay request form to the rehabilitation specialist for payment on the percentage of the work that has been done. The rehabilitation specialist along with the owner, will inspect for quality workmanship and to ensure that it has been completed in accordance with the work write-up. After the rehabilitation specialist has completed the inspection, a check is issued to the owner and to the contractor. The owner and the contractor must both sign the check before it can be cashed. Final payment is ten percent of the entire loan which has been retained from each Contractor=s Draw Request. Final payment is made to the contractor after the owner signs a Certificate of Completion.

FOR MORE INFORMATION OR AN APPLICATION:
Stop by the Department of Planning & Community Development office at 100 West Washington Street, Hagerstown, Maryland or call (301) 791-3065 extension 352 (hearing impaired call TDD (301) 791-3070) You may obtain a home rehabilitation application package from the Community Development Department, Third Floor of the Washington County Administration Building, 100 West Washington Street, Hagerstown, Maryland, 21740 or by calling 301/791-3065.  To download an application for assistance, please click here for application. This application is in PDF Format, requires Adobe Acrobat Reader. Download your free copy hereThe staff will assist borrowers in completing the application if they need help. All MHRP applications are processed through this office.

Loan Qualification:

• Application is received by the Department of Planning & Community Development.
• Rehabilitation specialist reviews the income, determines the interest rate, debt-to-value on property, and calculates equity which may be borrowed against.
• Rehabilitation specialist applies underwriting ratios which determines the borrower=s qualifications and preliminary loan terms.
• Rehabilitation specialist orders credit reports, reviews payment histories and sends out verification forms.

• Initial site visit is conducted by the rehabilitation specialist to determine scope of work. During this visit, the rehabilitation specialist will also survey lead paint hazards with the homeowner.
• An appraisal is ordered by the rehabilitation specialist (if necessary). Work write-up and construction drawings are prepared by the rehabilitation specialist.
• Work write-up, construction drawings, and lead paint hazards are reviewed by the homeowner and rehabilitation specialist. Note: The homeowner=s signature is required when the review is complete which means that they agree with the work write-up.
• Project goes out to bid. Homeowners are given five copies of the work write-up to give to cont-ractors. The homeowner is responsible for contacting the contractors and getting bids. Owners can call their own contractors, or they call contractors from the County=s list. Note: All contractors must have a valid MHIC license and there must not be any current or unresolved complaints against them. Homeowners are encouraged to get at least three bids.
• Bids are received by the homeowner (about 2-3 weeks later). The rehabilitation specialist reviews the bids for accuracy. The low or best bid is sent together with financial information to the State of Maryland for final approval and processing. A copy of the work write-up is also sent to the Maryland Historic Trust for their approval.
• After State approval (about 2-3 weeks later), the rehabilitation specialist will prepare the construction contract which is between the borrower / homeowner and the contractor. A Notice -to-Proceed order will be sent to the contractor informing them of the start date. The contractor will apply for all necessary permits.
• Construction begins. Normally the contractor is given 90 to 120 days to complete the job (depending on the size of the job). The rehabilitation specialist will inspect the job along with the owner for completeness and workmanship when the contractor request payment. The rehabilitation specialist assist will assist the borrower with change orders (if required).
• When the construction is completed, the loan is closed-out. The borrower signs a Completion Notice which authorizes the final 10 percent retainage payment.

• Rehabilitation work can only include code related work items. (General property improvements are not eligible.)
• Loans are deferred with 0% interest, and there are no monthly payments. These loans are due and payable upon the resale or transfer of the property or default under the deed of trust / note.
• Loans can be made for up to 100% of the appraised value of the property.
• The annual household income must fall below 55% of the statewide median.

• Window replacement and casing.
• Lead hazard reduction treatment for existing windows.
• Wall encapsulation or enclosure.
• Encapsulation or enclosure of lead painted floors, stair risers of and treads.
• Treatment including encapsulation of floors and stairs to provide a smooth, clean surface.
• Stabilization, repair or encapsulation of deteriorated lead-painted surfaces, interior and exterior repainting of all surfaces.
• Treatment of door, door frames, and casing; cleaning and HEPA vacuuming; post treatment cleanup and clearance testing.
• Treatment required to meet risk reduction standards of the Maryland Department of the Environment (MDE).
• Treatment designed to test innovative or unproved methods of lead paint reduction.
• Lead testing and dumping fees.

• Piping from the system into the building.
• Connection fees and assessments.
• Plumbing fixtures and equipment, including fixtures for the handicapped.
• Additions, modifications, and alterations required to provide adequate private space for toilet and bath facilities.