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
Session Highlights:
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, guarantee
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 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
Why You Should Attend:
This webinar addresses how to mitigate the higher risk, and it offers advice and guidance in how to extend construction loans safely and profitably with appropriate analysis and underwriting and structuring—LTV, LTC, minimum equity, bonding, etc. Once the construction loan is extended, it must be administered by real estate credit administration (RECAD), so the session also addresses the role and activities of real estate construction administration (RECAD)—sources & uses, costs review, inspections, disbursements, retention, liens, construction problem mitigation.
Who Should Attend:
Advanced Preparation: None
Program Level: Intermediate
Prerequisites: None
Field of Study: Finance
*You may ask your Question directly to our expert during the Q&A session.
** You can buy On-Demand and view it at your convenience.
Dev Strischek
A frequent speaker, instructor, advisor, and writer on credit risk and commercial banking topics and issues, Dev Strischek is principal of Devon Risk Advisory Group and engages in consulting, speaking and training on a wide range of risk, credit, and lending topics. As 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. He also spent three years as managing director and credit approver in SunTrust’s Florida commercial lending and corporate investment banking areas, respectively. Prior to SunTrust, Dev was chief credit officer for Barnett Bank’s Palm Beach market.
Besides stints at other banks in Florida, Kansas City, and Ohio, Dev’s experiences outside of banking include CFO of a Honolulu construction company, combat engineer officer in the U.S. Army, and college economics instructor in Hawaii, Missouri, and Florida. A graduate of Ohio State University and the ABA Stonier Graduate School of Banking, he earned his M.B.A. from the University of Hawaii. Dev serves as an instructor in RMA’s Florida Commercial Lending School, the Stonier Graduate School of Banking, and as both an instructor and as a member of the American Bankers Association's (ABA) Commercial Lending and Graduate Banking School advisory board. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA) and the AICPA.
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PLEASE NOTE: To receive credit through the NASBA for this program you MUST attend the Live program in its entirety and complete the required progress checks.
Number of CPE Credits Awarded for This Course: 1 (Finance-1.0)
Delivery Method: Group Internet Based