As previously announced, the VA is in the process of revising their “Lender’s Handbook” (VA Manual 26-7). Revised Chapter 10, 18-c requires the following in connection with a loan for new construction, in which the “Veteran, acting as a general contractor, is building a home for his/her own occupancy” (VA Lender’s Handbook ch. 10, 18-a):
“The lender must obtain the Veteran’s signed acknowledgment that no construction warranty is provided and that VA will not assist with any construction defects.” (Ibid. 18-c)
To enable clients in meeting this requirement, we are providing Cx13849 as an “upon request” document. Once requested, it will print for clients under the following default conditions:
- Base Type = VA
- Document Package Type = Closing
- Loan Purpose = ConstructionOnly
- Loan Purpose = ConstructionToPermanent
- Occupancy = PrimaryResidence
This document is comprised of three paragraphs. The first paragraph outlines the fact that the Borrower (or Borrowers) will be acting as the general contractor for the home to be built in connection with the loan. The second paragraph consists of the Borrower acknowledging that the VA will not provide assistance for construction defects and that no warranties will apply. The third paragraph consists of the Borrower acknowledging this information and holding the closing attorney and lender harmless from any claims arising therefrom.
This document is available immediately. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
DR 287317