As smooth as most 203k projects go I hate to write this post. There is about one in a hundred that become what we refer to as "the 203k from hell" because no one seem to get along.
We had one years ago that three days before the project was to be finished... just three day and we are done... the contractor brought his foul mouthed wife to the project to show her what he had done. Holy cow, from that moment it went down hill fast. Up till then everything was going very smooth.
It turns out her mouth was a "gutter mouth" and she started using the wrong terms to describe his work and it offended the owner's wife who was living in the trailer just outside when she heard F this and F that describing her new home. It was all good just bad choice of words and to a religious person it was about to blow sky high. The owner asked her to leave NOW and that she didn't appreciate the language being used in her home. The contractor's wife being from the gutter didn't take kindly and finally the owner kicked them both off the property. The contractor was fired and not allowed to complete the small amount of work left, ever.
We took another month to find an acceptable contractor to complete the project but who would have guessed that could even happen? Not me. There was no resolution, they weren't going to be allowed back into the home for any reason. Up till then the project had gone very well.
Who knows what that "last straw" might be?
What happens when there is $30,000 in work completed for the first draw and...?
...and none of the work done was listed on the scope of work? YIKES! This luckily hasn't happened to me but it did happened to a friend of mine in NJ and twice in three weeks. My question to him the first time is how was he going to pay it out? He answered correctly... "I can't pay for any of the work that was done as it isn't' on my list of repairs" - that is exactly right.
When it happened the second time, I had to question his consulting procedure. It seems to be flawed. You need to be very clear on staying with the "scope of work" as outlined in the bid specs because that is what the appraisal was based on and it MUST BE COMPLETED, it isn't an OPTION.
The house is much nicer than our scope of work laid out...
How do you handle that? I did have this happen on one of my projects and I was shocked to see the home was much more than anticipated. The borrower didn't want a draw, the bank called for it to see if anything was progressing. That is their option and obligation under the HUD Guideline. When I arrived it was so much more house. I couldn't believe my eyes. No permit on site, just did the second lender mandated draw and there is still no permit on site. PERMITS MUST BE POSTED AT THE SITE FOR AN INSPECTOR TO SEE ANY TIME THEY COME BY. This is also no an option. The lender was going to call and see if there were permits taken out. I haven't heard yet.
203k 911 is our solution to your problem 203k project
We have completed so many 203k projects that we have seen most everything that could happen, happen. We dealt with it and resolved it. There was some times where I stepped in and mediated for other consultants live and in person... to mutual benefit of all concerned. It actually helps us all to resolve issues amicably. The lender, the borrower, the contractor, all benefit from these services so we now have a place to go to help get these issues aired and resolved in the least costly manner. It is 203k911 and it works all over the country.
-Mike Young, 203k Team Leader
With offices coast to coast and HQ now at PMB 168, 5055 Business Center Drive, Suite 108 Fairfield, CA 94534 1.707.812.7668. We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state.
To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation".