When a builder needs an extra inspection how do you handle? We have been advised that we cannot pass the cost to the builder because it wasn't disclosed to the borrower and there is the possiblility for the builder to pass our fee to the borrower hence not being disclosed.
We charge a standard $150 on each construction loan to cover inspections, and this is disclosed to the customer. We also have an employee that visits every construction on a monthly basis to determine to %-complete and compare that against the %-disbursed. These monthly inspections continue until the construction is 100% complete. The $150 fee covers that activity.
We have the same problem. We use outside inspectors and never know who the inspector will be or how much or how many inspections will be needed when the LE is being done. So our procedure is to disclose $900.00 (6 inspections at $150 each). This is average for most of our construction loans. But we have run into instances where the inspections have cost more than $900.00 and the Bank has to pay anything over $900.00.