Role of a 203(k) Consultant
Step by Step Process
1. 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.
If feasible, Client signs Consultant Agreement and pays Consultant a $400 retainer fee.
2. Prepare Work Write-Up
Consultant prepares a detailed 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
3. Work Write-Up Delivery
Consultant delivers the work write-up
package to:
Borrower
Lender
Contractor
Consultant fee balance is paid by Borrower.
4. Selection of a
Contractor by the
Borrower
The Borrower selects a contractor.
Borrowers should be aware that many
lenders may have their own 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.
5. Loan Closes
Repair funds are placed in escrow.
Remodeling begins.
6. Draw Request
Inspections
1st Draw - Consultant insures permits were issued.
2nd & 3rd Draw - Draw request inspections are performed as renovation work progresses.
4th Draw - A punch list is established.
5th Draw - The project is closed out and warranties and lien releases collected.