FHA Pre-Construction Builder Acknowledgment Form

Site Built Homes

2015-01V9

Buildersutilizing ______and its affiliated entities’ or assigns (“Lender”) “Close It Build It” program must agree to,and by participating in the program do agree to, comply with the following guidelines and terms.

  1. The following costs associated with the loan will be paid by the Buyer/Borrowerduring the construction:

a)A one-time Construction Administration Fee payable to WMC at closing in the amount of $500.00

b)A staged funding draw request fee in the amount of $95.00per draw request payable to WMC.

c)All inspection costs associated with each staged funding draw request.

d)Annual interest at the rate of 6.25%on all funds advanced which include but are not limited toconstruction costs and any land payoff, from the date the construction loan documents are signed until that loan is modified into a permanent mortgage or is paid in full.

e)Date down Endorsement fees are collected from the Borrower and are reflected on the final HUD_ Settlement Statement. (Fee Varies $25 - $100)

f)Staged funding inspection costs, accrued daily interest and staged funding draw fee are to be billedto Buyer/Borrower monthly during each staged funding. All construction fees must be settled and paid in full, prior to completion of loan modification.

  1. The following costs associated with the loan will be paid by the Builder during the construction phase:
  2. If the Builder’s construction project exceeds the Builder selected build time and the permanentmortgage loan rate lock expires, the Builder will be responsible for costs to extend the interest rate “locked” at closing. The cost of an Interest rate lock extensions is .02%charge per day, of the base loan amount multiplied by the number of days requested for a rate lock extension. (i.e. 0.0002 x base loan amount = per day extension fee. This extension fee shall be deducted from escrowed construction funds.)
  3. A $75.00 per day charge payable from the final draw for non-timely completion of the construction project.
  1. Maximum number of days for construction cannot exceed 150days from date ofconfirmed construction loan funding. Builder to elect construction period below.
  1. New or existing construction projects which have begun prior to closing and funding are ineligible for the FHA OTC program.
  1. Lender requires first lien priority and that no mechanic’s and materialmen’s liens are filed against the real property which acts as Weststar’s collateral. Builders shall pay all costs necessary to remove any such liens and shall reimburse and indemnify Lender if Lender is compelled to pay to remove any such liens or settle claims related to same.
  1. Lender maintains the right to request sub-contractor’s lien waivers from Builder, prior to disbursement of any funds throughthe draw process.
  1. Oregon Specific Requirements:
  2. Builder will submit a list of all sub-contractor utilized on the construction project. Lien waivers will be required from each subcontractor, as services are provided. See #5 above.
  3. An Early Issue Title Policy, will be required. The cost associated with this policy is the responsibility of the Borrower. This fee will be collected at closing/funding and held in escrow until completion of the new construction project.
  1. Lender will discuss all construction matters directly with the Builder who has executed this acknowledgment below and is the general contractor for this construction project. Lender does not hire or recommend sub-contractors for ANY construction projectsnor does it endorse the Builder. The Builder must manage and resolve all sub-contractor matters.
  1. All funds disbursed during construction by Lender shall be disbursed to the Builder in accordance with the agreed upon draw schedule.
  2. Builder is responsible for payment to any sub-contractors involved with the construction project. Lender does not disburse funds directly to the sub-contractor.
  3. Borrowers may not receive funds from Lender or the Builder in return for work performed by a Borrower. Borrower’s participation as a sub-contractor or supplier is prohibited.
  1. Any existing water well or well to be constructed must meet FHA guidelines. No exceptions!
  2. If a water well exists, a water potability test is required. (Bacteria/E coli, Total Coliforms, Lead, Nitrate and Nitrite).
  3. Distance verification is required for all water wells.
  1. An Elevation Certificate is required if the property is located in a FEMA identified flood zone. If a property is located in an FHA acceptable FEMA identified flood zone, the finish grade level beneath the home shall meet minimum local, state and FHA guidelines required for the 100 year flood plain return per the Elevation Certification. Flood Insurance will be required in such instances.
  1. A final survey will be required and must berequested by Builderthroughthe Lender Construction Department. The final survey cost is collected from the Borrower at closing and is reflected on the final HUD-1 Settlement Statement(if applicable per state requirements).
  1. The Lender Construction Department orders the final inspection when notified by the Builder. The cost of the final inspection is the Borrower’s responsibility. This fee is collected at closing and is reflectedon the final HUD-1 settlement statement.
  1. Any change orders will be paid by the Borrower. The cost incurred with the change order will be an expense above and beyond any escrowed construction funds from the loan. Change order expenses must be paid byBorrower directly to Builder and will not be included in the escrowed funds for construction. Neither Builder nor the Borrower will look to Lender for payment of any change order. Despite these facts, all change orders shall be submitted to Lender for approval
  1. Stagedfundingdisbursements are based on the percent of completed work at the time of the request.The Builder is limited to one draw per month unless the Lender otherwise agrees to in writing. See Construction Draw Schedule Disclosure.
  2. Staged funding inspections are requested by Lender’s Construction Department upon notification of completion of a phase of work from the Builder.
  1. “Date Down”Endorsements will be required at each staged funding (stage 2 thru final). This will be ordered by the Lender’s Construction Department. Date DownEndorsement fees are collected from the Borrower and are reflected on the final HUD-1 Settlement Statement.
  2. A stage funding inspection must be completed by a city inspector, fee inspector, original appraiser or an engineer acceptable to Lender. Staged funding inspections will certify that each item has been satisfactorily completed according to the staged funding requirements.
  3. Inspection expenses incurred in excess of the estimated inspection expenses included in the Builder’s cost of construction will be an expense to the Builder and shall be paid from Builder’s gross draw amount.
  4. Staged Funding request forms are provided to the Builder by the Lender’sConstruction Department
  5. Lender will maintain asufficient retainage amount to comply with state law and will disburse same in accordance with state requirements.
  6. A 10% retainage shall be held by Lender for thirty-one (31) days after Closing or Substantial Completion of the Improvements and following Lender’s approval of final inspection, required FHA new construction forms, final survey, receipt of signed early release of retainage request by Borrower, sub-contractors lien waiver and signed loan modification documents. (Applies to Texas Only)
  7. A 5% retainage shall be held by Lender until Lender’s approval of final inspection, final survey (if applicable), required FHA new construction forms and signed loan modification documents. Applies to all states other than Texas.
  1. Final Stage Funding draw will be payable upon Lender’s:
  • receipt of an approved final inspection and Certificate of Occupancy (if applicable);
  • receipt and approval of all required new construction forms;
  • receipt of final survey (State’s Requirements Apply);and
  • Approval of drawby Lender’sunderwriting department.

Allowable build time for project completion

Prior to commencement of construction, the Builder acknowledges and agrees to the terms and conditions and associated charges of the Lender’s FHA one time closing “Close it Build it” guidelines contained herein.

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Builder Signature/DateLoan Officer Signature/Date

Weststar Mortage Corportation, 2155 Louisiana Blvd., Suite 8000

Albuquerque, NM. 87110 NMLS#92343