c. How to To authorize the fund release, create and send the escrow release letter to the escrow agent. To provide expectations for all parties involved in the construction Authorize the Fund Release and avoid potential delays, the escrow release letter must be created within 3- and Timeliness business days of the Assistant Valuation Officer (AVO) / Valuation Officer (VO) approving the Compliance Inspection Report (CIR). Requirement d. 20 Percent A 20 percent holdback is required to assure the project will be fully completed Holdback Of and is in compliance with the approved plans and specifications. The holdback is Project Cost required anytime a disbursement schedule is prepared for the project. The 20 Requirement percent requirement must account for the total project cost. Funds to be applied to the principal balance of a mortgage, or a direct reimbursement to the Veteran, cannot be included in the 20 percent holdback amount. The 20 percent holdback may or may not contain any of the loan funds or Note: Veteran funds, depending upon the parties’ preferences. Continued on next page 4. Authorization to Disburse When VA is Not the Escrow Agent, continued d. 20 Percent If there is a delay due to weather or a material backorder, but all Important: Holdback Of other aspects of the construction project are complete and have been verified by Project Cost the SAH Agent’s Final Field Review, the 20 percent holdback should be released to the builder with the following adjustment: Requirement, continued The amount to retain in escrow for a final payment must be two times the estimated cost of the incomplete items, or a minimum of $1,500.00, whichever is higher. e. Disbursing To authorize the release of the 20 percent holdback, the SAH Agent Final the 20 Percent Field Review must be performed. Refer to Chapter 10, SAH Agent Final Holdback Field Review, for completion instructions. The SAH Agent will provide a final escrow release letter to the escrow agent upon the AVO’s/VO’s approval of the Final Field Review documentation.
c. How to Authorize the Fund Release and Timeliness Requirement To authorize the fund release, create and send the escrow release letter to the escrow agent. To provide expectations for all parties involved in the construction and avoid potential delays, the escrow release letter must be created within 3- business days of the Assistant Valuation Officer (AVO) / Valuation Officer (VO) approving the Compliance Inspection Report (CIR). d. 20 Percent Holdback Of Project Cost Requirement A 20 percent holdback is required to assure the project will be fully completed and is in compliance with the approved plans and specifications. The holdback is required anytime a disbursement schedule is prepared for the project. The 20 percent requirement must account for the total project cost. Funds to be applied to the principal balance of a mortgage, or a direct reimbursement to the Veteran, cannot be included in the 20 percent holdback amount. Note: The 20 percent holdback may or may not contain any of the loan funds or Veteran funds, depending upon the parties’ preferences. Continued on next page 4. Authorization to Disburse When VA is Not the Escrow Agent, continued d. 20 Percent Holdback Of Project Cost Requirement, continued Important: If there is a delay due to weather or a material backorder, but all other aspects of the construction project are complete and have been verified by the SAH Agent’s Final Field Review, the 20 percent holdback should be released to the builder with the following adjustment: The amount to retain in escrow for a final payment must be two times the estimated cost of the incomplete items, or a minimum of $1,500.00, whichever is higher. e. Disbursing the 20 Percent Holdback To authorize the release of the 20 percent holdback, the SAH Agent Final Field Review must be performed. Refer to Chapter 10, SAH Agent Final Field Review, for completion instructions. The SAH Agent will provide a final escrow release letter to the escrow agent upon the AVO’s/VO’s approval of the Final Field Review documentation.
Chapter8_NOV2013.docx