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!

Know When to Hold ‘Em, Know When to Fold ‘Em

The Gingerbread Diaries

Time for another house update!

A couple of weeks ago I was getting ready to write a downer of a post. The good news was that the appraisal came in high enough for the roof repairs, the problem came with the mention of possible structural issues. And structural issues, regardless of cost, immediately take us out of the 203(k) Streamlined race and into the full shebang of 203(k) along with the need for a HUD Consultant and, because of the change in how the funds are disbursed (i.e., no up-front draws, only periodic draws based on work completed), the very real possibility of needing to change our contractor.

Despite the obvious gap between the pilaster and the porch, that corner is completely stable--we were hoping that would make it far more minor an issue.

Despite the obvious gap between the pilaster and the porch, that corner is completely stable–we were hoping that would make it far more minor an issue.

Cue freakout #I’ve-lost-count.

Underwriting demanded that we have a Structural Engineer evaluate the brick pilasters on the end of the addition (under the porch and laundry) to decide if there were, in fact, structural issues to be addressed and Todd thought it worthwhile to at least have it checked out–after all, knowing the structural integrity of the house we’re trying to buy seems like a good idea, right?

Let’s just total up the inspections we’ve now had on this house we don’t even own yet:

$275  Initial Buyer’s Inspection
$525  FHA Appraisal
$285  Structural Engineer Report
$1085  Total Inspection Outlay

Unfortunately, we didn’t get the news we held out hope for: the pilasters did need work and there were a few other things to work out. And the seller was still adamant that they’d gone as low as they were willing to by accepting our initial offer (which was almost 10K under their list price) and that it was already priced to sell.


So we did the only thing we could do: we walked away.

It was a very hard email to write, but we did it. And I almost felt better just being out of the limbo we’d been in for so very long on this project.

And then, in a move worthy of any used car lot in the country, the seller countered with an offer 10K lower than we’d originally settled on.

I was flabbergasted! Some say we called their bluff, but that implies there was a bluff to call. Others contend that the structural report finally convinced them of what they were trying to offload and what they’d have to ultimately do if they wanted to sell the home to anyone. The email I received made it sound like they wanted us to have it since we obviously loved it so much (which, yes, we do, but the timing is still a touch suspect).

Grinch-like compassion or desperation aside, this changed things more than I thought it would. It doesn’t change the fact that there are structural issues, but Todd seemed to think that the 10k wiggle room would be enough to make it doable. So the next morning I called our lender and asked if we could un-withdraw our application. Luck was on our side as the cancellation request hadn’t made it to the top of the queue and we were allowed to proceed, at least through the next hurdle.

And that hurdle come in the form of what amounts to a fourth inspection, this time with a HUD Consultant (who gets paid up-front) and the contractor in tow. Thankfully, our contractor was able to work with the changed disbursement schedule and stay on the project. This was such good news as we all remember the drama of trying to find a roofer at the beginning of this project! Our HUD Consultant pointed out a few more things than the FHA appraiser did (not that it was a big surprise) and then we were back to waiting for the contractor’s bid.

Of course, nothing can go smoothly and the loan was once again in peril once they were able to dig up the city property tax records (which are not available online anywhere–county and state are, for what it’s worth–making them damn hard for a prospective buyer to research) and the increase in the monthly mortgage cost was placing our DTI (debt-to-income) ratio close to the preferred threshold, before factoring in the additional renovation costs.

Thankfully (we had a lot of moments to be thankful during this process), that was before taking into consideration the lowered purchase price, so once the contractor’s new bid came in, we could run the numbers to see if there was any point in moving forward with the HUD write-up (another bit that gets paid on delivery instead of at closing, and whose fee is based on a sliding scale depending on the renovation amount). We caught a break and the bid came in below the appraiser’s estimated cost to cure (that phrase always makes me think of a house catching a cold), even with all of the HUD Consultant’s addition, and we got the “approvable” approval from the powers that be.

We’re not in for sure, yet–we’ve still got a few weeks until closing and the official underwriting approval to receive, but we’re a lot closer and, yes, a little more hopeful than we’ve been for the past month, truth be told.