Our loan is with the homeowner. What are your thoughts on requiring all but the final construction draws to be directly deposited into the builder's checking account? We are trying to streamline this process and were considering this instead of manually issuing checks each week. I felt that if we required the builder to open an account with us for this purpose, we were in violation of requiring a deposit account as a condition of making the loan. thanks for your input.

By doing this you will get into 1099 IRS reporting requirements (go to the IRS site and do a search on 199 MISC) if you pay the contractor/vendors direct. This is why we always make our checks payable jointly to our borrower and whomever.