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How to Navigate Due Diligence When Your Lender Is "To Be Determined"

"Lender TBD" due diligence assessments don't have to be complex

For many commercial real estate transactions, the source of funds drives the nature and extent of due diligence required. From financial institutions, to banks, to construction lenders to agencies, different stakeholders must balance the need to stay competitive with the necessity to manage risk and make sound business decisions. Risk tolerances and underwriting requirements vary from lender to lender and often from lending program to lending program. While Freddie and Fannie have some similarities, they differ and considerations within in both differ greatly from HUD. A correspondent may be looking to source through a balance sheet lender, CMBS or a life company all of which have a different approach to risk, not only from lender to lender, but from platform to platform. One of the opportunities we have as experienced consultants is in guiding our clients towards minimizing risk through appropriate due diligence and saving them headaches in the process.

Often, clients engage us seeking due diligence for projects and portfolios where a lender is yet to be identified. The client is in the process of entertaining several possible sources, isn’t sure which way their financing will go, but wants to produce environmental assessment and physical building assessment reports that encompass a broad range of due diligence requirements.

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