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203k Loans; Duties Of HUD Consultant

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Midwest Guy

Senior Member
Joined
Dec 12, 2006
Professional Status
Certified Residential Appraiser
State
Missouri
I have read the qualification requirements and application of a HUD consultant.

Does HUD specify their duties and responsibility of care in their publications?
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Starts on page 468 of the 4000.1
 

Midwest Guy

Senior Member
Joined
Dec 12, 2006
Professional Status
Certified Residential Appraiser
State
Missouri
Starts on page 468 of the 4000.1
THANK YOU!

I AM ALSO FINDING THIS DOCUMENT HELPFUL! https://www.federalregister.gov/doc...-203k-consultant-fee-schedule-solicitation-of

II. Section 203(k) Consultants
An FHA-approved 203(k) Consultant is required for all Standard 203(k) mortgages and may be used for Limited 203(k) mortgages. As part of the Section 203(k) program requirements, the Federal Housing Administration (FHA) maintains a list of approved 203(k) Consultants on the FHA 203(k) Consultant Roster from which the Mortgagee must select a 203(k) Consultant and assign the 203(k) Consultant to the transaction, if required.

When a Section 203(k) Consultant is required, the Consultant will enter into a written agreement with the Borrower that outlines the services that the Consultant will perform. In some cases, the Mortgagee or Borrower may require the Consultant to conduct a Feasibility Study to determine if the 203(k) mortgage is achievable, based on the costs of the rehabilitation project. The 203(k) Consultant conducts a Feasibility Study by completing a preliminary inspection of the property, and estimates the material and labor costs for the project.

The 203(k) Consultant must inspect the property to ensure:

  • There are no rodents, dry rot, termites and other infestation the property;
  • there are no defects that will affect the health and safety of the occupants;
  • there exists adequate structural, heating, plumbing, electrical and roofing systems; and
  • there are upgrades to the structure's thermal proportion (when necessary).
The Consultant must prepare a report on the current condition of the property that categorically examines the structure utilizing a 35 point checklist. The Consultant must determine the repairs/improvements that are required to meet the U.S. Department of Housing and Urban Development (HUD's) Minimum Property Requirements, Minimum Property Standards and local requirements. The report must address any deficiencies that exist. The Consultant is responsible for identifying all required architectural exhibits. The Consultant must prepare the exhibits, or, if not qualified to prepare all of the necessary exhibits, must obtain the exhibits from a qualified subcontractor.

The Consultant must prepare an unbiased Work Write-up and Cost Estimate without using a contractor's estimate. The Work Write-Up and Cost Estimate must be detailed as to the work being performed based on the project proposal, including all required reports.

The Consultant must physically inspect the work for completion, quality of workmanship, conformity to local codes and ordinances, and ensure that all building permits are onsite for the work that was performed at each draw request.

At the Borrower's or Mortgagee's request, the Consultant must review proposed changes to the Work Write-Up and prepare a Change Order Form HUD-95277. The Consultant must inform the Mortgagee of the progress of the rehabilitation and of any problems that arise, including:

  • Work stoppages for more than 30 consecutive days or work not progressing;
  • significant deviations from the Work Write-Up without the Consultant's approval;
  • any issues that could affect adherence to the program requirements or property eligibility; or
  • any issues that could affect the health and safety of the occupants or the security of the structure.
The Borrower is responsible for the fee charged by the Section 203(k) Consultant. Under the Standard 203(k) program, the Consultant fee charged for Start Printed Page 61711the Feasibility Study, Work Write-Up, Mileage (not associated with a Draw inspection) and Architectural Exhibit preparation, may be included in the mortgage as a part of the cost of rehabilitation.
 
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