Construction Lenders: Here’s How to Get the Most out of Your Process Auditing
Construction lenders are in a booming business. As such, there’s a lot of competition, especially in 2021.
And if your lending processes aren’t smooth and easy for borrowers to navigate, you might find yourself missing out on potential profits. Process auditing is an important part of ensuring you’re doing the best you can to keep your loan administrators and borrowers happy. Here’s how to do it.
Ask These Questions
Construction loans are complex, which means the lending process isn’t as straightforward as it is for other types of loans. These layers of complexity solidify the need for examining your practices regularly through a process audit. To begin your audit, consider the following questions:
- How frequently do you perform a credit check on your contractors?
- Are all contractors’ risk insurance still valid, or do any expire before the project completion date?
- How many of your loans are within compliance?
- What is your process for dealing with loans that don’t reconcile?
- What can you do to speed up your turnaround time to collect more interest?
- Do you frequently refund fees to your borrowers, and how much have you lost due to fee waivers?
- Are any of your active loans in danger of extending past the maturity date? How many?
- Are any loans funded beyond the amount of work that has been completed?
If finding this data is difficult, construction lenders can benefit from using a loan management software. These platforms allow for real-time access to numbers and information to help streamline and improve your business. The integration of a construction loan software allows your loan administrators to manage more loans at once, increasing profitability.
Wasatch Peaks Credit Union recently started using a loan management software for their construction lending, and their improvements are notable. They cut their draw processing time by 75%. The communication between lender and borrower was dramatically improved. And they reduced the amount of other software systems by at least 50% [CoFi].
Process audits are extremely beneficial to determining how effective your past practices and processes have been. But it’s essential to take it one step forward and use the information you’ve gathered to put together a plan for moving forward. Review these questions as you look forward:
- Do you feel confident in your team’s ability to manage your current portfolio?
- Do you plan to grow your portfolio, and do you have the staff necessary for growth?
- Would loan administration software improve our lending practices?
- Are you prepared to handle a market decline or a disaster like COVID-19 [LA Times]?
CoFi Is Here
Here at CoFi, we know and understand the complexities that construction lenders face. That’s why we’ve created the only construction loan management software that caters to both lenders and contractors to provide a straightforward and streamlined lending process. CoFi’s software provides important status updates and loan information at-a-glance, so you don’t have to spend hours sifting through paperwork and spreadsheets to find a single piece of information. We’ve also automated the draw process, so interest starts accruing faster. See how CoFi can help your business. Schedule your personalized demo today!