construction loan disbursement schedule form

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					         Glossary of One-Time-Close Mortgage Terminology

         Term             Definition
                          Appraisal that is based on the value of the project assuming all construction
                          has been completed. Includes land value. The appraiser utilizes the
"As-Built" Appraisal
                          builder’s line item budget and plans and specifications to arrive at the
                          appraised value.
                          Attachment to Deed Of Trust/Mortgage that governs the loan transaction
Addendum To
                          during the construction phase. This document is removed from the Deed Of
                          Trust/Mortgage at permanent loan commencement.
                          This addendum governs the loan during the construction phase of the loan,
Addendum To Note          stating the start date and completion date of the construction phase as well
                          as the interest rate and payment parameters of the construction phase.
                          Also identified as architectural plans, these are provided by a licensed
                          architect, a custom builder or can be provided by a factory-built home
                          supplier. They provide a complete overview of how the project will be
                          constructed, including all necessary architectural and structural issues.
                          A specific insurance policy carried by the builder/contractor that provides
                          specific coverage to the physical structure of the building in case of fire or
Builder Risk Insurance    accident. Countrywide must be on the policy as Lenders Loss Payee. This
                          coverage is mandatory for all transactions and must be carried by the
                          builder/contractor or as Course of Construction Insurance by the borrower(s).
                          Also know as Conditions, Covenants and Restrictions, this document may
                          apply to homes constructed in a particular area or subdivision. Homeowners
                          Associations include this document as a part of title liens. The OTC-PC or
C C and Rs
                          CMD Construction Lending reviews these to make sure the proposed project
                          is within the applicable parameters of the respective requirements. If the
                          Appraisal specifies these, they are mandatory for Project Approval.
                          Signed by a contractor, subcontractor or material supplier, this form waives
Conditional Lien          their right to file a Mechanic’s Lien (see above). This is signed on the
Release                   condition that they receive payment for work performed. This release may be
                          submitted throughout the construction period or at completion of the project.
                          Closing document that spells out the parameters and conditions of the
Construction              construction loan, as well as the responsibilities of all parties associated with
Loan Agreement            the loan. Countrywide, the borrower(s) and the builder/contractor will all sign
                          this document at the closing table.
                          This fee covers the cost of all inspections and disbursements during the
                          construction phase of the loan. Unlike some lenders that bill the borrower at
                          each disbursement, CHL includes this fee in the overall Closing Costs of the
Administrative Fee
                          loan. The dollar amount is governed by the length of the construction phase
                          and is found in the OTC guidelines.
                          Construction Start Date is the day the loan security instrument is recorded
Construction Start Date
                          reflecting CHL as lender of record.
                          The actual term of the construction phase of the loan. It is stated in months:
Construction Term
                          4, 6, 9, 12 or 18 months are the current options or conventional loans.
         Term         Definition
                      A reserve account usually equal to 5% of the Direct Costs of the construction
                      project. These funds are held in reserve and will be available to cover any
Contingency Reserve   unexpected construction mishaps or severe problems. Any funds remaining
                      in this account at the completion of construction will be applied to the
                      permanent loan as a principal reduction with new P & I.
                      This form is to be used for submitting a builder/contractor for prior approval
Contractor Review
                      for the OTC program. It required specific information about the builder /
                      contractor and provides for attachment of licensing & insurance information.
                      Details of the type grade and color of all building materials to be used in the
Description Of
                      construction of the home. Can be presented on a standard HUD Form or in
                      any format chosen by the builder/contractor.
                      Construction costs that include labor and all building materials associated
Direct Costs
                      with the actual construction project. These costs are found on the
(Hard Costs)
                      builder/contractor line item budget.
                      A loan specific schedule that is created as part of the Construction Loan
                      Agreement signed at closing. The schedule defines the percentage of
                      construction funds that will be disbursed to the borrower(s) and/or
                      builder/contractor at each draw request. CHL offers a choice of 4 different
                      stage draw options as well as a line item disbursement draw option.
                      This form is to be submitted by the borrower(s) and/or builder/contractor to
                      CHL to request a disbursement of construction funds. This form is provided
                      to the borrower(s) and builder/contractor at loan closing. Receipt of this form,
Draw Request
                      via FAX, notifies OTC-PC or CMD Construction Lending to order inspection
                      to review the work completed to date and to arrange wiring of funds from
                      OTC-PC or CMD Construction Lending to the borrower(s) and/or
                      As easement is a right for a third party to use a portion of another individual’s
                      property. Typical easements are for actual access, utilities, water flow, etc.
                      Easements can increase or decrease a property’s value. Any easement
                      noted under a title review must be reviewed prior to closing the loan.
                      A foundation endorsement certifies that the project is located within the
                      proper boundaries of the property and that there are no easements or
                      encroachments present. This endorsement is issued by a title company at
                      completion of the foundation work and is required on properties in states that
                      do not normally require a survey.
                      This covers damage to other party’s property or another person due to
General Liability     construction related project accidents. COUNTRYWIDE MUST BE NAMED
Insurance             AS AN ADDITIONAL INSURED. Builders must carry their own General
                      Liability Policy as governed by their applicable state law.
                      Construction costs other than labor and materials. These include, but are not
                      limited to, architect fees, building permits, builder profit and overhead,
Indirect Costs        temporary utilities for the job site, soils reports. These costs are broken out
(Soft Costs)          in the builder/contractor line item budget. Items in this category can be
                      reimbursed to the builder and /or borrower at full amount as opposed to items
                      contained in the Direct or Hard Costs category.
           Term         Definition
                        Ordered by OTC-PC or CMD Construction Lending upon receipt of a Draw
                        Request form from the borrower(s) and/or builder/contractor. Inspector visits
                        the construction site, verifies the work completed to date and notifies OTC-
Inspection Report       PC or CMD Construction Lending accordingly. This inspection is always
                        ordered by OTC-PC or CMD Construction Lending, and no construction
                        funds will be dispersed until the inspection report has been received by OTC-
                        PC or CMD Construction Lending.
                        A reserve account that holds an estimated interest amount that will be due on
                        the loan during the construction phase of the loan. CHL will advance the
                        interest due as necessary from this account to pay the monthly-accrued
Interest Reserve        interest. Any funds remaining in this account at the completion of
                        construction will be applied to the permanent loan as a principal reduction
                        with new P & I.
                        Calculation: Loan Amount x Interest Rate x 60%/ 12 x Construction Term.
                        A detailed listing of the actual costs of the construction project. This includes
Line Item Budget/Cost
                        the cost of labor, all building materials, and any other costs associated with
                        A right by a contractor, sub-contractor or material supplier to place a lien on a
                        borrower’s property for payment of work performed or material delivered on
Mechanic’s Lien         the property. Depending on state law, these liens may have priority over our
                        construction loan. In such a case, a valid mechanic’s lien can be a
                        foreclosure and the person filing can obtain ownership of the property.
                        Improvements that are to be made to the adjacent to the subject property.
Offsites                (I.e.) roads, water and sewer, sidewalks, etc. These improvements must be
                        complete prior to the start of actual construction on the financed project.
                        The start date of the permanent phase of the loan. This date is defined in the
Permanent Loan
                        construction loan documents executed at the initial closing. It is the date of
Commencement Date
                        the Note and the Deed Of Trust/Mortgage.
                        Ordered by the borrower(s) and/or the builder/contractor, these represent
                        permission and agreement from local authorities and municipalities that the
                        proposed project can be constructed on the assigned lot and will meet all
                        required specifications and rules that apply to the area.
                        Any fees or preliminary project costs that have been paid out of pocket by the
                        builder or borrower(s) prior to the closing of a construction loan. These costs
Pre-Paid Costs          include local permits and fee, payment to architects and other design
                        services, pre-payment of taxes, etc. It does not include borrower paid
                        expenses for which they want to be reimbursed.
                        A portion of construction loan funds that are held back from disbursement
                        until the project is complete. This retention is an insurance policy for the
                        borrower(s) and Countrywide that the builder will complete the work as
                        Construction project that is free standing on a purchased lot and not
Spot Development
                        associated with a specific development, tract or sub-division.
                        A project built as a condominium project with a HOA. The unit is not
Stand Alone Condo
                        connected to other units at any point. (Refer to the Conventional
(Site Condo)
                        Underwriting Manual for specifics concerning these types of housing).
         Term             Definition
                          Some states require a property survey at three intervals. 1) Prior to start of
                          construction to properly locate easements and building set backs, 2) after
Three Part Survey         completion of foundation to verify the correctness of the location and 3) a
                          final survey at completion of construction to warrant that there are no
                          encroachments present that impact marketability.
                          These constitute an enhancement to a standard title policy. Title
                          endorsements are intended to eliminate risk associated with un-plotted
Title Endorsements        easements (see above) foundation placement on the lot, and address and
                          other items listed on the property title that Countrywide would not want to
                          have priority over the construction/permanent loan.
                          This fee covers the cost of what the construction industry considered a "title
                          date down" At completion of each inspection and prior to disbursement of
Title Inspection          construction funds, CHL may contact a local Title Company and ask for an
Endorsement Fees          endorsement that states our first lien position on the property. In some
                          states, the original Title Policy covers these issues and these fees are not
                          charged. CHL includes this fee in the overall Closing Costs of the loan.
                          One of two components identified in determining the actual LTV of an OTC
                          loan. Total Cost to Construct includes all Direct and Indirect Costs, all
Total Cost to Construct
                          exterior finish work and landscaping, etc., all Closing Costs, Discount and
                          Origination Fees, and all Reserve Costs.
                          Signed by a contractor, subcontractor or material supplier, this form waives
                          the right to file a Mechanic’s Lien (see above). This type or release in not
Unconditional Lien
                          dependent on their receiving payment for work released. This release may
                          be submitted throughout the construction period or at completion of the
                          This policy covers injury that might occur on the project site as a result of
                          working on the project. It covers any of the Contractor’s employees assigned
                          to and working on the site. It is generally carried by the builder/contractor.
Worker’s Comp
                          This coverage is not available to Tradesman Owner –Builders or Owner-
                          Builders. In some states, builder/contractors are not required to have this
                          coverage if their sub-contractors cover themselves. Countrywide must be on
                          the policy as Lenders Loss Payee.

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