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Mortgage payments in thirds

The Mortgage Payment Process

The Mortgage Payment Process

by guest author Linh Pham, construction consultant

Mortgage Company Controls Insurance Funds

Once you have an agreed scope and cost of repairs and your insurance company has issued payment, for those Homeowners who have a Mortgage Loan on their home, the insurance payment will include the Mortgage company (or Companies if you have multiple lenders on the home), on the payment check(s). By law, Mortgage companies are required to be named on the insurance payment(s), as they have a vested interest in the property, namely the balance of your loan. They want to protect that interest by controlling the funds, and making sure that the money is applied to the Dwelling restoration so that their assets are protected.

You will have to contact your Mortgage company to request their proprietary forms as those forms will need to be completed by you and your Contractor. Ask the Mortgage company to send you their Loss Draft package (documents & forms) by e-mail so you can save time by not waiting for the package to arrive by US (Snail) mail. You will be instructed to endorse the payment check(s), and send it to the Mortgage company along with the estimate of repairs on which the settlement is based, the claim payment summary from your carrier, your signed Contract with the Contractor, and all the proprietary forms that they require you and your Contractor to complete. Only after they receive the above listed documents and the insurance payment check (s) will they begin their document review and funding process.

Funding for Your Construction Project

Unlike a new construction loan, where the funding is dictated by a construction draw schedule provided by your Contractor, in a fire-rebuild, the money to pay the Contractor comes from the Mortgage company. Customarily, the Mortgage company will issue the insurance proceeds in thirds.

The initial one-third of the insurance proceeds is released upon receipt of the above listed documents and the payment check(s). It is not uncommon to have to wait 3-4 weeks for that first payment to arrive. The second installment payment from the Mortgage company is issued at 50% completion of the construction, and the final one-third draw is issued at substantial completion (95% or better) of the project.

The Mortgage company will need to be notified by the Owner as the 50% and substantial completion phases approach, since they will send inspectors to verify the construction progress before they will issue payments.

Educate Your Contractor on the Payment Process

be diligent and forthright in discussing the funding process with your contractorMake sure that the Contractor with which you are working understands this process, and that they are willing to work directly with you and the Mortgage company so that these funds are released in a timely manner.

Before you sign on with a Contractor, do your best to address the funding issue with your Contractor and verify that he has enough capital to fund the project through the completion. Consider the volume of work being performed by the Contractor because if the Contractor is building 10-50 houses simultaneously, the Contractor may have cash flow issues as these projects near completion.

Be careful in vetting your Contractor to make sure that he actually has enough capital to undertake what he’s promising to do. Ask the Contractor if they have enough capital in reserves and backing or credit lines necessary to float the project through to completion, given the Mortgage companies’ payment practice.

Be diligent and forthright in discussing the funding process with your Contractor, as the way in which the Mortgage companies issue draws may not be familiar to your Contractor, especially if they have no experience with insurance restoration/repairs. Review with your Contractor the mortgage payment process as all parties have to enter into the construction agreement with eyes wide open.

If you are unclear in how the process works, and are uncomfortable explaining the process to your Contractor, you could refer them to a consultant (like Scope Writing Services) as they can also be used to help educate your Contractor on the Mortgage process. You don’t have to go through this process alone.

What you need to know before hiring a contractor

North Coast Builders Exchange to Host Webinar on Hiring a Contractor

North Coast Builders Exchange to Host Webinar on Hiring a Contractor

Hiring a contractor requires lots of research on the part of the homeowner.  What questions should you ask?  What kinds of qualifications and experience will be important for a smooth building process?  Our local North Coast Builders Exchange is offering a webinar, free to North Bay fire victims, to help educate with practical tips and advice as you begin the rebuilding process.

Hosted on Zoom, a web conferencing platform, you can watch this event live if you have an internet connection.

 “What You Need to Know Before Hiring a Contractor”

Thursday, Dec. 14, 2017     6:00 – 7:15 p.m.the 

Featuring speakers Mike Behler (Behler Construction Co.) and Craig Lawson (CAL Custom Building Services)

Please click the link below to join the webinar on Thursday, December 14 at 6 p.m.:


Or iPhone one-tap :

US: +16465588656,,436881994#  or +16699006833,,436881994#

Or you can listen on a Telephone:

Dial (for higher quality, dial a number based on your current location):

US: +1 646 558 8656  or +1 669 900 6833

Webinar ID:  436 881 994

coffey strong important update

Update from Jeff Okrepkie

Update from Jeff Okrepkie

Coffey Park,

thre is time for due diligence and weigh all optionsIn this ever evolving rebuild we currently have some progress to share and to be aware of. Before we get to that, I want to address a few things. First, every builder I have talked to has expressed the same sentiment with the rebuild in regards to timeline. That is, at best, no construction will start at least until early April. That is the best case scenario where debris removal is done on time and efficiently, there are no set backs with utilities or public works and weather cooperates. This means there is time for due diligence and to weigh all options. This is particularly important as you need to have a preferred builder and a back up. A back up is crucial because you don’t want to be left at square one should your builder back out. This happened after Scripps Ranch in San Diego, so don’t be surprised if that happens here.

Latest on Builders

There are three predesigned turnkey builders. Those are APM Homes, Gallaher Construction and Synergy Group.The Tuxhorn Company is also doing some upgraded plans for their previous builds in Windrose, Barnes Meadows and the adjacent areas. There are plenty of builders that are willing to do custom homes. However there are a handful of large to mid-size builders that want to work with homeowners in order to develop new plans to build in scale. They include DeNova, Stonefield, American Pacific Builders among others. That last part is the reason for this post. Area 1 and Area 2 have begun to talk to builders in order to revitalize their old plans.

Mapping to Connect Neighbors with Similar Floorplans

We have recently mapped the original Coffey Park subdivision phases #1-5 by floor plan  (not to be confused with our Coffey Strong areas 1-5), The majority of these homes are located in Coffey Strong areas 3 & 4. We are about to begin the process of cross-referencing contact info by plans so we can contact all houses with the same floor plans with the intent to organize, and interview developers that wish to customize floor plans using resident input. You will see emails in the coming weeks to initiate this process.
All of us in Coffey Strong are volunteers and are doing this in what used to be our free time, so it won’t be instantaneous. You do not have to participate if you don’t wish to go this route. It should be said that there may be many plans that fit your lot, so the one derived from your group may not ultimately be the one you pick.
Areas 1 & 2, and the Windrose & Barnes Meadows subdivisions are progressing with this kind of effort and we intend on initiating this process soon for the previous mentioned areas, however that doesn’t mean the rest will be left out. We would still like help in tracking down floor plan info for the other areas to offer the same solution.
Thanks for your time,
Jeff Okrepkie
More about builders and notes on a realistic timeline

More on Builders, and Notes About a Realistic Timeline

More on Builders, and Notes About a Realistic Timeline

map of Coffey Park with areas outlined
Map from Nextdoor.com showing the Areas of Coffey Park’s Coffey Strong organizing efforts. Houses in green are addresses that are part of the Nextdoor network.

Who is Building?

There are a LOT of builders interested in rebuilding Coffey Park. We (the Coffey Strong volunteers) have tentatively grouped them as follows:

1: Builders who are interested in building 50+ houses each: APM, DeNova, Gallaher, Stonefield, Synergy. We just today posted a matrix of information on these builders on the website: http://coffeystrong.com/builder-matrix/. Not all of these builders are willing to build in all Areas; for example, APM is unwilling to build in Areas 1 & 2 because they are focused on rebuilding Condiotti homes, which are mostly in Areas 3 & 4.

2. Medium-sized builders who want to do 10-50 houses each: American Pacific Builders, Tuxhorn, Cobblestone, Shook & Waller, and a bunch more.

3. Small builders who want to do fewer than 10 houses each — there are probably at least a dozen of them.

Builders Won’t Likely Stick to One Area Only

Every one of these builders are different (look at the matrix mentioned above for an example of what I mean). Those differences will have a BIG effect on which builder a homeowner selects. I don’t think it’s going to be as simple as mapping builders into Areas. I don’t think we even have a clear idea yet HOW we’re going to help match up homeowners with builders, at least not on the scale of all 1,100 burned homes in Coffey Park. Another point is that some of these builders still aren’t ready to lay out their complete program — an example is APM, who won’t have real pricing until the end of January. It takes a while for a large builder to nail down all the elements of a program this big.

Some Public Infrastructure is Needed First

When will this all get started? It doesn’t seem likely that rebuilding will be able to start until late spring — and it’s not just the weather that’s the problem! The entire neighborhood must be certified by the City & County as ready for rebuilding. Before that can happen, the infrastructure must be tested and repaired to some acceptable level (water, sewer, gas, underground electric, storm drains, etc.). That’s going to take some time.

Those builders who say that they expect to start building in February are probably just trying to nail down customers as quickly as possible. We don’t believe that Coffey Park will be ready for building to start in February. Areas 1 & 2 are different because the houses were built in 1977-1980, compared with 1986-1990 in Areas 3 & 4. Because of the 10-year time difference, the houses in Areas 1 & 2 are generally smaller. Some of the above builders are not interested in such small houses. Area 2 is working on a plan that involves boiling the original 10 Cal West plans down to five models, updating those plans to current code, and then finding a builder willing to work with that package.

The bottom line is that we are still very early in this process.  We DO understand the need for specifics, but we’re not even close to having all the data yet. We’re working on it. Please be patient.

Adapted from a Post originally written for Nextdoor on December 7, 2017 by Geoff Walker (volunteer, Area 4)

builders matrix

Builders Matrix

Builders Matrix

Builder Matrix
Builder Matrix-click to enlarge view

This is a builders matrix of the 5 largest builders intending to work in the Coffey Park area: APM, DeNova, Gallaher, Stonefield and Synergy. These are builders looking to do a minimum of 50 homes and have the capacity to do hundreds. These are for “turn-key” homes. That means they take care of nearly everything for you, as you can see.

This is not intended as an endorsement for one or another. This is just informational so you do not waste your time if there is a factor that is a deal breaker for you, like what kind of foundation they use. There are also dozens of builders willing to do much smaller groups. There are too many to list but the ones that I have heard most often are The Tuxhorn Company, Shook & Waller, G Family Construction, and American Pacific Builders.

Click to Download Builder’s Matrix .pdf file

Originally posted on Nextdoor by Jeff Okrepkie, December 5, 2017.