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ATTACHMENT 12-E
Repair Escrow and Rehabilitation & Repair
with Purchase Comparison
REQUIREMENT Repair Escrow: Minor Borrower Completed Repairs
Repair Escrow: Contractor Completed Repairs
Rehab and Repair Program: Minor Rehab ($75,000 or less)
Rehab and Repair Program: Extensive Rehab (greater than $75,000)
Property Type New or Existing1
New or Existing1 Existing Existing
Repair Amount Up to $10,000 and not greater than 10% of the loan amount
Not greater than 10% of the loan amount, lender must escrow at least 100% of total repairs
Not to exceed $75,0002
Greater than $75,0002
Timeframe 180 days 180 days Typically 10 months
Typically 10 months
Yes Yes Yes No3
Property to be habitable at close
Contract Required No4 Yes Yes Yes
At Close5
At Close5 At Close At Close
Loan Note Guarantee Issued
Lenders should follow the guidance in 12.9 C. Repair Escrows for Existing and New Dwellings, Post Issuance of the Loan Note Guarantee [7 CFR 3555.202(c)] as well as 12.28 Rehabilitation and Repair with Purchase of Existing Dwellings.
1. New construction must be 100% complete, except for minor work not affecting livability that cannot be completed due to weather conditions.
2. The maximum loan amount cannot exceed the cost of acquisition plus the cost of repairs, up to the as-improved market value, plus the guarantee fee, if financed.
3. Extensive rehab over $75,000 allows for up to 10 months PITI reserves, or until lender deems property habitable.
4. Borrower may complete their own repairs if lender determines borrower has knowledge, skills, and time to complete work within 180 days.
5. Repair work can be escrowed for and completed post Loan Note Guarantee, provided the work does not affect the livability of the dwelling, and all requirements of Section 12.9C are met.