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Compliance Companion®
Standard Procedures Manuals (SPM)
 

Construction Lending September 2021


This Manual is designed for both the construction lending specialist and those new to construction lending as a comprehensive resource regarding the broad range of issues presented by this complex field of lending. SPM #11 discusses the following topics.

  • Due Diligence – such as verifying borrowers and guarantors (including the proper documentation to obtain for each type of borrowing entity), CIP requirements, beneficial ownership and customer due diligence, evaluating a construction project and the real estate collateral, environmental due diligence, and tax and judgment liens
  • Regulatory Issues – including real estate lending standards, HVCRE capital rule, lending limits, credit union member business loan requirements, appraisal regulations, flood insurance regulations, ECOA & Regulation B matters, Truth in Lending and Regulation Z requirements, IRS reporting requirements, and the California fair housing law known as the Holden Act.
  • Construction Loan Documentation – how to structure and document a construction loan, including the terms of a letter of intent, construction loan agreement, promissory note, construction deed of trust, assignment of rents, authorization to borrow, guaranties, and subordination agreements.
  • Related Issues – mechanics liens and stop notices, credit enhancements (such as letters of credit), title insurance and endorsements appropriate for construction loans, other types of insurance and how to protect a lender’s interest in those policies.

The text of this Manual is 644 pages, plus 64 pages of appendices.

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Compliance Companion

Compliance Companion® is a one-stop regulatory compliance resource for financial institutions. This online compilation of 19 industry-leading compliance manuals, including this SPM #11, Construction Lending, takes the legalese out of federal and California laws and regulations, making it easier to understand and keep up with ongoing compliance developments.

Published by Aldrich & Bonnefin, PLC, Compliance Companion® has many useful features including search capabilities, links to internal cross-references and web-based sources, as well as samples of dozens of forms, disclosures and notices.

This compliance resource can also be accessed from your mobile device, making it faster and easier to get the latest information on federal and California laws and regulations governing financial institutions.

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SPM 11
* Janet Bonnefin is retired from the practice of law with the firm.
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