12.14 LENDER REQUIREMENTS (05/17/17)

Owned by Kacey Olson
Nov 17, 2018
2 min read

© RHS HB-1-3555 SFH Guaranteed Loan Program Technical Handbook

Approved lenders will be responsible for monitoring construction of the subject property, overseeing disbursement of mortgage proceeds, and obtaining documentation that confirms the construction of the subject property is complete. The lender must meet the following conditions to offer this loan feature:

  • An approved lender with a fully executed Form RD 3555-16 lender agreement and self-certify that they have staff with two or more years’ experience making and administering construction loans, or employ a construction loan management company with two or more years of experience as their agent;
  • The approved lender will be responsible for conducting investigations and obtaining documentation to confirm the eligibility of construction contractors/builders, and their construction loan management company if they contract one;
  • The approved lender will be responsible for conducting investigations and obtaining documentation to confirm the eligibility of construction contractors/builders.
  • The approved lender will be responsible for the approval of construction contractors, construction loan management companies, or builders upon submittal and review of evidence the contractor/builder meets requirements set forth in Paragraph 12.15 of this Chapter;
  • The lender will be responsible for resolving any issues that arise as a result of the contract;
  • The lender must agree to retain evidence of contractor/builder/construction loan management company approval for future review by the Agency;
  • For loans closed prior to commencement of construction, proceeds may be disbursed for the cost of the land, or the balance owed on the land, and Agency allowed closing costs. Any balance of the mortgage proceeds, including the “lenders construction holdback”, must be placed into an escrow account.
  • The approved lender will be responsible for approval and disbursement of mortgage proceeds in accordance with the construction loan agreement, with prior written approval by the borrower and confirmation of work completion prior to disbursement. The lender must maintain a draw and disbursement ledger for each single close loan.

The lender is representing they meet the criteria of this paragraph when requesting a commitment for loan note guarantee.