Friday, May 29, 2015

Kentucky Rural Housing USDA Repair Escrow for 2015

Kentucky Rural Housing USDA Repair Escrow Guidelines

USDA and RHS allow Escrow holdbacks and are used to facilitate loan closings for Kentucky approved rural housing properties that require no more than $5,000 of repairs. The USDA borrower is required to establish a cash escrow that will ensure the completion of the required repairs. These proceeds are held in an escrow account until the repair requirements are completed. This borrower accommodation allows the loan to close and the borrower to occupy the property while incidental work is finished.

  • Minimum amount: $500 USDA Guaranteed Loan Program Only in Kentucky 
  • The cost of any remaining work, exterior or interior, is not greater than $5,000;
  • The livability of the dwelling is not affected;
  • A signed contract between the borrower and the contractor is in effect for the proposed work and the funds to be escrowed are not less than the contract;
  • The final Settlement Statement reflects the holdback;
  • The work will be complete within 90 days of closing (except in cases of exterior repairs that cannot be completed due to inclement weather);
  • Certification of completion is provided to verify the work was completed, and must:
  1. Be completed by the appraiser;
  2. State that the improvements were completed in accordance with the requirements and conditions in the original appraisal report;
  3. Be accompanied by photographs of the completed improvements; and
  4. The individual performing the final inspection of the property must sign the completion report.
  • An amount equal to one and a half percent (1.50%) of the estimated cost of the repairs will be collected at time of closing (so the maximum escrow amount permitted would be $7,500).