203k Software for consultant and contractors

I get such a kick out of seeing new consultants who come on strong with their new software... only to find out they are paying per write up for the use of that software. The minute they fall behind on a montly installment they are out of business. 

We believe that when you purchase a software license you should have free use of that software to do as many projects as you like as long as you have that software in service.

There is little more satsifying than helping new consultants get it right. Too bad they had to start off with a "per use" product that is difficult to navigatge. Let us know when you are ready to try a better solution to your 203k write ups.

Mike Young, 203k Team Leader 

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state. It really doesn't matter as we have associate offices in most every state in the USA. Find a consulant anywhere in the country.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant

    

How many draws are allowed on a 203k loan?

This has been misread for long enough - we are not held to only 5 draws

4240.4 REV-2 (5-2.C.) 2) Intermediate draws (four maximum) are inspected by the HUD assigned fee (or DE staff, where applicable) inspector (see paragraph 4-9).

If the cost of rehabilitation exceeds $10,000, then additional draw inspections are authorized provided the lender and borrower agree in writing, and the number of draw inspections are shown on Form HUD 92700, 203(k) Maximum Mortgage Worksheet.

Even HUD is guilty of misinterpretation of this. Now we have lenders who think on large projects there are only 5 draws allowed, 

I just received an accounting from a lender who charged $250 x 5 title update fees... they missed this in the guideliine

4240.4 REV-2
(1-13.)
E. Title Update Fee. To protect the validity of the mortgage position from mechanics liens on the property, reasonable fees charged by a title company may be included as an allowable cost of rehabilitation. Where the mortgage position is protected and is not in jeopardy, this fee may not apply. Borrowers may wish to obtain lien protection, but the fees must be paid by the borrower where such lien protection is not required to ensure the validity of the security instrument (see paragraph 1-20). The allowable fee should not exceed $50.00 per draw release. If all draw inspections are not made, monies left in escrow must be applied to reduce the mortgage balance.

Supplimental origination fee - The lenders get this fee and it is a minimum of $350 or 1.5% of the construction cost.  They think this fee is for writing 5 checks, and they are willing to take $70 per check, that seems reasonable to me... how about you?  But, watch what happens when the project is $500,000 in construction... they get 1.5% and they seem to think it is for writing those same five checks. They don't seem to understand this is to manage the additional draw inspections. Why would it make sense to pay them $1,500 each to write five checks.  Of course it doesn't make any sense at all.

ADDED 5/7/2021 - Handbook 4000.1 -  So, if you have a loan and the contractor fails to draw enough money with the first five draws leaving a balance in the construction loan... example, say they have $25,000 and they haven't finished the work. Choices are 1) foreclose on the home, no one wants that, 2) authorize another draw, and additional draws as necessary to complete the project... of course. When the guideline says "no more than five draws will be allowed" they mean to say "no more than five draws will be allowed to be financed into the loan." Additional draws may be paid with a change order authorizing funds from the contingency reserve to be used, or the fee can be paid in cash at the time of that draw. Either way is acceptable. I don't, however, recommend, taking a check as I one crooked client provide me with a check which she promptly stopped payment on. 
Mike Young Team Leader    

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state. It really doesn't matter as we have associate offices in most every state in the USA. Find a consulant anywhere in the country.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant

    

Make more money consulting

Join us this Saturday at 10:30 am PST or the following Saturday at the same time, it will be... 

The best $49.00 you'll spend this year
Make more money consulting using the knowledge you already have from your 203k consultant training. Provided you have been trained correctly. This webinar will show you how to take the knowledge you already have consulting and turn it into another profit center. You will see what you have to do to get your inspection fees up under the current "Guideline" restrictions but more than that you will see another way to use your skills to make more money that you ever thought was possible. 

The best $49.00 you'll spend this year

FHA 203k Contingency reserve

We just had a lender ask us to increase the contingency based on all these fees that didn't used to be allowed. Interesting that they want to increase their security and though the borrowers quite often want to keep the loan as low as possible, now they are going to have another 10-20% on fees that many lenders demand we get to the penny. Some lenders like M&T even have a form they want us to fill out with the exact amounts of all permits... nice, and impossible to get eactly unless we submit the plans in many cases and we don't have those plans just yet since the client hasn't paid the architect to draw them till they own the house. You have to laugh at some of these things. But this is a new one. Read carefully as it also states it is up to the lender to require a contingency at all or not, so for this one (not M&T) to actually want them higher than they have been is likely just so they make their loan amount a little bigger for their company.

II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products - 203(k) Rehabilitation Mortgage Insurance Program
Handbook 4000.1 362 Effective Date: 09/14/2015 | Last Revised: 09/30/2015 *Refer to the online version of SF Handbook 4000.1 for specific sections’ effective dates
Limited 203(k) Financeable Contingency Reserves (E)
A Contingency Reserve is not mandated; however, at the Mortgagee’s discretion, a Contingency Reserve account may be established and may be financed. The Contingency Reserve account may not exceed 20 percent of the Financeable Repair and Improvement Costs.
The Borrower may provide their own funds to establish the Contingency Reserves. Where the Borrower has provided their own funds for Contingency Reserves, they must be noted under a separate category in the Repair Escrow Account.
 
 
Standard 203(k) Financeable Repair and Improvement Costs and Fees (D)
The following repair and improvement costs and fees may be financed:
· costs of construction, repairs and rehabilitation;
· architectural/engineering professional fees;
· the 203(k) Consultant fee subject to the limits in the 203(k) Consultant Fee Schedule section;
· inspection fees performed during the construction period, provided the fees are reasonable and customary for the area;
· title update fees;
· permits; and
· a Feasibility Study, when necessary to determine if the rehabilitation is feasible.

Sat in on a seminar yesterday... lets clear the air

I heard another person (consultant)  telling clients they get $1250 for a 203k and you can get it all reimbursed in the loan back to the client. This simply NOT true, sorry, but the only fee that is reimburseable per the guideline is the consultation fee and feasibility report, NOT a separate home inspection fee. READ the guideline and you will see that a consulation includes a "203k property inspection". If you charged the client for a home inspection too then you should also provide a full home inspection report of quite a number of pages, if so you can get your full consultation fee. A feasibility cannot or at least should not be charged unless you provide a feasibility report as well and most of the time you do not.

If you charge separately for a full home inspection and deliver one, then you are entitled to be paid for your service but NOT from the 203k escrow, that would be against the guideline. I received a call from a HOC the other day where I was told we cannot sell any ansilary products as it would be a conflict of interest.  No termite report, no engineering report, no architectural services, yet we all have been doing all of the above as needed to get the job done faster.  I dissagree.  I am an engineer or architect, I can be a consultant therefore they are clearly wrong. 

Mike Young Team Leader    

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state. It really doesn't matter as we have associate offices in most every state in the USA. Find a consulant anywhere in the country.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant