Role of a 203 (k) Consultant
I. Site Visit
Consultant meets with the borrower at the site.
A general examination of the work to be done determines if the project is feasible.
If feasible, Client signs Consultant Agreement and pays Consultant a $400 retainer fee.
II. Consultant prepares a detailed Work Write-Up which contains:
Clear, concise project specifications
Construction cost analysis
HUD required draw request forms
Preparation of contractor bid packages
Preparation of lender packages
III. Consultant delivers the Work Write-Up Packages
Consultant fee balance is paid by Borrower
IV. Selection of a Contractor by the Borrower
The Borrower selects a contractor. Borrowers should be aware that many lenders may have their own contractor qualification criteria. Some lenders maintain a list of contractors that have met their qualification criteria. Discuss contractor selection with your lender to learn about their contractor requirements. If youre considering a contractor which has not yet been approved by your lender or has never done a 203(k), it is important that they are informed early on about the 203(k) concept as it applies to contractors.
V. Loan Closes
Repair funds are placed in escrow.
VI. Consultant Performs Draw Request Inspections
1st Draw – Consultant insures permits were issued.
2nd and 3rd Draw – Draw request inspections are performed as work progresses.
4th Draw – A punch list is established.
5th Draw – The project is closed out and warranties and lien releases collected.
Under the203k program, 5 draws are permitted. All draws over the program limit are the responsibility of the client or contractor. A feasibility study is a quick inspection of the property, with a “rough estimate” of work that will be necessary to comply with HUD’s requirements. A feasibility study is additional to the above fee chart.
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