Regulation .14 Loan Procedures—Construction or Rehabilitation.
Regulation .14 Loan Procedures—Construction or Rehabilitation.LinkCopy Citation
A.
Construction Period Disbursements. If the loan finances construction or rehabilitation, the Administration shall:
(1)
Conduct on-site inspections of the construction;
(2)
Make construction loan disbursements on the basis of work-in-place, plus materials acceptably stored on-site, less a retention of up to 10 percent of the construction request; and
(3)
Make disbursement for materials acceptably stored off-site, if the materials are:
(a)
In a bonded warehouse;
(b)
Set aside and labeled with the project's name;
(c)
Inspected by the Administration's inspector;
(d)
Insured with the Administration as a named insured; and
(e)
Documented by evidence of payment for the materials.
B.
Cost Certification. For loans financing new construction and substantial rehabilitation under a cost-plus form of construction contract, the Administration shall require the sponsor and contractor to submit, upon completion of the project, a certification of project costs prepared by an independent accountant.
C.
Permanent Mortgage Closing. A closing shall be arranged after construction completion and cost certification according to procedures and documentation as may be required by the Administration.