5.10.9 Completion of Repairs and Alterations

A. If the Borrower has not completed the required scope of work consistently with the repair schedule set in the Escrow Agreement (as adjusted for any HUD-approved extensions), the Lender shall complete the work using the remaining escrowed funds including assurance of completion amounts. The Lender will provide HUD a new repair schedule. In addition, the Lender will provide the Borrower with a breakdown of these repairs and the cost(s) of completion (including administrative expenses). Funds remaining in the escrow account after completion of the repair work will be returned to the Borrower, less reasonable administrative costs incurred in completing the repairs.

B. In cases where all or a portion of the costs of repairs and alterations support the size of the loan amount and actual costs are less than estimated, the maximum insurable loan amount must be recalculated and this recalculated figure compared to the endorsed loan amount. When the recalculated maximum insurable loan amount is less than the endorsed amount, the Borrower must use the excess proceeds for one or more of the following purposes:

1. Additional repairs approved by HUD and the Lender; and/or

2. Prepayment of the mortgage in amounts equal to the scheduled monthly principal payments, with any remainder going to the RfR.