The third annual Construction Lenders Risk Management (CLRM) Roundtable will be held in Miami Beach, FL on March 7-9, 2016. Representatives from the OCC, Fannie Mae, Freddie Mac and some of the country’s largest lenders will join the roundtable to share insights, concerns and strategies to manage construction lending risks and regulatory pressures.
This year’s Roundtable sessions include discussion of changing bank regulations, the state of agency due diligence, and problematic market conditions such as labor and materials shortages, management of risks during construction, the adequacy and use of contingency budgets and more.
The event is sponsored by Partner Engineering and Science, Inc. and will be attended by close to 100 leaders from across the construction lending industry. “As in previous years, the Roundtable will tackle current issues in an effort to establish better procedures and policies, and to provide participants with the resources to better protect bank net income and assets from construction risk” said Bill Tryon, Partner’s Director of Strategic Development and key organizer of the CLRM Roundtable.
A key focus will be to clarify the application and impact of recent regulatory changes pertaining to construction lending. After the recent recession, studies completed by the FDIC and Office of the Inspector General determined that construction lending played a significant role in the demise of a high percentage of failed banks. Examiners are expected to pay special attention to construction lending going forward; with particular emphasis on lenders with rapidly increasing construction portfolios. In addition, the impact of High Volatility Commercial Real Estate (HVCRE) rules continues to play out. Where the rule applies, the cost of borrowing or profitability of construction lending have been impacted by 50 basis points, or more. In order to avoid these impacts, borrowers may subject to more stringent underwriting requirements. The OCC and senior managers will discuss problems with consistent implementation of HVCRE rules as well as other challenges encountered by lenders.
In this new regulatory landscape, construction lenders are adjusting risk management practices and internal policies to ensure regulatory compliance, while also remaining competitive and profitable. “We want to facilitate sharing of experiences and opinions so that lenders can develop the most appropriate approach to manage construction risk, based on their individual expertise and risk tolerance, and within the framework of current regulatory guidance” said Tryon.
Additionally, the diverse CLRM Roundtable program will look at the value of proactive due diligence measures, how a weaker global economy will impact CRE financing in the US, and the role that technology will and should play in construction industry.
The CLRM board is currently conducting a survey on the state of the construction industry, which you can access here: https://www.surveymonkey.com/r/CLRM-Survey-LinkedIn. For more information, please contact Bill Tryon at [email protected] or Kelly McMicken at [email protected].