## Chapter 13 Escrows, Escrow Agents, Compliance Inspection Reports, and the Authorization of Funds

#### Overview

+------------+---------------------------------------------------------+
| ##### In   | > This chapter contains information about escrows,      |
| troduction | > escrow agents, compliance inspection reports, and the |
|            | > authorization to release funds, including:            |
|            |                                                         |
|            | -   general information about escrows                   |
|            |                                                         |
|            | -   selection of the escrow agent                       |
|            |                                                         |
|            | -   preparation of the escrow agreement package         |
|            |                                                         |
|            | -   review and approval of *VA Form 26-1839*,           |
|            |     *Compliance Inspection\                             |
|            |     Report*, and                                        |
|            |                                                         |
|            | -   management and authorization to release funds.      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > This chapter includes the following sections:         |
| ### In thi |                                                         |
| s Chapter  |                                                         |
| {#in-this- |                                                         |
| chapter .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

  ---------- ----------------------------------------------- ------------
  Section    Section Name                                    See Page

  A          General Information About Escrows               13-A-1

  B          Selection of the Escrow Agent                   13-B-1

  C          Preparation of the Escrow Agreement Package     13-C-1

  D          Review and Approval of *VA Form 26-1839,        13-D-1
             Compliance Inspection Report*                   

  E          Management and Authorization to Release Funds   13-E-1
  ---------- ----------------------------------------------- ------------

## Section A General Information About Escrows {#section-a-general-information-about-escrows .unnumbered}

#### Overview {#overview-1 .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This section contains information about escrows for   |
| troduction | > the Specially Adapted Housing (SAH) and Special       |
|  {#introdu | > Housing Adaptations (SHA) Grants.                     |
| ction-1 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > This section includes the topic "Escrow Guidelines."  |
| ### In thi |                                                         |
| s Section  |                                                         |
| {#in-this- |                                                         |
| section .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

#### Escrow Guidelines {#escrow-guidelines .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information about escrow          |
| troduction | > guidelines, including:                                |
|  {#introdu |                                                         |
| ction-2 .u | -   definitions                                         |
| nnumbered} |                                                         |
|            | -   when escrows are required                           |
|            |                                                         |
|            | -   general guidelines                                  |
|            |                                                         |
|            | -   when the escrow account is established              |
|            |                                                         |
|            | -   release of funds                                    |
|            |                                                         |
|            | -   use of grant funds to acquire land, and             |
|            |                                                         |
|            | -   use of earned interest.                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The table below defines terms related to this topic.  |
| # Definiti |                                                         |
| ons {#defi |                                                         |
| nitions .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-----------------+----------------------------------------------------+
| Term            | Definition                                         |
+-----------------+----------------------------------------------------+
| Escrow Account  | ***Escrow*** ***account*** is an account where     |
|                 | money \[Specially Adapted Housing (SAH)/Special    |
|                 | Housing Adaptations (SHA) grant funds and          |
|                 | supplemental funds, such as personal funds and     |
|                 | construction loan funds\] is put into the custody  |
|                 | of a third party (escrow agent). The escrow is to  |
|                 | be held by the escrow agent until authorization    |
|                 | from Department of Veterans Affairs (VA) to        |
|                 | release the funds. Once the agreed upon conditions |
|                 | have been met, the escrow agent delivers the       |
|                 | escrowed funds to the grantee, such as a creditor  |
|                 | or contractor.                                     |
|                 |                                                    |
|                 | ***Reference***: For more information about the    |
|                 | release of escrow funds, see Appendix A: "Grant    |
|                 | Funds Flow Chart."                                 |
+-----------------+----------------------------------------------------+
| Escrow          | An ***escrow agreement*** is a legal instrument    |
| agreement       | used to govern the control and release of funds in |
|                 | escrow.                                            |
+-----------------+----------------------------------------------------+

Continued on next page

Escrow Guidelines, Continued

+------------+---------------------------------------------------------+
| ##         | > ***When Escrows Are Required***:                      |
| ### When E |                                                         |
| scrows Are | > Escrows are required for all SAH/SHA cases.           |
|  Required  |                                                         |
| {#when-esc | > ***Exception:***                                      |
| rows-are-r |                                                         |
| equired .u | > Escrows are ***not*** required if funds are to be     |
| nnumbered} | > released immediately or within 10 working days after  |
|            | > receipt of the grant check.                           |
|            |                                                         |
|            | > Examples:                                             |
|            |                                                         |
|            | -   Plan 4 for SAH grants since there is no             |
|            |     > construction or remodeling, or                    |
|            |                                                         |
|            | -   any turn-key project.                               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ge   | > For both SAH and SHA cases, the grant and the         |
| neral Guid | > veteran's funds must be:                              |
| elines {#g |                                                         |
| eneral-gui | -   deposited in an account in the veteran's name       |
| delines .u |                                                         |
| nnumbered} | -   subject to the control of VA, and                   |
|            |                                                         |
|            | -   readily available without charge or early           |
|            |     withdrawal penalty.                                 |
|            |                                                         |
|            |     > For both SAH and SHA cases, loan construction     |
|            |     > funds are subject to control of VA, if allowed by |
|            |     > the lender. If VA does not have control of loan   |
|            |     > construction funds, the grant and the veteran's   |
|            |     > funds cannot be released over and above the value |
|            |     > of in-place improvements.                         |
|            |                                                         |
|            |     > For both SAH and SHA cases, funds should be       |
|            |     > placed in an interest bearing escrow account if:  |
|            |                                                         |
|            | -   it is not contrary to local, State, and Federal     |
|            |     laws or customs                                     |
|            |                                                         |
|            | -   funds are available upon demand, and                |
|            |                                                         |
|            | -   the funds are not commingled with the veteran's     |
|            |     personal funds.                                     |
+------------+---------------------------------------------------------+

Continued on next page

Escrow Guidelines, Continued

+------------+---------------------------------------------------------+
| #####      | > The escrow account is established after:              |
| When the A |                                                         |
| ccount Is  | -   *VA Form 26-1854*, *Escrow Agreement* has been      |
| Establishe |     signed by all parties                               |
| d. {#when- |                                                         |
| the-accoun | -   the check has been endorsed, and                    |
| t-is-estab |                                                         |
| lished. .u | -   all supplemental funds are deposited.               |
| nnumbered} |                                                         |
|            |     > ***IMPORTANT***: The SAH agent must assure that   |
|            |     > the grant funds are placed in the escrow account  |
|            |     > in a timely manner to assure that the:            |
|            |                                                         |
|            | -   veteran receives the highest benefit from the       |
|            |     proceeds                                            |
|            |                                                         |
|            | -   project is not unnecessarily delayed, and           |
|            |                                                         |
|            | -   in the event of a veteran's death, with Central     |
|            |     Office (CO) concurrence,\                           |
|            |     the estate may continue with the project or have    |
|            |     the property returned to\                           |
|            |     the same condition it was prior to grant approval.  |
|            |                                                         |
|            |     ***Reference***: For more information about death   |
|            |     cases see Chapter 15, Section D, "Death Cases."     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Fund releases are either:                             |
| Release of |                                                         |
|  Funds. {# | -   scheduled releases, or                              |
| release-of |                                                         |
| -funds. .u | -   a lump sum payment at the end of the project.       |
| nnumbered} |                                                         |
|            |     > ***References***: For more information about      |
|            |     > scheduled releases and lump sum payments, see     |
|            |     > Chapter 13, Sections C, "Preparation of the       |
|            |     > Escrow Agreement Package," and E, "Management and |
|            |     > Authorization to Release Funds."                  |
+------------+---------------------------------------------------------+

Continued on next page

Escrow Guidelines, Continued

+------------+---------------------------------------------------------+
| ##### Use  | > In some cases, the veteran may need to use grant      |
| of Grant F | > funds to acquire the land. The maximum amount         |
| unds to Ac | > permissible for land acquisition is 50 percent of     |
| quire Land | > grant funds.                                          |
|  {#use-of- |                                                         |
| grant-fund | > If a veteran wishes to use the grant funds to acquire |
| s-to-acqui | > land, the following must occur:                       |
| re-land .u |                                                         |
| nnumbered} | -   Regional Counsel (RC) must give an acceptable       |
|            |     opinion on title, showing\                          |
|            |     that the veteran will receive good and marketable   |
|            |     title                                               |
|            |                                                         |
|            | -   CO must approve the use of grant funds above 50     |
|            |     percent for the land\                               |
|            |     acquisition, and                                    |
|            |                                                         |
|            | -   the SAH agent must fully document the grant file.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Any interest earned on the grant funds is outside the |
| Use of Ear | > scope of the escrow agreement. The veteran chooses    |
| ned Intere | > how to handle the earned interest upon completion of  |
| st {#use-o | > the escrow agreement.                                 |
| f-earned-i |                                                         |
| nterest .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

## Section B Selection of the Escrow Agent {#section-b-selection-of-the-escrow-agent .unnumbered}

#### Overview {#overview-2 .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information about the selection   |
| troduction | > of the escrow agent, including:                       |
|  {#introdu |                                                         |
| ction-3 .u | -   escrow agent selection guidelines                   |
| nnumbered} |                                                         |
|            | -   making initial contact with the escrow agent, and   |
|            |                                                         |
|            | -   responsibilities of the escrow agent.               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > This section includes the following topics:           |
| # In this  |                                                         |
| Section {# |                                                         |
| in-this-se |                                                         |
| ction-1 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

  ---------- ----------------------------------------------- ------------
  Topic      Topic Name                                      See Page

  1          Escrow Agent Selection Guidelines               13-B-2

  2          Making Initial Contact with the Escrow Agent    13-B-4

  3          Responsibilities of the Escrow Agent            13-B-5
  ---------- ----------------------------------------------- ------------

#### Escrow Agent Selection Guidelines {#escrow-agent-selection-guidelines .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information about escrow agent    |
| troduction | > selection guidelines, including:                      |
|  {#introdu |                                                         |
| ction-4 .u | -   types of qualifying institutions and agencies       |
| nnumbered} |                                                         |
|            | -   characteristics of the escrow agent                 |
|            |                                                         |
|            | -   who selects the escrow agent                        |
|            |                                                         |
|            | -   when to select an escrow agent                      |
|            |                                                         |
|            | -   notification of the selected escrow agent, and      |
|            |                                                         |
|            | -   escrow agent fees.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > The following institutions or agencies qualify as     |
| ### Types  | > escrow agents:                                        |
| of Qualify |                                                         |
| ing Instit | -   banks                                               |
| utions and |                                                         |
|  Agencies  | -   attorneys                                           |
| {#types-of |                                                         |
| -qualifyin | -   Federal Housing Administration (FHA) approved       |
| g-institut |     mortgagees                                          |
| ions-and-a |                                                         |
| gencies .u | -   title insuring companies                            |
| nnumbered} |                                                         |
|            | -   supervised lenders, as defined in Title 38 United   |
|            |     States Code 3702(d),\                               |
|            |     and                                                 |
|            |                                                         |
|            | -   finance groups of the Department of Veterans        |
|            |     Affairs (VA), upon\                                 |
|            |     approval by Central Office (CO).                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > The escrow agent, whether an individual or an         |
| ### Charac | > institution, should:                                  |
| teristics  |                                                         |
| of the Esc | -   be acceptable to the veteran, contractor, and       |
| row Agent  |     lender (if applicable)                              |
| {#characte |                                                         |
| ristics-of | -   practice financially sound principles, and          |
| -the-escro |                                                         |
| w-agent .u | -   be of unquestionable integrity.                     |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Wh   | > The veteran, contractor, lender (if applicable), and  |
| o Selects  | > the Specially Adapted Housing (SAH) agent work        |
| the Escrow | > together to select an escrow agent.                   |
|  Agent {#w |                                                         |
| ho-selects |                                                         |
| -the-escro |                                                         |
| w-agent .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

Escrow Agent Selection Guidelines, Continued

+------------+---------------------------------------------------------+
| ##         | > The escrow agent must be selected:                    |
| ### When t |                                                         |
| o Select a | -   at the time of grant approval, and                  |
| n Escrow A |                                                         |
| gent {#whe | -   before the receipt of the grant check.              |
| n-to-selec |                                                         |
| t-an-escro |                                                         |
| w-agent .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The veteran, contractor, or lender notifies the SAH   |
| # Notifica | > agent of the selected escrow agent, including the:    |
| tion of th |                                                         |
| e Selected | -   company name                                        |
|  Escrow Ag |                                                         |
| ent {#noti | -   company address                                     |
| fication-o |                                                         |
| f-the-sele | -   name of the escrow agent, and                       |
| cted-escro |                                                         |
| w-agent .u | -   telephone/fax number of the escrow agent.           |
| nnumbered} |                                                         |
|            |     ***Note:*** All parties of the project must agree   |
|            |     to the use of the selected escrow agent.            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The escrow agent usually sets the fee for his/her     |
| Escrow Age | > services. For fees that seem excessive, the veteran   |
| nt Fees {# | > and the escrow agent usually negotiate for a more     |
| escrow-age | > reasonable fee. When negotiations fail, the SAH agent |
| nt-fees .u | > discusses the matter with the veteran and suggests    |
| nnumbered} | > selecting an escrow agent who charges a lesser fee.   |
|            |                                                         |
|            | > ***Note***: The veteran has freedom of choice when it |
|            | > comes to selecting the escrow agent.                  |
+------------+---------------------------------------------------------+

#### Making Initial Contact with the Escrow Agent {#making-initial-contact-with-the-escrow-agent .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information about making initial  |
| troduction | > contact with the escrow agent, including:             |
|  {#introdu |                                                         |
| ction-5 .u | -   the purpose                                         |
| nnumbered} |                                                         |
|            | -   when to perform, and                                |
|            |                                                         |
|            | -   how to brief the escrow agent.                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The purpose of contacting the escrow agent is to      |
| Purpose {# | > discuss the:                                          |
| purpose .u |                                                         |
| nnumbered} | -   escrow process, and                                 |
|            |                                                         |
|            | -   escrow agent's responsibilities.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Make initial contact with the escrow agent upon       |
| ### When t | > notification of the selected escrow agent.            |
| o Perform  |                                                         |
| {#when-to- |                                                         |
| perform .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Follow the steps in the table below to brief the      |
| ### How to | > selected escrow agent.                                |
|  Brief Esc |                                                         |
| row Agent  |                                                         |
| {#how-to-b |                                                         |
| rief-escro |                                                         |
| w-agent .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | Contact the escrow agent and discuss:                        |
|       |                                                              |
|       | -   that the veteran was approved for a grant                |
|       |                                                              |
|       | -   the approximate time frame for receipt of all funds      |
|       |                                                              |
|       | -   that grant funds are only released upon authorization    |
|       |     from\                                                    |
|       |     the Department of Veterans Affairs (VA)                  |
|       |                                                              |
|       | -   that supplemental funds, if relevant to the case, will   |
|       |     be\                                                      |
|       |     deposited and will also be released upon authorization   |
|       |     from\                                                    |
|       |     VA                                                       |
|       |                                                              |
|       | -   how the staged releases operate, and                     |
|       |                                                              |
|       | -   the fees for the escrow agent's services.                |
+-------+--------------------------------------------------------------+
| 2     | Explain the escrow agent's responsibilities and receive      |
|       | written confirmation of the escrow agent's acceptance of VA  |
|       | requirements.                                                |
|       |                                                              |
|       | ***Reference***: For more information about the escrow       |
|       | agent's responsibilities, see "Responsibilities of the       |
|       | Escrow Agent" later in this section.                         |
+-------+--------------------------------------------------------------+

#### Responsibilities of the Escrow Agent

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information about the             |
| troduction | > responsibilities of the escrow agent, including:      |
|            |                                                         |
|            | -   setting up the escrow account                       |
|            |                                                         |
|            | -   completing the escrow fee in Item 8 of *VA Form     |
|            |     26-1854*, *Escrow\                                  |
|            |     Agreement*                                          |
|            |                                                         |
|            | -   scheduling the endorsement of the grant check and   |
|            |     obtaining signatures\                               |
|            |     on *VA Form 26-1854*                                |
|            |                                                         |
|            | -   releasing the funds in accordance with VA           |
|            |     instructions, and                                   |
|            |                                                         |
|            | -   accounting for all funds released.                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Sett | > The escrow agent is responsible for setting up the    |
| ing Up the | > account:                                              |
|  Escrow Ac |                                                         |
| count {#se | -   in the veteran's name, and                          |
| tting-up-t |                                                         |
| he-escrow- | -   with the following instructions: "Written           |
| account .u |     authorization from VA for any\                      |
| nnumbered} |     withdrawal is required."                            |
|            |                                                         |
|            |     > ***Rationale***: This ensures that VA has control |
|            |     > over the funds and the veteran is protected.      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The escrow agent is responsible for completing Item 8 |
| # Completi | > of *VA Form 26-1854*, *Escrow Agreement*.             |
| ng Item 8  |                                                         |
| of VA Form | > ***Note***: Item 8 is the escrow fee to be charged to |
|  26-1854 { | > the veteran and should not include any other costs or |
| #completin | > fees.                                                 |
| g-item-8-o |                                                         |
| f-va-form- |                                                         |
| 26-1854 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

Responsibilities of the Escrow Agent, Continued

+------------+---------------------------------------------------------+
| ##### Sche | > Upon receipt of the grant check from the Specially    |
| dule Endor | > Adapted Housing (SAH) agent, the escrow agent is      |
| sement of  | > responsible for setting up an appointment with the    |
| the Grant  | > veteran for the check's endorsement and deposit.      |
| Check & Ob |                                                         |
| taining Si | > After depositing the grant check in escrow, the       |
| gnatures o | > escrow agent is responsible for:                      |
| n the VA F |                                                         |
| orm 26-185 | -   signing the original copy of *VA Form 26-1854*      |
| 4 {#schedu |                                                         |
| le-endorse | -   obtaining signatures from the veteran and           |
| ment-of-th |     contractor on\                                      |
| e-grant-ch |     the original copy of *VA Form 26-1854*, and         |
| eck-obtain |                                                         |
| ing-signat | -   providing copies of *VA Form 26-1854* to VA, the    |
| ures-on-th |     veteran, and the\                                   |
| e-va-form- |     contractor for their records.                       |
| 26-1854 .u |                                                         |
| nnumbered} |     ***Note***: All signatures must be witnessed by     |
|            |     either the SAH agent, escrow agent, or be           |
|            |     notarized.                                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > The escrow agent is responsible for releasing the     |
| ### Releas | > grant funds in accordance with the disbursement       |
| e of the F | > schedule only after receiving written authorization   |
| unds {#rel | > from VA.                                              |
| ease-of-th |                                                         |
| e-funds .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Acco | > The escrow agent is responsible for submitting a full |
| unting of  | > accounting to VA of all funds released. This          |
| Funds {#ac | > accounting includes:                                  |
| counting-o |                                                         |
| f-funds .u | -   lien waivers                                        |
| nnumbered} |                                                         |
|            | -   evidence of funds released, such as receipts, wire  |
|            |     transfers, cancelled\                               |
|            |     checks, etc.                                        |
|            |                                                         |
|            | -   the date the escrow account was closed, and         |
|            |                                                         |
|            | -   a statement concerning the release of all interest  |
|            |     accrued.                                            |
+------------+---------------------------------------------------------+

## Section C Preparation of the Escrow Agreement Package {#section-c-preparation-of-the-escrow-agreement-package .unnumbered}

#### Overview {#overview-3 .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This section contains information about preparing the |
| troduction | > escrow agreement package, including:                  |
|  {#introdu |                                                         |
| ction-7 .u | -   general information about escrow agreement packages |
| nnumbered} |                                                         |
|            | -   *VA Form 26-1854*, Escrow Agreement Guidelines      |
|            |                                                         |
|            | -   *VA Form 26-1854*, Disbursement Schedule            |
|            |     Guidelines, and                                     |
|            |                                                         |
|            | -   instruction letter guidelines.                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > This section includes the following topics:           |
| # In this  |                                                         |
| Section {# |                                                         |
| in-this-se |                                                         |
| ction-2 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

  ---------- ----------------------------------------------- ------------
  Topic      Topic Name                                      See Page

  1          General Information About Escrow Agreement      13-C-2
             Packages                                        

  2          Guidelines for VA Form 26-1854, Escrow          13-C-4
             Agreement                                       

  3          Guidelines for VA Form 26-1854, Disbursement    13-C-6
             Schedule                                        

  4          Instruction Letter Guidelines                   13-C-10
  ---------- ----------------------------------------------- ------------

#### General Information About Escrow Agreement Packages {#general-information-about-escrow-agreement-packages .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information about the escrow      |
| troduction | > agreement package, including:                         |
|  {#introdu |                                                         |
| ction-8 .u | -   the purpose                                         |
| nnumbered} |                                                         |
|            | -   when to perform                                     |
|            |                                                         |
|            | -   components of the escrow agreement package          |
|            |                                                         |
|            | -   delivery of the escrow agreement package, and       |
|            |                                                         |
|            | -   updating the Specially Adapted Housing (SAH)/The    |
|            |     Appraisal System\                                   |
|            |     (TAS).                                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Pu   | > The purpose of preparing the escrow agreement package |
| rpose {#pu | > is to provide the escrow agent with all necessary     |
| rpose-1 .u | > information to establish the escrow account.          |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Prepare the escrow agreement package when the         |
| # When to  | > Treasury check is received at the Regional Office     |
| Perform {# | > (RO) or Regional Loan Center (RLC).                   |
| when-to-pe |                                                         |
| rform-1 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Components of the escrow agreement package include:   |
| Components |                                                         |
|  of the Es | -   *four* unsigned copies of *VA Form 26-1854*,        |
| crow Agree |     *Escrow Agreement*, including\                      |
| ment Packa |     the disbursement schedule                           |
| ge {#compo |                                                         |
| nents-of-t | -   the letter of instruction to the escrow agent, and  |
| he-escrow- |                                                         |
| agreement- | -   the grant check.                                    |
| package .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | Deliver the escrow agreement package through:           |
| ### Delive |                                                         |
| ry of the  | -   hand delivery, or                                   |
| Escrow Agr |                                                         |
| eement Pac | -   certified mail.                                     |
| kage {#del |                                                         |
| ivery-of-t |     > ***Rationale***: Both methods of delivery ensure  |
| he-escrow- |     > proof of delivery of the escrow agreement         |
| agreement- |     > package.                                          |
| package .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

General Information About Escrow Agreement Packages, Continued

+------------+---------------------------------------------------------+
| #          | > Update SAH/TAS with escrow information.               |
| #### Updat |                                                         |
| ing the SA |                                                         |
| H/TAS {#up |                                                         |
| dating-the |                                                         |
| -sahtas .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

#### Guidelines for VA Form 26-1854, Escrow Agreement  {#guidelines-for-va-form-26-1854-escrow-agreement .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information about guidelines for  |
| troduction | > *VA Form 26-1854, Escrow Agreement*, including:       |
|  {#introdu |                                                         |
| ction-9 .u | -   the purpose of *VA Form 26-1854*                    |
| nnumbered} |                                                         |
|            | -   when to complete                                    |
|            |                                                         |
|            | -   the parts of *VA Form 26-1854*, and                 |
|            |                                                         |
|            | -   a review for accuracy.                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The purpose of *VA Form 26-1854* is to notify the     |
| # Purpose  | > escrow agent, veteran, and contractor about how the   |
| of VA Form | > grant funds, loan funds, and veteran's funds, if any, |
|  26-1854 { | > will be released.                                     |
| #purpose-o |                                                         |
| f-va-form- |                                                         |
| 26-1854 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > *VA Form 26-1854* should be prepared:                 |
| # When to  |                                                         |
| Complete { | -   after the grant has been approved by the Loan       |
| #when-to-c |     Guaranty Officer (LGO), or\                         |
| omplete .u |     designee, and                                       |
| nnumbered} |                                                         |
|            | -   upon receipt of the grant check.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Part | > The table below describes the parts of *VA Form       |
| s of VA Fo | > 26-1854*.                                             |
| rm 26-1854 |                                                         |
|  {#parts-o |                                                         |
| f-va-form- |                                                         |
| 26-1854 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------------------+--------------------------------------------------+
| Part              | Description                                      |
+-------------------+--------------------------------------------------+
| Parties to the    | Lists the names of the parties to the agreement, |
| agreement.        | including the:                                   |
|                   |                                                  |
|                   | -   veteran                                      |
|                   |                                                  |
|                   | -   contractor, and                              |
|                   |                                                  |
|                   | -   escrow agent.                                |
+-------------------+--------------------------------------------------+
| Director or       | Indicates the name of the individual at          |
| designee.         | Department of Veterans Affairs (VA) who          |
|                   | authorizes the release of funds.                 |
+-------------------+--------------------------------------------------+
| Property.         | Provides a legal description of the property.    |
+-------------------+--------------------------------------------------+
| Financial terms.  | Indicates the amount of loan funds and veteran's |
|                   | personal funds used in the project.              |
+-------------------+--------------------------------------------------+
| Disbursement      | Defines the scheduled releases and the amount of |
| schedule.         | funds to be released.                            |
+-------------------+--------------------------------------------------+

Continued on next page

Guidelines for VA Form 26-1854, Escrow Agreement, Continued

  -----------------------------------------------------------------------
  Parts of VA Form 26-1854 (continued)

  -----------------------------------------------------------------------

  -------------------- --------------------------------------------------
  Part                 Description

  Escrow agent fee.    Indicates the cost of the services provided by the
                       escrow agency.

  Signatures.          Provides an area for the signatures of all
                       parties.
  -------------------- --------------------------------------------------

+------------+---------------------------------------------------------+
| #####      | > The following information must be reviewed for        |
| Reviewing  | > accuracy on *VA Form 26-1854*:                        |
| for Accura |                                                         |
| cy {#revie | -   the contract and commitment letter from the lender  |
| wing-for-a |                                                         |
| ccuracy .u | -   the funds, and                                      |
| nnumbered} |                                                         |
|            | -   assurance that the stage inspections coincide with  |
|            |     the draws.                                          |
+------------+---------------------------------------------------------+

#### Guidelines for VA Form 26-1854, Disbursement Schedule {#guidelines-for-va-form-26-1854-disbursement-schedule .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about preparing the   |
| roduction  | > disbursement schedule, including:                     |
| {#introduc |                                                         |
| tion-10 .u | -   a reference                                         |
| nnumbered} |                                                         |
|            | -   the purpose                                         |
|            |                                                         |
|            | -   stages of the disbursement schedule                 |
|            |                                                         |
|            | -   conditions that impact the disbursement schedule    |
|            |                                                         |
|            | -   calculating releases, and                           |
|            |                                                         |
|            | -   how to generate the schedule (VA Form *26-1854,     |
|            |     Disbursement Schedule*) .                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Refe | > For more information about the authorization of       |
| rence {#re | > funds, including lump sum payments and staged         |
| ference .u | > releases, see Chapter 13, Section E, "Guidelines for  |
| nnumbered} | > Escrow Fund Release."                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Pu   | > The purpose of preparing the disbursement schedule is |
| rpose {#pu | > to define the following information for all parties   |
| rpose-2 .u | > in both *Specially Adapted Housing (SAH) and Special  |
| nnumbered} | > Housing Adaptations (SHA) cases*:                     |
|            |                                                         |
|            | -   the stages of the disbursement schedule, and        |
|            |                                                         |
|            | -   the amount of funds to be released at each stage.   |
+------------+---------------------------------------------------------+

Continued on next page

Guidelines for VA Form 26-1854, Disbursement Schedule, Continued

+------------+---------------------------------------------------------+
| ##         | > The disbursement schedule will usually contain five   |
| ### Stages | > stages, which coincide with the stages of the         |
|  of the Di | > construction process. The disbursement schedule       |
| sbursement | > typically calls for 20 percent of the total funds to  |
|  Schedule  | > be paid out for each stage. The table below describes |
| {#stages-o | > the five stages involved in the disbursement          |
| f-the-disb | > schedule; however, the description of each stage may  |
| ursement-s | > be modified to fit the needs of the project.          |
| chedule .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Stage | Description                                                  |
+-------+--------------------------------------------------------------+
| 1     | The foundation walls are complete and ready for backfill.    |
+-------+--------------------------------------------------------------+
| 2     | The building is enclosed and rough in is complete.           |
+-------+--------------------------------------------------------------+
| 3     | The following types of fixtures are set:                     |
|       |                                                              |
|       | -   plastered/sheetrock                                      |
|       |                                                              |
|       | -   trimmed, and                                             |
|       |                                                              |
|       | -   plumbing fixtures.                                       |
|       |                                                              |
|       |     ***IMPORTANT***: This stage does *not* include the       |
|       |     finished floors, doors, decorating, electrical fixtures, |
|       |     or heating equipment.                                    |
+-------+--------------------------------------------------------------+
| 4     | The building is complete.                                    |
+-------+--------------------------------------------------------------+
| 5     | Payment of the 20% holdback to the contractor is made.       |
+-------+--------------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The table below illustrates a disbursement schedule   |
| Example {# | > where the:                                            |
| example .u |                                                         |
| nnumbered} | -   awarded SAH grant is for \$50,000.00                |
|            |                                                         |
|            | -   supplementary bank loan is \$50,000.00, and         |
|            |                                                         |
|            | -   veteran has \$2,000.00 in personal funds.           |
+------------+---------------------------------------------------------+

  ----------- ------------ ----------------- ----------------- ---------------- ------------------
  Stage       Percentage   Grant Funds       Loan Funds        Veteran's Funds  Total Funds

  1           20%          \$10,000.00       \$10,000.00       \$400.00         \$20,400.00

  2           20%          \$10,000.00       \$10,000.00       \$400.00         \$20,400.00

  3           20%          \$10,000.00       \$10,000.00       \$400.00         \$20,400.00

  4           20%          \$10,000.00       \$10,000.00       \$400.00         \$20,400.00

  5           20%          \$10,000.00       \$10,000.00       \$400.00         \$20,400.00

  **Total**   **100%**     **\$50,000.00**   **\$50,000.00**   **\$2,000.00**   **\$102,000.00**
  ----------- ------------ ----------------- ----------------- ---------------- ------------------

Continued on next page

Guidelines for VA Form 26-1854, Disbursement Schedule, Continued

+------------+---------------------------------------------------------+
| ##### Co   | > The stages of the disbursement schedule and the       |
| nditions t | > amount of the release may be impacted by the type of  |
| hat Impact | > project (remodeling, remodeling with an addition, or  |
|  the Disbu | > new construction).                                    |
| rsement Sc |                                                         |
| hedule {#c | > The stages of the disbursement schedule may also be   |
| onditions- | > impacted by the:                                      |
| that-impac |                                                         |
| t-the-disb | -   availability of funds, and                          |
| ursement-s |                                                         |
| chedule .u | -   SAH agent's receipt of the Department of Veterans   |
| nnumbered} |     Affairs (VA)\                                       |
|            |     Compliance Inspection Report from the VA-assigned   |
|            |     Compliance\                                         |
|            |     Inspector (CI) indicating that the work for the     |
|            |     particular stage is\                                |
|            |     incomplete and/or non-compliant.                    |
|            |                                                         |
|            |     ***Note:*** Any modifications to the original       |
|            |     escrow agreement concerning disbursements must be   |
|            |     corrected by an amendment and signed by all parties |
|            |     to the escrow agreement.                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ex   | > The table below illustrates a disbursement schedule   |
| ample {#ex | > where there:                                          |
| ample-1 .u |                                                         |
| nnumbered} | -   are three compliance inspections                    |
|            |                                                         |
|            | -   are three draws, and                                |
|            |                                                         |
|            | -   there is a 20 percent holdback shown on the         |
|            |     schedule.                                           |
|            |                                                         |
|            |     > ***Notes***:                                      |
|            |                                                         |
|            | -   In this example, the construction was completed at  |
|            |     the time of the third\                              |
|            |     inspection. If VA has an acceptance statement by    |
|            |     the veteran and a lien\                             |
|            |     waiver from the contractor for the entire project,  |
|            |     the remaining 20 percent                            |
|            |                                                         |
|            | > can be released along with the third draw after the   |
|            | > final field review by                                 |
|            | >                                                       |
|            | > the SAH agent.                                        |
|            |                                                         |
|            | -   If settlement for permanent financing is scheduled, |
|            |     and 20 percent is                                   |
|            |                                                         |
|            |     retained, the 20 percent can be released at loan    |
|            |     settlement as long as the                           |
|            |                                                         |
|            |     house is 100 percent complete.                      |
+------------+---------------------------------------------------------+

  ----------- ------------ ----------------- ------------ ----------------- ------------------
  Stage       Percentage   Grant Funds       Loan Funds   Veteran's Funds   Total Funds

  1           11%          \$7,280.00        \--          \$10,120.00       \$17,400.00

  2           44%          \$21,120.00       \--          \$40,480.00       \$61,600.00

  3           25%          \$12,000.00       \--          \$23,000.00       \$35,000.00

  4           20%          \$9,600.00        \--          \$18,400.00       \$28,000.00

  **Total**   **100%**     **\$50,000.00**   **\--**      **\$92,000.00**   **\$142,000.00**
  ----------- ------------ ----------------- ------------ ----------------- ------------------

Continued on next page

Guidelines for VA Form 26-1854, Disbursement Schedule, Continued

+------------+---------------------------------------------------------+
| #####      | > Reference the plan that was used to compute the grant |
| Calculatin | > amount to determine the manner in which the grant     |
| g Release  | > proceeds are paid out from the veteran's account.     |
| Amounts {# |                                                         |
| calculatin | > Calculate release amounts on the basis of in-place    |
| g-release- | > construction. Limit the release amount to no more     |
| amounts .u | > than 80 percent of the value of in-place              |
| nnumbered} | > construction, plus the cost of the land.              |
|            |                                                         |
|            | > ***References***: For more information about plan     |
|            | > types and calculating the grant amounts, see Chapter  |
|            | > 6, "Specially Adapted Housing (SAH) and Special       |
|            | > Housing Adaptations (SHA) Plan Types and Grant        |
|            | > Calculations."                                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Generate *VA Form 26-1854, Disbursement Schedule*     |
| # How to G | > from SAH/The Appraisal System (TAS).                  |
| enerate VA |                                                         |
|  Form 26-1 |                                                         |
| 854 {#how- |                                                         |
| to-generat |                                                         |
| e-va-form- |                                                         |
| 26-1854 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

#### Instruction Letter Guidelines {#instruction-letter-guidelines .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about preparing the   |
| roduction  | > instruction letter, including:                        |
| {#introduc |                                                         |
| tion-11 .u | -   the purpose                                         |
| nnumbered} |                                                         |
|            | -   when to perform                                     |
|            |                                                         |
|            | -   items to address, and                               |
|            |                                                         |
|            | -   generating the instruction letter.                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Pu   | > The purpose of the instruction letter is to:          |
| rpose {#pu |                                                         |
| rpose-3 .u | -   confirm issues addressed in the initial contact     |
| nnumbered} |     with the escrow agent, and                          |
|            |                                                         |
|            | -   provide instructions for the escrow agent in order  |
|            |     to establish the escrow\                            |
|            |     account.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The instruction letter should be prepared with the    |
| # When to  | > escrow agreement package.                             |
| Perform {# |                                                         |
| when-to-pe |                                                         |
| rform-2 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The table below describes the items to address in the |
| # Items to | > instruction letter to the escrow agent.               |
|  Address { |                                                         |
| #items-to- |                                                         |
| address .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-----------------+----------------------------------------------------+
| Item            | Description                                        |
+-----------------+----------------------------------------------------+
| Grant approval  | Indicate that the veteran has been approved for    |
|                 | the grant.                                         |
|                 |                                                    |
|                 | ***Note:*** Place a photocopy of the grant check   |
|                 | in the grant file.                                 |
+-----------------+----------------------------------------------------+

Continued on next page

Instruction Letter Guidelines, Continued

  -----------------------------------------------------------------------
  Items to Address (continued)

  -----------------------------------------------------------------------

+-----------------+----------------------------------------------------+
| Item            | Description                                        |
+-----------------+----------------------------------------------------+
| Grant check     | Advise the escrow agent that:                      |
|                 |                                                    |
|                 | -   the grant check is enclosed, including the:    |
|                 |                                                    |
|                 | ```{=html}                                         |
|                 | <!-- -->                                           |
|                 | ```                                                |
|                 | -   date of the check, and                         |
|                 |                                                    |
|                 | -   check number                                   |
|                 |                                                    |
|                 | ```{=html}                                         |
|                 | <!-- -->                                           |
|                 | ```                                                |
|                 | -   he/she should:                                 |
|                 |                                                    |
|                 | ```{=html}                                         |
|                 | <!-- -->                                           |
|                 | ```                                                |
|                 | -   schedule an appointment with the veteran and   |
|                 |     the contractor\                                |
|                 |     to endorse the check, and                      |
|                 |                                                    |
|                 | -   place the grant proceeds in the escrow account |
|                 |     as early as\                                   |
|                 |     possible, **[even if evidence of title has not |
|                 |     been received]{.underline}**, so\              |
|                 |     that interest will be earned during            |
|                 |     construction and/or\                           |
|                 |     remodeling.                                    |
|                 |                                                    |
|                 |     ***Note**:* No grant funds will be released    |
|                 |     from the escrow account until acceptable title |
|                 |     is obtained.                                   |
+-----------------+----------------------------------------------------+
| Contact         | Provide the following contact information about    |
| Information for | the veteran and the contractor:                    |
| the Veteran and |                                                    |
| the Contractor  | -   name, and                                      |
|                 |                                                    |
|                 | -   telephone number.                              |
+-----------------+----------------------------------------------------+
| Deposit and     | Advise the escrow agent that he/she should:        |
| Release of      |                                                    |
| Funds           | -   deposit the funds in an interest bearing       |
|                 |     account, if possible, and                      |
|                 |                                                    |
|                 | -   not release any funds without authorization    |
|                 |     from the Department\                           |
|                 |     of Veterans Affairs (VA).                      |
+-----------------+----------------------------------------------------+

Continued on next page

Instruction Letter Guidelines, Continued

  -----------------------------------------------------------------------
  Items to Address (continued)

  -----------------------------------------------------------------------

+-----------------+----------------------------------------------------+
| Item            | Description                                        |
+-----------------+----------------------------------------------------+
| Information to  | Advise the escrow agent that he/she should         |
| be Provided to  | provide:                                           |
| VA              |                                                    |
|                 | -   a copy of the executed escrow agreement        |
|                 |                                                    |
|                 | ```{=html}                                         |
|                 | <!-- -->                                           |
|                 | ```                                                |
|                 | -   evidence the account has been established, and |
|                 |     evidence the\                                  |
|                 |     grant funds have been deposited.               |
+-----------------+----------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ge   | > Generate the instruction letter using Specially       |
| nerating t | > Adapted Housing (SAH)/The Appraisal System (TAS).     |
| he Instruc |                                                         |
| tion Lette |                                                         |
| r {#genera |                                                         |
| ting-the-i |                                                         |
| nstruction |                                                         |
| -letter .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

## Section D Review and Approval of VA Form 26-1839, Compliance Inspection Report {#section-d-review-and-approval-of-va-form-26-1839-compliance-inspection-report .unnumbered}

#### Overview {#overview-4 .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This section contains information about the review    |
| roduction  | > and approval of *VA Form 26-1839*, *Compliance        |
| {#introduc | > Inspection Report*, including:                        |
| tion-12 .u |                                                         |
| nnumbered} | -   information about compliance inspections            |
|            |                                                         |
|            | -   reviewing *VA Form 26-1839*, and                    |
|            |                                                         |
|            | -   handling non-compliant inspections.                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > This section includes the following topics:           |
| # In this  |                                                         |
| Section {# |                                                         |
| in-this-se |                                                         |
| ction-3 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

  ---------- ----------------------------------------------- ------------
  Topic      Topic Name                                      See Page

  1          General Information About Compliance            13-D-2
             Inspections                                     

  2          Reviewing VA Form 26-1839, Compliance           13-D-4
             Inspection Report                               

  3          Handling Non-Compliant Inspections              13-D-6
  ---------- ----------------------------------------------- ------------

#### General Information About Compliance Inspections {#general-information-about-compliance-inspections .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about compliance      |
| roduction  | > inspections, including:                               |
| {#introduc |                                                         |
| tion-13 .u | -   the purpose                                         |
| nnumbered} |                                                         |
|            | -   who performs the inspections, and                   |
|            |                                                         |
|            | -   a description of *VA Form 26-1839, Compliance       |
|            |     Inspection Report*.                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Pu   | > The purpose of a compliance inspection is to obtain   |
| rpose {#pu | > approval of the construction for all Specially        |
| rpose-4 .u | > Adapted Housing (SAH) or Special Housing Adaptations  |
| nnumbered} | > (SHA) cases, where a Department of Veterans Affairs   |
|            | > (VA) grant is being sought. The compliance inspection |
|            | > certifies that the property has been constructed or   |
|            | > remodeled in accordance with:                         |
|            |                                                         |
|            | -   Federal, State, and local building codes (see       |
|            |     Chapter 9, Section F,                               |
|            |                                                         |
|            |     "Building Code Requirements" , and                  |
|            |                                                         |
|            | -   the specifications outlined by VA, including the:   |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   conformance to the Minimum Property Requirements    |
|            |     (MPRs), and                                         |
|            |                                                         |
|            | -   inclusion of special adaptive features.             |
|            |                                                         |
|            |     ***Note**:* Certification of federal, state, and    |
|            |     local building codes can be in the form of a        |
|            |     certificate of occupancy, or in case of remodeling, |
|            |     a copy of the final inspection report from the      |
|            |     local building authority.                           |
|            |                                                         |
|            | > ***Rationale***: VA can release grant funds only      |
|            | > after:                                                |
|            |                                                         |
|            | -   a proper inspection has been conducted by a VA      |
|            |     assigned Compliance\                                |
|            |     Inspector (CI)                                      |
|            |                                                         |
|            | -   all non-compliant items on *VA Form 26-1839,        |
|            |     Compliance Inspection\                              |
|            |     Report* are resolved, and                           |
|            |                                                         |
|            | -   *VA Form 26-1839* has been reviewed and approved by |
|            |     the Regional Loan\                                  |
|            |     Center (RLC).                                       |
+------------+---------------------------------------------------------+

Continued on next page

General Information About Compliance Inspections, Continued

+------------+---------------------------------------------------------+
| #####      | > A VA-assigned CI is responsible for performing the    |
| Who Perfor | > compliance inspections.                               |
| ms the Ins |                                                         |
| pection {# | > ***Exception***: In some cases the SAH agent may      |
| who-perfor | > conduct the final inspection if a VA-assigned CI is   |
| ms-the-ins | > not available in the area. However, all efforts       |
| pection .u | > should be made to assign a VA-approved CI for         |
| nnumbered} | > liability purposes.                                   |
|            |                                                         |
|            | > ***References***: For more information about          |
|            | > VA-assigned CIs in:                                   |
|            |                                                         |
|            | -   SAH cases, see Chapter 9, Section G, "Specially     |
|            |     Adapted Housing (SAH)                               |
|            |                                                         |
|            | > The Inspection Schedule and Assignment of the         |
|            | > Department of Veterans                                |
|            | >                                                       |
|            | > Affairs (VA) Compliance Inspector" and                |
|            |                                                         |
|            | -   SHA cases, see Chapter 10, Section F, "Special      |
|            |     Housing Adaptations\                                |
|            |     (SHA) Inspection Schedules and Assignment of a      |
|            |     Department of Veterans                              |
|            |                                                         |
|            | > Affairs (VA) Compliance Inspector."                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > After the compliance inspection, the VA-assigned CI   |
| Descriptio | > completes *VA Form 26-1839*.                          |
| n VA Form  |                                                         |
| 26-1839 {# | > This report:                                          |
| descriptio |                                                         |
| n-va-form- | -   lists the stage of the inspection                   |
| 26-1839 .u |                                                         |
| nnumbered} | -   indicates whether or not the project is compliant   |
|            |     with the plans and\                                 |
|            |     specifications at a specific stage of construction, |
|            |     and                                                 |
|            |                                                         |
|            | -   indicates when a re-inspection by the VA-assigned   |
|            |     CI is required.                                     |
|            |                                                         |
|            |     > ***Note:*** Once an inspection report from the    |
|            |     > VA-assigned CI is received, indicating that all   |
|            |     > SAH-related construction is complete, the SAH     |
|            |     > agent must conduct a Final Field Review to ensure |
|            |     > that the construction is compliant with SAH       |
|            |     > requirements.                                     |
|            |                                                         |
|            |     > ***Reference***: For information about the Final  |
|            |     > Field Review, see Chapter 9, Section G,           |
|            |     > "Specially Adapted Housing (SAH) The Inspection   |
|            |     > Schedule and Assignment of the Department of      |
|            |     > Veterans Affairs (VA) Compliance Inspector."      |
+------------+---------------------------------------------------------+

#### Reviewing VA Form 26-1839, Compliance Inspection Report {#reviewing-va-form-26-1839-compliance-inspection-report .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about reviewing *VA   |
| roduction  | > Form 26-1839, Compliance Inspection Report*,          |
| {#introduc | > including:                                            |
| tion-14 .u |                                                         |
| nnumbered} | -   the purpose                                         |
|            |                                                         |
|            | -   a definition, and                                   |
|            |                                                         |
|            | -   how to review the report.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Pu   | > The purpose for reviewing *VA Form 26-1839* is to:    |
| rpose {#pu |                                                         |
| rpose-5 .u | -   check the stage of construction and verify that the |
| nnumbered} |     construction is\                                    |
|            |     completed per plans and specifications, and         |
|            |                                                         |
|            | -   determine whether or not reports of compliance      |
|            |     inspections, re-inspection,\                        |
|            |     and inspections for staged payments of construction |
|            |     were completed.                                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > ***Non-compliant items*** include:                    |
| ## Definit |                                                         |
| ion: Non-C | -   deficiencies                                        |
| ompliant I |                                                         |
| tems {#def | -   deviations, or                                      |
| inition-no |                                                         |
| n-complian | -   unauthorized substitutions or changes.              |
| t-items .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### How  | > Follow the steps in the table below to review *VA     |
| to Review  | > Form 26-1839*.                                        |
| the Report |                                                         |
|  {#how-to- |                                                         |
| review-the |                                                         |
| -report .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | Review *VA Form 26-1839* and check for any non-compliant     |
|       | items.                                                       |
|       |                                                              |
|       | ***Reference***: For information about handling              |
|       | non-compliant items, see "Handling Non-Compliant             |
|       | Inspections" later in this section.                          |
+-------+--------------------------------------------------------------+

Continued on next page

Reviewing VA Form 26-1839, Compliance Inspection Report, Continued

  -----------------------------------------------------------------------
  How to Review the Report (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 2     | > Sign VA Form 26-1839, and indicate if the report is a:     |
|       |                                                              |
|       | -   pre-final report                                         |
|       |                                                              |
|       | -   final report, or                                         |
|       |                                                              |
|       | -   reinspection.                                            |
+-------+--------------------------------------------------------------+
| 3     | Mail copies of the report to the:                            |
|       |                                                              |
|       | -   veteran                                                  |
|       |                                                              |
|       | -   contractor, and                                          |
|       |                                                              |
|       | -   lender (if applicable).                                  |
+-------+--------------------------------------------------------------+
| 4     | File the original report in the grant file.                  |
+-------+--------------------------------------------------------------+
| 5     | Update Specially Adapted Housing (SAH)/The Appraisal System  |
|       | (TAS).                                                       |
+-------+--------------------------------------------------------------+
| 6     | Submit the VA-assigned CI's fee invoice for payment.         |
+-------+--------------------------------------------------------------+

#### Handling Non-Compliant Inspections {#handling-non-compliant-inspections .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about handling        |
| roduction  | > non-compliant inspections, including:                 |
| {#introduc |                                                         |
| tion-15 .u | -   how to handle non-compliant items, and              |
| nnumbered} |                                                         |
|            | -   the contractor's failure to correct the deficiency. |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ho   | > Follow the steps in the table below to handle         |
| w to Handl | > non-compliant items on *VA Form 26-1839*.             |
| e Non-Comp |                                                         |
| liant Item | > ***IMPORTANT***: If the non-compliance affects the    |
| s {#how-to | > structural integrity of the structure and purpose of  |
| -handle-no | > the project, contact the contractor and Department of |
| n-complian | > Veterans Affairs (VA)-assigned Compliance Inspector   |
| t-items .u | > (CI) to discuss the deficiency.                       |
| nnumbered} |                                                         |
|            | > ***Reference***: For information about handling       |
|            | > non-compliant items that cannot be corrected, see     |
|            | > Chapter 15, Section A, "Delays, Complaints, and       |
|            | > Transfer Cases."                                      |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | Immediately provide the counter-signed copy of *VA Form      |
|       | 26-1839* to the contractor thereby notifying him/her that    |
|       | there are non-compliant items.                               |
+-------+--------------------------------------------------------------+
| 2     | Send a detailed letter to the contractor and a courtesy copy |
|       | of the letter to the veteran:                                |
|       |                                                              |
|       | -   identifying the:                                         |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   situation, and                                           |
|       |                                                              |
|       | -   needed corrections, and                                  |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   explaining that the cost of the re-inspection is at the\ |
|       |     contractor's expense.                                    |
|       |                                                              |
|       |     ***Note***: A change order may be necessary if there is  |
|       |     a substitution or deviation from the plans and           |
|       |     specifications.                                          |
+-------+--------------------------------------------------------------+
| 3     | -   Monitor the status of the needed corrections, and        |
|       |                                                              |
|       | -   schedule a re-inspection, once the non-compliant item    |
|       |     is\                                                      |
|       |     corrected.                                               |
+-------+--------------------------------------------------------------+

Continued on next page

Handling Non-Compliant Inspections, Continued

+------------+---------------------------------------------------------+
| ##### Fa   | > Allow the contractor a reasonable amount of time to   |
| ilure to C | > correct the construction problem. However, if the     |
| orrect the | > contractor still fails to correct the deficiency,     |
|  Deficienc | > contact the Regional Loan Center (RLC) to:            |
| y {#failur |                                                         |
| e-to-corre | -   advise of the deficiency, and                       |
| ct-the-def |                                                         |
| iciency .u | -   request guidance in resolving the problem.          |
| nnumbered} |                                                         |
|            |     > ***Reference***: For more information about the   |
|            |     > contractor's failure to correct the deficiency,   |
|            |     > see Chapter 15, Section A, "Delays, Complaints,   |
|            |     > and Transfer Cases."                              |
+------------+---------------------------------------------------------+

## Section E Management and Authorization to Release Funds {#section-e-management-and-authorization-to-release-funds .unnumbered}

#### Overview {#overview-5 .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This section contains information about the           |
| roduction  | > management and authorization to release funds,        |
| {#introduc | > including:                                            |
| tion-16 .u |                                                         |
| nnumbered} | -   guidelines for escrow fund release                  |
|            |                                                         |
|            | -   twenty percent holdback of grant funds              |
|            |                                                         |
|            | -   authorization of release letter guidelines, and     |
|            |                                                         |
|            | -   guidelines for obtaining documentation and evidence |
|            |     of the escrow fund\                                 |
|            |     release.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > This section includes the following topics:           |
| # In this  |                                                         |
| Section {# |                                                         |
| in-this-se |                                                         |
| ction-4 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

  ---------- ------------------------------------------------ ------------
  Topic      Topic Name                                       See Page

  1          Guidelines for Escrow Fund Release               13-E-2

  2          Twenty Percent Holdback of Grant Funds           13-E-4

  3          Authorization of Release Letter Guidelines       13-E-5

  4          Guidelines for Obtaining Documentation and       13-E-7
             Evidence of the Escrow Fund Release              
  ---------- ------------------------------------------------ ------------

#### Guidelines for Escrow Fund Release {#guidelines-for-escrow-fund-release .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about guidelines for  |
| roduction  | > the escrow fund release, including:                   |
| {#introduc |                                                         |
| tion-17 .u | -   when to initiate the release                        |
| nnumbered} |                                                         |
|            | -   how to authorize the release, and                   |
|            |                                                         |
|            | -   when to retain funds in escrow.                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### When | > Use the table below to determine when to initiate the |
|  to Initia | > release of funds.                                     |
| te Release |                                                         |
|  {#when-to |                                                         |
| -initiate- |                                                         |
| release .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+---------------------+------------------------------------------------+
| If the case is a    | Then initiate the release of funds after ...   |
| ...                 |                                                |
+---------------------+------------------------------------------------+
| Specially Adapted   | -   obtaining an acceptable title opinion      |
| Housing (SAH) case  |     from\                                      |
|                     |     Regional Counsel (RC), and                 |
|                     |                                                |
|                     | -   receiving an acceptable *VA Form 26-1839*, |
|                     |     *\                                         |
|                     |     Compliance Inspection Report* from the\    |
|                     |     Department of Veterans Affairs (VA)        |
|                     |     assigned\                                  |
|                     |     Compliance Inspector (CI).                 |
|                     |                                                |
|                     | ***Note:*** A Final Field Review report must   |
|                     | be completed by the SAH agent or other         |
|                     | qualified VA personnel before the final funds  |
|                     | (20% holdback) can be disbursed.               |
+---------------------+------------------------------------------------+
| Special Housing     | -   receiving an acceptable *VA Form 26-1839*  |
| Adaptations (SHA)   |     from\                                      |
| case                |     the VA-assigned CI, and                    |
|                     |                                                |
|                     | -   an acceptable Final Field Review report.   |
+---------------------+------------------------------------------------+

+-----------------------------------------------------------------------+
| > ***References***: For more information about:                       |
|                                                                       |
| -   checking the title requirements, see Chapter 11, Section C,       |
|     "Verifying\                                                       |
|     Evidence of Acceptable Title," and                                |
|                                                                       |
| -   *VA Form 26-1839*, see Chapter 13, Section D, "Review and         |
|     Approval of\                                                      |
|     VA Form 26-1839, Compliance Inspection Report."                   |
+-----------------------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ho   | > To authorize the fund release, prepare and send the   |
| w to Autho | > escrow release letter to the escrow agent.            |
| rize the F |                                                         |
| und Releas | > ***Reference***: For more information about the       |
| e {#how-to | > escrow release letter, see "Authorization of Release  |
| -authorize | > Letter Guidelines" later in this section.             |
| -the-fund- |                                                         |
| release .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

Guidelines for Escrow Fund Release, Continued

+------------+---------------------------------------------------------+
| ##         | > Retain funds in escrow upon receipt of the Final      |
| ### When t | > Field Review report if work is still not complete     |
| o Retain F | > because of:                                           |
| unds in Es |                                                         |
| crow {#whe | -   non-compliant items, or                             |
| n-to-retai |                                                         |
| n-funds-in | -   items outside of the contractor's control.          |
| -escrow .u |                                                         |
| nnumbered} |     > The amount to retain in escrow must be two times  |
|            |     > the cost of the incomplete items *or* a minimum   |
|            |     > of *\$1,500.00*, whichever is higher.             |
|            |                                                         |
|            |     > ***Note:*** Final escrow funds must not be        |
|            |     > released until the SAH agent has received         |
|            |     > evidence of completion of non-compliant items     |
|            |     > and/or items outside of the contractor's control. |
|            |     > Evidence includes an additional Final Field       |
|            |     > Review report by the SAH agent or, in the case of |
|            |     > minor items, photographs and a statement of       |
|            |     > satisfactory completion, signed by both the       |
|            |     > veteran and the contractor.                       |
+------------+---------------------------------------------------------+

#### Twenty Percent Holdback of Grant Funds {#twenty-percent-holdback-of-grant-funds .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about the 20 percent  |
| roduction  | > holdback of grant funds, including:                   |
| {#introduc |                                                         |
| tion-18 .u | -   the purpose                                         |
| nnumbered} |                                                         |
|            | -   requirements                                        |
|            |                                                         |
|            | -   an example, and                                     |
|            |                                                         |
|            | -   exceptions.                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Pu   | > The purpose of coordinating the 20 percent holdback   |
| rpose {#pu | > is to assure the project:                             |
| rpose-6 .u |                                                         |
| nnumbered} | -   will be fully completed, and                        |
|            |                                                         |
|            | -   is in compliance with the approved plans and        |
|            |     specifications.                                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > A 20 percent holdback of *grant funds* is required    |
| # Requirem | > anytime a disbursement schedule is prepared for the   |
| ent {#requ | > project.                                              |
| irement .u |                                                         |
| nnumbered} | > ***Note***: The 20 percent holdback may or may not    |
|            | > contain any of the *loan* funds, depending upon the   |
|            | > lender's preference.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > In some instances, the 20 percent holdback may be     |
| ### Except | > considered excessive. Such instances may include      |
| ions {#exc | > situations where the:                                 |
| eptions .u |                                                         |
| nnumbered} | -   contractor must postpone completion of certain      |
|            |     improvements or is unable\                          |
|            |     to deliver or install certain kinds of equipment on |
|            |     schedule due to                                     |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   weather conditions, or                              |
|            |                                                         |
|            | -   other reasons beyond his/her control, or            |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   veteran may desire occupancy before the property is |
|            |     entirely completed\                                 |
|            |     and completion is delayed because of reasons beyond |
|            |     the control of the\                                 |
|            |     contractor.                                         |
|            |                                                         |
|            |     > ***IMPORTANT***: The amount to retain in escrow   |
|            |     > must be two times the estimated cost of the       |
|            |     > incomplete items, *or* a minimum of *\$1,500.00*, |
|            |     > whichever is higher.                              |
+------------+---------------------------------------------------------+

#### Authorization of Release Letter Guidelines {#authorization-of-release-letter-guidelines .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about the             |
| roduction  | > authorization of release letter guidelines,           |
| {#introduc | > including:                                            |
| tion-19 .u |                                                         |
| nnumbered} | -   a description                                       |
|            |                                                         |
|            | -   when to perform                                     |
|            |                                                         |
|            | -   components of the letter, and                       |
|            |                                                         |
|            | -   generating the letter.                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The ***authorization of release letter***:            |
| # Descript |                                                         |
| ion {#desc | -   authorizes the escrow agent to release a specified  |
| ription .u |     amount of the grant\                                |
| nnumbered} |     funds, and                                          |
|            |                                                         |
|            | -   indicates to whom the checks are to be made         |
|            |     payable.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > ***Scheduled Release Cases***                         |
| # When to  |                                                         |
| Perform {# | > The authorization of release letter should be         |
| when-to-pe | > prepared and sent:                                    |
| rform-3 .u |                                                         |
| nnumbered} | -   in accordance with the established escrow agreement |
|            |     disbursement\                                       |
|            |     schedule                                            |
|            |                                                         |
|            | -   upon acceptance of each inspection report requiring |
|            |     a disbursement, and                                 |
|            |                                                         |
|            | -   after acceptable title opinion is received from     |
|            |     Regional Counsel (RC).                              |
|            |                                                         |
|            | > ***Reference***: For more information about checking  |
|            | > the title requirements,\                              |
|            | > see Chapter 11, Section C, "Verifying Evidence of     |
|            | > Acceptable Title."                                    |
|            |                                                         |
|            | > ***Lump Sum Payment Cases***                          |
|            |                                                         |
|            | > The authorization of release letter should be         |
|            | > prepared and sent:                                    |
|            |                                                         |
|            | -   after acceptable title opinion is received from RC  |
|            |                                                         |
|            | -   after the final *VA Form 26-1839* is received and   |
|            |     approved, and                                       |
|            |                                                         |
|            | -   after the Final Field Review is conducted.          |
|            |                                                         |
|            |     ***Reference***: For information about the Final    |
|            |     Field Review, see Chapter 9 Section G, "The         |
|            |     Inspection Schedule and Assignment of a Department  |
|            |     of Veterans Affairs (VA) Compliance Inspector."     |
+------------+---------------------------------------------------------+

Continued on next page

Authorization of Release Letter Guidelines, Continued

+------------+---------------------------------------------------------+
| ##### Comp | > For both scheduled release cases and lump sum payment |
| onents of  | > cases, the authorization of release letter should     |
| the Letter | > include the:                                          |
|  {#compone |                                                         |
| nts-of-the | -   names of the payees to be included on the check,    |
| -letter .u |     including the veteran\                              |
| nnumbered} |     and contractor                                      |
|            |                                                         |
|            | -   amount to release, and                              |
|            |                                                         |
|            | -   instructions for submitting supporting              |
|            |     documentation and evidence,\                        |
|            |     including a lien waiver and/or material and labor   |
|            |     cost receipts (depending\                           |
|            |     on local practices).                                |
|            |                                                         |
|            | > ***References***: For more information about:         |
|            |                                                         |
|            | -   the amount of the release, see "Guidelines for      |
|            |     Escrow Fund Release"\                               |
|            |     earlier in this section, and                        |
|            |                                                         |
|            | -   lien waivers and other supporting documentation and |
|            |     evidence, see\                                      |
|            |     "Guidelines for Obtaining Documentation and         |
|            |     Evidence of the Escrow\                             |
|            |     Fund Release" later in this section.                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The authorization release letter may be generated     |
| # Generati | > from the Specially Adapted Housing (SAH)/The          |
| ng the Let | > Appraisal System (TAS).                               |
| ter {#gene |                                                         |
| rating-the |                                                         |
| -letter .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

#### Guidelines for Obtaining Documentation and Evidence of the Escrow Fund Release {#guidelines-for-obtaining-documentation-and-evidence-of-the-escrow-fund-release .unnumbered}

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information about the guidelines  |
| roduction  | > for obtaining the documentation and evidence of       |
| {#introduc | > escrow fund release, including:                       |
| tion-20 .u |                                                         |
| nnumbered} | -   the purpose                                         |
|            |                                                         |
|            | -   when to obtain                                      |
|            |                                                         |
|            | -   a description of lien waivers                       |
|            |                                                         |
|            | -   required documentation and evidence, and            |
|            |                                                         |
|            | -   when to file the evidence and update Specially      |
|            |     Adapted Housing\                                    |
|            |     (SAH)/The Appraisal System (TAS).                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Pu   | > The purpose of obtaining the documentation and        |
| rpose {#pu | > evidence of escrow fund release from the escrow agent |
| rpose-7 .u | > is to ensure that the grant funds were properly       |
| nnumbered} | > released.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### When | > Documentation and evidence of escrow fund release     |
|  to Obtain | > should be obtained after the final release of the     |
|  {#when-to | > grant funds.                                          |
| -obtain .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > A ***lien waiver*** states that:                      |
| #### Descr |                                                         |
| iption: Li | -   the contractor has paid or will pay for materials   |
| en Waivers |     and specialty contractors\                          |
|  {#descrip |     and sub-contractors, and                            |
| tion-lien- |                                                         |
| waivers .u | -   no enforceable mechanic liens can or will be placed |
| nnumbered} |     on the subject\                                     |
|            |     property.                                           |
+------------+---------------------------------------------------------+

Continued on next page

Guidelines for Obtaining Documentation and Evidence of the Escrow Fund
Release, Continued

+------------+---------------------------------------------------------+
| ##         | > The escrow agent must provide:                        |
| ### Requir |                                                         |
| ed Documen | -   evidence of all releases, such as copies of         |
| tation and |     endorsed checks                                     |
|  Evidence  |                                                         |
| {#required | -   lien waivers                                        |
| -documenta |                                                         |
| tion-and-e | -   evidence that any interest accrued was paid to the  |
| vidence .u |     veteran                                             |
| nnumbered} |                                                         |
|            | -   evidence that the escrow account has been closed    |
|            |                                                         |
|            | -   a statement or summary of payments                  |
|            |                                                         |
|            | -   evidence that grant funds were applied to the       |
|            |     principal balance of the\                           |
|            |     mortgage, if applicable                             |
|            |                                                         |
|            | -   evidence that the veteran was reimbursed, if        |
|            |     applicable, and                                     |
|            |                                                         |
|            | -   the *HUD 1 Settlement Statement*.                   |
|            |                                                         |
|            | > ***Note***: The *HUD 1 Settlement Statement* is       |
|            | > obtained from the lender when the veteran is          |
|            | > obtaining supplemental financing.                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Whe  | > After all of the evidence and documentation has been  |
| n to File  | > received:                                             |
| the Eviden |                                                         |
| ce and Upd | -   file the Final Field Review and all evidence and    |
| ate SAH/TA |     documentation from the\                             |
| S {#when-t |     escrow agent in the grant file, and                 |
| o-file-the |                                                         |
| -evidence- | -   update SAH/TAS with information about inspections   |
| and-update |     and escrow\                                         |
| -sahtas .u |     payments.                                           |
| nnumbered} |                                                         |
|            |     ***Note***: SAH/TAS must be updated after each      |
|            |     release of funds.                                   |
|            |                                                         |
|            |     ***Reference:*** For more information about the     |
|            |     Final Field review, see Chapter 9, Section G,       |
|            |     "Final Field Review."                               |
+------------+---------------------------------------------------------+