Following completion of the renovation work, the lender must obtain a certification of completion stating that the renovation was completed in accordance with the submitted plans and specifications. The certification must be documented on the Appraisal Update and/or Completion Report (Form 1004D), or a HomeStyle Completion Certificate (Form 1036), completed with all applicable signatures.
Concurrent with the last disbursement of funds, the lender must obtain a title update through the date the renovation was completed, thus ensuring the continuance of Fannie Mae’s first lien priority and the absence of any mechanics’ or materialmen’s liens. When the property is located in a state in which contractors’, subcontractors’, or materialmen’s liens have priority over mortgage liens, the lender must obtain all necessary lien releases or take any other action that may be required to ensure that the title to the property is clear of all liens and encumbrances.
The lender also must obtain for retention in the individual mortgage file a certification regarding the adequacy of the property insurance following completion of the renovation. The certification must confirm that the coverage has been increased, if necessary, to comply with Fannie Mae’s standard property and flood insurance requirements.
The table below provides references to the Announcements that have been issued that are related to this topic.
|Announcement SEL-2015–09||August 25, 2015|