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Well Flow Testing
Home Inspection LLC
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Dear Valued Client,
I’d like to take this opportunity to explain my role in the
203(k) loan program or the FNMA HomeStyle loan program.
203(K) Program: The
role of the Consultant
Site Visit: The site visit is an opportunity for the
consultant to grasp the concept of the project for purposes of the write-up. It is helpful to forward any architectural
plans or home inspection reports prior to the site visit. If they are unavailable, no worries, forward
them when you can. Also, it is the job
of the consultant to identify any items that would need to be addressed as per
the US Department of Housing and Urban Development (HUD)’s Minimum Property
Requirement, Minimum Property standards, and local requirements. The fee for the write up is due at the time
of the site visit.
Work Write-Up and
Cost Estimate: The consultantprepares a work write-up and cost
estimate that details the necessary repairs and wish list items. The consultant also uses the SOR to prepare a
lender packet of required documents and a contractor’s bid packet. The General contractor’s estimate must match
the Specification of Repairs(SOR) and price estimate. Once construction is underway, the Specification
of Repairs and cost estimate will serve as a guide for paying out the general contractor. As work is completed, it will be paid out as
it is itemized in the SOR.
Draw Inspection: Once construction has started, the lender
requires a draw inspection every 30 days to ensure progress is moving forward. However, the borrower may schedule draws at any
time if there has been substantial progress. During the inspection the consultant will evaluate completion of the
items on the SOR. Completed items will
be paid out. Partially completed items
will be paid in proportion to the rate of completion. The contractor is required to sign a Waiver
of Lien for the funds distributed. 10% of
the gross funds will be held back until the final permits are closed out. The contractor will receive a check for 90%. This is usually mailed to the borrower’s
A loan with an anticipated full term duration of 6 months
will require 5 draw inspections. On the
5th and final draw, permits are required to be closed out and the
10% holdback will be distributed.
Change Orders: Any work order that is outside of the
original Specification of Repair must be reviewed by the consultant. The consultant must prepare a Change
order. The funds for the change order come
out of the contingency funds.
203(K) Program: Consultant
Write-up fee: The write up fee will be paid at the time
of the site visit. Please be advised, this payment is non-refundable. The payment
schedule is determined by HUD and listed in handbook 4000.1. The write-up fee is paid based on the
estimate of repairs:
$400 for repairs less than $7,500
$500 for repairs between $7,501 and $15,000
$600 for repairs of $15,001 and $30,000
$700 for repairs between $30,001 and $50,000
$800 for repairs between $50,001 and $75,000
$900 for repairs between $75,001 and $100,000
$1000 for repairs over $100,000
Draw Inspection Fee: The
consultant will be paid an inspection fee of $250-$350 per draw inspection. This fee is built into the loan.
FNMA HomeStyle Loan
The HomeStyle loan program is similar to the 203(k) program. However, the use of funds may be a bit more broad. For example, you cannot us 203(k) funding to install a pool but you can through a HomeStyle loan. Ask your lender about which program better suits your needs. The lender may require a consultant on larger projects. Functionally the consultants role is the same in both programs. We use the 203(k) consultant fee structure identified above for HomeStyle loans.
Write up fee: The
write-up fee is paid by the borrower at the time of the site visit. Please
be advised, this fee is non-refundable.
Should you have any questions about the the loan programs feel
free to contact us. We will be more than
happy to assist.