Borrower selects a contractor* and submits renovation plans to the lender.
Lender reviews borrower’s documents to ensure the project meets all requirements.
Lender orders an as-completed appraisal to assess maximum mortgage amount, check loan-to-value ratio, and calculate the loan amount.
Lender prepares to close by checking whether improvement funds need to be escrowed or require a contingency reserve.
Lender and borrower execute required documents at loan closing, including a Renovation Loan Agreement.
Funds are placed into custodial account, and lender delivers the loan to Fannie Mae®.
Lender services the loan, managing all project draws and overseeing the renovation process.
Lender receives the final draw request, initiating the last phase of lender oversight.
Lender orders a final inspection, appraiser signs completion certificate, and lender provides it to Fannie Mae.
Before funds are issued, lender must ensure a clear title and make sure no additional liens remain on the property.
After project is completed, lenders can submit required documents to remove recourse.
Lender closes the renovation escrow account and uses any remaining funds towards reducing the unpaid principal balance (UPB).
