The mortgagee will release escrow funds upon completion of the rehabilitation in compliance with the Work Write-Up or work plan, as applicable. The mortgagee may issue the check directly to the borrower alone if the release is for:
• materials for work performed under a self-help agreement; or
• materials for items prepaid by the borrower under contract with the supplier.
For a Standard 203(k) Rehabilitation Mortgage Insurance Program, the mortgagee must issue checks to both the borrower and contractors as co-payees, unless the borrower provides written authorization, at each draw, to issue the check directly to the contractor.
For a Limited 203(k), the mortgagee may issue checks solely to the contractor, or issue checks to the borrower and the contractor as co-payees.
For additional information see Handbook 4000.1 II.A.8.a.xviii.(C)(1)(d) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh