Construction Lending and Real Estate Credit Administration: Evaluating, Underwriting, and Monitoring Construction Loans

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Learning Objectives

To analyze how to mitigate the higher risk.
To analyze how to extend construction loans safely and profitably.
To discuss construction lending policy—defining a construction loan, outlining necessary information and documentation needed to evaluate construction loan, and monitoring loan performance.
To explain appropriate underwriting and structuring—LTV, LTC, minimum equity, bonding, etc.
To inspect the role and activities of real estate construction administration (RECAD)—sources & uses, costs review, inspections, disbursements, retention, liens, and construction problem mitigation.

Course Description

Most bankers acknowledge that construction lending is riskier than other types of commercial lending. Its repayment ability depends on the 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. Moreover, during the construction period, the collateral is a work in progress, and often the guarantors do not have sufficient outside net worth or income to pay off the loan.

Key topics covered in this CPE Finance course are:

Learning 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 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

Join this CPE webinar by Dev Strischek to understand everything about construction lending and real estate credit administration!

Webinar Qualifies For

1.5 CPE Credit of Finance for Certified Public Accountants (CPA-US)
1.5 General Credit of Finance for Accountant/Bookkeeper/Tax Professionals
1.5 CPE Credit of Corporate Finance for Certified Management Accountants (CMA)
1.5 CPE Credit of Finance for Certified Valuation Analyst (CVA)
1.5 CPD Credit of Finance for Accredited in Business Valuation (ABV)
1.5 CE Credit for Certified Treasury Professional (CTP)
1.5 CPE Credit of Finance for Certified Business Appraiser (CBA)/Master Certified Business Appraiser (MCBA)
1.5 CE Credit of General finance principles and financial concepts for Certified FP&A Professional (FP&A)
1.5 CPE Credit of Finance for Iowa Licensed Public Accountant (IA-LPA)
1.5 CPE Credit of Finance for Maine Licensed Public Accountant (ME-LPA)
1.5 CPE Credit of Finance for Delaware Licensed Public Accountant (DE-LPA)

About Instructor

Dev Strischek

Principal, Devon Risk Advisory Group, LLC

A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Dev 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 region. 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 at the Stonier Graduate School of Banking, the Southwestern Graduate School of Banking, and the American Bankers Association's (ABA) Commercial Lending School. 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. He worked with RMA to develop, implement, and teach its Critical Thinking course.

Dev has written about credit risk management, financial analysis and related subjects for the ABA's Commercial Insights, the Risk Management Association's RMA Journal, the IMA’s Strategic Finance and other business professional journals. He is the author of Analyzing Construction Contractors and its related RMA workshop. A past national chair of RMA and former Florida Chapter president, Dev serves as a member of the RMA Journal's advisory board. He represented the banking industry as a member of the Financial Accounting Standards Board’s Private Company Council, which reviews and recommends changes to existing and proposed generally accepted accounting principles that make them more cost-effective for privately held companies. Finally, he has consulted on credit risk issues with banks in Morocco, Egypt, and Angola through the US State Department's Financial Service Volunteer Corps (FSVC).

Additional Information

Duration

1.5 Hours

Course Level

Basic

Instructional Method

Group Internet Based

Pre-requisites

None

Advance Preparation

None

FAQ’s

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NASBA APPROVED

MY-CPE LLC, 1600 Highway 6 south, suite 250, sugar land, TX, 77478

MY-CPE LLC (Sponsor Id#: 143597) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.NASBARegistry.org.