Combination construction and permanent loans.

CFR · 2024-01-01 · US · Title 7

Guarantees of combination construction and permanent loans are subject to the following conditions: (a) (1) Have two or more years experience making and administering construction loans. (2) Submit an executed construction contract with each loan application package. (3) Review and approve construction contractors or builders. The lender will conduct due diligence investigations to determine that the contractor or builder meets the minimum requirements in paragraph (b) of this section. Evidence of the contractor or builder's compliance must be made available by the lender upon request of the Agency. (4) Close the loan prior to the start of construction with proceeds disbursed to cover the cost of, or balance owed on, the land and the balance into escrow. (5) Pay out monies from escrow to the builder during construction. The lender must obtain written approval from the borrower before each draw payment is provided to the builder. The borrower and lender are jointly responsible for approving disbursements during the construction phase. The lender must ensure that the appropriate work has been completed prior to releasing each draw. The Agency may require the lender to submit a draw and disbursement ledger for any loan guarantee upon request. (6) Obtain documentation that confirms the construction of the subject property is complete. (b) (1) Two or more years experience building or constructing all aspects of single family dwellings similar to the type of project being proposed;

official document · source cfr-2024 · id 7:§ 3555.105