Sec. 05.04.11.14. Loan Procedures—Construction or Rehabilitation  


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  • 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.