Internal Control Questionnaires and Verification Procedures

Documentation

  1. Does the bank require and maintain documentary evidence of:

    1. The contractor’s payment of:

      • Employee withholding taxes?

      • Builder’s risk insurance?

      • Workmen’s compensation insurance?

      • Public liability insurance?

    2. The property owner’s payment of:

      • Real estate taxes?

      • Hazard insurance premiums?

  2. Does the bank require that documentation files include:

    1. Loan applications?

    2. Financial statements for the:

      • Borrower?

      • Builder?

      • Proposed prime tenant?

      • Take-out lender?

      • Guarantors?

    3. Credit and trade checks on the:

      • Borrower?

      • Builder?

      • Major sub-contractor?

      • Proposed tenants?

    4. copy of plans and specifications?

    5. A copy of the building permit?

    6. A survey of the property?

    7. Building and loan agreemen

    8. Appraisal?

    9. Up-to-date preliminary title search?

    10. Mortgage?

    11. Ground leases?

    12. Assigned tenant leases or letters of intent to lease?

      • Copies of any other legally binding agreements between the borrower and tenants?

      • Reports of past due leases, including delinquent expense reimbursements?

    13. Copy of take-out commitment?

    14. Copy of the borrower’s application to the take-out lender?

    15. Tri-party buy and sell agreement?

    16. Inspection reports?

    17. Disbursement authorizations?

    18. Undisbursed loan proceeds and contingency or escrow account reconcilements?

    19. Insurance policies?

  3. Does the bank employ standardized checklists to control documentation for individual files?

  4. Do documentation files note all of the borrower’s other loan and deposit account relationships?

  5. Does the bank use tickler files that:

    1. Control stage advance inspections and disbursements?

    2. Assure prompt administrative follow-up on items sent for:

      • Recording?

      • Attorney’s opinion?

      • Expert review?

  6. Does the bank maintain tickler files that will give at least 30 days advance notice before expiration of:

    1. Take-out commitment?

    2. Hazard insurance?

    3. Workmen’s compensation insurance?

    4. Public liability insurance?

Previous: Completion Bonding Requirements Next: Real Estate Loan Records