The conclusion the phrase specialist mortgage within the 201.2 to prohibit lenders regarding disbursing possessions update loan proceeds only in order to a distributor. HUD advised to need you to definitely a lender disburse the fresh new continues possibly entirely to your debtor otherwise as you to the borrower and you may dealer or any other parties towards the exchange. The fresh rule as well as suggested and also make a conforming switch to , hence makes reference to the fresh standards to possess disbursement out of property update loan proceeds.
Comment: Two-team disbursements departs traders vulnerable to unscrupulous individuals. Numerous commenters have been concerned that the advised two-team disbursement criteria perform log off builders instead verify out of commission abreast of end of its work.
The fresh new commenters wrote you to lenders would have no chance to prevent a dishonest borrower away from cashing new check and you can sustaining money
HUD Response. New advised dual disbursement requirements cannot deprive contractors of their directly to commission.