1. How are required repairs determined?
Repairs may be required as a result of the property appraisal and/or termite inspection report. Your loan officer will inform you of required repairs prior to closing.
2. Who pays for repairs?
Repair costs are paid from the reverse mortgage proceeds, either at closing, if completed prior to closing, or from a repair escrow account (“set-aside”) if completed after closing.
3. How are the cost and/or amount of set aside determined?
A contractor’s bid is required to estimate the funds needed to create the set aside account. A compliance inspection fee of $100 for each inspection estimated to be needed is also included in the repair set aside funds. The contractor should be licensed in the State (s) in which they operate (in accordance with applicable State requirements). Electricians and plumbers are always required to be licensed. Additionally, a non-refundable repair administration fee is charged equal to the greater of $50.00 or one and one half-percent of the amount advanced for repairs.
4. Who does the repairs?
It is the borrower’s responsibility to find and hire a contractor and provide contractor bids prior to closing. This company is not affiliated with any contractor or service company and does not endorse or recommend any contractor or service company.
5. When are the repairs done?
Whenever possible, repairs should be completed prior to closing. When required repairs cannot be completed prior to closing, and when approved by the underwriter, such repairs may be completed after closing. Required repairs to be completed after closing must be estimated to cost less than 15% of the Maximum Claim Amount. All repairs resulting from the appraisal and termite inspection must be completed within six months of closing. If repairs are not completed within 12 months, other funds from the reverse mortgage line of credit may be frozen until the repairs have been completed.
NOTE: When the structural integrity of the home is questioned, related inspections and repairs must be done prior to closing. A structural engineer’s report or related inspections may be required. Some of the repairs may have to be completed prior to closing at the underwriter’s discretion.
6. Who has the repair money and how do I get it?
Funds are held in a repair set-aside account with your lender. Speak with the staff in this department about payment for work done as well as about questions or problems related to repairs . Texas requires that funds be held by the Title Company.
7. What about funds remaining after repairs are completed?
Once repairs have been completed, a final inspection is performed and the contractors are paid, remaining funds in the repair set-aside are transferred to the reverse mortgage line of credit and the borrower is informed that this sum is available to be drawn.
8. May I have additional work done beyond the required repairs?
You may have additional work done, but it will not be handled through the repair escrow account. Additional work is completely independent of required repairs and must be handled separately by the borrower. Contractor bids for additional work must be separate from required repairs, and costs must be paid from personal funds or the reverse mortgage line of credit .