What are the accounting system requirements for the 203(k) rehabilitation escrow account?

The mortgagee must utilize an accounting system that records all transactions from the rehabilitation escrow account and which documents the amount escrowed for each of these categories: 
• repairs 
• Contingency Reserve 
• inspection fees 
• title update fees 
• Mortgage Payments 
• other fees (i.e., architectural and engineering fees, Consultant fees, permits, supplemental origination fee and discount points on repair costs)  

The accounting system must provide: 
• the Borrower’s name and property address 
• the FHA case number 
• the closing date 
• the scheduled completion date 
• the amount of funds in the rehabilitation escrow account 
• the interest rate provided on the escrow account  

For each draw on the escrow account, the accounting system must record: 
• a list of Disbursements 
• the number of Days in escrow 
• the amount of money in the account 
• the interest earned for the applicable time period  

For additional information see Handbook 4000.1 II.A.8.a.xviii(A) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04931