lender’s draw schedule not = builder’s
In the process of building our house, I got a construction loan from a national mortgage lender, and I selected an experienced builder.
The glitch is that the builder’s draw schedule is slightly ahead of the lender’s, by about 1 draw period. In order for the builder to honor his price to me, he needs to be able to secure the cost of building supplies. This means outright purchase of the supplies. But the lender will only pay for what has been done and for supplies on site.
I’ve been assured by the lender that this is their standard operating procedure, no deviations. This is to protect my money. The builder said he has never experienced anything like this. He has always been able to get money he needs to secure the material costs. I don’t have reasons to doubt any party’s position. My contract with the builder is a pay-as-I-go type. We’d agreed on a contract price, but the contingency portion is mine. The lender also had the builder sign a draw schedule that supercedes the schedule on the contract.
What has been everyone’s experience in this area? As builders, how do you deal with this? I’d think this is so common that the industry should’ve settled on some sort of de facto procedure. Learn me.