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#2249297 - 02/17/21 05:48 PM Lender Required Property Repair
CRL Offline
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I've searched for this subject, and am having a hard time finding a clear answer, so would like to ask where/how to disclose the following:

1. We have a loan request for cash-out on a free and clear primary residence.
2. Home inspection reported roof repairs are needed, we are requiring repairs be completed prior to closing. Repair costs will be paid from borrower loan proceeds at closing (paid directly through escrow.)

I understand that if the repairs are required by us, we should re-issue an LE within 3 days, adding the estimated repair costs listed in section C, service you can shop for, and provide an updated Service Provider List. But what if the borrower hasn't chosen a contractor, and we have no idea how much it is going to cost? Are we supposed to find a contractor, get a bid, and put that on the revised LE and Services you can shop for list?

Or, is the following comment from another thread accurate, and an estimate should be put on the revised LE in section H? Again, not sure how to estimate an amount?

The repair expense is then allowed to be disclosed in Section H. The contractor employed to complete the repair is engaged by the consumer and never the lender. The lender would never want to provide an implied warranty by referring a contractor, so it would be impractical to have to list this service in Section C or have the lender provide a shoppable provider for the repair.

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TRID - TILA/RESPA Integrated Disclosures Rule
#2249380 - 02/18/21 09:44 PM Re: Lender Required Property Repair CRL
rlcarey Online
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If the repairs are a condition of granting the loan imposed by the lender, how can this be a voluntary fee under Section H?
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#2249387 - 02/18/21 10:16 PM Re: Lender Required Property Repair CRL
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I understand, but are we supposed to find a contractor to list on the service provider list, and get an estimate amount for the LE?

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#2249394 - 02/18/21 10:38 PM Re: Lender Required Property Repair CRL
rlcarey Online
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Well, I think you have a couple of options, but either way someone is going to need to figure out what the repairs are going to cost. How is the customer going to go into this blindly? You could deny the loan - have the borrower come back with a solid repair contract and make them a home improvement loan with additional cash back. Or you could figure out the costs ahead of time and do a repair escrow and have the repairs done post closing.
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#2249396 - 02/18/21 10:46 PM Re: Lender Required Property Repair CRL
CRL Offline
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Thanks Randy. Today the borrower gave us the bid they've received to do the work, and plan to pay it directly, before closing. So I will be putting the contract amount on the LE, and their contractor on the service provider list. So, I guess I just have to hope that there are no cost over runs, right? since this will be a zero tolerance item?

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#2249397 - 02/18/21 10:46 PM Re: Lender Required Property Repair CRL
rlcarey Online
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Cost overruns would be a valid changed circumstance.
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#2249406 - 02/18/21 11:28 PM Re: Lender Required Property Repair CRL
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OH! I figured that if they were going with our listed service provider there would be no room for changes. Well that takes all the pressure off, thank you!

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#2249410 - 02/18/21 11:46 PM Re: Lender Required Property Repair CRL
rlcarey Online
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Galveston, TX
Well, it would be new information that was or could not have been anticipated by the lender, would it not?
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#2249412 - 02/19/21 12:33 AM Re: Lender Required Property Repair CRL
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Yep, I agree, thank you so much!

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