Most bankers acknowledge that construction lending is riskier than other types of commercial lending:
- Repayment ability depends on successful completion of the construction before the project can generate cash flow from the sale of the finished property, from rental or lease of the real estate, or permanent take-out refinancing
- During the construction period, the collateral is literally work-in-progress, and often the guarantors do not have sufficient outside net worth or income to pay off the loan
WHY SHOULD YOU ATTEND?
Therefore, participants will learn how to evaluate the developer’s ability to repay the construction loan.
- Developer’s background and expertise
- Contractor’s background and expertise
- Developer’s legal structure
- Owner’s minimum equity,
- Repayment ability from project cash flow, collateral, and guarantees
Develop an appropriate underwriting of the construction project to ensure the resulting structure ensures the bank will be repaid in full, on time, and as agreed.
- Sources and uses, cost review of hard costs & soft costs, appraisal review
- LTV, LTC, DCR
- Interest reserves
- Bonding
Explain how to satisfactorily monitor and manage credit exposure and the construction activity
- Role of and activities performed by real estate construction administration (RECAD)
- Inspections and disbursements
- Reallocations and change orders
- Retention, punch lists, charge-backs
- Causes of and cures for construction problems
- Problem asset management of construction loans
AREA COVERED
Most bankers acknowledge that construction lending is riskier than other types of commercial lending:
- Repayment ability depends on successful completion of the construction before the project can generate cash flow from the sale of the finished property, from rental or lease of the real estate, or from permanent take-out refinancing
- During the construction period, the collateral is literally work-in-progress, and often the guarantors do not have sufficient outside net worth or income to pay off the loan
Therefore, participants will learn how to evaluate the developer’s ability to repay the construction loan, develop an appropriate underwriting of the construction project to ensure the resulting structure ensures the bank will be repaid in full, on time, and as agreed, and how to satisfactorily monitor and manage the credit exposure and the construction activity.
Course Level - Basic/Fundamental
LEARNING OBJECTIVES
This webinar addresses how to mitigate the higher risk, and it offers advice and guidance on how to extend construction loans safely and profitably:
- Construction lending policy - defining a construction loan, outlining necessary information and documentation needed to evaluate construction loan, monitoring loan performance
- Appropriate underwriting and structuring - LTV, LTC, minimum equity, bonding, etc.
- Role and activities of real estate construction administration (RECAD)—sources & uses, costs review, inspections, disbursements, retention, liens, construction problem mitigation
WHO WILL BENEFIT?
- Commercial Real Estate (CRE) lenders, underwriters
- Real estate credit administration team members
- Credit policy managers
- Credit managers
- Credit Risk Managers
- Credit approval officers
- Risk Managers
- Enterprise Risk Managers
- Chief Credit Officers
- Senior Lenders
- Senior Lending Officer
- Bank Director
- Chief Executive Officer
- Bank President
- Board Chairman
Therefore, participants will learn how to evaluate the developer’s ability to repay the construction loan.
- Developer’s background and expertise
- Contractor’s background and expertise
- Developer’s legal structure
- Owner’s minimum equity,
- Repayment ability from project cash flow, collateral, and guarantees
Develop an appropriate underwriting of the construction project to ensure the resulting structure ensures the bank will be repaid in full, on time, and as agreed.
- Sources and uses, cost review of hard costs & soft costs, appraisal review
- LTV, LTC, DCR
- Interest reserves
- Bonding
Explain how to satisfactorily monitor and manage credit exposure and the construction activity
- Role of and activities performed by real estate construction administration (RECAD)
- Inspections and disbursements
- Reallocations and change orders
- Retention, punch lists, charge-backs
- Causes of and cures for construction problems
- Problem asset management of construction loans
Most bankers acknowledge that construction lending is riskier than other types of commercial lending:
- Repayment ability depends on successful completion of the construction before the project can generate cash flow from the sale of the finished property, from rental or lease of the real estate, or from permanent take-out refinancing
- During the construction period, the collateral is literally work-in-progress, and often the guarantors do not have sufficient outside net worth or income to pay off the loan
Therefore, participants will learn how to evaluate the developer’s ability to repay the construction loan, develop an appropriate underwriting of the construction project to ensure the resulting structure ensures the bank will be repaid in full, on time, and as agreed, and how to satisfactorily monitor and manage the credit exposure and the construction activity.
Course Level - Basic/Fundamental
This webinar addresses how to mitigate the higher risk, and it offers advice and guidance on how to extend construction loans safely and profitably:
- Construction lending policy - defining a construction loan, outlining necessary information and documentation needed to evaluate construction loan, monitoring loan performance
- Appropriate underwriting and structuring - LTV, LTC, minimum equity, bonding, etc.
- Role and activities of real estate construction administration (RECAD)—sources & uses, costs review, inspections, disbursements, retention, liens, construction problem mitigation
- Commercial Real Estate (CRE) lenders, underwriters
- Real estate credit administration team members
- Credit policy managers
- Credit managers
- Credit Risk Managers
- Credit approval officers
- Risk Managers
- Enterprise Risk Managers
- Chief Credit Officers
- Senior Lenders
- Senior Lending Officer
- Bank Director
- Chief Executive Officer
- Bank President
- Board Chairman
Speaker Profile
A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC). PCC’s purpose is to evaluate and recommend to FASB revisions to current and proposed generally accepted accounting principles (GAAP) that are …
Upcoming Webinars
Accounting For Non Accountants : Debit, Credits And Financi…
Regulation update Q1 2025: New and Proposed Regulations for…
Successful Strategies for FDA Expedited Pathways for Your D…
Unlock Employee Loyalty: Stay Interviews Will Keep Them Eng…
Pay Transparency in Action: Strategies for Building Trust a…
Designing Employee Experiences to Build a Culture of Compli…
Reinvent Your Business with the Power of AI
Excel Lookup Functions: VLOOKUP, HLOOKUP, and XLOOKUP Made …
Developing and Implementing Quality Culture in the Organiza…
Break Free from Toxicity: Reclaim Your Power and Peace
Tips and Techniques for Conducting an Effective Fraud Risk …
Physician Employment Agreements: Problem Areas that can be …
Measure the Effectiveness of Compliance Programs by Engagin…
FDA Regulation of Artificial Intelligence/ Machine Learning
Quality Management Systems and Data Integrity
Onboarding Best Practices for 2025: Proven Strategies to Po…
Computer System Validation (CSV) 3-Hour Boot Camp
Implementing an Effective Human Error Reduction Program
Navigating 2025 Employment Laws: What Every Employer Needs …
Cleaning Data without Complex Functions - A Course for Data…
Succession Plan for 2025: It's Not Just for Emergencies - I…
Employers Should Prepare for Immigration Raids in 2025! Thi…
Managing Toxic Employees: Strategies For Leaders To Effecti…
21 CFR Part 11 - Compliance for Electronic Records and Sign…
Using High-Performance Coaching for Managers to Address Per…
Negotiating Skills For Professional Results - Winning Strat…
Tattoos, hijabs, piercings, and pink hair: The challenges …
Principles & Practices for the Cybersecurity of Legacy Medi…
6-Hour Virtual Seminar on Learning the Highlights of Excel …
How to Lead and Manage a Narcissistic Manager
ChatGPT and Project Management: Leveraging AI for Project M…
Building Thriving Teams: Proactive Strategies for Managers …
Reduce Stress in the Workplace: Effective Ways to Handle Co…
Stress, Change And Team Resilience Through Humor: An Intera…
The Importance of the first 5 seconds when presenting
GAAP—Update on new Accounting Principles and How They Impac…
Creating Employee Handbooks that Protect You and Support th…
ChatGPT and Project Management: Leveraging AI for Project M…
Female to Female Hostility @Workplace: All you Need to Know
How to Prepare For and Host a FDA Inspection and Respond to…
How to Manage the Legal Landmine of the FMLA, ADA and Worke…