Construction Lending and Real Credit Administration (RECAD): Evaluating, Underwriting, and Monitoring Construction Loans

Most bankers acknowledge that construction lending is riskier than other types of commercial lending because:

• 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

This lending webinar addresses how to mitigate the higher risk, and it offers advice and guidance in how to extend construction loans safely and profitably:

• 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

Key Takeaways:

• How to assess a developer’s repayment ability, project background, and cash flow
• Practical underwriting techniques, including LTV, LTC, and bonding requirements
• Best practices for monitoring construction progress and managing risk with RECA

*This program does NOT qualify, nor meet the National Standard for NASBA accreditation.