Selling Guide

Published December 16, 2020

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B5-3.2-05, HomeStyle Renovation Mortgages: Completion Certification (02/27/2018)

Introduction

This topic contains information on the HomeStyle Renovation mortgage including:


Completion Certification

Following completion of the renovation work, the lender must obtain a certification of completion stating 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). The 1004D must confirm all “subject to” items listed on the appraisal were completed. If deviations have been made to the initial plans, the appraiser must note any impact to the value. If the value has been impacted, the lender must follow the policy in Unplanned Changes in Scope or Incomplete Work in B5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations .

The lender must also obtain a certificate of occupancy upon completion of renovation if it is required by local authorities for the type of renovation work that was completed.


Title and Insurance Updates

Concurrent with the last disbursement of funds, the lender must obtain a title update through the date the renovation was completed, to ensure 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 title to the property is clear of all liens and encumbrances.

The lender also must retain in the loan file a certification regarding the adequacy of the property insurance following completion of the renovation. The certification must confirm the coverage has been increased, if necessary, to comply with Fannie Mae’s standard property and flood insurance requirements.

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