Course Overview

This course will cover the key components of managing risk in construction lending for individual loans to build commercial and residential buildings, as well as a line of credit for a residential homebuilder. It will also focus on the procedures to administer and monitor construction loans, including: feasibility studies, appraisals and environmental assessments; inspections, draw requests and advances; title insurance and lien issues; certificates of completion, retainages, and warranty issues. Beyond individual loans, the course also will provide formats for monitoring a portfolio of construction loans or builder lines, and key areas that should be reported to and monitored by senior management of a bank.

     

Duration

7.5 hours

Delivery

Instructor-Led Online

Program Level

Foundational

 

Prerequisites

This course assumes participants have taken RMA’s Commercial Real Estate Lending I or equivalent course or practical experience.

 

 

Who Will Benefit?

Institutions – Community banks/smaller regionals that do not have specialized construction lending staffs and have construction loans in the $500,000 to $5,000,000 range. Bankers – Intermediate to experienced commercial lenders, real estate lenders, credit officers, and credit analysts. Individuals who are not real estate experts but require exposure to the topic because of responsibilities of analyzing and/or managing construction loans.

   

Learning Objectives

Upon completion of this course, participants will be able to:

• Identifying the different types of construction projects and key issues associated with each.
• Implementing a construction loan approval using the commitment letter and sound administration procedures including feasibility studies, appraisals, and construction loan agreements.
• Developing summary information about individual construction loans and the entire construction loan portfolio for monitoring by senior management.

Methodology:

In Construction Loan Management, participants will use middle-market case examples that focus on situations typical of commercial real estate loans. The participants are actively involved through large and small group casework. Participants learn by practice, which in turn increases retention. Furthermore, involvement facilitates their ability to apply the course’s content when they return to their jobs.