The lender orders an appraisal by a
professional appraisal firm. It is paid for
by the homeowner. This determines the
market value of the home. However, the
final value is not established until the
Loan Underwriter employed by the lender
reviews the appraisal and approves it.
After receiving all pertinent information
from the homeowner and obtaining other
required items, the loan package is
submitted to the Loan Underwriter for
final approval. It generally takes anywhere
from 1-5 days to underwrite a loan.
Underwriting involves verifying all
information and making sure the loan
complies with all laws and regulations.
A conditional approval is provided with
a final home value and any repairs or
additional inspections required, as well as
anything else the lender may need in order to
issue a final approval, so the loan can close.
Your home is the collateral for a HECM load and mut be maintained to meet HUD standards. As part of the loan origination process, your Lender will order an inspection of your home and the inspector will deliver a report indicating if repairs are required. If so, a portion of your loan will be set aside to pay for those repairs. It is your responsibility to hire a contractor to do the repairs. Once the repairs are completed, the contractor will sign a lien release form. Then the completed repairs will be inspected. At that point, the Servicer will disburse the funds from the set-aside to pay the contractor and return any remaining funds to your loan proceeds.
A borrower has one year from the closing date of the loan to complete the repairs. If repairs are not completed, loan payments will be suspended until they are completed or the Servicer may request that HUD deems the loan due and payable