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
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.
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..
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