President Reagan this week signed a bill into law that sets new minimum interest rates that must be charged in property transactions when the seller provides part of the financing.
The so-called "imputed interest" legislation mainly affects multimillion-dollar transactions, although it could affect arrangements involving ordinary home buyers.
For transactions in which the seller provides financing of $2.8 million or less, the interest rate charged the buyer must be 9 percent or the rate at which the federal government borrows money for a similar term, whichever is smaller. Most deals involving seller financing of more than $2.8 million will require a minimum rate that matches the federal rate.
If the minimum rates are not charged, the Internal Revenue Service will tax the seller as if they were. The new rules replace a version that expired on June 30 and are retroactive to that date. They will not affect any loan that is assumed after June 30.
To help replace tax revenue lost by the rules, the bill increases from 18 years to 19 years the period over which real estate must be depreciated.
Attached to the bill is a provision stating that loans of $90,000 or less made by a taxpayer to a "continuing-care facility" are not loans, but advance payment of fees. That change will exempt such payments from a 1984 law that sets rules for taxing below-market loans and cost the government about $44 million over five years.
A continuing-care facility is an institution that, for a one-time fee of $90,000 or so plus a monthly charge of about $1,000, guarantees lifetime care and living quarters for an elderly person. The change has the effect of allowing the financing of such care with tax-free money, even though a person without such means gets no such break.
The Maryland Department of Economic and Community Development is providing $50 million for below-market mortgage loans to qualified home buyers, the agency announced this week.
The state's mortgage purchase program will reopen Nov. 13 to help home buyers in 17 counties and Baltimore City.
"We advise borrowers to apply for a low-interest mortgage as soon as the money becomes available," said DECD Secretary Thomas Maddux. "This low-interest money will be loaned out very quickly, and those who apply first will have the best chance of obtaining mortgage money."
The DECD's Community Development Administration has sold more than $150 million in bonds to fund the low-interest mortgages, the agency said.
To qualify for the mortgages, a family's income must be $33,000 a year or less and the income of single individuals cannot exceed $28,000 a year. In Baltimore, a family's annual income may be as high as $36,000, and single persons may earn up to $30,000.
Borrowers must have a signed sales contract when they apply for a mortgage.
Baltimore City will get the largest allocation -- $17 million -- from the fund. The 17 counties that will receive funds are: Allegany, $1 million; Anne Arundel, $5.9 million; Baltimore County, $7.5 million; Caroline, $1 million; Carroll, $1 million; Cecil, $1 million; Dorchester, $950,000; Frederick, $3.7 million; Garrett, $950,000; Howard, $2 million; Kent, $1 million; Queen Anne's, $1 million; St. Mary's, $1.3 million; Somerset, $1 million; Talbot, $1.3 million; Washington, $1.5 million, and Wicomico, $1 million.
Montgomery and Prince George's counties elected to sell mortgage revenue bonds on their own.
Since the program began in 1980, it has provided more than 6,300 mortgage loans worth $270.5 million to Marylanders.
Mortgage loan delinquencies declined in August, according to the U.S. League of Savings Institutions, chiefly because of a sharp drop in delinquencies for graduated-payment mortgages and for balloon loans, which are short-term notes that require full payment at maturity.
The delinquency rate for all loans totaled 1.74 percent in August, down from 1.81 percent in July. The rate for graduated-payment loans and balloon notes dropped from 4 percent in July -- the high for the year -- to 1.97 percent in August. Other delinquency rates in August were 1.05 percent for fixed-rate loans and 1.26 percent for adjustable-rate loans.
IN THE BUSINESS. . . A team of students from the urban and regional planning department of George Washington University has won third place in an international competition for improving large-scale postwar housing developments sponsored by the International Federation of Housing and Planning in connection with its 1985 international congress in Budapest. The team included students Kelley S. Roark, Patricia L. D'Angelo, Michele F. Burbano, Lisa S. Schwartz, Kimberley P. Brown, Douglas J. Woods and William D. Guernier and their adviser, Associate Professor Sherwin Greene. The group studied and made recommendations for the revitalization of the Fay Apartments in Anacostia . . . Solomons Joint Venture, owned by the Annapolis-based Simpson Land Co. and John A. Simpson Sr., is planning to build a 167-room Holiday Inn on Back Creek in Solomons, Md., the first hotel project to be developed in Calvert County . . . Mulligan/Griffin and Associates Inc. is planning to build Decoverly, a 41.5-acre office park in Montgomery County's Shady Grove-Interstate Route 270 corridor. The project will include seven buildings with a total of 800,000 square feet . . . The cost of owning and operating a typical condominium leveled off last year after two years of increases, with owners paying median monthly assessments of $103, according to a report by the Institute of Real Estate Management. The institute also reported that pre-tax income generated by apartment buildings rose between 5 and 10 percent last year, while median rents increased between 5 and 7 percent . . . Evans Co. plans to develop a 26.7-acre tract at Loudoun Square along Route 7, one mile west of Route 28 . . . Western Development Corp. and Kan Am Realty Inc. have broken ground for the second phase of the Germantown Commons Shopping Center, which is slated for completion next spring . . . The second phase of Backlick Center South, a 225,000-square-foot office, warehousing and distribution center off Interstate Route 95 on Backlick Road, has opened.