203k renovation loan

Blood From a Stone, Funds From an Escrow Account–Same Difference?

The Gingerbread Diaries

“The time has come,” the Dollhouse said, “to talk of many things…

Like, namely, when’re we gonna get the contractor paid for the roof?!”

Good question, Dollhouse, good question indeed. Who knew our house was a fan of Alice in Wonderland?

How Draws Work in a 203(k) Renovation–A Worst Case Scenario Guide

Now, if you’ll think back to when we first went down the 203(k) road (back in January), you might remember that there are several moving parts to the renovation side of the mortgage loan. It’s not just the contractor’s numbers and a bump for just-in-case, there are fees for the draw center, the inspections, and all sorts of other things. And it’s not like, once you close on the mortgage they hand you a checkbook for the renovation escrow account and say ‘Have fun, send us your receipts!’ (Would that it were that easy, seriously, this post probably wouldn’t exist if the bank actually trusted homeowners enough to do that.)

Instead, we have the contractor who has to do the work, the HUD Consultant to verify the work, and the Draw Specialist at the bank who metes out the funds like a la Scrooge McDuck (withholding 10% of each request until the bitter end just in case someone places a lien on our property in the mean time–I mean, I get it, but you have to admit it’s a fair comparison). Oh, right, and I sign all the forms for good measure, too.

The contractor’s office billed us for the roof (which was almost half of the total renovation contract) which triggered our HUD guy to schedule a time to go up and view the house. Of course, when he got up there, they weren’t quite finished and, since pictures have to be submitted to the bank with the draw request, the request was adjusted to 95% of the roof expense, to allow for the portion yet to be completed. He had the contractor initial the changes, sign the pages, and then brought the paperwork to my office before sending it up to the bank.

Had this been any other renovation project, that would have been all it took.

Since when has this process been anything other than difficult?

It seemed simple enough: the bank kicked the forms back because they were signed by Contractor L (our original guy) and not Contractor S (the one with the license that came on as supervisor). But the the HUD-C acts like he doesn’t know who this Contractor S even is, when–hello!–he had to redo the paperwork to put S’s name on the work order. Sure, that was a couple months ago, but check your notes, dude! It felt like being in my gastro’s office when he asks who’s monitoring my A1AC deficiency and I have to tell him he is! Grr!

So we forward the paperwork to Contractor S, only somewhere in the preceding 24 hours one of the forms has changed and now requires Contractor S’s signature be notarized. Now, I ask you, what contractor has time to go hunt down a notary in the middle of a project?! One that wants to get paid, obviously, but still, it meant an additional delay. Then the forms come back to me to sign and I send them up to our Draw Specialist to meet up with the photos that were already there. Of course, that wasn’t enough, the HUD forgot to date one of his signatures.

All of this started on Wednesday, and by Monday I still hadn’t received confirmation that the check had been cut. Meanwhile, Contractor L let me know that he’d done all he could until he got paid, which meant nothing was getting done on the house. Which, you know, I can’t really fault him because expenses were incurred, crews have to get paid, etc.; but I was a little peeved at the same time that the time we were ahead (thanks to the rapid turn on the roof) was being frittered away.

By Tuesday I was placing yet another request for update, which did get an eventual reply that if she had the updated signature then she could conceivably process the payment. Which was confusing since she’s replied Monday that they did receive the corrected paperwork on Friday! Turns out the Draw Specialist was out on Monday, one of her team members had replied in her stead, but since they didn’t copy her on the reply she didn’t know what was said. Even though it came from her own email address!

There was one more wrinkle about to come into play: I was leaving town Thursday night to head to Mobile for MobiCon. If the check didn’t arrive at my office early enough for me to drive it up to Thomasville (which is a 2 hour round trip) then it would be the following Tuesday before I could get it to him and he could get his crew back to work, if even then, what with the holiday and all. Thankfully the check did arrive on Thursday morning and I did spend 2 hours on the road just to get things moving again.

All in all it took over a week to fully process this first draw request and 1 week of lost work on the house. And while they say it’s random, I just got word that our project was selected for a Disbursement Quality Assurance Inspection on our HUD Consultant. What are the freaking odds?!

But, hey, at least we have a pretty new roof to keep the rain out and the floors are close to being fixed, now, too.

Back to our usual video updates next week!

The Roof That Started It All

The Gingerbread Diaries

It’s gone, y’all! And replaced with spiffy new shingles all since last week’s update (apparently our contractor decided to fast-track it and I don’t blame him–more on why in a minute).

First things first: no video this update since we didn’t actually go up to the Dollhouse last weekend. We had friends coming over at 2pm on Saturday so it would have meant doing what we could up there Friday night and hustling it back down here first thing in the morning: not exactly a good payoff for the time spent there and back. It was awfully nice to sleep in on Saturday morning, though, not to mention have a nice, relaxed date night on Friday, too!

Bye-bye old shingles and tin! (Todd was nice enough to go snap pictures of each day's progress, this was just Day 1)

Bye-bye old shingles and tin! (Todd was nice enough to go snap pictures of each day’s progress, this was just Day 1)

And since they started replacing the roof on Wednesday, it was just as well we opted not to go up since there were building materials and debris in various places: no sense tripping over all that just for a couple hours work (on the #$%^&* hot water heater).

To refresh your memory (or explain for those of you not with us from the beginning):

  • The roof was the first thing that tipped us over into Renovation Loan territory;
  • In part because under the deteriorating shingles/tin (different parts of the house) were the original (?) wood shake/shingles;
  • Which meant that in addition to pulling all that up to begin with they were going to have to re-deck the entire roof before they could put new shingles on!
  • The extra work and supplies that entailed pretty much doubled the cost of what a roof in that area would cost under normal circumstances.

Of course, that was just the tip of the iceberg as far as this house’s issues went, but it still represents half the total renovation costs that were worked into our mortgage. Because of the various twists and turns we traveled through during the loan process that ended up with us going the standard 203(k) route, that meant our contractor couldn’t get any funds up front, only once work had been completed. As part of our 203(k) structure there are a total of 3 disbursements (i.e. draws against the renovation escrow account) factored in: 2 mid-project and 1 at the end. Each of these draws can only be made on the work that’s completed (not even for supplies purchased: they have to be installed on the house to count). And then the bank keeps back 10% of each draw until the final inspection is complete and they verify that no liens have been placed upon the property before paying out that final bit. So, you know, the contractor is motivated to get. stuff. done!

So yesterday they put in for the first draw based on the roof work. This meant that our HUD Consultant had to ride up there (and, yes, mileage fees are tacked onto the inspection fees by the HUD-C, and all that’s figured into the total cost of renovation) to verify the work being drawn upon was complete and take pictures to show the bank as proof, etc. Well, the roof wasn’t quite finished when Mr. A got there, so he adjusted the draw form to be 95% of the total roof quote, even though they probably would have it finished by the end of the day, it only counts if he sees it at his appointment. One draw down, 2 more (and another 5 weeks or so of work, though maybe not even that long if they can keep up this pace) to go!

Now, just because we didn’t go up to the Dollhouse last weekend doesn’t mean we did nothing as far as the house went: I was doing research!

(What, doesn’t everyone find that exclamation point-exciting?)

Unfortunately Georgia is still working on digitizing their property records–they’ve only got as far back as 1992 on file and since the K’s bought the Dollhouse back in 1994, I can only see who they bought it from, but not any previous transactions unless I go and camp out in the records room of the courthouse for untold hours and sift through the deed books myself! Since that will require a day off that coincides with them being open (aka not a holiday) it might be a while before that happens!

1920 Sanborn Fire Insurance Map of Thomasville, GA (population--including suburbs--10,000!)

1920 Sanborn Fire Insurance Map of Thomasville, GA (population–including suburbs–10,000!)

In the mean time, I’ve been trolling the South Georgia Newspaper archives for any mention of our street address, trying to find some history on the place. After exhausting the free archives (that end in 1922) I even paid for a membership to NewspaperArchives.com just to stay on the trail. The other resource I found was the Sanborn Fire Maps. Unfortunately the 1912 map stopped the block before ours, but the 1920 map clearly shows the Dollhouse in pretty much it’s current configuration! The only things added since then were the 2 bathrooms and, possibly, the extended back porch/utility room area (which we pretty much figured from the beginning, though the Realtor suggested the kitchen wasn’t originally attached, and that seems unlikely, now).

Through my newspaper crawl I found out the following:

  • For much of the latter half of 1889, E.M. Mallette [an obvious bigwig in the real estate market back then] was marketing an “elegant residence lot” on our street with the same lot dimensions and referencing the cross-street next to us for a whopping $400; even if this wasn’t our exact lot (the Sanborn map shows the two lots next to ours to be of approximately the same dimensions) it’s a good bet he had the selling of the original lot.
  • In October & November 1914 there was an 8-room house for rent at our address [that would square with the number of rooms the house has, not counting the bathroom additions] by a Mr. Burch; this holds with the idea that the house was built in 1910 or so, until…
  • Continued searching actually found a listing for a Lost Dog by Mr. Burch at our address in 1904! So either there was a previous home built that was torn down and replaced by the Dollhouse or the Dollhouse is older than we thought!
  • Mr. Burch, a widower twice over by then, passed away after a nasty fall in the house in December, 1941.
  • They appear to have taken in a boarder at some point or rented the place out as there are ads for a Mr. Van Dore offering to repair or tune pianos and listing the Dollhouse as his address in April, 1948. He didn’t stick around long, though, as in June of that same year he posted an ad selling his light housekeeping wares as he was leaving town.
  • As of 1949 I can see references to Mr. Burch’s daughter (a local school teacher) hosting various church functions at the Dollhouse, so either she let rooms while living there are moved in after Mr. Van Dore vacated. Either way, she appears to have stayed in the house until her own passing in 1969.

And after there the trail has gone cold. I’ve yet to come across a mention of the address past 1969 in the local papers (people started getting cagey about posting their addresses so freely, I suppose). From the K purchase I had the names of the two sisters that sold the house in 1994, but at the time of Miss Burch’s demise, one was a musician and teacher at Wesleyan College in Macon, and the other is tied to a Grant St. address from what I’ve been able to find. So there’s still a 25-year gap to fill in; but I’ll get there!

One other tidbit of information was uncovered during my search, and helps explain how the perceived-to-be-original wood shake could have survived long enough (notwithstanding the hardiness of the old-grown wood used back then, of course) to be covered with asphalt shingles somewhere in the 1970s (again, guessing on the part of the Realtor).

It didn’t!

[box type=”alert” style=”rounded” border=”full”]Roof Fire Damages Burch Residence On C— Street—
A roof fire at the residence of Mr.  Burch on East C—street fanned by a gusty wind caused serious damage to the dwelling and contents yesterday afternoon. The whole building was deluged with water and the entire roof and second story practically gutted before the blaze was brought under control. The firemen worked two or three hours mopping up and clearing out debris and ashes making sure that no hidden fire remained but at four o’clock this morning the fire broke out again and the firemen were forced to fight fire again for an hour or two before retiring to their headquarters.
–Thomasville Times Enterprise, April 1, 1939[/box]

At then end of March, 1939, the roof of the Dollhouse caught fire and destroyed the upper floor of the house. By mid-May it had been rebuilt and renovated and the family was able to move back in. My guess, then, is that they used the wood shake at that point (similar to what would have been in place before the fire), and it lasting the 30 or so years until the asphalt shingles were laid down is a far more believable timeline that it being from the original 1910 (or earlier!) build. Of course, depending on just how much of the house had to be rebuilt, it does make me wonder if the house still counts as it’s original build date–whenever that may actually be!

Good thing we like puzzles, right?

Are We There Yet?

The Gingerbread Diaries

And by ‘there’ I mean home-owners.

5 more minutes or 2 more hours. Take your pick.

A couple years ago I was on a road trip with some friends and the ‘are we there yets’ started–though just in fun, it was only a 2-hour car ride after all. One friend said her parents would always answer ‘5 more minutes’ regardless of where they were in their journey while another’s always answered ‘2 more hours,’ even if they were pulling into the driveway.

So, are we there yet?

Nope.

Up until yesterday afternoon we were scheduled to “arrive” today… but you know there’s more to the story than just a simple postponement, right?

Last month we were dealing with the contractor snafu, but we’d found a solution and just after my last post on the subject, Contractor S got the paperwork turned in to the bank and we got the HUD work write up redone (thankfully that didn’t cost me another $600), the paperwork was off to validation and we thought we could finally breathe a sigh of relief.

[box type=”tick” size=”large” style=”rounded” border=”full”]Note: Never engage in a premature sigh of relief. Not until the ink is dry on the page and you have keys in your hand do you dare breathe that sigh of relief because to do so ahead of time is a sure-fired invitation to the Universe to knock the wind right out of you.[/box]

Y’all, we had a license issue. Again.

Only this time it was one born of, I believe, one hand not knowing what the other one intends, or maybe not caring all that much.

Supposedly, the State of Georgia requires general contractors who are representatives of LLCs or corporations to have said license in said company’s name. And Contractor S had it in his given name. Now, logically (and I tried to argue this with the bank) if S’s LLC was formed in 2003, and S is listed as the registered agent of said LLC, then wouldn’t they have had an issue with S registering for his contractor’s license in 2008 (Georgia only started licensing contractors in 2004 and it was only mandatory by 2008–let that sink in for a bit, too) in his own name? Doesn’t the fact that it was allowed through subsequent annual reports and license renewals negate the concept of the hard-and-fast rule?

Nope.

So Contractor S had to apply for an updated/replacement/appended license in the company name to be validated by Wells Fargo. Thankfully, that process was only supposed to take 2 weeks (not that we had that much time, really) but they only needed proof of application to move forward. (With the understanding that until the correct license was produced no draws could be made on the renovation funds. So let us all hope that 2 weeks was an accurate estimate, otherwise the renovation could be held up. The good news is that they estimate the work only taking 6 weeks, total, so there’s that. A 203(k) Renovation Loan technically allows up to 6 months for the work

And, of course, in par-for-the-course fashion, I didn’t find out about this little hiccup until after 5 pm on the Thursday that fell a week after all the paperwork was turned in. And of course the contractor was heading out of town, pre-dawn the next morning. More waiting, more anxiety.

I recently joked to a friend that all 203(k) applications should come with a 3-month prescription for Valium or some such.

At any rate, the application was submitted, we finally got our validation, and all we needed was for the bank to confirm the funds were in the bank and we could send everything to final underwriting.

And that was the other headache of this past month.

To refresh everyone’s memory, we were not planning to buy a home so soon after getting married. The opportunity fell into our lap, pretty much, and we jumped on it, but we weren’t exactly ready for it in the we-have-a-savings-account-for-the-down-payment-and-closing-costs sense. Instead, the funds for this adventure were coming from two sources:

  1. A whole-life policy of Todd’s that his grandfather had taken out for him when Todd was just a baby. It was about 60 years from maturation, but it had a decent surrender value that we’d planned to use as the starter funds for our house savings.
  2. A draw on my 401(k) account (not always a great idea, but it’s one of the 5 legit reasons to withdraw from our plan since we don’t allow loans against the balance and it makes sense for us right now).

The one thing we could have done differently is get the funds out of the life policy before now. We’d talked about it, but I fully admit we got lulled into the plenty-of-time illusion with the snail’s pace everything seemed to be taking, plus the fact that the beginning of the year is pretty much a stressful time for anyone in finance and accounting and we kept putting it off. We had (and by we, I mean Todd, since it was in his name and I couldn’t request anything from them on his behalf), by this time, made the funds request, but the first person Todd spoke to insisted the forms had to be mailed. Two days later (and no forms having yet arrived), Todd called back and finally got someone who understood how modern technology worked and was able to use email and fax to get the forms completed, so then it was just a waiting game.

And boy did we wait! It took almost 2 full weeks for the check to arrive from that insurance company, while my 401(k) request went in on a Wednesday afternoon and I had it in the bank by 2pm on that Friday–they, of course, had a better process and an Express option, but still. Night and day difference. And it was that difference that put this week’s closing in peril.

See, the seller was getting fed up with the delays. Not that I can completely blame her, but each time we had to ask for a closing extension there was much hemming and hawing and wringing of hands relayed by the Realtor. And this last one (well, it was supposed to be the last one) was the icing on the cake. We weren’t going to be able to make the closing for March 26th, but we knew that our drop-dead date was April 14th, since our lease renewal is due to the property manager on the 15th if we’re not planning to move. No wiggle room.

Our loan processor had suggested we ask for the 14th on the new extension, since we knew it was as late as we could go, but that we try to close before that date, just as soon as everything was where it needed to be. Seller didn’t like that at all! She only wanted to extend it a few days and, well, that just wasn’t going to happen. We were in the very real position of having the seller cancel the contract after 3 months of stress and anguish trying to make this deal happen.

It wasn’t a happy weekend.

The seller conceded to a 1-week extension and we waited to see if the check from Todd’s insurance would show up, and every day Todd would call to find out the status from the insurance company and get a ‘they’re just waiting for the final accounting numbers to be able to cut the check.’ Meanwhile, the check had actually been cut on the 26th but then took it’s sweet time travelling from Nebraska to Florida, finally arriving on the 31st.

Our current extension was set to expire on the 2nd, but there’s something in Georgia purchase contracts that allows a 7-day unilateral extension to allow for financial processing delays. Could be use that and be able to close within that window?

Maybe.

Ready for another wrinkle? In Georgia you have to designate an attorney for the loan closing (Florida and many other states consider the attorney optional, for what it’s worth, and you just get your docs from the title company and keep on moving) and our lawyer was going out of town the week of the 7th. Can you say crap on a cracker? I can!

Was the lawyer available for a Friday closing? Maybe we could squeak this in? No, he was booked (as anyone would be if they were clearing their schedule to be gone for a week), but he could realistically do 3pm on Thursday (that would be today, folks) IF the bank got their paperwork to him by 10am that day. He said it wouldn’t be as pretty and seamless compared to when he had more time, but I told him I didn’t care if it was pretty, I just needed it done.

And so this week happened:

  • Monday, 3/31: insurance check arrives, but too late to make the bank’s deposit for that day
  • Tuesday, 4/1: Todd deposits check in the morning (being late for work to get there right when the teller’s window opens at 8:30), and writes me a check in the evening
  • Wednesday, 4/2: I deposit the check first thing in the morning (ditto the being late), and then leave work early to drive up to Cairo to secure the needed home owners insurance so it’ll be bound for the next day.

That’s when things ground to a halt.

Because the funds were not inherently mine, we’d had to treat the insurance money as a “gift” from Todd to me to be acceptable by mortgage standards. Because it would have required 3 more documents (including one from the slow-as-molasses insurance company) for Todd to just sign the check over to me (again with the lack of logic/too much red tape), the funds had to go through the accepted chain of custody account-hop to make sure everything was on the up and up. And because the bank had to be able to verify the funds before getting the all clear from underwriting, we were counting on a major miracle that the bank (which is, incidentally, the same as the lender, so why… no, not going there again) would release the “pending” status of my deposit early. That didn’t happen.

So when I got to the insurance office (an hour away from my office, so thanks lost time at work!) was when I checked my email messages to find we weren’t going to make the closing on Thursday.

I mean, I knew it was a long-shot, but everyone seemed to think we could make this work, so we forged ahead, allowing ourselves to anticipate being homeowners by the end of the week. To have that taken away, again, was just… no words are coming to me to describe the mixture of disappointment, dejection, and frustration that settled on my shoulders once again.

I had ice cream for dinner, if that’s any indication of my mood.

But there was hope. By the time I got back to Tallahassee, the lawyer had spoken with the seller and convinced her (citing that it was his schedule, not ours, that was causing the delay–thanks for taking that bullet!) to wait until he got back–on the 14th–to close. He got us this final extension, even while the Realtor said the seller wouldn’t approve the 14th no-way, no-how. Thank you, Lawyer S!

5 more minute. 2 more hours. 10 more days.