Construction Lending Essentials, Risk Mitigation, & more…

Learn how to mitigate the higher risks in real estate lending, and get guidance on ways to extend construction loans safely and profitably.

Course Description

Most bankers acknowledge that construction lending is riskier than other types of commercial lending. Therefore, it is important 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 satisfactorily monitor and manage the credit exposure and the construction activity.

Join us as we examine the core concepts of real estate lending. We will look at the different commercial real estate loan types (including new construction loans), and the factors lenders must consider when lending for different properties. We will also explore the timeline and process of real estate transactions and give you a practical demonstration of real estate credit analysis.

Areas Covered

• 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 and uses, costs review, inspections, disbursements, retention, liens, construction problem mitigation.

Why should you attend?

In this webinar, the presenter will discuss proven methods to mitigate the higher risk of real estate lending, and offer advice and guidance on how to extend construction loans safely and profitably with appropriate analysis and underwriting and structuring — LTV, LTC, minimum equity, bonding, etc. Deal scenarios will be presented for better understanding.

Once the construction loan is extended, it must be administered by the Real Estate Credit Administration (RECAD), so the session also addresses the role and activities of real estate construction administration (RECAD) — sources and uses, cost review, inspections, disbursements, retention, liens, and construction problem mitigation.

Learning Objectives

#1. 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

#2. 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

#3. 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

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

About the Instructor

Martin J. “Dev” Strischek is Principal of Devon Risk Advisory Group based near Atlanta, Georgia. He advises, trains, and develops risk management solutions and recommendations for financial organizations on a range of issues and topics (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 more appropriate for privately held firms. He also serves as the PCC’s representative to FASB’s Credit Losses Transition Resource Group supporting the new current expected credit loss (CECL) standard.

Dev is the former SVP and senior credit policy officer at SunTrust Bank, Atlanta. He was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business–commercial, commercial real estate, corporate investment banking, capital markets, business banking and private wealth management.

Refund policy

Attendees may cancel up to two working days prior to the course start date and the refund will be processed within two working days.

We will process/provide a refund if the webinar is canceled. Refunds will not be given to participants who do not show up for the webinar. On-demand Recordings can be requested in exchange. Webinar may be canceled due to lack of enrollment or unavoidable factors. Attendees will be notified 24 hours in advance if a cancellation occurs. Substitutions can happen at any time.

If you have any concerns about the content of the webinar and are not satisfied please contact us at care@thecomplyguide.com