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A key to the success of the loan feature will be the financial stability and reputation of the builder constructing the home. The approved lender and their agent, if any, will be responsible for approving participating builders. Each builder seeking to participate will be subjected to a process that involves license verification, insurance validation, and reference verification. Owner-builders are ineligible for this loan feature. Lenders are required to document their determination for eligibility of the builder to participate in the Rural Development mortgage transaction as further described in Chapter 15.
Construction contractors or builders of homes financed with the single close loan must have:
x Two or more years of experience building and constructing all aspects of single-
family dwellings similar to the type of project being proposed; x Evidence of a state-issued construction or contractor license, as required by state
law or local law; and
x Evidence of commercial general liability insurance with a minimum coverage of
$500,000. Contractors or builders who are constructing their own residence are ineligible. The lender is representing the builder meets the criteria of this paragraph when requesting a commitment for loan note guarantee.