Frequently Asked Questions

1. The reimbursement is the money that is paid back to  borrower out of the rehab escrow funds for repayment of rehab expense  paid to the contractor for the work that was completed and paid for.

• Pay the contractor’s their initial starting funds. (Down payment) When they get to their 1st milestone or need more money, request a draw and inspection for  reimbursement of funds you gave to your contractor to start the project  and have them sign a lien waiver.

• Repeat step 1 of the process until the rehab is completed. 

• Typically, 1 draw per $10,000 in rehab or whatever you can afford for your upfront cost to start your rehab. Remember, this is a reimbursement of funds. You need to determine what your cash flow looks like. If your budget is $75,000 and you ask for 3 draws be prepared that your initial out of pocket cost will be $25,000 and you will keep using that $25,000 throughout the entire rehab. Again, figure out what you can afford to pay upfront and base that on how many draws you are going to need.

• The costs for the inspection and disbursement are collected upfront at $400 per draw at closing. If you don’t plan for enough inspections up front you will need to pay for them as you go before you can get your reimbursement.  

You can order your 1st inspection 5 days after closing. But you must have an inspection withing the 1st 90 days of closing and within 90 days of every inspection.  

• Send an email to sgcdraw@sekur.com
• In subject line: Request for inspection and loan number
• Body of email:
• Client’s last name
• Client’s rehab address
• Contact person for inspector
• Contact phone number
• Contractor’s email
• Items that are completed

For any additional inspection or disbursements that are needed above and beyond those that were initially prepaid for, the fee will come out of the reimbursement draw. If you don’t have a reimbursement coming back, you will need to pay out of pocket before the inspection is ordered. Inspections 

Fees are $150 and the wire fees are $250. Call Lake City Servicing at 800-630-9252 to pay for those fees.  

We do not do change orders. Unexpected repairs will need to come out of the client’s own pocket. If SCG held a contingency, that contingency would not be able to be released until rehab is 100% completed. Then you would be able to use those funds.

WE DO NOT DO CHANGE ORDERS!

You and your contractor need to think about the unexpected cost that always comes up in renovating that might happen. Make sure to have a contractors contingence set aside for those unexpected cost and do not count on change orders. 

Reasons For Change Orders

• Haste or inadequate planning in preparing the initial contract.
• A poorly defined scope of work.
• Compressed project schedules.
• Unrealistic cost constraints.
• Time and material changes; and
• Owner-directed acceleration.

Observation

In my experience, contractors just want the bid, so they don’t put in that contractor’s contingence which in turn, hurts our clients in the long run. So, if you are getting multiple bids and a bid is higher because of a contingency, I would go with that contractor because they know the reality of rehab.

To get your reimbursement funds you will need to first have an inspection. The inspector needs to prove through photos the items you are requesting reimbursement for is completed. Next you will need to fill out a lien waiver and a banking information sheet. It is important that you carefully fill out the banking information sheet. We don’t want the wire to end up in someone else’s account. We only wire to the borrowers account please do not use any other account. But we do reserve the right to pay a contractor or subcontractor directly if there  are issues.  

• Monthly payments not made – It takes 3-5 business days for payments to clear before the wire can be released. Best to make your loan payments by the 1st
• NSF payments – takes 5 days to clear payments after an NFS payment is made
• Outstanding fees owed
• The maturity date expired with no extension
• Taxes and/or Insurance lapsed

We need all paperwork into our office by 11:00 am Pacific time if you want your wire to go out the same day. Paperwork would be:

• Lien Waiver
• Banking Info Sheet
• Permits
• Paid Receipts and/or invoices

Wires go out daily between 3:00 & 4:00 pm Central Time – It is up to your bank when it gets released. Some banks release immediately, others release next day. We have no control over your bank and what their processes are.