via Repair Escrows for Kentucky USDA, FHA, VA, Fannie Mae Home loans
Repair Escrows for FHA, USDA, VA and Fannie Mae Mortgage Loans in Kentucky
When are repair escrows allowed for a FHA, VA, USDA and Fannie Mae Loan in KY?
- Agency owned properties (FHA, Fannie, VA, or RHS owned)
- New Construction seed and sod (depending on weather conditions)
- Energy Efficient Mortgages (EEM’s are only for FHA and VA loans)
When are repair escrows not allowed?
- Voluntary improvements to the home unrelated to EEM’s
- If the nature of the repair impacts the safety, structural integrity, or livability of the property
How much can you escrow for repairs?
- $5,000 which must include the cushion
- $6,000 for EEM’s which much include the cushion
- $11,000 for FHA REO properties which must include the cushion
- For FHA loans a 10% cushion must be added to any repair amount being escrowed
- For all other loan types a 50% cushion must be added to any repair amount being escrowed
- Be sure to include the cost of a 442 Certification on your LE
- Agency Maximum LTV/CLTV and loan limits must still be followed
What is the process for a loan with repair escrows?
- A Repair Escrow Agreement (found under forms in our AllRegs guidelines) detailing the terms of the repair must be filled out and provided to underwriter prior to clear to close
- An estimate for all the repairs must be provided prior to clear to close unless the property is a HUD REO. For HUD REO’s we require that the property manager provide either the FHA REO Appraisal, the Repair Escrow Addendum, or the Property Condition Report
- The funds for the repair escrows will be withheld from the wire and place in a non-interest bearing escrow account