ESCROW DISBURSEMENT FY Movement Mortgage, LLC s Escrow Disbursement Department Manual. This policy was last revised on July 14, 2015.

Transcription

1 ESCROW DISBURSEMENT FY 2015 Mvement Mrtgage, LLC s Escrw Disbursement Department Manual This plicy was last revised n July 14, 2015.

2 Escrw Disbursement Manual Table f Cntents Sectin (k) Disbursement Plicies...4 Sectin (k) Disbursement Prcedures...7 Sectin 300 FHA 203(k) Full Prgram Plicies Sectin 400 FHA 203(k) Streamline Plicies Sectin 500 FHA 203(k) Streamline Escrw Disbursement Prcedures Sectin 501 Streamline Supplier Draw Disbursement Sectin 502 Streamline Initial Draw Disbursement Sectin 503 Streamline Cntingency Draw Disbursement Sectin 504 Streamline Final Draw Disbursement Sectin 600 FHA 203(k) Full Escrw Disbursement Prcedures Sectin 601 Full Supplier Draw Disbursement Sectin 602 Full Interim Draw Disbursements Sectin 603 Full Cntingency Draw Disbursement Sectin 604 Full Final Draw Disbursement Sectin 700 HmePath Disbursement Plicies Sectin 800 HmePath Disbursement Prcedures Sectin 801 HmePath Interim Draw Disbursements Sectin 802 HmePath Cntingency Draw Disbursement Sectin 803 HmePath Final Draw Disbursement Sectin 900 HmeStyle Disbursement Plicies Sectin 1000 HmeStyle Disbursement Prcedures Sectin 1001 HmeStyle Interim Draw Disbursements Sectin 1002 HmeStyle Cntingency Draw Disbursement Sectin 1003 HmeStyle Final Draw Disbursement Sectin 1100 Renvatin Lan Pst-Disbursement Prcessing Sectin 1200 Repair Escrw Disbursement Plicies Sectin 1300 Repair Escrw Disbursement Prcedures Sectin 1400 Escrw Disbursement Check Request Prcedure Sectin 1500 Escrw Disbursements Special Circumstances Sectin 1501 Pst-Clsing Cntractr Change

3 Escrw Disbursement Manual Sectin 1502 Pst-Clsing Cnsultant Change Sectin 1503 Extensin Requests Sectin 1504 Overdue r Unrespnsive Prjects Sectin 1505 Overdue Mnthly Mrtgage Payments fr Escrw Disbursement Files Sectin 1506 Cntingency Funds Brught t Clsing by the Brrwer Sectin 1507 Mnthly Mrtgage Payments Financed int the Lan Sectin 1508 Freclsure Sectin 1509 Escrw Disbursements Additinal Infrmatin Sectin 1600 Draw Crdinatr s Additinal Respnsibilities

4 Escrw Disbursement Manual SECTION 100: 203(k) DISBURSEMENT POLICIES 3

5 Escrw Disbursement Manual Sectin (k) Disbursement Plicies The FHA 203(k) lan prduct is available t wner-ccupants f hmes that are in need f repairs, t meet the minimum prperty standards set frth by HUD, r hmes that are ging t be updated by a new buyer. A single lan is given t the brrwer and this lan cvers bth the purchase price r existing lien and the prpsed imprvements. The maximum lan amunt is determined by the value f the hme after imprvements. All f the repairs are perfrmed after the lan is clsed. Fr purchase lans the repairs are all cmpleted after the lan clses as all hmes sld under this prgram are sld as is. Mvement Mrtgage, LLC ( Mvement Mrtgage ) adheres t all f FHA s 203(k) Guidelines fr the 203(k) Prgram when determining the eligibility f a prperty and specific imprvements. The brrwer must first determine, with the assistance f their lan fficer, if they qualify fr the FHA 203(k) mrtgage prgram. At this time the brrwer cmpletes the mrtgage applicatin and all necessary FHA 203(k) frms and pays the applicatin fee. Once a hme is targeted by the brrwer the lan fficer must perfrm a feasibility analysis fr a 203(k) lan. Three basic pieces f infrmatin are gathered by Mvement Mrtgage t perfrm this analysis: the amunt f the purchase price r existing lien, the amunt f rehabilitatin needed and the anticipated afterimprved value. After these three items are prvided, if it is evident that structural wrk and/r repairs in the amunt f thirty five thusand dllars r mre are required, a Full 203(k) lan is required. A HUD trained inspectr (a FHA 203(k) Cnsultant) walks thrugh the prperty and, in cnjunctin with the cntractr bidding n the prject determines the dllar amunts that will be required fr material and labr (minimum f $5,000). This reprt (a Wrk Write-Up r Specificatin f Repairs ) is given t the appraiser. The appraiser then appraises the hme assuming all repairs are cmplete and determines an estimated after-imprved value fr the hme. The brrwer is allwed t base the mrtgage amunt n ne hundred and ten percent f the estimated afterimprved value. This amunt never exceeds the maximum lan amunt set by HUD fr the cunty that the prperty is lcated in. The remaining prcessing f the lan (verificatin f funds, credit and emplyment) fllws all FHA Guidelines. Any prperty ne year ld r lder that is a prperly zned ne-t-fur-unit dwelling in its after-imprved state is eligible fr a 203(k) lan. Fr rehab prjects belw thirty five thusand dllars which d nt encmpass structural imprvements t the prperty Mvement Mrtgage ffers the Streamline 203(k) Prgram which eliminates the requirement fr a Wrk Write-Up. A detailed cntract frm a licensed general cntractr is required in lieu f the Wrk Write-Up. The brrwer begins by engaging a general cntractr t cmplete the repairs after which the cntractr submits the required cst estimate fr the specificatin f repairs. Mvement Mrtgage des nt apprve cntractrs Mvement Mrtgage simply verifies that cntractrs are legitimate business peple legally able t cmplete the prjected prject. A 203(k) mrtgage is a single lan that cnsists f tw different pls f mney. The first pl f mney cntains the funds which are used t pay ff the purchase price r existing lien while the secnd pl hlds the rehabilitatin funds (these funds are held in escrw by Mvement Mrtgage). The rehabilitatin funds fr a Full 203(k) are released n an as-cmpleted basis meaning cntractrs are 4

6 Escrw Disbursement Manual reimbursed after they cmplete wrk n the hme. The 203(k) Streamline prgram allws fr an initial escrw payut f up t thirty five percent f the repair fund t be used fr purchasing materials. After the prject is ne hundred percent finished, a clear title update, a clear cmpliance inspectin and the necessary paperwrk has been received the remaining funds are disbursed. 5

7 Escrw Disbursement Manual SECTION 200: 203(k) DISBURSEMENT PROCEDURES 6

8 Escrw Disbursement Manual Sectin (k) Disbursement Prcedures All f Mvement Mrtgage s 203(k) Escrw Disbursement Prcedures fllw the regulatins laid dwn by HUD, FHA and any ther regulating entity s requirements fr the 203(k) Escrw Disbursement Prcess. Every mrning the Escrw Disbursement Crdinatr pulls the Disbursed Lan Detail 203(k) reprt frm PC Lender (PCL) and checks fr new 203(k) lans and distributes them t the Draw Administratrs as necessary. The Draw Administratr assigned t the file enters the lan infrmatin int the Escrw Disbursements Database and crafts the 203(k) Prgram Welcme Letter t the brrwer. In PCL the Draw Administratr adds the fllwing items t the Image Flder FHA 203k Draw Dcuments : Fr Streamline (SL) 203(k) s: The 203(k) SL Welcme Letter, the Initial Disbursement Request Frm, the Statement Regarding Permits frm and the Request fr Acceptance f Changes in Apprved Drawings and Specificatins Frm (Change Order Frm) Fr Full 203(k) s: The 203(k) Full Welcme Letter, the Statement Regarding Permits frm, the Change Order Frm and the 203(k) Cntractr Lien Waiver These dcument are then ed t the brrwer, Lan Officer (CC d) and the Draw Administratr (BCC d) frm PCL. Once the Welcme Infrmatin is sent t the brrwer the file must be entered int the Escrw Disbursements Database by the Draw Administratr (the Disbursement Crdinatr enters the file infrmatin nt the apprpriate 203(k) prtin f the Escrw Disbursements Tracking Spreadsheet after assigning it t a Draw Administratr): Open the Escrw Disbursements Database, it will pen t the Navigatin Page Open the Brrwers and Cntractrs tabs In the Brrwers tab create a new recrd fr each brrwer n the lan file and enter all brrwer infrmatin int the apprpriate places In the Cntractrs tab check t see if the cntractr has already been entered int the database. If they exist in the database enter the additinal lan number. If they d nt exist yet create a new recrd and enter all the cntractr infrmatin int the apprpriate places Clse the Brrwers and Cntractrs tab s the infrmatin saves in the database Open either the 203K Streamline r 203K Full tab as necessary and create a new recrd fr the lan file entering the lan number, investr lan number, brrwer(s), address and cntractr. Make sure the start date is crrect, save all yur changes and exit Access The Draw Administratr mnitrs their recent files every mrning, and when a cpy f the Final Signed HUD-1 Settlement Statement is available in the images flder the Draw Administratr enters the escrw funds infrmatin int the Escrw Disbursements Database: 7

9 Escrw Disbursement Manual Open the lan file in PCL and lcate the Final Signed HUD-1 Settlement Statement. Als pen the Escrw Disbursements Database and navigate t the lan entry n either the 203K SL r 203K Full tab. The Repair Fund and Cntingency Fund amunts can be lcated n the first page f the HUD-1 (in the 100 s), r the bttm f the secnd page (in the 1200 s). Typically they will be allcated ut separately; hwever, smetimes they will be cmbined int ne line item. See the Maximum Mrtgage Wrksheet (MMW) t determine what amunt is fr the Repair Fund and what is fr the Cntingency Fund if they are cmbined int ne line item. The Inspectin Fees amunt will be lcated n the secnd page f the HUD-1 (in the 800 s). The Title Update Fees amunt will be lcated n the secnd page f the HUD-1 (in the 1200 s r, rarely, the 800 s) r in the Escrw Breakdwn pages after the main pages f the HUD-1. Full 203(k) s: The Cnsultant Fee (Wrk Write-Up Fee) amunt will be lcated n the secnd page f the HUD-1 (in the 800 s). Als check the first page f the HUD-1 fr a Cnsultant Fee Credit. If a Write-Up Fee is listed at $ but a credit f $ is given, the Draw Administratr marks that Mvement Mrtgage is hlding the difference f $ if the line is nted as being issued t Mvement Mrtgage. If the line is nted as being sent directly t the Cnsultant the Draw Administratr shuld let the Disbursement Crdinatr knw that they need t check with accunting t verify whether r nt the Cnsultant Fee is being held by Mvement Mrtgage r if it was sent directly t the Cnsultant as listed n the HUD. Any Permit Fees r additinal fees amunt will be lcated n the secnd page f the HUD-1 (in the 800 s r the 1200 s) Any escrwed mnthly mrtgage payments can be lcated n the first page f the HUD- 1 (in the 100 s f 200 s) r n the bttm f the secnd page (in the 1200 s). After the infrmatin has been entered frm the HUD-1 g t the 203(k) Maximum Mrtgage Wrksheet (MMW) in the images flders and ensure that all f the amunts match what was entered frm the HUD-1. If the amunts d nt match cnsult the Disbursement Crdinatr. Full 203(k) s: G t the Cnsultant Write-Up images flder and enter the crrect amunts fr each f the 35 HUD Repair Categries. Ensure that the ttal figures match the 203(k) MMW and HUD-1. If the amunts d nt match cnsult the Disbursement Crdinatr. Streamline 203(k) s: G t the Cntractr s Bid images flder and ensure that the ttal figure matches the 203(k) MMW and HUD-1. If the amunts d nt match cnsult the Disbursement Crdinatr. Once all f the escrw dllar amunts are entered int the Escrw Disbursements Database the Draw Administratr updates the 203(k) prtin f the Escrw Disbursements Tracking Spreadsheet with the Ttal Escrw Amunt (ttal f all escrw items: repair, cntingency, fees, etc.) fr the lan file. 8

10 Escrw Disbursement Manual SECTION 300: FHA 203(k) FULL PROGRAM POLICIES 9

11 Escrw Disbursement Manual Sectin 300 FHA 203(k) Full Prgram Plicies Mvement Mrtgage s FHA 203(k) Full Prgram gverns rehab prjects in excess f thirty five thusand dllars (and/r prjects that include structural imprvements) and require a HUD licensed FHA 203(k) Cnsultant. A Cnsultant is engaged and meets the brrwer and cntractr at the prperty t cmplete a Wrk Write-Up/Specificatin f Repairs fr the ptential repairs t the prperty. The ptential repairs are listed n the Wrk Write-Up as fllws: Mandatry required repairs that must be cmpleted in rder t bring the prperty up t HUD/FHA minimum standards; r Desired - vluntary repairs the brrwer wuld like t cmplete. The ttal amunt f repairs must be at least five thusand dllars. If the Cnsultant indicates that the prperty will be uninhabitable during the repair perid mrtgage payments may be included in the amunt financed fr the number f mnths indicated by the Cnsultant as lng as it des nt exceed the six mnth maximum. The Cnsultant als indicates the suggested HUD required cntingency amunt which is set aside as insurance against unfreseen health and safety items and cst verruns. The cntingency fund amunt reflects the repair fund but is nt a part f the repair fund. The cntingency reserve guidelines are: - Minimum f ten percent fr a brrwer using a licensed General Cntractr where the utilities were turned n at the time f inspectin - Up t twenty percent if the cnsultant feels the rehab is extensive and/r the utilities were nt turned n at the time f the inspectin - The cntingency fund can als be increased at the discretin f DE Underwriter (nt t exceed twenty percent). Thrughut this prcess the brrwer pays the Cnsultant a fee f fur hundred dllars t ne thusand dllars depending n the ttal cst f the repairs as indicated in the Wrk Write-Up. Upn receiving a cpy f the Wrk Write-Up the lan fficer cmpletes a 203(k) Maximum Mrtgage Wrksheet. A FHA appraisal is rdered based n the repairs t be cmpleted and the general prcessing f the mrtgage applicatin ccurs simultaneusly during this time. Once the mrtgage clses the mney set aside fr inspectins and repair wrk is held in a designate renvatin escrw accunt by Mvement Mrtgage. The specified repairs must begin within thirty days f clsing (weather permitting) and must nt cease fr mre than thirty cnsecutive days thrughut the duratin f the prject. The repairs must be cmpleted by the deadline listed n the Hmewner/Cntractr Agreement. Any change t the Wrk Write-Up r a change in the general cntractr requires Mvement Mrtgage s prir apprval. While wrk is nging, regardless f whether the brrwer is living in the hme r nt, timely mnthly mrtgage payments are required. Frmal draw requests are required in rder fr the brrwer t access the renvatin funds. Mvement Mrtgage s Escrw Disbursement Department must have a cpy f the Final Signed HUD-1 Settlement 10

12 Escrw Disbursement Manual Statement and/r must have cnfirmatin frm accunting that the renvatin funds have been received prir t any funds being disbursed frm the renvatin escrw accunt. The maximum number f draws is five. If a fifth draw is required it must be the final draw. All draw checks will be written ut dual party t the brrwer and the cntractr. The brrwer is nt required t access any funds prir t the wrk being cmpleted n the prject; hwever, Mvement Mrtgage may require that a draw take place at any time in rder t verify that wrk is cntinuing. Mvement Mrtgage will nt disburse funds prir t a prtin f the wrk being cmpleted. The nly exceptin is if the first draw is a supplier draw. The supplier draw must be made ut directly t a supplier(s) fr large special rder items (i.e., things that need t be paid fr prir t delivery; e.g., cabinets, cuntertps, etc.) that are apprved by the Escrw Disbursement Department. A breakdwn f csts, a bill, invices, etc., must be furnished prir t the disbursal f the supplier check(s). Fr supplier draws checks will be written directly t the supplier(s) and sent t an address f the brrwer s chsing fr distributin. Supplier draws d nt cver the cst f any labr r installatin fees. N mre than fifty percent f the repair fund will be released as a supplier draw. Once a prtin f the wrk has been finished the 203(k) Cnsultant wh cmpleted the riginal Wrk Write-Up visits the site and writes up a FHA 203(k) Full Draw Request and Lien Waiver n the apprpriate frms. Only wrk and materials that have been purchased r ccurred after clsing are eligible fr reimbursement. The Cnsultant, brrwer and cntractr are all required t sign each draw request while just the cntractr signs the Lien Waiver. The brrwer can have the cntractr reach ut t the FHA Cnsultant t schedule the visit, they can rder the inspectin themselves r they can reach ut t Mvement Mrtgage s Escrw Disbursement Department fr assistance in scheduling draw inspectins. The first draw request must als cntain cpies f all required permits. If n permits are required the frm Statement Regarding Permits must be cmpleted and submitted. Each draw (aside frm a supplier draw) will have a mandatry ten percent held back frm the requested amunt t assure that all f the repairs are cmpleted prperly and fr the purpses f lien prtectin. The hldback fund will be released at the time f the final draw unless Mvement Mrtgage fresees a need t withhld thse funds fr the allwable thirty days. Every draw als requires the submissin f a cmpleted lien waiver which indicates the amunt wed t the cntractr in cnjunctin with that draw. In the event f unfreseen health and safety items r cst ver runs the cntingency reserve fund can be accessed t cver thse additinal csts. The Cnsultant must cmplete a Change Order Frm and the brrwer, the cntractr and the Cnsultant must sign the frm. If cst savings ccur during the repair prject brrwers may mve thse funds t the cntingency reserve fund t cver cst ver runs r additinal wrk. When the prject is nearing cmpletin if there are any remaining funds in the cntingency reserve fund the brrwer may use thse funds fr additinal allwable repair wrk after a Change Order has been submitted and apprved by Mvement Mrtgage. Any items that are cmpleted prir t a Change Order being submitted and apprved by Mvement Mrtgage run the risk f nt being cmpliant. Any nn-cmpliant items will nt be paid fr ut f the repair r cntingency fund and will be the brrwer s respnsibility t cver ut f pcket. Additinally if any csts exceed the cmbined 11

13 Escrw Disbursement Manual balances f the repair and cntingency funds the brrwer is respnsible t cver thse csts ut f pcket. At the time the final draw is submitted the brrwer must cmplete and submit a Mrtgagr s Letter f Cmpletin. A title update is rdered at this time and nce a clear title update, the inspectin reprt and all required final draw dcuments are received the final draw and hldback amunt are released. Any mney left in escrw is applied twards the mrtgage principle as a principle reductin. 12

14 Escrw Disbursement Manual SECTION 400: FHA 203(k) STREAMLINE POLICIES 13

15 Escrw Disbursement Manual Sectin 400 FHA 203(k) Streamline Plicies Frmal draw requests are required in rder fr the brrwer t access the renvatin funds. Brrwers can access up t tw draws frm their 203(k) repair fund. Mvement Mrtgage s Escrw Disbursement Department must have a cpy f the Final Signed HUD-1 Settlement Statement and/r must have cnfirmatin frm accunting that the renvatin funds have been received prir t any funds being disbursed frm the repair escrw accunt. All draw checks will be written dual party t the brrwer and the cntractr. The initial draw can request up t thirty five percent f the repair fund. In cnjunctin with the initial draw any permits required fr the repair wrk must be submitted. If n permits are required the frm Statement Regarding Permits must be cmpleted and submitted. The nly exceptin t the tw draw rule is that the first draw (prir t r in cnjunctin with the initial draw) may be a supplier draw. This supplier draw must be made ut directly t a supplier(s) fr large special rder items (i.e., things that need t be paid fr prir t delivery; e.g., cabinets, cuntertps, etc.) that are apprved by the Escrw Disbursement Department. A breakdwn f csts, a bill, an invice, etc., must be furnished prir t the disbursal f the check(s). Fr supplier draws the check(s) will be written directly t the supplier(s) and sent t an address f the brrwers chsing fr distributin. If a supplier draw is utilized the initial draw can still take place fr up t thirty five percent f the remaining repair fund (the repair fund minus the supplier draw) r up t fifty percent f the repair fund ttal whichever is less. The brrwer is nt required t access any funds prir t the wrk being cmpleted n the prject. In the event f unfreseen health and safety items r cst ver runs the cntingency reserve fund can be accessed t cver the additinal csts. The brrwer must fill ut a Change Order Frm and have themselves and their cntractr signs the frm. The cntingency fund cannt be utilized t add additinal wrk t the prject (aside frm health and safety items). When the cnstructin prject is ne hundred percent cmplete the final draw takes place. In rder t disburse the final funds a Final Disbursement Request Frm, a Cntractr Lien Waiver and, if required, a Change Order Frm must be submitted. Additinally an appraiser needs t visit and issue a final cmpliance inspectin certifying that the prject has been fully cmpleted and that the prperty meets all FHA/HUD minimum standards. A final title update is als rdered nce the prject is cmplete t ensure that n liens have been filed since clsing. Once all f the necessary infrmatin is received and is cmplete and crrect the final draw check is disbursed. Any mney left in escrw is applied twards the mrtgage as a principle reductin. 14

16 Escrw Disbursement Manual SECTION 500: FHA 203(k) STREAMLINE ESCROW DISBURSEMENT PROCEDURES 15

17 Escrw Disbursement Manual Sectin 500 FHA 203(k) Streamline Escrw Disbursement Prcedures Sectin 501 Streamline Supplier Draw Disbursement SL 203(k) brrwers, as their first draw (prir t r in cnjunctin with the initial draw disbursement), may request a supplier draw disbursement. Nt all prjects are eligible fr this type f draw and cnsequently Draw Administratrs will carefully cnsider the lan infrmatin befre apprving, r even ffering, a supplier draw. This request may be made at the time f clsing r any time prir t the disbursement f the initial r, if n initial draw is utilized, befre the final draw. Draw Administratrs may NOT apprve draw requests unless there is a valid date in the Funded date in PCL (a valid date shws the present date r any preceding day future dates are nt valid) and the Draw Administratr has access t a cpy f the Final Signed HUD-1 Settlement Statement and the 203(k) MMW. Draw Administratrs must cnsult the Disbursement Crdinatr prir t apprving any supplier draw disbursements. If the Final Signed HUD-1 is nt available yet the Disbursement Crdinatr will cntact accunting and ask fr a cpy f the lan s ledger t verify that the funds have been received. In cnjunctin with the first draw all permits must be submitted t the draw department. If n permits are required the frm Statement Regarding Permits must be cmpleted and submitted with the initial draw request paperwrk. Supplier draws may be accessed by brrwers wh have material heavy prjects which include large items that must be paid t the supplier prir t delivery. Items that may fall under this categry are kitchen cabinets, cunter tps, etc. Checks will be written ut directly t the supplier(s) and sent t the address f the brrwer s chsing fr distributin. In additin t the initial draw disbursement frm, detailed invices must be submitted shwing the exact items being purchased and the ttal cst. General supplies (nails, general building materials) and labr and installatin fees are nt cvered by a supplier draw. Supplier draws may NOT pay ut mre than fifty percent f the repair fund. If the supplier draw des nt access fifty percent f the repair fund the brrwer may still submit an initial draw disbursement request that requests thirty five percent f the remaining repair fund r up t fifty percent f the repair fund whichever is less: Example 1: A brrwer has a repair fund f $10,000. The brrwer requests a supplier draw f $3,000 t pay fr cabinets and carpet--$7,000 nw remains in the repair fund. The brrwer then requests an initial draw f $2,450 (35% f what remains) but nly $2,000, which equals 50% f the repair fund, is disbursed as 35% f $7,000 wuld exceed the 50% cap. Example 2: A brrwer has a repair fund f $10,000. The brrwer requests a supplier draw f $1,500 t pay fr cabinets--$8,500 nw remains in the repair fund. The brrwer then requests an initial draw f $2,975 (35% f what remains) and $2,975 is disbursed as $2,975 and $1,500 d nt exceed the 50% cap which allws the brrwer t request 35% f what s remaining. Supplier draw disbursements are prcessed as fllws: 16

18 Escrw Disbursement Manual A 203(k) SL supplier draw disbursement request is received by the Draw Administratr Once the frm is verified by the Draw Administratr as being cmplete and crrect the request is apprved. A cmplete and crrect 203(k) SL supplier disbursement request cntains, at a minimum, all f the fllwing infrmatin cmpleted Brrwer s Name Prperty Address Supplier Name(s) (listed under Cntractrs ) Payment Amunt(s) Materials t be Purchased Brrwer s Signature & Date C-Brrwer s Signature & Date (when applicable) General Cntractr s Signature & Date Attached Invices Detailing Exact Amunts Owed and fr What Items Shuld a supplier disbursement request frm be missing items r be incrrect, the brrwer must cmplete r crrect the missing/incmplete items r grant the Draw Administratr written permissin t fill in/alter certain items. Signatures must always be cmpleted by the Brrwer, C-Brrwer and Cntractr respectively (with the exceptin f a legitimate need fr a dcument t be signed by Pwer f Attrney [POA]) and n digital/web signed dcuments are allwed. After the request is apprved, the Draw Administratr cnfirms with the brrwer what address the brrwer wuld like t receive the check(s) at. Only the brrwer may request t have the check(s) sent anywhere besides the prperty address r their current mailing address. When an address has been cnfirmed the Draw Administratr enters the check nt the accunting Escrw Disbursements Check Request Ggle Dcs Spreadsheet. Once the Draw Administratr enters the check request, the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. Sectin 502 Streamline Initial Draw Disbursement SL 203(k) brrwers may request an initial draw disbursement f up t thirty five percent f their repair fund at the time f clsing r any time prir t the disbursement f the final draw. Draw Administratrs may NOT apprve draw requests unless there is a valid date in the Funded date in PCL (a valid date shws the present date r any preceding day future dates are nt valid) and the Draw Administratr has access t a cpy f the Final Signed HUD-1 Settlement Statement and the 203(k) MMW. If the Final Signed HUD-1 is nt available yet the Disbursement Crdinatr will cntact accunting and ask fr a cpy f the lan s ledger t verify that the funds have been received. Initial Draws may nt exceed thirty five percent f the brrwer s repair fund. In cnjunctin with the first draw all permits must be submitted t the draw department. If n permits are required the frm Statement Regarding Permits must be cmpleted and submitted with the initial draw request paperwrk. Initial draw disbursements are prcessed as fllws: 17

19 Escrw Disbursement Manual A 203(k) SL initial disbursement request is received by the Draw Administratr Once the frm is verified by the Draw Administratr as being cmplete and crrect the request is apprved. A cmplete and crrect 203(k) SL initial disbursement request cntains, at a minimum, all f the fllwing infrmatin cmpleted: Date Brrwer s Name Mvement Mrtgage Lan Number FHA Case Number Prperty Address (including City, State and Zip Cde) Cntractr Name Payment Amunt Materials t be Purchased Brrwer s Signature & Date C-Brrwer s Signature & Date (when applicable) Cntractr s Signature & Date Shuld an Initial Disbursement Request frm be missing items r be incrrect, the brrwer must cmplete r crrect the missing/incmplete items r grant the Draw Administratr permissin t fill in/alter certain items. Signatures must always be cmpleted by the Brrwer, C-Brrwer and Cntractr respectively (with the exceptin f a legitimate need fr a dcument t be signed by POA) and n digital/web signed dcuments are allwed. After the request is apprved the Draw Administratr cnfirms with the brrwer what address the brrwer wuld like t receive the check at. Only the brrwer may request t have the check sent anywhere besides the prperty address r their current mailing address. When an address has been cnfirmed the Draw Administratr enters the check nt the accunting Escrw Disbursements Check Request Ggle Dcs Spreadsheet Once the Draw Administratr enters the check request, the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. Sectin 503 Streamline Cntingency Draw Disbursement If, thrugh the curse f the 203(k) Cnstructin Prject, unfreseen health and safety items arise r the prject encunters cst verruns the brrwer may request a disbursement frm their Cntingency Reserve Fund. There is n limit t the amunt f times a brrwer can request mney frm their Cntingency Reserve Fund; hwever, nce the fund is depleted the brrwer is respnsible t cver any and all verages ut f pcket. A cmpleted and crrect Change Order Frm may be submitted at any time thrugh the curse f the prject when the brrwer is requesting funds t cver an unfreseen health r safety items. If the Change Order Frm is requesting cntingency funds t cver a cst verrun the request may be placed 18

20 Escrw Disbursement Manual n hld until the prject is clser t cmpletin, r has been fully cmpleted, at the discretin f the Draw Administratr. If the request is apprved and the listed wrk cmpleted the Draw Administratr fllws the same steps as listed abve fr requesting the Streamline Initial Draw Request Check t request the Cntingency Reserve Disbursement Check. When a request is placed n hld the Draw Administratr may retain the frm and revisit the request during the final draw prcess if cntingency funds are still available. Sectin 504 Streamline Final Draw Disbursement After the supplier and/r initial draw n additinal funds are disbursed frm the repair fund until the 203(k) cnstructin prject is ne hundred percent cmplete and the final draw requirements have been met: A final cmpliance inspectin which certifies that the repairs have been cmpleted and the hme nw meets FHA/HUD Minimum Guidelines. A title update free and clear f relevant mechanical liens and negative judgments A cmplete and crrect Cntractr Lien Waiver A cmplete and crrect Final Disbursement Frm A cmplete and crrect Change Order (if cntingency mney is being requested) Cpies f all permits required fr the prject (if the final draw is the nly draw). If n permits are required the Statement Regarding Permits frm must be cmpleted and submitted. The title update and final cmpliance inspectin cannt be rdered until the prject is cmpleted r is a day r s frm cmpletin. The infrmatin n the title update and the final inspectin reprt must be dated the day the prject was cmpleted r any day after. Once the prject has been cnfirmed as cmpleted (r is a day r s frm cmpletin) the Draw Administratr frwards the necessary paperwrk (Final Disbursement Frm, Cntractr Lien Waiver and Change Order) and rders the final cmpliance inspectin and title update: Final Inspectin: The final cmpliance inspectin is rdered by entering int the lan file in PCL and ing the appraiser cntact listed (the Draw Administratr BCC s themselves) with a request similar t the fllwing: Subject: Final Cmpliance Inspectin Request - Jnes Gd afternn, I have a 203K Streamline which yu issued the initial appraisal n and at this time they are ready fr yu t revisit and issue the final cmpliance inspectin. If yu culd respnd and cnfirm that this request is being wrked n I wuld appreciate it. The brrwer s name is Erick Smith and the prperty address is: 1368 Brad Street, Virginia Beach, VA Yu can reach the hmewner at t set up the date and time f the visit. 19

21 Escrw Disbursement Manual Please frward the final inspectin and invice directly t me and let me knw if yu need any additinal infrmatin. The Draw Administratr marks a reminder t fllw up with the appraiser the next day t ensure that the request has been received and cntinues t fllw up in a timely manner until the reprt is received. Once the inspectin and invice are received the Draw Administratr requests that the inspectin fee be paid n the Check Request Spreadsheet and the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. Final Title Update: The final title update is rdered by entering int the lan file in PCL and ing the attrney/title cntact (the Draw Administratr BCC s themselves) with a request similar t the fllwing: Subject: Final Title Update/Rundwn Request Jnes Gd afternn, I have a 203K cnstructin lan that yur ffice wrked n the clsing fr us a little while back. At this time the cnstructin prject is finished and prir t us disbursing the final funds frm the repair escrw accunt we need t ensure that the title is still clear. T that extent I need a title update/rundwn frm the time f clsing thrugh nw t ensure that n liens have been filed. The brrwer is Jhn Jnes and the prperty address is 1248 Brad Street, Virginia Beach, VA If yu culd please respnd and cnfirm that this is being wrked n r if yu culd frward this t the crrect persn I wuld appreciate it. Please frward the update and an invice (if necessary) and let me knw if yu need any additinal infrmatin. The Draw Administratr marks a reminder t fllw up with the title cmpany/attrney s ffice the next day t ensure that the request has been received and cntinues t fllw up in a timely manner until the update is received. Once the update and invice are received the Draw Administratr requests that the update fee be paid (when applicable) n the Check Request Spreadsheet and the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. Lien Wavier: A cmplete and crrect Cntractr Lien Waiver cntains, at a minimum, all f the fllwing infrmatin cmpleted: Prject Owner Prject Address 20

22 Escrw Disbursement Manual Cntractr Cntractr Name Cntractr Address Cntractr License Number Dllar Amunt Date Cntractr Signature Cntractr Name Under Signature Cntractr Title Under Signature *The remaining infrmatin can be cmpleted by the 203(k) Draw Administratr. The Cntract Date referenced n the lien waiver shuld reflect the date the Hmewner/Cntractr Agreement was signed and n digital/web signed dcuments are allwed. Final Disbursement Frm: A cmplete and crrect Final Disbursement Frm cntains, at a minimum, all f the fllwing infrmatin cmpleted: Lan Number Brrwer(s) Prperty Address Cntractr/Payee Name Payment Amunt Wrk Cmpleted Brrwer(s) Signature(s) & Date Cntractr s Signature & Date Cntractr/Cmpany name, Mailing Address & Phne Number *The remaining infrmatin can be filled in by the Draw Administratr. Additinally, during the pst-disbursement prcessing/filing phase the Draw Administratr enters the crrect infrmatin int the Lender Authrized Agent Apprval/Certificatin & Cntingency Release and Crrespndent Certificatin and 203(k) Final Release Ntice sectins f the frm and takes the frm t the Draw Crdinatr fr their signature. N digital/web signed dcuments are allwed. Change Order: If cntingency funds are being requested during the final draw prcess a cmplete and crrect Change Order Frm must be submitted. Nt all 203(k) prjects will need t utilize their cntingency funds and cnsequently this frm will nt be used fr every final draw. A cmplete and crrect Change Order Frm cntains, at a minimum, all f the fllwing infrmatin cmpleted: Prperty Address Descriptin(s) f why the cntingency mney is being requested Dllar amunts that crrespnd with the different request reasns Brrwer(s) Signature Cntractr Signature 21

23 Escrw Disbursement Manual *During the pst-check prcessing/filling phase the Draw Administratr may enter missing infrmatin and takes the frm t the Draw Crdinatr fr their signature. N digital/web signed dcuments are allwed. Once all f the cmplete, crrect paperwrk has been submitted, the appraiser has submitted the all clear final inspectin reprt and an all clear title update has been acquired the Draw Administratr apprves the request and cnfirms with the brrwer what address the brrwer wuld like t receive the check at. Only the brrwer may request t have the check sent anywhere besides the prperty address r their current mailing address. When an address has been cnfirmed the Draw Administratr enters the request nt the Check Request Spreadsheet and the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. * If the final inspectin reprt des nt verify that all f the wrk is cmpleted, r that the huse des nt meet FHA/HUD minimum guidelines the brrwer must make arrangements t cmplete, r have the cntractr cmplete, the unfinished items. Once the items have been cmpleted anther final inspectin request is submitted t the appraiser. The appraiser may charge a fee fr every visit and the brrwer is respnsible fr any and all fees nce the 203(k) Fee and Cntingency escrw funds have been depleted. The final draw disbursement is put n hld until an all clear final inspectin reprt is received by Mvement Mrtgage s 203(k) Disbursement Department. * If the title update des nt cme back clear f negative judgments and/r mechanical liens any relevant negative judgments r liens must be taken care f by the brrwer. Once the title is again free and clear f relative negative judgments and/r mechanical liens Mvement Mrtgage s Disbursement Department requests anther title update frm the title cmpany/attrney s ffice. The title cmpany/attrney s ffice may charge a fee fr every update and the brrwer is respnsible fr any and all fees nce the 203(k) Fee and Cntingency escrw funds have been depleted. The final draw disbursement is put n hld until an all clear title update is received by Mvement Mrtgage s 203(k) Disbursement Department. 22

24 Escrw Disbursement Manual SECTION 600: FHA 203(k) FULL ESCROW DISBURSEMENT PROCEDURES 23

25 Escrw Disbursement Manual Sectin 600 FHA 203(k) Full Escrw Disbursement Prcedures Sectin 601 Full Supplier Draw Disbursement Full 203(k) brrwers as their first draw (prir t their first repair draw disbursement), may request a supplier draw. Nt all prjects are eligible fr this type f draw. This draw shuld utilize HUD Frm A which all 203(k) Full requests must be submitted n. Draw Administratrs may NOT apprve draw requests unless there is a valid date in the Funded date in PCL (a valid date shws the present date r any preceding day future dates are nt valid) and the Draw Administratr has access t a cpy f the Final Signed HUD-1 Settlement Statement, the 203(k) MMW and the 203(k) Cnsultant s Write-Up. The Draw Administratr must always cnsult the Escrw Disbursement Crdinatr prir t apprving a supplier draw. If the Final Signed HUD-1 is nt available yet the Disbursement Crdinatr will cntact accunting and ask fr a cpy f the lan s ledger t verify that the funds have been received. In cnjunctin with the first draw all permits must be submitted t the draw department. If n permits are required the frm Statement Regarding Permits must be cmpleted and submitted with the draw request paperwrk. Supplier draw disbursements may be accessed by brrwers wh have supply heavy prjects which include large material purchases that must be paid directly t a supplier prir t delivery. Items that may fall under this categry are bath and kitchen cabinets, cunter tps, etc. Checks will be written ut directly t the supplier and sent t the address f the brrwer s chsing fr distributin. In additin t the HUD 203(k) Draw Frm detailed invices must be submitted shwing the exact items being purchased and the ttal cst f each item. General supplies (nails, general building materials) and labr and installatin csts are nt cvered by this draw. Supplier draws may NOT pay ut mre than frty percent f the repair fund. A ten percent hldback will nt be assessed n supplier draws as the funds are being issued directly t suppliers fr items and n labr is included. The Draw Administratr uses discretin when determining what kinds f items, and hw much, t apprve and shuld cnsult the Disbursement Crdinatr. Supplier draw disbursements are prcessed as fllws: A 203(k) Full supplier draw disbursement request is received by the Draw Administratr Once the frm is verified by the Draw Administratr as being cmplete and crrect the request is apprved. A cmplete and crrect 203(k) Full supplier draw cntains, at a minimum, all f the fllwing infrmatin cmpleted: Brrwer s Name Prperty Address Payment Amunt(s) being deducted frm the apprpriate categries and crrect ttal n the first page Brrwer s Signature & Date General Cntractr s Signature & Date 24

26 Escrw Disbursement Manual FHA 203(k) Cnsultant s Signature, Date and ID Number in all applicable places Attached Invices Detailing Exact Amunt Owed and fr What Items Fee amunt payable t the 203(k) Cnsultant Cmpleted Inspectin Reprt (typically n the secnd page) Cntractr Lien Waiver shwing $0.00 as the amunt wed Shuld a supplier disbursement request frm be missing items r be incrrect, the brrwer r Cnsultant must cmplete r crrect the missing/incmplete items r the brrwer must grant the Draw Administratr written permissin t fill in/alter certain items. Signatures must always be cmpleted by the Brrwer, C-Brrwer, Cntractr r Cnsultant respectively (with the exceptin f a legitimate need fr a dcument t be signed by POA) and n digital/web signed dcuments are allwed. At this time, if the prperty is lcated in a state with full title update requirements, the Draw Administratr rders a title update. Fr the supplier draw the title update is nt an item that will hld up the disbursement. If any liens r negative judgments are fund n additinal draws will be apprved until the lien is remved and a title update is received which shws that the item has been remved. States that require a title update with every draw are as fllws: Massachusetts, Michigan, Minnesta, New Hampshire, New Jersey, New Yrk, Rhde Island, Virginia and West Virginia. If an update is rdered the Draw Administratr fllws up with the title cmpany r attrney s ffice in a timely manner until the update is received. If a fee is due they fllw the prcess nted under the FHA 203(k) Streamline Final Draw, Title Update. After the request is apprved, the Draw Administratr cnfirms with the brrwer what address the brrwer wuld like t receive the check(s) at. Only the brrwer may request t have the check(s) sent anywhere besides the prperty address r their current mailing address. At this time the Draw Administratr request that the FHA 203(k) Cnsultant s Inspectin Fee (if ne is charged) be paid n the Check Request Spreadsheet and then the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. When an address has been cnfirmed the Draw Administratr requests the check n the Check Request Spreadsheet and the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. Sectin 602 Full Interim Draw Disbursements Full 203(k) brrwers may access up t five draws frm their repair funds. If a supplier draw is utilized it is cnsidered the first draw. Draw Administratrs may NOT apprve draw requests unless there is a valid date in the Funded date in PCL (a valid date shws the present date r any preceding day future dates are nt valid) and the Draw Administratr has access t a cpy f the Final Signed HUD-1 Settlement Statement, the 203(k) MMW and the 203(k) Cnsultant s Write-Up. If the Final Signed HUD-1 is nt available yet the Disbursement Crdinatr will cntact accunting and ask fr a cpy f the lan s ledger t verify that the funds have been received. In cnjunctin with the first draw all permits must be submitted t the draw department. If n permits are required the frm Statement Regarding Permits must be cmpleted and submitted with the draw request paperwrk. 25

27 Escrw Disbursement Manual Brrwers are nt required t utilize all five draws; hwever, if they d the fifth draw must be the final draw. All full interim draws are prcessed the same and cnsequently these instructins apply t all full draw requests (excluding supplier and final draws). Cntingency mney may be requested in cnjunctin with a repair fund draw r wn its wn. The 203(k) FHA Cnsultant must sign ff n all Cntingency requests regardless f whether r nt they are submitted with a repair fund request. N mney will be disbursed frm the repair fund fr an interim draw (excluding the supplier draw) until a prtin f the wrk has been cmpleted. Once wrk is cmpleted the 203(k) FHA Cnsultant visits the prperty and writes up a draw disbursement request. A ten percent hldback will be assessed n every interim draw (including Cntingency requests) and placed int a hldback fund. The hldback fund will be disbursed with the final draw funds unless Mvement Mrtgage deems that there is a legitimate reasn t hld the funds fr the allwable, additinal 30 days. Draw disbursements are prcessed as fllws: A 203(k) Full draw disbursement request is received by the Draw Administratr Once the frm is verified by the Draw Administratr as being cmplete and crrect the request is apprved. A cmplete and crrect 203(k) Full interim disbursement request cntains, at a minimum, all f the fllwing infrmatin cmpleted: Brrwer s Name Prperty Address Payment Amunt(s) being deducted frm the apprpriate categries and crrect ttal n the first page Brrwer s Signature & Date General Cntractr s Signature & Date FHA 203(k) Cnsultant s Signature, Date and ID Number in all applicable places Any and all applicable permits (first interim draw request nly) Fee amunt payable t the 203(k) Cnsultant Cmpleted Inspectin Reprt (usually n the secnd page) Cntractr Lien Waiver shwing the amunt wed Shuld a draw disbursement request frm be missing items r be incrrect, the brrwer r Cnsultant must cmplete r crrect the missing/incmplete items r the brrwer must grant the Draw Administratr written permissin t fill in/alter certain items. Signatures must always be cmpleted by the Brrwer, C-Brrwer, Cntractr r Cnsultant respectively (with the exceptin f a legitimate need fr a dcument t be signed by POA) and n digital/web signed dcuments are allwed. At this time if the prperty is lcated in a state with full title update requirements the Draw Administratr rders a title update. Fr interim draws the title update is nt an item that will hld up the disbursement. If any liens r negative judgments are fund n additinal draws will be apprved until the lien is remved and a clear title update is received by the Draw Administratr. States that require a title update with every draw are as fllws: Massachusetts, Michigan, Minnesta, New Hampshire, New Jersey, New Yrk, Rhde Island, Virginia and West Virginia. If an update is rdered the Draw Administratr fllws up with the title cmpany r 26

28 Escrw Disbursement Manual attrney s ffice in a timely manner until the update is received. If a fee is due they fllw the prcess nted under the FHA 203(k) Streamline Final Draw, Title Update. After the request is apprved the Draw Administratr cnfirms with the brrwer what address the brrwer wuld like t receive the check at. Only the brrwer may request t have the draw check sent anywhere besides the prperty address r their current mailing address. At this time the Draw Administratr als requests that the FHA 203(k) Cnsultant s Inspectin Fee be paid n the Check Request Spreadsheet and the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. When an address has been cnfirmed fr the draw check the Draw Administratr requests the draw check n the Check Request Spreadsheet and the Escrw Disbursement Check Request Prcess is fllwed. See directins belw under Escrw Disbursement Check Request Prcess. This prcess is fllwed fr all interim 203(k) Full draws. Sectin 603 Full Cntingency Draw Disbursement If, thrughut the curse f the 203(k) Cnstructin Prject, an unfreseen health and safety item arises the brrwer may request funds frm their Cntingency Reserve Fund. There is n limit t the amunt f times a brrwer can request mney frm their Cntingency Reserve Fund; hwever, nce the fund is depleted the brrwer is respnsible t cver any and all verages ut f pcket. A cmpleted and crrect Change Order Frm may be submitted at any time thrugh the curse f the prject when the brrwer is requesting funds t cver an unfreseen health and safety item. If the Change Order Frm is requesting cntingency funds t cver any cst ver runs, r t perfrm additinal vluntary wrk items, the request may be placed n hld until the prject is nearing cmpletin r has been fully cmpleted. If the Draw Administratr is unsure f what is cnsidered t be allwable additinal imprvements they shuld cnsult the Disbursement Crdinatr and the HUD 203(k) Handbk. Any Change Order request where the wrk is cmpleted prir t Mvement Mrtgage s apprval being given runs the risk f being ut f cmpliance and ptentially being an item that Mvement Mrtgage cannt issue reimbursement fr. If the request is apprved and the wrk cmpleted the Draw Administratr fllws the same steps as listed abve fr requesting the Streamline Initial Draw Request Check t request the Cntingency Reserve Check. If the request is placed n hld the Draw Administratr hlds nt the frm and may revisit the request during the final draw prcess if thse cntingency funds are still available. All Full 203(k) Cntingency requests will have a ten percent hldback assessed. The hldback fund will be disbursed with the final draw funds unless Mvement Mrtgage deems that there is a legitimate reasn t hld the funds fr an additinal 30 days. Sectin 604 Full Final Draw Disbursement Once the prject has been ne hundred percent cmpleted the 203(k) FHA Cnsultant visits the prperty again and writes up the draw disbursement request. The ten percent hldback is still calculated 27