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Here is an overview of the role of the HUD Consultant and the 203(k) loan .

Site Visit

    Consultant meets with the borrower at the site.

    A general examination of the work to be done determines if the project is     feasible. This examination will include the Minimum Property Standards (MPS)     inspection that FHA will require to be repaired as a condition for the loan as     well as the additional work the borrower desires to have done.

    Client signs Consultant Agreement and pays the MPS inspection fee.

II. Consultant prepares a detailed Preliminary Work Write-Up which contains:

    Clear, concise project specifications

    Construction cost analysis

    HUD required draw request forms

    Preparation of contractor bid packages                                                              

    Preparation of lender packages

III. Consultant delivers the Work Write-Up Packages

    Borrower

    Lender

    Contractor

IV. Selection of a Contractor by the Borrower

    The Borrower selects a contractor. Borrowers should be aware that many lenders may have contractor qualification criteria. Some lenders maintain a list of contractors that have met their qualification criteria. Discuss contractor selection with your lender to learn about their contractor requirements. If you’re considering a contractor which has not yet been approved by your lender or has never done a 203(k), it is important that they are informed early on about the 203(k) concept as it applies to contractors.

    Virginia uses class A and B contractors

V. Loan Closes

    Repair funds are placed in escrow.

    Remodeling begins.

VI. Consultant Performs Draw Request Inspections

    1st Draw - Consultant insures permits were issued.

    2nd and 3rd Draw - Draw request inspections are performed as work progresses.

    4th Draw - A punch list is established.

    5th Draw - The project is closed out and warranties and lien releases collected.