HomeStyle – Draw Request

Establishing You HomeStyle Renovation Escrow Account

At closing, funds will be deposited into a separate interest-bearing HomeStyle renovation escrow account established by the lender. The borrower will continue to earn interest until the escrow account is closed out.

Interim Inspections

All interim inspections can be performed by either:

  • The lender-approved Third Party Inspector, herein referred to as “Inspector” or an equivalent replacement, or
  • The approved appraiser who appraised the property or another approved appraiser.

The inspector performs the final draw inspection and the appraiser performs the final property inspection (completion certification). The approved appraiser who appraised the property or another approved appraiser must perform the final inspection. If the final inspection is performed by someone new to the property, the final bid/work write-up must be provided prior to that individual performing the final inspection.

Draw Request/Inspection Process

The Draw Request and Inspection Form will be used to process all HomeStyle draws and interim inspections for the property. These forms are completed and given to the borrower and contractor for signatures. It is critical that borrowers understand the importance of not signing the forms until the work is completed and they have reviewed.

Completion of the form proceeds as follows:

  • The Inspector will visit the property and confirm that work has been completed in accordance with the original detailed bid/work write-up.
  • Once the Contractor or Inspector determines that sufficient work has been completed, he/she will complete the HomeStyle draw request form.
  • The borrower’s and contractor’s signatures are required, which will acknowledge that all work has been completed in a workman-like manner and accepted by the borrower.
  • The inspector must provide photos of the completed renovation work which validate the items on the Draw Request and Inspection Form.
  • The photos and the completed and executed draw request form are to be sent to the draw center prior to the release of any disbursements.
  • Original photos may be mailed to the draw center and/or digital photos may be emailed to your files HomeStyle Draw Specialist.

The Draw Request and Inspection Form may be faxed or scanned and emailed to the Draw Center, but no funds will be released until the photos are received, reviewed and approved.

Notes:

  •  The first draw cannot be processed until one business day after closing.
  • Underwriting will not be required to review individual interim draw requests. The Draw Center, prior to funds being released, must review all change orders/draws from contingency and the final draw.

Conventional Renovation Disbursement Form

All checks and/or wires are prepared by the HomeStyle Draw Center and disbursed accordingly.

When a change to the original Homeowner Contractor Agreement and/or the original Specification of Repairs is required based on unforeseen repairs or deficiencies, the Request for Acceptance of Changes in Approved Drawings and Specifications form must be completed. It must be signed by all applicable parties and approved prior to the start of the work. The draw specialist must also review the final costs related to the change to confirm that sufficient funds exist in the contingency reserve to pay for the changes. If the HomeStyle contingency fund is depleted, the borrower will be responsible for paying out of pocket the cost for the necessary repairs. The HomeStyle Draw Center will be required to review and approve all changes.

Note: Changes are acceptable but may be contingent upon an inspection that does not reflect any health, safety and livability issues.

Cost Overruns Cost overruns are the responsibility of the borrower unless cost savings have been accrued or the cost relates to an item that can be taken out of HomeStyle contingency funds.

Cost Savings Cost savings may be used to pay for cost overruns as described above. Any unused cost savings at the time of final release must be applied as a principal reduction.

All draws processed will be released at 90 percent of cost. The remaining 10 percent are held until the final draw to protect the borrower and the HomeStyle Renovation lender in case of filing of mechanics liens or other unforeseen circumstances.

Note: Tennessee only allows 5 percent retainage.

Renovation Extension Request Form

When renovation work is not completed in accordance with the original time frames, an extension request must be processed. The Request for Acceptance of Changes in Approved Drawings and Specifications Form  is to be used to document the extension. The contractor and the borrower must document on the form the cause for delay, new work schedule and the new completion date. The request requires the Draw Center’s approval.

The borrower, prior to the final inspection being ordered, must sign the  Mortgagor’s Letter of Completion and the final draw request. By executing this form, the borrower is certifying that all work is completed to their satisfaction and that if necessary, we may hold back reserve funds up to 35 days or longer as allowed by state laws to assure all liens have been paid.

Closing Out The Renovation Escrow Account

Certificate of Occupancy

Obtain a copy of the Certificate of Occupancy when a Certification of Occupancy is required by the local governmental authority.

Completion Certificate for Conventional Renovation Mortgage Loans

This Completion Report is used in lieu of the Inspection Report and must be signed by the appraiser performing the final inspection. This document, once signed by the appraiser, certifies that all work was completed in accordance with the submitted plans and specifications.

Final Release Notice

Once the final release is processed, the Final Release Notice must be filled out by the closing specialist and sent to the borrower. This form serves as final notification regarding the activity on the account, including final principal reductions.

Final Release Checklist for Conventional Renovation Loans

Upon completion of all draw paperwork, the closing specialist is to use the Final Release Checklist to confirm that all necessary documentation is secured.  This form is to be filled out and sent within 30 days of property completion.

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