The HENN Blog: Higher Education Now for Mortgage & Real Estate News

Do you have a listing that needs to go but it needs a few repairs prior to "move in or as/is condition?"  We can close a loan with an "escrow hold back."  See below for details:

There are two types of escrows:

Regular exterior escrow repair (AKA weather related escrow) – 30 days to complete (may be extended if extenuating circumstances), escrow at 1.5 times the amount of the bid (max 10% of sales price/value). Lock must run through disbursement date, not repair period. BOA must be excluded because they will not purchase loans with a repair escrow.

Prior to investor exception (PTI condition) escrow for cosmetic interior repairs, may not be health/safety items or affect livability of the property – 5 days to complete, escrow at 1.5 times the amount of the bid. Lock must be extended to cover escrow repair period. BRANCH MUST TAKE RESPONSIBILITY FOR FOLLOWING UP ON PTI ESCROWS.

An Escrow Holdback Request Form must be completed and submitted to the Underwriter, Closer and Post Closing along with a copy of bid or bids for required repairs.

A Final Inspection Fee of $100 will apply and disclosed on the Good Faith Estimate if a repair escrow will be required.

We can never escrow for structural or foundation repairs.

Funds will be refunded to whomever we are instructed on the Escrow Holdback Request Form unless property is a HUD REO. If HUD REO, because the repairs are financed, we will need receipts to evidence escrow was invested into property. If buyer completed some of the work themselves, we cannot pay them for their time. Any excess escrow funds on a HUD REO must be used as a principal reduction. Investors require a principal reduction only if the borrow financed the repairs (i.e. HUD REO or 203k streamline). If the borrower put up the funds and repairs aren't included in the loan amount, we can refund the borrower (or seller) who's noted in the escrow agreement

Once repairs are complete, the Processor should order a final inspection (Form 1004D/442 or FHA Compliance Inspection Form 92051) from the original appraiser who made the conditions. However if the property is a HUD REO, we should not contact the original appraiser so you may select an FHA appraiser of your choice to complete the Compliance Inspection.

Once the final inspection is obtained (along with paid receipts if HUD REO), it is forwarded to the Post Closing Dept (and Underwriter if 5 days PTI escrow) with clear instructions to whom the escrow check should be written and how you want it delivered. A CCMC check will be requested if we are holding the funds or contact title to request a check if the title company is holding the funds. CCMC needs a copy of the title company check to forward to our investor.