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Remodel/Renovation Consultant's Duties & Fees
Contractor Approval
LeaderOne must review the contractor’s credentials, work experience and client references and may require additional information if they deem necessary. All contractors must have Liability insurance and be able to obtain a bond on a project. After review, the selected contractor(s) must agree in writing to complete the work for the amount of the cost estimate and within the allotted time frame. A copy of the contractor’s cost estimate(s) and the Homeowner/Contractor Agreement(s) must be placed in the the file. The contractor must finish the work in accordance with the written estimate and Homeowner/Contractor Agreement and any approved change order. As in the standard Remodel/Renovation program, the Rehabilitation Construction Period begins when the mortgage loan is closed.
Duties - Full Remodel/Renovation loan: A General Contractor must be utilized on a full Remodel/Renovation loan. Because of usual complexity of this program the Contractor will normally have the assistance of an architect or HUD approved consultant in preparing their bid proposal. The borrower and the architect/consultant must be in a position to assist the contractor in understanding and identifying all repairs for their bid while not influencing his final project cost.
The improvements must comply with HUD's Minimum Property Standards (24 CFR 200.926d and/or HUD Handbook 4905.1) and all local codes and ordinances. The homebuyer must provide LeaderOne with the appropriate architectural exhibits that clearly show the scope of work to be accomplished. The following list of exhibits are recommended;
A. A Plot Plan of the Site is required only if a new addition is being made to the existing structure. Show the location of the structure(s), walks, drives, streets, and other relevant details. Include finished grade elevations at the property corners and building corners. Show the required flood elevation.
B. Proposed Interior Plan of the Dwelling. Show where structural or planning changes are contemplated, including an addition to the dwelling. (An existing plan is no longer required.)
C. Work Write-up and Cost Estimate. Any format may be used for these documents, however, quantity and the cost of each item must be shown. Also include a complete description of the work for each item (where necessary).
Cost estimates must include labor and materials sufficient to complete the work by a contractor. Homebuyers doing their own work cannot eliminate the cost estimate for labor, because if they cannot complete the work there must be sufficient money in the escrow account to get a subcontractor to do the work. The Work Write-up does not need to reflect the color or specific model numbers of appliances, bathroom fixtures, carpeting, etc., unless they are nonstandard units.
Duties - Streamline 230K: The mortgagor must use the services of one or more contractors to complete the repairs. Since this is a limited repair program, no general contractor is required, however, the mortgagor must provide LeaderOne with a written cost estimate(s) and references from a duly licensed and bonded contractor(s) for each specialized repair or improvement. If “self-help” arrangements are utilized, the mortgagor must provide written estimates from the suppliers of the materials that the mortgagor will purchase.
Only “fixed price” contracts, which are subject to written change orders approved by the DE Underwriter in the event of unforeseen conditions, are acceptable. “Cost plus” or “time and material” contracts are prohibited. LeaderOne is responsible for ensuring that the cost of the repair is reasonable and customary for the area in which the property is located.
The cost estimate(s) must clearly state the nature and type of repair and the cost for completion of the work item and must be made even if the mortgagor is performing some or all of the work under a self-help arrangement.
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